Virginia Beach homebuyers need to know the rules of credit reporting in this marketplace where lenders are demanding record-high FICO scores.

Given the importance of maintaining high scores, we thought it would be helpful to go over the key rule concerning inquiries that affect Virginia Beach homebuyers, since Fannie Mae and Freddie Mac are now averaging around 760 scores on approved mortgages this year.

FICO Inquiry Rules Affecting Virginia Beach Homebuyers

homebuyers need to know the FICO rulesRacking up large numbers of inquiries can lower your score. The FICO models consider such numbers significant because extensive behavioral research has shown that "consumers who are seeking new credit accounts are riskier," more prone to defaults. Statistically, people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports, so inquiries do matter.

This doesn't mean if you're shopping for a mortgage or looking to refinance that your score will drop if you have 6 lenders pull your credit reports. The FICO models ignore all mortgage-related inquiries during the 30 days immediately preceding the computation of the score. All mortgage inquiries during the 45 days preceding your loan application count as no more than a single inquiry. The same goes for shopping for auto loans and student loans, but no other forms of credit fall under this buffer zone.

Fannie Mae and Freddie Mac have begun requiring lenders to pull a second set of credit reports immediately before closing to ensure that applicants' FICO scores haven't changed significantly. Depending on when the first reports were pulled, you could be hit with two inquiries for the same loan. That could cost you 5 to 10 points on your score.

Virginia Beach homebuyers need to keep in mind, if you're shopping for a mortgage, avoid all other credit-related shopping until your mortgage is approved and closed. Avoid shopping for furniture, home improvements, credit cards, you name it, in the weeks before your home closing. A string of inquiries can mount up and knock your home purchase right out of the water.

If you're checking your own credit, either through AnnualCreditReport.com (where they are free once a year) or by buying them from Equifax, Experian or TransUnion, your FICO score goes untouched.

Remember, we can help you find a Virginia Beach real estate agent at no cost to you. To have us find the best agent for your Virginia Beach home search, simply click the "Find a VA Beach Real Estate Agent" link at the top or bottom of this page to get started.

Virginia Beach housing is finally recovering as conditions have boosted affordability to an all-time high. At the same time, a new study shows that lenders' unwillingness to loosen their qualifications may be slowing down the recovery.

The latest data from the annual Harvard Joint Center for Housing Studies report shows that, in general, the Virginia Beach housing market is in better shape than it has been in years, as employment continues to grow and home prices have rebounded — or at least stopped falling — over the past few months. Sales of existing homes have been on the rise for the last 10 months, and bottomed-out prices suggest a full recovery may come over the next few years or so.

Virginia Beach Housing Loans

Mortgage Application - Housing Being Stifled by Lending RestrictionsPeople are becoming more and more confident in their abilities to afford a home, but many mortgage lenders are keeping tight wraps on home financing.

Home prices are down some 35 percent nationwide, interest rates are below 4 percent and have been for some time, and at the same time, renting is becoming more expensive. But with loans harder to get, the reality of owning a home is becoming even more cloudy for some would-be home buyers.

Experts generally agree that this continued tight policy on lending is an overreaction to the downturn seen in the last few years, which led to millions of people becoming delinquent and later defaulting on their home loans, and it cost banks billions.

Many lenders are still requiring credit scores well above what would have been needed to qualify for a mortgage just a few years ago, and most also require larger down payments from those who would otherwise qualify, making it still difficult to afford Virginia Beach housing.

If you've been watching mortgage rates plummet, and rents going up, and think now may be the time to look into the Virginia Beach housing market, give us a call. We'll be happy to sit down with you and discuss your options.

Remember, we can help you find a Virginia Beach real estate agent at no cost to you. To have us find the best agent for your Virginia Beach home search, simply click the "Find a VA Beach Real Estate Agent" link at the top or bottom of this page to get started.

home prices and interest rates are at all time lowsThere's never been a better time for buying a Virginia Beach home than right now. Mortgage rates hit a new record low almost on a weekly basis of late, and home prices may have already bottomed and be starting on their way back up. Waiting much longer could mean higher Virginia Beach home prices, and interest rates could stop dropping and head back in the northerly direction.

Use Caution When Buying a Virginia Beach Home

If your current employment is in jeopardy, be cautious about signing on the dotted line for a mortgage. Once you sign, you're responsible, no matter what happens. If you buy a home and commit to a mortgage, then lose your job, that's how people end up in short sales or foreclosures.

