http://forecasts.org/fha.htm

-Gary Schoenholz (864)979-1111.  15+ Years of mortgage experience. Website:  www.GarytheMortgageExpert.com

We are all happy rates are down in 2010!

Prices have risen more than 3% since May, according to S&P/Case-Shiller.

But most forecasts predict price declines in 2010, with possible losses ranging from anywhere from 3% on up. Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%.

“We’ve seen recent price stabilization because of low mortgage interest rates and the impact of the first-time homebuyers tax credit,” said Pat Newport of IHS Global Research. “But there are really good reasons to think prices will now start going down.”

There are three main reasons for the reversal: a coming flood of foreclosures, rising interest rates and the eventual end of the tax credits.

For Gus Faucher, the director of macroeconomics for Moody’s Economy.com, the huge number of foreclosures that remain in the pipeline is the big problem.

Moody’s upped its estimate of defaults recently because of shortcomings of the government-led mortgage modification programs. Trial workouts are not being made permanent and completed modifications are redefaulting at high rates.

“There are going to be fewer [successful] modifications than we thought,” said Faucher.

Even so, he added, much of the price decline has already occurred and Moody’s forecast is for only another 8% drop. The worst-hit markets will be the ones suffering the most foreclosures, places like Arizona, California, Florida and Nevada. (See 7 tips for buying foreclosures)

Resetting option ARMs (adjustable rate mortgages) will also aggravate the foreclosure problem. These mortgages allow borrowers to pick their own payments, which can be so low they don’t even cover the interest. Balances swell.

For many of the more than 350,000 option-ARM borrowers, it’s time to pay the piper. Their loans will change into fully amortizing mortgages that will carry much higher monthly payments. A very large percentage of these homeowners will default, according to Shari Olefson, author of “Foreclosure Nation: Mortgaging the American Dream.”

“We’ve still only seen the tip of the foreclosure iceberg,” she said.

She also predicts more strategic defaults, people deliberately walking away from even fixed-rate mortgages as the value of their homes dips well below the amount they owe.

Olefson’s forecast is for price declines of 5% to 15%, depending on the area, with a national median price drop of about 10% for 2010.

Also affecting prices will be higher interest rates. Some analysts, according to Newport, think rates for a 30-year mortgage will pass 6% next year as the government curtails housing market support.

The Federal Reserve has helped keep rates low through purchases of mortgage-backed securities. But that program is winding down and will end in March.

“The government is throwing everything at the market but the kitchen sink,” said Peter Schiff, president of Euro pacific Capital. “It can’t prop up housing markets forever.”

Schiff is among the bigger bears. Though he gave no specific prediction, he thinks prices — already down 29% from the peak — are only halfway to the bottom.

As a tool for supporting housing markets and prices, the tax credit for homebuyers is a two-edged sword. It reduces taxes dollar-for-dollar by up to $8,000 for new homebuyers and $6,500 for buyers who already own a home and should support home prices. But it ends at the end of April.

Many buyers will push their deals forward to get in before the deadline and then demand for homes could sink afterward.

One of the few bulls out there is NAR, whose chief economist, Lawrence Yun, is counting on the tax credit to provide temporary support for housing markets until the economy recovers enough to start fueling sales. He predicts price improvement in 2010 of more than 3%.

“The headwind we face is rising mortgage interest rates,” Yun said, “but the compensating factors will be the homebuyers tax credit in the first half of the year and increased job creation in the second half.”

All of this means, now is the time to buy!  To talk to a mortgage manager, call 864-979-1111 and ask for Gary Schoenholz (15 years of mortgage experience) or go to my website: www.GaryTheMortgageExpert.com.

The median price of a new home decreased to $212,000 from $213,000 a year earlier. Sales of new homes were up 5.1% from October 2008 the first year over year gain since November 2005.

Inventories dropped as well. The number of homes for sale fell to a seasonally adjusted 239,000 the fewest since May 1971. The supply of homes at the current sales rate decreased to 6.7 months worth, the lowest level since December 2006.

