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Buying Renting in Miami

Miami Real Estate – Should You Continue Renting Or Buy A Home?

Many economists are predicting a significant hike in home prices over the next 5 years, so if you are a renter who has been debating on whether or not now is the right time to buy, you may want to take a close look at the numbers.  In her article, Ten Cities To Go From Renting To Buying, Francesca Levy states that although renting isn’t always cheaper than buying in the ten cities mentioned in the article, home buyers are likely to get a good return on their investment.

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Buying Foreclosures Selling

Home Foreclosures Expected to Continue in 2010

The good news is that sales on existing homes, both single family and condos, continue to increase and inventories are decreasing in Miami-Dade county.

The bad news is in the foreclosure numbers for 2009.  The numbers include all properties that are in some stage of the foreclosure process.

  • Palm Beach County – 30,870
  • Broward County – 69,633
  • Miami-Dade County – 72,391
  • Monroe County – 1,275

Since the unemployment rate is so high in Florida, foreclosures are expected to continue to add to inventories on the market in 2010.  Miami-Dade’s new on-line foreclosure program and the government’s Home Affordable Refinance Program should help keep the foreclosure rate lower than 2009’s.

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Buying Mortgage information

Mortgage Rates – How An Increase In Rates Affects Your Purchasing Power

I came across a great article that explains the effect of interest rates on your purchasing power so well, that I have to blog about it.  Now that inventories are decreasing and we are running into an April 30, 2010 deadline for tax credits, you have to read it if you have been on the fence about whether or not now is the right time to buy real estate.

The article, If You Don’t Buy a House Now, You’re Stupid or Broke may have an offensive title, but the graphs that it contains illustrate historic interest rates and increasing trends and the explanation on how an increase in rates affect what you will pay in principal in interest are easy to understand.  In a nutshell:

  • For 30+ years interest rates ranged from a low of 7% to a high of 18% (my husband and I were paying over 16% interest when we purchased our first home in the 1980’s)
  • Current interest rates are the lowest they have been in 40 years
  • For every quarter-point change in interest rates you will pay an additional $6,000 for every $100,000 borrowed over the life of a 30-year fixed rate  mortgage.

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Buying Foreclosures Market Summary Mortgage information

7 Reasons to Buy Real Estate Now

met 1 & 2Okay, you have been hearing that now is the time to buy a home, but maybe you are still unsure of why, when there is so much inventory on the market and so much insecurity in the economy.  Here are 7 specific reasons:

  1. Home Buyer Tax Credits – The Government is paying first-time home buyers and move-up buyers money to purchase a home.  It can be a single family home or a condo, it just has to be your primary residence.
  2. Interest rates are still at historic lows, currently around 5.25% for a 30-year fixed rate mortgage.
  3. Lenders are moving their inventories of foreclosures and are becoming more likely to agree to short sales.
  4. Interest rates will increase due to the huge amount of government debt.
  5. The median price of a single family home is currently $185,000, down from a median price of $400,000 at the peak of the real estate boom.
  6. There is currently a 10 month supply of single family homes in Miami-Dade County, down from a 24 month supply at the end of 2008.  A stable market has an inventory of 6-9 months.
  7. There has been a 29% increase in sales since last year.
  8. Whether single family or condo, under $300,000 or over $1,000,000, the market trend has been a steady decrease in inventory since at least October of 2008.

Now, you may be a naysayer and agree with someone who stated that the price of real estate is going to go down another 33%, but those of us that are active in the market are not seeing it.  We are seeing inventories decreasing, foreigners and investors coming back into the market that they had shied away from during the boom years and buyers getting some very good buys.  Miami is on sale and many properties are selling for less than what it would cost to build the exact same structure on the same lot.  Are you going to be someone who says, “Shoulda, woulda, coulda” or someone who feels lucky that they got into the market when they could?

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Buying Foreclosures

Miami Foreclosures Now On-line

In an attempt to work through the more than 110,000 open foreclosures and the 7,000 new ones that are filed each month, Miami-Dade County has put them on-line.   Registration is free and allows you access to the county’s foreclosures.  If you want to bid, you will be required to put down a refundable 5% deposit.

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Buying Mortgage information

Mortgage Rates Fall Slightly This Week

After rising for the past four weeks, long-term mortgage rates fell last week.  Freddie Mac reported 30- year fixed rate mortgages averaged around 5.09%, down from 5.14% last week.

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Market Summary

Existing Home Sales Surge in November

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Buying Mortgage information

Interest Rates Will Start Increasing in 2010

The Fed’s Mortgage Backed Security (MBS) purchase program ends on March 31, 2010.  This purchase program is what has kept mortgage rates so low for the better part of 2009 and once the Fed stops purchasing MBSs  the demand will drop.  Since the supply of MBSs is still high, this will have a downward affect on bond prices which, in turn, will make home mortgage rates rise.

This will affect the purchasing power of home buyers.

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Buying

Short Sales Starting to Pick Due to New Treasury Rules

At the end of November, the United States Treasury Department released new rules attempting to encourage banks to speed up short sales.  The rules create a uniform process and documents that all banks must use as well as provide cash incentives to banks willing to participate.  The new rules are starting to work…I actually had a previously unapproved short sale close faster and with less problems than a regular sale that went under contract at around the same time.

This is great news for buyers and sellers as it will help us move through the inventory levels that much faster.  In order to qualify, a seller must:

  • use the home as his/her primary residence
  • have taken the loan out prior to January 1, 2009
  • must be delinquent on mortgage or likely to default on it
  • have a loan that is less than $729,750
  • have a monthly mortgage payment that is more than 31% of before-tax income

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Buying Mortgage information

Buying Real Estate? Bring Plenty of Patience if You Are Financing

I just came from a closing that almost didn’t happen because of the strict lending requirements lenders have.  Mind you, the Buyer has been under contract on a regular sale for over a month and was putting 40% down.  Last night the bank decided it needed more information on the source of his original $5,000 deposit, given back in early October.  When he provided his bank statement showing the $5,000, the latest bank statement also showed a significant deposit, a gift from his sister to help with the down payment.  This initiated a request from the lender for a letter from the sister saying it was a gift.  He got the letter, but this morning they wanted a copy of the sister’s account where the money came from.  She forwarded the statement showing the debit being made to her account.  Unfortunately for all parties involved, the sister is married and doesn’t share her husband’s last name, which lead to another request for information.  We finally closed a little before 9:00 p.m.

I have no problem with lenders tightening up their lending requirements and wanting to track the money.  I do have an issue with them doing so the day before the closing, jeopardizing the transaction, and stressing out all parties, who are usually stressed out enough on the day of a closing.

Moral of the story?

  • Create a paper trail of where all the money you are using for the closing is coming from and provide it to your lender or mortgage broker at least several days before the closing.
  • If you are getting money from a family member, get a gift letter to go along with it.  The letter should be specific as to where the funds are coming from and include a bank statement showing the funds.
  • Make sure the name(s )of the accounts match the name(s) in the gift letter.
  • If you are running short on time, sign an addendum for a one-two day extension for the closing and make sure all parties to the original contract sign it before the end of the contracted closing date so that you are still in contract.
  • Be patient.  Lenders are backlogged with new buyers and new regulations.