Dec

30

Mortgage Shopping

Filed Under Mortgage Matters | Leave a Comment

Shopping Around for a Mortgage?

HERE’S THE INSIDE SCOOP ON HOW TO DO IT RIGHT!

First, make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?

Here are FOUR SIMPLE QUESTIONS YOUR LENDER ABSOLUTELY MUST BE ABLE TO ANSWER CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS…RUN…DON’T WALK…RUN…TO A LENDER THAT DOES!

1. What are mortgage interest rates based on? (The only correct answer is Mortgage Backed Securities or Mortgage Bonds, Not the 10-year Treasury note. While the 10-year Treasury note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)
2. What is the next Economic Report or event that could cause interest rate movement? (A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, ask to be added to my e-mail distribution for my weekly newsletter.)
3. When Bernanke and the Fed “change rates”, what does this mean…and what impact does this have on mortgage interest rates? (The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very short-term rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed Change. This is due to the dynamics within the financial markets in response to inflation. For more information and explanation, just give us a call).
4. Do you have access to live, real time, mortgage bond quotes? (If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!)

Be smart… Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do these only four or five times in your entire life… but we do this every single day. It’s your home and your future. It’s our profession and our passion. We’re ready to work for your best interest.

Tony Auffant
Senior Mortgage Planner
Continental Home Loans, Inc.

Dec

27

Mortgage Rates: Oh My Goodness…What Are You Waiting For?

Filed Under Buyers | Leave a Comment



Got Mortgage Rates?
If you watched TV news, you’d think banks have no money to lend. Ridiculous! I have officially concluded that television is our greatest enemy. I believe this whole-heartedly. I cannot tell you how much I am sick of hearing people on the news saying, “…the sky is falling…”. Over and over again, it’s a constant mantra. And that’s just a comment I catch just when I’m flicking through channels. I don’t actually watch much television and when I do, if I pass Fox, CNN, ABC, CBS, etc. - I find myself catching a news anchor saying how horrible things are.
Well let me tell you something…interest rates are hovering around 5% for a 30 year fixed mortgage. Of course, that’s a rate for a prime buyer with fico scores over 630 and good income and low debts. But wait just a minute - 630 credit score? Last I checked, that wasn’t all that stellar - but it can get you a good rate.
Now I must qualify that statement with this: The mortgage market is changing every month. My business associate, Tony Auffant of Continental Home Loans, is constantly updating me on the changes to the mortgage market.
Due to these changes, it can be amazing what is available one month and gone the next. Like a 5% interest rate! The following is an excerpt from an article I wrote in April about the effect of mortgage rates on your monthly interest paid:
If you buy a house for say $440,000 now and put 20% down, with a $350,000 mortgage now, at a fixed percentage rate of 6%, 30 year mortgage, the total amount of payments over the 30 years would be $755,431.84 with the total amount of interest paid being $405,431.84.

If you buy this same house say, 10 months from now (when the market prices “hit bottom”) for $410,000 and put 20% down, with a $328,000, at a fixed percentage rate of 8%, 30 year mortgage, the total amount of payments over the 30 years would be….$866,426.55 with the total amount of interest paid being $538,426.55.

We’re talking over $100,000 more in costs just to “save” 8 to 10 percent now on a purchase price. It clearly doesn’t add up. Even if you say you’re not going to live their for 30 years and will most likely sell the home 5 to 7 years from now, the cost to you will be more if you wait and take the chance of interest rates being higher.

Now you can adjust those numbers but they remain the same. The difference between 5% and 6.5% means you’re paying approximately 23% more in interest (the difference between 5% and 6.5% is not just 1.5% - it’s a 23.077% difference).
So now I basically am saying to you, as a buyer, you’re just simply nuts not to seriously consider buying real estate now. I have written in the past that interest rates would be higher now. And I can admit, I was wrong, but no one saw what happened in October to the entire financial market. Not even Warren Buffet himself saw that coming.
So I’m not going to say that interest rates will be higher 3 months from now. What I will say is that I know the following facts:
1. Interest rates for qualified buyers are incredible…right now.
2. Prices have dropped over 20%.

This may not be enough for you, as a buyer. To you I say - continue paying rent and see how much you increase your net worth over the next year and call me when you’re ready to buy or sign up for a listingbook account now and browse the market like a champ. To the buyer who’s shaking his head in curiousity and is saying, “I think it’s time to buy”…Call me 631-831-9048.

(c) Copyright 2008, www.tommcgiveron.com

By Thomas McGiveron, Licensed Salesperson

LISPENDENSLISTS.COM

Dec

24

Long Island Real Estate Market: Foreclosure Update, December 2008

Filed Under Foreclosure Info, Long Island Foreclosure Stats | 3 Comments

This is a foreclosure update for the Long Island real estate market. This report features the number of homes that are in the foreclosure process or currently bank-owned throughout a sample of the Long Island real estate market.

