Karp Real Estate

Over 12,000 Homes Selling Each Day!

Below is a short article from today's KCM Blog. If you are thinking of buying or selling (or both),  I'd like to know what YOU are waiting for? 

Many believe that very few houses are selling and that almost no one can get a mortgage. We want to let everyone know that neither of these assumptions is true. Recently, the National Association of Realtors (NAR) released their Existing Homes Sales Report. According to the report there are, on average, 12,109 homes selling in the United States EACH and EVERY DAY! That means that approximately 12,000 houses sold yesterday, approximately 12,000 will sell today and approximately 12,000 will sell tomorrow. So the thinking that homes aren’t selling just isn’t true.

Another interesting fact in the report was that 72% of these transactions were accompanied by a mortgage. That means that approximately 8,719 people qualify for a mortgage on a daily basis in this country.

There are over 12,000 homes sold and over 8,000 mortgages granted every day. The real estate market is doing better than many believe.

Thank you for reading!  If you want to know what is going on in your local market and why, please contact me directly.

To find any property for sale in the Chicago area, click here.

For up-to-the minute market information, including recent sales, on any North Shore community, click here.

 

Trying to Refinance (and you don't have a Fannie or Freddie Mortgage)?

I know I said that I would write more about real estate property assessments.  I promise I will get to that....FYI the Lake County assessments have been published and sent to homeowners.  You have less than 30 days to appeal your assessment. Today's topic really strikes a chord with me....read on...

Trying to Refinance

The Federal government recently announced a program (HARP) that provide some relief for home owners that have paid their mortgages regularly.  This is exactly what many home owners today want and need.  It is a “reward” for staying the course and doing the right thing, even though your home value has declined and you are very likely upside down, or close to it.  Basically home owners will be allowed to refinance with much lower interest rates without getting an appraisal, as long as they have good credit and are current on their mortgage.

The problem is that this program only applies to Freddie and Fannie mortgages.  So what about all of the other home owners who have also stayed the course and continued to pay their mortgage and home equity loans in the face of falling prices.  Many people would love to refinance and take advantage of today's incredible rates, but they can’t get approved because their loan-to-value (LTV) is over 95% or possibly worse (and still sliding).  Many of these people are struggling to make ends meet.  If they could refinance the monthly savings would give them much needed breathing room. 

I don’t know how many people are in this situation, but I am sure that it is huge. I'd love to start a grass roots campaign to lobby the government to take action to encourage the banks to reward those of us who have been playing by the rules!!  If a significant number of people could save some real $$ on their mortgages it would be a boost to the economy.  These people could use it to purchase goods and services, pay off other debts, go on vacations, or maybe build up their savings so they have a safety net once again.  I realize that the banks will probably lobby against this because they say that they'll lose money on this scenario. I think that in the long run this is better option for the banks than strategic defaults, short sales, foreclosures and bankruptcy…don’t you?

I confess that I am among the many homeowners in this predicament.  So this topic is near and dear to me.  If you have any ideas on how we can get some attention in Washington D.C. on this topic, let me know...I'm all ears.  Feel free to repost this blog - as long as you give me credit for the original content, that is fine with me...

(FYI, photos are from my recent trip to historic Galena, IL)

Thanks for reading!

nsk

Nancy S. Karp

 

To find any property for sale in the Chicago area, click here.

For up-to-the minute market information, including recent sales, on any North Shore community, click here.

Will the 30-year Mortgage Disappear?

NOTE: THIS ARTICLE IS A REPRINT FROM THE KCM BLOG.  IT WAS POSTED YESTERDAY.  THIS IS ANOTHER REASON WHY ANYONE THINKING OF BUYING A HOME SHOULD NOT WAIT TOO LONG TO DO IT (ASSUMING THEY ARE GOING TO GET A MORTGAGE).  ALSO, IT IS A GOOD REASON WHY SELLERS SHOULD NOT WAIT EITHER - FEWER PEOPLE WILL BE ABLE TO QUALIFY FOR MORTGAGES IF THESE CHANGES ARE MADE! nsk

The federal government is reconsidering their involvement in the home mortgage process. They plan to still ‘guarantee’ certain mortgages. However, they appear to be redefining what they consider a ‘qualified purchaser’. They are discussing stricter lending guidelines in four different areas:

1. The type of mortgage
2. The minimum down payment
3. The debt ratios of the buyer
4. The FICO score of the purchaser

Today, we want to look at #1.

It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.

Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza:

“Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out.

“Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”

Why Is This Important?

