Saturday, December 20, 2008

An Interesting Retort From a Commenter

Thought I'd post a nice comment in full from local blogger and Realtor Eric Rojas. Like I tell my wife, disagreement is good, it provides more ideas rather than just agreeing with one idea...

I might disagree with your "waiting game". There is no guarantee the right deal will be there for you later. I personally have offered on a foreclosure (lost in a multiple offer) and have won a multiple offer short sale for my clients on another place this month.
Meaning, many preceived the prices as agood deal and jumped. This is still very rare, even in our worst months here after Red October.

You did acknowledge people could jump if it's a steal. But finding the combo of good location, good building, good price is still tough... especially if you don't write and offer.

I know of sales happening now that are $50K less (give or take) than previous sales on units for sale simply because the buyer wrote an offer (did not have to wait and compete when the price finally would be lowered).

Anyway, I'm biased here, but also put my own money where my mouth is. Making an arbitray decison when it's better to buy based on the current market is like trying to time any market. I think if a home is what you want and you have a good understanding of the location... and you can afford it... take a shot.

If you were in the market today (say renting and needed a place for your growing family) you'd wait another 6 months even though a great house becomes availble?

Ethanol Subsidies and No-Money-Down Mortgages?

Who would have known? I saw this piece in the WSJ describing a mortgage program buried within the Department of Agriculture.

To be eligible for a USDA-backed loan, a borrower can't have income that exceeds 115% of the median county income, and the loans are restricted to areas with lower population density -- generally towns of no more than 25,000 residents. So while home buyers in big cities aren't eligible for the loans, residents of many of America's fastest-growing towns and exurbs do qualify. The loans that come through the program are made by private lenders, then insured by the government and sold to Ginnie Mae, a federal agency that sells mortgages to investors.

Here's an overview from USDA. Likely not eligible in Cook but maybe in a collar of a collar county.

New Tax Breaks for Homeowners

A nice little reminder/overview from Kiplinger's regarding end of year tax planning for homeowners.

Notably, the new up to $7,500 tax credit for new homes brought from April 9, 2008, through June 30, 2009 and the Private Mortgage Insurance deduction for homes bought since 1/1/07.

A Second Wave of Mortgage Disaster

I saw the above on 60 Minutes last week...not exactly a cheery prognosis for the holiday season. Here's the full text of the story. Obviously just one person's quote, but still...

"We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."

Wednesday, December 10, 2008

It May Be Time to Think About Buying a House

I saw the piece over the weekend in the NYTimes but hadn't gotten around to reading it until today. It's been their most read article for nearly a week now so I thought I'd give it a skim. An important and true opening 'graph:

Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.

But when is the right time? At least around Chicagoland, unless you can get a steal, I'd wait 6 months before buying anything. My view is that surely until the new administration comes into office things will remain dour. Then, I'm expecting Obama to make a big economic push right away but it will still take 2-4 months from legislative passage until that stimulus gets into the real economy. With greater confidence, I don't think you lose much by waiting until spring 2010.

As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines.

How should you proceed if you're planning to buy a home in the next 1-2 years?

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.

John Ulzheimer, president of consumer education for, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at and dispute errors.

While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable.

Remember the tax credit and it's expiration date.

Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.

Thursday, December 04, 2008

Mortgage Fraud Incidents up 45% Year-to-Year: We're #3!

Saw this reported here. Some snippets from the piece:

Reported incidents of mortgage fraud grew by 45 percent in the second quarter compared to the year-ago period, as borrowers misstated their financial information to maneuver around tighter lending standards, industry data released Tuesday showed.

Florida properties led the way with about one-fifth of mortgage fraud incidents reported in the second quarter, the Mortgage Asset Research Institute reported. California was second, and Illinois third, the data showed...

The largest increase in mortgage fraud in the first half of this year involved borrowers misstating their financial profile, which is not surprising as borrowers try to get around stricter lending guidelines, the report said.

Some basic examples of fraud included false bank statements made on computers and pay stubs with white correction liquid on them, said Jennifer Butts, the institute's director of operations.

See it's not all the big, bad lenders. Now that the election's over perhaps some acknowledgment of fault on the part of buyer's signing these mortgages is at hand.

That’s the Problem, there was NO CANCER CLAUSE!

Saw this in a recent What’s Your Problem? column in the Trib. regarding a builder’s failure to return an elderly couple's earnest money deposit. A sad tale, the husband got cancer and subsequently died and thus the couple didn’t want to purchase the home. The potential buyer’s relied on the developer’s oral promise that they’d refund the earnest money if the gentleman got cancer. I read that in the end they did get 3/4 of the deposit back.

But really, would you expect a developer to honor an oral promise regarding an earnest money refund? Get it in writing!

Wednesday, December 03, 2008

Choosing a Real Estate Attorney

Nice video over on YouTube from a local practitioner I know well. Who'd have thunk it. I've had like 3 deals with this guy, good lawyer for your smallish condo development projects. Never knew he was high-tech. I don't think his firm even has a Website.