Mortgage Insights -- Mike Duggan, Mortgage Blogger

7 Weeks Remain To Find A Home, Claim Up To $8,000 In Tax Credits

Tue, 09 Mar 2010 07:45:00 -0700

In November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of "move-up" buyers -- homeowners that have owned and lived in their home for 5 of the last 8 years.

The credit ranges up to $8,000 per buyer. There's now just 7 weeks left to take advantage.

To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.

In addition to meeting the deadline dates, there's a basic set of requirements to be tax credit-eligible:

You can't purchase the home from a parent, spouse, or child
You can't purchase the home from an entity in which the seller is a majority owner
You can't acquire the home by gift or inheritance
Each buyer in the purchase must meet eligibility requirements

There's other criteria, too.

For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.

You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional's opinion is always wise.

And lastly, don't forget that government's tax credit program is a true tax credit. It's not a tax deduction. This means that a tax filer whose "normal" tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.

If you're currently in the House Hunt, mark your calendar for April 30, 2010. It's 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase. You may find sellers more willing to negotiate today than several weeks from now.

What's Ahead For Mortgage Rates This Week : March 8, 2010

Mon, 08 Mar 2010 07:45:00 -0700

Mortgage markets improved last week in low-volume trading.

Between Monday to Thursday, Wall Street focused on the upcoming jobs reports and mortgage markets gained while traders jockeyed for position. Mortgage rates drifted lower through Thursday afternoon. But, then, after a better-than-expected Non-Farm Payrolls report Friday morning, mortgage markets -- and mortgage rates -- reversed.

Overall, mortgage rates dropped last week, but only by a small margin. Rates were best Thursday afternoon.

It was the second consecutive week in which mortgage rates fell.

Last week was also interesting in that both stock markets and bond markets improved, proving that rates don't always rise when stock prices do. 455 of the S&P 500 companies posted gains last week.

If you're shopping for a home or a refinance, though, don't rest on your laurels. After Friday's big sell-off, this week opens into a major headwind and, plus, the Federal Reserve's support for mortgage markets ends in just 3 weeks.

This week, without much data to influence traders, the upward momentum in rates may have little cause to temper. We'll see the Consumer Confidence numbers on Tuesday and Retail Sales on Friday. Beyond that, there's not much else.

After last week’s performance, conforming mortgage rates may be poised to rise rather sharply. If you're waiting for the right time to lock your rate, it may have been this past Thursday. Consider locking your rate early this week to protect against further rate hikes.

Pending Home Sales Drag In January, But Should Rebound For Spring

Fri, 05 Mar 2010 07:45:00 -0700

Fewer homes went under contract in January as the housing market continues to limp through the winter months.

According to the National Association of Realtors®, the Pending Home Sales Index fell to its lowest level in 3 quarters this January. By contrast, in October 2009, the index had touched a 3-year high.

The Pending Home Sales Index measures the number of homes that have gone under contract to sell, but have yet to close nationwide. It's compiled using data from more than 100 regional listing services and 60-plus brokerages -- the sample set encompasses 20 percent of all home resales in a given month.

Economists have come to rely on the Pending Home Sales Index because of its high correlation to actual home sales. 80% of all home marked "pending" close within 60 days. Many of the rest close within 120.

Therefore, when we see Pending Home Sales show weakness like it did in January, we can infer that home resales will remain weak through the spring.

But will they really?

Fewer sales should drag down home prices, bringing more buyers into the market
Mortgage rates are still very low, but are poised to rise in just a few weeks
The home buyer tax credit requires buyers to be in contract by April 30, 2010

In other words, there's a confluence of factors that could lead to a rush of sales around the country over the next two months, reversing the housing market's recent momentum.

Tying Friday's Jobs Report To Rising Mortgage Rates

Thu, 04 Mar 2010 07:45:00 -0700

Conforming and FHA mortgage rates have improved over the last 10 days, but that could all change this Friday with the release of February's Non-Farm Payrolls report.

Non-Farm Payrolls is the official name of the government's monthly jobs report and, given the fragile state of the U.S. economy, Wall Street will be watching it closely.

Mortgage rates could spike come Friday morning.

