US New Home Sales Drop 12.8% in July

Sales of new U.S. homes fell a steep 12.8% in July, but the drop came after revisions to June sales showed the sales highest growth in 12 years.

The Commerce Department said Friday that new homes sold at a seasonally adjusted annual rate of 635,000 units. That’s down from a sharply revised upward rate of 728,000 in June. So far this year, sales have risen 4.1%, a sign that buyers are beginning to respond to lower mortgage rates.

The volatility in home sales reflects broader uncertainty in the housing market. Buyers have been eager to take advantage of wage growth and historically-low mortgage rates. The average rate on a 30-year loan declined to 3.55% this week, according to mortgage buyer Freddie Mac. The revisions to the June figure, coupled with a rebound in existing home sales in July according to data released by the National Association of Realtors, show sales reacting largely well to lower borrowing costs.

However, the rush has further constrained inventories at a time when new construction is limited. Robert Frick, a corporate economist at Navy Federal Credit Union, said that while the revised June figures were a positive sign for the market, low inventory remained the core problem dragging home sales growth.

“The average sales price for a new home was $388,000, and half of the home buyers are looking for a sub $300,000 home. Until more, less expensive homes and condos come to market, millions of Americans will be shut out of homeownership,” Frick said.

A big 50% jump in sales in the Northeast was offset by declines in the West, Midwest, and South this month.

The median sales price fell to $312,800. That is down 4.5% from a year ago but marks the highest level since April.

source: usa.inquirer.net

Types of Home Loans

It is necessary for investors to understand that the business of real-estate might look transparent from a regular perspective with a robe of simplicity on. However, certain crucial aspects need to be investigated before investment in any property. Before you enter into a purchase agreement to buy your next home, it would be to your greatest advantage to locate the most valuable home loan program for you and your family. The complexities of each home loan type might overpower, yet with a little research and exhortation from a proficient credit officer you ought to almost certainly discover a home loan program that will give you and your money related circumstance the best advantages. Up front installment, financing cost, credit term, and private home loan protection all portray a home loan, however seeing how rules contrast from home loan program to program will enable you to locate the most worthwhile parts of each advance kind and the least demanding way to endorsement.

The following is a rundown of the four fundamental home loan types, they include: Regular,  Federal Housing Administration (FHA), Veterans Administration (VA), and the United States Department of Agriculture (USDA). As you filter through the rules of these home loan types, you will find that the up front installment, FICO rating, work history, co-endorser choices, and property condition prerequisites change extraordinarily.



Conventional Mortgage

These loans are backed by Fannie Mae or Freddie Mac who have set regulations and requirements for their procedures. The Fannie Mae mortgage-backed bond is linked to mortgage interest rates via Fannie Mae. The Freddie Mac mortgage-backed bond is linked to mortgage-backed bonds via Freddie Mac.

Mortgage programs that use conventional mortgage interest rates include the "standard" 30-year fixed-rate mortgage rate for borrowers who make a 20% downpayment or more; the HARP loan for underwater borrowers; the Fannie Mae HomePath mortgage for buyers of foreclosed properties; and, the equity-replacing Delayed Financing loan for buyers who pay cash for a home.


Federal Housing Administration (FHA)

The FHA home loans have been helping many borrowers seeking a low down payment mortgage program, and also for those that need a bad credit mortgage. FHA mortgages can help a 1st time home buyer or 2nd time home buyer. You're able to use the FHA loan as many times as you move to a new home.

FHA home loans are now being given to people with blemished credit. The Federal Housing Administration is a government agency that insures the loan you are applying for from private lenders. Anytime you are unable to pay, they will partly do so on your behalf. With the government securing the loan, it definitely gives lending company the assurance they need. For this reason, even with a bruised credit score, you can apply for this loan and use it to buy or construct your own home.


Veteran's Administration (VA)

VA loans require a Certificate of Eligibility that documents your past or current military service, it is exclusive to those who bravely served our country and are available to those who have served our country and offer a number of advantages.

