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  1. Buying A Home Is A Great Investment, Buffett Says

    By on March 9, 2011

    buffett's best investment, manufactured housing financing, clayton homes

    Warren Buffett, renown as the smartest investor around, says buying his home was one of the best investments he ever made.

    Specifically, it was the third best investment after wedding rings. “For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come,” writes Buffet, chairman of Berkshire Hathaway, in his 2010 letter to shareholders.

    Buffett concedes that he could have made more money if he had rented instead and used the extra money to purchase stocks, but most of us are not Buffett and don’t do a job picking stocks.

    “Homeownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates,” he writes in the shareholder letter. “But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

    Buffett remarked about homeownership while commenting on financial performance of Clayton Homes, a producer and financier of manufactured homes, that Berkshire Hathaway owns. Continue Reading…

    Category: First Time Home Buyer, Purchase

  2. Including Rents On Credit Reports Can Help First-Time Home Buyers Qualify For Lower Mortgage Rates

    By on March 7, 2011

    first-time home buyer, credit score, mortgage qualificationsSome first-time home buyers could find qualifying for a home loan and getting lower mortgage rates easier now that Experian, a major credit bureau, has started collecting rent payment histories.

    Building good credit is one of the biggest obstacles to qualifying for a home loan and finding the best mortgage rates available. Yet rent payments, usually a renter’s largest financial obligation, are typically not included in credit scores. Neither is phone, Internet, electric bills or other utilities, for that matter.

    Credit scores, including the FICO score used by most mortgage lenders, are based on credit cards and personal loans like car loans and student loans. Borrowers with little use for loans or credit cards have what lenders call “thin files” that can prevent them from qualifying for a mortgage.

    So, in the odd world of credit scoring, you can get a mortgage if you have $10,000 of debt but not if you have $10,000. This credit scoring quirk is especially troublesome for younger borrowers, who tend to lack credit histories, and immigrants who lack a tradition of using credit cards and debt. Continue Reading…

    Category: First Time Home Buyer

  3. First-Time Home Buyers Benefit As Purchasing Becomes More Affordable Than Renting In Many Places

    By on January 25, 2011

    Owning a home is more affordable than renting in most major cities. That’s the conclusion of the latest rent vs. buy index from Trulia.com.

    The online home-shopping service says it’s more affordable to buy a two-bedroom home in 72 percent of America’s 50 largest cities than it is to rent it.

    first-time home buyers, purchasing vs renting

    Renting is less expensive than buying a home in just four cities in Trulia’s study: New York, Seattle, Kansas City and San Francisco. In 10 cities, buying may still be a financially sound long-term decision despite the relative affordability of renting.

    More Americans are renting, either by choice or due to unforeseen financial difficulties. Mortgage defaults caused by the subprime lending crisis and high unemployment have caused a flood of former homeowners to rent homes. Following the principal of supply and demand, that has caused rents to increase, said Pete Flint, CEO and co-founder of Trulia.

    “Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term,” he added. “Even highly qualified home buyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan”

    Continue Reading…

    Category: First Time Home Buyer, Housing Market

  4. Rising Mortgage Rates Push First-Time Home Buyers Into Housing Market

    3 By on December 21, 2010

    Rising mortgage rates prompted more first-time home buyers to purchase homes last month.

    That was one of the conclusions of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

    While mortgage rates began increasing from record lows in early November the first-time home buyer share of home purchases surged from 34.4 percent in October to 37.2 percent last month.

    “The recent surge in interest rates has made potential home first-time home buyers, mortgage rates, first-time home purchase, mortgage interest ratesbuyers nervous,” said Thomas Popik, director of the HousingPulse survey. “If rates go up much more, then a good percentage of them will no longer qualify for the properties they want. As a result, they’re making bids on homes and quickly closing before their rate locks expire.”

    “First-time buyers are back looking at homes,” said a real estate agent in Oregon who commented in the survey. Resources for first-time home buyers.

    “Interest rates have helped spur recent activity,” said a real estate agent in Colorado.

    Although mortgage rates have increased their record lows this summer, they’re still at historically low levels. Check current mortgage rates.

    Continue Reading…

    Category: First Time Home Buyer, Housing Market, Mortgage Interest Rates, Mortgage Rates, Purchase

  5. Deficit Commission Should Not Mess With The Mortgage Interest Tax Deduction

    4 By on December 2, 2010

    If Congressmen are seriously thinking about cutting the mortgage interest deduction, they had better think again.

    If they did vote to eliminate the mortgage interest deduction, they would face uproar. Many middle-class homeowners count on deduction as a way to save or a way to make ends meet, and the powerful real estate industry also depends on the mortgage interest tax .  (You can use a mortgage calculator to compute your tax savings.)

