Atlanta Real Estate Blog

WASHINGTON – Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been – with banks unwilling to lend even to other banks.

But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720?
Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there’s a lot more light there than in most other financial sectors. Consider these facts:

• There is no shortage of money available for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the American mortgage market has been federalized – at least for the time being. More than 90 percent of new loans now are being made through FHA, the Federal Housing Administration insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury.

• Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA’s credit standards are generous and forgiving – the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit score requirements over the past year, but buyers and refinancers with scores in the upper 600s can still qualify for loans carrying reasonable rates and fees.

• Despite the global financial system’s quakes, mortgage rates not only remain low by historical standards, but for the week ended October 30, 2008 while 30 year fixed rates ticked up to 6.46% from 6.04% a week earlier – that is still among the lowest rates for a 30 year mortgage in the last 25 years!

• Maximum “jumbo” loan amounts through FHA, Fannie and Freddie in high-cost local markets on the West and East coasts continue to be $729,750 through December. In January, the high-cost maximum is projected to dip to approximately $625,000.

• Home prices – pushed by foreclosures and short sales – have rolled back to 2003 and 2004 levels or lower in many of the former boom markets. As a result, growing numbers of buyers are coming off the sidelines, making offers and writing contracts. The pending home sales index jumped by 7.4 percent based on purchase contracts signed in August, according to the National Association of Realtors. The heaviest increases – pointing to higher closed sales in the coming two to three months – were in California, Florida, Nevada and the Washington, D.C., metropolitan area.

Housing and mortgage leaders say consumer worries about the stock market have obscured positive developments under way in real estate, where pricing pain and downsizing have been facts of the life for the past two and a half years.

David G. Kittle, president and CEO of Principle Wholesale Lending Inc. and incoming chairman of the Mortgage Bankers Association, says “the mortgage market has never shut down” despite the global financial crisis. Money is “clearly available as long as you can qualify for it” with at least a modest down payment and decent credit history.

On the front lines, mortgage company owner Jeff Lipes, president of Family Choice Mortgage near Hartford, Conn., says “I don’t think consumers really know how free-flowing capital is right now in the residential mortgage market. There are no shortages, no breakdowns. People ought to be aware of that.”

Bottom line: Scary as the news has been about stocks and banks, this is not the case for mortgages. Besides shopping at large national lenders, check in with local banks and credit unions who may be originating loans for their own portfolios – not for Fannie, Freddie or FHA. Many of them are healthy, have plenty of cash to lend, and may be surprisingly competitive on terms and rates compared with the big boys.

Contact Robert Whitfield at Advantage Realtors if you need a good source for home equity lines – we have a local North Atlanta lender with more relaxed underwriting guidelines and better rates than the big national banks.

From one of the greatest Presidents of all time, and the writer of perhaps the best speech ever delivered in human history – and to this writer, the single Greatest American who ever lived…Abrahm Lincolin.

I received the following email from my favorite closing attorney, Brian Dubuc, and had to post this.

During this political season let’s be reminded of these wise words:

You cannot help the poor by destroying the rich.

You cannot strengthen the weak by weakening the strong.

You cannot bring about prosperity by discouraging thrift.

You cannot lift the wage earner up by pulling the wage payer down.

You cannot further the brotherhood of man by inciting class hatred.

You cannot build character and courage by taking away people’s initiative and independence.

You cannot help people permanently by doing for them, what they could and should do for themselves.

Abraham Lincoln

Beleive it or not I am about to share some with you – both nationally and locally! I know everyone is tired of the bad financial news so here goes – a little upbeat housing market news…

Existing Home Sales Rise on Improved AffordabilityWASHINGTON, October 24, 2008

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007.
Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” he said. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord, said low home prices and low interest rates have been attracting buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” he said. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

Total housing inventory at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.
“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices,” Yun explained. “The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

Now for Metro Atlanta…

According to Smart Numbers, after 18 consecutive monthly year-to-year percentage closing declines metro Atlanta will post an increase in the number of single family closings once the September closing lags are reported. Additionally, the number of closed transactions for September may be close or even exceed August 08’s 4180 closings. This is especially good news since historically September experiences a 10 to 25% decline in closed transactions compared to August.

Finally, according to the Standard & Poor’s/Case-Shiller Home Price Indexes as reported by Reuters on September 30 2008, markets in Atlanta, Boston, Dallas, Denver and Minneapolis showed the most evidence that a bottom has formed, with home price increases for the past three months or more.

While the two presidential candidates were taking time away from their campaigns this week to attend congressional hearings on the $700 billion dollar “bail out”, the internet and chat rooms in Atlanta have been on fire. Apparently a local Atlanta real estate Broker has been endorsed by people all over the country as a possible candidate! CNBC’s Wolf Blitzer says this is nothing short of a Phenomenon! Click the following video for this emerging story.

