THREE THINGS YOU NEED BEFORE BUYING A HOUSE

Julie and Walt just bought and moved into their first house. They’ve been married two years and Julie’s about a month away from delivering their first child. They saved to put down 22% down on the house and were able to get an $8,000 first-time buyer tax break. Their fixed, 30-year mortgage is at 5.075%.

In a year when the economic news seems to get worse and worse, there is one bright spot for buyers: falling housing prices and low interest rates mean it’s your market. Especially those buying for the first time, who can take advantage of that tax break. What about you?

Here’s what you’ll need:

Credit you can take to the bank
A house (or rather the mortgage, the financial vehicle that makes it possible) is the holy grail of your credit score: arguably the biggest single financial move you’ll ever make. Just like you’d start saving for a down payment long before you buy, you need to start getting your credit in order well before you’re ready to apply for a mortgage.

If your credit history is good overall but there are one or two blemishes like a late payment, many mortgage lenders will simply ask for a written explanation. The most important time period in your credit history is the preceding year or two. If the explanation is reasonable and believable, many lenders will overlook the isolated problem especially if it occurred some time ago and your credit has been on track since.

More than just your score
As credit scoring in mortgage loan decisions has become more sophisticated, lenders have also begun looking at other factors in your credit history. They might be concerned if your credit cards are "maxed out", indicating potential problems with debt management. Or they might worry that if you have large lines of available credit it could mean future unmanageable debt. It’s critical to be sure the information in your credit report is accurate. Inaccuracies or the damage due to credit or identity fraud might determine whether or not mortgage lenders will offer you a loan.

Lenders also look at the number of recent inquiries into your credit report. They interpret a large number of inquiries to mean that you have recently applied for a large amount of credit. They may decide you have too much credit available to be a good credit risk if you’ve been applying for numerous lines of credit. They might foresee you getting into trouble by using them excessively, or assume other lenders have rejected your loan applications.

The right place for you
One question to ask yourself is if you’re prepared to stay in this house (or condominium) for a long time. Experts advise against buying a home unless you plan to stay in it at least three to four years because the high transaction cost of buying and selling property means you could lose money on the deal. Look at this purchase as a long-term investment, something permanent…in other words, home!

Financial security—at least some
Before you sign the mortgage papers on the dotted line, take a look at your income. Is it steady and documented? Could you cover the costs of closing, moving, and a down payment? Will you be able to also pay other associated expenses of homeownership like maintenance and repairs, homeowners association or condo association dues, insurance, utility bills, major appliance replacement or repair? And could you also continue to meet other expenses such as student or car loans and all your other costs?

If you feel like you’re ready to take on the financial challenges of home ownership, the rewards can be significant—a major investment, security for your future, even the stability of having a permanent address. Following these steps will help put yourself in the best position to get a great mortgage rate. This will make it all the sweeter when you turn the key to your new front door for the first time.

1 Million Foreclosures This Year

1 Million Foreclosures This Year 
As of this week, 1 million new foreclosures have been filed in 2009, according to estimates by the Center for Responsible Lending, a nonprofit research and policy organization dedicated to preserving home ownership.

A new foreclosure starts every 13 seconds – nearly 6,500 a day.

"It's easy to think, 'Well, that's tough luck for the families that lose their homes.' The truth is that foreclosures are costing neighboring families hundreds of billions of dollars and dragging down the entire economy,” says Michael Calhoun, president of CRL.

Calhoun called on lenders and loan servicers to utilize the tools offered by the U.S. government to keep people in their homes.

Source: Center for Responsible Lending (06/01/2009)

Practitioners Say Homes Prices Have Hit Bottom

Real estate professionals are optimistic that home prices will hit bottom in the next six months, according to a survey from listing and home-pricing site HomeGain.com.About half of practitioners surveyed expect home prices to stay the same in the next six months, 29 percent expect them to drop, and 22 percent believe they will increase. More than 84 percent of practitioners believe their clients’ homes lost value in the last year, while 12 percent say values had stayed the same. Only 3 percent believe homes had gained value.Meanwhile, sellers were skeptical of their real estate professional’s analysis, with 69 percent believing their homes were worth more than the practitioner recommended. About 35 percent of home sellers thought their home was worth 10 percent to 20 percent more, and 10 percent thought their home was worth at least 21 percent more than their real estate professional suggested.Source: Inman News (05/18/2009)

Rates Below 5% for Ninth Week Straight

Freddie Mac reports a slight rise this week in the 30-year fixed mortgage rate to 4.86 percent from 4.84 percent in the previous week.