You probably want to set your housing expense at the lowest number possible for the longest time possible. This may be the appropriate time to lock-in your long term housing expense as three things seem possible, if not likely, in the future:

• § Mortgage rates will increase from current historic lows
• § The 30 year fixed rate mortgage may disappear
• § Rents will return to historic norms of 3% annual increases 

Bottom Line

If you want to purchase a home of your own but are waiting to see where prices will go, consider what you could be giving up while you wait.

Real Estate Market Showing Signs of Improvement!

There are some signs that housing market is finally starting to recover. I am cautiously optimistic - the experts (and I) are not suggesting that it will come roaring back and that we will see 2006 numbers right away.  Here are some positive statistics:

• National Association of Realtors released their December Existing Home Sales Report this week. The report showed a 12.3% increase in closed transactions over the month before.
• Also this week the Census Bureau reported that privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Both of the above reports are promising.  However, not all the news in the reports was positive.

• Existing home sales were slightly down from the same month last year.

You may recall that home sales were artificially inflated at the end of 2009 because of the First Time Homebuyer Tax Credit, which was set to expire at the end of the year.  So comparisons between Q4 of 2009 to 2010 are somewhat murky.

So overall, these reports seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry. 

There is still a huge amount of visible and shadow inventory (homes in foreclosure and other sellers that have been waiting to sell their homes) which will continue to put downward pressure on prices.  It seems that buyers are beginning to realize that there are tremendous opportunities in the market.

My biggest concern about the recovery is the banking industry.  In addition to the foreclosed properties that are expected to come onto the market, the other side of the equation is the availability of mortgages.  I heard recently that Fannie/Freddie will be initiating “risk based” pricing adjustments this week.  This means that:

• Clients will now have to put down 25% regardless of property type and have at least 740 credit score to receive best pricing. 
• Rates will be higher for home buyers with less than 20% down for conventional loans and for “combined loan to value” loans, (with second mortgages).

Right now, the rates are still very good, but how many home buyers will qualify?  Here are rates this week, quoted by one of my mortgage brokers:

• 4.625% for a 30 year fixed “perfect” loan, (40% down, paying escrows with mortgage). 
• With 20% down, we’re at 4.75%. 
• With “risk based” pricing, we would be at 4.875% with 20% down and a 720 credit score. 

Thank you for reading and GO BEARS!!!

Click here to search for your next home on Chicago's North Shore.

Is it a good time to buy or sell real estate?

With winter and the holidy season approaching, many homebuyers and sellers in the Chicago area assume now is the time to put real estate matters on hold. In the current market I think that the idea of hibernating for the winter may not be the best decision. Here are some reasons why right now is the right time for both buyers and sellers to be in the market.

Buyers, consider this....
1. Price - The #1 reason qualified individuals are reluctant to buy today is a fear that prices will fall. And they may. But in the long run, that shouldn't make a difference.  Housing affordability is the best it has been in a very long time.

2. Interest Rates - Mortgage interest rates are 30% lower than they were four years ago. When you layer today's rates on top of prices that are 30% lower, you get monthly principal and interest that is only slightly more than half of what it was four years ago. That's a big deal!

3. Long-term Financial Benefits - While significant short-term price appreciation is unlikely with the current market conditions, the long-term financial benefits of homeownership still provide validation for owning versus renting. Renters do not get to take advantage of deductions for mortgage interest and real estate taxes, and do not benefit from protection against inflation or the forced savings plan that homeownership provides.

Sellers, take this to heart....

1. Buyers Are Serious - It may be fun to drive around and look at open houses on a beautiful summer day, but when the weather starts to turn and people get busy with holiday schedules, shopping for a new home is usually the last thing on someone's mind...unless, of course, they actually need to buy. Sure, there are fewer buyers in the fall and winter, but the ones who are out there are serious.

2. You're Moving Up - The thought of losing equity on a sale doesn't appeal to anyone, but in this market, sellers who trade up have more to gain than to lose. That's because, dollar for dollar, the more expensive home they're buying almost certainly has come down in price more than the home they're selling, which means move-up buyers will actually come out ahead provided they have the finances to complete a transaction.

3. Less Competition - The inventory of homes for sale is very high - that is the main reason that prices have continued to fall.  However, the number of homes for sale in the fall and winter is generally about 25% less than in the spring. Additionally, the recent moratorium on foreclosures has kept thousands of homes off the market. Those homes will eventually be put up for sale. So if you can capture the last few weeks of fall, you will face less competition than if you wait until next spring.

To talk about your specific real estate needs, call or e-mail me today. And please remember that I always appreciate your referrals.

Thank you for reading!

To find any home for sale in the Chicago area, click here.

Ready to move on, but you feel paralyzed by the market?

