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Real Estate Related News
- Thread starter James48843
- Start date
Silverbird
Well-known member
Foreclosures Come to McMansion Country
By Reuters | 07 Apr 2008 | 10:18 AM ET
Million-dollar fixer-upper for sale: five bedrooms, four baths, three-car garage, cavernous living room. Big holes above fireplace where flat-screen TV used to hang.....
The crisis has hit especially hard here in Loudoun County, Virginia, where upscale developments have supplanted horse farms over the past fifteen years.
About an hour's drive from Washington, Loudoun is one of the nation's most affluent counties, with a median household income of $98,000, more than double the national figure.
The county has also ranked as one of the nation's fastest growing in recent years as developers built thousands of super-sized, amenity-laden houses to keep pace with the booming high-tech economy.
These houses are sometimes nicknamed "McMansions," disparaging both their extravagance and their look of mass production -- like hamburgers from a McDonald's restaurant.
http://www.cnbc.com/id/23993467
By Reuters | 07 Apr 2008 | 10:18 AM ET
Million-dollar fixer-upper for sale: five bedrooms, four baths, three-car garage, cavernous living room. Big holes above fireplace where flat-screen TV used to hang.....
The crisis has hit especially hard here in Loudoun County, Virginia, where upscale developments have supplanted horse farms over the past fifteen years.
About an hour's drive from Washington, Loudoun is one of the nation's most affluent counties, with a median household income of $98,000, more than double the national figure.
The county has also ranked as one of the nation's fastest growing in recent years as developers built thousands of super-sized, amenity-laden houses to keep pace with the booming high-tech economy.
These houses are sometimes nicknamed "McMansions," disparaging both their extravagance and their look of mass production -- like hamburgers from a McDonald's restaurant.
http://www.cnbc.com/id/23993467
Here are a couple of articles on aspects of legitimates and scams. Usually the buyer is the one who must beware, but if he's coming to you with a contract you better fine tooth comb it with your lawyer. My big question would be whether the buyer knows what they are doing. Are they fully aware of the risk involved or just acting cause they want a house? If you can look at their credit report you can probably figure out if they'll be able to afford a mortgage in the time parameters of the contract. Remember the house will have to appraise at the price you both agree on. Hopefully you are not too leveraged that you can absorb any potential problems that could arise from their failure to pay rent.
http://opportunitiesaplenty.com/Debt_Blog/2007/11/_rent_a_house_to_own_what_to_watch_out_f.html
http://www.buzzle.com/editorials/12-2-2005-82927.asp
http://opportunitiesaplenty.com/Debt_Blog/2007/11/_rent_a_house_to_own_what_to_watch_out_f.html
http://www.buzzle.com/editorials/12-2-2005-82927.asp
We have the house listed with an agent, but under the current market we have not had much for looks as of late. i want to keep it listed for at least April and possibly May. the interested party came to us with the lease with option to buy, is that a bad sign ?? 
we are not desperate yet, since we have someone renting already. but the new people are willing to pay more for rent plus purchase the house. any more advice wouild be helpful.
thanks
guchi
we are not desperate yet, since we have someone renting already. but the new people are willing to pay more for rent plus purchase the house. any more advice wouild be helpful.thanks
guchi
Guchi Lease to own is pure hustle designed to grab the rent plus the option money. I'd stay away from this if I were you unless you want the potential headaches that could come from bad blood between you and the lessee especially in this market where prices may be falling and credit is tightening.
Minnow
Well-known member
GUCHI: From: www.themtgprofessor.com good luck, hope it helps!!!!
What Is a Lease-to-Own Purchase?
A lease-to-own house purchase (also "rent-to-own purchase" or "lease purchase") is a lease combined with an option to purchase the property within a specified period, usually 3 years or less, at an agreed-upon price. The borrower pays an option fee, 1% to 5% of the price, which is credited to the purchase price. The borrower pays rent, and an additional rent premium that is also credited to the purchase price. If the purchase option is not exercised, the buyer loses both the option fee and the rent premium.
As with any kind of financial contract, lease-purchase deals can be structured in such a way that all the benefits flow to one of the parties and none to the other. Buyers especially need to be careful. But lease-purchase plans have a solid economic rationale, which means that they can be structured so that both parties benefit.
Contract Features of a Lease-Purchase
Contract Features of a Lease-Purchase
A lease-purchase has 5 major provisions. The sale price of the house and the rent are market-determined, yet subject to negotiation just as in a straight purchase or rental transaction. Buyers often know less about the market than sellers, which places buyers at a disadvantage unless they do some homework, which is advisable.
