BlogArizona Category: Mortgages & LoansThis page contains all BlogArizona posts related to Mortgages & Loans. Read a specific post by clicking on a title below, or scroll further down the page to read through all posts in this category.Monday, October 19, 2009Extending or Expanding Tax Credit for First Time Homebuyers: Good for the Real Estate Market?Knowing that I'm a Realtor® and that much of my income is dependant upon the real estate market, you might be surprised as you read my opinion on extending and/or expanding the Homebuyer Tax Credit. For starters, I'll say that I believe the free market can almost always solve problems better without government involvement. Unfortunately, the real estate market has not been allowed to operate without government interference for some time. I'll even go one step further and say that government interference caused the real estate market bubble and resulting crash, and the same idiots who created the problem should not be trusted to fix it. Politicians, who wanted to buy votes by forcing banks to give loans to people who could not afford to pay them back, are the primary cause of the real estate bubble and ultimate crash (which I believe also caused the current recession). This effort was driven by bleeding-heart liberal Democrats, but many of the so-called conservative Republicans shamefully went along with it for many years and many administrations. We all know what happens when banks are forced to lend money to people who can't afford to pay it back... eventually they don't pay it back and the banks lose money. The banks then have to make up these losses somewhere else: either by charging good customers more, or by (the new trend of) getting billions in bailout dollars from taxpayers. So either way, hard-working taxpayers lose when government forces businesses to make bad bets. But instead of recognizing that government is the problem, our brilliant bureaucrats instantly (and without any real thought) decided that more government is the answer. So they offered $8,000 refundable tax credits (aka govt handouts) aimed at first time homebuyers who otherwise could not afford to buy a house. HELLO? These are the people whose loans are currently foreclosing at astronomical rates. Incentivizing people who can't really afford a house into buying one anyway isn't going to fix the real estate market or the banking situation. This is what caused the problem! Repeating the same mistake will only prolong the agony and further stress the financial institutions that finance these properties. Not to mention the fact that it's inherently unfair to ask some taxpayers to pay higher taxes so the government can give their money to others for a down-payment on a new house they can't really afford. And then add insult to injury by forcing those same taxpayers to bail out the banks when these loans foreclose, as if it were not foreseeable (right!). So like cash-for-clunkers, I believe the First Time Homebuyer Tax Credit was a stupid idea, and therefore extending or expanding it will ultimately do more harm than good to the real estate market. It may cause a short-lived spike in sales like cash-for-clunkers did (at the cost of future sales, by the way). But do we really want manic ups and downs in the real estate market, or do we want a slower but sustainable growth? I think anyone who owns real estate or works in the real estate industry would agree that a slow, sustained growth is better for all of us in the long run. Some lawmakers and various Realtor® associations are pushing to increase the tax credit to $15,000 and extend it to more than just first time homebuyers, with a higher limit on the buyer's income. To me, this is just the same dumb idea with longer lines of people taking the handout, and with a much higher price tag. So when will the real estate market start to recover if government stops interfering? It's already started to recover, in Arizona at least. Keep in mind that national statistics quoted in the news may not be applicable to Arizona's real estate market. Real estate is local. Arizona was one of the first and hardest hit areas of the country when the real estate bubble started to burst (for lack of a better term!). And I think Arizona was also one of the first to start recovering, because Arizona real estate prices were driven down faster and lower than other areas. And lower prices is what makes buyers start coming out. Don't get me wrong, the Arizona real estate market is not all sunshine and lolli-pops. Not at all. There are still tough times ahead, but people are buying despite the fact that banks aren't really lending like they should be (I guess it's more profitable for banks not to lend, and suck up taxpayer bailouts instead!). But if the government just stays out of the way, the market will slowly recover on its own - without unnecessary, artificial government stimulation that really just wastes billions in taxpayer's money.
