REMAX 440/Central Blog

MBA Weekly Survey Shows Increase in Mortgage Applications, Driven by Refinances

May 20, 2011 10:27 am

RISMEDIA, May 20, 2011-Mortgage applications increased 4.0% from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending April 29, 2011.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.0% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4.1% compared with the previous week. The Refinance Index increased 6.0% from the previous week. The seasonally adjusted Purchase Index increased 0.3% from one week earlier. The unadjusted Purchase Index increased 1.1% compared with the previous week and was 36.9% lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is down 0.9%. The four week moving average is down 2.4% for the seasonally adjusted Purchase Index, while this average remained unchanged for the Refinance Index.

The refinance share of mortgage activity increased to 62.7% of total applications from 61.6% the previous week. This is the highest refinance share of the month. The adjustable-rate mortgage (ARM) share of activity increased to 6.7% from 6.5% of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76% from 4.80%, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010. The effective rate also decreased from the previous week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.96% from 4.03%, with points decreasing to 0.82 from 0.96 (including the origination fee) for 80% LTV loans. This is the lowest 15-year fixed contract rate since November 26, 2010. The effective rate also decreased from the previous week.

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7 Burglary Prevention Tips for Your Summer Vacation

May 20, 2011 10:27 am

RISMEDIA, May 20, 2011--Warm weather is finally here and you might be planning your summer vacation. Here are a few tips for making sure your possessions are still there when you get back:

1) Do not post about your vacation online until after you get back. If that takes more discipline than you can muster, at the very least keep your location status off any public social networking pages. Many burglars use these sites to identify "safe" targets.

2) Make your home look lived in. A light on a timer is a great first step. You can even buy a small device called "FakeTV" that simulates the light output of a television, making it look like you are home watching TV each evening.

3) Don't leave obvious signs that the house is unoccupied. Stop the mail and paper, or have a neighbor take it in. Arrange for lawn care as needed, and don't leave notes on the door.

4) Make your home hard to get into. You need good locks. Your hidden outdoor key is probably not as cleverly hidden as you think it is. Get to know your neighbors, and leave the key with them. Let them know you will be gone, and have them keep an eye out during your absence. If you have an alarm system, by all means use it. Amazingly, many people forget to set the alarm. Conversely, do not think that an alarm system makes you invulnerable. Burglars can still cause you a great deal of misery in a smash-and-grab robbery, leaving before the police can respond. Park a car in the driveway, but be sure to take out the garage door opener first.

5) Remove obvious temptations. Take a walk around your property and make sure you cannot see any easily pawned valuables through uncovered windows. Are there any ladders left out, or particularly easy or well-concealed access points?

6) Prepare for the worst. If your computer were stolen, what might the consequences be? For most of us, this would be dire indeed. Make sure to back up and password protect. Make a quick run-through around the house with a video recorder, listing off the valuables. This could save a lot of hassle with the insurance company if you need to file a claim.

7) Strike the right balance. Only you can make the trade-off between security measures and the burdens they impose. You may wish to place irreplaceable items in a secure location, such as a fireproof safe. This can include expensive jewelry, family photos, and financial records. Make sure your insurance policy is up-to-date. Also, label your possessions with your name. An engraver is best, but a Sharpie is a lot better than nothing.

The good news is that only two out of a hundred homes will be burglarized in any given year. The bad news is that for those two homes that are burglarized, the effects of the intrusion are often devastating. The average burglary costs $1,750, and an invaluable amount of peace of mind. Take a few simple steps to improve your home's security and ensure that your getaway is that much more relaxing.


The Consequences of Walking Away

May 20, 2011 10:27 am

RISMEDIA, May 20, 2011--Have you had a conversation with someone in the last 30 days about the consequences of walking away from your mortgage? If the answer is yes, you are not alone. With an estimated 11 million people underwater on their mortgage, (owing more on their mortgage than their home is worth), even the most credit-worthy consumers are considering walking away from their mortgage.

Walking away from a mortgage, or what's known as a strategic default, usually results in either a short sale or foreclosure and many people in this position are asking one simple question: What are the consequences?

