Yajnesh Rai

Rates at Lowest Level Since November | Realtor Magazine

Home buyers were in a rush to lock in low mortgage rates last week, sending total mortgage application volume soaring 7.1 percent, the Mortgage Bankers Association reported Wednesday. 

“Purchase application volume increased to its highest level since May 2010,” says Joel Kan, an MBA economist. “Refinance activity bumped up as well in response to moderating rates, but remained generally subdued.”

Home purchase applications skyrocketed 10 percent from the previous week on a seasonally adjusted basis. Applications are now 5.5 percent higher than a year ago, but overall volume remains 16 percent lower than the same week a year ago, when mortgage rates were lower.

The average 30-year fixed-rate mortgage dropped to its lowest level since November, averaging 4.14 percent last week, the MBA reports. Following the two weeks after the presidential election, mortgage rates jumped from 3.77 percent to 4.16 percent.

Meanwhile, applications for refinancings also got a little uptick from low rates, rising 3 percent week over week. Refinance volume remains 34 percent lower than a year ago, when interest rates were below 4 percent.

Credit Scores Hit Record High | Realtor Magazine

Credit scores among U.S. consumers surged to a record high this spring. Further, the share of borrowers considered among the riskiest borrowers hit a record low. The higher credit scores could be a boon for the mortgage market: A good credit score can help borrowers snag a better mortgage rate and better their chances of qualifying for financing.

“Higher scores lead to more available credit,” says Cris deRitis, senior director in the economics group at Moody’s Analytics. “We’d see more activity in terms of loan approvals and credit-card approvals, more spending, and that would have a ripple effect across the economy, increasing aggregate demand for goods and services.” 

In April, the average credit score nationwide reached 700, which is up one point from last fall, according to the Fair Isaac Corp. That is the highest average since FICO began tracking such data in 2005.

The share of consumers considered to be the riskiest — with scores below 600 — hit a record low of about 40 million, or 20 percent of U.S. consumers who have FICO scores, according to Fair Isaac. That is down from a 25.5 percent peak in 2010.

Rising credit scores will likely prompt banks to make more credit available to consumers and at a cheaper cost, finance experts say.

“The domino effect for lenders would be more consumers they can market to [and] more consumers who may be credit-eligible who weren’t in last year’s models,” says Nidhi Verma, senior director of research and consulting at TransUnion, a credit-reporting firm. 

Part of the reason behind the soaring credit scores is the increasing number of foreclosures and bankruptcies that are falling from American’s credit reports. More than 6 million U.S. consumers will have personal bankruptcies disappear within the next five years from their reports, according to Barclays PLC.

Consumers have a greater likelihood of getting approved for financing after negative events, like bankruptcies and foreclosures, drop from their reports. Foreclosures stay on credit reports for up to seven years (dating to the missed payment that resulted in the foreclosure). Foreclosure starts peaked in 2009 at 2.1 million, according to ATTOM Data Solutions. Personal bankruptcies can stay on credit reports for seven to 10 years.

6 Myths About Flood Insurance

If your home is damaged in a flood, are you covered?

That depends on the value of your home, the level of water damage and whether you have flood insurance.

Regular homeowners insurance policies don’t cover flood water damage. And policies through the National Flood Insurance Program top out at $350,000 for your home and goods. So you may need supplemental coverage if your home and possessions total more than that.

But, while people tend to associate floods with a total loss, the average flood claim for U.S. homeowners is about $30,000, according to the National Flood Insurance Program.

Here are six myths that persist about flood insurance — and the truth you need to know.

 

Myth: You must live in a flood plain

Not true. If you live in a flood plain, your mortgage company will likely require you to buy flood insurance. But you can purchase it even if you don’t live within a flood zone.

“Almost anybody can get flood insurance who wants flood insurance,” says Chris Hackett, director of personal lines for the Property Casualty Insurers Association of America. It’s cheaper if you don’t live inside a flood plain.

The price of insurance through the federal flood insurance program is based on standardized rates and depends on the home’s value and whether or not it’s in a flood plain, says Don Griffin, vice president of personal lines for the Property Casualty Insurers Association of America.

The average price for flood insurance is about $600 annually, Hackett says.

If you rent your home or live in a condo, you can buy flood insurance for just your possessions, says Griffin.

