Fannie Mae Gets Tough(er) On Borrowers. Again.

Fannie Mae raised the bar for mortgage applicants this past weekend.  Getting approved for a home loan just got harder.

In its official announcement, Fannie Mae says the updates minimize long-term lending risks.  If that's the case, this won't be the last guideline change Fannie Mae makes -- especially with loans defaulting at an above-normal clip.

The immediate changes are major. The first pertains to credit scores.

Effective December 13, 2009, the bulk of Fannie Mae's loans require a 620 credit score minimum.  There are very few exceptions.

A second relates to loans with private mortgage insurance. 

Homeowners whose loan-to-value exceeds 80 percent now have a choice:

1. Pay higher mortgage insurance premiums month-after-month
   
2. Pay a one-time fee paid at closing to compensate for higher risk

Both options result in higher consumer loan costs.

A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores. 

In no case whatsoever may debt-to-income exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for "expanded level" mortgage approvals.  These updates affect just a small part of the population.

So, home prices are rebounding, mortgage rates are low, and -- for 5 more months at least -- there's a federal tax credit for qualified buyers.  You don't have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.

The best "deal" won't matter if you can't get qualified on your mortgage.

Who Knew? Great Gift for Do It Yourself Guys.

Tools For The Home : 16-In-1 Black And Decker ReadyWrench

When it comes to DIY projects, one socket size rarely fits all.  So, for light jobs around the house, the 16-in-1 Black & Decker socket wrench can come in handy.  Its official name is the ReadyWrench.

The ReadyWrench won't replace a complete socket set, but because it features the 16 most popular socket sizes, it can simplify your work. The tool fits SAE sizes (5/16 inch, 3/8 inch, 7/16 inch, 1/2 inch, 9/16 inch, 5/8 inch, 11/16 inch, 3/4 inch) and metric sizes, too (8mm, 10mm, 11mm, 13mm, 14mm, 16mm, 17mm, and 19mm).

The head rotates to 45 and 90 degrees so the tool can be used for ratcheting in tight places, when needed.

The ReadyWrench comes with a lifetime warranty and is available at most hardware stores and on Amazon.com for $30. If you're looking for an inexpensive, suitable gift for a DIY homeowner, the ReadyWrench could be your fit.

Featured Listing Of The Week

This week I am featuring an exciting home in Emerald Heights.  2134 View Crest Glen, Escondido, CA. 92026.  It is located at the end of a quiet cul-de-sac with the most amazing panoramic views of the canyon and mountains.  You will be amazed at the peaceful serenity found here.  Master suite is on the lower level.  Great things come in 3's - 3 bedrooms, 3 baths, 3 car garage!  One of a kind with many designer touches.  Seller will consider offers from $499,000 to $539,000.

Just for fun!

Foreclosure Activity Falls For The 4th Straight Month

Since peaking in July 2009, national foreclosure activity has dropped through 4 consecutive months. 

On a month-to-month basis, November's foreclosure activity fell another 8 percent. 

However, national foreclosure activity continues to be dominated by a minority of states.

As reported by RealtyTrac.com, more than half of November's foreclosure-related activity sourced from just 4 states:

1. California
   
2. Florida
   
3. Illinois
   
4. Michigan

These are the same 4 states that topped October's foreclosure activity despite three of them posting month-to-month declines last month.

The remaining Top 10 states in terms of total foreclosure activity include Arizona, Texas, Ohio, Georgia, Nevada and New Jersey.

If you've been actively looking at REO lately, you've likely noticed that true bargains are harder to find.  This is because buyers of all types -- first-timers, move-ups, and investors -- are purchasing bank-owned homes aggressively and getting better at identifying the "best ones".

But just because supplies are dwindling doesn't mean you should just jump in.  Buying foreclosures isn't for everyone for two very strong reasons:

1. Homes are often sold as-is and may have "issues"
   
2. The closing process can be unpredictable

Therefore, if you're thinking of buying a foreclosed home, be sure to talk with your real estate agent about potential problem before going under contract.  Better too soon than too late.

There are still good deals in the foreclosure market, but based on November's data, they may not last through the winter.  "Distressed home" sales now account for 30 percent of home resale activity.