Jobs are an important part of the nation's recovery. Among other concerns, unemployed Americans don't spend as much money on goods and services, and are more likely to default on a mortgage. This retards economic growth and increases the potential for foreclosures.

When jobs numbers worsen, therefore, it follows that economic projections worsen, too.

Poor employment figures draw money away from the stock markets and into less-risky bond markets, including mortgage-backed bonds. Mortgage rates improve as a result. Conversely, when jobs numbers improve, stock markets gain and bond markets worsen.

Analysts expect that a net 30,000 jobs were lost in February.

The Bureau of Labor Statistics press release hits at 8:30 A.M. ET, roughly an hour before Friday's mortgage pricing will be available to consumers. If you're worried about rates rising on the heels of a strong jobs report, therefore, be sure to get your rate lock in today instead. Once Friday gets here, it may be too late.

How To Properly Screen A Prospective Tenant

Wed, 03 Mar 2010 07:45:00 -0700

According to the the National Association of Realtors®, "distressed homes" represented nearly 2 of every fifth home sold in January 2010. Clearly, real estate investors are taking advantage of good deals on cheap property. But there's risk involved.

This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home -- just make sure you do your research first. There's plenty of ways for investors to get burned.

Some of the tips in the video include:

Buy in your own backyard
Start small, then build to a bigger portfolio
Watch receipts -- rent rolls don't matter if tenants aren't paying rent

Corcoran also gives pointers on how to evaluate a prospective tenant.

Foreclosures should represent a large number of 2010's total home sales and will offer interesting opportunities to bona fide real estate investors. Before you jump in, make sure to watch the video. The rents you save may be your own.

Remember, the stats and the data are from 12 months ago, but the advice stays meaningful.

Existing Home Sales Drop Again In January But Stay On The Trendline

Tue, 02 Mar 2010 07:45:00 -0700

The winter months have not been kind to home sales.

After plunging 17 percent in December, Existing Home Sales fell by an additional 7 percent in January, according to the National Association of Realtors®. An "existing home" is a home resold by a previous owner (i.e. not new construction).

In looking at the annualized, adjusted Existing Home Sales data, we find:

Sales volume is at its lowest levels since June 2009
Sales volume fell below its 12-month rolling average
Home supplies are at a 5-month high

These are similar findings to the New Home Sales data issued by the government last week. That report put new home sales at a 40-year low and showed new homes supplies higher by an entire month.

But don't think housing rebound has halted! Home sales are cyclical and there are outside forces on today's market.

For one, the market is still feeling the after-effects of the original First-Time Home Buyer Tax Credit. Sales spiked in the months leading up to the original November 2009 expiration date. A pull-back is natural and expected.

Looking at the long-term trend, Existing Home Sales volume appears right in line.

Furthermore, weather across much of the U.S. was awful in January. That, too, can impede home sales as homes are neither shown nor negotiated when weather is majorly inclement.

Anecdotal evidence is showing sales activity higher through February and into March. And, although it's unlikely we'll see a spike through April like we did last November, buy-side demand for homes should remain strong. The good news of the sagging sales reports is that today's buyers may find home prices are lower and sellers are more willing to negotiate.

What's Ahead For Mortgage Rates This Week : March 1, 2010

Mon, 01 Mar 2010 07:45:00 -0700

Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.

Mortgage rates are now at their lowest levels since early-February.

Last week was heavy on negative data:

Consumer Confidence posted 16% short of expectations
New Home Sales posted 13% short of expectations
Initial Jobless Claims were higher than expected

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.

The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.

Bernanke stayed on message -- the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.

This week, mortgage rates will jockey around Friday's Non-Farm Payrolls report.

Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February. If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it's worse, rates will rise.

Other important data this week include Personal Consumption Expenditures -- the Fed's preferred inflation gauge -- plus the Fed's Beige Book release. Mortgage rates remain in flux so float with caution.

Mortgage rates look good today, but by Friday, they could be much, much worse.

The Home Price Index Shows Some Regions Up, Some Regions Down

Fri, 26 Feb 2010 07:45:00 -0700

Earlier this week, the private-sector Case-Shiller Index showed home prices slightly lower between November and December. Thursday, the public-sector Home Price Index showed the same.

Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December. And that's an average, of course. Some regions performed well in December as compared to November, others didn't.

Values in the Middle Atlantic states improved slightly
Values in New England were essentially unchanged
Values in the Mountain states sagged, down 3.5%

These aren't just footnotes. They're an important piece toward understanding what national real estate statistics really mean. In short, "national statistics" are just a compilation of a bunch of local statistics.

For example, if we dig deeper into the FHFA Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, and Amarillo, TX posted year-over-year home price gains. You won't see that in a "national" report.

Furthermore, it's a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not. Just because the city shows higher home values overall, it won't necessarily be the case for every home in the city.

Every street in every neighborhood of every town in America has its own "local real estate market" and, in the end, that's what should be most important to today's buyers and sellers. National data helps identify trends and shape government policy but, to the layperson, it's somewhat irrelevant.

So, when you need to know whether your home is gaining or losing value, you can't look at the national data. You have to look at your block -- what's selling and not selling -- and start your valuations from there.

As The Supply Of New Homes Grows, So Does The Opportunity For A "Good Deal"

Thu, 25 Feb 2010 07:45:00 -0700

The housing recovery showed particular weakness in the New Homes Sales category last month -- good news for homebuyers around the country.

A "new home" is a home for which there's no previous owner.

New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 -- the year the government first started tracking New Home Sales data.

Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009's pace.

The reasons for the spike in supply are varied:

The original home buyer tax credit expired in November
Weather conditions were awful in most of the country in January
Weak employment and consumer confidence continue to hinder big ticket sales

Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it's a welcome turn of events. Home prices are based on supply and demand, after all.

As a result, this season's home buyers may be treated to "free" upgrades from home builders, plus seller concessions and lower sales prices overall.

It's all a matter of timing, of course. New Home Sales reports on a 1-month lag so it's not necessarily reflective of the current, post-Super Bowl home buying season. And from market to market, sales activity varies.

That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It's a favorable time to buy a new home.

December 2009 Case-Shiller Data Shows Battered Markets In Bona Fide Recovery

Wed, 24 Feb 2010 07:45:00 -0700

Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday. The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.

According to Case-Shiller representatives, the housing market is "in better shape than it was this time last year", but some of the summer's momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.

Meanwhile, it's interesting to note the 5 markets that didn't decline -- Detroit, Los Angeles, Las Vegas, Phoenix and San Diego. Each of these metro regions were among the hardest hit nationwide when home prices first broke. Now, they're leading the pack in price recovery.

For some real estate investors, that's a positive signal. But we also have to consider the Case-Shiller Index's flaws because they're big ones.

As examples:

Case-Shiller data is reported on a 2-month lag
The Case-Shiller sample set includes just 20 U.S. cities
There's no "national real estate market" -- real estate is local

That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.

If the markets that led the housing decline will lead the housing resurgence, December's data shows that full recovery is right around the corner.

How You Can Get The Most Accurate, Real-Time Mortgage Rate Quotes Available

Tue, 23 Feb 2010 07:45:00 -0700

You can't get your mortgage rates from the newspaper. Last week proved it. Again.

Friday morning, headlines and around the country read that mortgage rates were down 0.04 percent, on average, since the week prior.

A sampling of said headlines includes:

US Mortgage Rates Drop For 2nd Straight Week (Reuters)
Mortgage Rates On 30-year US Loans Fall To 4.93% (Business Week)
30-Year Fixed Mortgage Rate Falls Farther Below 5% (Marketwatch)

The story behind the headline was sourced from the Freddie Mac Primary Mortgage Market Survey, am industry-wide mortgage rate poll of more than 100 lenders. The PMMS has reported mortgage rate data to markets since 1971 and is the largest of its kind.

Unfortunately, rate shoppers can't rely on it.

See, unlike governments and private-sector firms, when consumers are in need mortgage rate information, they need the information delivered in real-time; for making decisions on-the-spot. Consumers need to know what rates are doing right now.

The Freddie Mac survey can't offer that.