You are not alone.  Many people are thinking about moving from their current home into something smaller, larger, or to a retirement community, but they are afraid that they are stuck because of all of the negative press about the real estate market.

While it is true that if you have a property to sell right now, you aren't going to get the same dollars for it that you would've 2 or 3 years ago, there are still many good reasons to sell now instead of waiting. Here are my top 5 reasons to sell now, not later:

1. If you sell your home in the current real estate market, that means you will also be able to buy in this market.  With low prices and incredibly low interest rates, you can get a terrific deal in the current market.  A low price on your new purchase and a great interest rate can more than make up for the lower price on the home you sell.
2. You can get more house for the money in today's market.  So you may be able buy more house now than you would've been able to afford a couple of years ago.
3. There are tons of distressed properties available right now that need a lot of work to make them livable. Buyers that are looking for a nice home in move-in condition don't have much to choose from. If your home is in good condition and you price it competitively, you can sell it quickly.  I've seen several of these homes end up with multiple offers, yes multiple offers in today's market.
4. When the federal government extended the tax credit for first-time home buyers, they added a credit for existing home owners. If you've lived in your home for at least 5 of the past 8 years, you may qualify for up to $6,500 income tax credit (contact me to find out if you qualify). Time is running out on this deal - you must have a sales contract by April 30th to qualify for the credit.
5. Retirement communities are struggling to reach capacity right now. Many of these communities are offering huge financial incentives to lure to residents. If you sell your home now, you can take advantage of these special offers.

If you are interested in learning about foreclosed properties, go to my foreclosure website at www.ForeclosuresOnTheNorthShore.com

This month I became the exclusive licensee in Highland Park for www.teardowns.com. If you or someone you know has a property that needs a major rehab or is a possible tear down candidate in Highland Park, please contact me. I can market these properties to our unique database of builders and remodellers that are looking for this type of property - and the best part is that you can save significantly on commission when you list your property with teardowns.com.

 

Thank you for reading!

Short Sale Advice for Buyers

Most home buyers right now are looking for bargains.  And, there are plenty of them in the Chicago area - the North Shore is no exception.  The best bargains are "distressed" properties, here are the most common situations: 

• Bank-owned properties - These are homes that the banks had to foreclose,  and yes the North Shore is not exempt from foreclosures.
• Short sales -When the owner owes more to the bank than the property is worth on the current market it is a short sale.  The owner must either come to the closing with money to make up the difference, or they must prove to the bank that they have a hardship and cannot make up the difference.  If the seller cannot make up the difference, then the sales contract and all terms of the sale must be approved by the bank.  Since the banks really aren't in the real estate business, depending on the bank, the purchase process can be lengthy.
• Bankruptcy - The homeowner has declared bankruptcy and the sale of the home is being directed by the court system.

In general any distressed property will sell at a price below the market value.  This is particularly true in those cases where the property is not in good condition.  For short sales, the lower market value reflects the added inconvenience of purchasing a home that is a short sale, even if the home is in relatively good condition. 

If you are interested in purchasing a home that is going to be a short sale, here is what you need to know:

• The short sale process takes longer than a normal sale.  It  also takes longer than purchasing a bank-owned property or a home being sold for bankruptcy.  If you want to purchase a short sale, be prepared to WAIT between 30 - 120 days for the bank to approve the purchase.
• Do not wait until the bank approves the deal to do your own due diligence. You should have  home inspection immediately so that you can decide whether or not you want to go through with the purchase (usually these sales are for the property in "as is" condition).
• Ask if the homeowner's bank is offering special financing.  One bank that I am dealing with offers 4% mortgage rates to buyers that are purchasing their short sales.  Buyers still need to qualify with strong credit score and a downpayment.
• Hire a lawyer that has a successful track record with short sales.  You need a pro-active attorney that will work hard for you to make sure that the sale makes it to the closing table.  Some real estate lawyers just sit back to wait and see what happens with the bank - if your lawyer does this, the sale will most likely fall through.  Your lawyer needs to be in touch with the seller's lawyer and the bank to make sure that the process is moving forward.  The banks are inundated with short sales and foreclosures and it is very easy for these deals to fall through the cracks if at least one of the lawyers doesn't know how to work with the banks.
• Once the sale is approved, you will need to be ready to move quickly.  Typically, after the sale is approved, the bank will want the transaction to close within 30 days. This is another reason that you need a pro-active lawyer that can move quickly to make sure that nothing falls through the cracks.

I have a property for sale in Highland Park right now that is a short sale. This particular home is in great condition, and has had many updates.  Click here for more information on this home.

Thank you for reading.

nsk

Real Estate Market Stimulus Package

I'm not an economist, and I don't play one on TV.  However, as a Realtor, I do have an opinion on what it will take to get all of the excess inventory sold everywhere.

