Feb

15

What Is Going To Happen To Mortgage Rates In 2010?

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So the question is, what is going to happen to mortgage rates in 2010? Well, have you ever heard the saying “It ain’t over til it’s over”? The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over - and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.

Chart: The Fed’s Purchase of MBS (By Month)
mbs-purchases.jpg

The purchasing of these MBS’s, is exactly what has kept mortgage interest rates low, as I’ve previously mentioned. Originally, I thought, as many did, that rates wouldn’t take a hit until after the complete execution of this program in March. However, the government slowing of these purchases will have an effect on the rates before March 31st!

These are historic times in real estate and I feel that many people who want to really buy, are going to miss out on an opportunity to have a 5% 30 year fixed interest rate…because they just kept waiting and waiting….and waiting.

Now is absolutely the time to buy. Prices are down over 35% in almost every area throughout Long Island. If you’ve been paying attention to certain homes on the market through your home search, you know that home is on the market now (it may not be there 3 months from now). And right now, you can obtain an historically low interest rate.

I had a closing the other day and my buyer client, with buying down his rate, got a 30 year fixed loan for 4.25%.

4.25% for 30 years. In 3 months, that will most likely be 6.25%…with buying down the rate…

The clock is ticking.

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Jan

20

The State of The Long Island Real Estate Market: December 2009

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Well 2009 is in the books and I want to put a stamp on exactly how the Long Island real estate market faired throughout the course of the year. The Long Island real estate statistics for 2009 may surprise many people. There’s one very clear message from the stats that I want to share right away and that is, we are in “the trough”.

As the downward trend has dropped, these statistics which I’m sharing here, demonstrate that we are in the low point of the Long Island real estate market. It doesn’t mean that things are miraculously going to turn around and homes are going to start appreciating, but it does mean that we are almost certainly at the low point and we could “skip along” here at this level for quite sometime and even dip down a little.

I’ve talked alot over the past 3 years about supply and demand. Supply is still very high, but little by little, it is decreasing and more homes are being sold so demand is catching up with supply. Ask any real estate agent on Long Island and they will tell you, when a property for sale is priced right, it sells quick and usually receives multiple offers. So buyers are out there and more importantly, they’re buying.

Now before moving forward I need to preface this information with the following challenges our market faces. One, unemployment is high and inflation may hit the country in 2010, which most economists say it will. Two, foreclosures are rising due mainly to unemployment with prime buyers being the hardest hit (now we’re in the second phase of this foreclosure crisis) - see previous article here. Regarding the foreclosure crisis, you can see the article in Newsday’s Sunday, January 17th paper online about foreclosures on Long Island.

The state of the Long Island real estate market for December 2009 is broken down into a comparison between December 2008 and also a slight comparison to April 2009 (the last time I did this graph).

What you’ll see is not just one or two anomolies but many areas having increased sales prices or very slight declines over December 2008 and April 2009. Long Island is broken down into zones. For information on where you live and what zone you’re located in, please contact me directly at 631-831-9048.

the-state-of-the-long-island-real-estate-december.jpg

For the above Long Island real estate market information, it actually surprised me to see the dramatic improvements from the April, 2009 report. One of the main themes throughout the statistics was, that the market is leveling off. Units sold from December 2008 were basically doubled in December 2009. And with over 11 out of 17 zones, actually seeing an increase in sales price averages, that represents an improvement of 65% of the overall Long Island market.

Again, I’m not saying that values are “going up”. What this data suggests is that more homes are selling and many of those homes that sold, sold for more money than they did in just April of 2009.

Now for a closer look at where we are in the Long Island market, we need to look at the amount of homes that are for sale and how many are selling. The graph below demonstrates very simply that while the market has made great strides in the right direction (less inventory), we still have a long way to go until demand evens out with supply.

december-09-inventory-vs-sales.jpg

For buyers, these are clear signs that if you want to buy a home, now is the time to seriously do what you must to purchase a home at the lowest rates in our history. I continually hear prospective buyers tell me they’re waiting…and I’m thinking in my head, “…for what, cows to fly?”

Five percent interest rates are not here to stay. And once they go up, chances are we will never see rates like that, on 30 year loans, for a very long time, if ever again in our lifetimes. Rates are historically low and the Long Island real estate market is down nearly 37% (and more in some areas)…and let us not forget about the $8,000 tax credit (which is money in your pocket).

This State of The Long Island Real Estate Market tells me what I need to know and that is, convince buyers to buy, rather than sit around and wait. The bottom is here and the market might stay down in this area for a good amount of time, but interest rates of 5% and $8,000 will not.

For sellers, your motivation for selling is paramount. If you’re highly motivated, it’s so important that you hire a real estate agent who can prove to you that he or she can sell your home for the most amount of money in the shortest period of time. Selling before May 1st, 2010 is extremely important. Call me if you don’t know why.

