Archives for January 2013

Are record low mortgage rates gone for good?

Mortgage interest rates have ticked up for three of the past four weeks, and while big increases are unlikely, further drops are, too.

The average for a 30-year, fixed-rate mortgage hit 3.53% this week, marking the first time rates pushed above 3.5% in more than three months, mortgage giant Freddie Mac reported Thursday.

“I do think that perhaps the all-time low is behind us,” says Freddie’s chief economist, Frank Nothaft.

There’s no point to dilly-dally waiting for lower rates if someone is considering refinancing their home

That was set in November when 3.31% was the average for a 30-year, fixed rate loan, according to Freddie Mac’s weekly mortgage rate surveys.

chart_upFor the rest of the year, Nothaft expects rates to gradually move higher, ending the year at about 3.75% and then moving above 4% sometime next year.

“There’s no point to dilly-dally” to wait for lower rates if someone is considering refinancing their home, Nothaft says.

Rising rates will affect homeowners looking to refinance more than they’ll affect home shoppers, says Jed Kolko, chief economist with real estate website Trulia.

That’s because refinancing is mainly an interest-rate-driven decision, while home purchases have more to do with jobs and lifestyle changes, he said. Even though they’re up, rates are still near historic lows.

Along with an improving economy, rates have edged up, given less demand for “safe haven investments” such as bonds since Congress partly averted the so-called fiscal cliff of tax increases and spending cuts on Jan. 1, says Greg McBride, senior financial analyst for Bankrate.com.

McBride said mortgage interest rates may dip below current levels on occasion. He, too, expects them to hover between 3.5% and 4% for most of this year. That assumes no big economic shocks to the U.S. economy.

Except for a few weeks, mortgage rates have been below 4% for the past 14 months.Hear_This-320

The low rates have helped the housing market, which is showing signs of strengthening. Home prices were up 5.5% in November year-over-year, Standard & Poor’s Case-Shiller data showed earlier this week. New and existing home sales are also up. That also is helping the overall economy.

“If the economy is getting better, slightly higher interest rates are a natural occurrence,” says Keith Gumbinger, vice president of mortgage tracker HSH.com. “But there’s no reason to believe that rates are headed upward in a straight line.”

But a slow-growing economy will work to keep a lid on them, he says. The U.S. economy is forecast to grow just 2% this year, and it actually shrank at an annual rate of 0.1% in the fourth quarter of last year, the government said Wednesday.

The Federal Reserve has also said that it plans to continue buying $40 billion a month in mortgage-backed securities. Its high-volume purchases bring down yields on those securities, which influence mortgage rates.

“Until the economy strengthens and the job market picks up, we won’t see rapidly rising interest rates,” says Doug Lebda, CEO of LendingTree, an online lender exchange.

Lenders also have room to keep rates down by shrinking their profit margins, Lebda says. They may do that if loan volume drops.

SOURCE: Freddie Mac / USA Today

Obama: Housing “Clearly Turning a Corner”

The housing market has shown signs of “bottoming out nationally and clearly turning a corner,” according to the Obama Administration’s December Housing Scorecard.

HouseCoinsLedgerHome values are inching up while home sales remain strong. Some home price indexes are showing values up 5.6 percent and 4.3 percent from year ago levels, according to the Scorecard.

“As the December housing scorecard indicates, our housing market is continuing to show important signs of recovery,” says Michael Berman, a HUD senior adviser. Home inventories are falling, reaching a 4.8-month supply in December compared to November’s 5.3-month supply.

Americans are continuing to see the amount of equity in their homes increase. American home equity grew to $8 trillion in December but is still below the nearly $14 trillion in equity reached prior to the recession.

More than 6 million mortgage modifications and other kinds of housing assistance have taken place between April 2009 and November 2012, helping more home owners stay in their homes, according to the administration. The housing scorecard is a comprehensive report on the national housing market, released every month by the U.S. Department of Housing and Urban Development and the U.S. Department of Treasury.

To view the press release and report: Click Here

SOURCE: HUD

CFPB Unveils Sweeping Changes to Mortgage Rules

The Consumer Financial Protection Bureau unveiled new mortgage rules Thursday that are expected to change how home buyers go about getting approved for a home loan.

Loans that meet the agency’s new lending criteria now will be called a “qualified mortgage.” Every company that issues mortgages will be required to follow the new guidelines in order to receive protection from lawsuits filed by troubled borrowers or buyers of mortgage-backed bonds. Some types of loans will be excluded from these rules, such as interest-only mortgages and loans on which the principal balance rises over time.

