My New Blog

How Does a Fed Cut Affect Mortgage Rates

March 22nd, 2008 10:41 AM

Author: Kristin Abouelata - Mortgage News Article

You hear quite a bit lately that "the Fed is cutting the interest rate." Maybe you've been considering a refinance, and you're waiting to move forward till the Fed takes action again. But be smart about waiting and watching. A Fed cut doesn't directly affect long term rates (for instance a 30 year fixed mortgage), but it does impact long term mortgage rates. The problem is the impact might not have the result you've been waiting for.

Who is the Fed? Well, it's really the Federal Reserve. And when the Fed cuts rates, it usually cuts the Fed Funds Rate, which is the rate banks lend each other money. However, when the Fed lowers the Fed Funds Rate, Prime Rate, the rate banks give their best customers, usually drops as well. Ok, that's great. But what does that really mean to the average person on the street? It means that anything that has an interest rate tied to Prime is directly affected by the Feds' rate cut. Typically, these are short term loans. For instance: a credit card or a Home Equity Line of Credit (HELOC). In general, these rates decline when the Fed lowers rates. On the flip side, a Fed rate cut means your savings will perhaps not yield as much interest and your CD (certificate of deposit) won't be at such a great rate. So, it's not all good.

Why aren't mortgages directly affected? Because mortgage rates are typically longer term rates and are influenced by buyers and sellers in the bond market. Daily movements in the bond market cause mortgage rates to change. That's why you might get a quote from a loan officer on Tuesday, and on Wednesday, your quoted interest rate has increased .125%. The Fed lowers rates to help stimulate the economy. Ultimately a healthy economy is good for the real estate market. Jesse Lehn, Senior Vice President for Mortgage Investors Group, believes, "...a liquid real estate market is beneficial for the mortgage market and that keeps rates competitive." So, when the Fed lowers rates, indirectly it can help mortgage rates, but there is no direct correlation.

Another misconception is that mortgage rate changes occur in direct relation to when a Fed rate cut happens. In actuality, most mortgage rate changes, positive or negative, occur regardless of whether the Fed is actually meeting. That's because the mortgage market anticipates what the Fed is going to do.

A good loan officer should have their finger on the pulse of the market, but again it's a gamble. Remember to have a target interest rate in mind if you want to lock a loan but are watching the market. Trying to lock an interest rate on the day the mortgage rates have reached their lowest point in a year is like trying to get a royal flush in poker. It happens, but it's not a realistic goal. It just means you were lucky. Just stick to your home financing goals and consider the big picture, and you'll be fine.

Posted by AJ JOHNSON on March 22nd, 2008 10:41 AMPost a Comment (0)

Latest real-estate fad: Hunting for foreclosure deals

March 29th, 2008 10:56 AM

Latest real-estate fad: Hunting for foreclosure deals

Catherine Reagor
The Arizona Republic
Mar. 29, 2008 12:00 AM

During the housing boom, investors flocked to metro Phoenix and climbed onto buses that took them to the Valley's fringes, where they checked out affordable new homes they could buy low and sell high.

Now, the bus tours to those edge suburbs are starting again. But this time, home buyers are looking for foreclosure properties they can flip for a fast profit.

The Valley's foreclosure-buying spree started with auctions last fall. Late-night infomercials turned from buying homes with little down to foreclosure-investing. Daylong foreclosure-investing seminars in Valley hotel conference rooms, including sessions held by Trump University, began filling up in January. Smaller bus tours put on by local real-estate agents are going on most weekends now, and a national group called Foreclosure Bus Tours today will hold its first daylong event in the Phoenix area.

"Foreclosure-investing is the real-estate buzzword now," said Eric Brown, a former Phoenix home builder who is a managing director of real-estate consulting firm Robert Charles Lesser & Co. "Huge investment companies and individuals are looking to pick up properties cheap."

Foreclosure Bus Tours has shuttled investors around Detroit, Fort Lauderdale, Fla., and Boston, and it has tours planned in Dallas and Houston as well as Maryland and Connecticut. For $97, investors get lunch and check out several foreclosure properties. Usually, a local real-estate agent and mortgage broker is on the bus to get deals going.