631-831-9048

(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson

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Jan

12

Loan Originators Disclosure of Closing Costs

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Recent guidelines impacting loan originators disclosure of closing costs have been set up by HUD in order to bring all lenders up to the same standard of excellence in reporting closing costs to consumers. The estimates provided by loan originators must be realistic fees that a buyer should expect to pay at closing with no last minute surprises.

Some of the important facts you should be aware of as a homebuyer are:

Please be sure to make note of these items when you’re looking for a mortgage lender. This information was provided courtesy of Tony Auffant, Senior Mortgage Planner with Continental Home Loans. Tony can be reached at 631-241-4366 or email him tauffant AT cccmtg.com (use the @ sybol in your email).

(c) Copyright 2010, www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson


Dec

8

The Future Of Mortgage Interest Rates

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So this is an article about the future of mortgage interest rates. It’s a video article (and my first).

Part I

Part II

You can reach me at 631-587-1700, Ext. 51 or you can EMAIL ME HERE.

By Thomas McGiveron, Licensed Real Estate Salesperson
(c) Copyright 2009 www.tommcgiveron.com


Dec

6

For First-Time Buyers: The Process Of Buying A Home

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Here’s an outline for the home-buying process for first-time buyers.

First thing’s first, relax. I know how you feel. I bought 2 homes before I became a real estate agent. I look back and if I could say one thing to myself then, I would say, “Relax and enjoy this. Have fun!” So in the process of buying a home, remember, relaxing and taking things one day at a time is paramount!

Here’s the “nuts and bolts” of the process. Remember, first thing is…R E L A X. Now I will take you through the rest of the typical process. I’m going to just focus on when you make an offer and go from there. However, before any of this, you must do three things. One, determine how much you can afford on a monthly basis (write down your monthly income and write down your expenses, including some for savings), this will give you what you can afford to manage the home (Principal, Interst, Taxes, Insurance, Heat, Electric).

Two, meet with a mortgage professional and get pre-approved for a mortgage. Without this, you are driving blind, because you have no idea which direction you should be going. Without knowing what you’re qualified for, how do you know what price range you should be looking in? The mortgage pre-approval is the foundation of your entire search.

Three, discuss your needs and preferences for the home and neighborhood you’d like to buy. Be realistic. Remember, this is a starter home most likely and over 70% of home buyers move after 7.5 years. Things change, families grow, money is greater, etc, so people “upgrade” or just move to another area.

Okay so we’ve got those basic items out of the way. Now you find the home (easier said than done…). You make an offer.
Once the offer is accepted, your offer will most likely be contingent on an engineer inspection of the property. To this point, no money is put down and you are not in contract. The purpose of the engineer inspection is to allow you to have a professional look at the home before going into contract.

Normally, any issues that are noticed during the inspection, are discussed up front, before the seller’s attorney sends your attorney a contract of sale. This allows for a smooth transition for the lawyers to execute a contract.

Once the inspection process is completed and any issues are addressed, you will be meeting with your attorney to sign a contract. Just a few notes here are needed.

One, the purpose of an engineer inspection is not to renegotiate the offering price. During your time of viewing the home before the inspection and before the offer, it’s important to pre-inspect the property the best you can and make notes of any little items that may need attention such as a leaky faucet or old water heater that needs replacement. All this should be taken into account before you make your initial offer. The purpose of an engineer inspection is to review electrical, plumbing, heating, and foundation/structural components of the home and not for a running toilet or a sliding glass door that’s hard to close.

Secondly, understand that during this process where your offer has been accepted by the seller and you move to get an inspection and work things out with your contract, that the home could still be sold to another party. You are not in contract until you (the buyer) and the seller(s) have signed a complete contract that is agreeable to both parties. So moving somewhat swiftly is adviseable.

In moving on, once you’re ready to sign the contract, your attorney will review items in the contract and protect you legally. Both the seller and you, the buyer, have to be represented equally. Things like certificate of occupancy, survey, title work, mortgage contingencies, etc. will all be worked out in this contract.

As a Licensed Real Estate Salesperson, I only show homes and help people buy and sell them. I do not render legal advise, so it’s important that you hire an attorney you are comfortable with, who can handle your legal representation to your satisfaction.

Once you’re in fully executed contract, where both you and the seller(s) have signed an agreeable contract, you will then move to acquire an appraisal of the home you’re purchasing. This is required by you bank, to establish the value of the home. The appraised value usually always comes in very close to the agreed upon sales price. However, with changes to Home Valuation Code of Conduct (HVCC’s), there has been an increasing number of homes that have received low appraisals (a symptom of the tightening in the industry). Something I am well aware (lucky for my clients).