Lenders with trained personnel that work with the VA home loan program can easily acquire this document. However, in some cases, the applicant must fill out a form or other form online or by mail to receive the document. You must also have a reasonably Good Credit record.


United States Department of Agriculture (USDA)

This loan type is a loan from the United States Department of Agriculture, this program is overseen by the Rural Housing Service (RHS). This loan is designed for borrowers with low income that live in rural areas that have trouble getting financial assistance from traditional lenders.

5 Benefits Of Mortgage Insurance

Mortgage insurance is an insurance vehicle designed to protect the lender in case the owner of the mortgage is unable to pay for their monthly costs. But mortgage insurance can also work to benefit the homeowner as well. And in this latest article, our expert team highlights five of the top benefits of mortgage insurance.

1. Access to Better Interest Rates

    Because of the protection mortgage insurance offers lenders, it then allows the lending company to offer homebuyers access to better interest rates. This works to consolidate the cost of the home for the buyer.

2. Offers Access to the Marketplace for Many Buyers

    Homebuyers who are self-employed or don’t otherwise have access to steady income may also benefit from mortgage insurance. Mortgage insurance ensures that buyers outside the traditional marketplace can qualify for a low cost mortgage while keeping the lender’s interests protected.

3. Mortgage Insurance can be Transferred

    Another advantage of mortgage insurance is that it can be transferred from one property to another. This means that owners looking to purchase a new property can simply save their premiums over time and transfer their insurance to the new property. By maintaining this payment record over time, owners can show lenders they’re trustworthy, potentially limiting their future purchase costs.

4. Allows Buyers to Purchase with a Smaller Down Payment

    The use of mortgage insurance also now means that buyers with only a small down payment can enter the marketplace. Buyers can use insurance through the CMHC and will only have to pay 5% down on their property. This gives first-time buyers and others with limited resources the flexibility to enter the marketplace.

5. May Protect Buyers in Case of Job Loss

    The consistent payment of mortgage insurance premiums can help protect the homeowner in case they lose their income for a short period of time. This could be vital for Canadians with growing families, and offers a way to avoid the stress and financial hardship associated with a period of unemployment. Lenders now offer a series of insurance options to help specifically manage time when homeowners are out of work, ill or otherwise unable to pay their financing costs.

The mortgage insurance product is now offering millions of Canadians access to the wider real estate marketplace, by protecting lenders and safeguarding homes. To learn more on insurance and the benefits it provides to homeowners, contact our expert team today.

source: northwoodmortgage.com

4 Myths About Down Payments

A leading challenge preventing many buyers entering the home ownership marketplace is their misunderstanding on down payments. Many potential buyers feel that the cost of down payments is too high for their budget. This may mean they wait to purchase a property. But by analyzing down payment options, buyers may find they have more flexibility than they first thought on the road to home ownership. In this article, our expert team will highlight four myths of down payments.

Myth 1: A 20% Down Payment is Required

One of the most widely disseminated myths concerning down payments is the idea that a 20% down payment is required to complete a home purchase. This simply isn’t true. Within the current Canadian real estate marketplace, buyers can begin the purchase process with a 5% down payment on their new home. To avoid having to pay insurance fees, a 20% down payment is required, but a 5% down payment can offer many buyers the ideal path to purchasing real estate.

Myth 2: Down Payment Assistance is Only for First-Time Buyers

While there are many marketplace programs designed to help first-time buyers enter the marketplace, there are a multitude of options for all homeowners seeking assistance for their down payment. For example, many local lenders will offer cash-back down payment mortgages, through which they will pay for the 5% down payment and then offer buyers a mortgage directly, to streamline the purchase process.

Myth 3: There are no Local Programs

The Government of Canada has ensured that down payment financing programs are now available to Canadians across the country, with the goal of helping more people find their ideal home. Consider for example, Ontario, which offers residents in the province up-to $60,000 through its CalHome program. The CalHome program offers loans at a 1% interest rate, and the loan is deferred for 30 years, which means buyers are required to pay back the loan plus the interest 30 years after completing the loan paperwork.