Buyers generally prefer a long option period because it provides more time to build equity and repair credit. A long period can boomerang on them, however, if they are never able to exercise the option, since they lose the rent premium they have been paying all the while, in addition to the option fee. Sellers generally prefer a short option period, but if it is too short, the house won’t be sold.
The option fee and rent premium are viewed differently by buyers and sellers. To the buyer, they are part of the equity in the house they will soon own. Fully anticipating that they will exercise the option, the only cost is the interest they would otherwise have earned. To sellers, however, these payments are the best guarantee that their houses will sell; if they don’t sell, the payments are retained as income. That the benefit to the seller generally exceeds the cost to the buyer makes the lease-to-own deal a possible win-win.
Using a Lease-Purchase to Buy
Buyers generally prefer a long option period because it provides more time to build equity and repair credit. A long period can boomerang on them, however, if they are never able to exercise the option, since they lose the rent premium they have been paying all the while, in addition to the option fee. Sellers generally prefer a short option period, but if it is too short, the house won’t be sold.
The option fee and rent premium are viewed differently by buyers and sellers. To the buyer, they are part of the equity in the house they will soon own. Fully anticipating that they will exercise the option, the only cost is the interest they would otherwise have earned. To sellers, however, these payments are the best guarantee that their houses will sell; if they don’t sell, the payments are retained as income. That the benefit to the seller generally exceeds the cost to the buyer makes the lease-to-own deal a possible win-win.
Using a Lease-Purchase to Buy
The lease-purchase offers homeownership opportunities to consumers with little cash and/or poor credit, who are prepared to bet on themselves. The bet is that before the option period expires, they will qualify for the mortgage they need to exercise the purchase option. During the option period, they have the opportunity to rebuild their credit and accumulate equity while living in the house.
The development of the sub-prime market, in which consumers with poor credit or no cash can obtain loans, does not seem to have lessened interest in lease-purchase. It is very likely that those who succeed in exercising their option under a lease-purchase do better than if they had financed a conventional purchase in the sub-prime market. The savings in finance costs will more than offset a higher price on the house. But those who can’t exercise their option will lose their bets.
Consumers who need to rebuild their credit rating during the option period should understand that paying their rent on time won’t do it. Rent payment information is not used in compiling credit scores. While Fair Isaac, the company that developed credit scoring, has recently unveiled an “expansion” score based on “non-traditional credit data,” it does not yet include rent payment information from individual home owners. Lease-purchase buyers who need a higher credit score must focus on their credit cards and loans.
Even though it is costly, the right not to exercise the option is of value to buyers. If there is something seriously wrong with the house, neighborhood, or neighbors, the money left behind on a lease-purchase is much smaller than the cost of an outright purchase followed by a sale.
Dangers to Buyers
The development of the sub-prime market, in which consumers with poor credit or no cash can obtain loans, does not seem to have lessened interest in lease-purchase. It is very likely that those who succeed in exercising their option under a lease-purchase do better than if they had financed a conventional purchase in the sub-prime market. The savings in finance costs will more than offset a higher price on the house. But those who can’t exercise their option will lose their bets.
Consumers who need to rebuild their credit rating during the option period should understand that paying their rent on time won’t do it. Rent payment information is not used in compiling credit scores. While Fair Isaac, the company that developed credit scoring, has recently unveiled an “expansion” score based on “non-traditional credit data,” it does not yet include rent payment information from individual home owners. Lease-purchase buyers who need a higher credit score must focus on their credit cards and loans.
Even though it is costly, the right not to exercise the option is of value to buyers. If there is something seriously wrong with the house, neighborhood, or neighbors, the money left behind on a lease-purchase is much smaller than the cost of an outright purchase followed by a sale.
Dangers to Buyers
On October 2, 2005, Bob Mahlburg, an investigative reporter for the Sarasota Herald-Tribune, published an article on a substantial lease-to-own program in Florida that had generated numerous complaints. Over a 5-year period hundreds of deals were executed under this program but only a handful of purchases. In fact, there were more evictions than purchases.
The contract used in this program made it all too easy for the seller to avoid having to sell when it was more profitable to evict the tenant and do another deal with another hopeful buyer. The moral: read the contract very carefully to make sure you are confident you can live up to all the terms, such as paying your rent on time, every time.
