Home Values to Drop by $1.7 Trillion in 2010

Home Values to Drop by $1.7 Trillion in 2010
2010 December 9

U.S. homes are expected to be worth $1.7 trillion less in 2010 than they were worth last year, amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow.

“With foreclosures near an all-time high in late 2010 and high rates of negative equity persisting, it does not appear that the first part of 2011 will bring much relief,” said Stan Humphries, Zillow’s chief economist.

The drop in home values pushed more buyers underwater. In the third quarter of 2010, 23.2% of single family homeowners with mortgages owed more on their mortgage than their home was worth, up from 21.8% in 2009.

About $9 trillion in value has been lost since the market peaked in June 2006. “Despite a strong start to 2010, by the end of the year, homes lost more of their value in 2010 than they did in 2009,” said Humphries.

“Government interventions like the home-buyer tax credit helped buoy the market during the second half of 2009 and the first half of 2010, but we saw a renewed downturn in the last half of this year.”

“It’s a testament to the nearly irresistible force of the overall market correction that government incentives can only temporarily hold back the tide, and that the market will ultimately find its natural equilibrium of supply and demand.”

Only 24% of the 129 markets tracked by Zillow increased in total home value this year. Home values increased $10.8 billion in the Boston metropolitan statistical area, and $10.2 billion in San Diego.

The regions suffering the biggest drops in home prices include New York City, which lost $103.7 billion in value and Los Angeles, where home values fell $38.6 billion.


Household Worth Rose by $1.2 Trillion, Debts Reduce

How to Reduce Homeowners Insurance Costs

How to Reduce Homeowners Insurance Costs: "

Homeowners insurance, also called hazard insurance or home insurance is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home.

Homeowners insurance is a very important protective measure you can take to secure and protect from perils and losses. Getting the most expensive coverage may be unnecessary, as lower insurance cost will cover you just as well. Now is a good time to examine your policy and look for ways to save money.

The cost of homeowners insurance depends on what it would cost to replace the house and which additional items are attached to the policy. Typically, claims due to floods, earthquakes, or war are excluded. Special insurance can be purchased for these possibilities, including flood insurance.

If you are like most homeowners purchase your home with a mortgage, your lender will require insurance on the property to protect their collateral. In the loan contract, the collateral is your pledge, as a borrower, of the property to your lender, to secure repayment of a loan. It’s best you buy home insurance on your own. If you let your lender buy it on your behalf, the insurance costs will be very high.

Here are some steps you can take to reduce your home insurance costs.

Shop for the best deal. Get more quotes, the better. In addition to the low prices, evaluate which companies provide the best customer service.

Raise your deductible. The higher your deductible, the less premium you’ll have to pay.

Buy your home and automobile policies from the same insurer. Ask for discounts.

Make your home more resistant to disasters. Adding storm shutters and shatter-proof glass or reinforcing your roof. Upgrade your heating, plumbing and electrical systems to reduce the risks of water and fire damage.

Secure your home. Install smoke detectors, burglar alarms and dead-bolt locks.

If you are 55 or older, ask your insurer for discounts.

Review your policy and the value of your possessions. May be you don’t need so much coverage on your personal property.

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Making an Offer on a House

Making an Offer on a House: "

How to make an offer on a house you want to buy.

You have found the house you want and you’re working towards making it your home. Making an offer on a home involves a written offer to buy it, including setting the price and adding contingencies.

Details and planning are important. Know what you would like to pay but also think about the most you’re willing to pay and the total pre-approved loan amount. Be specific, and put everything in writing.

Information contain in your offer should include property address, the amount of money you are offering, target closing date, terms of payment (all cash or mortgage loan), amount of earnest money deposit accompanying the offer, target date for closing, and contingencies.

Negotiate a sales price. Negotiating is a standard practice in real estate, and something that your real estate agent will do on your behalf. The advertised price of a house is just a starting point. It’s up to you to decide how much the house is really worth.

Earnest money is a deposit that you give when making an offer on a house. A cash deposit shows good faith by the buyer to the seller on a written offer. The earnest money will become part of your down payment.

The seller will either accept your offer, make a counteroffer with one or more changes, or reject it outright.

Real estate offers almost always contain contingencies in events that must happen within a certain amount of time or else the deal won’t become final. Your offer contingencies should say “this offer is contingent upon a certain event.” Two common contingencies contained in a buy offer: ability for buyer to obtaining mortgage and a satisfactory report by a home inspector.

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How Reverse Mortgage Help Seniors

How Reverse Mortgage Help Seniors: "

Seniors looking to cash out their equity in their homes should look into getting a reverse mortgage program. A reverse mortgage enables you to withdraw some of the equity in your home.

What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence.

Reverse mortgage or lifetime mortgage is used to tap the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves.

In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.

Difference between a reverse mortgage and a bank home equity loan

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments.

The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don’t make payments, because the loan is not due as long as the house is your principal residence. With a reverse mortgage, you cannot be foreclosed or forced to vacate your house. Like all homeowners, you still are required to pay your real estate taxes, homeowner’s insurance and other conventional payments like utilities.

You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

To qualify for a reverse mortgage, the borrower must be at least 62 years of age. There are no minimum income or credit requirements, but there are other requirements and homeowners should make sure that they qualify for the loan.

How to receive cash payments

You can receive the reverse mortgage loan funds in different ways.

