Karen Maserjian Shan writes for the Poughkeepsie Journal,

Among the options here are mortgages for 100 percent or more financing, where borrowers can purchase a house without any out-of-pocket costs; a low down payment for people with little money to put down on a house; and interest-only products where borrowers pay only the interest on their mortgage for a period of time to lower their monthly mortgage payments.

Other types of mortgages for qualifying candidates include first-time home buyer programs and government loans through the Federal Housing Administration or the Veterans Administration.

Conforming and nonconforming loans are available in fixed or adjustable rate products, Johnson said. With fixed mortgages, the loans’ interest rate and monthly mortgage payments remain constant for the term of the loan, typically 10 to 30 years. On the other hand, the interest rate of variable or adjustable rate mortgages changes at pre-set intervals, altering monthly mortgage payment amounts.

For example, the interest rate of the loan may stay fixed for the first three or five years of the mortgage and then adjust every year after that. ARM interest rates generally start out lower than fixed rates, but they’re linked to an economic index (for example, the 10-year Treasury bill), and a margin the mortgage lender adds to the index.

If the indicator has risen when a borrower’s mortgage adjustment period occurs, the interest rate will rise on the loan. Similarly, if the index has gone down at the time of his adjustment, his interest rate will drop.

ARMs usually have caps, Johnson said, that limit how much the interest rate can rise during the life of the loan.

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The Daily News reports,

FHA loans are made by banks but are 100 percent guaranteed by the federal government. That makes it possible for banks to offer loans and competitive interest rates to people with bad credit or bad debt-to-income ratios.

“It’s definitely a good thing for those folks who need FHA financing. It gives them more buying power so they’re still able to buy a home,” Sue Lantz, owner of Windermere Allen & Associates, said of the new limit.

Cowlitz County home prices have been surging over the last year. Lantz said the new FHA loan cap “is trying to keep pace with the market.”

However, Lantz said recently there has been a trend away from getting FHA loans as conventional loans become easier to obtain. “It’s still a good opportunity, and it’s good to have a choice.”

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Via KETV.com we learn that,

“A lot of first-time homebuyers think they have to have a sizable down payment when that’s not necessarily the case because the 100 percent product, and even the ones where closing costs are absorbed, are really prevalent nowadays,” Hughes said.

The process begins with a credit check, just like opening a charge card. Real estate agent Cerita Tucker-Smith said even problem credit often doesn’t stop buyers from being approved for a home loan.

“There are a lot of credit counseling agencies that can assist the first-time homebuyer with their credit, if there are some issues they need to take care of,” Tucker-Smith said.

The loan approval process is usually fast and includes dozens of options. The most popular option now is the zero-down deal.

“There are loans where you can finance 100 percent and even closing costs along with it,” Hughes said.

But Hughes admits putting some money down is often what he recommends. He also helps buyers decide what kind of mortgage is best based on several simple questions.

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From Jason Lee reporting from Burbank Weekly we learn about reverse mortgages,

Most reverse mortgage are set up so that there is no monthly payment as long as the owner or co-owner resides in the home. There are no minimum income requirements, and the money can be used for any purpose. Equity disbursed from this type of loan is tax-free. Depending on the type of plan, reverse mortgages will usually allow the owner to retain the title to the property until they have lived in a different residence for 12 months, sell the property, die, or the end of the loan term is reached.

On the flip side reverse mortgages can be more costly than a normal equity loan. Interest is added to the principal balance each month, and the amount of interest owed is compounded over time. The interest will not be tax deductible until the loan is paid off, in part or in full. Also, since the reverse mortgage uses equity in the property, this constitutes a loss of assets one could pass on to heirs.

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The Real Estate notebook writes,

Take your time. Sure, once you decide to buy a home, you’ll be anxious to move in and start a new phase of your life. However, you want to be careful not to rush the process so you choose the home that’s right for you. Make use of online listings, which offer you a constantly updated look at all the homes that fit your specifications. In addition, remember that buying a home entails more than just the house. You’ll want to take the time to research the neighborhood and nearby amenities like schools, shopping areas and parks — all which will also affect your house’s eventual resale value.