"There's a lot of interest in Arizona foreclosures," said Rodney Townsend, who started Foreclosure Bus Tours in Detroit with partner Ralph Claxton. He said a man and his sister from Boston are flying to Phoenix for this weekend's tour to try to find a home for their mother.

Foreclosures on rise

Last month, 2,500 homes in metro Phoenix were foreclosed on, the highest monthly tally since the real-estate recession of 1990.

"I don't see foreclosures peaking in metro Phoenix until after the second quarter this year," said analyst Tom Ruff of Information Market.

A big auction held in Sun City earlier this month marketed almost 400 foreclosure properties in the Valley. Most sold at bargain prices.

Jim Sexton, president of the Phoenix-based real-estate firm John Hall & Associates, said more real buyers who are ready to make deals are going to foreclosure auctions now instead of watching curiously.

One bidder at the auction, Saul Grotstein of Los Angeles, said there was more competition for the properties than he expected. He is partnering with some other investors buying two foreclosure homes in the southwest Valley.

"We aren't done buying in Phoenix," said Grotstein, who was heading to Florida for another foreclosure auction. "There are going to be more deals as the foreclosure inventory grows."

There is some concern that novice investors will get in over their heads aske many did during the boom of 2004-05.

"Last time around, it was the amateurs who believed the infomercials and used all the home equity in their own homes to buy rental properties," said Jay Butler, director of Realty Studies in the Morrison School at Arizona State University Polytechnic.

"Now, many of those houses are in foreclosure and selling to a similar group of investors."

Townsend said his group works with real-estate agents to counsel potential foreclosure buyers so they are ready. Foreclosures have always been popular investments in metro Phoenix, but in the past, most buyers bid on them at trustee-sale auctions on the Maricopa County Courthouse steps. Most investors did their homework and checked out the house and how much was owed on it before the auction.

But now, most Valley homes in foreclosure don't have any equity left because of falling home values. More than 95 percent of the houses going into foreclosure are going back to the lender because no one wants to bid on the houses with upside-down loans, which are worth less than what is owed on them.

Lenders are trying to sell them at other auctions or through real-estate agents for sometimes less than half of what they are owed.

Some homeowners are trying to avoid foreclosure by doing short sales. But Brett Barry of Realty Executives said many lenders aren't willing to negotiate, particularly on home-equity loans or second mortgages, and that is forcing more people into foreclosures.

Lenders won't deal

"Lenders just won't deal, and it makes no sense because it's only going to cost them more money, particularly when the houses are going for so cheap at auctions," Barry said.

Diane Drain, a Phoenix bankruptcy and foreclosure attorney, is seeing the same thing. She said she is working with two to three investors a day who are going to lose homes to foreclosure because lenders won't negotiate with them.

She cautions people investing in foreclosures to spend only money they can afford to lose.

"If it's money you would take to Vegas and drop on a table, then invest it in foreclosure properties," Drain said. "But if it's your retirement account or home equity, don't touch it. I am seeing too many people now who are losing everything because they invested in homes they thought they could flip for a profit."

Posted by AJ JOHNSON on March 29th, 2008 10:56 AMPost a Comment (0)

Pay more to sell home

March 27th, 2008 6:22 PM

Pay more to sell a home

As houses become harder to sell, some agents are charging more than the standard 6% to deliver better results. Should you consider a higher commission?

By BusinessWeek

Jim McCarty decided a year ago to give real-estate agents an added incentive to guide buyers past the clutter of for-sale signs to his vacant four-bedroom house about 20 miles outside Minneapolis.

He agreed to pay his agent an 8% commission, which would be split (55% to 45%) with the agent representing the buyer. Full-service agents in the past few years have been charging 6% commissions and frequently less. Discount brokers charge much less.

McCarty's investment property was under contract within a month for just under the asking price of $324,000 despite competition from about a dozen similar houses for sale in the development, his agent said.