Generally speaking, if you are considering walking away from a mortgage the major consequences will include:

Impaired Credit

Most people are aware that walking away from a mortgage will mean their credit score will take a hit. What most people may not be aware of is between short selling and foreclosure, there is very little difference in how much your credit score is impacted. The main difference between a short sale and foreclosure is how soon you can qualify to buy a home again after the event, not how many points your credit score went down.

In addition to your credit score taking damage points, it is also common for credit card companies to cancel credit cards or lower your credit limit as a result of missing mortgage payments. It is also common that it will become more difficult to obtain financing for larger ticket items such as autos or furniture - or any other type of revolving account after walking away from a mortgage.

Tax Consequences

If you are considering walking away from a mortgage on your primary residence, there is a chance that you may have some tax liability. If you are considering walking away from a mortgage on a second home or investment property, there can be a significant tax liability and you should consult your tax accountant.

Moving Costs

One of the commonly under-estimated consequences of walking away from a mortgage is the expense and process of moving. Some of the common concerns related to moving include:

  • Moving into a rental - perhaps after decades of being a homeowner.
  • Possibly explaining to the landlord any credit report concerns as a result of missed mortgage payments.
  • Paying for moving expenses. Utilities, deposits, moving trucks and other expenses can add up fast.
  • Moving family members school, work or community activities they have gotten used to.

Professional Implications

Depending on what you do for a living, you may have professional consequences as a result of walking away from a mortgage. The number of professions where your credit profile matters has grown over the last decade and if you are in a situation where your credit profile matters, you should know what the professional implications are before you walk. After all, you don't want to lose your house and your job at the same time.

Although walking away from a mortgage is never recommended, when making the decision, the consequences are crucial to consider. Not being fully informed of what the consequences are is the biggest mistake homeowners can make.

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Tips for Throwing A Successful Housewarming Party

May 19, 2011 10:27 am

RISMEDIA, May 19, 2011--After you move into a new home and your family is settled, a housewarming party is the perfect way to introduce your home to your friends, extended family and new neighbors. In order to ensure a successful soiree, proper planning must be taken into account. Here are a few tips to help you through the process:

Decide on a budget. The very first step is to decide on a budget. Depending on the space, you may need to limit your guest list. If money is a bit of an issue, stick to close friends only and consider having a pot luck. Once a budget has been determined, you can continue making decisions from there.

What kind of party will it be? You can mold your party into any sort you'd like. Choose a theme or have a costume party, if you'd like, but be sure to tell your guests well in advance. In addition, plan some activities or games. If you are blending many different groups together, try a nice icebreaking game that will assist your guests in getting to know each other. If themes and games don't suit your taste, create the perfect playlist to set the perfect tone for your party. Music is a must.

Make your menu decisions early. Decide on the menu early so you can give yourself plenty of time to go shopping for food. Cook or prepare anything you can in advance to give yourself some breathing room on the day of the party. Have some vegetarian options available, and be sure to choose items that adhere to your budget.

Be a good host and introduce everyone early on. Be sure to introduce your guests to each other upon their arrival. If you are learning names for the first time yourself, introducing that person to someone else is a great way to make sure you remember the name. Walk your guests around the party when they arrive and be sure to offer and refill the guests' beverages.

As always, display gratitude for your guests' time. Be sure to send thank you notes, when appropriate, to thank your guests for their time and any gift they may have given you. Share any photos or videos you may have captured at the party or give out small favors the night of. If one of your guests has an event of their own in the near future, make a point to attend. A little bit of gratitude goes a long way.

It's not hard to make your housewarming event a great success, but planning is crucial toward achieving this goal. Start your planning as early as possible and enjoy!

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Housing and Economic Forecast Points to Rising Activity

May 19, 2011 10:27 am

RISMEDIA, May 19, 2011-- Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum at the REALTORS Midyear Legislative Meetings & Trade Expo.

Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. "If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4%, but the remainder of the year looks better," Yun says. "We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million that's a sustainable level given the size of our population."

Mortgage interest rates should rise gradually to 5.5% by the end of the year and average 6.0% in 2012 still relatively affordable by historic standards.

"A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers," Yun says. "The problem isn't with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years."

