Doing the Charleston!

TO THOSE OF YOU WHO PLAN TO USE AN FHA LOAN TO TAKE ADVANTGE OF THE $8000 OR $6500 HOME BUYERS TAX CREDIT, THIS IS VERY IMPORTANT NEWS!

The Federal Housing Authority (FHA) outlined mortgage loan policy changes in late January that will affect home buyers in the very near future. The new polices are meant to reduce the government group's portfolio risk and strengthen it financially overall. FHA is experiencing record-high delinquency rates on single-family mortgages. This has sent the number of claims FHA has been forced to pay out skyrocketing, and left its capital reserve fund depleted – falling below what’s required by law for the first time since the agency was formed.

What these policy changes mean are higher costs for home buyers using FHA loans, beginning in spring/early summer of this year. The new policies are more detailed in FHA’s official announcement, but the basics of the changes are:

¨    The upfront mortgage insurance premiums, collected at closing, are increasing from 1.75% to 2.25%.

¨    If a home buyer’s FICO score (credit report score) is below 580, a minimum of 10% down payment will be required, instead of the 3.5% minimum down payment homebuyers have come to expect on an FHA loan.

¨    The amount of money that sellers can kick in for homebuyers/borrowers – typically in the form of closing costs – will drop from 6 percent to 3 percent of the home’s value.

If the increase in upfront mortgage insurance premiums is a major cause of concern for you, it is worthwhile to note that FHA has asked Congress to allow it to raise the maximum annual premiums that borrowers can be charged. If allowed, it will shift some of the premium increase from up-front (paid at closing), to the monthly payments made by the borrower over the life of the loan.  FHA says this will allow it to increase needed capital reserves with less impact to the consumer. However, either way, it can possibly make or break whether a home buyer qualifies for a loan.

Homebuyers should expect underwriting to be tougher in 2010 as well.  FHA’s mission is to provide affordable financing to families that need it, but it must also manage the risk that comes with insuring lesser-quality loans. This spring, FHA approved lenders will have to assume liability for all the loans they originate and underwrite. If a lender produces an unacceptable number of bad loans, FHA can withdraw their approval as a lender nationwide, even if only one of its regional branches is at fault. As a result, even though FHA is allowing 580 FICO scores, many banks are already making 620 the minimum FICO score they will accept.

The FHA's new guidelines don't go into effect until spring (the exact date has not been announced), until then the old guidelines will apply.  If you plan to buy a home with an FHA home loan, and these new guidelines will effect your ability to do so, your #1 priority should be finding the home you want to buy, and closing on it before spring/early summer of 2010.

If I can assist you in any way toward that goal, or need more information, please don’t hesitate to contact me.

Information contained in above commentary was compiled from information on the HUD website.

Many of you may know this - the First-Time Home Buyer Tax Credit program was extended to allow Buyers who contract on a house by April 30, 2010, and close by June 30, 2010, to still receive the $8000 tax credit. What you may NOT know is that the program was also expanded to offer a tax credit to home buyers that are NOT first time home buyers. That means a lot more people can get a piece of this pie!

You could qualify for a tax credit of up to $6,500, if you previously owned a home and bought another after Nov. 6, 2009, or if you currently own a home and want to buy another before April 30, 2010. Also, the house purchased does NOT have to cost more than the house you sell. (This will be good news to those of you who are downsizing.)

The basic rules are for the $6500 tax credit are:

1. You must have lived in your home as a primary residence for at least 5 of the last 8 years

2. The home sales price can’t exceed $800,000.

3. You can't purchase the home from a parent, spouse, or child; or an entity in which they're a majority owner (IE: If the home’s title is in the name of a family business, you can’t buy it from the business.)

4. You can't acquire the home by gift or inheritance

The following rules apply for both first time homebuyers and other home buyers:

¨    You cannot have an adjusted gross income over $250,000 if you file a joint tax return, or over $125,000 if you are a single filer.

¨    You must be 18 years or older. (For a married couple, only one spouse must meet this age requirement.)

IMPORTANT NOTE:  Homebuyers who claim the credit on their 2009 tax return will not be able to file electronically, but instead will need to file a paper return. For homes purchased in 2009 there is an option to take the credit on an original or amended 2008 tax return.

Remember this is a true tax credit - it reduces a taxpayer's tax bill, or increases his or her refund, dollar for dollar, AND, it will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

If you would like to buy a house, this is absolutely one of the best times I’ve seen in my lifetime, and I’ve been doing this for 30 years.!  

