Saturday Reporter-Herald December 18, 2010 E1
Real Estate Matters
www.homeandrealtyguide.com • Saturday, December 18, 2010 • Reporter-Herald
Work with lender for exact rate ILYCE GLINK TRIBUNE MEDIA SERVICES
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uestion: I am struggling to find some of the rates you have discussed for refinance. Do you mind passing me a couple of sites? Answer: All of the major lenders are now offering similarly great rates, although they jumped up quite recently. But to get the best information, you’ll need to call several different types of lenders in your area, as well as searching online. Call your real estate agent and ask for some referrals to great mortgage brokers. Talk to at least four or five different types of lenders, including a credit union (if you belong to one or can join one), a big box lender and a small local bank, and then compare loans, costs, fees and interest rates. If you’re searching the internet for rates on home mortgages, you can take a look at the big box lender sites, along with aggregators or mortgage portals like BankRate.com or Zillow.com or QuickenLoans.com. These sites can be a guide for you, but remember that the rates on these sites might be stale by the time you call a local lender, mortgage broker or credit union, or you may not qualify for the best loan programs. Finally, watch out for lenders that advertise mortgage interest rates that seem way below rates quoted elsewhere; it’s possible that their rates are that low because you pay tons of other fees to get the loan. In effect, you get the lower rate, but you’re paying up front for the privilege of getting that low rate. Make sure you shop, compare and become knowledgeable about the mortgage process. Homeowners interested in refinancing need to understand that interest rates on home loans can fluctuate from day to day, and even several times in a day. On a recent Wednesday, the bond market experienced a massive selloff and mortgage interest rates jumped more than a quarter of a percent in a single day. So if you read one of my columns and it mentions an interest rate, that rate may have gone up or down between the time I wrote it and the time you read it. In general, if you have a great credit history and a high credit score, you’ll get a lower interest rate than if your credit history and credit score are worse. When I quote an interest rate, it’s generally the interest rate for those with the best credit history, sufficient cash and income, and a property with at least 20 percent in equity. Question: I have a 30-year mortgage held by the former owner of my house that is at 8 percent interest. I paid $63,000 for the property originally, and my year-end loan I See GLINK/Page E3
Wavering Outlook The federal tax credits for home buyers, which boosted sales for more than a year, added to the confusion. The tax benefit kicked housing sales into gear; the end of the credit put the housing market back on life support. “We misjudged the impact of ALAN J. HEAVENS the two tax credits,” said MCCLATCHY-TRIBUNE economist Patrick Newport of IHS Global Insight Inc. “We expected the credits to both shift he housing downturn that demand and increase sales and began in 2005, 2006 or starts. It appears that the tax 2007 — depending on loca- credits mostly shifted activity.” tion — has tested the mettle of The level of interference is now the economists whose job it is to much lower, and a clearer picture figure out when and how the cri- of the market is emerging, allowsis will end. ing economists, as well as civilSome economists argue, and ians, the opportunity to predict with considerable justification, with a bit more accuracy. that government interference in The “when” remains difficult to the real estate market has made pin down, although the nonpropredicting the date of recovery fessionals — typical homeowners from difficult to impossible. and renters — believe they have the answer. That government interference manifested itself primarily in the Recovery will occur anywhere Federal Reserve’s purchase of from 2012 to 2015 and even latmortgages from Fannie Mae and er, according to most of the Freddie Mac, which affected in2,000 homeowners and renters terest rates until the program surveyed by Harris Interactive in ended March 31. November.
