|
Michael Corboy
Specialty Financial Services, Inc.
111 Pheasant Run, Suite 202
Newtown, PA 18940
mcorboy@specialtyfinancialmtg.com
267-685-0320
888-885-2298
http://www.specialtyfinancialmtg.com
MLO: 716049
Branch/Company ID: 141636 |
|
We are dedicated to helping Americans achieve and maintain the
American Dream of Homeownership. Our commitment is to provide the
highest quality service while working to help our clients achieve their
financial objectives within the real estate process. We are proud of
our work that has made us the area's company of choice for so many
working towards their long-term goals. |
|
Why Are Home Prices Rising?
Last week we introduced statistics regarding rising home prices and
introduced the first two reasons for this increase. These reasons
included tighter inventory and an upward "bounce" from very low prices
in certain areas of the country. This week we will present the second
two reasons: economics and demographics. The economic rebound has been
going on for years, but at a very slow place. However, this is the first
year that the markets do not seem to be concerned with a threat of a
double-dip recession. The rebound may not be strong, but it is enduring.
This means that many families have seen their finances stabilize and
confidence grow. Even more importantly, household formulation is up from
recent lows and this causes increased demand for housing. Which brings
us to the second reason--demographics. We will give you one projection
released recently by the U.S. Census Bureau: The high series projects
that the U.S. population will hit 400 million by 2044.
Today, the U.S. population is just over 315 million. So that means
that as much as 85 million people will be added in the next 30 years, or
close to one million per year. A perspective? In 1900 the U.S.
population was approximately 76 million. So in 30 years we will have
more growth than we had in the first 125 years. And while the economy
was slumping, the population did not stop growing. This leads us to the
final question -- will home prices keep rising in the short run? As we
have presented previously, the shortage of inventory will disappear as
prices rise and more homeowners (and banks) realize that they can get
more for their homes and thus will offer them for sale. Recent data
indicates that is happening. With more inventory, we are expecting the
rise in home prices to slow down. However, with increased demand due to
population growth, increased household formulation and confidence --
house prices could continue rising at a more sustainable level. Of a
more immediate note, the employment report this week will be watched
closely as the stock markets have experienced a wild ride while
long-term rates have risen sharply over the past several weeks. We
believe that the rise in home prices is actually very much related to
the rise in rates. More on that next week.
You
can call it Big Brother. You can call it high-tech snooping. But be
aware: If you are applying for a home loan in the coming weeks, you can
be sure that your credit will be checked and rechecked — possibly
monitored daily — to make certain no hints of new debts pop up before
you close on the loan. Just as the federal monitoring of phone traffic
that's been in the headlines lately was a direct outgrowth of 9/11,
pre-closing credit monitoring is a byproduct of the housing crash.
Lenders are terrified of being forced to "buy back" loans from investors
Fannie Mae or Freddie Mac because borrowers had more debts than they
disclosed at the time of application. As a result, virtually all home
loan lenders now use some form of commercially available program to keep
tabs on credit files between the date of your loan application to your
settlement. One of the three national credit bureaus, Equifax, offers a
popular service that monitors applicants 24/7 and can detect even subtle
hints that a home purchaser is planning to add debt before the closing.
Say your application was just approved. In the documents you laid out
all your credit obligations and just barely passed the lender's crucial
"debt-to-income" ratio test. You're feeling upbeat about the prospect of
moving to a new home and you start thinking of things you need to buy:
Furniture for the living and family rooms. New beds. TVs. Audio
equipment. So you visit a couple of stores and take up their offers for
low interest-rate credit lines. You apply for what could come to as much
as $14,000 worth of new debt, all to be paid off monthly. Ping! In
Equifax's computer maze, your credit "inquiries" to merchants trigger
alerts. Your lender or broker is notified immediately that you are
pursuing additional credit. And in this case, that $14,000 in potential
new payment obligations could knock your debt-to-income ratio over the
cliff. Lenders say clients can mess up transactions in all sorts of
ways. Equifax Vice President Raymond White says undisclosed debts — or
fresh inquiries for additional credit never disclosed to the lender —
turn up in "nearly one out of five" home loan applications. Yet under
Fannie Mae and Freddie Mac rules, any increase in the total
debt-to-income ratio of more than three percentage points, or that
pushes the ratio beyond 45%, can put the lender into a vulnerable
position. If the home loan later goes bad, Fannie and Freddie can force
the lender to buy it back, which is financial torture for any bank. Source: The Washington Post, Ken Harney, The Nations Housing
Individual home buyers comprised a quarter of all house purchases
last year, according to National Association of REALTORS® data. Single
women purchase homes at double the rate of single men, according to the
data. However, solo buyers can face particular challenges in
qualifying for a home loan. During and following the recession, banks
tightened their underwriting standards, which also made it more
difficult for single home buyers without dual incomes to qualify for a
loan. Between 2010 and 2012, home purchases made by singles dropped
7 percent — unprecedented, according to NAR. Low rates and high home
affordability have drawn more singles back to home buying. Home
purchases are often a means of self-expression for singles, Jennifer De
Vivo, a real estate professional in Orlando, Fla., told MSN Real Estate.
"It's a way for singles to express their lifestyles and values,” De
Vivo says. “They are able to focus on the exact communities, home
styles, and features that cater to their individuality with much less
compromise." For single buyers who outgrow their first homes, some
experts encourage them to keep the properties as investments. "I
always counsel them to try to keep their current home as an investment
property and rent it out. It's a big step toward helping them create
long-term financial security," De Vivo says. Source: MSN Real Estate
Nearly a quarter of Americans say they’ve discovered problems with
their credit reports, according to a new study of 1,000 American adults
by FindLaw.com, an online legal information portal. The most common
problems reported were incorrect or outdated credit or personal
information, information that was mixed up with another person due to
identity theft, a credit score being incorrectly reported as too low, or
a denial of credit because of an incorrect credit
report. Sixty-eight percent of those who found a problem with their
credit report were able to fix the problem, the study found. However,
18 percent of the people who reported problems with their credit report
said they were never able to get it corrected. "It's important to
check your credit report periodically to ensure the information it
contains about you is accurate and up-to-date," says Stephanie Rahlfs,
an attorney and editor with FindLaw.com. "The credit reporting agencies
all have detailed procedures for correcting errors. And our survey found
that people are generally having success in getting the agencies to
correct those errors.” The FindLaw.com study finds that 22 percent of
Americans have never checked their credit report to verify its
accuracy. Source: Realty Times
|
No comments:
Post a Comment