Using a Lease-Purchase to Sell
The contract used in this program made it all too easy for the seller to avoid having to sell when it was more profitable to evict the tenant and do another deal with another hopeful buyer. The moral: read the contract very carefully to make sure you are confident you can live up to all the terms, such as paying your rent on time, every time.
Using a Lease-Purchase to Sell
Most home sellers want a cash sale, but for those prepared to hang on to the property awhile longer, the benefits can be compelling. Bob Bruss, an expert’s expert on lease-purchases, says that in this market, there are always more buyers than sellers – he has been both. As a result, buyers generally pay top dollar, perhaps including some assumed future appreciation.
To be sure, the deal may fall through, but in that case the seller gets to pocket the option fee and rent premium. The seller also enjoys the tax deduction on his mortgage interest payments during the option period.
Copyright Jack Guttentag 2007
To be sure, the deal may fall through, but in that case the seller gets to pocket the option fee and rent premium. The seller also enjoys the tax deduction on his mortgage interest payments during the option period.
Copyright Jack Guttentag 2007
Interesting article on mortgage equity withdrawals over the last several years and what it may portend for consumer spending and the market over this next year or more. Not a reall cheery picture.
http://www.financialsense.com/Market/wrapup.htm
http://www.financialsense.com/Market/wrapup.htm
Silverbird
Well-known member
ARM Reset charts: A little dated but you can see the trends.
http://www.bubbleinfo.com/statistics-2007/
http://www.bubbleinfo.com/statistics-2007/
Gilligan
Member
Housing prices are holding steady in college towns.
Enrollments -- especially at large public universities -- are growing as more children of baby boomers (so-called echo boomers) graduate from high school. At cash-strapped public universities, dorm beds are limited and students are often forced to find private housing after freshman year......http://news.yahoo.com/s/bw/20080314/bs_bw/mar2008bw20080313093883
Real estate is based on supply and demand. If you have a kid that will be going to college in the near future, you may want to explore investing in a house for them to stay in for the 4 year term rather than renting an apartment.
alevin
Well-known member
Freddie Mac CEO says housing drop has 2/3 more to go. http://www.marketwatch.com/News/Sto...40CB-BE4C-A538BA6607B1}&siteid=yhoo&dist=yhoo
As a side note, I stumbled over a blog yesterday (forgot to bookmark it, forget who it was), who described a rule of thumb for longterm sustainable housing prices in any particular community. The RofT being 3x the median household income for that community. Based on that, my home's price has grown by a little over 2%/year over the past 9 years since I bought. Good "investment", eh? More like a TIPS.
Something for other folks to consider that may be trying to figure out reasonable bids on new purchases. I've been selectively jobhunting the past few years due to longterm gradual budgetary downsizing trend here, housing prices in communities with potential jobs has been a primary criterion for me deciding whether to go after a particular job or not, relative to my income and comfort level with payments on a 30-yr mort (my basis for determining affordability compared to current situation). Yikes! Right now the budget pressure still exists but not as extreme as it appeared awhile back, so think I'll stay put awhile longer.
As a side note, I stumbled over a blog yesterday (forgot to bookmark it, forget who it was), who described a rule of thumb for longterm sustainable housing prices in any particular community. The RofT being 3x the median household income for that community. Based on that, my home's price has grown by a little over 2%/year over the past 9 years since I bought. Good "investment", eh? More like a TIPS.
Something for other folks to consider that may be trying to figure out reasonable bids on new purchases. I've been selectively jobhunting the past few years due to longterm gradual budgetary downsizing trend here, housing prices in communities with potential jobs has been a primary criterion for me deciding whether to go after a particular job or not, relative to my income and comfort level with payments on a 30-yr mort (my basis for determining affordability compared to current situation). Yikes! Right now the budget pressure still exists but not as extreme as it appeared awhile back, so think I'll stay put awhile longer.
James48843
Well-known member
Looks like home prices are falling at record rates:
Home Prices Fall in 77 U.S. Metro Areas, Realtors Say
By Bob Ivry
Feb. 14 (Bloomberg) -- Home prices fell in a record number of U.S. metropolitan areas in the fourth quarter, according to a report released today by the National Association of Realtors in Chicago.
The median sale price of a U.S. home dropped 5.8 percent to $206,200 in the last three months of 2007 from $219,000 in the same period of 2006, the realtors group said today. Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979. The decline was 10 percent or more in 16 metro areas, the association said.