"I wanted more agents to show the property," said McCarty, 70, who is a speaker on leadership and business-growth strategies. "I was willing to take a little bit more of a hit and pay a higher percentage. But if the house is sitting there vacant, you want to move the house."

Most agents charge 6% and will sometimes agree to less. But more and more agents, especially successful ones, have started charging more than 6%, in part because selling a house is more time-consuming and expensive than it used to be. And fewer homes are selling. Sellers in some parts of the country are paying up to 8% and sometimes more, agents said. Builders, eager to get rid of inventory, sometimes offer more than 10%.

A broker's market

"When the market was really going crazy, there were sellers out there trying to get any Realtor for 4% who would undercut the guy next to him," said Arthur Tassaro of Friedberg Properties in Cresskill, N.J., where commissions are reportedly holding steady around 6%. "Now you don't have to do that anymore. Now sellers want the home on the market and sold."

Frank D'Angelo, the broker for Exit Realty Executives who represented McCarty, said he offers customers a transparent, tiered system of payment. For 6%, sellers get the typical menu of services. Sellers who agree to pay 7% get additional benefits, including a guarantee that if the home isn't sold within 39 days, he'll return up to $10,000 of his commission (2% of the sales price). For 8%, buyers also get free home staging and a "media blitz" of advertisements.

But the primary benefit is more buyer traffic and the hope that agents might point out subtle pluses of the home, such as new paint or serene views. "If they (buyers' agents) have to choose from 12 homes, they don't have time to see all 12 homes," D'Angelo said. "They're going to select from buyers' criteria, so anything that's marginal is thrown out." But they might show a marginal home if it includes a "hefty" commission, D'Angelo said.

He said simple cash bonuses for buyers' agents don't work because they raise red flags that a home might be a distressed property and could lead to a lower sale price.

Higher commissions called 'silly'

Ilyce Glink, the publisher of ThinkGlink.com, a Web site that offers real-estate and personal-finance advice, said sellers should never agree to pay more than a 6% commission and that a buyer's agent should always get at least half of that. Glink said it's better to lower the asking price than to put more money in agents' pockets.

She said the last time she saw 7% commissions was during a downturn in the early 1990s, but only for properties that were particularly difficult to sell.

"The whole concept of paying 7% or 8% is silly," Glink said. "It used to be that by not doing any work, agents would have buyers lining out the door and they'd collect a big fat commission. Now they have to do some work. You have to allocate dollars where it's most important."

Posted by AJ JOHNSON on March 27th, 2008 6:22 PMPost a Comment (0)

Some Myths and Realities About Real Estate Appraisals and Appraisers

March 26th, 2008 10:33 AM

Some Myths and Realities About
Real Estate Appraisals and Appraisers

Myth: Assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximate estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: In a robust economy - when the sales prices of homes in a given area are reported to be rising by a particular percentage - the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: An Appraisal is the same as a home inspection.
Reality: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.

Posted by AJ JOHNSON on March 26th, 2008 10:33 AMPost a Comment (0)

The Negative Press and Dreams

March 24th, 2008 9:27 PM

Get on with life. Do not pay attention to negative mainstream news. At least in reference to a home and your dreams. The news works and feeds off of our biggest fears as a society.

It is all fact until someone finds out there is a lie.

The truth sometimes hurts. However, you are making a decision on true facts.

A house is a nest to raise your family. Not an investment vehicle. Not saying a house is not a good investment.

But, If you buy and move with your heart and dreams, your family reap the benefits of happiness and equity.

I promise you that.

That is how it use to be.

A.J.Johnson-Sr. Loan Officer

Posted by AJ JOHNSON on March 24th, 2008 9:27 PMPost a Comment (0)

Housing Woes Are an Opportunity for First-Timer Buyers Repost

March 24th, 2008 9:04 PM

Housing Woes Are an Opportunity for First-Timer Buyers

by Suze Orman

Even though every nook and cranny of the housing market is draped in doom and gloom, it may be a good time for potential buyers to take a contrarian look.