How To Increase Your 2009 Mortgage Interest Tax Deduction

For many American homeowners, interest paid on a mortgage is tax-deductible in the year in which it was paid.

Knowing that, eligible homeowners can increase their 2009 tax deductions just by making their January 2010 mortgage payment before the end of the year.

By paying in 2009, the mortgage interest paid can be applied against 2009's itemized tax deductions even though the payment isn't technically due until 2010.

It can reduce your tax burden come Thursday, April 15, 2010.

And lest you think you're paying the mortgage "in advance", remember that mortgage interest is paid in arrears; a payment due January 1 accounts for interest that accumulated in December 2009 anyway. 

Tax planning is a complicated issue and not all homeowners qualify for mortgage interest tax deductions. Check with your tax professional before making tax planning decisions.

If you don't have an accountant you trust, call or email me anytime; I'm happy to make a recommendation to you.

Stay Safe This Winter

As temperatures turn cooler and home heating systems get fired, homeowners should learn to recognize the symptoms of carbon monoxide poisoning and how to safeguard against it.

Carbon monoxide poisoning presents like the flu -- headache, dizziness, and nausea.  As a result, many people confuse the two. 

Sometimes, the consequences are fatal. Each year, carbon monoxide sends 40,000 Americans to the emergency room and, as we learn from CBS News, those that survive are far more likely to develop and die from heart disease later in life.

Stay safe in your home.

1. Don't heat your home using your gas oven
   
2. Don't leave a running car in your garage
   
3. Service your gas-burning appliances annually

And, most important, install carbon monoxide detectors near every bedroom in your home.

Get Your Home Ready For Listing : How To Eliminate Home Odors Completely

Difficult home odors plague homeowners.  Ground into rugs, absorbed into walls, and clinging to furniture, some smells are slow to fade, leaving lasting impressions on both guests and potential buyers. Often, that impression is unfavorable.

Do something about it. 

In this 4-minute piece from NBC's The Today Show, you'll learn how to eliminate bad smells and prevent them from returning.  It's all basic direction, too:

• How to use the porous nature of wood to your advantage
  
• How to remove get "smoke smell" out of a wall
  
• How to improve a home's air quality by cleaning carpets

For more serious offenses, the video covers in-home air purifiers, too.

"Smelly homes" are undesirable and can make your home less attractive to buyers.  Watch the video, follow the instruction, and declare your home an Odor-Free Zone.

Existing Home Sales Blow Past Expectations

Another month, another piece of evidence that the housing market is in recovery.
Existing Home Sales surged in October as the nation's homebuyers took advantage of low mortgage rates, low list prices, and, for some, a generous tax credit.
Home resales are 23 percent higher versus a year ago and home supply is down to 7 months nationwide.
Inventory hasn't been this low since February 2007.
The news shouldn't be surprising, however.  The same real estate trade group that produces the Existing Home Sales report also publishes a monthly report meant to predict future home sales called the Pending Home Sales Index.
Pending Home Sales have been through the roof since mid-May.
So, with pending home sales showing no signs of slowing and 80% of pendings turning into actual, closed sales, we can expect existing home sales volume to rise in the coming months, too.  Especially because Congress extended the home buyer tax credit to include (1) "Move-up" buyers and, (2) Buyers with higher household incomes.
It's terrific news for home sellers. The housing market turnaround means higher sale prices and fewer concessions to buyers long-term.
To buyers, on the other hand, the news isn't so good. The window to find a "deal" appears to be closing quickly.

Don't Miss Upcoming Events!

December is such a wonderful time of the year!  Don't miss the fantastic community events scheduled around the Holiday Season.  Just go to the sidebar and see what looks fun for you and your family.  I will be adding activities as I become aware of them.  For additional information, call or go to the website listed there.  Have a wonderful holiday season and Merry Christmas to everyone.

Happy Thanksgiving!

Should I Consider A 15-Year Fixed Mortgage?

For today's home buyers and homeowners that can manage the higher monthly payments, 15-year fixed rate mortgage rates look attractive as compared to comparable 30-year products.

The 15-year/30-year interest rate spread is near its 5-year high.

Despite lower rates, however, homeowners opting for a 15-year fixed mortgage should be prepared for its higher monthly payments.  This is because the principal balance of a 15-year fixed is repaid in half the years as with a standard, 30-year amortizing product.

