Long Island NY Real Estate News – February 2015

Long Island NY Real Estate News - February 2015

In our Long Island NY Real Estate News for February 2015:

Protect Your Long Island NY Mortgage Until It's Funded

Getting a Long Island NY mortgage does not just entail applying for the loan and getting an approval letter. There are still things that can go wrong, and you need to be aware of these so you don't find yourself out all the cash to get the loan, and still not get the funds you thought you were approved for.

Why Your Long Island NY Mortgage May Not Get Funding

Your Long Island NY mortgage can still fall apart even after you think you are approved.

You've gotten the call that your Long Island NY mortgage was approved, and your lender coordinates a closing date with you. You get the movers all lined up, you notify the utility companies to switch the untilites over to your name effective on your closing date, and you send out the change of address notices. Everything's all set to move in, until you get another call from your lender that says, your loan has fallen through.

There are no formal statistics on deals that are approved but then don't actually close. These 11th hour disapprovals happen more often than many people realize. What they also don't know is that losing the loan at the last moment is almost always preventable and possibly fixable.

The most common mistake people make after their loan has been approved but before it closes is taking out additional credit after the lender has reviewed your credit report. Buying furniture on credit after you've been approved, or new appliances for the house, are both big no-no's! If your income to debt ratio was close during the initial documentation review, taking on more debt might push you into a debt ratio the bank deems unacceptable.

The bottom line is — just don't do it. Wait until your deal has completely closed before taking on any new debt. Your normal purchase of gas and a night at the movies isn't likely to cause any problems. It's a major purchase or opening new accounts that will get your loan denied.

Another mistake that may or may not be repairable is changing jobs during the loan funding process. Lenders almost always verify your employment shortly before the loan is set to close. If anyone that submitted financial documentation for your loan is planning to changed employers or stop working, it's best to wait until after the loan closes.

One you will never recover from is if you submit fraudulent income statements. When getting a Long Island NY mortgage, there are no undocumented income statements. The lender will validate your income statement with the IRS or other taxing authority. What you submit to the lender must be exactly what you submitted to the IRS. Often the original loan approval is based on a contingency that your income be validated by the IRS.

Between the time you are initially approved for your Long Island NY mortgage and when the deal closes, try to keep everything the same regarding your financial situation.

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Long Island NY Mortgage Rates Up

Long Island NY mortgage rates ticked up this week for the first time in 2015 following positive home sales reports.

Freddie Mac says a 30-year fixed-rate Long Island NY mortgage averaged 3.66 percent this week, up from 3.63 percent last week. A year ago, 30-year rates averaged 4.31 percent. The all-time low of 3.31 percent was set in November 2012.

A 15-year fix averaged 2.98 percent this week, up from 2.93 percent. A one-year adjustable-rate mortgage rose to 2.38 percent.

New-home sales in December rose 11.6 percent, a better monthly gain than had been expected. Existing-home sales rose 2.4 percent in December.

A separate report from the National Association of Realtors said pending sales of existing homes, a more forward-looking gauge of housing market activity, fell in December, though contract signings remained above year-ago levels.

We'll continue to keep you updated here on any news that might affect Long Island NY mortgage rates, either up or down.

Long Island NY Real Estate News – January 2015

Long Island NY Real Estate News - January 2015

In our Long Island NY Real Estate News for January 2015:

Long Island NY Housing – What to Expect in 2015

As we turn the calendar to 2015, it seems only fitting that we explore Long Island NY housing and some of the things to watch for in the new year.

2015 Long Island NY housing forecast and what to expect in the new year.

Long Island NY Housing – Prices, Inventory and Sales

Let's start our look at Long Island NY housing with Prices, and what's expected to happen in 2015.

When all the figures are in, it appears Long Island NY housing prices – as measured by the national repeat sales index (Case-Shiller, CoreLogic) – will be up about 5% or so in 2014 (after increasing about 12% in 2013).

Some of the key factors in 2012 and 2013 were limited inventory, fewer foreclosures, investor buying in certain areas, and a change in psychology as buyers and sellers started believing house prices had bottomed.  In some areas, there appeared to be a bounce off the bottom – but that bounce appears to have ended in 2014.  The investor buying has slowed – as have distressed sales.

The consensus of housing analysts appears to be for price increases of around 3.5% to 4.0% in 2015.

Inventory – It appears housing inventory bottomed in early 2013. The question is, will inventory increase further in 2015, and, if so, by how much?

Inventory is not seasonally adjusted, and usually inventory decreases from the seasonal high in mid-summer to the seasonal lows in December and January as sellers take their homes off the market for the holidays.

The Long Island NY housing market is slowly moving back to normal, and real estate is very local, as we all know. But our best guess at this point is, available inventory will increase further in 2015. If this holds true, it will keep home price increases from going to high too fast, which is never a good thing for the Long Island NY housing market.

Sales – CoreLogic released its 2015 Housing Outlook that shows home sales will increase by 9 percent. The most important economic trend is that employment growth for millennials began to improve in 2014, with the 25- to 29-year-old segment experiencing a 3 percent improvement in employment growth — one percentage point higher than the overall employment growth rate. That's important because this age group is the key first-time homebuyer segment.

When it comes to the Long Island NY housing market, 2015 may be the year first-time home buyers make a comeback. With rents rising faster than incomes, many Millennials are expected to start looking to buy homes of their own.

Here are two more Long Island NY housing market trends economists and other industry experts expect to see in the year ahead, in additon to the price expectations and inventory projects we just covered.