Posted by Randy Ratchford/Randy is a partner/mortgage planner with Horizon Financial. Randy can be reached @877-627-9211 ext.107 or email Rratchford@HorizonFinancial.org

Today the Senate has announced plans to extend the credit until April 30 while expanding it to include higher-income Americans and some who already own homes.  The current creit applies to individuals who earn 75,000 or less and couples who earn $150,000 or less, the new plan would raise that to $125,000 and $225,000 respectively. Another addition to the bill would give a $6,500 credit for home buyers who have lived in their prior residence for at least 5 years.

The Obama Administration fully supports this recommendation and they are hoping to see it come to a vote in the coming days.  We will let you know if this comes to pass.

Posted by Randy Ratchford/Randy can be reached toll free 877-627-9211 ext.107 or email RRatchford@HorizonFinancial.org

Who Qualifies: To qualify as a first time buyer you truly have to be a first time buyer or someone who has not owned a property in the past 3 years.

How Much Will The Credit Be:  The maximum credit allowed is $8000 any price less than 80,000 the maximum would be up to 10% of the purchase price: i.e. if you buy a $50,000 dollar home the max credit would be $5000…. The maximum allowable income is $75,000 for singles and up to $150,000 for married couples.

Eligible Properties: Single Family homes, Condos, and Town-homes as long as it is your primary residence.

Will the Tax Credit Need to Be Repaid: If you stay in the home for at least 3 years the answer is NO. If the proeprty is sold before the 3 year period then the entire credit would be repaid at time of sale.

If you are looking to take advantage of the tax credit the time to move is now.  The tax credit is good through 11-30 -2009 if you close on a home after that date you are not eligible.

Posted by Randy Ratchford. Randy can be reached toll free @ 877-627-9211 ext107 or email RRatchford@HorizonFinancial.org

If you find yourself in a position of thinking you may not be able to take advanage of buying at the moment because of lack of funds do not hesitate to inquire about what down payment assistance may be available for you.

There are some great programs geared specifically towards hospital workers and teachers as well as Greenville county residents in general.  Let your mortgage professional see what you may be eligible for. These great programs are available and most people are not aware of them. If you were thinking of making that move and were not sure if you were quite ready to do so check with your mortgage professional and see what assistance you could possibly be eligible for.

Posted by Randy Ratchford..Randy is a Partner/Sr. Loan Officer with Horizon Financial…Randy can be reached toll free @877-627-9211ext107 or email RRatchford@HorizonFinancial.org

In fact homes priced under $200,000 these sales jumped to 47% of all transactions in the month of June up from 39% in May. According to the U.S. Commerce Department and their data homes under $200,000 accounted for almost half of the sales in the first six months of this year.

With home affordability at an all time high and the tax incentive the time to take advantage of this is now. Rates are still very low and with FHA, USDA or VA financing you can still get into a home with zero to 3 1/2% down payment. You will need to act fast in order to take advantage of the $8000 tax credit, this incentive is set to end 11-30-2009. 

Posted by Randy Ratchford/Randy is a Partner/Sr. Loan Officer with Horizon Financial Inc. Randy can be reached toll free @ 877-627-9211ext107 or email RRatchford@HorizonFinancial.org

According to the MetroMonitor analysis, Greenville’s housing prices were up 3.1% for the first quarter.

With the $8000 tax credit for first time homebuyers and continued near record low rates this is an excellent time to look at hom ownership.  It is always a good idea to obtain a pre qualified approval before your new home search and with the tax credit and lower borrowing costs, there may never be a better time to move.

Posted by Randy Ratchford. Randy is a Partner/Senior Loan Officer with Horizon Financial. Randy can be reached toll free @ 877-627-9211 ext.107 or email RRatchford@HorizonFinancial.org  Source: Statistics provided from The Greenville News Real Estate Forum 7-19-2009