Prospective homeowners had a tougher time getting mortgages in 2007 as lenders tightened standards amid rising foreclosures, and made 14 percent fewer loans and 28 percent fewer jumbo loans, which cover up to $417,000 of a home's value. Prices have fallen more than 10 percent since their July 2006 peak in the worst U.S. housing slump in 26 years.
``The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,'' said Lawrence Yun, the association's chief economist. ``Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.''
The economic stimulus package signed by President George W. Bush this week will raise the jumbo loan limit to $729,750.
Nationwide Declines
All five regions of the U.S. experienced price declines, led by the West with 8.7 percent. The drop was smallest in the Midwest, at 3.2 percent, the realtors group said.
The metropolitan area with the biggest decrease was Lansing- East Lansing, Michigan, which had a 19 percent decline. Prices fell 18.5 percent in the Sacramento, California, region and 17 percent in Riverside and San Bernardino, California -- the so-called Inland Empire -- and in the Jackson, Mississippi, region, the group said.
Of the 73 areas with price increases, 11 had gains of 10 percent of more. The greatest was in the Cumberland, Maryland, area, at 19 percent. The areas around Yakima, Washington, and Binghamton, New York, had 18 percent and 15 percent jumps respectively.
Prices in the Atlantic City, New Jersey, area rose 11 percent in the quarter, according to the association.
Median home prices ranged from $72,600 in the Youngstown, Ohio, region to nearly 12 times that amount in the Silicon Valley area of California, where the median price was $845,300, the group said.
In the fourth quarter of 2006, home prices fell in 73 of 149 metropolitan areas, said association spokesman Walter Molony.
U.S. home sales fell 21 percent in the last three months of 2007, according to the report. The West saw the biggest drop, with 28 percent. Nevada, Wyoming, New Mexico, Arizona, Oregon and Utah all had sales declines of more than 30 percent, the realtors said.
(Note: My local county figures show home prices fell on average 24% in my county year-over-year. )
Home Prices Fall in 77 U.S. Metro Areas, Realtors Say
By Bob Ivry
Feb. 14 (Bloomberg) -- Home prices fell in a record number of U.S. metropolitan areas in the fourth quarter, according to a report released today by the National Association of Realtors in Chicago.
The median sale price of a U.S. home dropped 5.8 percent to $206,200 in the last three months of 2007 from $219,000 in the same period of 2006, the realtors group said today. Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979. The decline was 10 percent or more in 16 metro areas, the association said.
Prospective homeowners had a tougher time getting mortgages in 2007 as lenders tightened standards amid rising foreclosures, and made 14 percent fewer loans and 28 percent fewer jumbo loans, which cover up to $417,000 of a home's value. Prices have fallen more than 10 percent since their July 2006 peak in the worst U.S. housing slump in 26 years.
``The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,'' said Lawrence Yun, the association's chief economist. ``Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.''
The economic stimulus package signed by President George W. Bush this week will raise the jumbo loan limit to $729,750.
Nationwide Declines
All five regions of the U.S. experienced price declines, led by the West with 8.7 percent. The drop was smallest in the Midwest, at 3.2 percent, the realtors group said.
The metropolitan area with the biggest decrease was Lansing- East Lansing, Michigan, which had a 19 percent decline. Prices fell 18.5 percent in the Sacramento, California, region and 17 percent in Riverside and San Bernardino, California -- the so-called Inland Empire -- and in the Jackson, Mississippi, region, the group said.
Of the 73 areas with price increases, 11 had gains of 10 percent of more. The greatest was in the Cumberland, Maryland, area, at 19 percent. The areas around Yakima, Washington, and Binghamton, New York, had 18 percent and 15 percent jumps respectively.
Prices in the Atlantic City, New Jersey, area rose 11 percent in the quarter, according to the association.
Median home prices ranged from $72,600 in the Youngstown, Ohio, region to nearly 12 times that amount in the Silicon Valley area of California, where the median price was $845,300, the group said.
In the fourth quarter of 2006, home prices fell in 73 of 149 metropolitan areas, said association spokesman Walter Molony.
U.S. home sales fell 21 percent in the last three months of 2007, according to the report. The West saw the biggest drop, with 28 percent. Nevada, Wyoming, New Mexico, Arizona, Oregon and Utah all had sales declines of more than 30 percent, the realtors said.
(Note: My local county figures show home prices fell on average 24% in my county year-over-year. )
Gilligan
Member
With the low dollar...