Select an agent. Just as you are a unique home buyer with your own specific needs, no two real estate agents are alike. Take the time to talk to several Realtors about your home-buying needs so you can choose one who will provide you with the most options. Start by talking to friends and family about agents they’ve used in the past and work on a referral basis. And look for agents who make use of today’s most advanced real estate tools, such as virtual tours, online listings that appear in real-time and e-mail updates.

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Rutland Herald posts article on importance of affordable housing,

Perhaps the most prominent initiative proposed is that state-owned land should be available to private developers to build affordable housing with no requirement for perpetual affordability. The secretary of commerce and community development is traveling the state asking, “Could you buy your house again at today’s values?” What he fails to admit is that giving state-owned land to for-profit developers with no mechanism to ensure permanent affordability will prevent families who buy those homes today from being able to buy their homes again at future values. Vermont’s current policy approach ensures that the homes we’re creating with public housing resources are affordable to low- and moderate-income families today and into the future.

The governor is right to recommend that “additional resources be provided to affordable housing development,” but his policies generate few new resources. With new and better tools, both our nonprofit and for-profit developers could produce more affordable units. Here are some better ways to increase our supply of affordable housing:

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Les Christie, CNNMoney.com staff writer updates us on Manhattan Real Estate values,

According to Pamela Liebman, Corcoran’s CEO, the Manhattan market began to soften in the third quarter, owing in part to rising energy costs and media reports of the real estate bubble.

Locally, a lot of new inventory came on the market. Some 5,764 residences were in the listing inventory, a huge 52 percent increase over the past year.

“Buyers got tired of paying more and more and took a breather,” said Liebman.

But things began to turn a bit in the last six weeks of the year.

Much of that improvement came courtesy of Wall Street, according to Jonathan Miller, a real-estate appraiser and consultant who compiled data for the Elliman report. He said bonuses in the financial industry set a record this year.

“Wall Street accounts for only about 6 percent of the jobs in New York but 25 percent of the economic activity,” said Miller. “Every time there’s an up-tick in bonuses, there’s an up-tick in the real estate market.”

Elliman’s CEO, Dottie Herman, said she doesn’t expect the Manhattan market to return to double-digit appreciation. That will “weed out the segment of the market that likes to flip, buy properties and sell them six months later for millions of dollars.”

Herman does predict modest price increases of five or six percent during the coming year.

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Smartmoney.com offers advice on the right time to refinance,

If you’re worried that mortgage rates are soon going to rise to the point where refinancing is no longer appropriate for you, you obviously want to lock in a rate as soon as possible.

Then, once you have a rate locked for, say, 45 days, probably the best thing to do is to ignore the direction of interest rates. After all, should rates actually drop, you’re likely to wind up flagellating yourself outside your lender’s office.

On the flip side, if you truly believe that rates are going to fall, then hold off on locking in a rate.

What you most likely don’t want to do is get involved with what’s known as a “float down” option, which is essentially an opportunity to pay for the privilege of getting a lower rate should rates fall while you’re still refinancing.

As tempting as these offers might sound, they aren’t free. In fact, they’ll often cost you another one-eighth of a percentage point on your interest rate. In that case, mortgage rates would have to fall at least one-fourth of a point to make this deal worthwhile. And over a short period of time, that’s not likely to happen.

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Broderick Perkins writes for Realty Times,

Studies show new home owners buy about $10,000 in initial improvements over the first 12 to 18 months of moving in. Such projects could grow in cost beyond $11,500 when higher interest rates are considered if the project is financed.

What’s more, the estimated 15 percent as the greatest increase in building material costs thus far, may be just the beginning.

Not long after Hurricane Katrina left hundreds of thousands of destroyed and uninhabitable homes in its path the National Association of Home Builders (NAHB) warned that the rebuilding effort would dwarf any other and be crippled by the immense demand, limited building and supply facilities, disrupted supply lines and displaced regional work force.

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Article by Ann Perry, Special to The Times,

Financial experts caution, however, that not all parents should loan to their children. They could be putting their retirement income at risk.

If the loan is sealed with a handshake rather than written documents, there’s a chance it might turn into a gift and create tensions among siblings. Loans improperly set up can cause borrowers who deduct interest payments to run afoul of the IRS. And should children default on an undocumented loan, parents may have little recourse to recover their money.

