Real Estate Information

Buying a home is perhaps the most arduous, expensive and, ultimately, valuable acquisition you'll ever complete.

Just one mistake could mean disaster -- perhaps the worst mistake you'll ever make.

Here are 9 Mistakes You Need To Avoid:

Going Solo:  Buying a house is a complex transaction. It should be a team effort. You'll need a real estate agent, lender, inspector, insurer, perhaps a lawyer and other team members to help you through each step of the way. Team build before you start the search.

Love at First Sight:  Your home should fit your real needs right now. Buy a home that fits your budget and your lifestyle. Be sure the home is in a community and neighborhood you desire. Visit neighborhoods several times before you buy to check out schools, noise and traffic patterns.

Loanless Shopping:  Being pre-qualified gives you a general idea of how much you can afford to borrow. It's better to be pre-approved for a given loan. Sellers will take you more seriously. You'll stay on budget.

Overbuying:  Analyze all your monthly costs including debts, food, transportation, entertainment, and savings. Your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Don't forget to budget closing costs (often two to five percent of the home's purchase price), plus moving, redecorating and maintenance. Look ahead and allow for increases in ongoing expenses such as utilities and taxes.

Misplaced Trust: You are engaged in what's likely your most valuable acquisition ever. It's a business transaction. Ask family, friends, co-workers, professionals and others you trust for referrals, but don't take their word for it. Vet your team members.

Accepting Oral Agreements:  Get it in writing. The rate lock, the home inspection, disclosures, the contract. Always. Should a dispute arise, you've got the details documented.

Skipping the Fine Print:  Understand what's really in any document before picking up a pen. Get documents in advance, take time to read them and ask questions. Get copies of your mortgage and closing papers a few days ahead of closing.

Forgetting or Betting on Resale:  Avoid buying a home that costs 50 percent more than neighboring homes. Reconsider buying the most expensive home on the block. Neighbors' lower home values will weaken yours. Buy intending to flip your investment only to have the market fail means when it's time to sell your price may not cover your costs.

Making an Unconditional Offer:  Protect yourself with contingencies.

IT'S THE END OF THE FEDERAL RESERVE MORTGAGE BACKED SECURITIES 

On Thursday, April first 2010, the Federal Reserve started to pull the plug on its purchases of mortgage-backed securities. Since December 2008, the Fed has kept the mortgage-backed securities market going by buying $1.25 trillion in securities issued by Fannie Mae, Freddie Mac and Ginnie Mae that no one else wanted. The massive program has helped keep home loan interest rates low during the financial crisis.

The securities — comprised of residential mortgages bundled to diversify risk — have long fueled the housing market. But after the sub-prime meltdown, investors viewed mortgage securities as too risky.

Starting now, private investors have to step back up to the plate to buy up the $1.5 trillion in mortgage-backed securities likely to be produced this year. Will they? Or will the government withdrawal leave a vacuum in the housing market that could push interest rates higher, as some fear?

A lot of analysts think rates will be rising but who knows what will happen.  So, if you are planning on purchasing a home this year, it may be wise to jump into the market soon than later!

When home prices, mortgage applications to buy homes and consumer confidence are ALL pointing upward, even the perpetual doomsayers on Wall Street have to admit: Housing in the U.S. looks like it's on a very positive track.

And that's where we are right now. The latest monthly Standard & Poor's/Case-Shiller home price index came in higher last week. Prices were up in 12 of the 20 major markets that Case Shiller monitors.

On a year-over-year basis, prices gained nine percent in San Francisco, six percent in San Diego, about four percent in metropolitan Dallas, Washington DC and Los Angeles, 2.6 percent in Denver and one and a half percent in Boston.

Even Cleveland, which has struggled with unemployment and distressed home sales, saw prices gain, though by only two tenths of a percent.

Consumer confidence also improved significantly in the last month, as measured by the Conference Board. That's hugely important for overall economic growth and for home sales in the months ahead.

The Conference Board's index, which is based on interviews with a representative sample of 5,000 households, jumped by seven points in March from February - pushed by cautious optimism that the jobs situation may be slowly turning around.

The Commerce Department released parallel findings last week - that consumers are finally beginning to loosen up on spending, and are making purchases they deferred during the scary months of 2009.

Personal consumption in February increased at a three percent annualized rate. That was a bit of a surprise since the Commerce Dept. also found that household incomes showed little or no corresponding increase -- consumers were simply more willing to spend more ... and save a little less.

If that rate of expansion in consumption continues, not only will it begin to whittle away at the unemployment rate, but also stimulate the entire US economy, since consumer spending accounts for 70 percent of the national gross domestic product or GDP.

The housing and mortgage sectors could also begin to show some of that confidence and willingness to spend.

Home sales are expected spike upwards in the coming several months as the two federal housing tax credits head for expiration.

And in fact, the Mortgage Bankers Association reported last week that applications for new loans to buy houses - a bellwether indicator - jumped by seven percent and now stand at their highest level in six months.

Wow...this much snow on April 1st has got to be a cruel April Fool's Day prank!

I hope it melts soon and that everyone has a great Easter Weekend!

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The following chart highlights some interesting trends in the Salt Lake Area.  It includes information from Dec. 09 through Feb. 10.

In a tough market, we need to appreciate even the smallest of improvements.  I'd like to share a few with you today. 

On the home pricing front, evidence continues to mount that in most parts of the country, home values have either bottomed out or have turned positive.

Last week's Zillow home value report found values essentially flat on a national average basis. They were down by just three tenths of a percent, but up in some major markets.

Two other statistical hints that conditions are improving: The difference between listed prices and selling prices of homes nationwide is now smaller than it's been in a year, according to Trulia.com.

And Realty Trac found that foreclosures, which are clearly still a massive drag on the market -- dropped by two percent last month -- the second straight month of decline!

Hopefully we're going to continue in this direction!

I thought I would share this story with you.  Unfortunately, their are quite a few people in this situation right now.

Six years ago, Eric and Jennifer were living the Great American Dream:  Two beautiful children, great jobs, building a gorgeous custom home.  They had a big mortgage, but they made good salaries, and when their third child was born, Jennifer decided to stay home with the kids and not to return to work.  When they needed a new car to fit their new family, they took out second mortgage to do it.  Life was good!

Today Eric and Jennifer’s home is what we call “upside down”:  They owe more on their home than it’s worth.  They were economizing, and Jennifer was job hunting, but then Eric’s company began laying people off and Eric had to take a 20 percent pay cut.  They were late on one mortgage payment and in serious danger of missing the next one.  By helping them through a successful short sale, we spared them the pain of foreclosure and gave the family the chance to make a new start.                                            

It's sad that many people who lose their homes never talked to a real estate professional.  I would hate for someone to lose their home if it could be saved OR sold short.

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