Foreign Buyers Snap Up 2nd Homes in US
http://biz.yahoo.com/ap/071224/real_estate_foreign_buyers.html
Foreign Buyers Snap Up 2nd Homes in US
http://biz.yahoo.com/ap/071224/real_estate_foreign_buyers.html
pyriel
Active member
Depending on who is reading these articles about the housing woes, we can either say that it is bad or it is good. For those on the red end of the stick, of course it will be bad. However, for those RE investors, do you think that they are panicking right now? I'm not talking about those speculators that bought properties hoping that the RE market will continue to rise and they were getting all those crazy mortgages and overextending themselves. Those good RE investors are actually smiling from ear to ear. Ask yourself when you read this kind of articles; are you seeing an opportunity or seeing that this market will come crashing down.
Guam is currently in the uptrend right now. I say we have another 5 good years. Hopefully, I will be in better positions 5 years from now so when the wall start crushing down, I will be ready to scoop up some bargains out there...
Pls be careful...
Pyriel
Guam is currently in the uptrend right now. I say we have another 5 good years. Hopefully, I will be in better positions 5 years from now so when the wall start crushing down, I will be ready to scoop up some bargains out there...
Pls be careful...
Pyriel
robo
Well-known member
Feds cut down-payment assistance programs
By Holden Lewis • Bankrate.com
For a decade, credit-challenged homebuyers have used a regulatory loophole that lets them get Federal Housing Administration mortgages without putting their own money down, while at the same time avoiding costly subprime loans. About 7,000 buyers per month were exploiting the loophole, and now the feds are squeezing it shut.
The new policy means that prospective homebuyers with marginal credit will have to act quickly if they want to buy houses without putting any money down. Otherwise, they will have to save for down payments or wait for the FHA to roll out its own zero-down program.
At issue is a controversial method of scraping together the down payment for a house. Many subprime lenders require down payments of at least 5 percent. That's a high hurdle for people who already have credit problems; luckily for those borrowers, loans insured by the Federal Housing Administration require smaller down payments -- as little as 3 percent.
Lenders mandate down payments for several reasons, the main one being that borrowers are less likely to stop making monthly payments if their own money is at risk. To make sure that borrowers have something to lose, no lender allows sellers to make down payments on behalf of buyers. But for FHA-insured loans, there has been a way to get around that seller-funded prohibition.
The housing boom and the loophole
The FHA allows homebuyers to accept gifts of down-payment money from nonprofit organizations. There's your loophole: Since the 1990s, the FHA has grudgingly allowed home sellers to "contribute" money to nonprofits, and for the nonprofits to then "donate" the money to homebuyers. In effect, sellers could fund buyers' down payments, which was a no-no, but the enterprise was technically legal because the money was shuttled through nonprofits. The nonprofits collected service fees from sellers.
A lively down-payment assistance industry grew quickly behind the protection of this loophole in FHA regulations. In the 2000 fiscal year, 6 percent of FHA-insured purchase loans had down payments channeled through nonprofits; four years later, 33 percent did. When this funding method was most popular, in fiscal years 2003 through 2005, more than 10,000 people per month were taking advantage of it, boosting the housing boom. From 2000 through 2006, more than 650,000 buyers got their down payments through nonprofits.
The federal housing department and Congress have commissioned at least three studies since 1999 that concluded these loans were riskier than FHA loans that didn't involve down-payment gifts. Sellers inflated home prices to recoup their contributions to the nonprofits, researchers found.
The studies recommended that the nonprofit down-payment assistance loophole be closed. Mortgage lenders, home builders and down-payment assistance programs argued to keep the loophole open, on the grounds that boosting the homeownership rate was good for everyone. The feds didn't take action until now.
http://www.bankrate.com/brm/news/mortgages/20071011_down_payment_assistance_a1.asp
By Holden Lewis • Bankrate.com
For a decade, credit-challenged homebuyers have used a regulatory loophole that lets them get Federal Housing Administration mortgages without putting their own money down, while at the same time avoiding costly subprime loans. About 7,000 buyers per month were exploiting the loophole, and now the feds are squeezing it shut.
The new policy means that prospective homebuyers with marginal credit will have to act quickly if they want to buy houses without putting any money down. Otherwise, they will have to save for down payments or wait for the FHA to roll out its own zero-down program.
At issue is a controversial method of scraping together the down payment for a house. Many subprime lenders require down payments of at least 5 percent. That's a high hurdle for people who already have credit problems; luckily for those borrowers, loans insured by the Federal Housing Administration require smaller down payments -- as little as 3 percent.
