Home Buying Sales Slump Linked to Student Loan Debt

DS News is reporting that student loan debt is preventing potential homebuyers from buying homes in America.  Student loan debt is at $1.2 trillion and growing.  The rising cost of tuition and the increase in the number of college students is causing more debt in the U.S. and hurting the U.S. economy.  

The Consumer Financial Protection Bureau reports that 7 million Americans are in default on their student loans.  For those who default at a young age, the black mark on their credit report may prevent them from buying a home, and in some cases, can prevent one from getting a job.

The decrease in new household formation is preventing economic growth. The homeownership  rate for young people is down 15% from the peak which was prior to the financial crisis. 

To deal with this issue, some employers are creating programs to help employees pay down their student loan debt.  Congress needs to take a good look at this growing economic crisis and universities need to put more thought into their tuition structure and into helping students after graduation.

Selling a West Valley Home? First Two Weeks Tells All

Yesterday Michael Orr came out with a report stating that sales are sluggish in Maricopa County. Obviously, he is looking at the county as a whole and throwing in Maryvale homes with Paradise Valley homes, etc.
What we are seeing on the west side is a great void in the days on the market. The majority of homes here are selling in less than 30 days. When priced properly, typically homes are selling within 2 weeks. When priced improperly, the homes will sit on the market for months and months.
Our last 2 listings were priced properly and went under contract in less than 7 days. On the other end of the spectrum, we have owners that refuse to react to market data and have priced their homes too high for the market. These homes have been on the market for more than 3 months.
So, seller beware. If you want your home to sell quickly, price it right. If you have not had any showings in a week or you have having a multitude of showings and no offers, the buyers are giving you a message and they are speaking loudly. Be prepared to keep your home for many months.
The first 2 weeks on the market are critical in the west valley market. Price it right from the start. Don't "overshoot" the correct pricing in the hopes of snagging a sucker.

The World Cup and Your Home...USA! USA! USA!!

AZ Real Estate Update: USA! USA! USA!!: The World Cup in my house is bigger than the Superbowl.  It is so interesting to learn and hear of countries that I never know existed.  Isn...

USA! USA! USA!!

The World Cup in my house is bigger than the Superbowl.  It is so interesting to learn and hear of countries that I never know existed.  Isn't it crazy to think that our housing in Phoenix is better than 90% of the rest of the world? 
Here in Phoenix we think a home is old or "historic" if it was built in the 1940's or 1950's.  Heck, I have had clients tell me a home built earlier than 1990 is too old and would need too much maintenance. In Europe, many people live in homes built in the 1800's and many people in the African nations consider themselves lucky to live in what we consider huts. 
Do you think it is difficult for players who live in the homes with minimal housing to return to their homes after living in hotels in Brazil?  Or do you think they are so happy to be back in their familiar surroundings?
Homes are determined by the feelings and emotions that are felt when you walk through the door. Not by the granite vs. laminate countertops. Do you have a realtor commited to help you find your ideal home in your ideal neighborhood? 

Best Return on Investment ??? A Home Office !

Turn Your "Extra Room" Into An Office For A Good ROI

Recently, Seattlebubble.com surveyed their visitors with this question: What's the most important "extra room" to have in a house? Nearly half the respondents (48%) said an office or study would be their most important extra room.

Comfortably integrating a home office into one's dwelling can generate a good return on investment if you are using it for work or for a hobby that generates a few extra bucks.

Amy–Mae Elliott at mashable.com recently interviewed home office expert Lisa Kanarek, founder of WorkingNaked.com who said the first thing to do is decide where your home office should be.

Kanarek suggests considering obvious places like a spare bedroom or guest room, as well as more unorthodox spaces like a dining room or formal living room, if rarely or never used.

One important consideration, she says, is making sure your office has a door, ensuring you can switch off when you're not working. Some other tips include:

• Install an L–shaped arrangement for a desk to double your work surfaces.
• Add shelves above or next to your desk to gain more storage space and to reduce desktop clutter.
• Use open shelves or a hutch that sits on your desk to increase your storage space.
• Invest in some decent, surge–protected extension cords to install around the room where you need power most.
• Consider a Wi–Fi printer, which can be kept further away from the computer.
• If you work from home full–time, you're going to be spending as much time in your office as you do in the rest of the house, Kanarek says. Don't treat your working space as a second–class accommodation. Give it the importance it deserves.

Waiting For Your Current Home's Value to Rise Could Cost You Hundreds of Thousands of Dollars

A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Of these home owners, 75% are considered to move up buyers. These buyers are looking for a larger and/or higher valued home.

