Photos from Rick Hauser, ABR, CNE, GRI Exclusive Buyer Agent - 100% Buyers
Home in Countryside Glen subdivision of Hawthorn Woods lit up around the Holidays.Located in: Hawthorn Woods, IL
Rates on prime mortgages eligible for purchase or guarantee by Freddie Mac hit another new low this week.
For borrowers making 20 percent down payments, the 30-year fixed-rate mortgage averaged 4.78 percent with an average of 0.7 point for the week ending April 2, down from 4.85 percent a week ago and 5.88 percent at the same time last year. The rate has never been lower since Freddie Mac began the survey in 1971.
Rates on 15-year fixed-rate mortgages were also at lows not seen in records dating back to 1991, averaging 4.52 percent with an average 0.7 point, down from 4.58 percent last week and 5.42 percent a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.92 percent this week, with an average 0.7 point, down from 4.96 percent last week and 5.59 percent a year ago. The 5-year ARM has not been lower since the survey began tracking that product in 2005.
One-year Treasury-indexed ARMs averaged 4.75 percent this week with an average 0.6 point, down from 4.85 percent last week and 5.19 percent a year ago. The 1-year ARM has not been lower since the week ending Sept. 29, 2005, when it averaged 4.68 percent.
Low rates have spurred a boom in applications to refinance, but more modest increases in applications for purchase loans. According to the Mortgage Bankers Association, applications for refinance loans were up 141 percent last week from a year ago. Applications for purchase loans have picked up in recent weeks, but were still off 32 percent from a year ago
Purchase-loan applications were essentially flat, but applications for refinance loans were up 3.7 percent for the week ending March 27. That's not as dramatic as the 41.5 percent increase in refinancing applications seen during the week ending March 20, following the Federal Reserve's announcement that it would expand its balance sheet by $1.15 trillion to keep interest rates down and stimulate borrowing.
There is a rule of thumb that says you should not buy a home that costs you more per month that 20 to 25% of your take home pay. We rarely see anyone following that rule of thumb today.
Too many consumers are buying homes that take a large part of their monthly income. This leaves little room in their finances for emergencies, furniture, vacations, investing, etc. With the past relaxed lending requirements, people were buying way more home than what they could realistically afford. If you go down this road, chances are that you’ll grow to hate this home. You should own a home, the home should not own you.
If you are buying a home in the next 6 months and want to learn more about the process from an Exclusive Buyer Agent. Call us at 847-566-7558 or e-mail info@relocationadvisorsgroup.com We are an Exclusive Buyer Brokerage (meaning that we never list property for sale or represent sellers) serving the Chicago area.
The $15,000 homebuyer tax credit didn’t survive the final negotiations on the stimulus bill.
Reportedly - Congress slightly increased to $8,000 an existing $7,500 credit for first-time homebuyers and eliminated repayment provisions.
Please note that the $8,000 number isn’t yet finalized. It may turn out to be $7,500.
The move is sure to disappoint those who had favored a more generous $15,000 credit for all home buyers in the Senate bill.
The new credit is retroactive to Dec. 31, 2008, which means that anyone who buys a house this year, through August, won’t have to repay it. The legislation extends the effective date of the tax credit, which is for up to $7,500, to September 1 from June 30. Households that purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit as well.
First time buyers who used the credit in 2008 still have to pay it back over a 15-year period.
The real-estate industry had closely followed the tax credit debate, hoping that a larger credit would make potential buyers more comfortable at a time when declining values and rising job losses have scared off buyers.
“Washington needs to do more at compensating home buyers for the now considerable danger of yet lower home prices,” writes John Lonski, chief economist at Moody’s Investors Service. “The near-term stabilization of either the economy or the financial system may be impossible until the now 5.25% 30-year mortgage yield falls to something no greater than 4.5%, and even the latter may prove to be too costly.”
Comment -- I agree with Mr Lonski - and have been saying that for some time..... Rates need to drop. When will the politicians get it? In fact - I called the Fed in early 2006 telling them to get rates dropped somehow - or they will create the biggest financial disaster in US history since the Great Depression. (Ben Bernanke's office didn't listen of course.... His secretary told me "Don't worry - Mr. Bernanke knows what he is doing..." I told her - I don't think he really does...and informed her that I was seeing the impact already...)