Posted by Shannon Hubbard, Arizona Real Estate Agent on October 19, 2009 | Permalink | Comments (9) Is the Phoenix, Arizona Real Estate Market Recovering?Here's a snapshot of the current Phoenix metro area real estate market, as I see it: At the end of last year, the real estate market in the Phoenix metropolitan area started to pick up... not because of any government program, but because the free market works. When prices came down to a certain level, the investors came out to play. Some of those who were sitting on the sidelines waiting decided it was time. And people started buying again... not in huge droves like a few years back when people were fighting each other for houses. But then again, who wants that, really? (I was taught that slow and steady wins the race!). Since then, I've seen a steady flow of buyers into the market, and many banks/real estate agents are even creating bidding wars again. Of course, these bidding wars are driven by totally fabricated demand. The bank has a real estate agent list the house for a super low price to attract multiple offers. Then instead of rejecting any of the offers, they entice all of the propsective buyers into a bidding war and tell them to make their "highest and best offer". None of the buyers know what the other bids are, so they often times end up bidding higher than they should because they get sucked into the emotion of 'wanting to win the bid' rather than rationally determining what the house is worth without that emotion present. I always tell buyers to avoid bidding situations, even in a sellers market. But especially in the current buyer's market... there are still way too many houses available for sale right now to get into a bidding war. Go find a seller who appreciates your offer more and is willing to negotiate under your terms. In a buyer's market, the buyer should feel like they're driving the terms of the deal, not the seller. But realize that Arizona's residential real estate market still faces significant foreclosures, and this will continue for some time. Supply is good for buyers and you shouldn't let uncertainty scare you away from the market if you're buying an owner-occupied home that you plan to keep for at least 3-5 years. However, I would advise inexperienced investors to be very careful buying Arizona real estate right now, especially if you plan to do a short-term flip. There's money to be made, but you can also lose a bunch so just know what you're doing. In my opinion, Arizona's real estate market is recovering, but is not out of the woods yet. The biggest danger to this recovery (other than government interference) is the commercial real estate market. I'm not sure why nobody is talking about it, but the commercial market could create huge problems in the coming years, especially if banking problems are not addressed. Commercial real estate market trends lag the residential market, and I don't think we've even started to see the real impact of the commercial market yet. Here's why: Many commerical real estate mortgages are 5-year or 10-year interest-only loans with balloon payments due at the end of the term. So as those commercial loans made at the height of the real estate bubble start to come due (as they currently are), the property owner (probably a small business owner) will have only a few choices. They either have to pay off the entire balance, which is unlikely for most businesses since they're probably already struggling to make ends meet. Or they'll have to re-finance the loan, which is also unlikely because 1) property values are much lower now and the property is probably not worth the loan amount anymore, and 2) lending standards are tighter and commercial loans are very hard to get. So if these loans can't be re-financed or paid off, the only other option is to sell the property before the loan is due. Many property owners will wait too long, not realizing how long it takes to sell a commercial property in today's market and will consequently face foreclosure. For this reason, I believe the commercial market could be the next big real estate crisis. Of course, I don't have a crystal ball, and nobody really knows for sure what tomorrow will bring. Everybody with an opinion on the future of the real estate market is really just guessing :) So my advice is guess carefully, and as always, buyer beware!
Posted by Shannon Hubbard, Arizona Real Estate Agent on October 19, 2009 | Permalink | Comments (5) | TrackBack Wednesday, July 15, 2009Wells Fargo Sues Itself In Mortgage Foreclosure CaseOkay, just when you thought things in the mortgage industry couldn't get any more insane... Wells Fargo files a lawsuit against itself. That's right, Wells Fargo Bank NA v. Wells Fargo Bank NA. Apparently, the lawsuit is related to a mortgage foreclosure case in Hillsborough County, Florida. Wells Fargo spokesman, Kevin Waetke reportedly said, "The primary reason is to clear title and ownership interest in a property to prepare it for sale". Personally, I've never found it necessary to sue myself in order to prepare a property for sale. But then I've also never been dumb enough to give both a first mortgage and second mortgage to the same person on the same house either. So I guess it makes perfect sense if you're a "too big to fail" lending institution like Wells Fargo. You know, the kind where the right hand doesn't know what the left hand is doing so they end up hiring lawyers to sue themselves, and then have to hire lawyers to defend themselves too. Who knows, it might be a brilliant legal strategy because even if Wells Fargo loses, they also win! But then even if they win, they also lose. The biggest losers here are the taxpayers who bailed this company out thinking it was "too big to fail". Sometimes stupidity needs to be allowed to fail. If Wells Fargo has nothing better to do with the BILLIONS of taxpayer dollars they received under the recent government bailout (TARP), why don't they just pay it all back?
Posted by Shannon Hubbard, Arizona Real Estate Agent on July 15, 2009 | Permalink | Comments (17) Sunday, July 05, 2009Federal Reserve Keeps Interest Rates Low... No Worries About InflationI'm really sick of looking at this really old post about the Federal Reserve and interest rates so I'm posting an update! At the end of June, the Federal Reserve met and decided to keep the federal funds rate the same at 0 - 0.25%. The federal funds rate is the rate banks charge each other. This was really no big surprise, as most economists expected the Fed to leave the rate alone. It hasn't changed since December 2008 and isn't likely to increase anytime soon. The Fed says that the pace of economic contraction is slowing and there's evidence of household spending stabilizing, but inflation does not seem to be a worry to the Fed right now.