I'm not minimizing the risks in the housing market, because they're very real in many locations. Nor am I predicting any sort of miraculous turnaround in the next six months, since I doubt that we'll see that happen. But I'm still a believer in the long-term viability of housing as a solid investment if you buy at the right price. This has me thinking that the current shakeout is in fact creating an interesting sweet spot for first-time homebuyers to at least start checking out the market.

That said, potential first-timers need to be extra-strategic and cautious when considering a purchase; there's no room for making any mistakes these days. But simply sitting on the sidelines to wait for signs that the worst is over, or that your local market has turned the corner, means you may miss out on the best deal-making opportunities.

Here are some tips:

• Take a new look

Right now, some of the markets that were hot a few years ago are full of overextended builders looking to unload their unsold inventory. First-timers tend to focus on existing homes rather than more expensive new construction, but I advise them to take a look at new homes as well.

All those stressed-out developers are motivated to make deals. That can mean sharp price discounts or great offers to help with your mortgage financing. But be careful, too -- you don't want to be the only owner on a block where half of the homes haven't even been finished.

• Know what price is right

In today's markets, it's crucial to load up on as much data before you bid on a home. Get at least three to five recent comparable sales, what are known as "comps" from your real estate agent.

You want to know the differential between the initial list price and the sale price for those homes. The size of the gap, and whether it's been trending lower or higher, is what will determine your aggressiveness in bidding. Keep updating your market analysis every few weeks to stay on top of your market's twists and turns.

In today's market, being patient and bidding correctly is crucial. I know someone who had a $2 million bid for a new home in Florida turned down a year ago. A year later, the house was still on the market and the developer was desperate to deal. This time, the same buyer offered $1 million and the bid was accepted.

So don't be afraid to go for it. If you see a house you want and it's been on the market for some time, you have nothing to lose by going in and bidding 50 percent lower than the asking price. Don't be afraid to insult someone. Remember, 50 percent of something is better than 100 percent of nothing. If they counter at a higher price, be careful -- you can't afford to overbid to meet an unrealistic seller's price. Besides, there are plenty of other homes to choose from.

• Buy only if you have a five-year time frame

If you anticipate relocating anytime soon, it's probably smart to keep renting instead of buying.

Remember that once you're an owner, it's going to cost you a 5 to 6 percent sales commission when you decide to sell. To have a decent chance of selling with some equity left in your pocket -- even after paying the commission -- you probably need to stay put for at least five years.

• Shore up your score

Before you look at a single house, check your FICO credit scores. Home buying is the one time you want to pay up for all three scores, because many lenders base the interest rate you're offered on a calculation that takes all three scores into account.

If you're applying for a mortgage with someone else, make sure both of you have strong FICO credit scores. Some lenders will base the rate you're offered on the lowest score between the two of you. If your scores aren't in the top range of 760 to 850, chances are you'll be given a higher interest rate on a loan -- and that can make all the difference in whether you can afford to buy or not.

For example, if you need a $200,000 mortgage and have a score of 760, you might qualify for a 30-year fixed rate loan at 5.8 percent with a monthly payment of $1,775. With a 619 score, you're looking at a 9.2 percent rate for the same loan, and a monthly payment of $2,458. That $683-per-month difference is enough to cover property tax, insurance, and probably annual maintenance costs.

If one or both of you has low FICO scores, focus on getting them into the 760-or-higher range. Not only will it save you a lot in mortgage costs, it's also an important step in making sure you have the financial discipline to take on such a huge commitment.

• Get the lowdown on down payments

During the housing boom, lenders were all too happy to dole out mortgages that didn't require a down payment. That's coming back to sting many lenders -- and crippling the entire credit system -- as homeowners who never had to put equity into their home are now walking away from them when their outstanding mortgage is more than the current value of the home. The upshot is that to have any chance of getting a mortgage in today's tight lending market, you need to come to the loan table with a down payment.

A 20 percent down payment will speed up your loan approval, but not many people have that right now. One possible remedy is the recent change in FHA limits; FHA-insured loans require just a 3 percent down payment, but up until a month ago these loans maxed out at $362,790 in high-cost metro areas. The economic stimulus package signed into law in February authorized the FHA to raise those limits for the remainder of 2008. The new top loan limit for high-cost metro areas is as much as $729,750. You can check the new FHA loan limits in your area here.