Although we don't know exactly what will happen to the market in the year ahead, we can look at what has happened in the past year. The following is an example of buyers who waited one year to purchase because they were waiting for the value of their current home to rise before buying:

Assume these owners had a home worth $300,000 and were looking at a home priced at $450,000. At 10% down they would get a mortgage for $405,000. By waiting, their house appreciated by approximately 10% over the last year (based on the Case Shiller Pricing Index). Their current home could now sell for $330,000. That would mean an additional $30,000 in equity assuming they didn’t incur any repairs by waiting one year to sell the house.

But because they waited, the new $450,000 home would now be worth $495,000 (10% more). Adding the original 10% down payment ($45,000) to the $30,000 in proceeds they received from the sale of their house, they would now have a $75,000 down payment. So, they would now need a mortgage of $425,000.

Here is a table showing what additional monthly cost would be incurred by waiting:

SO, BY WAITING, THE HOMEOWNERS MUST PAY $305.85 MORE EACH MONTH FOR THE LIFE OF THE LOAN. FOR A 30 YEAR LOAN, THIS EXTRA WOULD EQUAL A TOTAL OF $110,106. AND, ALL FOR WAITING 1 YEAR.

Sacrificing Your 1st Amendment Rights for a Loan Modification??

Reuters news service is reporting that Ocwen, Bank of America and PNC Financial Services have been adding new terms to their loan modifications preventing the homeowner receiving a loan modification from publicly disparaging the lender as part of the loan modification.

By accepting these loan modification terms, the homeowners must agree to never publicly say, write or post anything negative about the company doing the loan modification. 

If the borrower agrees to this gag order, he/she may be foregoing his/her right to complain publicly or sue if they have difficulty with the lender's actions during the entire term of the loan modification...even if the lender is in breach of the contract.

Where is the government watchdog now?  Is this not in violation of our 1st Amendment Rights?  Why are lenders afraid of what the public is saying about their actions during loan modifications?  Is it because their performance when conducting loan modifications is less than stellar?

Did You Modify Your FHA or VA loan and Receive a Principal Reduction?? Read This...

Some homeowners who had FHA/VA loans were offered a loan modification that promised a permanent principal reduction. The amount of the principal reduced was turned into an interest-free second mortgage and was due only when the first mortgage was paid or when the home was sold.

Generally, these borrowers pay only interest during the first 10 years of the heloc before it resets.  When it resets, borrowers will have to pay BOTH interest and principal payments for the first time. 

If your permanent FHA/VA principal reduction occurred in 2004 or 2005, the new payments with interest will be starting soon.  We have seen homeowners quoted jumps from 0% interest to 13% interest.  In some cases, the heloc payments were now more than the first mortgage payment.  If the household has not had a significant increase in income during these past 10 years, these adjusted Heloc payments may be impossible for homeowners to pay.

If you are caught in this situation, please call us at 623-694-0354 and we will guide you to the best resources to help you make a decision on your home.  Your best bet is to be proactive and call your lender to see what your new interest rate and payments will be so you can adequately plan for your next move.

Explosive Growth in West Valley New Homes

We are seeing a huge increase in the number of new home starts planned for the west and northwest valley.  With the completion of Loop 303, builders are beginning to prepare their land for these new communities.

New homes are very attractive to buyers who have recently had a short sale or foreclosure because builders are often able to give better loan terms to their buyers. 

Do remember that to be represented by your own real estate agent at a new home community, the agent MUST accompany you on your FIRST visit to the community.  The Builder's Representatives are often friendly, but represent the builder and the builder only.  Be sure to call us to have The Drefs Team's New Home Specialists accompany you on your first visit.  Our specialists will be able to help you make the best decisions and negotiate on your behalf.
http://www.azcentral.com/story/money/real-estate/2014/03/26/loop-drives-housing-development-northwest-valley/6907717/

AZ Real Estate Update: Loan Mod Expiring... Get A Plan!

AZ Real Estate Update: Loan Mod Expiring... Get A Plan!: What should you do when you receive a notice that your loan modification trial period will soon be expiring?  Most people will ignore the ...

Loan Mod Expiring... Get A Plan!

What should you do when you receive a notice that your loan modification trial period will soon be expiring? 

Most people will ignore the warning which is the WORST thing to do.  This is not the time to be idle, but the time to be proactive!

Some of the loan modifications will have a gradual escalation for several years and will top off at your previous interest rate.  This may have sounded good at the time you started the loan modification, but making higher payments each month does not sound good now that the time is near!
If your lifestyle has not changed and your income has not increased since you started the loan modification, you may not be able to make the higher payments. So, what should you do?