Still, those in the older generation who can afford to make a gift or a loan sometimes view it as a way of distributing some of their estate in advance so they can watch their children enjoy it.

“The point is, parents can give very-low-interest loans to their kids,” said Asheesh Advani, president of CircleLending, the Waltham, Mass., company that formalized and administers the Landres’ mortgage.

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Kris Drake writes on mortgage fraud taking place in Missouri,

This illegal practice hurts consumers because the buyers believe they are buying a $250,000 house for $200,000. However, if they can’t make the house payments and try to sell the property, they will find that the property has no equity. Ultimately, the consumer is forced to find a new place to live and go through a foreclosure or bankruptcy and the expense of moving.
Another form of sales price inflation fraud is referred to as a “flipping” scam.
Imagine a buyer purchases a $100,000 home for $100,000 cash. In a typical flipping scam, the new homeowner might work with an appraiser who agrees to artificially inflate the home value to $150,000, and then the new homeowner immediately resells the home to another buyer for $150,000. The $50,000 profit is often split between the engineer of the fraud scam, appraiser and others.
You may be a victim of mortgage fraud:

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Scott Burns from The Dallas Morning News writes,

Homeownership is the key to building wealth: This is true all over the planet, not just in Boston and San Francisco.

Peruvian economist Hernando de Soto found that owning a home was the most important step toward maintaining a good standard of living and stability.

In countries where homeownership is less common than in the United States, the distribution of wealth tends to be more highly concentrated.

If you examine the consumer balance sheet in the Federal Reserve flow-of-funds figures, you’ll find that individual homes always play a large role in consumer net worth.

Similarly, if you examine the sources of wealth for most households in the survey of consumer finance, you’ll find that home equity is the largest contributor to net worth for all but the wealthiest households.

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By David WrenThe Sun News,

U.S. government-chartered mortgage companies Fannie Mae and Freddie Mac have foreclosed on at least 46 homes worth $4 million in the Laurel Woods neighborhood since 2002, according to an analysis of real estate data by The Sun News.

In 29 of the foreclosures, Fannie Mae and Freddie Mac resold the homes within months for less than half of their mortgage value. Six of the homes were resold for between 50 percent and 60 percent of their mortgage value, and the remaining 11 homes haven’t sold.

The track record in Laurel Woods is a microcosm of the dangers Fannie Mae and Freddie Mac face when they rely on largely unregulated finance companies to ensure that borrowers are qualified for, and can repay, the loans they get.

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By Les Christie, CNNMoney.com staff writer,

Jonas Lee, of Redbrick Partners, a real-estate investing firm specializing in single-family homes, says his company has had success since 1993 by “playing in the lowest-priced markets.” The typical single-family home his company buys costs a mere $80,000 and has three bedrooms and two baths.

Redbrick has found these bargains in the downtown residential areas of rust-belt cities such as Baltimore and Philadelphia. The company shuns hot markets like Boston and New York.

He’s hoping a housing-market dowturn will enable him to expand his holdings.

Many investors who bought in at the top may not have the resources to ride out a bust and they’ll be forced to sell out or even give their properties back to the banks.

“In falling markets, people need to sell their homes more quickly,” says Lee. “They’ll take a discount to the true market value at that time.”

Foreclosures become more common because there’s little benefit to the property owner to cash out before it reaches the foreclosure stage; they may owe more than the property is worth. And foreclosures can pile up in local markets causing a spiraling down of prices and providing opportunities for bold investors.

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Via article from Blackenterprise.com by Philana Patterson we learn,

Peebles, president of the Peebles Atlantic Development Corp., dropped out of college in the late 1970s and now at age 45 has become a successful developer of hotels and residential and commercial real estate. He’s working on a book on entrepreneurship and offers this advice to any aspiring real estate investors:

1. Make a commitment to the industry.
People interested in becoming a real estate investor or developer, “should step back and make a decision as to whether they are willing to make a commitment to the industry or are they going to make a short-term commitment like people did in the Internet boom,” Peebles says. “If the answer is no to the first and yes to the second, they shouldn’t do it.”