Ideally, you can scrape together your down payment from savings. But if that's not going to cover everything, you might consider raiding your IRA. Yes, you read that right: The typical 10 percent penalty for early withdrawals made before age 59-1/2 is waived when the money is used for a down payment on a first-time home purchase.

If your money is in a traditional IRA you'll still owe tax on the withdrawal. Roth IRAs are a better deal; you can pull out money you contributed with no penalty or tax. Any Roth earnings you withdraw for the down payment are also tax-free as long as you've had the account for at least five years.

Posted by AJ JOHNSON on March 24th, 2008 9:04 PMPost a Comment (0)

Now is the time to buy in Arizona - Repost

March 19th, 2008 1:34 PM

RISMEDIA, March 19, 2008-Considering all of the negative press the housing market received in late 2007, it’s more important than ever for buyers to separate fact from fiction when deciding on a time to buy a home. This report is intended to help home buyers assess the facts of the real estate market objectively.

About Inventory

FACT: The housing market is undergoing a natural cyclical correction. It’s impossible to ignore the ongoing news surrounding the downturn of the housing cycle. The recent “housing boom,” which lasted from 2001 to 2005, was caused by low interest rates and a rapid increase in property valuations, resulting in high numbers of renters opting to buy. Three factors caused this decade’s housing boom to spiral upward:

1) A run-up in home-price valuations that spurred a high sense of urgency in home buying and selling.
2) Poor lending practices, which caused many home buyers to secure loans that they ultimately couldn’t afford over the long term.
3) Speculative purchases of homes also increased, with buyers investing in real estate with the hope of a quick return on investment.

Like the dot-com bust, the housing market has begun to correct itself after a number of years of unwise purchasing, but unlike what the media would have us believe, a correction in the housing market doesn’t equate to a crash. Unfortunately, the ongoing negative news about the troubled areas in the U.S. has caused a ripple effect, with home buyers and sellers on a national level exercising caution before making a decision. This has caused an overall slowdown in the marketplace.

The National Association of Realtors’ chief economist, Lawrence Yun, projects that nationally, the “median existing-home price will drop about 1.7% this year. This is a small, minor adjustment after a strong run-up in housing prices.”

True, the number of homes sold in 2007 will have dropped from the year before, but 2007 is still among the highest years on record, with numbers of sales for both 2007 and 2008 projected to be even higher than the levels seen in 2002.

However, with homes taking longer to sell, the number of homes on the market has grown. In markets like California and Arizona where homes are taking much longer to sell than the 11-month national average, this has caused a glut in the marketplace.

In the Pacific Northwest, where the inventory of homes on the market ranges from seven to 10.5 months as of November 2007, this equates to good news for buyers who have more homes at more price ranges from which to choose.

About Mortgages

FACT: Low mortgage rates give buyers more house for their dollar.

With the 30-year fixed rate hovering between 6-7%-a 45-year low-qualified buyers continue to have access to incredibly low interest rates. This means that although housing prices have risen, monthly mortgage payments remain reasonable for those who look at real estate as a long-term investment. For example, today if a buyer secured a 6.5% interest rate on a 30-year fixed loan for a $300,000 home (with no money down), the monthly mortgage payment would be $1,896.20. In 1991, the same monthly mortgage payment would have bought a house worth only $230,492 when mortgage rates were 9.25%. In 1982, when the 30-year fixed rate was 14.6%, the same payment would have bought a house worth only $151,657.

FACT: Heavy speculation and overbuilding result in an increase in foreclosures when prices go down.

The media has been focusing on the hardest-hit areas of the country that have seen a dramatic downturn in the market: California, Nevada, Florida and Arizona. Over the past five years, these markets have experienced an abundance of new housing, a rise in investment properties and a rise in prices that was high above the national average.

Now that home prices are starting to drop and stabilize, the areas that went through a building frenzy and experienced the largest price increases are suffering a heavy devaluation in home prices, which in turn has caused homeowners to foreclose on loans.

