Higher FHA limits should help

Thanks to the Economic Stimulus Act of 2008 that President Bush signed into law several weeks ago, the Federal Housing Administration (FHA) has temporarily increased its loan limits and can insure larger mortgages at more affordable rates in high cost areas of the country, HUD announced.
The new temporary loan limits, which range from $271,050 to $729,750, will give 240,000 more homeowners and buyers a safer, more affordable mortgage alternative for purchases and refinancing. The maximum amount of $729,750 will apply only to high-cost areas, such as New York, Los Angeles, San Francisco and Washington, D.C.

HUD also calculated new limits for Fannie Mae and Freddie Mac loans. FHA Commissioner/Assistant Secretary for Housing Brian Montgomery says, “Many families all over the U.S. will benefit from this access to credit, and increasing these loan limits will inject much-needed liquidity into the housing market.”

Curb appeal! The #1 item for quick home sales

A survey of almost 500 real estate agents commissioned by JELD-WEN Windows & Doors indicates the increasing importance of curb appeal in selling a home.

According to the Real Estate Agent Community Trends survey, 82 percent of practitioners polled said buyers unimpressed with a home's exterior will not want to look inside. The results also found that 90 percent of respondents said a sale depends on first impressions of the front entry, while 91 percent said the home's exterior is just as important as what is inside.

Additionally, 75 percent of those surveyed said natural light is important; while the appearance of windows and doors and the presence of energy-efficient products were mentioned by 71 percent and 63 percent, respectively. Universal design features are gaining in popularity as well, according to 65 percent of agents.

Source: Building Online (03/18/08)

Buy now! Get ahead of the crowd

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said.

“Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year

What do Buyers want most from a resale?

This is a continuation of the preceding Remodeling Post.

When considering remodeling it's always nice to know which items will yield the most
"bang- for- your-buck", when you eventually sell your home. Why, for example would you want to convert a garage to extra living space, if that expense isn't easily recovered.

We all know remodeling costs can exceed tens of thousands, so its wise to evaluate each item against "need" and "resale value" as well. Of course, if you plan to stay in your present home indefinitely, then "need and budget" reign supreme; but remember the average time for Americans in a home is about 5-7 years.

The list below gives an estimate (by percentage) of typical Buyer's survey when considering a resale home and what really matters. According to Remodeling magazine’s 20Th annual Cost vs. Value Report, the top five mid range home improvements that bring the greatest returns are:

1. A deck addition, 85.4% of the buyers surveyed said this would be their #1 priority
2. Siding replacement, 83.2 %,
3. Minor kitchen remodel, 83%, new appliances, fixtures, etc.
4. Wood window replacement, 81.2%
5. Vinyl window replacement, 79.3%

Should I remodel or sell and buy up?

There are many situations where a family needs a larger home, more bedrooms/baths, etc. The big question in these difficult economic times is whether to add on to your existing home or sell and buy a larger home?

The list below is meant to provide a short method for examining needs in dollars and cents against other factors.

1. First, how would the improvements affect your home's neighborhood ranking? Would the
improvements cause your home to be best in your neighborhood; if yes than you
might not be able to regain all your improvement costs in any future sale; if no than an
addition or remodel might be fine and actually raise your home's value as well. By the way
bathroom and kitchen improvements seem to add more to the home value than
other rooms. Basement finishing ,on the other hand, may not add that much to value.

2. If you plan to stay in your home for the long term than improvements may be the best
answer.

3. If you are wishing to upscale to a much nicer home you may consider selling and buying
since the higher priced upscale homes are plentiful and at bargain prices. Also, medium
price home prices have relaxed the smallest and are in general easier to sell.

4. Other factors- If school locations, family activities, hobbies-golf water, biking or other
family dictate relocation rather than improve than now may be the time to talk to a
real estate professional to see how they can help.

How is Delaware doing in home sales?

Much has been written about how poorly homes sales nationwide were in 2007, and I'm sure the data is correct in what they said. When you consider that normal housing appreciation rates have been 3-5% for many years, the 2003-2006 period with rates of 10-20% were abnormal and clearly not sustainable, else ordinary families wouldn't be able to afford even a starter home shortly.

Central Delaware housing exhibited some decline in units sold and price in 2007 as most areas of the Country, but is clearly alive and well, with sold units equal to that seen in 2004. So far this year I am encouraged at the number of inquiries and pending transactions (buying and selling).

Clearly, real estate continues to be a good investment especially with the many bargains available, Also, if you stop to think about it, what other investment allows you to live in it and enjoy its benefits while it continually appreciates in value.

How does Delaware rank in Foreclosures

Delaware provides many positive reasons for its residents to crow; not the least are lower taxes, lower cost-of-living and housing choices that speaks volumes. When you compare its real estate health against the Country it again shines. Maybe that's why so many are relocating here from the high tax states of the Mid-Atlantic and Northeast.

In 2007 Delaware recoded some 1441 foreclosures state-wide ,and is ranked 14th best(lowest) in the country as far as states with the lowest overall foreclosure rates. When you apply the fact that 3 out of 4 homes that are initially placed in foreclosure, don't actually complete the process, due to owner recovery, sale, etc. we can infer the numbers are actually even better.

In case you're wondering why, there are many possible reasons, but just look at unemployment; Delaware's unemployment rate (3.6% in December 2007) is significantly lower than the nation (5% for the same period).

More to come.....

This is the first of several posts to help put explore Delaware Real Estate in full perspective and why there is no better time to buy here

The Feds cut rates but mortgages don't follow; why?

What can the Federal Reserve really do to effect the current mortgage rate?

Not that much!

We get excited when we hear something about the Fed lowering interest rates. It seems only logical that mortgage rates are immediately going lower too. A mortgage interest rate is not the same thing as the Fed rate.

Other names for the Fed rate are short term rates, prime, Fed funds rate. This interest rate is the one tied to your car loans, credit cards, and home equity lines of credit. Even though a home equity line of credit is considered a mortgage, it is amortized like a credit card. That is the only mortgage product affected by the Fed funds rate or Prime.

Mortgage rates are indirectly affected by the Fed moving rates. When the Fed makes a rate move it is felt by the investors. Some of these folks invest in mortgage backed securities. It is the mortgage backed securities that move mortgage rates up or down.

The Fed makes rate decisions on what is happening in the market. The unemployment number, consumer confidence, consumer price index, etc. are just some of the economic indicators that are used to decide if a rate change is needed.

These same indicators are what affect the mortgage backed securities which in turn affect mortgage rates. Every day the market is examined using the economic indicators and a rate is established for the mortgage backed securities.

This happens whether the Fed is active or not. A good indicator of where mortgage rates are going is by watching the 10 year bond. When there is bad economic news then that often means good news for the mortgage market.

Investors get nervous when a bad economic indicator shows up, and they take their money out of the stock market where they feel their money may be at risk and put it into a safer place like the 10 year bond. When money floods into the 10 year bond it drives the price up but the yield down. When the yield is down then current mortgage rates go down.

When there are good indicators and news the investors take money out of the 10 year bond and put it back into the stock market. They can make a better rate of return in the stock market then in the 10 year bond. When they feel safe that the economy is rebounding then the stock market is the place to be. The 10 year bond price goes down and the yield goes up so mortgage rates go up.

by Rob K. Blake author of the BUILD System