Negative Equity continues being a Serious Concern Despite Year Over Year Decline!

Negative Equity continues being a Serious Concern Despite Year Over Year Decline!

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While the percentage of homes in the United States with negative equity has declined substantially since the fourth quarter of 2013, they experienced a slight increase quarter-over-quarter in Q4 2014, according to CoreLogic‘s Q4 2014 Equity Report released last Tuesday.

CoreLogic reported that 10.8 percent of all residential homes were underwater in Q4, this is about 5.4 million properties approximately, which was down from 13.3 percent  in the same quarter a year earlier. The Q4 total was up slightly from the 10.3 percent that was reported for Q3 2014 – an increase of 3.3 percent.

Despite the year-over-year decline in the percentage of underwater residential properties, negative equity remains a serious issue, according to Anand Nallathambi, president and CEO of CoreLogic. For the full year of 2014, 1.2 million borrowers regained equity – but nearly five and a half million properties remained in negative equity as of the end of the year after approximately 172,000 homes slipped into negative equity from the third quarter to the fourth quarter in 2014.

Approximately 10 million of the nearly 50 million residential properties with a mortgage in the United States, which is about 20 percent of these properties have less than 20 percent equity, a condition known as under-equitied.

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80,000 Foreclosures prevented!

The Federal Housing Finance Agency (FHFA) indicated in its report on foreclosure prevention  for Q2 2014 released on September 24, that Fannie Mae and Freddie Mac  prevented nearly 80,000 foreclosures nationwide in the second quarter, raising the total number of foreclosures prevented since the start of the conservatorship in September 2008 to 3.3 million.

fThe measures taken by the two GSEs to prevent foreclosures have helped about 2.7 million borrowers remain in their homes in the last six years, with approximately 1.7 million of those borrowers receiving permanent loan modifications. The number of foreclosures prevented is down 10 percent from Q1, when GSE measures stopped almost 89,000 foreclosures.

FHFA reports as well that about 37 percent of those who received permanent loan modifications were able to reduce their monthly payments by more than 30 percent in second quarter.

Mortgage Rates and Terms Beware!

Mortgage Rates and Terms Beware!

Mortgage rates haven’t moved much this year, and the good news is they’ve been stuck at historically low levels. However, mortgage rates are expected to move higher as we head through the fall. While various groups report national mortgage rate averages each week, the rates you get can vary dramatically from that average, depending on what product you choose and how you shop.

One of the biggest mistakes home buyers make is to take a 30 year, fixed-rate mortgage when they don’t really need it. The 30-year fixed is the most expensive of all mortgage products because the rate is the highest and you’re paying for the longest time.imprevistos

It is better to consider a product that matches how long you expect to be in your home, and make some changes later. Points are an upfront payment of interest in exchange for a lower rate. This boosts your closing costs and makes the rate appear to be artificially low.

Also, a great rate can turn into a bad one if your rate lock expires and you have to pay for an extension. Get your financials ready and provide them when asked, the sooner the better so it won’t interfere with the possibility of losing your rate lock. Documentation requirements can be arduous these days, and financial institutions are not going to waive them.

Beware of hidden fees and loan level pricing adjustments. Be sure to review a full breakdown of closing costs before committing to a lender. You can shop by rate or shop by fees, but you can’t shop for both at the same time.

Be aware about the Zero-closing cost mortgages that are sometimes available for as little as 12.5 basis points (0.125 percent) added to your mortgage rate. Your payment might raise $30-50 per month, but you’ll eliminate $4,000 in closing costs or more.

And finally, don’t let multiple lenders run your credit score. This can actually damage your score.

 

 

Homeowners Pay Less for  Mortgage than Renters for Rent

Homeowners Pay Less for Mortgage than Renters for Rent

Paying a mortgage is cheaper than paying rent. But owning a home costs more.  The never ending debate…Is better to buy or rent?  This could be answered only after considering all of the expenses that contribute to homeownership.

The Bureau of Labor Statistics (BLS) says it’s cheaper to own. It has become less expensive to own. From 2009 to 2012, fueled by falling interest rates, ForRentForSalehomeownership has become more affordable, while renters saw costs go in the opposite direction, according to the BLS.

A recent report by Zillow found that current U.S. home buyers can expect to pay 15.3% of their incomes to a mortgage on the typical home – down considerably from the 22.1% of income homeowners had to budget in the pre-bubble years but renters pay today over 29.5% of their income to rent, compared to 24.9% in the pre-bubble period.

The main reason for the budget disparity is the income gap between owners and renters. At the end of the second quarter, the Census Bureau reported the median annual income in the U.S. was $53,216. But among homeowners, median salaries were $65,514 per year, while the typical renter’s income was just $31,888.

Propietarios de Casas pagan menos por hipoteca que inquilinos por alquiler.

Propietarios de Casas pagan menos por hipoteca que inquilinos por alquiler.

Pagar una hipoteca es más barato que pagar alquiler. Pero ser propietario de una Casa cuesta más que rentar. El debate interminable de que es mejor ¿Comprar o alquilar una Casa? Se puede determinar después de considerar todos los gastos que contribuyen al mantenimiento de una casa.

La Oficina de Estadísticas Laborales (BLS) afirma que es más barato comprar que rentar. Es más económico ser dueño de una propiedad que rentarla.  ForRentForSaleDesde el 2009 al 2012, impulsado por la caída de las tasas de interés, ser propietario de una vivienda se convirtió en una posibilidad más asequible, mientras que los inquilinos vieron los costos en las rentas en dirección opuesta, según la BLS.

Un reciente informe de Zillow encontró que los compradores de vivienda actuales de Estados Unidos esperan pagar un 15,3% de sus ingresos en una hipoteca sobre una vivienda típica por debajo de los inquilinos que pagan hoy sobre 29,5% de sus ingresos para alquilar.

La principal razón de esta diferencia en presupuesto, es la brecha de ingresos entre propietarios e inquilinos. Al final del segundo trimestre, la oficina del censo informó que el ingreso anual promedio en los Estados Unidos fue $53.216. Pero entre los propietarios, los sueldos promedio está entre $65.514 anuales, mientras que el ingreso típico del arrendatario era sólo $31.888.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Congress is now back from its summer vacation, so the burning financial question on thousands of homeowners’ minds right now is this: Are you finally going to help the consumers who are underwater on their mortgages and have already accepted a principal reduction by their lenders? 20131125_fact copy

Under current federal tax law, when the homeowners accept reductions in what they owe, the amount forgiven by the bank gets reported to the IRS, and the owner is hit with taxes as if it were ordinary income.

The Mortgage Forgiveness Debt Relief Act of 2007 was created to help distressed homeowners; that were faced with taxes after a Principal reduction; however this law has already expired Dec. 31, 2013.

If Congress does not extend the law retroactively thousands of underwater homeowners could be hit with tax burdens they may not be able to handle. We hope for the Best!