Epain Homes

This drives me nuts… I should have just went ahead and offered on a house in Wilmette we looked at two weeks ago (pictured here). Mint condition, a huge master suite addition and a terrific yard. Turns out we are not “ready” for that just yet. And trying to sell our place with the kids right now is more than we can take!

The rates and lower home prices in good locations are making it hard for me to just settle down in my current home. I can’t help myself.

From the Chicago Tribune:

Average rates for 30-year home loans stayed below 5 percent for the second consecutive week, kick-starting refinancing activity, Freddie Mac said.

The average rate on a 30-year fixed mortgage was 4.87 percent, down from 4.94 percent last week, the mortgage financing giant said. The last time rates for 30-year home loans were lower was the week ending May 21, when they averaged 4.82 percent.

This week’s average rate remained slightly above the lowest level on record, 4.78 percent established in the spring. Last year at this time, the 30-year fixed-rate mortgage averaged 5.94 percent.

Meanwhile, refinance applications climbed 18 percent from last week, the Mortgage Bankers Association said.

I saw the piece over the weekend in the NYTimes but hadn’t gotten around to reading it until today. It’s been their most read article for nearly a week now so I thought I’d give it a skim. An important and true opening ‘graph:

Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.

But when is the right time? At least around Chicagoland, unless you can get a steal, I’d wait 6 months before buying anything. My view is that surely until the new administration comes into office things will remain dour. Then, I’m expecting Obama to make a big economic push right away but it will still take 2-4 months from legislative passage until that stimulus gets into the real economy. With greater confidence, I don’t think you lose much by waiting until spring 2010.

As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines.

How should you proceed if you’re planning to buy a home in the next 1-2 years?

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.

John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.

While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable.

Remember the tax credit and it’s expiration date.

Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.

Saw this reported here. Some snippets from the piece:

Reported incidents of mortgage fraud grew by 45 percent in the second quarter compared to the year-ago period, as borrowers misstated their financial information to maneuver around tighter lending standards, industry data released Tuesday showed.

Florida properties led the way with about one-fifth of mortgage fraud incidents reported in the second quarter, the Mortgage Asset Research Institute reported. California was second, and Illinois third, the data showed…

The largest increase in mortgage fraud in the first half of this year involved borrowers misstating their financial profile, which is not surprising as borrowers try to get around stricter lending guidelines, the report said.

Some basic examples of fraud included false bank statements made on computers and pay stubs with white correction liquid on them, said Jennifer Butts, the institute’s director of operations.

See it’s not all the big, bad lenders. Now that the election’s over perhaps some acknowledgment of fault on the part of buyer’s signing these mortgages is at hand.

Saw a review of the above in the Sun-Times.

Thought this was an interesting overview reporting from a Florida real estate auction done to sell a developer’s condos. I used to think of this as limited to the foreclosure scene but not anymore. We have a client who’s going to do one of these shortly so I’m very interested and will be reporting more in the near future.

As long as you can set a minimum bid, what’s to lose?