First call The Drefs Team at 623-694-0354 to see if you have any equity in your home. Then have The Drefs Team review your options with you.  They can help you make an action plan so that you are in control and not at the mercy of the lenders.

400,000 loan Modifications Expiring

I just learned that in 2009 over 400,000 loan modifications were given. Soon those loan modifications will be expiring.  This means that 400,000 homeowners will need to make some big decisions in the next six months.
It is time for the Drefs team to get busy so that these homeowners realize that they have a friend.

AZ Real Estate Update: RENTAL DEMAND IS HIGH. RENTAL RATES RISING...

AZ Real Estate Update: RENTAL DEMAND IS HIGH. RENTAL RATES RISING...: In the last 2 weeks we have seen an explosion in the number of renters seeking rentals.  The demand is high and the supply of rentals is low...

RENTAL DEMAND IS HIGH. RENTAL RATES RISING...

In the last 2 weeks we have seen an explosion in the number of renters seeking rentals.  The demand is high and the supply of rentals is low. 
The average asking price for rent has risen from $.70 per sq foot in January '14 to $.81 per sq foot in April 2014.  The average days that a rental is actively listed on the MLS has dropped, showing that rentals rent fast!
So, it is a good time to be a landlord and a bad time to be a tenant.  This is a signal for both groups (landlords and tenants) to buy, buy, buy if possible!

We Know the BEST Agents in Prescott, Pinetop & Flagstaff !!!

As the temperatures rise, you and your friends may want to make your dream of having a vacation home in Prescott, Pinetop or Flagstaff a reality.  Did you know that we know EXCELLENT Keller Williams Realty agents in all of these cool locations?  Prescott even has 2 Keller Williams offices to serve you. Call us and we will introduce you to the best agents in these offices.

Here are some tips for buying a vacation home:
1.Stay within your budget.  Be sure to keep in mind the mortgage payment, the insurance, the taxes, the assessments, the maintenance and a caretaker to watch over the place when you are gone.
2. Determine the frequency of use.  Make sure the location is practical for your lifestyle.  Want to share the place with your children and grandchildren? Consider where they live as well.  No one wants to spend their vacation driving a long distance.
3. Pick the right location.  Pick a locale that matches your interest. Like to golf? Visit wineries? Ski? Beaches? Casinos?
4. Understand the upkeep.  A big lawn means mowing.  A big house means cleaning. You don't want to spend your weekends working.
5. Research rental potential. If you plan on renting your vacation home, find out if the HOA allows rentals , children and pets. Research the costs of having a rental service or property manager. Is the place winterized?
6. Think about resale and changing needs. If the market changes, is the house or condo desirable for resale.  It may be worth the extra money to invest in the 3 bedroom vs. 2 bedroom house.

Bankruptcy, Short Sale, Foreclosure ? An FHA Loan Is The Only Way To Go...

The majority of real estate offers that cross my desk are showing that  the buyers are obtaining FHA loans to purchase the property.
FHA is the only option for borrowers who have marginal credit. (as low as a 580 credit score)
Even if the buyer has good credit and lots of money to put down. if the buyer has had a recent bankruptcy, short sale or foreclosure, FHA will be the only option for a loan. 
So, the upside is the FHA loan requirements are more forgiving.  The downside is there is a price for that forgiveness in the form of monthly mortgage insurance.

AZ Real Estate Update: VA Loans Are Currently The Way to Go!

AZ Real Estate Update: VA Loans Are Currently The Way to Go!: Some home buyers mistakenly think that the qualifications for a VA loan are too strict.  Not in today's mortgage world. VA is by far th...

VA Loans Are Currently The Way to Go!

Some home buyers mistakenly think that the qualifications for a VA loan are too strict.  Not in today's mortgage world.
VA is by far the best option for borrowers who are VA eligible.
Why?  VA has made no changes in the way they underwrite (scrutinize) loans in the past 20 years.  VA also has the most awesome Jumbo Loan Product for loans over $417,000.
Eligible for a VA loan?  Then use it!

The True Challenge In Getting A Home Loan Today Made Simple

The true challenge in getting a home loan today is not that the qualifying requirements are more stringent.  The challenge is for the borrower to get in the documentation required accurately and quickly. 
The challenges arise for the borrower when the borrower does not give the exact document requested or hands in 3 pages when all 5 are required.  The best way to overcome this challenge is for the borrower to face this as a challenge of persistence.  Take on the attitude, "I can take on and deliver whatever document the lender requests, regardless if the lender requests the same document multiple times."
Click here for a great article in Forbes about this topic.  The lender's "just because I said so" attitude in requesting documents needs to be accepted by the borrower because the prize for fulfilling all these requests is so much greater.  Keep your eye on the prize borrowers!