Lenders mandate down payments for several reasons, the main one being that borrowers are less likely to stop making monthly payments if their own money is at risk. To make sure that borrowers have something to lose, no lender allows sellers to make down payments on behalf of buyers. But for FHA-insured loans, there has been a way to get around that seller-funded prohibition.
The housing boom and the loophole
The FHA allows homebuyers to accept gifts of down-payment money from nonprofit organizations. There's your loophole: Since the 1990s, the FHA has grudgingly allowed home sellers to "contribute" money to nonprofits, and for the nonprofits to then "donate" the money to homebuyers. In effect, sellers could fund buyers' down payments, which was a no-no, but the enterprise was technically legal because the money was shuttled through nonprofits. The nonprofits collected service fees from sellers.
A lively down-payment assistance industry grew quickly behind the protection of this loophole in FHA regulations. In the 2000 fiscal year, 6 percent of FHA-insured purchase loans had down payments channeled through nonprofits; four years later, 33 percent did. When this funding method was most popular, in fiscal years 2003 through 2005, more than 10,000 people per month were taking advantage of it, boosting the housing boom. From 2000 through 2006, more than 650,000 buyers got their down payments through nonprofits.
The federal housing department and Congress have commissioned at least three studies since 1999 that concluded these loans were riskier than FHA loans that didn't involve down-payment gifts. Sellers inflated home prices to recoup their contributions to the nonprofits, researchers found.
The studies recommended that the nonprofit down-payment assistance loophole be closed. Mortgage lenders, home builders and down-payment assistance programs argued to keep the loophole open, on the grounds that boosting the homeownership rate was good for everyone. The feds didn't take action until now.
http://www.bankrate.com/brm/news/mortgages/20071011_down_payment_assistance_a1.asp
James48843
Well-known member
More sub-prime news articles:
http://biz.yahoo.com/cnnm/070322/032207_toptips.html?.v=1&.pf=loans
Why you should care about the subprime fallout
Thursday March 22, 12:26 pm ET
By Gerri Willis, CNN
The Senate Banking Committee held hearings Thursday on the crisis in the subprime mortgage lending industry. But we're going to tell you why you should care about the subprime mortgage meltdown and how it's going to affect you.
1: As a homeowner
Even if you're sitting nice and cozy in your 30-year fixed mortgage rate home, this subprime lending mess could really put a dent in your home's value.
A recent study shows that about 1 in 5 subprime mortgages will go into foreclosure. And whether that foreclosed property is across the street, or in the same neighborhood, that is not going to reflect very well on your property value.
The Center for Responsible Lending estimates that one foreclosure in the neighborhood lowers the value of nearby single-family homes by about 1 percent. So, if there are 10 foreclosures in your area, you're talking about 10 percent dip in your home's value.
2: In the market
If you're in the market for a home, you're at an advantage. Sellers are becoming very competitive with each other since there are more houses on the market. And prices have come down in some areas too. That means you may be able to score your dream home at quite a bargain.
If you do have solid credit, the 30-year fixed interest rate is very attractive at just above 6 percent. If you don't have good credit however, you may find it more difficult to qualify for a loan.
3: Selling your home
It used to be that securing credit for just about anyone was a no-brainer, but those rules are changing. Lenders tightening their standards, so there may be fewer borrowers out there who qualify to get a mortgage. And that means that fewer people will have the means to buy a home.
That means if you want to sell your home, you need to price it right. You may also have to market your home more aggressively. Make low-cost improvements that can really help to sell your home like sprucing up the backyard or adding some fresh paint to the exterior.
4: In the market for a mortgage
With all the turmoil in the subprime market, it's more important now than ever that you find a mortgage lender that you trust and feel comfortable with. If you have good credit, you'll find that rates are in your favor. That's because there's a real demand now for homeowners that can make their monthly payments.
Make sure you get at least three mortgage rate quotes from banks and credit unions. You may also want to ask friends and family to recommend a lender. Don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down are long gone.
What to do if your mortgage lender goes out of business
Subprime risk: Most vulnerable markets
http://biz.yahoo.com/cnnm/070322/032207_toptips.html?.v=1&.pf=loans
Why you should care about the subprime fallout
Thursday March 22, 12:26 pm ET
By Gerri Willis, CNN
The Senate Banking Committee held hearings Thursday on the crisis in the subprime mortgage lending industry. But we're going to tell you why you should care about the subprime mortgage meltdown and how it's going to affect you.
1: As a homeowner
Even if you're sitting nice and cozy in your 30-year fixed mortgage rate home, this subprime lending mess could really put a dent in your home's value.