• Tenure equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.


• Term equal monthly payments for a fixed period of months selected.


• Line of Credit unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.


• Modified Tenure combination of line of credit with monthly payments for as long as you remain in the home.


• Modified Term combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Reverse Mortgages you can apply for

There are a variety of reverse mortgage products available in the market, such as the FHA-insured Home Equity Conversion Mortgage (HECM) and Home Keeper Mortgage offered by Fannie Mae approved lenders.

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home.

You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

You can receive free information about reverse mortgages by calling AARP toll free at (800) 209-8085.

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How to Avoid Home Buying Mistakes

How to Avoid Home Buying Mistakes: "

There are mistakes which many home buyers make when purchasing a house, but they can be very easily avoided with a little of research and planning. If you arm yourself with these tips to get the most out of your purchase and avoid making costly mistakes that you won’t have to be stuck with the consequences.

Refusing to Confide in Trusted Advisors

Advisors could be your realtor, real estate lawyer, real estate agent. Home buyers withhold information from advisors can be a costly mistake. Buyers do it for fear of how they will be perceived, have a belief they have all the answers, and/or don’t feel it is important enough. Your advisors are representing your best interests and have a fiduciary responsibility to do so.

Find a good buyer’s agent. Buyers should rely heavily on knowledgeable agents to help them in home buying process and can provide valuable resources. Buyer’s agents have a fiduciary responsibility to the buyer exclusively and should be looking out for their best interests. It might not work in your best interest if you are dealing with a seller’s agent without your own.

Not Knowing How Much House You Can Afford

Many first time home buyers spend a lot of time researching homes, but very little time spend on their finances. What you think you can afford and what the bank is willing to lend you may not match up, so make sure to get preapproved for a mortgage loan before house shopping.

You want to talk to a qualified lender and get preapproved for a mortgage. Figuring out how much house you can afford is the first step that prepares you for buying a home.

Never underestimate the costs involved in buying real estate property. Remember to budget for home inspection fees, appraisal fees, loan application fees, credit reports, title insurance, and other costs.

Underestimating the Costs of Owning a Home

When you finance a home purchase with a mortgage loan, the costs of owning a home is more than the monthly mortgage payment. Do not forgetting to include property taxes, maintenance costs, and home insurance into your calculation of housing costs.

When considering how much your budget is for your new home, you must consider your borrowing capacity — your ability to make regular payments on your possible home loan.

Maintenance Costs. Many home buyers don’t anticipate the additional costs for repair and maintenance, or for an increase in utility costs. Consider the age of your new home. Be prepared to set aside a small budget annually for repairs and upkeep.

Property Taxes. You should know how property taxes will have to pay and factored it into your home buying budget. Call the local county tax assessor’s office or ask your agent or the seller.

Home Insurance. Homeowner’s insurance is a requirement by your lender since they want to protect their collateral from perils. Get recommends from your agent and shop around for the best deal. Don’t pay too much for over coverage.

No Home Purchase Contract Contingencies

Finally, you want to include a contingency clause in the contract. A mortgage financing contingency clause protects you. A contingency would let buyers back out of a purchase contract. That is, to cancel a contract without penalty, meaning buyers would get back the money deposit used to secure the property. Without the clause, a buyer can lose that money and still be obligated to buy the house.

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YouTube - Carmel Mission

Nice video of the Carmel Mission from You Tube


"Host Beth Fisher takes you to one of California's famous missions.

Fixed-Rate Mortgages Rise, 30-Year Fixed Above 5%

Fixed-Rate Mortgages Rise, 30-Year Fixed Above 5%: "

Mortgage rates climbed for the first time in three weeks, increasing borrowing costs as new home sales slumped to the lowest level on record, according to Freddie Mac’s weekly survey of conforming mortgage rates.

Mortgage rates are widely seen to be on an upward trajectory this year. Rising mortgage rates do not bode well for the housing market, which remains highly vulnerable.

Rates on the 30-year fixed-rate mortgage averaged 5.05% for the week ending February 25, 2010, up from 4.93% last week, and 5.07% a year ago.

15-year fixed-rate mortgage averaged 4.40%, up from 4.33% last week, and 4.68% a year ago.

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 4.16%, up from 4.12% last week; they averaged 5.06% a year ago.

1-year Treasury-indexed adjustable-rate mortgages (ARM) averaged 4.15%, down from 4.23% last week, and 4.81% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point and the adjustable-rate mortgages required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

“Interest rates for 30-year fixed mortgages followed long-term bond yields higher and rose above 5% this week amid a mixed set of economic data reports” said Frank Nothaft, Freddie Mac vice president and chief economist.

Mortgage rates are linked to yields on Treasuries and mortgage-backed securities.

“For instance, the January producer price index jumped well above the market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to the Conference Board.” Nothaft said.

Mortgage rates may rise further when the Federal Reserve ends its’ program to purchase as much as $1.25 trillion in mortgage-backed securities next month. The mortgage purchase program is credited with helping reduce mortgage rates.

Lower mortgage rates and the home buyer tax credits weren’t enough to boost new home sales in January 2010. Sales of new homes in the fell to the lowest level on record, slumping 11% to an annual pace of 309,000 units, the Commerce Department reported.

Median sales price declined 2.4% to $203,500 and the supply of unsold homes increased to 9.1 months worth at the current sales rate.

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