Posted by BlogArizona BlogMaster on July 5, 2009 | Permalink | Comments (5) Tuesday, August 05, 2008Federal Reserve Leaves Interest Rates AloneEarlier today, the Federal Reserve decided to keep its main interest rate the same. The federal funds rate, which is the rate banks charge each other, will remain at 2.0%. This was really no big surprise, as most economists expected the Fed to leave rates alone during today's meeting. In fact, even despite fears of inflation, many believe the federal funds rate will remain unchanged for the remainder of the year. Keep in mind that the federal funds rate does not immediately affect long term mortgage rates, but the Fed's decisions can affect consumer confidence in the real estate market right away. Wall Street investors sure loved today's news, and the stock markets went crazy! Although inflation is becoming a very real worry, the Fed obviously thinks the fear of economic slow down is greater. I tend to agree (not that any economists care what I think!). But the housing and mortgage markets really need to improve before the Fed starts raising interest rates again. Higher rates could really hurt an already slow real estate market.
Posted by Shannon Hubbard, Arizona Real Estate Agent on August 5, 2008 | Permalink | Comments (27) | TrackBack Tuesday, March 11, 2008Foreclosure Rates and Neighborhood CrimeHere's an interesting statistic: For every 1% increase in a neighborhood's foreclosures, violent crime increases 2.33%.
Posted by Shannon Hubbard, Arizona Real Estate Agent on March 11, 2008 | Permalink | Comments (12) | TrackBack Saturday, March 08, 2008Recent Changes to the FHA Loan ProgramIt seems like the FHA Loan program is being looked to by government leaders, consumers, lenders and anyone in between to save the housing market. As a result there has been a lot of changes to this program within the past few months. 1. FHA Loan Limits Increased: The loan limit has been raised across the entire country. For Maricopa and Pinal County (which includes all the major cities in the Phoenix Metro area) the new limits are as follows:
2. Down payment Assistance Programs: While this is not a direct FHA feature, one of the major reasons to use the FHA program is because it allows third-parties to contribute towards a buyer’s down payment. The FHA loan limit is 97% of the value of the property but it allows the remaining 3% to be gifted from such non-profits as AmeriDream, Nehemiah etc. Recently HUD (which oversees FHA) challenged the legality of such gifts and threatened to shut them down. The down-payment programs fought back and recently won in court. 3. FHA Secure: This was an initiate from the White House designed to help subprime borrowers refinance into a FHA loan program. It is targeted to those on adjustable rate mortgages facing abrupt increases to their monthly housing payment. The HUD website has addition information, but here are some high points on how you may qualify for FHASecure:
There are further changes coming to the FHA program. Congress is working on a FHA Modernization bill which will decrease the down payment requirement but add risk based insurance (higher insurance for lower credit scores). So, stay tuned, nothing stays the same in today’s mortgage market.
Posted by Shailesh Ghimire, AZ Mortgage Guru on March 8, 2008 | Permalink | Comments (5) | TrackBack Monday, February 25, 2008AZ Home Inspector Licensing Board going away?Arizona Home Inspectors need your help! Arizona's home inspector licensing agency, the AZ Board of Technical Registration (BTR) is inefficient, expensive and allegedly corrupt. In fact, Arizona lawmakers are thinking about eliminating the BTR altogether (SB1171), and moving home inspector licensing to the Registrar of Contractors (ROC). As most of my readers already know, I'm co-owner of Homewerx Home Inspections, one of the Valley's leading home inspection companies since 1999. As such, I sincerely appreciate your support on this matter. While I do NOT support eliminating the BTR, it definitely needs some change - starting at the top with the guy in charge. It's unfortunate, but AZ home inspector licensing seems to be alot more about money and power and industry organizations than it is about quality home inspections. There are some real problems and conflicts of interest that have just been ignored at the BTR, and we all know that problems don't just go away when they're ignored...they get worse! Now, the BTR is so inefficient and lacking accountability that I think the whole idea of protecting homebuyers got lost somewhere along the line. Home Inspectors don't trust the BTR, consumers kind of laugh at them. And the cost of inefficient government regulation is real... look at how much it costs to be a home inspector in Arizona compared to other professionals licensed by the same agency. And look at how much Arizona home inspectors pay compared to home inspectors in other states. "Wow" is all I can say! Home Inspection companies inevitably pass these ridiculous costs onto the homebuying consumer, who is already strapped for cash in case the BTR hasn't heard. And a home inspection is an out-of-pocket expense - those are the ones that really hurt and will be a deal-breaker alot quicker than borrowed money will. So please Help support the 'little guy', and you will help keep Arizona home inspection prices down plus eliminate government incompetence at the same time. Thank you again for your support!
