Image via Wikipedia

WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.

The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.

The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.

Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.

“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.

The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.

The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.

Information obtained from the Calif. Asso. of Realtors with permission.

Article printed in the Mercury News and A.P.  Jan. 25,  2012.

Related articles

• Interest Rates will Stay Low, Low, Low (marvicirealtygroup.wordpress.com)

Image via Wikipedia

The Fremont Planning Commission held a work session on Thursday, Nov 17 to discuss the proposed Climate Action Plan (CAP).  Among the implementing measures is a Residential Energy Conservation Ordinance (RECO) that would require energy retrofits be completed when a home is sold. This could cost a home seller hundreds of dollars.

 Realtor members have testified at several meetings and met with Fremont officials in an attempt to remove these proposals from the CAP.  The Planning Commission appears to understand the negative impacts such requirements would have on the real estate market. However, City staff are still set on including the RECO, and it’s point-of-sale requirements, in the final CAP.

Related articles

• Another Energy Retrofit Initiative (green.blogs.nytimes.com)

• Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
• Poor credit: Lenders typically reject applicants with FICO scores below 620.
• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Related articles

• How to Boost Your Odds of Getting Approved for a Mortgage (dailyfinance.com)
• First-time buyers hit by lenders’ caution (guardian.co.uk)
• How to Know if You Qualify for a House Loan (thinkup.waldenu.edu)

Fifty-one percent of California households could afford a single-family home priced at the median, according to the CAR. That was an increase from 46% during the same period last year, when buyer tax credits fueled the market and pushed up prices. Affordability decreased from the prior quarter, but that was due to seasonal variations that pushed up prices.

Potential buyers needed to earn a minimum annual income of $63,080 to qualify for the purchase of a home priced at the state’s median, $293,580, which is the price at which half the homes sold for more and half for less. The house payment on that purchase, including taxes and insurance, would be $1,580, the group reported, assuming a down payment of 20% and an effective composite interest rate of 4.85%.

During the second quarter, affordability fell in the priciest parts of the state. San Bernardino County was the most affordable in the state, with a rate of 77%, while San Mateo County was the least affordable, with only 21% of households in the state able to afford that county’s median-priced home, the group reported.

That’s great news, so it’s now time we all buy instead of rent. Call me if you need help.

This information was obtained by permission from the Calif Assoc of Realtors.

• Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
• Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
• Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.
• In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
• Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or get no inspections.
• Even with the challenges associated with short sales, buyers don’t have too avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.

According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.

Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.  The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.

Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

This information was obtained from the Calif. Asso. of Realtors, and used with permission.

 The first improvement/repair homeowners should consider are those that impact the home’s basic structures and systems.  Potential home buyers generally do not want to face expensive repairs, and if items such as the foundation, roof, air conditioning, water heater, or other basic structure need to be fixed, the property will be considered a fixer-upper and its market price will be discounted accordingly.

Some minor replacements will produce big results for minimal cost.  Replacing and coordinating bathroom and kitchen hardware and fixtures are generally inexpensive, but tend to make a big difference.  The same can be said for getting rid of any dated finishes, such as old wallpaper and brass light fixtures.

Homeowners who don’t know when or even if they will be able to sell their home are advised to choose home improvement projects carefully.  Unless the home is located in an upscale neighborhood and the property already is immaculate, owners can skip expensive upgrades – such as remodeled bathrooms – and focus on the fundamentals.

Information obtained by the Calif. Assco. of Realtors with permission. Photo by Barry Ripp.

I look forward to helping you in anyway I can. 

Alameda, California – http://www.youtube.com/watch?v=umg9CUVhcm0

Albany, California – http://www.youtube.com/watch?v=UHtBnoRUEe8

Berkeley, California – http://www.youtube.com/watch?v=99hulMyHn50

Blossom Valley, California – http://www.youtube.com/watch?v=-NnhW9Aa8qo

Campbell, California – http://www.youtube.com/watch?v=0vW1XRohxnA

Carmel, California – http://www.youtube.com/watch?v=d_fv8raJvJs

Cupertino, California – http://www.youtube.com/watch?v=-t5-VBa-xDI

Dublin, California – http://www.youtube.com/watch?v=TrCa7J8vseY

Emeryville, California – http://www.youtube.com/watch?v=nIVFzcKDqJM

Fremont, California – http://www.youtube.com/watch?v=GxBg9z_aZX0

Gilroy, California – http://www.youtube.com/watch?v=zpIcevWc1T0

Hayward, San Lorenzo, California – http://www.youtube.com/watch?v=hj-9Q44DxoE

Livermore, California – http://www.youtube.com/watch?v=wIceLQhYBeo

Los Altos, California – http://www.youtube.com/watch?v=NGbdSewOpzs

Los Gatos, Monte Sereno, California – http://www.youtube.com/watch?v=xjz7pIcPVnI

Milpitas, California – http://www.youtube.com/watch?v=L70mGkUN-Ug

Monterey, California – http://www.youtube.com/watch?v=L5tAE6JFD9I

Morgan Hill, California – http://www.youtube.com/watch?v=zMtQmrp20-8

Mountain View, California – http://www.youtube.com/watch?v=UMRVDVYCNZE

Newark, California – http://www.youtube.com/watch?v=2G5FT6SGeio

Oakland, California – http://www.youtube.com/watch?v=3okcJIUIlwI

Palo Alto, California – http://www.youtube.com/watch?v=FkJBK3-R_Aw

Piedmont, California – http://www.youtube.com/watch?v=ErZ_obcGb54

Pleasanton, Sunol, California – http://www.youtube.com/watch?v=voAFmyM3NGw

Salinas, California – http://www.youtube.com/watch?v=R-EYkmN7WR8

San Jose, California – http://www.youtube.com/watch?v=dcK3X9J-awU

San Leandro, California – http://www.youtube.com/watch?v=OAu1Up1PNnw

Santa Clara, California – http://www.youtube.com/watch?v=AnmCscnxXKs

Santa Cruz, California – http://www.youtube.com/watch?v=o1_mh1uLlF8

Saratoga, California – http://www.youtube.com/watch?v=kESZB-7tyeg

Sunnyvale, California – http://www.youtube.com/watch?v=_LcGBiK7e1Y

Union City, California – http://www.youtube.com/watch?v=zFXiAOe1Yck

Higher credit score requirements – although you may get approved with a 620 credit score, you likely won’t get the most favorable interest rate and fee.  The solution?? Contact all three credit reporting agencies—Equifax, Experian & TransUnion, by calling 1-877-3222-8228 or going to www.AnnualCreditReport.com . Once you get your credit reports, check all information for accuracy.  If you find any discrepancies, report it to the credit company immediately.

Greater scrutiny of income & assests – mortgage lenders have to verify your information, so be prepared when you apply for your loan by having documentation that supports your income & assets. Have copies of tax returns, paystubs, bank statements and any investment accounts.

With a little preparation, you’ll be able to take advantage of today’s low interest rates and reasonable home prices…and buy the home of your dreams.