 
The Robert Whitfield Home Selling Team hope you enjoyed the video and the consensus is, there is very little chance of Robert being called away to Washington – at least for the near and far foreseeable future! Robert in a recent press release stated emphatically, My skill sets and intersts will keep me here in Atlanta – I am still available to assist the public with unmatched service for all their Atlanta Real Estate needs!

The Current Market Is Allowing More Atlantan’s To Treat Themselves To The Solitude And Splendor Of A Second Home Or Vacation Home – With More Options And Better Deals Than Anytime In Recent Memory

Today there are over 7 million vacation homes in the United States. With interest rates extremely low and hundreds of very desirable vacation home opportunities within a 2-5 hour drive from Atlanta, your dream of owning a vacation home may be easier than you think.

Whether you dream of a mountain lodge or a beach house on the Gulf of Mexico or off the coast of South Carolina, there are many options to choose from, and Robert Whitfield can help you.

According to  Walter Molony a spokesman for the National Association of Realtors (NAR), sales of second homes hit a new record in 2006, with over one million buyer purchasing vacation homes. In 2007, second homes and vacation homes accounted for more than 12 percent of all home sales. A NAR study found that the typical vacation home buyer in todays market is 46 years old, with a median annual income of $99,000.

“There are some great deals to be made in real estate right now,” said Molony, citing the large number of homes on the market, low interest rates and a 2.5 percent decline in home prices in 2007. “Buyers, especially financially fit baby boomers, are looking to diversify their portfolios. Historically speaking, real estate typically appreciates in value considerably over the years making it an excellent long term investment,” he said.

NAR reports that about 60 percent of vacation homes buyers choose locations within easy driving distance of where they live, with the average distance being about 220 miles, just a 4 to 5 hour drive. Because of Atlanta’s close proximity to the North GA and Blue Ridge mountains and even sections of the Gulf of Mexico, there are wonderful options that are anywhere from one to three hours away.

There has been a surge of interest in vacation home communities anchored among scenic natural settings, near a gorgeous mountain range, or the sandy beaches of a clear lake or sea coast.

Things To Consider Before Buying

Location, Location!

Select homes that are near outdoor recreation attractions and nature, especially those with or near breathtaking views – and homes where the return has been historically high. Properties along the Gulf Coast are popular with Atlantan’s and continue to have a great resale and return on investment potential.

Talk To Your Lender!

Lenders may require a larger down payment and charge a higher rate for second homes. To keep your costs down, you may want to consider financing a portion of your vation home with a home equity loan on your primary home. Home equity loans have lower rates than conventional mortgages. Robert can not only help you find a great vacation home, but refer a great home equity lender with some of the lowest rates around as well.

Check With Your Insurance Agent

Premiums for homeowners insurance for vacation homes are usually higher than your primary home, especially if you are far from a fire hydrant or fire station, or, you plan to rent the home out while you aren’t using it.

Consult With Your Tax Adviser

Have your tax adviser explain all the tax issues that pertain to a second home especially if you plan to rent it out, and if you don’t treat it as an investment property.

For more information, contact Robert Whitfield, Broker/Owner Advantage Realtors

Early reaction to the Fannie-Freddie takeover by the Fed has been roundly positive. Mortgage rates dropped almost a half point and that will be a boon to homebuyers with decent credit as rates are in the 5% range again as they were in 2005.

As Treasury secretary Paulson had hoped, the spread between the yield on mortgage-backed securities and risk-free Treasury bonds narrowed sharply Monday and mostly held those gains Tuesday. The tightening of those spreads has the effect of bringing down rates on the mortgages the companies are eligible to buy or guarantee – so-called conforming loans, typically those of $417,000 or less though up to $729,000 in some pricier areas. The rate for a conforming 30-year fixed mortgage fell to 5.88% Monday from 6.26% a week ago, according to BankRate.com.

The steep decline in mortgage rates will be good news for the housing market if it holds, by allowing some troubled homeowners to refinance and by generally making financing more available.

“Mortgages tightened a ton,” says Merrill Lynch mortgage-backed securities strategist Akiva Dickstein. “The question now is whether there’s more tightening to come.”

If so, people looking to buy houses could find purchasing a house more affordable. That could bring more buyers into a market struggling to digest near record levels of houses for sale, and slow the decline of prices. Prices in 20 big metro areas have fallen 16% over the past year, according to data from the S&P/Case-Shiller national survey.

In an additional bit of good news, Treasury bond prices rose in the wake of the rally in mortgage-backed bonds, and the dollar continued its two-month-long ascent against other major currencies.

Now is one of those windows of opportunity to refinance, buy a new home, or buy a second home – especailly now that the deal out there can be acquired with cheaper money.

The Robert Whitfield Home Selling Team is excited to introduce our new Atlanta Real Estate blog.  This blog is integrated into www.TheHomeBuyersRep.com  and is easily accessible to buyers visiting our site. We’ll be including real estate news, posting new listings, and providing current information on Metro Atlanta real estate.

We will be posting frequently, so be sure to check back often.  We invite comments and feedback, which can be added to each blog.