As compared to 30-year terms, 15-year products repay 3 times as much principal each month.

Versus a 30-year, 15-year fixed mortgages have a few downsides worth noting.  The first is that, because 15-year mortgages are heavy on principal and light on interest, homeowners who itemize tax returns may have to claim a smaller mortgage interest tax deduction at tax time.

Another negative is that the sheer size of the payment.  If you run into fiscal trouble down the road, the only way to reduce the monthly obligation is to refinance into a 30-year product and that costs money to do. 

In other words, be sure you can manage the payments over the long-term before you opt for a 15-year term.   If you can manage it, though, the rewards are tangible.

At today's rates, a 15-year fixed and 30-year fixed costs $230 extra per $100,000 borrowed.

Help! Thanksgiving Is Thursday And I Don't Know What To Cook!

Thanksgiving is Thursday. If you're cooking for group (or a crowd) and you haven't yet put your menu in order, click on through Bon Appetit's Thanksgiving Menu Planner.

Answer to 3 basic questions and Bon Appetit serves up a list of dishes and their respective recipes.

1. For how many people are you cooking?
   
2. How much time do you have to cook?
   
3. What's your style?

The dishes range from the simple (Pumpkin Pie with Spiced Whipped Cream) to the sophisticated (Herb Roasted Turkey with Apple Cider Gravy).  There's even a menu for vegetarians.

It's not too late to host a delicious Thanksgiving dinner. Bon Appetit can get you moving in the right direction.

 

Great News!

The Federal Reserve kept its key interest rate near zero once again Wednesday.
It added in a statement that although the economy continues to improve, it intends to stay the course. It is amazing to me that interest is at zero. How long can it last? Take advantage of it, now is the time to refinance or buy!

Not passed but getting close

The much desired tax-credit-extension-to-pass-this-week

Wait until you see this:

After two weeks of delay, the Senate last night cleared the way to
pass a seven month extension and expansion of the tax credit for
homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut
off debate on a package of measures that includes the homebuyer
credit, making it virtually certain that the legislation will reach
President Obama for his signature this week.
The homebuyer tax credit, due to expire in 28 days, would be extended
through April 30 of next year. First-time buyers who are in process of making
a purchased would not need to worry about qualifying for the $8,000
credit if they close after the November 30 deadline.
For the first time, the legislation cleared last night makes move-up
buyers as well as first-time buyers would be eligible for a credit.
The $8,000 maximum first-timer credit will continue and will now
available to couples with income up to $225,000, a nearly $55,000
increase above the level in existing law. A new $6,500 maximum
credit would also be available to move-up homeowners who have lived
in their current residence for five of the prior eight years..

Higher Home Prices Ahead, Says The Pending Home Sales Index

The housing market continues to steam forward.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September.

It's the longest winning streak in the history of the index and Pending Home Sales are now at their highest levels since December 2006.

A Pending Home Sale is a home under contract to sell, but not yet closed. It's the precursor to an Existing Home Sale.

Trade group data shows that nearly 80 percent of "pending" homes close within 2 months. The majority of those remaining close within months 3 and 4.

When the Pending Home Sales Index rises, it tells us that market activity has picked up. September's data confirms what we've been noticing since February -- the Buyers Market is ending.

With more homes under contract in the marketplace, homebuyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Fewer seller concessions

Therefore, if you're buying a home in the next several months, know that the 8-month run in Pending Sales will lead to a run in closed sales. It should result in higher home prices, too

Indeed, we're already seeing it.

How To Test A Home Smoke Alarm

According to the United States Fire Administration, there were an estimated 1.5 million domestic fires last year, resulting in more than 3,400 deaths. 

Many of these deaths occurred in homes with no smoke detectors or no working smoke detectors. 

When detectors fail, it's often because its batteries are dead or missing. Therefore, make a point to test your smoke detectors annually. 

Here's how to do it:

1. Have somebody go to the farther point of the house from the detector
   
2. Push and hold the testing button for 5 seconds to activate the alarm
   
3. Confirm the alarm is audible by all parties

You should also buy smoke detector aerosol and spray it directly into the device.  This will simulate a real fire.  If the alarm doesn't sound, the smoke detector will fail when it's needed most.  Replace the device immediately -- even if it beeps when you push the Test button.