Rates have been below 5 percent for nine weeks in a row. Last year at this time, the average 30-year rate was 6.01 percent.

The 15-year fixed mortgage rate climbed to 4.52 percent from 4.51 percent. Meanwhile, the five-year adjustable mortgage rate slipped to 4.82 percent from 4.9 percent; and the one-year ARM fell to 4.71 percent from 4.78 percent.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.

Source: Freddie Mac

Big Improvement to First-Time Buyer Tax Credit

Big Improvement to First-Time Buyer Tax Credit 
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change. 

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Other Solutions for Today's Market

During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana.Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort. 

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

Source: NAR

A letter from Habib F. Balian,CEO, Gold Line Foothill Extension Construction Authority

Jess,

I am pleased to report that the support we are getting along the Metro Gold Line Foothill Extension corridor is growing and so is the momentum.
On May 7, Citrus College will host an "I Will Ride" rally to urge Metro to fund the extension in 2010. We can complete the next phase of the extension to Azusa in 2013 with Measure R funding, if Metro allocates the resources.
The rally will feature Citrus College President Dr. Geraldine M. Perri, supporters of the "I Will Ride" campaign, students and others from the dozen colleges and universities along the corridor.
The rally will take place Thursday, May 7, at 11 a.m. on the Campus Center Mall at Citrus College, 1000 West Foothill Blvd., in Glendora. For more information, click here I Will Ride. See you there.

The Journey Continues....



Habib F. BalianChief Executive OfficerGold Line Foothill Extension Construction Authority

Pending home sales jump 3.2%

Buyers defy expectations with an increase in sales contracts signed during March.

NEW YORK (CNNMoney.com) -- Is the housing meltdown ending?

Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago.

The consensus forecast of industry experts polled by Briefing.com had predicted no increase in the index.

It may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed, according to Lawrence Yun, NAR's chief economist. And, the upturn may have been boosted by the first-time homebuyers tax credit, a temporary measure that will lapse in December.

"We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around," said Yun. "This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment."

The index is understood to be a forward indicator of home sales trends since it measures contracts signed, not completed sales. The up-tick may indicate that home prices have fallen low enough for buyers to get off the fence.

Feeling for the bottom

Yun is not calling a bottom yet, however, because the index is still at a relatively low level. Instead, he's looking toward the summer selling season to determine what direction the market will take. Plus, he would like the number of homes on the market to drop to a more normal level of six to seven months of supply.

"If inventory goes down - it's at just under 10 months now - to below eight months, that would mean we're on the way to a sustainable recovery," Yun said.

Anecdotal evidence indicates that trend may be happening. Realtors and other industry insiders are seeing rising open house attendance and multiple bids on some particularly desirable properties. Plus, pricing has become sharper, according to Sherry Chris, the CEO of Better Homes and Gardens Real Estate.

"Overpricing seems to be ending," she said. "Properties are coming onto the market and selling quickly."

And buyers are feeling a little more urgency, she added. In many markets, buyers have not felt any pressure to make an offer. "They said to themselves, 'I don't have to act immediately. It will still be on the market two weeks from now,'" she said.

Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house.

They don't, however, believe there will be price increases soon; three of four buyers think prices will stabilize or even decline in their areas over the next 12 months, according to Gallup.

Pat Newport, a real estate analyst for IHS Global Insight, is putting less emphasis on pending home sales than he once did for his housing market analyses. There has been a disconnect lately, he said, between the number of properties going into contract (pending home sales) and the number that actually close (existing home sales).

He speculates that this is because buyers are making offers and signing contracts but, because of financing problems, many deals are falling through.

Regional differences

The South saw the largest gain of any region, with pending home sales jumping 8.5%. Pending sales are 7.7% higher there compared with a year ago.

The Midwest gained 3.9% from February and 1.7% year-over-year. Northeast sales fell 5.7% and are off 24.1% compared with March 2008. The West dropped 1% for the month but are up 8.2% year-over-year.

Low home prices continued to help to drive sales, although NAR's affordability index actually fell 2.3% from February, when it hit a historic high. This index is based on family income, home prices and mortgage rates.

"Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment," said NAR President Charles McMillan, in a prepared statement. "For buyers who've been on the sidelines and have good jobs, the market has never looked more favorable.

By Les Christie, CNNMoney.com staff writer

Last Updated: May 4, 2009: 1:59 PM ET