    The president’s deficit reduction commission’s draft documentdeficit commission, mortgage interest tax deduction, mortgage interest tax break, deficit commission mortgage interest tax deduction proposal proposes scaling the mortgage interest deduction to $500,000 and limiting it to only primary residences.  The deduction is currently limited to $1 million and can be used on second homes.  The deficit commission also lays out the option of eliminating the mortgage interest deduction.

    But even that group of deficit hawks – perhaps hesitant about the idea and other proposals in the document – has delayed a final vote on its proposals.

    Every so often some panel proposes eliminating or curtailing the mortgage interest deduction. They usually don’t get very far once the real estate industry groups, like National Association of Realtors and National Association of Home Builders, flexes their muscles.

    NAR firmly believes that the mortgage interest deduction (MID) is vital to the stability of the American housing market and economy,” stated NAR President Ron Phipps in a news release. “The MID must not be targeted for change.”

    Phipps mentions that NAR is working hard for 75 million home owners and 1.1 million. He doesn’t mention that all those Realtors can vote and write letters to their Congressmen and even make campaign contributions, but we get the hint. Continue Reading…

    Category: First Time Home Buyer, General, Mortgage Regulations

  6. First-time Home Buyers Take Over Home Purchases

    By on November 8, 2010

    first-time home buyers, fixed-rate mortgages, home purchases, mortgage ratesHalf of all home purchases involved first-time home buyers this year, the largest portion since the National Association of Realtors started keep records in 1981.

    Last year 47 percent of home purchases were by first-time home buyers, according to NAR’s Profile of Home Buyers and Sellers. The previous largest share of first-time home buyers was 44 percent in 1991. Learn about tips for buying your first home.

    The first-time home buyers’ tax credit, which has now expired, was a major reason for their large share of home purchases. Almost all first-time home buyers, or 93 percent, used the tax credit.

    Almost all of first-time home buyers, or 95 percent, used fixed-rate home loans. Check mortgage rates for fixed-rate terms.

    Most, 74 percent, used savings for their down payment, while 27 percent used a gift from friends or relatives, slightly more than last year. That increases shows that more parents helped their children take advantage of the tax credit and extremely affordable housing, said Paul Bishop, NAR vice president of research.

    Also, 56 percent of first-time home buyers used FHA home loans to finance their home purchase. NAR also reported that 52 percent of the home buyers said obtaining a mortgage was more difficult than they had expected and 9 percent were rejected by a lender. Find tips for getting mortgage approval.

    The median down payment for home buyers was 8 percent, including 4 percent for first-time buyers to 14 percent for repeat buyers. First-time may have used FHA loans, which allow down payments as low as 3.5 percent. How to purchase a house with an FHA mortgage and current FHA mortgage rates.

    NAR’s survey shows that the median age of first-time buyers was 30 and their median income was $59,900. The typical first-time buyer bought a 1,540-square-foot house for $152,000. The typical home sold for 96 percent of the listing price, compared to 95 percent the group’s survey last year.

    Category: First Time Home Buyer, Fixed Rate Mortgages, Purchase

  7. Case Shiller Index Co-Creator Says Go Buy A House

    By on October 26, 2010

    home prices, home values, home purchases, first time home buyersWhile the latest Case Shiller Housing Index shows a decline in house prices, one of the inventors of the index, Karl Case, is optimistic about the housing market’s future. With home prices depressed, this is a great time to purchase a home, he believes. Learn about purchasing a home.

    An increase in existing-home sales in September was an encouraging sign, said Case, the co-creator of the Case Shiller index.

    Monthly home sales for last month were up 10 percent, over August sales, but significantly down from last year, according to numbers from the National Association of Realtors.

    “The fact that it went up is very good news, because everyone thought it was going to go down,” Case said at a Maine’s Affordable Housing conference in Portland, ME, yesterday, according to The Portland Press Herald.

    The latest figures show that housing markets are stabilizing, said Case, a speaker at the conference. Another round of increasing home sales in the next NAR report would indicate that the housing market is recovering. Continue Reading…

    Category: First Time Home Buyer, Purchase

  8. Avoid McMansions – The Trend To Smaller Homes Is Permanent

    By on October 21, 2010

    small homes, home sizes, home sales, mortgage lending requirements, home sale trendsThe trend to smaller homes is here to stay, and McMansions will be out of style. That’s the prediction from the National Association of Home Builders outlined in a study released today.

    Tighter mortgage lending requirements is one factor driving home sizes down, the NAHB points out. Find mortgage products.

