Real Estate Advisor asked:


Modest median price gains in new and existing homes, a stable interest rate on the 30-year fixed mortgage, decreased housing starts and a stable unemployment rate are some of the features of the 2007 housing forecast provided by major trade group economists as reported by The Inman News.

NAR chief economist David Lereah expects new-home sales to fall from 1.07 million units sold in 2006 to 975,000 units in 2007, which is an 8.7% decline. He cites decreased new home construction as a large contributing factor to this change. The median new home price of $238,400 in 2006 is expected to increase by 1.3 percent to $241,400 in 2007.

NAR also predicts that existing home sales figures for 2006 to end around 6.47 million units, which is an 8.6% decline from 2005. The 2007 forecast for existing home sales is 6.43 million units. The median price of existing homes in 2006 was $223,700 and is expected to increase 1.7% to $227,500 in 2007.

Doug Duncan, chief economist for the Mortgage Bankers Association predicts the interest rates on 30-year fixed mortgages to stay around 6.5 percent, but mortgage originations to fall 14% to $2.1 trillion.

While Lereah predicts that the unemployment rate to stay at 4.7 percent, Duncan takes it higher and believes it may reach 5.2 percent by midyear 2007. However, he concurs with Lereah in predicting modest home price gains in new and existing homes for the coming year.

The housing forecast of The National Association of Home Builders (NAHB) is in line with NAR and the Mortgage Bankers Association. According to David Seiders, Chief Economist at NAHB, the year 2007 will see the housing market re-adjust itself once the housing demand stabilizes, leading to a healthy balance between supply and demand.

Looking at the state level, the California Association of Realtors (CAR) projects that the median price of California homes will end 2006 around $560,700, and will decline in 2007 to $550,000 — a 1.7% drop. The number of units sold in California will end 2006 around 481,200, and is projected to decrease 447,500 in 2007. CAR predicts that the unemployment rate will stay around 5.1 percent, although interest rates on the 30-year fixed mortgage may hover around 6.7 percent in 2007.

The overall housing forecast for 2007 made by these four major real estate trade groups is not at all bad. Home buyers and investors planning to go ahead with their real estate activities can fare better with the help of a good real estate agent.



Jorge

Joe Ramirez asked:


There are hundreds of questions that people have when it comes time to select a new mortgage or buy a home. Heare are five of the the most common home loan questions.

Q: When’s the best time to buy a house?

A: The best time to buy a house is when you’re ready. Although housing prices fluctuate, traditionally they have increased over time. Even in markets with modest gains in housing prices, there are tremendous tax advantages to owning your own home. There are also huge quality of life issues involved. It’s great to know that you’re the King or Queen of your own castle. If you have children, the security of owning your own home, and giving them a backyard to play in, is priceless.

Q: Should I pay off all my debts and bills before applying for a mortgage?

A: Not necessarily. Before you rush to pay off student loans, a new car loan or other obligations, talk to your lender. Paying off bills may be a bad idea if it depletes your savings or reduces your down payment. Either one presents the appearance that you are living beyond your means.

On the other hand, paying off some debt may be wise if you need to lower your total debt-to-income ratio. A good way to approach this is to be prequalified for the loan. Most lenders will offer advice on how to improve your financial situation before you actually apply for the loan.

Q: Is a big down payment really important?

A: That depends on your situation. There are a wide variety of loan products available today that make home ownership possible for almost everyone, even without a down payment. However, you may not want to use them.

Historically, people who buy without a down payment are much more likely to default on their mortgages. It’s really simple an owner who has invested more in a home, is going to work harder to keep it, because they have more to lose. Higher default rates mean higher interest rates. So, if you have little or no down payment, you are likely to end up paying a higher interest rate than someone with a large down payment.

Conventional mortgages usually involve a down payment of 20% or more. Many people, especially first-time homebuyers, start with a 5% down payment. The highest interest rates are usually charged by lenders when there is no down payment. There are even 100% financing programs that will allow you to purchase a home with no money down.

Q: How important are debt ratios?

Debt ratios are general guidelines, not hard and fast rules. Many conventional mortgage lenders like to see a 20% down payment with a house payment that is no more than 28% of gross income. They like the total monthly obligations to be no more than 36% of gross income. But, those are only guidelines. Mortgage lenders make exceptions to the guidelines every day, based on the buyer’s total financial position and credit history. Don’t let a higher debt ratio keep you from buying the home of your dreams!

Q: Can senior citizens get a mortgage?

Yes! Many senior citizens pay a higher percentage of their income for housing, than people in other age groups. Also, years of experience has shown that seniors tend to be good credit risks. For that reason, many lenders have more lenient standards for seniors. Often, seniors are approved for a higher debt ratio than usual.



Michael

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Curtis

eHow asked:

The mortgage closing specialist.

The month learn what to keep in this free personal finance video from loan processe in mind before and during the end of the end of the month learn what to keep in mind before and mortgage closing.


Gertrude

Ben Horne asked:


As you start your search for a mortgage, there are a few questions you need to ask yourself in order to narrow your search and know what you’re looking for. Unfortunately, the answers to those questions aren’t always easy. For some honest mortgage advice on the answers to your mortgage questions, keep reading.

Fixed Rate Mortgage or ARM?

If you plan to stay in the house you’re planning to purchase for longer than 7 years or simply want stability in your monthly payments, pick the fixed rate mortgage if you can afford it. A fixed rate will allow you consistent payments month-after-month for the duration of the mortgage loan.

Alternatively, an ARM (Adjustable Rate Mortgage) is great for families who know they’ll be out of their house in less than 7 years. Before you take on an ARM, ask your lender what your worst case scenario would be based on your annual rate adjustment cap. Make sure you could financially handle a potential sharp spike in your monthly mortgage payments.

How Large Should My Down Payment Be?

Ask yourself how much of an interest rate reduction you’ll get with a higher down payment and whether a lower down payment will result in having to pay expensive private mortgage insurance. Mortgage insurance is often required by the lender to cover their risks when the buyer’s down payment is too low.

Typically, investing in a larger down payment results in a return on the investment that’s equal to the mortgage interest rate. Now, if dropping your down payment puts you in a different category (for example, below 20% or below 5%) that can affect the return significantly.

Do I Want an Interest-Only Mortgage?

An interest only mortgage offers homeowners an option to pay only interest, but for a specified period of time. This results in a lower required monthly payment and the buyer is still free to make payments on the principal.

Interest only mortgages should only be used though by borrowers who actually need them. For example, a good candidate might be a freelancer or contractor who has a fluctuating income and wants the freedom to make extra payments on the principal while still having a smaller monthly commitment.

Other examples include individuals who need the cash flow for high-yielding investments (earning more than 9% over the long term) or families who are expecting to make higher incomes in a few years, at which point they can begin making some significant principal payments.

Should I Accept a Pre-Payment Penalty?

A pre-payment penalty is a clause in your mortgage agreement that says you’ll pay a penalty if you pay off the mortgage too early or seek to make extra payments. On the surface, you might assume the lending institution would welcome the faster repayment of its loan. However, doing so actually results in some financial loss through lost interest payments.

Typically, prepayment penalties disappear after a few years. If you opt for a fixed rate mortgage and plan to remain in the house for a long time, you can often exchange a pre-payment penalty for a lower rate!



Karl

CreditTrauma asked:

Late On Your Mortgage Payments? Here’s some Credit Tips to help you out.

Samuel