Once you’ve gotten this completed, it’s very important that you follow up with your lender to assure that you receive your mortgage committment in a timely fashion. It’s also very important that your attorney do his/her part in ordering the title work and seeing to it that it is acceptable and that there are no issues to be addressed in the last minute. Being prepared and on the ball is the key.

Last minute items that you will need to address will be your money at closing and your home insurance. You should get quotes from companies ahead of time, during the beginning stages of your contract period. This way, in the last two weeks before your closing, you know exactly who to contact to get your proof of insurance.

Things to prepare yourself for include the need for a new survey. Sometimes, a survey on a home can be old or not acceptable due to any number of issues. So at times, you will have to pay for a new survey or an updated one from the company that did the original survey (if they’re still in business). This can be an unexpected cost, but in my opinion, a good expense. I believe every buyer should pay for a brand new survey of their land. But that’s my opinion.

Now in a worst case scenario, your lender may be laxed in underwriting your loan. This is where things can get very uncomfortable and tense. It’s important that you not focus solely on the “best rate”, but rather focus on a the “best bank”. What do I mean by “best bank”, give me a call and we can discuss that further. But I’ll give you a hint, a bank that underwrites its own loans and has comprehensive services (not just basic qualification of your credit and work history) is the bank to seriously consider.

On the day of the closing, you will have hopefully gotten “the numbers” from your attorney and you will get any money you need for closing in a certified check from your personal bank. You will bring that along with your check book and some cash to the closing. The cash is for the title agent at the closing, as it is common to tip them.

It is an exciting experience and with a good team of professionals helping you (real estate agent, attorney, lending institution), the process of buying your first home should be both a little “terrifying” and mostly fun! Good luck!

If you are looking for a home to buy and want a professional salesperson like myself and our team to help you, feel free to call us at 631-587-1700, ext. 51.

(c) Copyright 2009
By Thomas McGiveron, Licensed Real Estate Salesperson


Nov

15

Long Island Short Sales: Update, November 2009

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When it comes to Long Island short sales, having completed several this year, let me say that throughout the course of 2009, the process has improved…but has a long way to go. I came across some very interesting information about the process of how “banks” determine whether or not to move forward with a short sale negotiation.

I put the word “banks” in quotations because it’s not necessarily banks that are handling the short sales. During the course of the past several years, Loan Servicing companies have become increasingly popular.

80-percent-hike-service-companies.jpg

There are two basic elements to a mortgage loan. They are Processing and Servicing. Keeping in mind that any business must function with the intent on making a profit.

effect-of-servicer-incentives-on-default-outcomes.jpg

In order to explain this slide simply, anything that says “negative” would mean that the loan service company would lose money on that aspect of a short sale. Without incentives to go through with a short sale, loan service companies have no choice but to lean in the direction of foreclosure. Hence, where it says “positive”, that’s where the companies will make money, rather than lose.

Now the Treasury Department has come up with a viable plan to actually encourage banks and loan service companies to consider short sales over foreclosure, many homeowners may be saved from foreclosure.

treasury-department-incentive-program.jpg

So what does this mean to buyers?

It means that a short sale may very well be an excellent opportunity to purchase a home and help a struggling homeowner to avoid foreclosure.

For sellers, it’s simple, if you want to ever buy a home again or at least within the next 3 to 4 years, cooperating with your “bank”, may very well put you and your family in a position to buy again sooner than you think.

fannie-mae-2-years-short-sale.jpg

If you are struggling to make your mortgage payment, please call me at 1-877-765-3123, ext. 51, immediately.

If you’re a buyer, it is imperative that you find a qualified real estate agent to help you through the process of buying a short sale. They can be very good opportunities, but know which ones are good and which ones are not is the key to successfully purchasing a short sale. You can visit www.islandforeclosures.org and contact me there by signing up to receive email updates on properties for sale throughout Long Island or call me at the number above.

(c) Copyright, 2009
By Thomas McGiveron, Licensed Real Estate Salesperson

Nov

7

Homebuyer Tax Credit Update

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Homebuyer Tax Credit Update!

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.
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If you’re a seller and you don’t quite understand how this can help you, call me at 1-877-765-3123, ext. 51.

By Thomas McGiveron, Licensed Real Estate Salesperson

Oct

15

Long Island Real Estate Market: 45 Days Remaining For First-Time Tax Credit

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The Long Island real estate market is going to see a flood of hopeful buyers scrambling to close by November 30th, 2009. If you don’t know why that is, then call me immediately (631-587-1700, ext. 51). But most of you will know that the date of Nov. 30th, represents the final day a first-time buyer must close on their new home, in order to be eligible to receive the $8000 tax credit.

For sellers, the date of November 30th, 2009 should be a signal to get their price to a place where they will receive offers. This of course, varies on price range (most first-time buyers are purchasing homes with price tags of under $500,000 here on the Long Island real estate market).