Those suffering the most in California, Nevada and Florida are far above the national average of foreclosure with one out of every 325, 152 and 282 homes in foreclosure, respectively. Washington, Oregon and Idaho are well below the national average of one in every 617 homes in foreclosures because fewer home buyers in the Pacific Northwest opted for subprime mortgages and because home values have continued to steadily appreciate.

Washington has seen one in 1,072 homes in foreclosure, and Oregon and Idaho have one in 1,275 and 893, respectively.

FACT: Subprime borrowers get a reality check.

Then there are the problems that are affecting subprime borrowers: those who are considered at a higher mortgage risk due to a past history of bankruptcy, delinquent loan payments and low credit scores. During the last number of years, some home buyers in the U.S. qualified only for these riskier subprime loans to fund the American dream.

But, again, unlike the media’s portrayal, the reality is that subprime loans comprise only 9% of total loans nationwide and of those 9%, less than 11% of those subprime ARM and fixed borrowers have defaulted on their loans. The Pacific Northwest stands apart as its own micro-market, with more home buyers qualifying for prime loans. Homeowners in the Northwest have been able to successfully sell their homes for a profit or refinance to pay off their subprime loans.

Real Estate Cycles and Economics

FACT: Over the long-term, real estate has always appreciated in value.

The continuing appreciation of homes in the Northwest is not an anomaly. Real estate has always been one of the most solid investments in the U.S, because, after all, people always need a place to live. Real estate has less volatility than the stock market and over the historical long-term it remains a guaranteed return-on-investment. Take this example from NAR’s Yun: If a buyer were to put down $10,000 for a down payment on a “typically priced home in the United States at a typical appreciation rate of 5%…(he/she) would see a return of $110,300 after 10 years. The same $10,000 invested in the stock market appreciating 10% annually will result in $23,600.”

As history has shown, for those who choose to keep their home for six to 10 years (and not flip for a quick profit) real estate investments do pay off, and pay off well. In fact, what we’re seeing now is a repeat of a housing cycle we’ve seen before. In the early 1980s and 1990s, some areas of the country experienced the worst downturn they had seen in the last 25 years, which were caused by localized economic weaknesses and loss of jobs while on a nationwide average, others, including the Pacific Northwest were barely affected at all. But even those areas that were hit the hardest in the past experienced a historic uptick in prices, and then a continuing long-term appreciation.

Excerpted from a January 2008 Report from John L. Scott Real Estate

Posted by AJ JOHNSON on March 19th, 2008 1:34 PMPost a Comment (0)

Retirees - Now is the time to buy (Vacation Homes/2nd)

March 16th, 2008 2:15 PM

Retiree Home Buyers

Simplifying is the key

Tony and Mary Dellinger came to metropolitan Phoenix to visit family five years ago.
They liked the area so much they decided to buy a second home here when they retired.

Last November, the Dellingers left Pennsylvania and moved into their new $250,000 house in the retirement community of Sun City Festival, near the West Valley's White Tank Mountains.

Retirees continue to boost the Valley's growth and housing market. Some housing analysts think the area's retirement communities are holding their values better than other neighborhoods because homeowners buy for the lifestyle and not necessarily the investment.

“We thought about Florida but liked Arizona better because there's more to see and do,” Mary said.

The couple calls their two-bedroom, 1,800-square-foot home in Sun City their “easy house” because their other home is a Pennsylvania farmhouse built in 1815.

“Our easy house has granite countertops, a garage-door opener and a laundry room on the first floor instead of the basement,” Mary said.

She said their new neighborhood is full of people from all over, including London and Holland. The Dellingers know prices in their development have dropped since they bought, but they're not concerned.

“It would be difficult to sell for a profit now,” Mary said. “But we plan on keeping this house for awhile.”

Tips for retiree buyers

-- If your home is worth a lot, consider downsizing. You can put that extra money toward living expenses and keep from dipping into other accounts. Consult an accountant to make sure you aren't penalized for any real-estate windfall.