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 25, 2008 | Permalink | Comments (3) | TrackBack Wednesday, February 20, 2008Arizona MLS Listings I Don't Quite UnderstandAs I pull up various AZ properties on MLS, I'm frequently amused. Sometimes it's the price that makes me laugh. Sometimes it's the directions that get you nowhere near the home, which makes me go hmmmm. And sometimes it's just a comment about the house that catches my attention. Here are a couple that have recently caught my interest: 1. Found in the comments of a MLS listing: "Buyer proof of funds or prequalification letter from a Wells Fargo Mtg. Consultant must accompany all offers." As a Realtor®, I would never dream of requiring a potential buyer to get prequalified or have their funds verified by a specific mortgage company. I'm not sure if that's even legal from a mortgage perspective, especially if the mortgage company owns the house. According to the MLS, this property is "corporate owned". Public records don't show the new owner yet, but the house was sold at auction in December to "US Bank National Association as Trustee Asset Backed Pass Through Certificates Series..." (that's a mouthful and doesn't really tell me who owns it!). But the tax statements are being forwarded to "ASC for Wells Fargo Home Improvement". Hmmmm.... 2. Found in a Flyer Heading: "20% Co-Broke! / Attention All Investors" Call me crazy, but I wonder if this agent ever thought about recommending a price reduction to their client, instead of a HUGE co-broke. Perhaps, I dunno...maybe a 17% - 20% price reduction? Work with me here...! And what real investor isn't going to realize that a 20% co-broke means they're paying 20% too much? These are just a few of my thoughts... enjoy your day! Past BlogArizona articles you may also enjoy:
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 20, 2008 | Permalink | Comments (4) | TrackBack Tuesday, February 19, 2008Selling Your House? Don't Take the Curtain Rods When You Move.By the title of this post, you might think I'm getting ready to talk about the difference between personal property and real estate fixtures, and what you can take with you when you move versus what has to stay with the house. Nope. This post is actually just something funny my Dad emailed me, which I thought my readers would enjoy. By the way, don't do this! She spent the first day packing her belongings into boxes, crates and suitcases. On the second day, she had the movers come and collect her things. On the third day, she sat down for the last time at their beautiful dining room table by candle-light, put on some soft background music, and feasted on a pound of shrimp, a jar of caviar, and a bottle of spring-water. When she had finished, she went into each and every room and deposited a few half-eaten shrimp shells dipped in caviar into the hollow of the curtain rods. She then cleaned up the kitchen and left. When the husband returned with his new girlfriend, all was bliss for the first few days. Then slowly, the house began to smell. They tried everything; cleaning, mopping and airing the place out. Vents were checked for dead rodents and carpets were steam cleaned. Air fresheners were hung everywhere. Exterminators were brought in to set off gas canisters, during which they had to move out for a few days and in the end they even paid to replace the expensive wool carpeting. Nothing worked!!! People stopped coming over to visit. Repairmen refused to work in the house. The maid quit. Finally, they could not take the stench any longer and decided to move. A month later, even though they had cut their price in half, they could not find a buyer for their stinky house. Word got out and eventually even the local real estate agents refused to return their calls. Finally, they had to borrow a huge sum of money from the bank to purchase a new place. The ex-wife called the man and asked how things were going. He told her the saga of the rotting house. She listened politely and said that she missed her old home terribly and would be willing to reduce her divorce settlement in exchange for getting the house back. Knowing his ex-wife had no idea how bad the smell was, he agreed on a price that was about 1/10th of what the house had been worth, but only if she were to sign the papers that very day. She agreed and within the hour his lawyers delivered the paperwork. A week later the man and his girlfriend stood smiling as they watched the moving company pack everything to take to their new home.... And to spite the ex-wife, they even took the curtain rods!! I LOVE A HAPPY ENDING, DON'T YOU? ORIGINAL SOURCE: UNKNOWN
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 19, 2008 | Permalink | Comments (2) | TrackBack |
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