Myth 4: It is Too Expensive to Buy in the Marketplace

A common myth in the current Canadian market is that it’s too expensive to buy a home in Canada. This is simply not true, as lenders offer a range of programs to help buyers enter the marketplace and find homes that meet their budgetary parameters. There are many unique paths to homeownership for the proactive and committed buyer.

To uncover more on the myths of down payments in Canadian real estate, contact our mortgage experts directly!

source: northwoodmortgage.com

What are Cash Back Mortgages?

When it comes to choosing a mortgage, there are many possibilities. A cash back mortgage is often recommended to first-time homebuyers because it gives you exactly what its name states: Cash back – money in your pocket to use as you please.

 How do cash back mortgages work?
With a cash back mortgage you will need to come up with a down payment – like any other mortgage – but you will be entitled to a lump sum after your mortgage closes.

What can I use my cash for?
This is entirely up to you. Most people use the money to help them with moving, closing costs, land transfer tax, lawyer’s fees or renovations – basically things required to get them into their new home.

How is the amount of cash calculated?
The amount you receive is based on the size and term of your mortgage. This translates to roughly 5-7% of its value with a maximum of $20,000.

When do I get access to my cash?
Usually, you are given access to your cash directly following the closing of your mortgage. This works out well for most people since they need these funds to cover the expenses that go along with moving, renovations, and other similar factors.

What are the benefits of this type of mortgage?
Besides using the advanced cash to pay for fees and taxes associated with moving, you can also use the money to apply it towards your mortgage as an immediate prepayment of the principal.

What are the drawbacks of a cash back mortgage?
If you break your mortgage terms before it’s reached maturity, you will unfortunately have to pay back the cash you received along with the standard penalty that goes along with refinancing. Also, rates are higher with cash back options and they are not available for variable rate mortgages.

Is this type of mortgage right for me?
Cash back mortgages aren’t ideal for every homebuyer, but the Canadian housing market is conducive to different types of mortgages that suit every kind of buyer. If you’re a first-time homebuyer, a cash back mortgage may be better suited to you because it can help pay for the expenses linked with purchasing a home.

Northwood Mortgage can advise you on which type of mortgage products will work for your particular situation. Your mortgage should fit your needs because it’s your home and your money. Talk to our experts today to find out more!

source: northwoodmortgage.com

Foreclosure offerings in Nevada are hardly a steal, report finds

Buying a distressed home in Nevada was no bargain last year.

The average sales price of a home in some stage of foreclosure — such as having a notice of default or being bank-owned — was $126,521 in 2012, almost 6 percent higher than in 2011, according to a new report from RealtyTrac.

Also, the state’s average foreclosure discount of 19 percent — the price break compared with nondistressed homes — was well below the national average of 31 percent.

About 34,900 distressed homes were sold in Nevada last year, down 36 percent from 2011. Still, they accounted for 37.78 percent of all home sales statewide last year, the third-highest rate in the country.

California was No. 1 at 38.05 percent, followed by Georgia at 37.83 percent. Nationally, distressed homes accounted for 21.4 percent of all sales.

Las Vegas Valley home buyers and brokers say there is fierce competition for all homes, distressed or otherwise. That’s because of the limited inventory and the seemingly endless appetite of cash investors, who buy cheap homes in bulk to use as rentals.

Meanwhile, the number of short sales — in which a lender agrees to sell a home for less than what’s owed on the mortgage — soared by 86 percent last year in Nevada, RealtyTrac reported. They accounted for 33 percent of all home sales statewide, and the average amount owed was $121,977.

But just because short sales are a dominant force in the housing market doesn’t mean they’ve become any faster to process. It still can take six months to a year — if not longer — to complete a deal.

Nationally, short sales rose 4 percent from 2011 and comprised 22 percent of all sales last year. The average amount owed was $81,621.

source: vegasinc.com