A recent study shows that about 1 in 5 subprime mortgages will go into foreclosure. And whether that foreclosed property is across the street, or in the same neighborhood, that is not going to reflect very well on your property value.
The Center for Responsible Lending estimates that one foreclosure in the neighborhood lowers the value of nearby single-family homes by about 1 percent. So, if there are 10 foreclosures in your area, you're talking about 10 percent dip in your home's value.
2: In the market
If you're in the market for a home, you're at an advantage. Sellers are becoming very competitive with each other since there are more houses on the market. And prices have come down in some areas too. That means you may be able to score your dream home at quite a bargain.
If you do have solid credit, the 30-year fixed interest rate is very attractive at just above 6 percent. If you don't have good credit however, you may find it more difficult to qualify for a loan.
3: Selling your home
It used to be that securing credit for just about anyone was a no-brainer, but those rules are changing. Lenders tightening their standards, so there may be fewer borrowers out there who qualify to get a mortgage. And that means that fewer people will have the means to buy a home.
That means if you want to sell your home, you need to price it right. You may also have to market your home more aggressively. Make low-cost improvements that can really help to sell your home like sprucing up the backyard or adding some fresh paint to the exterior.
4: In the market for a mortgage
With all the turmoil in the subprime market, it's more important now than ever that you find a mortgage lender that you trust and feel comfortable with. If you have good credit, you'll find that rates are in your favor. That's because there's a real demand now for homeowners that can make their monthly payments.
Make sure you get at least three mortgage rate quotes from banks and credit unions. You may also want to ask friends and family to recommend a lender. Don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down are long gone.
What to do if your mortgage lender goes out of business
Subprime risk: Most vulnerable markets
pyriel
Active member
I really feel for these people that was baited to get these kinds of teaser loans. This country thrives in debts and it is what is keeping this country afloat. However, being buried in debts doesnt last long and somehow, at one time or another, the house of cards shall fall.
But instead of concentrating on this negativity, how about we look at the positive side of what is going on. This means that in a about a year or so (maybe even earlier), we might see another big RE drop. As for me, I welcome this wholeheartedly. Yes, it might sound very selfish but I am an investor. And like any investors, we make our profits when we buy really low and sell high. In fact, this is how we are all playing our TSP here. An advice for everyone, dig in now, raise cash, look at your financial statements, fix your credits, learn about mortgage, etc etc et... These would get you ready to move in to some bargain RE properties out there. Good luck to all.
Pyriel
But instead of concentrating on this negativity, how about we look at the positive side of what is going on. This means that in a about a year or so (maybe even earlier), we might see another big RE drop. As for me, I welcome this wholeheartedly. Yes, it might sound very selfish but I am an investor. And like any investors, we make our profits when we buy really low and sell high. In fact, this is how we are all playing our TSP here. An advice for everyone, dig in now, raise cash, look at your financial statements, fix your credits, learn about mortgage, etc etc et... These would get you ready to move in to some bargain RE properties out there. Good luck to all.
Pyriel
James48843
Well-known member
Government says sub-prime foreclosures not risking the rest of the economy-
http://news.yahoo.com/s/nm/20070322/ts_nm/usa_subprime_dc_1
Officials downplay wider risks of subprime failures By Chris Reese
Government officials on Thursday minimized the broader economic impact of a crisis in the subprime mortgage market, but the largest U.S. mortgage lender said foreclosures in 2006 may be the worst yet.
A U.S. home builder also warned that increased foreclosures could prolong the housing slump.
A senior staffer for the Federal Reserve said the central bank is not seeing signs that problems in the subprime market are spilling over into other market sectors. The U.S. Office of Thrift Supervision said its 17 savings and loan banks with significant subprime lending operations were "well positioned" to absorb increases in losses due to foreclosures.
Credit deterioration in the housing market is focused on the narrow subprime sector, Fed Division of Banking Supervision and Regulation Director Roger Cole told a Senate Banking Committee investigating problems among lenders who write mortgages for people with weak or no credit histories.
"At this time we are not observing spillover effects from the problems in the subprime market to the traditional mortgage portfolios or, more generally, to the safety and soundness of the banking system," Cole said.
Scott Polakoff, deputy director of the Office of Thrift Supervision, told the committee that thrifts with significant subprime lending operations were "generally well capitalized."
The chairman of the committee, Connecticut Democratic Sen. Christopher Dodd (news, bio, voting record), told the hearing that while he plans legislation on predatory lending, the solution to the problem of those facing foreclosure on their mortgages may not be legislative.