-- Consider obtaining a reverse mortgage on a house you have owned for a while to finance a second home. A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live in your home.

-- If you choose a retirement community, check out the construction schedule of amenities like clubhouses and retail in a new retirement community so you don't move in and wait years for a grocery store.

-- Stay at the community if you can before buying to see if you like the lifestyle and residents. Some retirement developments have guest lodging for potential buyers.

Topics: BUSINESS BLOGS

posted by Retiredbuyers on Thursday, March 13, 2008 at 11:59 AM
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Posted by AJ JOHNSON on March 16th, 2008 2:15 PMPost a Comment (0)

Arizona First Time Home Buyers- FHA Repost

March 16th, 2008 2:12 PM

First-time buyers benefit from class, housing counselor

Catherine Reagor
The Arizona Republic
Mar. 16, 2008 12:00 AM

Jose and Liliana Garcia are about to buy their first home.

The couple looked at new homes in south Phoenix, which is close to their jobs, but the houses were too pricey. Instead, they are buying a new home in the town of Maricopa, an affordable southeast Valley suburb.

Their payments are going to be a couple of hundred dollars lower a month than they expected, and it's not only because their builder is dropping prices.


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The Garcias, who are in their early 30s, were at a home-buying class earlier this year when a housing counselor looked at their loan documents. The couple was about to get an 80/20 mortgage. The 20 on such a mortgage is a home equity loan that typically comes with an adjustable interest rate.

Brenda Lopez, a counselor with the Valley non-profit Housing Our Communities, helped the Garcias get another mortgage that didn't require any more money down. The new loan also came with a lower interest rate, less risk and grant money for first-time home buyers.

"At first I didn't want to spend eight hours in a class about home buying," said Liliana, a health-care worker with the Laveen School District. "Now I am telling my friends and relatives to take the class before buying a house."

The Garcias have been living with family to save money for their new home, on which they will close this month.

Tips for first-time buyers

Check out housing help groups. There are many programs out there that offer down-payment assistance as well as help finding an affordable home and cleaning up bad credit.

Talk to lenders about FHA, or Federal Housing Administration, loans. These are government-backed loans for first-time buyers that are easier to get and require smaller down payments.

Figure out how much you can afford. The rule is not to put more than 30 percent of your gross income toward a mortgage payment or rent.

Don't forget your monthly mortgage payment will also include taxes, insurance and potentially homeowners-association fees.

Posted by AJ JOHNSON on March 16th, 2008 2:12 PMPost a Comment (0)

FHA loan limit in Phoenix climbs to $346,260

March 10th, 2008 7:53 PM

FHA loan limit in Phoenix climbs to $346,260

Metropolitan Phoenix's housing market received some good news last week. The new FHA loan limit for Maricopa is out. It's now $346,250, about $80,000 higher than before.

This means first-time borrowers can now use government-backed Federal Housing Administration loans to buy homes priced at nearly $350,000. And the higher limit will also help some struggling homeowners refinance adjustable-rate mortgages into fixed-rate FHA loans.

“A lot of people have been waiting for this,” said Amy Swaney, a mortgage banker with Scottsdale-based Premier Financial. “It will help many first-time buyers because only a 3 percent down payment is required, and it will help homeowners struggling to refinance because their values are down.”

The new limit is based on 125 percent of the metro Phoenix's median home price, and that median home price is what was released by HUD last week. Allowing FHA to raise its loan limits was approved as part of Washington's economic stimulus plan last month.

Other areas with higher median home prices and now higher FHA loan limits could see mortgage giants Fannie Mae and Freddie Mac raise their nonconforming loan limit above the current $417,000 threshold. But since 125 percent of metro Phoenix's median price is still below $417,000, it's not likely to happen here.

The Valley's old limit was $263,150, and the higher lending limit will expire at the end of the year and revert back to that, unless real estate groups can lobby to have it made permanent.

To check out what FHA loan limits are in other areas, go to https://entp.hud.gov/idapp/

html/hicostlook.cfm.

Posted by AJ JOHNSON on March 10th, 2008 7:53 PMPost a Comment (0)