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Peter Boutell at Santa Cruz Home Finance reports,

The frustrating part for borrowers may be that they feel they missed the low rates that were available just within the last few months. Since the Fed started dropping short term rates, fixed mortgage rates dropped nearly one percent and have since bounced back up to the 6 to 6.5 percent range. Consequently, these borrowers may feel that rates are too high now. On the contrary though, a quick study of interest rate over the past 20 years will convince anyone that the mortgage rates that are available today are a bargain.

In addition, the mortgage industry has done an incredible job of making financing a home as easy as possible. Traditionally, the lack of cash has been the biggest challenge to home ownership. In response, lenders have rolled out 100 percent financing. There are even some 103 percent financing options available for those that don’t have any money to cover closing costs.

To keep payments low, lenders offer payment plans on the 30 year fixed rate mortgages that do not require the pay back of principal for the first 10 years. This keeps payments lower for the first years of home ownership. As a family’s income grows, mortgage payments can be increased to include principal. There are countless other loan options to help those who have abused their credit privileges, for those who are self employed and there are even loans for those who are not employed at all

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Real Estate Adviser Steve McLinden writes for Bankrate.com,

I am thinking of buying a foreclosure home to live in and possibly another for an investment some time in the next year or so. I am wondering: Is this a good time to look?

foreclosure buying is a very competitive game right now, with so many real estate gurus advocating the strategy in books and seminars, and on TV and the Internet. Just do a Web search under “foreclosure opportunities” and you’ll see what I mean. Obviously, more and more buyers — particularly investors — are looking for an advantage in the game.

While there’s not space here to go through all the strategies, buying a “pre-foreclosure” from a defaulting or financially strapped owner might be the best way to go on the consumer end. The county clerk’s office keeps lists of such pre-foreclosures. Seek out titles where a “lis pendens” notice has been filed by the lender.

Before contacting and engaging in negotiations with the owners of these properties, make sure you are pre-qualified for a loan. You’ll probably want to enlist a buyer’s agent to make sure your best interests are represented and that you make the right offer — which would ideally be at a below-market price.

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Forbes.com presents article by Matt Schifrin

The Unconventional Wisdom
The real estate boom will keep on going. Thanks in large part to profits from soaring commodity prices for resources like oil and iron ore, there is a surplus of liquidity worldwide looking for an investment home. Globally, U.S. real estate is now considered more blue chip than blue chip stocks, yet it is also fairly fixed, and limited in supply. More and more real estate will be securitized here and abroad to meet this demand. In Australia, half of the commercial market has been securitized. In Japan, a new REIT market is fueling a real estate turnaround, and the first REIT was just issued in Hong Kong.

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Article posted by The Norman Transcript

One saving grace for the real estate industry is the relatively low mortgage rates. The newspaper said the average rates for a 30-year fixed mortgage was 6.26 percent last week.

If rates remain relatively low, buyers could take advantage of some new found purchasing power. The soft market gives them more room to negotiate on prices that seemed sky high a few months ago.

The newspaper said the median price for a home in November was $215,000. In the western U.S., the median price soared to $328,000, a record high and 19 percent more than a year ago. Prices in the South, Midwest and Northeast remained flat for the month.

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Robert J. Bruss reports with The Boston Globe on financing strategies,

There are so many ways to finance the purchase of your home, I don’t have space here to explain them all. My personal low-cash favorites include (1) lease-options, (2) seller financing, and (3) FHA, VA and PMI (private mortgage insurance) mortgages. More details are in my special report “Secrets of Buying Your Home or Investment Property for Nothing Down.”

As emphasized throughout this report, even when buying your personal residence, look for profit potential. If you purchase a home in tip-top near-perfect condition, it has little profit potential. That’s the way to SELL property, but not the way to profitably buy it at a bargain purchase price.

Following the old Nickerson formula, look for homes (and other investment property) “with the right things wrong.” Cosmetic improvements are the easiest and most profitable. Aim for $2 of increased market value for each $1 spent on improvements.

Profitable improvement examples include paint (the most profitable improvement of all), landscaping, new light fixtures, new carpets, and other improvements which add more value than they cost. Try to avoid property in need of unprofitable improvements, especially if the work won’t show and add market value, such as foundation repairs, new roof, and new heating and air conditioning. Kitchen and bathroom remodeling, by the way, rarely adds its cost to the market value of most homes.

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