Before starting to look for a Virginia Beach home, be realistic and patient about what's available. Inventory of homes is down, and finding that perfect home to fit your needs may take some time.

Also before you begin your home search, use an online calculator to determine your price range for purchasing a house. The debt to income calculator will take your current income and your debts and then calculate the payment that you can afford. You will then have an idea of what price you can afford to pay for a home so you don't waste your time looking at homes you cannot afford.

Before choosing a neighborhood to settle down in, check the national data base for sex offenders living in the area you're considering. All states provide public sex offender information, but that doesn't mean that a seller or even a real estate agent is going to tell you if an offender lives in the neighborhood. Research it yourself for peace of mind.

When making an offer on the Virginia Beach home you're interested in, ask the seller about any financial incentives they may be willing to offer, like helping with closing costs. Some sellers may not want to give you a price break on the home if you ask for financial perks, so don't be greedy. If you need help with the closing costs or down payment, don't try to low-ball your offer price.

Buying a Virginia Beach home can be a daunting experience, but if you do your research and use some common sense, you'll find the right home at the right price.

Remember, we can help you find a Virginia Beach real estate agent at no cost to you. To have us find the best agent for your Virginia Beach home search, simply click the "Find a VA Beach Real Estate Agent" link at the top or bottom of this page to get started.

Real Estate News - July 2012

In this Issue:*

Pending Home Sales Up 13.3 Percent

Reverse Mortgage = Foreclosure Risk

A Turn in Housing: Are These Signs Real?


 

Pending Home Sales Up 13.3 Percent

Pending Home Sales Up

Home contract signings rose for the 13th straight month, according to the National Association of Realtors, which reported pending home sales rising 13.3% over May 2011 and up nearly 6% over April 2012.

"The housing market is clearly superior this year compared with the past four years," said Lawrence Yun, NAR chief economist. "Actual closings for existing-home sales have been notably higher since the beginning of the year and we're on track to see a 9 to 10% improvement in total sales for 2012."

On a seasonally adjusted basis, the Standard & Poor's Case-Shiller 20-city index increased by 0.7% in both March and April. The CoreLogic national house price index rose by 1.1% and 1.2% in March and April, respectively. Additionally, Zillow's home value index posted a 0.5% increase in May.

Housing analysts at Goldman Sachs said there are some suspicions as to whether all of this good housing news may be misleading. After all, they point out there are 2 million vacant housing units, with another 4 million in shadow inventory.

"These two seemingly contradictory aspects of the housing market lead many to ask: Can house prices increase in the presence of excess housing supply?" they ask.

Yun commented that desirable housing inventory is actually low, indicating a push on prices. This low inventory, he said, could actually hold back some contract activity. "If credit conditions returned to normal and if we had more inventory, especially in the lower price ranges, more people would become successful buyers. In an environment of historically favorable housing affordability conditions, it's frustrating to see some consumers thwarted in the process," Yun said.

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Reverse Mortgage = Foreclosure Risk

Reverse Mortgage Equals Foreclosure Risk

The Consumer Financial Protection Bureau (CFPB) released a report recently showing that although reverse mortgages are meant to help borrowers in retirement, they are in fact causing problems for many who don't fully understand them.

A reverse mortgage is a type of home loan that lets older homeowners access the equity they have built up in their homes and defer loan payment until they sell the home, move out, or pass away. The original intent of reverse mortgages was to allow these homeowners to convert home equity into an income stream or line or credit to use in retirement. Borrowers were largely expected to age in place with their loans, living in their current homes until they passed or needed skilled care.

Reverse mortgages require no monthly mortgage payments, but borrowers must still pay property taxes and homeowner's insurance. The report showed that nearly 10 percent of reverse mortgage borrowers are at risk of foreclosure because they failed to pay those costs.

The report found that many reverse mortgage borrowers do not understand how their loan balance will rise and their home equity will fall over time. In addition, the influx of new choices brought on by innovations and policy changes have made the matter too complex for many homeowners.

Many consumers are getting reverse mortgages before the age of 70 (with the most common age for a new borrower being 62, the first age at which reverse mortgages are available), and some are even getting them before retiring.

These borrowers will have fewer resources to pay for everyday and major expenses later in life and may find themselves without the financial resources to finance a future move-whether due to health or other reasons.

