Real Estate Market Update

For weeks when the stock market, rates and oil prices were diving and many have given up on the recovery, we maintained at least a certain air of optimism. No one could be sure where the economy was headed, but it appeared to be temporary factors that had caused the slow patch and not a change in the fundamentals. Now the first measure of the economy for the third quarter (Gross Domestic Product) seems to bear out this theory. While the number is preliminary and certainly not strong by any means, a 2.5% growth rate does not signal an impending “double dip” recession. The most important word again is “confidence.” If this number gives more businesses confidence to hire and consumers confidence to spend, then we are on the way back up.

Speaking of confidence, the progress in Europe was welcomed by investors as another confidence builder. Even the Administration’s new refinance plan which will help thousands of Americans will more importantly provide positive press in the minds of consumers. Make no mistake about it. We are not out of the woods. Europe does not fix itself with a pact. One day after release of the news, analysts were indicating that the devil would be in the details. The same goes for our economy. We are nowhere near where we need to be. However, we must be moving forward and the good news is now we are again moving forward. What do we need next? Some good news from the Federal Reserve Board after their meeting and a positive employment report would be great confidence builders. Hopefully, next week we will be writing about these possibilities coming true.
President Obama announced a plan to ease eligibility rules for home owners who want to refinance to take advantage of ultra-low rates and lower their home loan payments. The administration hopes that by broadening its requirements for the Home Affordable Program that about 1 million home owners will now be able to qualify. Here are more details about the newly announced changes to the program:
What is HARP? It’s a program started in 2009 that allows home owners to refinance their home loans at lower rates without having to meet the typical requirement of having at least 20 percent of equity in their home to do so. Under current guidelines, many underwater borrowers have been ineligible for the program because their home values had to be no more than 25 percent below what they owed their lender.
What’s changing? Many of the extra fees to participate in the program have been waived, and home owners’ eligibility won’t be contingent on how far their home’s value has fallen.
Who’s eligible? Home owners with loans backed by Fannie Mae or Freddie Mac can participate. Home owners must also be current on their present home loan.
When will it take effect? The changes could take effect by Dec. 1. HARP also is being extended through 2013 to allow more home owners the opportunity to qualify.
How successful will this be? The administration hopes that by home owners being able to lower their monthly payments they’ll be more likely to stay current on their home loan and avoid foreclosure. Also, the administration hopes that it will then free up household money to start spending more on other things, which could provide an overall boost to the economy. However, the administration says it realizes that aiding the housing market requires much more than a refinancing plan.

Sources: Fannie Mae, Associated Press and Reuters. Want to know if your loan is eligible to be refinanced under this plan? We can help you by finding out if your home is backed by Fannie Mae or Freddie Mac and analyzing other aspects of your eligibility. Just contact us.

With low home prices and ultra-low rates, the housing market is offering “perhaps the best deals of a generation,” notes a recent article by Bloomberg Businessweek. Since the housing boom of 2006, home prices have fallen about 31 percent. Also, rates have been hovering at record lows for the past few weeks. “It’s hard to see the possibility of losing on a home purchase right now, with these rates,” says economist Dean Baker. “Prices may go lower, but not by much.” The article notes the following scenario: Buying a $300,000 home with a 4 percent rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012 but rates will increase by a half-point. So for that same loan under that scenario, a home would sell for $289,000 while the monthly payment would be $1,171–only a $26 difference. For those who can qualify for a home loan , “playing the waiting game” won’t result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek. Source: Bloomberg Businessweek
This information has been brought to you courtesy of:

Your Personal Mortgage Consultant for Life”!

Dana Kiklis
PO Box 706
Kittery, ME 03904
Office: (978) 988-LOAN(5626)
Cell: (781) 325-5312

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One Response to “Real Estate Market Update”

  1. Real Estate Market Update ~ Halifax Area Properties Halifax Area Properties says:

    Lindsey Westervelt

    Halifax Area Properties is your go-to real estate service for the Ormond Beach area. Looking to buy, sell, or rent? Contact us!

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