According to Freddie Mac, the survey's methodology is to collect mortgage rates from lenders between Monday and Wednesday and to publish that data Thursday morning. The survey results are an average of all reported mortgage rates. The problem is that mortgage rates change all day, every day. The PMMS results are skewed, therefore, by methodology.

And, meanwhile, the issue was compounded last week because mortgage rates shot higher Wednesday afternoon -- after the survey had "closed". The market deterioration ran into Thursday, too -- again, unable to be captured by Freddie Mac's PMMS.

Although the newspapers reported mortgage rates down last week, they weren't. Conforming mortgage rates were higher by at least 1/8 percent, or roughly $11 per $100,000 borrowed per month. In some cases, rates were up by even more.

Newspapers and websites can give a lot of good information, but pricing is far too fluid to rely on a reporter. When you need to know what mortgage rates are doing in real-time, make sure you're talking to a loan officer. Otherwise, you may just be getting yesterday's news.

What's Ahead For Mortgage Rates This Week : February 22, 2010

Mon, 22 Feb 2010 07:45:00 -0700

Mortgage markets had a terrible, holiday-shortened week last week as Wall Street responded to worse-than-expected inflation data and action from the Federal Reserve. Mortgage bonds sold off with force, causing mortgage rates to rise for the second week in a row.

Last week was a bad week to float a mortgage, to say the least. Rates rose by the largest margin in any week since late-2009.

The two biggest stories from last week both came from the Federal Reserve. The first was the release of the FOMC January meeting minutes which showed more confidence in the U.S. economy than Wall Street expected, and the second was the Fed's surprise announcement to raise the nation's Discount Rate to 0.75%. Both sparked risk-taking on Wall Street and bonds sold-off as a result.

Now, the Fed Funds Rate won't climb anytime soon and neither will Prime Rate, but the Fed has sent a clear message to the markets -- The Era of Loose Monetary Policy is over.

This week, there's a lot of economic data set for release.

Tuesday : Case-Shiller Home Price Index, Consumer Confidence
Wednesday : New Home Sales
Thursday : FHFA Home Price Index, Initial Jobless Claims
Friday : Existing Home Sales, Personal Consumption Expenditures

With markets already on edge, any better-than-expected results should be bad for mortgage rates.

After last week's performance, conforming mortgage rates have now unwound most their January gains. If you're waiting for the right time to lock, it may have been 2 weeks ago. Consider locking in this week to protect against any further deterioration in price.

Housing Starts Soar To 6-Month High In January... Or Do They?

Fri, 19 Feb 2010 07:45:00 -0700

Sometimes, headlines for housing can be misleading and this week gave us a terrific example.

On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Headlines on the Housing Starts story included:

U.S. Housing Starts Hit 6-Month High (Reuters)
U.S. Economy Receives Home Building Boost (Shepparton)
Housing Starts Post Sharp Rebound (ABC)

Based to the headlines, the housing market looks poised for rapid growth through the Spring Market.

The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units. This includes apartments and condominiums -- a sector of the housing market that's notoriously volatile.

If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009. January's tally is slightly below the 8-month average.

Perhaps more interesting than the Housing Starts, though, is the Commerce Department's accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit's dwindling time frame. Sales are expected to spike in March and April and more homes will come online to deal with that demand. Home buyers should shop carefully, but with an eye on the clock.

As the tax credit's April 30, 2010 deadline approaches, competition for homes may be fierce.

Mortgage Rates Spike On The Federal Reserve's January 2010 Meeting Minutes

Thu, 18 Feb 2010 07:45:00 -0700

Mortgage markets reeled Wednesday after the Federal Reserve released the minutes from its January 26-27, 2010 meeting. Mortgage rates are now at their highest levels since the start of the year.

The Fed Minutes is a follow-up document, delivered 3 weeks after an official FOMC meeting. It's a companion piece to the post-meeting press release, detailing the debates and discussions that shaped our central bankers' policy decisions.

The Minutes is a terrific look into the Fed's collective mind and, yesterday, Wall Street didn't like what it saw. Specifically, the report disclosed that:

The Fed plans to break support for mortgage markets after March 31, 2010
Raising the Fed Funds Rate will be a key part of the Fed's strategy to tighten monetary policy
The fundamentals behind consumer spending strengthened modestly

Furthermore, the Fed Minutes said that there is a growing risk of "higher medium-term inflation". Inflation, of course, is awful for mortgage rates.