The $8,000 tax credit

I applaud the $8,000 tax credit for new home buyers in the Federal stimulus package - however I don't think that this is going to do much in the short term.  If someone that is considering buying a home right now, they won't see that $8,000 tax credit until they file their 2009 income taxes next year.  That is a long way off, especially for first time buyers that could probably use the extra money for a down payment NOW.  In fact, I don't think that this tax credit will have an impact until Q4 of this year.

Subsidized interest rates

I'd like to see the banks use the money they've received from the government (or that they are going to receive) to subsidize mortgage rates for ANYONE buying a home.  A great incentive that would motivate buyers immediately would be a 4% interest rate. This type of program would help shrink the huge inventory of homes for sale - including the homes that are short sales, pre-foreclosures and bank-owned (foreclosed) properties.  Of course this rate would only be for qualified buyers.

Additionally, people meeting certain requirements that need assistance keeping their current home should also get access to this type of rate.  Unfortunately, someone that has purchased a home that is way beyond their means should just get out of that home and move on to something that is more realistic for their situation. 

Help for unemployed

Maybe banks could offer temporary relief for those that are recently unemployed (again meeting some specific criteria) to help them out temporarily until they get work.  I know so many people that have lost their jobs or have had dramatic pay cuts in recent weeks.  They shouldn't have to lose their homes due to these temporary situations.  This would prevent their homes going up for sale and adding to an already glutted market.

Short sale guidelines/subsidies 

A huge bottle neck with the excess inventory is short sale properties.  I've written a lot about short sales already, but here is my $.02 on what needs to happen to get rid of this inventory quickly,  The sooner these homes are off the market, the sooner the market will stabilize.

• The government needs to provide financial incentives for banks to shorten their short sale approval process from the current 12 - 16 weeks, to something more realistic like 2-4 weeks.  Buyers have no patience to wait 3 or 4 months to find out if the bank is going to accept their offer.  By the time that happens, many buyers have moved on to something else.

• Create subsidies or some other financial incentive for banks to approve more of these contracts (or maybe use some of the $ that they've received, or will recieve, for this purpose). Buyers right now are looking for great deals, and many short sales could satisfy that desire.  However, in addition to taking too long to approve these deals, they won't even approve some reasonable deals. And each bank has different criteria on what what is an acceptable deal.

• Create uniform guidelines for banks to follow for these deals.  If they follow the guidelines (which would be structured so that more of these deals are approved) then the bank qualifies for some some of the bail-out money, or a tax break, or something like that.

I  talked to one bank that said that they already "wrote off" the home equity line (in other words they've already assumed the loss on their books) on a home that is going through the short sale process, and yet they were still holding out for a larger amount of $ to release their lien on the property.  I understand that they are trying to minimize their losses, but if a home goes through foreclosure and/or the sellers declare bankruptcy, they bank won't get any money at all. So why not agree to release the lien and collect some $ from a buyer that is offering CASH to purchase the home NOW?  This way we can put someone into the home that can afford it and the home won't go into further disrepair (the current owner can't even afford to maintain it).

Loan restructuring

Let's say someone is having temporary financial issues and they know that in a month or two it will be difficult or impossible to make their mortgage payment.  If they call their lender/bank today to try to renegotiate their loan or ask if they can get some temporary relief (e.g. skip a payment or make partial or interest only payment with no penalty), the bank will tell them that there is nothing they can do unless the homeowner is already in default.  In other words they won't talk to you until you've already screwed up your credit score and missed a few mortgage payments. 

There needs to be some way for homeowners to negotiate with the banks BEFORE they are in default.  I realize that there is risk that some people would take advantage of this - there must be a way to do this to help some of the hard-working people that have been affected by the economic downturn.  These people have been playing by the rules, paying their mortgages and their other bills, and now the rug has been pulled out from under them.  A job that was secure only a couple of months ago is gone - or a self-employed person has seen their business drop by 60 - 70% within a few short months. These people need a little time to get their footing back, to find temporary employment or find a new job. (Hey, how do they apply for one of the new jobs that is being created with the stimulus money - give 'em a shovel?)

That's my thoughts for now.  Would love to hear your comments.

Thanks for reading.

nsk

Kiplinger Forecast for 2009

Toward the end of 2008, Jon Frandsen wrote an article at Kiplinger.com titled  "12 Things to Look Forward to in 2009."