Yun says that if credit requirements returned to normal, safe standards, home sales would be 15 to 20% higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.

Yun projects the Gross Domestic Product to grow 2.5% this year and 2.7% in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8% by the end of 2011 and average 8.6% next year, returning to a normal level of 6% around 2015.

Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. "A recovery in new homes will be slow because of the extra price discount in the existing home market," Yun notes. In March, the typical new single-family home cost $53,300 more than an existing home.

Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9% this year. "We'll be closely watching the impact of fuel costs on consumer spending and inflation that would slow economic growth, job creation and home sales," Yun says.

Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. "Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters," Yun says. "Rising rents and excellent housing affordability conditions will encourage potential buyers who've been on the sidelines."

Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.

Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. "Economic activity will accelerate this year there will be no double dip in the economy," he says. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4% by the end of the year.

Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25% by the end of the year, and for home sales to rise 5%. "National home price indices are close to a bottom and prices are likely to bottom sometime this year," he says.

Refinancing activity in 2011 will be only half of what it was last year. "As a result, banks may become more willing to lend to home buyers," Nothaft says.

HUD Secretary Donovan Announces $216 Million in Homeless Grants

May 19, 2011 10:27 am

RISMEDIA, May 19, 2011-Housing and Urban Development (HUD) Secretary Shaun Donovan awarded more than $216 million to nearly 700 new homeless programs across the country. The grants announced are $26 million more than last year's grants and, combined with renewal funding announced earlier this year, represents the most homelessness assistance ever awarded by HUD. HUD is also continuing to confront rural homelessness by targeting a record $16.4 million to 87 never-before-funded programs in less populated areas of the country.

In January, HUD awarded more than $1.4 billion in Continuum of Care grants to renew funding to 7,000 existing local homeless programs. The funding announced today will invest in local projects that have never before received HUD homeless funds, providing critically needed housing and support services to an estimated 21,000 homeless individuals and families. Though homelessness is largely an urban phenomenon, HUD is reserving record funding to meet the unique challenges faced by homeless individuals and families living in rural areas.

"Today, we build on the goal to prevent and end homelessness in America," says Donovan. "This funding will make a significant impact in the lives of thousands of people and provide resources to bring them towards the road of independence."

HUD's Continuum of Care grants fund a wide range of transitional and permanent housing programs as well as supportive services such as job training, case management, mental health counseling, substance abuse treatment and child care. Street outreach and assessment programs to transitional and permanent housing for homeless persons and families are also funded through these grants. Continuum of Care programs include:

  • Supportive Housing Program (SHP) offers housing and supportive services to allow homeless persons to live as independently as possible.
  • Shelter Plus Care (S+C) provides housing and supportive services on a long-term basis for homeless persons with disabilities, (primarily those with serious mental illness, chronic problems with alcohol and/or drugs, and acquired immunodeficiency syndrome (AIDS or related diseases) and their families who were living in places not intended for human habitation (e.g., streets) or in emergency shelters.
  • Single-Room Occupancy Program (SRO) provides rental assistance for homeless persons in one-person housing units that contain small kitchens, bathrooms, or both.

Last year, 19 federal agencies announced a plan to end all homelessness through Opening Doors-an unprecedented federal strategy to end veteran and chronic homelessness by 2015-and to end homelessness among children, families and youth by 2020. In addition to the Continuum of Care grant program, HUD's new Homelessness Prevention and Rapid Re-housing (HPRP) Program made possible through the American Recovery and Reinvestment Act of 2009 is making a major contribution to the Opening Doors strategy. To date, HPRP has allocated $1.5 billion to prevent more than 875,000 people from falling into homelessness or to rapidly re-house them if they do.

HUD's homelessness grants are reducing long-term or chronic homelessness in America. Based on the Department's latest Annual Homeless Assessment Report (AHAR), chronic homelessness has declined by 30% since 2006. This decline is directly attributed to HUD's homeless grants helping to create significantly more permanent housing for those who might otherwise be living on the streets. It was also reported in the AHAR that the number of homeless families increased for the second consecutive year, almost certainly due to the ongoing effects of the recession.