Suffolk County

West Islip = 70 Homes Pending Foreclosure - this represents over a 50% increase since the last report on Oct. 7, 2008.
Deer Park = 176 Homes Pending Foreclosure - a 165% increase since October, 2008.
Babylon = 34 Homes Pending Foreclosure (nearly 200% increase)
West Babylon = 188 Homes Pending Foreclosure (117% increase)
Lindenhurst = 193 Homes Pending Foreclosure (exactly 100 more foreclosures…in two months)
Patchogue = 17 Homes Pending Foreclosure
Miller Place = 47 Homes Pending Foreclosure
Riverhead = 3 Homes Pending Foreclosure
Huntington = 95 Homes Pending Foreclosure (nearly 100% increase since Oct. 2008)
Port Jeff = 21 Homes Pending Foreclosure (100% increase)
Sayville = 32 Homes Pending Foreclosure
East Hampton = 4 Homes Pending Foreclosure (300% increase)
Smithtown = 11 Homes Pending Foreclosure
Hauppauge = 26 Homes Pending Foreclosure
Manorville = 43 Homes Pending Foreclosure (over 144% increase)

Total = 960 Homes Pending Foreclosure (51% increase since last report in October, 2008)

Nassau County

Farmingdale = 34 Homes Pending Foreclosure
Seaford = 9 Homes Pending Foreclosure (125% increase)
Massapequa = 37 Homes Pending Foreclosure (8% decline)
Freeport = 56 Homes Pending Foreclosure
Wantagh = 10 Homes Pending Foreclosure
Lynbrook = 3 Homes Pending Foreclosure
Elmont = 47 Homes Pending Foreclosure
Oceanside = 6 Homes Pending Foreclosure

Total = 202 Homes Pending Foreclosure

If you want information on a specific town, leave me a comment or call me at 631.831.9048.

It’s clear that Suffolk county had a tremendous surge in foreclosure filings. All this information was gathered from RealtyTrac. The information is a combination of lis pendens filings with local county offices, public notices of foreclosure sales, and real estate owned properties (properties currently owned by banking institutions).

The average loss of equity from a foreclosure on Long Island is about $8000. So the fewer foreclosures in your area, the better! Overall, the foreclosure numbers, gathered from RealtyTrac, appear to be increasing. A 50% increase in the number of foreclosures in less than 3 months.

under-water-1208.jpg Click the slide to enlarge it. These are some national numbers which seem to correlate with the Long Island real estate market.

I will continue to report on the Long Island foreclosure situation and see how things change from month to month. Please continue to come back. If you have any questions on a specific town, please feel free to contact me.

For the previous foreclosure updates, www.tommcgiveron.com/category/foreclosures/.

Resource For Homeowners

Dec

2

Long Island Home Prices: How Real Estate Offices Are Being Affected

Filed Under Sellers | Leave a Comment

Long Island home prices are hurting. What you’re thinking right now is, “Gee thanks for the insight there Tom!” While many people talk about homes sales and focus on the values of real estate, one thing many people don’t talk about is the business of real estate.

Since 2006, over 220 offices throughout Long Island have closed. They’re either large companies “restructuring” to become more centralized, or they’re small offices that are just no longer in business any longer.

Many offices and their agents have dropped commissions to “compete” with low-cost real estate companies. This has been a trend for the past 30 months or so. But oddly enough, what has happened is these offices have closed down. The “flat-fee” brokerages charging $3500 (plus a commission pay out for cooperating brokerages) are mostly shut down.

Without boring anyone, I’ll talk briefly about how business works. It’s simple really. The equation is:

Revenues - Expenses = PROFIT

Now let’s look at the retail world of clothing. If a clothing company like The Gap decreases their prices, they are inadvertantly decreasing their revenues. They need to sell more in order to make a profit or, they need to eliminate expenses. Now fortune 500 companies usually will cut costs by firing people. It’s that simple.

In the real estate business, in order for a brokerage charging a flat-fee or charging a 4% commission (split 50/50 with another brokerage - the other brokerage brings the buyer and each office splits the commission), to make a profit, the must either sell more houses - faster and not hold onto them or they must decrease expenses.

In the real estate business, decreasing expenses includes less advertising, less auxilary staff to run the office, less open houses, less signs - basically less marketing all around. This is a fact, or the office will close like the over 220 offices that have gone that route since 2006.

Now think about prices of homes and add this into the mix. If a brokerage is letting their agents take 4% listings and the homes selling in their market have come down in price over 20%, assuming a standard and healthy commission is 6%, and their charging 4%, that’s a 49% drop in revenue.

Now prices across the board have come down. We all know this as you astutely thought to yourself at the beginning of this article about my insight. So ask yourself this question next time you’re sitting with a real estate agent who will accept a 4% or flat-fee commission:

“How can this agent and their office market my property when their revenues are down 50%?”

Ask yourself this question next:

“If this agent and their office is taking a 4% commission now, how well are they going to negotiate a price for me in the future?” (because they’re bottom-feeding right from the get-go).

If you could buy something now, that will definitely do what you bought it to do, or spend a little less and buy something that could very likely turn out to not be able to do what you’re buying it to do - which do you think you should buy?

The reason for this article is push back a little against the trend that is putting real estate businesses out of business and putting homeowners in situations where their equity is flying out the window each and every month their home doesn’t sell.

Price is king in this market, but effective marketing helps make any listing pop off the long list of homes for sale (over 30,000) on Long Island.

Call me now to talk about actually selling your home and how I use my fee for service to help sell your property faster and for more money than my competition.

1-877-765-3123, Ext. 51

(c) Copyright, 2008 www.tommcgiveron.com