John Beckett's Real Estate Blog

As mortgage rates hit a new record low this week, two questions come to mind:

• How low will rates go?
• And when will they head back up again?

The average rate for a 30-year fixed-rate loan fell for the third straight week, to 4.57%, down from 4.58% last week, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average rate for a 15-year loan was 4.07%, up from 4.04% last week. The 30-year rate is the lowest since Freddie Mac started keeping records in 1971 and the lowest recorded by the Bureau of Economic Statistics since February 1955, when home-loan terms were shorter than 30 years.  The number of refinancing applications rose 9.2% last week, the Mortgage Bankers Association said, as more people who refinanced last year, when rates were about 5.5%, see benefits to refinancing again. The number of applications for home purchases, however, continued to decline.  Why are rates so low? It’s the economy. Amy Hoak of MarketWatch explains, mortgage rates are low because of fears about the economy, both in the United States and abroad. She interviewed Greg McBride of BankRate.com, who said: When investors get nervous, they flock to safe-haven investments such as government debt. Mortgage rates are priced relative to yields on U.S. government debt. The decline on government bond yields has directly benefited the mortgage shopper. And when will rates start to rise? I left my crystal ball in my other office, but the short answer, obviously, is when the economy improves.  David Dessner, director of sales for New York’s GuardHill Financial mortgage company, told said: So keep an eye on when investors start moving their money from U.S. Treasury bonds to other venues. That’s when rates will start to inch up. Remember that the published weekly number is an average gathered nationwide, so the actual rate customers are offered can vary. In fact, mortgage rates offered by a given lender on a given product can change daily, or even several times a day.  The irony of the record-low mortgage rates, of course, is that so few people can refinance or can afford to buy because of the same economic conditions that are keeping rates low. Ted C. Jones, a title company economist in Houston who was interviewed by Holden Lewis of Bankrate.com, has what he calls “a great way to get money in the pockets for people to recover from this economy”: Allow anyone who is up to date on mortgage payments to refinance at the current market rate, even if they owe way more than their home is worth.  If you’re one of the lucky few Americans who have at least 20% equity in your home, a solid income and good credit, you may want to see if refinancing could save you money. Refinancing a $250,000 mortgage from 5.5% to 4.5% would save about $150 a month.  But whether refinancing provides a true savings depends on whether you’ll live in the house long enough to recoup your closing costs, which vary widely across the country.  Is this a good time to buy a house or should you wait for rates to go lower? Or rush now for fear rates will spike soon? This assumes, of course, you have a down payment, a secure job and good credit — things many Americans lack these days.  McBride and other experts  expect rates to rise by the end of the year, but McBride points out that 5.5% is still a low rate, by historical standards. On a $100,000 loan, the difference between a 4.5% rate and a 5.5% rate is $61 a month.  The biggest question to ask is whether this is the right time for YOU to buy a house.

Read at: http://articles.moneycentral.msn.com/SmartSpending/blog/page.aspx?post=1779385&_blg=1,1779072

Homebuyers and sellers who expect an appraisal to sail through to closing without a hitch may be surprised to discover that home appraisals today can be problematic. The reasons for the change are complex, but there’s no question that mortgage lenders have started to demand more reviews and do-overs. Rob Johnson, vice president of lending at San Diego Funding, a mortgage company in San Diego, attributes the increase in home appraisal reviews to lender-specific requirements imposed because of past problems with certain types of home loans. For example, a mortgage lender might demand more scrutiny of an appraisal if the borrower has a marginal credit score or high debt level relative to income or if the property was a foreclosure that was fixed up and flipped by an investor.

Appraisals may lag home prices

Home prices are also a factor. When prices are on the rise, perhaps because buyers have bid more in a multiple-offer situation, appraised values might still be lower. The reverse is also the case. “Any time you have a market in transition, appraisals aren’t going to keep up because the appraisal is based on historical data,” Johnson says. nadequate “comps” can present problems as well. (“Comps” are recent sales of nearby homes that are similar, or comparable, to the home that’s the subject of the appraisal.) The mortgage lender may deem the comps inadequate if the homes were too far away or were sold in such nontraditional circumstances as a short sale or foreclosure or if the sales occurred too long ago. If the comps aren’t sufficient, the lender may order a review or second home appraisal to verify that they were chosen correctly. “If (the appraiser) can’t find three comps within that area and has to expand, that is where you start to get appraisal reviews or secondary appraisal requirements to make sure the appraisal was valid or that (the lender) was comfortable,” Johnson says. The term “second appraisal” generally refers to a new, start-from-scratch valuation. An appraisal review could be a “desk review,” in which the appraisal gets a second look by an office-bound person, or a “field review,” in which the appraisal is subject to another drive-by or in-person inspection of the property. A review is more common than a second appraisal.