Another item to keep in mind, as a buyer, is the final month of the tax credit eligibility is going to be an extremely busy month for banks, appraisal companies, title companies, and attorney’s, as they all rush to complete transaction tasks.

So if you’re a buyer in this market, as of today, there is a very good chance, that if you’re not in contract as of this week (10/12/09 - 10/16/09), you will not be able to receive the $8000 tax credit.

With regard to speculation as to whether or not the government is going to extend the tax credit, I simply say, that as of today (and the past 2 years), the tax credit ends November 30th, 2009. I am not one to speculate as to what the government is going to do or not going to do.

There may be actually very little reason to extend the tax credit, mainly because we are nearing a bottom, on a national level. Even if there’s still a leveling off period, say of 6 to 10 months of further slight declines as the market adjusts, that may not be enough reason for the government to continue such a program because the “problem” is curing itself.

From articles that I read, it is clear to me that even the experts don’t know exactly what to expect in the future. Read this article and see for yourself.

At the end of the day, if you’re a buyer who’s not in contract, rates are super low, they’re going to remain relatively low and prices are down 35% from peak here on the Long Island real estate market. Now is such a great time to buy and working with a buyer’s agent to get the “inside scoop” on property values is key. I welcome the opportunity to assist.

(c) Copyright 2009, www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson

Sep

26

Long Island Real Estate Market: Unexpected Drop In Sales Across Nation

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I posted this article on my blog site: tommcgiveron.blogspot.com about how the Long Island real estate market is following along with the rest of the nation.

I, as a real estate agent, am very busy working with buyers and sellers. But I have seen somewhat of a slow down, overall, in call volume. Last month was very busy and much of what I have for sale went to contract and many of my buyers bought a home.

It’s the lack of new faces that concerns me and should concern sellers out there.

Anyhow, check out there article here: Unexpected Drop In Sales Across Nation.

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

Sep

19

Help For A Home Buyer: How Much To Offer?

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I frequent the website, trulia.com. I am a Pro on Trulia Voices where homeowners, buyers, and others can ask questions about real estate and get multiple answers from an array of real estate professionals.

I recently answered a question and below is the exchange:

The Question:
Im looking at a house on long island that is asking $225,000. How do i determine a good first offer? The house backs to railroad tracks but has a had alot of cosmetic work done.

Michael David
Home Buyer
Mount Sinai, NY

My Response:
mike -

what are you willing to spend for the property?

of course - you’ll say - “as little as possible” - but step back and ask yourself that question. determine UP FRONT what you want to spend. they’re asking $225,000 - i’m sure THEY KNOW they’re backed up to RR tracks.

knowing what sold when and all that stuff will help determine if you’re getting a good “deal” of course.

yatayatayata….do you want to buy the home? If so - how much are you willing and ABLE to spend.

what’s the monthly cost involved (how much, if any, mortgage payment can you afford?). now if you don’t know what the answer to that question is - then YOU are not ready to make an offer on any property. if you do know - then you’ve done your homework and built a foundation for making a real estate purchase.

so to answer your question - “how do i determine a good first offer?” determine what you want to spend - MAX - HONESTLY - then offer a little less than that. define “a little”…3% less than what your max is.

your max might be $215,000 - for this house. after factoring in, how much you can afford and other considerations which might include - how much there is to fix in the house, your time frame for purchase, how long you’ve been looking already, stressors with your partner over looking for a long time (if that’s the case), job, money, etc…

so say it’s 215,000 - then offer $208,550.

Okay - now what?

N E G O T I A T E

Are you a professional negotiator? How will you present your offer? How will you assure that you literally are not over paying for the home? How do you know it will appraise? do you know your closing costs (estimates)? Do you have enough money in savings? Do you know a competent home inspector?

Now THESE are the issues you’re up against AFTER you’ve determined the easiest part…how much to offer.

Email me http://tommcgiveron.listingbook.com/?&page=contact

If you’re out on your own - you’re winging it. Which is fine. Go for it. BUT - if you’re making the largest financial investment of your life (which for most people - that’s what a home is) - doesn’t it make sense to really know what you’re doing…or at least - have a pro helping you do it right? Seriously…Food for thought…

Either way man - good luck!!!

Web Reference: http://www.tommcgiveron.com/buyers/

_____________________________________________________

I just wanted to share the exchange with any of the buyers on my website because I thought the feedback was very pertinent to most buyers. That is a big question, “What to offer?” But there are other questions that are just as, if not more important when considering a home purchase.

One of the keys to making a serious decision to purchase a home is simply asking yourself:
How much you would spend on a particular home?
Can you afford the monthly payment?

It’s like any other purchase, only a lot larger. I believe buyers get caught up in “getting a deal”. But a “deal” is really a home you like and can imagine spending the next few years of your life living there. That’s a deal…

By Thomas McGiveron, LSA

keep looking »