Here is my favorite part:

2009 Will Be a Great Time to Buy or Refinance a Home. The median home price nationally has fallen 20% since the housing market’s peak in July 2006, according to the National Association of Realtors. That’s especially good news for first-time home buyers or anyone who doesn’t have to sell a home before they buy, as well as patient buyers who can handle the time consuming process of buying a distressed property. In mid-December, the 30-year fixed rate fell to 5.17%, according to Freddie Mac. Mortgage money hasn’t been this cheap in nearly 40 years. Buyers who are having trouble coming up with a 10% to 20% down payment or who have dings in their credit record may be able to get Federal Housing Administration financing with as little as 3.5% down. And there may be help for people already in their homes.

Borrowers facing a reset on adjustable mortgages may get relief, since key indexes have dropped. And for those teetering near foreclosure, the Obama administration and new Congress will help more distressed homeowners keep their homes.

You can read the entire article by clicking here:  12 Things to Look Forward to in 2009

My thoughts (a month after the above article was written):

• The new administration and the new Congress will only be able to help a limited number of people that are facing foreclosure.  If you don't have a job or some type of income, there is little that they can do for you.  If you do have some income, and your payments got too high due to an ARM adjustment, you may be able to get some relief.
• Buying a distressed property (short sale, pre-foreclosure, or foreclosure) takes more than time.  It takes patience, and nerves of steel.  I'm working on a couple of these deals and they are not for the average buyer.
• Refinancing sounds like a great idea when you hear the current interest rates....unfortunately, my mortgage resources tell me that many of the re-fi deals are falling through because properties aren't appraising high enough, or the borrowers aren't qualifying.  Doesn't mean that you shouldn't try refinancing, but beware, it may not work.

Thank you for reading.  Your comments are always welcome!

See all homes for sale in the Chicago area

How to raise your credit score

Even if you aren't planning to purchase a home in the near future, it is always a good idea to take steps to increase or maintain a strong credit score.  You never know when you will need credit for something - it could be something unexpected, or a planned purchase.  But either way, better to keep an eye on this. 

With all of the uncertainty in the financial markets right now, your credit score is more important than ever.

So, here are a few things that you can do to improve your score:

1. If you have fallen behind on any payments, you need to fix this asap.  The companies that calculate your credit score severely penalize you of you have accounts with a past due balance.  If you aren't sure, then get a free copy of your credit report and check it!
2. Late payments are another red flag for your credit score.  Even if you pay all of your bills each month, if you are consistently late, you will be penalized.  I know that there are some bills, like your mortgage payment or maybe an insurance bill, that have a grace period. If you consistently wait until the last minute to pay these bills, this may affect your score.  To find out if you've been "zinged" by this, take a look at your credit report and see if any companies have reported late payments to any of the credit reporting agencies.  If there are any reported late payments, you should contact the company and request that they remove the late payment record on your account.  Point out that you have been making regular payments and that you have been a good customer, etc.  Explain that you didn't realize that if you paid within the grace period that it would be considered late.  Be persistent, be polite, be friendly, and hopefully you will be successful.   It may take several calls.
3. Many people don't realize that their credit score includes an assessment of their usage of available credit.  What this means is that they look at how much credit has been extended to you (available balances on your credit cards, or from any other lenders, such as a home equity line) and how much of that credit you are actually using (balances due).  Ideally, you should have a lot of available credit, and your aren't using all of it.  One very simple way to improve your ratio of actual debt to available credit is to ask for an increase in the credit limit on any credit cards you may have (and don't spend it!).  This is a simple way to improve your credit score and it just takes a few quick phone calls.
4. If you are young and do not have a long credit history, you can become an "authorized user" or "joint account holder"on someone else's credit card account (maybe a parent's account?).  When you do this, this account will appear on your credit report, and the credit scoring companies will treat this account as though it is one of yours.  These are the criteria you should use for selecting an account for this purpose:
   • on-time payment history
   • continuation of on-time payment and low balance
   • low balance (ideally using less than 10% of the credit limit)
   • long payment history of at least 7 years
5. Having the same credit card for a long period of time can have a positive affect on your score.  So, if you have some older credit cards that you aren't using, don't be so quick to close the account.  First of all, the length of time that you've had the credit card is helpful for your score.  Secondly, the credit limit that you have on the card, even if you aren't using it, improves the debt to available credit ratio that was discussed in #3 above.  If the card is listed on your credit report as "inactive" then it isn't doing anything for you - it is ignored by the credit scoring companies.  So in order to get any benefit from your older credit cards you do need to use them at least once every 6 months.

I am not an expert in this area, but this is what I have learned from some of the mortgage brokers that I work with.  If you have any questions about this, please let me know and I will ask the experts for you.  Also, if you have additional info to add, please post your comments for my readers.

Thanks for reading.  Next post will be getting back to the topic of going green.

nsk