You can benefit from tax credits, low interest rates, and Buyer’s market prices on homes. If there is any legitimate way you can find a way to buy a home - as the well known slogan says – just do it;  and hurry, as of Sat., 1/30/2010, you only have 90 days and counting down to get a house under contract.

Let me know if I can help you do it.

Most of you now know about the severe devastation caused by the earthquakes in Haiti. The Haitian people are suffering terribly, and they need help immediately. The National Association of REALTORS® (NAR) is helping answer the calls for help in two key ways.

First, NAR is contributing $550,000 to charities that will help bring much-needed supplies and care to the people of Haiti. Included in that sum is $100,000 donated by our REALTOR Benefits® Program partner, Lowe’s®, which we have matched at $100,000. From that we will donate $50,000 to The Harvest of Haiti, founded by REALTOR® Patrick Moore, a 2007 Good Neighbor Award winner. Patrick has done great work for several years in Haiti supporting orphans, delivering clean water and providing medical care for more than 3,500 people a year.

We are also contributing $500,000 to the Clinton Bush Haiti Fund, which is supporting earthquake recovery efforts with immediate relief and long-term support to earthquake survivors.

Second, NAR is accepting donations from REALTORS® through the REALTORS® Relief Foundation. We have earned a reputation for our compassionate work on behalf of others – both here in the United States and around the world – and continue in these efforts on many levels.

Let us take the following words to heart. “An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.” - Dr. Martin Luther King, Jr.

Please demonstrate your compassion by donating today through the organization of your choice, and bring hope to people who so desperately need it.

Mortgage rates dropped this morning (Thurs. 1/15/10) on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The correlation between Retail Sales and home affordability isn't obvious, but it's definitely logical. Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments.

It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available. Conversely, the best place to find safety is in the market of government-backed bonds.  This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates.  Weak economic data puts mortgage bonds in demand.

Mortgage interest rate shoppers will be happy;  more demand for mortgage bonds causes mortgage rates to fall.  Mortgage rates are lower today because Wall Street is shedding some risk.

December's Retail Sales report closes out a year of generally-weak data.  2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago.  The other year was 2008.

Home buyers around the country, this is good news - so go buy that house you want!

This week marks the beginning of mini-Vacation Season on Wall Street; be prepared for big swings in mortgage interest rates.

Mortgage pricing worsened Monday, driving mortgage rates to their highest levels since October.

The day's action was drastic, too. 

Some banks issued as many as 3 rate sheets Monday -- each worse than the preceding and one reason why rates got so bad, so quickly, is because this week marks the beginning of mini-Vacation Season on Wall Street. 

Between now and January 4, 2010, be prepared for big swings in pricing from day-to-day.  Shopping for a mortgage could be a challenge.

The relationship between vacation days and mortgage rate volatility is rooted in how mortgage rates are "made".

1. Conforming mortgage rates are based on the price of mortgage-backed bonds, a security that is sold on Wall Street
2. Mortgage-backed bonds can't sell without a bond buyer and a bond seller agreeing to a specific sale price

So, during vacation week, when the total number of market participants are less, there are fewer opportunities for buyers and sellers to meet at a specific price.  As a result, bond prices rise and fall with a higher velocity than on a "normal" day.  Rallies and momentum plays are exaggerated, too.

Now, mortgage market action like this can work in your favor, or it could work out of your favor. Unfortunately, on Monday, rates moved out of favor.

This rest of this week is stacked with market-moving economic data. The data could be better-than-expected, or worse-than-expected.  Either way, markets will react a little more feverishly than normal.

Above info is courtesy of Melissa Breeland with Residential Mrotgage of SC

Here is picture from my recent high school class reunion, held in Georgia on 10-10-09. One of my classmates told me when he was searching for the ballroom at the resort, and turned a corner to see a gathering outside in one of the corridors, he thought to himself "Who are all those old people?!" (LOL) We may look a little older, but we are still young at heart! We had a good time together.

We all attended North Habersham High School, which closed decades ago, when a new Habersham Central High School was built.  Now, even the old building has been torn down.  A few of those attending the reunioin won or purchased paperweights made of some of the demo material from the school, so our Alma Mater does still live on in some physical form - and will always live on in our hearts and minds.

Memories...from the corners of our minds...

The national housing supply fell to a 2-year low last month, according to the National Association of Realtors®.

At the current sales pace, existing home inventories would sell out in 7.8 months -- 30 percent faster versus November 2008.

For a 10-month window, that's a major housing supply reduction and it helps to explain why multiple-offer situations have been so common lately.

