New program to benefit commuters

With the influx in gas prices, it’s getting more costly to drive your car to work, especially those living in the suburbs commuting to the city and vice versa.  And higher gas prices mean higher-priced tickets for the bus and train, too.  The Chicago Tribune has a new article about a great new program to benefit commuters. I am highlighting some of the main points below.

 There’s a Chicago organization called the Metropolitan Planning Council that is piloting a program called Commute Options.  What they’re hoping to do is recruit 10 to 15 employer this year that would offer their employees incentives to reduce the cost of commuting to work.  Right now a lot of affordable homes are in areas where there doesn’t happen to be a lot of job openings.

According to a council spokesperson, “A lot of communities where people can afford to live in our region are not the places where there’s a thriving job market.  In order to bridge that gap, we’re working with employers to give employees some options.”

So this is important information that can also benefit home sellers.  If you live within 2 minutes to a highway or are a 2-minute walk to the Metra station, you definitely want to highlight that in your home listing.  More and more people find commuting information as important as the number of bedrooms in a home or what type of flooring there is.  

The article also mentions a recent survey of Coldwell Banker agents.  75% said the increase in fuel prices has led their buyers to adjust their thinking on where they want to live.  More and more want to be closer to work or in a location that work is easily accessible and affordable.  

So sellers need to make sure their Realtor knows all the information about public transportation that’s close as well as proximity to highways and major roads.  It’s important to highlight.  

I hope everyone had a nice holiday weekend.  I can be reached via my Web site.

We can improve the mortgage industry

So now the government wants our help.  But this is going to be a good thing for all those homebuyers out there.  

According to this USA Today article, the Consumer Financial Protection Bureau is looking to get our feedback to help make their mortgage paperwork and disclosures a lot more user friendly.  They want to know suggestions on how to make the expenses easy to understand as well as getting input on what borrowers are looking to see in the paperwork.

For example, right now borrowers are given two documents when applying for a loan: a Truth in Lending form (a disclosure) as well as a Good Faith Estimate which predicts what your closing costs will be.  And the Good Faith Estimate was just regulated last year saying that the total cost could not be more than 10% off what the initial estimate was.  

But they’re still confusing.  According to the article, “They really don’t tell the consumer what they want to know,” says Mike Anderson of the National Association of Mortgage Brokers. For example, a key concern for borrowers is the total amount they’ll need to pay at closing. Yet that figure is absent from the current forms.”  Oftentimes you don’t receive the exact amount you need to bring to closing until 24 hours prior, sometimes as close to 2 hours prior.  This is hard when closing first thing in the morning when you have to get to a bank first.

I think this is a great idea.  They’re asking for our input as borrowers as to what’s important to us, rather than just trust the guys in suits that work there.  So I suggest that everyone goes on the Web site to view the forms and make suggestions.  It will be July 2012 before all the forms are finalized and the bureau said they’d be taking suggestions through at least September of this year.  

I can’t stress enough how great it is that our feedback can go toward implementing something that we’ll continue to use.  If you’re confused about any part of the forms or want to see more, definitely go online to give your input.  It’d be great if they did this with the HUD-1 settlement statement as well.  I have many buyers who are confused by how the statement appears and only get a cursory look with their attorney at closing.

I’m available online for all of your real estate needs.

Mortgage confusion still high

Zillow.com’s Mortgage Marketplace recently conducted a nationwide survey about what adults know about mortgages.  The Chicago Tribune posted a column about the results, and they were pretty surprising to me that a lot of adults don’t know much about mortgages.  So I wanted to post some results here and discuss to make everyone more knowledgeable.

1. 57% of prospective homebuyers don’t know how ARM (adjustable rate mortgages) work.  Most thought that they will always reset at a higher rate.  First of all, a definition.  An adjustable rate mortgage is one where the rate can change after a certain number of years.  For instance, you’ll hear the terms 5-year ARM or 10-year ARM.  That means the rate will reset after that number of years.  So if you lock in at 5% interest for a 5-year ARM, in 5 years, the rate will go up or down (not always up!) depending on what the current market conditions are.  And ARMs also have limits to how much they can go up or down.  The difference between this and a fixed rate loan is that your interest rate will not change on a fixed rate.  So it’s important to discuss ALL conditions with your mortgage broker prior to signing a loan.

2. 33% believe that being prequalified for a loan means you have financing secured.  This is very misleading.  Oftentimes when you go to make an offer or begin looking at homes, your Realtor will want to make sure you’re prequalified for a loan.  That means you’ve spoken to lenders who will talk to you and find out the maximum purchase price you have.  The lenders should pull your credit and get some other documentation from you to know the amount you can spend.  This, however, does not mean the loan is done.  Once you’ve found a home, you will submit your contract to your lender who will go through the underwriting process.  This involves an additional credit report sometimes, paycheck stubs, tax returns, etc.  You’ll also make sure that the title is clear on the home, all prior to you actually signing any closing paperwork.