A “qualified mortgage” will consist of the following:

  • Consumer Financial Protection BureauLenders must prove that income and assets are sufficient to repay the loan (this applies to jumbo loans as well).
  • Borrowers must be able to document their jobs.
  • Credit scores will have to meet a minimum standard.
  • Borrowers will have to be able to show that they can also still afford other debts associated with the home, such as home equity loans as well as property taxes.
  • Lenders will consider borrower’s other debts before issuing a mortgage too, such as student loans, car loans, and credit card debt.
  • Monthly payments must be affordable to the borrower.

Home buyers who fail to qualify for a “qualified mortgage” can still get a mortgage, but mortgage payments must not be more than 43 percent of the borrower’s pre-tax income.

Also, the CFPB plans to make some borrowers exempt from the new rules, such as applicants looking to refinance out of  subprime adjustable-rate mortgages or some mortgages issued by non-profits that target low-income home buyers.

The new rules will take effect Jan. 21. Lenders have a year to fully implement these rules.

SOURCE: Realtor Daily News

Comprehensive “Year to Year” Sales Report

Want to know how the Sun Valley Real Estate market is really doing?

Attached is a link to a complete “Year to Year” report that details all activity in the Sun Valley Board of Realtors® MLS.

The report compares 2011 (all 12 months) with 2012

SaleReport2011-2012-500

 

Example of detail in report

Single Family Residential, Mid-Valley location

Last Year = 2011  This Year = 2012

Active Listings

Last Year:220  This Year: 197 Down 10%

New Listing

Last Year: 124   This Year: 90 Down 27%

Number Under Contract

Last Year: 24  This Year: 57 Up 137%

Number Sold

Last Year: 23  This Year: 48 Up 108%

Sold Volume

Last Year: $29,625,511  This Year: $45,687,876 Up 54%

Average Sale Price

Last Year: $1,288,066  This Year: $951,831 Down 26%

Percent of List

Last Year: 92%  This Year: 93% Up 1%

Click to View Report

 

 

 

 

Bank Says Sell! – Price Reduced – Tremendous Value

Location doesn’t get any better than this close-in Sun Valley home located smack dab between Ketchum and Sun Valley in the Bitterroot area. Walking distance to everything.

Home boasts 4 bedrooms/3 baths, over 2600 square feet, 2 fireplaces, 2 decks, fenced rear yard, 2 attached garages with room for 3 cars, remodeled kitchen and master bedroom suite.

Large west facing decks with private yard (.323 Acres) and hot tub. Priced below current assessed value.

Real Estate Provisions in “Fiscal Cliff” Bill

ObamaSigningABillOn Jan. 1 both the Senate and House passed H.R. 8 legislation to avert the “fiscal cliff.”

The bill was signed into law by President Barack Obama on Jan. 2.

Below is a summary of real estate related provisions in the bill:

Real Estate Tax Extenders

  • Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
  • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  • 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012
  • 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.  These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000.  These thresholds have been increased and are indexed for inflation and will rise over time.  Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent.  That amount is then used to reduce the total value of the filer’s itemized deductions.  The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years.  They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012.  Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return.  After that, any gains above those amounts will be taxed at 20 percent.  The $250,000/$500,000 exclusion for sale of principal residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax.  After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

Shadow Inventory Threat Wanes

The number of homes in “shadow inventory” dropped from 2.6 million in October 2011 to 2.3 million in October 2012, according to a new report from CoreLogic.

Shadow inventory refers to the supply of homes that are in foreclosure or have seriously delinquent mortgages but are not yet on the market.

The size of the shadow inventory continues to shrink

No InventoryMany housing experts once predicted that the shadow inventory would cause overall inventories to skyrocket and place downward pressure on home prices. Yet an increase in short sales and loan modifications have helped to lessen the impact, analysts say.

“The size of the shadow inventory continues to shrink from peak levels in terms of numbers of units and the dollars they represent,” says Anand Nallathambi, president of CoreLogic.

“We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold.”

SOURCE: CoreLogic

FORECLOSURE: What It Really Means & How to Avoid It.

Mortgage debt relief extension should help distressed home owners

One measure tucked into Congress’ action to avert the Fiscal Cliff will help distressed home owners by approving the one-year extension of the Mortgage Debt Relief Act.