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Update Interiors with Wisdom Rather Than Big Budgets

May 18, 2011 10:27 am

RISMEDIA, May 18, 2011--For homes in dire need of a brightened d cor, a large budget isn't necessary to give the property a fresh look.

"As real estate values have fallen, many people are concerned with how much money to put into their homes. Yet, discerning clients recognize that a dated interior really lowers the value of their home," says Donna Hoffman, a Philadelphia-based interior designer.

In fact, homeowners can update their interiors without starting from scratch and without incurring sky-high expenses. To reclaim enjoyment of your home, Hoffman offers five fool proof and fiscally prudent design secrets that are the budget-savvy penicillin for outdated interiors:

  • Deconstruct the color palette. Don't throw out an existing color palette; deconstruct it. To do this, create a new color strategy that flips the existing main room color into the secondary position of "accent color." For example, if it's a blue and mauve interior that's at issue, turn the blue into the new accent color.

  • Neutralize the room. Now that you've isolated your new accent color, remove all strong colors in the room except for your one accent. "This includes removing area rugs, throw pillows, accessories, dated wallpapers-anything that sings too loudly in the old color palette," Hoffman says. Keep only the 'new' accent color, letting everything else go neutral. By project's end, you'll be left with an 'accent' color that gorgeously pops amidst a new palette of neutrals. Paint the walls in a rich neutral like latte or one of the new chameleon neutrals of 2011 for a crisp current look.

  • Elicit the power of throw pillows. "Custom is ideal for variety and impact, but if it's beyond your budget, look for little jewels at retail," Hoffman explains. "Sprinkle mostly neutral accent pillows in varied shapes and sizes through the room to move classic color, create interest and reinvigorate older upholstery."

  • Evaluate draperies. If draperies boast the old color scheme, look tired or overly sagged and dated, take them down. "Go bare if you must," Hoffman cautions, "because nothing in a room is better than something bad." If you can afford to do custom in the new color strategy, this is the place to invest. "Custom draperies give tremendous aesthetic return on the dollar," Hoffman explains. "But if custom is out, then to go for the best quality you can afford at retail, not the cheapest."

  • Examine the sofa. Pillows can tone down a loud sofa, but they can't hide a worn eyesore or a thoroughly outdated silhouette. Opt to update a dated sofa, even if at a budget retailer. Select a solid in a classic style, like a Track Arm or English Arm. "These have the staying power of that little black dress. Keep it simple and dress it with accessories. In our case we're doing pillows instead of pearls."

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Should You Start Planning Your Kids' Retirement? How to Secure Your Children's Retirement Fund Today

May 18, 2011 10:27 am

RISMEDIA, May 18, 2011--When our generation was growing up, we were taught about Social Security, and many of us had grandparents who were reasonably comfortable with a combination of their investment income and their government checks. Today, that may not be the case.

Over the last few years, we have seen the market waver, and Social Security is on its way toward doing the same. If we're scrambling to salvage our retirement income, imagine what it will be like for your kids.

That's why Rick Rodgers, a retirement counselor and author of the new book The New Three-Legged Stool: A Tax Efficient Approach To Retirement Planning believes that parents can help their kids safeguard their retirement by starting now.

"When we were just starting out in life, our parents told us to start saving money right out of the gate, but we didn't listen," he says. "Instead, we ran up our credit card debt, spent more than we earned and bought more house than we could afford. But our kids can and should learn from our mistakes and helping them to start saving now could give them a nest egg of millions instead of thousands."

Rodgers' advice includes:

  • Start at 16 Just $5,000 contributed to a Roth IRA each year for five years starting at age 16 could be worth more than a million by the time they reach age 65. In a Roth IRA all that growth would be tax-free when withdrawn.

  • 10% Rule Everyone should save a minimum of 10% of their take-home pay.

  • Shelter Early - Ideally, you should save in a Roth IRA account at the beginning of your career. When you reach your peak earnings (usually around age 40), switch to a tax-deferred account like a 401(k).

  • Fun or Fund? Take half of what you have been spending on gifts (toys, games, etc.) and invest it in a mutual fund for your child.

  • Birthday Booster - Encourage friends and relatives to contribute to the mutual fund account you've started instead of buying gifts for birthdays and holidays.