Smoke detectors are inexpensive and essential.  Make sure the devices in your home are working properly.  Test them at least once per year. 

Featured Listing Of The Week

This week we are spotlighting 331 Montecito in Escondido. It is located next to Kit Carson Park in the gated community of Las Palmas Ranch. 5 bedroom, 3 baths, 3,000 square feet, Master on the entry level. Situated on 3/4 of an acre. VR $599,000 to $635,00. It's a real gem. Tell a friend.

Yeah! One extra hour!

Don't forget to reset your clocks one hour back this coming Sunday. Daylight Saving ends November 1 at 2:00 AM.

WARNING: 2010 Census Cautions from the Better Business Bureau

With the U.S. Census process beginning, the Better Business Bureau (BBB) advises people to be cooperative, but cautious, so as not to become a victim of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data.

The big question is - how do you tell the difference between a U.S. Census worker and a con artist? BBB offers the following advice:

If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.

Census workers are currently only knocking on doors to verify address information. Do not give your Social Security number, credit card or banking information to anyone, even if they claim they need it for the U.S. Census.

REMEMBER, NO MATTER WHAT THEY ASK, YOU REALLY ONLY NEED TO TELL THEM HOW MANY PEOPLE LIVE AT YOUR ADDRESS.

While the Census Bureau might ask for basic financial information, such as a salary range, YOU DON'T HAVE TO ANSWER ANYTHING AT ALL ABOUT YOUR FINANCIAL SITUATION. The Census Bureau will not ask for Social Security, bank account, or credit card numbers, nor will employees solicit donations. Any one asking for that information is NOT with the Census Bureau.

AND REMEMBER, THE CENSUS BUREAU HAS DECIDED NOT TO WORK WITH ACORN ON GATHERING THIS INFORMATION.. No Acorn worker should approach you saying he/she is with the Census Bureau.

Eventually, Census workers may contact you by telephone, mail, or in person at home. However, the Census Bureau will not contact you by Email, so be on the lookout for Email scams impersonating the Census.

Never click on a link or open any attachments in an Email that are supposedly from the U.S. Census Bureau.

For more advice on avoiding identity theft and fraud, visit bbb.org

How To Find Good Deals As The Buyers Market Comes To An End

At some point in their lives, every home buyer in America has wondered "Is now the best time to buy a home?" In this 3-minute video, NBC's The Today Show does a good job of answering the question.

The conclusion? Yes, but not if you're going to overpay.

The Buyers Market is ending, we learn, as home prices rise across most of the country. Pockets of opportunity remain, however, and the focused home buyer can still find a "good deal".

Some of the video's tips include:

• On what types of homes can you get the best prices
• What you can learn from looking in a seller's closet
• How to identify a desperate seller

The piece also goes negative on short sales, noting the amount of time required to buy one. Short sales typically do take longer to close versus a "traditional" purchase, but that doesn't mean they should be avoided.

There's plenty of bargains in the short sale arena, too.

What The Media Missed In September's New Home Sales Report

Some days, newspaper headlines are a terrible place to get your real estate news.

Today is one of those days.

After the September New Home Sales report showed sales volume down from August, the mainstream media jumped on the story:

• New Home Sales fall a surprising 3.6%
• Surprise Drop In New Home Sales
• Stocks slide as New Home Sales fall

But the headlines miss the point, somewhat. Yes, home sales volume is important to housing, but it's not as important as home supply.

A deeper look at the New Home Sales data reveals an interesting comparison point:

• New home sales volume fell 3.6%
• The number of new homes available for sale fell 3.8%

In other words, sales outpaced supply -- a running theme this year and a positive signal for housing.

Since peaking in January 2009, the supply of newly-built homes has now dropped by 40 percent. The average sale price is up 15% over the same period.

This is why you can't get your real estate news from the headlines. You have to dig a little bit deeper to get the real story.

September's New Home Sales report was plenty strong. The housing market recovery continues.

It's Finally Here!

I have been wanting for quite a while to start a Real Estate Blog. This is the place where you can keep up to date on what is happening around you and keep an eye on your home value. I will have pertenent up to date information on the market. I will also provide some fun insights into this wonderful place we call home. Don't hesitate to leave your comments or questions.