3. 55% think that mortgage rates are set per day.  In fact, rates can fluctuate all throughout the day, just like the stock market.  It’s important to know this because sometimes your lender will quote you a rate of 5%, for example, and by that afternoon, that rate could be up to 5.125%.  So you’ll want to talk to your lender about “locking in” a certain rate, which you can often do but are given a timeline on it to go under contract on a home for that rate to stick.  And while missing the deadline can mean your rate will go up, it’s also possible that the rate will be lower.

I’d love to know what other mortgage questions you have.  Please always speak to a financial representative prior to signing any paperwork on a loan so you understand the process.  I can be reached  online.

Foreclosures down, backlogs up

Well, I’ve got good news and bad news.  And the bad news can even be interpreted as good news for some.  Good news: foreclosure rates across the country are at a 3-year low, according to MSN Real Estate.  Bad news: Courts are so backlogged by the foreclosure filings that it’s taking a year or more for foreclosures to be processed on some homes.  And that can be good news for those underwater on their mortgages, as they can live in their home for even 2 years in some states without being evicted and without a mortgage payment.

RealtyTrac Senior Vice President Rick Sharga says that “This is really all part of the robo-signing paperwork issue.  Almost none of this is related to a decline in distressed properties. ”  It’s just that Courts can’t keep up with all the paperwork.  And Sharga is unsure whether we’ve reached our peak of foreclosures or more filings will occur once the banks and Courts start catching up.  Even new hirings aren’t helping the banks move the process along any quicker.  And that’s also bad news for buyers interested in foreclosure or bank-owned properties.  The waiting process can still take a while for someone to review all the paperwork.

I just mentioned how some homeowners can live in homes for 2 years prior to being evicted.  In some states, like New York and New Jersey, it’s taking the bank an average of 800 days to finalize a foreclosure once the process has started.  And now the government is going to charge lenders for handling foreclosures improperly.  They’ve also passed regulation requiring 14 mortgage servicers to hire more staff and have a single point of contact for a homeowner dealing with a foreclosure or loan modification.

Nevada leads the country with the highest foreclosure rate.  1 in every 35 homes has received a foreclosure filing.  Arizona and California round out the top 3.  And, unfortunately, Illinois also is included in the top 10, along with Colorado, Idaho, Utah, Georgia, Michigan, and Florida.

And analysts say it can take years for all these foreclosed homes to clear the market brining home values up again.  But it could take even longer because of the backlogs in the courts.  Fannie Mae and Freddie Mac even said they’re going to slowly trickle foreclosures into the market instead of releasing them all at once.  While this is beneficial to home values now, it just means it will take even longer for the housing market to stabilize.

What do you think?  Should banks be allowed to control when foreclosures hit the housing market?  Please leave me a comment or visit me online.

Signs the economy is on the upswing

I don’t know about you.  But it gets kind of depressing when I keep reading about how home values are still low, mortgages are harder to come by, and it’s taking longer for homes to sell.  So I found this great slideshow by Kiplinger that talks about several different indicators that the economy is recovering.  And I’m not talking about business statistics.  These are signs that show that things are getting better based on what people are purchasing.

1. People are ordering dessert.  During a recession, it’s very common for restaurant traffic to slow down, as people don’t have the extra money to spend on eating out.  But now restaurants are indicating that people are ordering dessert again, a good sign that more money is back in their pocket.

2. In July 2010, search engines hit an all time high of the number of people searching for terms like “unemployment” or “unemployment benefits.”  However, since that time, claims to receive unemployment insurance are down.  Hopefully this is a start of a lot less mass layoffs.

3. Starbucks saying revenues were up in 2010, after dropping significantly in 2009.  If I’m not the first to tell you, splurges on fancy coffee drinks is one of the easiest ways to cut back spending.  But with more people shelling out cash at Starbucks when they haven’t dropped prices, it only means that people are managing to fit it into their budgets.

4. Plastic surgery is on the rise.  The American Society of Plastic Surgeons says that last year their patients increased by more than 13 million people who opted to get a procedure (or more) done.  So more people are able to use money toward this when insurance doesn’t cover it must mean that the economy has to be leveling off somewhat.

5. Headed to Las Vegas?  Casinos are saying that their traffic has started to increase, amidst a large drop in 2009 from a high in 20o7.  They’re predicting about a 3% gain.

Have you come across any other trends in purchasing or habits that you think signify the economy is bouncing back?  I’d love to hear them.  Please leave me a comment or visit me online.