  • Every Little Bit Helps Contributing small amounts on a regular basis is a better strategy than waiting to accumulate a larger sum. Get in the habit of saving something regularly.

  • Use the Refund Let the government help. Currently the child tax credit is $1,000 per child until they reach age 17. Discipline yourself to save the credit when it is returned to you as a refund.

"It doesn't take a lot to give your kids long-term security," Rodgers says. "The magic of compounded interest can do more of the heavy lifting as long as you start early and contribute often."

Updated Framework for Delinquent Mortgages to Include Servicer Incentives and Penalties

May 18, 2011 10:27 am

RISMEDIA, May 18, 2011-Federal Housing Finance Agency Acting Director Edward J. DeMarco has directed Fannie Mae and Freddie Mac (the Enterprises) to align their guidelines for servicing delinquent mortgages they own or guarantee. The updated framework will establish uniform servicing requirements as well as monetary incentives for servicers that perform well and penalties for those that do not.

"FHFA's directive to align Enterprise policies for servicing delinquent mortgages should result in earlier servicer engagement to identify the best solution available for homeowners, given their individual circumstances," says DeMarco.

The updated guidelines also address the so-called "dual track" by requiring servicers to contact borrowers as soon as they become delinquent and focus solely on remediating that delinquency. The foreclosure process may not commence if the borrower and servicer are engaged in a good faith effort to resolve the delinquency. The servicer must conduct a formal review of each case to ensure a borrower has been considered for foreclosure alternatives before the loan is referred for foreclosure. Even after foreclosure processing begins, financial incentives are provided to encourage servicers to continue to help borrowers pursue a foreclosure alternative.

Consistent with statements recently issued by federal and state regulators, this initiative is intended to deal with identified problems in mortgage servicing. The updated framework will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties. Fannie Mae and Freddie Mac will each issue detailed guidelines to their servicers in the second and third quarters of 2011.

"Once fully implemented by the servicing industry, the Enterprises' aligned policies should give homeowners a greater understanding of the process and faster resolution by requiring earlier contact, more frequent communication, and prompt decisions," says DeMarco. "Equally important, the newly aligned policies will minimize taxpayer losses by ensuring that Enterprise loans are serviced efficiently and fairly."

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Top 5 Home Improvement Projects Based on Average Cost and Return on Investment

May 17, 2011 10:27 am

RISMEDIA, May 17, 2011- Nearly 600 real estate professionals were polled nationwide in a study conducted by, configuring a list of the top 10 do-it-yourself home improvements that cost under $5,000 and benefit sellers most when they sell their homes.

According to the findings, the top five home improvements that real estate professionals recommend to home sellers based on average cost and return on investment (from highest to lowest ROI) are:

1. Cleaning and de-cluttering - ($290 cost / $1,990 price increase / 586% ROI)

2. Lightening and brightening - ($375 cost / $1,550 price increase / 313% ROI)

3. Home staging - ($550 cost / $2,194 price increase / 299% ROI)

4. Landscaping - ($540 cost / $1,932 price increase / 258% ROI)

5. Repairing electrical or plumbing - ($535 cost / $1,505 price increase / 181% ROI)

Cleaning and de-cluttering continues to rank as the top suggested home improvement (since the survey was originally conducted in 2000), recommended by 99% of real estate professionals, costing less than $300 and returning a value of nearly $2,000 to the home's sale price, or a 586% return on investment.

"Sellers need to prepare their homes for sale before putting them on the market," says Louis Cammarosano, general manager at HomeGain. "Homes that have initial appeal have a better shot at selling faster and closer to the asking price than homes rushed to the market with no improvements."

Rounding out the top 10 low cost, do-it-yourself home improvements include: updating electrical systems and/or plumbing, updating the kitchen and bathrooms, replacing or shampooing carpets, painting interior walls, repairing damaged floors, and painting the outside of the home.

The home improvement projects with the highest price increases to a home's resale value are updating the kitchen ($1,265 cost / $3,435 price increase), followed by painting the outside of the home ($1,467 cost / $2,222 price increase) and home staging ($550 cost / $2,194 price increase).

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