    Homeowners want to keep energy costs down, and they have less interest in buying homes as investments. Also, current homeowners have smaller amounts of home equity that they can use purchase new larger homes, first-time home buyers, who tend to buy smaller homes, are relatively more numerous.

    Home sizes experienced a similar decline when mortgage interest rates were outrageously high back in the 1980s. But that was temporary. The current trend to smaller homes will outlast the current economic downturn.

    That could mean owners of larger homes will be advantage when selling, taking longer to find an acceptable offer or accepting less than they want. Extra luxuries like fireplaces and might not matter as much. The housing market could favor sellers with smaller homes, sought by first-time home buyers. Continue Reading…

    Category: First Time Home Buyer, General, Mortgage Interest Rates, Purchase

  9. New Fees For FHA Loans Decrease Upfront Costs

    By on October 4, 2010
    FHA loans, FHA refinance, first-time home buyer, low down payment mortgage

    HUD's headquarters towers over homes in Washington, D.C.

    New changes to mortgage insurance premium fees for FHA loans make it easier for home buyers to purchase a home. The FHA is lowering its upfront insurance premium from 2.25 to 1 percent of the loan amount.

    On the other hand,  the FHA, which is part of the Department of Housing and Urban Development, is increasing its annual insurance premium from 0.55 percent of the loan amount to 0.9 percent. The ongoing MIP will be 0.85 percent for mortgages that are 95 percent or less than the property value.

    That means home buyers will face smaller upfront costs. That’s good news for cash-strapped home buyers, especially first-time home buyers. The trade off is higher long-term ongoing costs because of the higher annual MIP.

    The new fees will also help current homeowners seeking an FHA mortgage refinance – at least in the short term. The new fees cover the FHA streamline mortgage, a program that waives credit and income checks for homeowners who already have an FHA home loan and who want a new mortgage refinance.

    Mortgage insurance premiums for FHA loans with terms of 15 years or less remain unchanged at 0.25 percent for loans to value over 90 percent. Another piece good news for homeowners is that they should eventually rid themselves of the insurance payments after they build up equity in their homes. For instance, homeowners with terms of 15 years or less and a loan to value of 90 percent or less don’t pay an annual MIP.

    If you get an FHA loan, you pay the MIP monthly as part of your monthly mortgage payment.

    After subprime lending disappeared when the housing price bubble burst a few years ago, FHA-insured loans became the only low down payment mortgage program around. You can buy a home with as little as 3.5 percent down with an FHA loan. Other types low down payment mortgages, also known as high loan to value mortgages, have still not returned.

    As borrowers swarmed to FHA-loans, defaults on its loans jumped and many observers worried about lax underwriting and poor loan quality.

    The FHA says it wants to meet the needs of the housing market while at the same time increasing its Mutual Mortgage Insurance fund without disrupting the housing market. FHA doesn’t offer home mortgages itself, but insures home loans that made through private lenders it has approved.

    Private mortgage insurance companies hope the increase in the FHA MIP will give them an advantage and help them regain lost market share.

    Category: FHA, First Time Home Buyer, Purchase, Refinance

  10. Refinancing to Decline 50% in 2011?

    By on September 20, 2010

    Have you ever wondered how constant exposure to negative news shapes your own outlook on things?  I do, because all I seem to read lately is bad news.  Some days I feel like the kid from A Clockwork Orange.  Here’s some news that would be particularly bad for the mortgage industry: the Mortgage Bankers Association (MBA) is forecasting a sharp drop in refinance activity next year.

    A new report from the Mortgage Bankers Association via Housingwire predicts that refinancings could decline by 50 percent in 2011.  Currently refinancing accounts for around 80 percent of all mortgage-related activity and has been keeping many mortgage companies afloat.  Home purchases are down sharply over the past two years, as very low mortgage rates have not convinced potential buyers to make the leap into homeownership.  The lack of demand can be attributed to the expiration of the first time homebuyer tax credit, continued high unemployment, and generally poor economic conditions.

    The MBA predicts that refinance activity will decline due to a rise in mortgage rates and tight credit conditions.  According to the article, rates are predicted to hit 5.1 percent by the end of 2011.  This prediction is more or less in line with that of Fannie Mae and Freddie Mac.

    Further, the MBA predicted mortgage originations to fall to $1.1 trillion in 2011, down from $1.4 trillion in 2010 and $2.1 trillion in 2009.  Do you work in the real estate industry?  How do you intend to deal with this situation?  Let me know in the comments section below.

    Category: First Time Home Buyer, Fixed Rate Mortgages, Jumbo Mortgage, Mortgage Interest Rates

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