Interest rates edged up slightly at the end of January, and mortgage applications for new homes fell 14% during the four week period ending Feb. 6 from the previous four weeks.
Comment - Home Buyers -- does the slimmed down tax credit change your home buying plans? (I don't think so....)
Other provisions reportedly in the bill that could help housing markets and communities include:
* FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
* Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
* Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.
* Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.
* Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
* Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations
* Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds
* Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.
Citigroup Inc has agreed to support a controversial rewrite of U.S. bankruptcy law aimed at helping troubled mortgage borrowers.
Senators Richard Durbin of Illinois, Charles Schumer of New York and Christopher Dodd of Connecticut said the legal reform would help "millions of families save their homes."
Comment - I fail to see the rationale in writing down the principal balance on a home of someone going through bankruptcy. If they have no money to pay their mortgage anyway - what good does that do?? For example - lets say that they have $80,000 in credit card debt. They get their principal balance (and mortgage amount) cut in half. But - they are unemployed. The mortgage is cut in half - but they still don't have the ability to pay any of it. What are the senators smoking?
As an element of fairness - everyone's principal balance should be written down to some extent by the lenders - as they are getting bailed out by the govt. - but nothing is getting to homeowners to help THEM - which is the crux of the problem. I say - equal treatment to ALL homeowners - inclouding those that have made all their payments. The lenders who screwed up in making the loans in the first place - get bailed - and the homeowner gets shafted...
It continues...
Citigroup has agreed to support, under certain conditions, a rewrite of bankruptcy law. Under the change, known as "cramdown," bankruptcy courts could alter the terms of mortgages, subject to certain conditions, the senators said. Only mortgages entered into prior to the date of enactment of the bill would be eligible for the treatment.
Homeowners would have to certify that they have tried to contact their lender before filing for bankruptcy.
Only major violations of the "Truth in Lending Act" would invalidate creditor claims on bankruptcy.
Banks have long said that cramdowns — when bankruptcy judges force lenders to modify mortgages — would raise borrowing costs for all home buyers.
A recent NYT story reported that nearly one in six U.S. homes is worth less than the mortgage owed on it.
With the new legislation, judges could potentially reduce the balance of the loan to equal the amount of the current property value. That’s the “cram down.” Currently, judges overseeing bankruptcy cases can approve the modifications of the terms of auto and student loans and second home mortgages, but not those of primary homes.
Jerry Howard, president of the National Association of Home Builders, said that the NAHB has reversed its yearslong opposition to cramdowns, as foreclosures choke the market for new homes.
Samuel L. Bufford, a U.S. bankruptcy judge in Los Angeles: “The government is providing a trillion dollars in assistance to financial institutions to deal with the people that can’t afford to pay mortgages, so there ought to be something in the program to help people pay their mortgages. It’s a matter of fairness.”
Sen. Dick Durbin (D., Ill.) stated: “The question that faces us now is this: After committing over one trillion dollars in taxpayer money to address the financial crisis, why don’t we take a step that would indisputably reduce foreclosures and that would cost taxpayers nothing?”
Comment - I have a hard time seeing how giving a bankrupt person a mortgage write down is going to reduce foreclosures. What are they smoking?
Palatine Township Elementary District 15 board members settled on a 15 percent increase in the 2008 tax levy.
On Monday, the board approved asking the county for $114 million in property taxes, up from $99 million the district collected last year.
Officials acknowledge there's no way the entire amount will be collected, but it's common practice for districts to ask for more than they're entitled to, according to Assistant Superintendent Rebecca Allard.
Tax cap laws limit property tax increases to 5 percent or the rate of inflation - whichever is less.
This year, the district is entitled to the current 4.1 percent inflation rate. Levies are set higher because property tax receipts also take into account money generated from new property.
If the district doesn't ask for the maximum amount it can receive in property taxes, the state doesn't make up for the missing funds.
Though not one resident spoke out against the proposal during a public hearing Monday night, board members Sue Quinn, Kelly Keenan and Tim Millar again argued that 15 percent is too high an increase.
Officials won't know until August or September 2009 what growth numbers from new construction will be.
The tax rate is determined by the amount levied and the equalized assessed valuation of property within the district.
About 80 percent of the budget covers salaries and benefits for the district's 2,100 teachers and staff. The new budget year starts on July 1, 2009.
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