Another problem is that 70 percent of borrowers are taking out the full amount of proceeds as a single lump sum instead of treating the payment as an income stream. As a result, these borrowers have fewer available financial resources later in life. They may not be able to continue paying taxes and insurance on their homes, leading to potential foreclosure.

Then there is the issue of deceptive or misleading marketing materials about reverse mortgages. The report cited examples of mailers that depict reverse mortgages as a government benefit or entitlement program in the vein of Medicare and use images resembling government seals to entice consumers. It can be difficult for consumers to tell that a reverse mortgage is a financial product, not a government benefit.

If you'd like a copy of the 231 page report (PDF) click here.

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A Turn in Housing: Are These Signs Real?

Are These Signs About Housing Real?After several years of false hopes and news that things were turning around in the housing market, evidence is accumulating that the optimists may finally be right this time.

The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames.

Like the economic recovery that began three years ago, what happens next is likely to prove a little disappointing. The pace of recovery will probably be slow, and the price of homes in some areas will continue to decline.

Millions of people remain underwater, owing more on their homes than the homes are worth, and unable to sell. Millions of families still face foreclosure. And a setback in the still-fragile economic recovery could easily reverse the uptick in housing prices, too.

But roughly six years after the housing market began its longest and deepest slide since the Great Depression, a growing number of experts and people who actually put money into housing believe the end has come.

The trend is clear in the data. The widely respected S&P/Case-Shiller index reported recently that sales prices for existing homes rose in April for the first time this year. Several other measures, including a seasonally adjusted version of the index, show that price increases began in February. The pace of housing construction has increased. And the National Association of Realtors says that pending home sales climbed to the highest level since the end of a federal tax credit for first-time buyers in September 2010.

The rise in prices is happening despite the vast number of vacant houses awaiting buyers, up to two million more than the normal level, with several million more houses still at risk of being foreclosed.

Shadow inventory is not distributed uniformly, according to a new analysis by Goldman Sachs. Even within some metropolitan areas, vacant houses are clustered in less desirable neighborhoods, while buyers are seeking homes in areas where there are few vacancies.

Under these circumstances, researchers conclude, "It is possible for us to see both house price increases and excess housing supply at the same time." Indeed, in a growing number of areas demand for homes is outstripping supply.

If you've been sitting on the sidelines waiting for the bottom of the real estate market, you may have sat there a little too long.

Remember, we can help you find a Virginia Beach real estate agent at no cost to you. To have us find the best agent for your Virginia Beach home search, simply click the "Find a VA Beach Real Estate Agent" link at the top or bottom of this page to get started.

Virginia Beach home prices have edged up for the third month in a row, albeit ever so slightly.

home prices have edged upAccording to the Federal Housing Finance Agency's (FHFA's) monthly House Price Index (HPI), home prices rose 0.8 percent between March and April, on a seasonally adjusted basis. Previously, the FHFA had reported a 1.8 percent price increase in March, which has been revised to a 1.6 percent increase. Over the last year the Agency reports that home prices have risen 3.0 percent.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

Virginia Beach Home Prices, Sales and Inventory

The U.S. index is down 17.6 percent from its April 2007 peak and is now roughly the same as the April 2004 index level. The National Association of Realtors reported recently that in May, home prices rose, and sales slowed slightly.

Inventory shortages in certain areas have been developing since the beginning of the year. The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. Even with May's decline, existing home sales have recorded 11 consecutive months of gains over the same month a year earlier. The normal seasonal upturn in inventory did not occur this spring as it has typically in years past.

Meanwhile, banks are looking to alternatives to foreclosures that continue to punish home values, as seen in the reduced number of seizures. According to RealtyTrac, foreclosures fell 18 percent between May 2011 and May 2012.

The recovery continues despite excessively tight credit conditions and higher down-payment requirements, which are negating the impact of record high affordability conditions.

If you'd like to discuss Virginia Beach home prices, we'd like to invite you to contact us for a no obligation consultation into the current market conditions and how they may benefit you if you're looking to buy a home in today's Virginia Beach housing market.

Remember, we can help you find a Virginia Beach real estate agent at no cost to you. To have us find the best agent for your Virginia Beach home search, simply click the "Find a VA Beach Real Estate Agent" link at the top or bottom of this page to get started.