Orlando Mortgage Blog

If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.

Here's why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money.

With the job market still very sluggish, consumers aren't spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that's good for home loan rates. That's because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen.

While we certainly want to see better economic recovery news in the near future, we have to remember that there's an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.

Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me! 407-889-4321.

It's that time of year again...Daylight Saving Time (DST) that is.

Don't forget to move your clocks behind one hour, this Sunday, November 6, 2011, at 2:00 a.m.

And did you know that throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact? For instance, in the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul–which are considered one metropolitan area–didn't agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!

Also, to keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2:00 a.m.–the official time of DST change–and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.

As the holiday season approaches, I hope you enjoy this time of year with your family. And if you have any mortgage-related questions or concerns, call or email me anytime. I'm always happy to talk to you!

For those of you owning a home or looking at real estate that is located in a flood zone....

The National Flood Insurance Program (NFIP) is set to expire (again) on September 30, 2011. Congress can re-authorize, but there may be a lag time similar to last year.

IF YOU NEED FLOOD INSURANCE TO CLOSE:

Lenders should allow the closing with a copy of the application as proof that the Buyer has pursued coverage as required. The Lienholder will be listed on the application, and when the NFIP is re-authorized, the application will process and produce the Evidence of Insurance and Declaration… which automatically forwards to the Lienholder.

Rob Owen, Agent

Rob Owen Insurance, Inc | Property Insurance for Closings

For those of you owning a home or looking at real estate that is located in a flood zone....

The National Flood Insurance Program (NFIP) is set to expire (again) on September 30, 2011. Congress can re-authorize, but there may be a lag time similar to last year.

IF YOU NEED FLOOD INSURANCE TO CLOSE:

Lenders should allow the closing with a copy of the application as proof that the Buyer has pursued coverage as required. The Lienholder will be listed on the application, and when the NFIP is re-authorized, the application will process and produce the Evidence of Insurance and Declaration… which automatically forwards to the Lienholder.

Rob Owen, Agent

Rob Owen Insurance, Inc | Property Insurance for Closings

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Orlando Home Prices Increase 23% in 2011, Median Price at $117,000

Posted by David Barley 08/12/11 12:17 PM EST

Author Bio | Archives

Orlando, FL

(ORLANDO, FL) -- According to the Orlando Regional Realtor Association (ORRA), Orlando area's overall median price climbed to $117,000 in July. Since January of this year, Orlando's median price has increased by 23.29 percent. The median price is also 7.64 percent higher than the $108,700 recorded in July 2010.

An increase in the percentage of "normal" sales -- those that are neither bank-owned nor short sales -- continues to boost the overall median price. In July, the percentage of normal sales increased for the sixth consecutive month and made up 42.15 percent of all Realtor transactions.

The lower median price of foreclosures and short sales does continue to negatively influence the overall median price. The median price for bank-owned sales in July is $80,000 and the median price for short sales is $98,000.

The 2,147 sales transactions that were completed in July 2011 is 14.67 percent less than were completed in July 2010. Bank-owned sales dropped 49.08 percent compared to July 2010, while short sales increased 16.73 percent and "normal" sales increased 16.03 percent.

At the current pace of sales, there is a 4.82-month supply of homes in Orlando's inventory. The number of homes available for purchase in the Orlando area declined in July by 210 homes and now rests at 10,349. (Inventory is down 37.52 percent from July of last year; single family home inventory is down 33.28 percent; and condo inventory is down 53.19 percent.)

"With affordable prices and historically low mortgage interest rates, homebuyer demand remains strong. A more rapid sales recovery is possible if banks return to normal and safe but sensible lending standards," explains ORRA Chairman of the Board of Directors Mike McGraw, McGraw Realty Services, PL.

Pending sales - those under contract and awaiting closing - are currently at 9,869. In July 2010, the pending tally was 19,133.

Homes of all types spent an average of 101 days on the market before coming under contract in July 2011, and the average home sold for 95.00 percent of its listing price. In July 2010 those numbers were 84 days and 95.01 percent, respectively.

The area's average interest rate decreased in July 2011 to 4.53 percent, from the 4.56 percent posted in June 2011.

Affordability

The Orlando affordability index decreased to 235.71 percent in July. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,846 can qualify to purchase one of 5,692 homes in Orange and Seminole counties currently listed in the local multiple listing service for $275,777 or less.

First-time homebuyer affordability in July decreased to 167.61 percent from last month's 177.43 percent. First-time buyers who earn the reported median income of $36,615 can qualify to purchase one of the 3,931 homes in Orange and Seminole counties currently listed in the local multiple listing service for $166,692 or less.

Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area (369) decreased by 37.88 percent in July when compared to July of 2010 (594).

The most (162) condos in a single price category that changed hands in July were yet again in the $1 - $50,000 price range and account for 43.90 percent of all condo sales. Low-priced units have overwhelmingly dominated condo sales since March of 2009.

Orlando homebuyers purchased 178 duplexes, town homes, and villas in July 2011, which is a 28.51 percent decrease from July 2010, when 249 of these alternative housing types were purchased. Most sales (30) were between $100,000 and $120,000.

MSA Numbers

Sales of existing homes within the entire Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in July were down by 9.42 percent when compared to July of 2010. Throughout the MSA, 2,673 homes were sold in July 2011 compared with 2,951 in July 2010. To date, sales in the MSA are down 1.46 percent.

Individual county's monthly sales comparisons are as follows:

Understanding Credit Scoring

The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)

It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.

Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.

Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts!

Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.

Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.

Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.

Additional Resources:

To order your free credit report, go to:

www.annualcreditreport.com

To read the Fair Credit Reporting Act, go to:

www.ftc.gov/os/statutes/frca.htm

For the Federal Trade Commission's information on consumer credit, go to:

www.ftc.gov/bcp/conline/edcams/credit/index.html

A Qualified Mortgage Consultant Can Outline Your Options

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be on your way toward building equity. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop lower than the rate you’d currently be locked in at, and this would cause your monthly mortgage commitment to go down.

And not only would your own home give you added space, your own back yard and overall privacy—home ownership would also give you some tax advantages. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including "low"
down payment mortgage programs. The most common and beneficial loan for
people buying their first home is the FHA loan, which only requires a 3.5%
down payment. In addition, FHA allows a seller to cover up to 6% of a
buyer's closing costs which really helps decrease the amount of money it
takes to buy a home. Many people also don't know that FHA allows the lowest
credit scores of any loan available today, only needing a 640 score in
most cases.

If there is any time to buy it is NOW! Why? Because home prices are low today. Low home values are surely not good for people selling homes but they are great news for people wanting to buy a home. Don't miss this opportunity to take advantage of the current market before home values rise.

Clear Captial Says:

“Stability Ahead as Distressed Property Prices Rise”

… We are Getting Past the Bottom…BUY NOW before Prices Go UP!

Clients & Friends,

Clear Capital Says: Stability Ahead as Distressed Property Prices Rise !

The real estate valuation firm Clear Capital sees signs of market stability as we move into the summer months.

New data released Thursday by the company shows that U.S. home prices continue to fall, but the 2.3 percent drop recorded for the three months ending in May was half the decline seen in the previous month’s report.

Clear Capital says the median price paid for distressed properties has started to rise, indicating the REO market is seeing increased activity toward the upper end of the price range and helping to rein in the depreciating trend of the past several months.

The “uptick in distressed sale prices, combined with the upcoming summer buying season, could stabilize home prices,” according to the Clear Capital report.

This follows the realization of an official double-dip seen in the company’s May report on its home price readings, which was based on market data through the end of April.

One month after reporting a nationwide double dip in home prices, Clear Capital says “quarter-over-quarter home prices are showing signs of improvement as the deep winter lows were replaced by more stable spring prices,” suggesting “prices are stabilizing as the typically stronger summer buying season approaches.”

Based on historical patterns, the non-REO (“fair market”) segment increases its share of total sales volume in the spring and summer months, Clear Capital explained. The company says this is “critical” as its historical data has shown strong negative correlations between home prices and large REO sales volumes.

The company noted that the REO segment doesn’t typically follow a seasonal cycle because the release of distressed properties to the market is determined through the foreclosure process and sales driven by different marketing strategies.

The seasonal rise in non-REO volumes is now merging with a new trend, according to Clear Capital. The company’s market analysis has found that since the fourth quarter of 2010, the median price for distressed properties crept upward 5.0 percent while REO sale volumes have moderated.

“This marks the longest gain in median price for REOs since the market correction began in 2006,” Clear Capital said. “This is a positive signal at minimum; it indicates buyers’ appetite for higher-end REOs. Even with elevated distressed activity, this introduces the potential for gains.”

Regional quarterly price declines also softened across the nation, with the Northeast, West, and South regions all posting quarterly declines of less than 2.0 percent in May.

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Source: www.DSNNews.com

» Read the Original Article here:

http://www.dsnews.com/articles/clear-capital-stability-ahead-as-distressed-property-prices-rise-2011-06-08

Your business and referrals are greatly appreciated! Please be sure to contact me if I can assist you, your friends, family, or co-workers with their home financing needs!