If you want flood insurance, it pays to think ahead. There is a 30-day waiting period between when you buy the coverage and when it kicks in, he says.

 

Myth: Flood insurance is for high-risk areas

Merle Scheiber’s dream home wasn’t in a flood plain, and he didn’t have flood insurance.

Just after completing a three-year renovation project for his 1,800-square-foot cabin-style home, flooding put it underwater for almost four months. Now he’s working on an entirely different kind of renovation project.

“I’m in the process of tearing it apart myself and putting it back together,” says Scheiber, who is also the director of insurance for South Dakota.

He advocates that homeowners — even those who do not live in designated flood plains — weigh the dangers and their options and seriously consider buying flood insurance.

“You need to assess your risk,” Scheiber says. Griffin says 1 in 4 flood claims is for a home that isn’t in a flood plain.

 

Myth: Flood insurance covers everything

Not necessarily. When it comes to the physical structure of your house, federal flood insurance policies top out at $250,000, Hackett says. If you have a $300,000 house that’s a total loss because of a flood, the most you can recoup through the program is $250,000 to cover the structure itself.

For your personal possessions, the cap is $100,000 under the federal program.

And those limits are “definitely something you should keep in mind before purchasing a high-value home in an area that’s susceptible to flooding,” Hackett says.

If you already have insurance through the federal program, then you can buy “excess flood insurance” through a private carrier that would cover claims above the national limits, Griffin says. In essence, it’s a flood policy with a $250,000 deductible, he says.

While federal flood insurance pays to rebuild the structure, it only pays current value on possessions, Griffin says. It doesn’t cover anything in a basement (other than your heating and air-conditioning system). It doesn’t cover living expenses if you have to relocate while your home is being repaired, he says.

 

Myth: My homeowners policy covers floods

“Unfortunately, a lot of folks may be under the impression that their standard homeowners policy might cover flood damage,” Hackett says. But the standard policy doesn’t. Your umbrella policies won’t cover flood damage either.

The standard homeowners policy doesn’t cover earthquakes or floods. So a homeowner wanting coverage for either of those disasters will need to pick up separate, specific policies against those types of disasters.

“Realize that, for most people, their homes are one of their most valuable possessions,” says Hackett. “It’s worth protecting that.”

 

Myth: Water damage is water damage

When it comes to your insurance, not all water damage is the same.

If there’s a storm and your “roof comes off and water comes through, that would be covered under your homeowners policy,” Hackett says. “Versus a flood situation where the riverbank overflows and you look out of the front of your house and you need a boat to get from point A to point B.”

And most consumers “have a pretty good understanding” of how to draw the line between storm damage and flood damage, says Hackett.

Some homeowners policies offer an optional “water-backup endorsement” that covers damage from water backing up into your home from causes such as a broken sump pump, he says.

 

Myth: Flood plain maps don’t change

Flood plains (and flood plain maps) change and evolve. Just because you weren’t in a flood plain when you bought your home a few years ago doesn’t mean you’re not in one now.

There are a few ways you can find out about your flood risks and if you may be in a flood plain.

Most Expensive Bills Your Clients Will Pay | Realtor Magazine

Your buyers are probably focused on saving up for a down payment in order to purchase a home. But once they’re new homeowners, they could find themselves in over their heads financially if they haven’t prepared for other costs associated with homeownership.

You could help your clients now to be ready for the hidden costs of homeownership by making a list of all the expenses they will incur in the first year after buying a home, says Jenna Rogers of financial planning firm Mission Wealth Management. “[Then tell them to] open a new savings account and designate it as the ‘home account,’” Rogers suggests. “Send the necessary amount to this home account every month. That way, when you have to pay property taxes, for example, you’ve already had the cash built up.”

Here are some of the heftiest costs of homeownership your clients need to be aware of, according to realtor.com®:

Property taxes. This is often the largest home expense after a mortgage, and some of the highest property-tax rates are in the Northeast. Buyers there might need to take extra financial measures to make sure they can afford their home. Homeowners in Buffalo, N.Y., for example, pay 2.9 percent of their home’s value in property taxes. In Rochester, N.Y., they pay 2.8 percent. Nationally, homeowners pay an average of $2,100 a year in property taxes, according to the Census Bureau. “In states where you have wealthier people with more expensive homes, that tends to drive property taxes higher,” says John Buhl, spokesperson for the Tax Foundation.