Economists’ housing forecasts are skewed by tax credits
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“Economic recovery should accelerate gradually over the year, with the second half of 2011 exhibiting more growth and job creation than the early part of the year.” — Freddie Mac chief economist Frank Nothaft
2010 Larimer housing market similar to 2009 through October dropped substantially by 16.2 percent from last year at this time, while foreclosure sales ins 2010 comes to an end, creased by 17.2 percent, acthe Loveland/Berthoud cording to the Colorado Divireal estate market sion of Housing’s Monthly shaped up much as it did in Metropolitan Foreclosure Re2009. Through November, port released on November there were 1,250 detached 22. The report noted that the listings sold; compared to slowdown in foreclosure pro1,205 sold through the cessing influenced the numNovember in 2009. Fort ber of sales, which is expected Collins looked much the to be cleared up by the end of same, as 2,093 detached the year. listings were sold through As a state, Colorado is on November this year in comparison with 2,091 the year prior. pace to end the year below The median sales price is up 2009 totals in terms of fore6.1 percent at $206,819 com- closure sales. Denver, Weld and Larimer Counties experipared to the same time last enced the largest decrease in year ($194,900). Year-to-date average days on the market is foreclosure filings compared to the rest of the state. Weld 122 days, last year it came in at 127. Detached listing sales County experienced the highest rate of foreclosure sales volume in Loveland through with 679 households per forethe year is up 9.9 percent, at closure sale. Larimer county $326,892,244. had one foreclosure sale per The number of foreclosure 2,067 households. filings in Larimer County
JADE CODY SPECIAL SECTIONS EDITOR
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The survey, commissioned by real estate search engine Trulia and foreclosure-tracker RealtyTrac Inc., found that just 4 percent thought the market had recovered already. “Sellers and buyers are tamping down their expectations for a swift recovery in the housing market and bracing themselves for a long, slow climb back to a healthy real estate market,” said Trulia Chief Executive Officer Peter Flint. “Government incentives have come and gone, and historic lows in interest rates have done little to spur recovery,” he said. From the responses, Flint said consumers have a “What’s next?” attitude, “since they have lost faith in banks and their government to make good decisions.” What it will take for a market turnaround is a much easier question to have answered by the economists. “On the face of it, getting the housing market to recover is quite easy, since it’s well-established what drives housing,” said economist Kevin Gillen, vice president of Econsult Inc., of Philadelphia. That is, “You take a reasonable level of home building costs, combine household income growth with job growth, throw in a good dash of accessible mortgage credit, and presto: You have
a robust housing market,” Gillen said. All the government needs to do is reduce unemployment, grow the economy and keep inflation — and hence interest rates — in check, and housing will begin to recover. “Of course, this should remind you of Steve Martin’s old routine about his foolproof two-step plan to make a million dollars taxfree. ’Step One: Get your hands on a million dollars,’ “ Gillen said. So, given that unemployment rose in recent weeks, credit remains tight for buyers as well as the typical home builder, and 30year fixed-interest rates have risen in the past few weeks, Martin’s way is still the better bet. Rates rose, said Freddie Mac chief economist Frank Nothaft, “after Europe made strides in its debt situation,” allowing investors to leave the security of U.S. Treasury debt, causing bond yields and mortgage rates to rise. “Key macroeconomic drivers of the economy — such as income growth, unemployment rate, and inflation — will affect the perforI See OUTLOOK/Page E5
Foreclosures intrigue homebuyers, but risks may prevent a deal attached, you can get money out of it.” Despite strong interest in buying foreclosures, supply is exast spring in the waning pected to continue to outstrip days of the first-time demand in the coming year. homebuyer tax credit, In a survey released last week, Stephen Ploski, 24, made an ofnearly half, or 49 percent of U.S. fer on a foreclosed home. adults surveyed for two real esHe said the 1,400-square-foot tate websites, are at least somehome was livable, but needed what likely to consider buying a serious updates. He was willing foreclosed property. That’s up to do the work and take the from 45 percent in May. risk. Results from the online survey In exchange, he got a deal. The conducted Nov. 2-4 by Harris Inthree-bedroom, one-bathroom teractive for Trulia and Realtyhome was his for $49,000. He Trac also indicated that Amerilives in the home with his wife, cans are still uncertain about the Ashley, 22, and their daughter housing market and the majoriLana, 2. And they are expecting ty, or 58 percent, expect the retheir second baby. covery to take at least two more “I wanted to buy one because years. the market conditions were “2010 will be another record right,” he said. “This is my first year for foreclosures,” said Rick home for my family. But if you Sharga, senior vice president of do it with an investor’s mind I See RISKS/Page E5 instead of getting emotionally
GRETA GUEST MCCLATCHY-TRIBUNE
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