Overall, the Fed's economic optimism appeared stronger after its January meeting as compared to its December one. A stronger economy should lead to better job growth and higher home prices throughout 2010.

Mortgage rates were up yesterday but they remain historically low. And many analysts think that after March 31, 2010, rates will rise even more. Therefore, if you're buying a home in the near-term, or know you'll need a new mortgage, consider moving up your time frame.

Every 1/8 percent makes a difference in your household budget.

The Best And Worst Cities For Commuters (2010 Edition)

Wed, 17 Feb 2010 07:45:00 -0700

According to the Census Bureau, 2.8 million people commute to work 90 minutes or more each day, in each direction.

Now, your daily commute may not be as long, but time spent in cars, trains and buses is time away from work and from family. Drive-time can affect a person's Quality of Life and it's one reason why Forbes Magazine's Best and Worst Commutes is worth reviewing.

Measuring travel time, road congestion and travel delays in the 60 largest metropolitan areas, Forbes ranks city commutes from best-to-worst with Salt Lake City topping the list and Tampa-St. Petersburg finishing it.

The Top 5 Commutes, as compiled by Forbes:

Salt Lake City, Utah
Buffalo-Niagara Falls, New York
Rochester, New York
Milwaukee-Waukesha-West Allis, Wisconsin
Albany-Schenectady-Troy, New York

The bottom 5 are Tampa-St. Petersburg, Detroit, Atlanta, Orlando, and Dallas-Forth Worth.

Long commutes shouldn't deter you from moving to a particular city, but the potential commute should be consideration. Before making an offer on your next home, make a rush-hour commute to work from your potential new neighborhood. Then imagine doing it every day.

You can read the complete Forbes list of Best and Worst Cities for Commuters on its website.

What's Ahead For Mortgage Rates This Week : February 16, 2010

Tue, 16 Feb 2010 07:45:00 -0700

Mortgage markets worsened last week on general profit-taking in the U.S. bond market, combined with talk of a coordinated rescue effort for Greece and its debt burden. Mortgage-backed bonds sold off, causing conventional and FHA mortgage rates to rise.

There wasn't much hard data on which to trade last week, either, so momentum took markets farther than they otherwise might have moved on their own. It marked the first time in 5 weeks that rates rose for rate shoppers.

This week, data returns. Expect mortgage market movement.

Some of the week's more important releases include:

Housing Starts and Building Permits (Wednesday)
The release of the last month's FOMC Minutes (Wednesday)
Business and consumer inflation figures (Thursday and Friday)

Inclement weather may have impacted last month's Housing Starts reading so pay closer attention to Building Permits. Permits precede actual construction and can be more indicative of economic optimism. If permit readings are strong, it should be a negative for mortgage rates.

The same is true for the FOMC Minutes.

Last month's FOMC post-meeting press-release was decidedly middle-of-the-road, but the statement is just a summary of the Fed's 2-day meeting, boiled down to a few paragraphs. Wednesday's release of the FOMC Minutes will reveal the deeper discussions among members of the Fed. Wall Street will mine it for clues about the future of the economy.

If Wall Street senses optimism coming from the Fed -- again -- mortgage rates should rise.

And, lastly, keep an eye on Thursday and Friday's inflation data. Inflation is bad for mortgage rates so a higher-than-expected reading should spark a bond market sell-off.

Since mid-December, mortgage rates have moved within a tight range and there's little reason for rates will break this range this week. However, we are near the top of the channel. If you know you're going to need a rate locked soon, it's probably best to do early in the week.

How Rising Consumer Sentiment Is Linked To Higher Home Prices

Fri, 12 Feb 2010 07:45:00 -0700

Consumer Sentiment has been on the rise since last February and it's something to which home buyers should pay attention.

The affordability of your next home may hinge on consumer confidence.

As the economy recovers from a near-the-brink recession, many of the elements of a full recovery are in place. Business investment is returning, household spending is expanding, and financial systems are gaining strength.