Moreover, the same report from NAR showed sales activity reaching its highest point since July 2007, too.

If you're looking for evidence that the long-standing Buyers Market is ending, this month's Existing Home Sales report might be it. (See EXISTING HOMES SALES FOR MAJOR METRO AREAS below.)

Even median sales prices -- typically dragged lower by distressed and foreclosed properties -- declined at its slowest pace in a year.  The market may have turned a corner.

Home prices are rooted in the basic economics of supply and demand.

• When supply outweighs demand, home prices fall
• When supply lags demand, home price rise

Since March 2009, the market has been moving in the right direction.  Low mortgage rates, ample housing supply and a first-time home buyer tax credit fueled buy-side demand so that home prices are now rising in many U.S. markets.

If home supplies stay on this path into 2010, expect home prices to rise even more.

EXISTING HOMES SALES FOR MAJOR METRO AREAS

September Metro Area Existing Single-Family Home Sales and Prices  *All data reported herein is unadjusted for seasonality
		Median Price		% Change from 1 Year Ago
#	MSA	Sep-08	Sep-09	Price	Sales
1	Atlanta	143,700	125,600	-12.6%	-4.2%
2	Baltimore	263,700	247,900	-6.0%	10.6%
3	Boston	346,200	337,800	-2.4%	4.6%
4	Cincinnati	129,900	130,700	0.6%	12.0%
5	Dallas	143,100	144,500	1.0%	-5.7%
6	Houston	158,400	157,000	-0.9%	36.7%
7	Indianapolis	112,400	116,500	3.6%	-21.0%
8	Kansas City	139,700	140,100	0.3%	-2.5%
9	Miami/Ft. Lauderdale	274,700	217,200	-20.9%	70.4%
10	New Orleans	159,800	160,000	0.1%	39.3%
11	New York	424,000	383,800	-9.5%	13.9%
12	Philadelphia	231,800	216,800	-6.5%	18.4%
13	Phoenix	175,600	151,400	-13.8%	12.2%
14	Pittsburgh	115,900	119,900	3.5%	-1.1%
15	Portland	269,000	240,300	-10.7%	14.5%
16	San Antonio	148,600	147,900	-0.5%	-6.7%
17	San Diego	374,400	386,000	3.1%	-1.3%
18	St. Louis	132,500	136,700	3.2%	4.7%
19	Washington DC	301,600	307,100	1.8%	-3.4%
**NOTE:  There often are differences between this data and locally reported data because of differences in methodology, which may include the geographic coverage area, housing types, and Census benchmarking used in NAR’s model.  More importantly, there is a parallel between the percentage changes over time that is typically seen even when using different methodologies. ©2009 NATIONAL ASSOCIATION OF REALTORS®

The impending expiration of the first-time homebuyer’s credit has been front-and-center on many people's minds. Many have said chances are good the credit would be extended and that may be the case.

Senate negotiators reached a tentative deal to not only extend the current credit but to add a few bells and whistles: namely, a new credit of up to $6,500 (with income limits). The new credit would be available to all homebuyers who resided in their current residence for a consecutive five-year period in the past eight years (effectively excluding real estate investors). But it's not a done deal yet; a few House members have balked at the added costs.

Many property experts have cited the credit as the principal reason for the housing recovery, though that recovery was somewhat undercut by the September new-home sales, which dropped 3.6% to a 402,000-unit annual pace, substantially lower than the median forecast for 440,000 units.

Still, homebuilders could find comfort in the news that home prices continue to rise while inventory continues to fall. On the former, the median price of a new house rose 2.5% to $204,800 in September. On the latter, inventory shrunk to 251,000 houses, the fewest since November 1982. Based on the latest data, it should take only 7.5 months to sell all homes at the current sales pace.

Prices continue to firm across the housing spectrum, according to the closely watched S&P/Case-Shiller home-price index, which climbed 1% in August after posting a 1.2% increase in July. September's posting is worth anticipating; given that last week's data from Altos Research had home prices declining in September (Case-Shiller's data were for August). With any luck, the Altos data was an aberration.

Here are the economic reports due out his week:

Information above courtesy of Melissa Breeland with Residential Mortgage of SC

In these times of high unemployment rates and everybody worrying about the loss of jobs, Charleston received great news this week! A new Boeing assembly plant will be bringing a minimum of 3800 jobs to the area within 7 years. Below is the story published in The Post and Courier newspaper today.

BOEING: Aircraft giant lands here

Aviation giant expects to break ground on new assembly plant within the next few weeks