Since 2007, that law has given homeowners an exemption on federal taxes when they obtain debt forgiveness on their primary home. For example, a family with a short sale for $100,000 less than their mortgage would otherwise have to pay taxes on that difference as if it were income. It also applies when lenders forgive a portion of mortgage principal without the home changing hands.

Without a tax exemption, some homeowners might chose to lose the home to foreclosure instead of facing a large tax bill.

The Mortgage Debt Relief Act will last until Jan. 1, 2014.

“This extension will help struggling homeowners take full advantage of the assistance offered them by the national mortgage settlement and other foreclosure relief programs.”

9 Ways to Avoid Foreclosure:

REINSTATEMENT: Bring the loan current
FORBEARANCE: Temporary repayment plan
REFINANCE: New loan with reduction in monthly payments
LOAN MODIFICATION: Modify original loan terms
SELL THE PROPERTY: Use equity to payoff or pay difference
RENT THE PROPERTY: Must make loan current
SHORT SALE: Negotiate with bank to accept sale under loan amount
DEED IN LIEU OF FORECLOSURE: “friendly foreclosure:
BANKRUPTCY: Will stall foreclosure but not prevent it

Call today and allow our team of experts help you navigate a positive solution!

208-928-7653

It’s TaterTime for the Sun Valley SnowSports School

The Sun Valley Snowsports School offers 3 sessions of Spuds Camp for kids in grades K-6. Sessions will be held January – March for three consecutive weekends with AM and PM sessions. Please contact Sun Valley Snowsports School at (208) 622-2289 or visit www.SunValley.com to make reservations or for more information.

SpudSessions

Helmets are required in the Spuds Programs!

Senate ‘Cliff’ Bill Retains Mortgage Cancellation Relief

HouseVoteTax rates would remain the same for most households and mortgage cancellation relief is extended in a budget package passed by the U.S. Senate early this morning to avert the so-called fiscal cliff. The House today could take up the bill, which NAR has been monitoring closely because the fiscal cliff’s automatic tax increases and federal spending cuts involve programs important to real estate and impact household wealth. Based on what the House does, the provisions in the Senate bill could change in the final bill.

The “American Taxpayer Relief Act of 2012’’ passed on a bipartisan 89-9 vote in the middle of the night and extends current tax rates for all households earning less than $450,000, and $400,000 for individual filers. For households earning above these limits, tax rates would revert to where they were in 2003, when taxes were reduced across the board. That means taxpayers in the highest bracket would pay taxes on ordinary income at a rate of 39.6 percent, up from 35 percent.

Taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains in effect

The tax rate on capital gains would also remain the same, at 15 percent, for most households, but for those earning above the $400,000-$450,000 threshold, the rate would rise to 20 percent.

Importantly from NAR’s perspective, the exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains in effect, so only home sellers whose income is $450,000 or above and the gain on the sale of their house is above $500,000 would pay taxes on the excess capital gains at the higher rate (with corresponding numbers for individual filers). For the vast majority of home sellers, there is no change.

The bill also reinstates provisions that phase out personal exemptions and deductions for incomes over $250,000 for singles and $300,000 for couples.

The bill would also extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender

A number of what lawmakers call extenders are in the bill. Extenders keep in place expiring tax provisions. Of most interest to real estate, the bill would extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender, typically in a short sale or foreclosure sale for sellers and in a modification for owners. Without the extension, any debt forgiven would be taxable, which, for underwater households, represents a financial burden.

Also extended are deductions for mortgage insurance premiums and for state and local property taxes, which, along with the mortgage interest deduction, are important tax considerations for home owners and buyers.

In two other important provisions, the alternative minimum tax (AMT) is permanently adjusted for inflation, making it unnecessary for Congress to adjust it each year. The AMT was enacted in 1969 to help ensure a minimum tax bill for high-income households that would otherwise minimize their taxes by shielding much of their income in deductions and using other tax strategies. Because it was never indexed to inflation, AMT threatens to catch middle-income households in the tax, so Congress each year adjusts it. Now the adjustment would be permanent.

The other key provision is a change in the estate tax so that estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. Currently, the top rate is 35 percent.

The other side of the fiscal cliff is hundreds of billions of dollars in automatic, across-the-board federal spending cuts, with a disproportionate share of the cuts affecting defense spending. The Senate bill would push back the deadline for the cuts for two months.

SOURCE: National Association of Realtors®