New guidelines distance lenders from appraisers

Leslie Sellers, president of the Appraisal Institute in Chicago, says a lender might order a new home appraisal if the first one was based on factual errors or the appraiser wasn’t competent in the area. Some second appraisals, he adds, result from a misunderstanding of the Home Valuation Code of Conduct, guidelines that were meant to prevent undue pressure being placed on appraisers to inflate home valuations, but that may have caused some lenders to cut off communication with appraisers. “The banks are thinking they can’t even talk to the appraiser,” he says.

Sellers can offer comps to appraiser

An appraisal review can cost several hundred dollars while a second appraisal generally involves a second full fee, says Sara Schwarzentraub, owner of Inter-State Appraisal Service in San Diego. These costs usually are paid by the buyer. “It’s commendable that the lenders are being cautious and having stricter criteria to protect themselves, because in the long term that protects everybody, but it does make it more costly,” she says. Home sellers can offer the appraiser information that might affect the appraiser’s opinion of the home’s value. This information is best handed over before the appraisal is prepared. “If you know of a sale that’s similar to your house and it was a foreclosure, short sale, divorce or anything of that nature, make the appraiser aware of that,” Sellers says. Real-estate brokers can help buyers and sellers find comps to offer the appraiser, Johnson says. If the broker believes comps may present a problem, the buyer and seller can plan accordingly. “A good real-estate agent is aware of these issues. Many times, an agent will call us and say, ‘I know we are going to have problems with comps on this,” he says. Neither the buyer nor seller can choose the appraiser, but Sellers says buyers can insist on a minimum competency, which he defines as having local market knowledge and being certified as well as licensed. Buyers and sellers also can agree on longer time frames for the home appraisal contingency and closing date. Schwarzentraub says that asking for a 45- or 60-day closing, rather than 30 days, is not unreasonable. Buyers are entitled by federal law to a copy of any appraisal for which they’ve paid a fee. Buyers should look over the appraisal and notify the lender of any errors that could have affected the appraiser’s opinion of the home’s value.

Read at: http://realestate.msn.com/article.aspx?cp-documentid=24569959

Some great quotes from Morgan Freeman:

• As you grow in this business, you learn how to do more with less.

• Give me something interesting to play and I’m happy.

• I can only be so long without work before I start getting antsy.

• I find it difficult to watch myself… I find it boring.

• I’m not intimidated by lead roles. I’m better in them. I don’t feel pressure. I feel released at times like that. That’s what I’m born to do.

Today’s Real Estate terms come from the word “Zone or Zoning”

Zone:  The area set off by the proper authorities for a specific use or in an area subject to certain restrictions or restraints.

Zoning:  The regulation of land by local government under its police powers in controlling things such as height, size and use of buildings and the use of land.

Zoning Map: A map showing the various sections of the community and the division of the sections into zones of permitted land uses under the zoning ordinance in specific areas.

Zoning Ordinance:  An act by city or county authorities to regulate and control the use of real estate for the health, morals, safety and welfare of the general public.

Spot Zoning:  An allowance of a non-conforming use in an area zoned for a another specific purpose.

Inclusionary Zoning:  An ordinance that requires a builder of new housing to set aside a designated number of units for low and moderate-income people.

Today’s terms have to do with Lots:

Key Lot: A lot in such a position that one side is adjacent to the back of other lots. It is considered to be the least desirable of the lots in a subdivision.

Lot Line: A boundary line of a lot as that is identified in a property survey.

Lot Split: The division of an existing small parcel into two separate parcels.

Lot And Block: A method of identifying real property on a recorded subdivision plat that identifies a parcel of land by reference to its lot and block numbers within the subdivision. (Sometimes called a recorded plat.)