Home insurance. Buyers in Florida beware: Average home insurance costs in the state are the nation’s highest. At $298 per month, it’s nearly three times the national average of $102 per month, according to Insurance.com. (The average cost of insurance refers to policies on a $200,000 home with a $1,000 deductible and a $100,000 liability.) Also, make sure to bust these home insurance myths for your clients.

Maintenance and remodeling. A leaky roof or cracked foundation can be costly to repair. Financial experts suggest setting aside 1 percent of your home’s value for maintenance costs each year. Know which projects will put the most money back in your clients’ pockets.

Utility bills. Water and electricity bills can add up, but buyers should also remember that they have to pay for trash pick-up as well. Homeowners in Connecticut spend the most on heating oil at an average of $104 per month, according to an analysis by WalletHub. Owners in the city of Bridgeport incur an average $309 monthly bill for heating oil and natural gas—the highest in realtor.com®’s study. Areas of Florida have some of the highest electricity bills due to high use of air conditioners. Owners in Cape Coral, Fla., pay an average of $216 a month for electricity—the highest in the country. Miami residents pay $184 a month for electricity.

So, overall, where will homeowners pay the highest costs? Realtor.com® ranked the 100 largest metro areas by criteria such as property taxes, home insurance premiums, remodeling costs, maintenance and repairs, and pest control. These are the seven cities where the cumulative costs of homeownership are highest.

1. New York

• Property tax rate: 2 percent
• Average home insurance (monthly): $78
• Average utility cost (monthly): $234

2. Bridgeport, Conn.

• Property tax rate: 1.7 percent
• Average home insurance (monthly): $75
• Average utility cost (monthly): $309

3. Boston

• Property tax rate: 1.5 percent
• Average home insurance (month): $99
• Average utility cost (monthly): $236

4. Cape Coral, Fla.

• Property tax rate: 1.1 percent
• Average home insurance (monthly): $298
• Average utility cost (monthly): $220

5. New Haven, Conn.

• Property tax rate: 2.2 percent
• Average home insurance (monthly): $75
• Average utility cost (monthly): $291

6. Miami

• Property tax rate: 1.2 percent
• Average home insurance (monthly): $298
• Average utility cost (monthly): $188

7. New Orleans

• Property tax rate: 0.6 percent
• Average home insurance (monthly): $248
• Average utility cost (monthly): $158

Homeowners Cash in on Equity in Droves | Realtor Magazine

Homeowners may be reluctant to sell, but they still want to see a piece of that equity in their homes now. They’re cashing out in levels that have not been seen since the financial crisis, Freddie Mac reports.

Nearly half of borrowers who refinanced their homes during the first quarter did a cash-out option, the highest level since the fourth quarter of 2008, according to Freddie Mac.

Still, the number of borrowers doing a cash-out refi remains well below the nearly 90 percent peak reached prior to the housing crash. But it is up significantly from the post-crisis 12 percent in the second quarter of 2012.

Rising home prices have helped increase the number of homeowners who now have equity in their homes. As such, more owners are finding they can refinance to get a lower mortgage rate and also take out some cash for other uses. In hot markets like Denver and Dallas, in which home prices have surged by some of the highest amounts in the country, more than half of refinancers opted to refinance for cash last year, according to Freddie Mac.

While the number of cash-out refis grows, Len Kiefer, Freddie Mac’s deputy chief economist, does not see this as playing out similarly to the run-up to the financial crisis when borrowers were using their homes like ATMs. Borrowers must follower stricter underwriting standards now when they refinance a mortgage or get a loan. Also, there is less money at stake than a decade ago, Kiefer notes.

Housing’s Hottest Markets: May 2017 | Realtor Magazine

Amid scarce supplies and high buyer demand, homes are selling fast across the country. Home prices are rising as well: The nationwide median home list price rose above $250,000 for the first time, realtor.com® reports. The median list price is 10 percent higher than a year ago.