"Instead, I would seek to ask leaders from all the stakeholders ... to come together and try to work out an efficient process providing some relief for these homeowners who will be caught in this bind," Dodd said.
The largest U.S. mortgage lender, Countrywide, said on Thursday its subprime mortgage defaults for 2006 loans may exceed the company's highest on record.
Countrywide's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89 percent," Sandor Samuels, the company's executive managing director, said in prepared remarks to the government panel examining mortgage lending.
"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000," he said.
One U.S. home builder also warned on Thursday that higher foreclosures could prolong weakness in the housing sector and impact financial performance.
KB Home, the No. 5 U.S. home builder, said its net profit fell 84 percent in its fiscal first quarter ended February 28. The company's chief executive said lending problems in the broader market from rising default rates and tighter lending requirements for borrowers with riskier credit histories could strangle any improvement in the situation.
KB Home shares fell 27 cents to $47.52 in midday trading on the New York Stock Exchange.
A representative of the Conference of State Bank Supervisors told the Senate committee that Congress should not bail out subprime lenders and brokers who made risky mortgage loans to borrowers with bad credit.
Joseph Smith, North Carolina's commissioner of banks, said the overall U.S. mortgage market is strong even if some large subprime lenders suffer financial losses.
(Additional reporting by John Poirier and Kevin Drawbaugh in Washington and Ilaina Jonas in New York)
http://news.yahoo.com/s/nm/20070322/ts_nm/usa_subprime_dc_1
Officials downplay wider risks of subprime failures By Chris Reese
Government officials on Thursday minimized the broader economic impact of a crisis in the subprime mortgage market, but the largest U.S. mortgage lender said foreclosures in 2006 may be the worst yet.
A U.S. home builder also warned that increased foreclosures could prolong the housing slump.
A senior staffer for the Federal Reserve said the central bank is not seeing signs that problems in the subprime market are spilling over into other market sectors. The U.S. Office of Thrift Supervision said its 17 savings and loan banks with significant subprime lending operations were "well positioned" to absorb increases in losses due to foreclosures.
Credit deterioration in the housing market is focused on the narrow subprime sector, Fed Division of Banking Supervision and Regulation Director Roger Cole told a Senate Banking Committee investigating problems among lenders who write mortgages for people with weak or no credit histories.
"At this time we are not observing spillover effects from the problems in the subprime market to the traditional mortgage portfolios or, more generally, to the safety and soundness of the banking system," Cole said.
Scott Polakoff, deputy director of the Office of Thrift Supervision, told the committee that thrifts with significant subprime lending operations were "generally well capitalized."
The chairman of the committee, Connecticut Democratic Sen. Christopher Dodd (news, bio, voting record), told the hearing that while he plans legislation on predatory lending, the solution to the problem of those facing foreclosure on their mortgages may not be legislative.
"Instead, I would seek to ask leaders from all the stakeholders ... to come together and try to work out an efficient process providing some relief for these homeowners who will be caught in this bind," Dodd said.
The largest U.S. mortgage lender, Countrywide, said on Thursday its subprime mortgage defaults for 2006 loans may exceed the company's highest on record.
Countrywide's "worst single origination year was 2000, for which the cumulative foreclosure rate was 9.89 percent," Sandor Samuels, the company's executive managing director, said in prepared remarks to the government panel examining mortgage lending.
"We believe that declining home prices and other factors ... may produce foreclosures numbers on 2006 originations approaching or exceeding those on loans originated in 2000," he said.
One U.S. home builder also warned on Thursday that higher foreclosures could prolong weakness in the housing sector and impact financial performance.
KB Home, the No. 5 U.S. home builder, said its net profit fell 84 percent in its fiscal first quarter ended February 28. The company's chief executive said lending problems in the broader market from rising default rates and tighter lending requirements for borrowers with riskier credit histories could strangle any improvement in the situation.
KB Home shares fell 27 cents to $47.52 in midday trading on the New York Stock Exchange.
A representative of the Conference of State Bank Supervisors told the Senate committee that Congress should not bail out subprime lenders and brokers who made risky mortgage loans to borrowers with bad credit.
Joseph Smith, North Carolina's commissioner of banks, said the overall U.S. mortgage market is strong even if some large subprime lenders suffer financial losses.
(Additional reporting by John Poirier and Kevin Drawbaugh in Washington and Ilaina Jonas in New York)
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