Consumer confidence is at a 2-year high.

What's missing from the recovery, though, is jobs growth. Another net 20,000 jobs were lost in January. Data like that hinders economic growth.

That said, twenty-thousand jobs lost is a much better figure than the several hundred thousand that were shed per month throughout early-2009, but it's still a net negative number. Not only does household income drop when Americans lose jobs but so does the average American's confidence in his or her own economic future.

This is one reason why jobs growth is so closely watched by Wall Street -- jobs are linked to higher confidence levels which, in turn, is believed to spur consumer spending.

Consumer spending represents 70% of the U.S. economy.

As confidence rises, it could be good news for the economy, but bad news for home buyers. More spending expands the economy and, all things equal, that leads mortgage rates higher.

Same for home prices. More confidence means more buyers which, in turn, squeezes the supply-and-demand curve in favor of sellers.

Later this morning, the University of Michigan will release its February Consumer Sentiment survey. If the reading is higher-than-expected, prepare for mortgage rates to rise and home affordability to worsen.

In Pictures: The Severity Of The Foreclosure Crisis Depends On Where You Live

Thu, 11 Feb 2010 07:45:00 -0700

Foreclosures stories dominate the national housing news. It seems at least one foreclosure-related story makes its way to the front page or the nightly news every week.

But for as much as the foreclosure filing statistics can be astounding -- over 300,000 homes were served last month alone -- the prevalence of foreclosures depends on where you live.

As reported by RealtyTrac, just 4 states accounted for more than half of the country's foreclosure-related activity last month.

California : 22.7 percent of all activity
Florida : 14.9 percent of all activity
Arizona : 6.7 percent of all activity
Illinois : 5.7 percent of all activity

The other 46 states (and Washington D.C.) claimed the remaining 49.9%.

However, just because foreclosures are concentrated geographically, that doesn't make them less important to homebuyers around the country. There's been more than 1.4 million foreclosure filings in the last 12 months and that's a figure that can't be ignored.

Distressed properties now play a role in one-third of all home resales.

Therefore, if you're in the market for a foreclosed home, here's a few things to keep in mind.

Properties are usually sold "as-is" and may not be up to living standards. Be sure to physically inspect the home before buying it.
Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings.
Foreclosures aren't always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory.

In order to use the federal homebuyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010. That doesn't leave much time to find a bank-owned home and make it to closing. If you're serious about buying foreclosures, it's probably best to start your search soon.

Separating FHA Fact From Fiction : Mortgage Insurance Premiums

Wed, 10 Feb 2010 07:45:00 -0700

The mortgage lending landscape changes a lot. Rates and guidelines are in constant flux, and it creates preparedness challenges for buyers that aren't paying in cash.

The loan you get today won't always be the loan you get tomorrow.

Because of how frequently bank rules are changing, it can be hard for laypersons to distinguish between mortgage fact and fiction of "what's coming next".

Recently, we saw this with respect to FHA home loans.

January 20, 2010, the FHA issued a press release with new lending guidelines. Specifically, it announced 3 changes that will be effective starting April 5, 2010:

Upfront mortgage insurance premiums increase from 1.75% to 2.25%
Allowable seller concession reduced from 6% to 3%
FICO scores of 580 or lower are subject to a minimum 10% downpayment

But, also in its official statement, the FHA announced it would ask Congress for permission to raise monthly mortgage insurance premiums. This is where the rumors started.

Nestled on page 348 of the Budget of the United States Government, Fiscal Year 2011, in a section titled Special Topics, there is a 1-paragraph notation that details the FHA's petition.

Raise monthly premiums by roughly 0.30%, or $25 per $100,000 borrowed per month
Lower upfront mortgage insurance premiums by 1.25%, or $1,250 per $100,000 borrowed at closing

For now, the request is neither approved nor acknowledged by Congress. It's merely a request. And in the event that Congress does approves it, that doesn't mean that FHA has to stand by its initial projections.

Truth is, about the only thing we know about the future of FHA lending is that, come April 5, 2010, borrowing money is going to be tougher, and mortgage expensive. These are the facts as we know them today.

Homebuyers should plan accordingly.