“With a record number of home buyers out there, this is officially the most competitive, fastest-moving spring housing market in decades,” says Javier Vivas, manager of economic research at realtor.com®. “Following a furious start to the season, the median days on the market for homes on realtor.com® in May is the lowest since the end of the recession, and marks the first time that one in three homes is selling in under 30 days nationally.”

The hottest markets nationwide in May continued to be centered in California, with the Bay Area seeing some of the fastest sales in the country and most viewings of listings from visitors on realtor.com®. Here is realtor.com®’s full ranking of the hottest housing markets for May 2017:

 

Credit Scores Hit Record High | Realtor Magazine

Credit scores among U.S. consumers surged to a record high this spring. Further, the share of borrowers considered among the riskiest borrowers hit a record low. The higher credit scores could be a boon for the mortgage market: A good credit score can help borrowers snag a better mortgage rate and better their chances of qualifying for financing.

“Higher scores lead to more available credit,” says Cris deRitis, senior director in the economics group at Moody’s Analytics. “We’d see more activity in terms of loan approvals and credit-card approvals, more spending, and that would have a ripple effect across the economy, increasing aggregate demand for goods and services.” 

In April, the average credit score nationwide reached 700, which is up one point from last fall, according to the Fair Isaac Corp. That is the highest average since FICO began tracking such data in 2005.

The share of consumers considered to be the riskiest — with scores below 600 — hit a record low of about 40 million, or 20 percent of U.S. consumers who have FICO scores, according to Fair Isaac. That is down from a 25.5 percent peak in 2010.

Rising credit scores will likely prompt banks to make more credit available to consumers and at a cheaper cost, finance experts say.

“The domino effect for lenders would be more consumers they can market to [and] more consumers who may be credit-eligible who weren’t in last year’s models,” says Nidhi Verma, senior director of research and consulting at TransUnion, a credit-reporting firm. 

Part of the reason behind the soaring credit scores is the increasing number of foreclosures and bankruptcies that are falling from American’s credit reports. More than 6 million U.S. consumers will have personal bankruptcies disappear within the next five years from their reports, according to Barclays PLC.

Consumers have a greater likelihood of getting approved for financing after negative events, like bankruptcies and foreclosures, drop from their reports. Foreclosures stay on credit reports for up to seven years (dating to the missed payment that resulted in the foreclosure). Foreclosure starts peaked in 2009 at 2.1 million, according to ATTOM Data Solutions. Personal bankruptcies can stay on credit reports for seven to 10 years.

Firms Help Buyers Purchase But Want Ownership Stake | Realtor Magazine

A growing number of startups, such as Unison and OWN Home Finance, are offering buyers help with a down payment in exchange for a stake in their home’s future equity.

Unison gives buyers up to 50 percent of the cost of a down payment—or 10 percent of the total cost of a home—but when the buyer sells, they typically must pay the company about 35 percent of the profit from the sale. Unison has partnered with Freddie Mac to begin automating the process of underwriting mortgages with an equity stake. OWN, which will launch soon with a similar business model, plans to target buyers with median incomes of about $55,000 to $60,000 who want to purchase a home around $400,000 to $500,000.

“There’s a major hurdle that locks out a lot of qualified people [who] can’t come up with hundreds of thousands of dollars, even if they have good credit,” OWN cofounder Brian Bailey told MarketWatch. “We view our product as a rung in the ladder, helping people enter homeownership and build wealth.”

Brett Theodos, a senior research associate at the Urban Institute, says he thinks it’s a good experiment in assistance for prospective homeowners. “It’s really intriguing, as home prices appreciate and incomes don’t. It feels like a missing rung in the ladder between renting and owning. We have so many investment vehicles that you can get into for small amounts of money, but homeownership is very much an all-or-nothing proposition.”

But Theodos warns that homeowners need to carefully read the fine print for these types of programs, noting that the companies make money only when the home is sold. Unison officials say “special provisions” apply if owners sell in less than three years because they want owners to hold onto properties long enough for home prices to appreciate.

Daren Blomquist, senior vice president of ATTOM Data Solutions, sees a challenge for deeper market penetration of equity-sharing mortgages. “I see this as a response to a problem,” an affordability crunch that is particularly paramount in high-cost markets, he told MarketWatch. “It’s not going to be appealing if home prices start dropping. It’s hard to see it as something that could exist in all market cycles.”

Unison spokesman Michael Micheletti says that while the program “definitely addresses affordability challenges,” it’s appeal is much broader than that. “This is for somebody who doesn’t want to own all their home,” Micheletti says. “People don’t want to put all their money into an asset that they may or may not get all the return on because they saw what happened a decade ago.

Wannabe Buyers Aren’t Saving Enough | Realtor Magazine

Though millennials express desire for homeownership, they aren’t saving anywhere near what they need for a down payment. About 80 percent of millennials recently surveyed by rental website Apartment List say they hope to one day buy a home, but 36 percent say they’ll likely need to wait more than five years before they can. Only 16 percent believe they’ll be able to buy within two years, according to the survey of 24,000 millennial renters born between 1982 and 2004.

More than two-thirds of survey respondents say they don’t even have $1,000 in down-payment savings, but one in three believe they could come up with a 10 percent down payment in five years or less. “Millennials’ plans to purchase a home are being pushed further and further into the future,” says Chris Salviati, a data analyst with Apartment List. “That could have serious impacts on their long-term financial stability.”

For millennials who plan to save up 20 percent for a down payment, they may have a particularly long wait until they attain homeownership. For example, buyers in San Jose, Calif., may need to save for at least 24 years before having enough money to cover a 20 percent down payment for a condo there. In metros such as Austin, Texas, and Los Angeles, millennials will need 21 years to save. (The calculations entail home price, income, and savings growth projections.)

“A lot of college-educated millennials are still carrying a lot of student debt,” Salviati says. “To move to some of the best-paying jobs, millennials have to live in some of the most expensive cities. And throughout the country, increases in home prices are outpacing wage growth.”

Still, in reality, most first-time buyers put down a lot less than 20 percent or 10 percent on a home, so millennials may need less money than they think. The Federal Housing Administration insures loans that require only a 3.5 percent down payment. Other loan options with smaller down-payment requirements are available, too. 

8 winning tips to sell your house

Even in today’s tough economy, there are many who wish to sell their house. Whether it is because of a new job in a new state, the need to move because one can not afford the state they’re in, or because they are trying to get out of a bad neighborhood, there is always a reason behind it. The following tips will help you achieve your goals and help you obtain a fair price on your home.

 

You hired a #Real Estate agent because they are in the business of showing and selling your home. When a prospect home buyer comes to inspect your home, your job is to meet, greet and disappear. Let your agent do his/her job, show your property, answer questions and sell, sell, sell.

 

Don’t let the kids get in the way and keep it clean

If you have children and/or pets, don’t let them run around when prospect buyers are visiting your home. Whether it is an open house or one-on-one showing, buyers are there on business and do not need to be distracted by yelling children or barking dogs. Make arrangements for the kids and pets to ensure they are either away from the home or busy and quiet in a less seen area of the house. Turn off televisions, radios, and games as a quiet setting is best in this case.

To make sure your house is shown at it’s best, see to it that it is as clean as possible. Remember first impressions leave a big impact on the buyer’s mind. Do not have items like packed boxes, toys, and clothing sitting in the middle of the room or in the corners. Chipped or peeling paint, broken blinds, torn shades, fingerprints on the wall, and dirty rugs can all give the wrong impression and make the house look run down.

 

 

Staging and curb appeal

If you have moved out of your house before selling it, try to stage your house like someone still lives there. Leave curtains or drapery in place, make sure rugs are cleaned, leave lamps for night showings, stage unneeded furniture to give the buyer an idea of what the room is or can be used for. This also helps them visualize their own things in the room.

Make sure your house has curb appeal by keeping the grass cut, hedges trimmed, and the garden weeds pulled if you are selling in the warmer months. In winter, keep sidewalks shoveled, icy spots covered with salt or sand, and welcome mats out so they can wipe their feet before entering.

Put things in order

Do a home inspection and repair any leaky faucets, pipes, broken or cracked windows, electrical outlets, and so forth. Clean overcrowded closets.

The kitchen and bathroom/s are a big selling feature in any home so make sure they are neat and clean. Wash and put away dishes, make sure the floors are clean, keep shelves neatly arranged, and take out the garbage. Put up clean towels in the bathroom, clean the mirrors, and put away your essentials. #House selling #Homebuyer