Looser Lending Standards – In early December, Fannie Mae and Freddie Mac put new lending guidelines in place and started offering 3% down payment mortgages that will make it easier for more first-time buyers to qualify for a mortgage.
Add to that a strengthening job market, and prospects look much brighter for young home buyers.

First time home buyers are important to the overall Long Island NY housing market because a spike in the number of first time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones.

Mortgage Rates – If there's any single market trend that real estate industry pros have gotten consistently wrong lately, it's the direction of mortgage rates. But most do expect rates to rise at some point in 2015.

In December, the Federal Reserve signaled that it would not raise the Federal Funds rate until the summer of 2015 or perhaps even later.

With the mortgage rate guessing game continuing as we start the new year, many experts believe rates will peak in 2015 at 4.75% for a 30-year fixed rate mortgage, and even if they hit 5.00%, that's still a very favorable rate, historically.

An increase to 4.5% from the current 4% adds about $60 a month to mortgage payments on a loan with a principal balance of $200,000. Not enough to keep buyers away, when rental rates are increasing much faster, comparitively speaking.

As the economy improves and salaries rise, Millennials are expected to become a bigger force in the Long Island NY housing market in the new year. Households headed by Millennials are expected to see significant growth in 2015, particularly as the economy continues to make gains.

Millennials are expected to drive two-thirds of household formations over the next five years, according to a report from the National Association of Realtors. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, are the two factors that realtor.com® points to in driving more first time home buyers to the Long Island NY housing market.

As always, we'll continue to track all of these Long Island NY housing trends for you throughout the new year and keep you updated right here.

Long Island NY Real Estate News – December 2014

Long Island NY Real Estate News - December 2014

In our Long Island NY Real Estate News for December 2014:

Long Island NY Lease Purchase Full of Pittfalls

In a Long Island NY lease purchase, in most cases, you will rent at a higher cost than the going market rate. Prior to moving in, you agree on a potential purchase date and purchase price for the home. You may buy the property at any point during the rental period up until the lease option expires, providing the allowance to do is spelled out clearly in your agreement. The lease option period can be any length of time that you and the seller agree to, ranging from several months to several years.

Entering into a Long Island NY lease purchase agreement can be full of pitfalls for the buyer

If you do end up buying the property, the seller will usually credit part of your rent back to you, often-times the portion of your rent that was above market rate. You can opt to put this money toward a down payment and closing costs, or keep it. The purpose of the above-market rent is to give the seller an incentive to complete the transaction. If you do not purchase the property, all of the rent you paid remains with the seller, giving the seller an incentive for taking the property off the market during the time you were renting it.

How a Long Island NY Lease Purchase Benefits Sellers

A Long Island NY lease purchase favors the seller if he or she is having a hard time selling their property. The rent-to-own option provides the seller with an alternative to lowering the price, taking the home off the market, or renting the home long-term. In the meantime, the Long Island NY lease purchase helps the seller pay the mortgage, property taxes and insurance. Unlike a traditional rental, tenants are more likely to take special care of the property because they hope to own it at the end of the lease purchase time period.

How a Long Island NY Lease Purchase Benefits Buyers

The biggest advantage a buyer would have with a Long Island NY lease purchase is financial, of course. If buyers don't have the down payment saved or adequate monthly income to qualify for a mortgage but believe they will within the next couple of years, a Long Island NY lease option allows them to accelerate the path to homeownership. By signing a contract now, the buyer locks in a purchase price, which means no worrying about rising home prices.

Also, a seller will usually continue to pay the property taxes, insurance and maintenance and repairs on the property. And by living in the home, the buyer gets a lengthy test drive before diving into the financial commitment of owning the home themselves.

Best of all, if the buyer decides to walk away from the deal, the only real consequence is the loss of that portion of rent paid that was above market rate. If the buyer ends up buying the property, the seller will credit part of the rent back to the buyer, often more than the portion of rent that was above market rate.

Long Island NY Lease Purchase Full of Risks For The Buyer

A would-be buyer should be aware of the many things that can go wrong in the process before getting involved in a Long Island NY lease purchase agreement. Before entering a rent-to-own agreement, a potential buyer should:

Check the seller's credit report. – Look for potential warning signs that the seller may be in financial trouble, such as delinquent accounts or a large amount of outstanding debt. Even after a satisfactory credit check, a potential buyer who currently lives in the home should still pay attention to any warning signs that would indicate that the seller is in financial distress. Some examples include phone calls from debt collectors and suspicious-looking notices that are sent to the house.

Understand that the seller could lose the property during the rental period. – This could occur for any number of reasons such as if he or she is unable to make the mortgage payments, a tax judgment is placed on the property, he or she goes through a divorce, is being sued, etc. If the seller loses the property, the potential buyer loses the possibility of buying the property, forfeits the extra rent paid and will have to find a new place to live. There is one possible exception: if the home becomes bank-owned through foreclosure, the bank might consider selling the home as soon as possible to the Long Island NY lease purchase buyer in order to avoid the hassle of maintaining and marketing the property to a different buyer. In this case, the rent-to-own buyer would have to decide whether the purchase is feasible at the new date, and possible new terms of purchase.

Ensure that the Long Island NY lease purchase option clearly states who is responsible for maintenance or repairs. – This agreement should also specify the types of changes or improvements (if any) the potential buyer is allowed to make to the property during the lease term.

Be sure to enter a "lease-option agreement" rather than a "Long Island NY lease purchase agreement". – The former grants the option to buy at any time during the rental period, while the latter requires purchase by the end of the lease period and has legal ramifications for backing out.

Do market research and obtain a home inspection. – This is how you can be sure the home purchase price is fair before ever signing a contract.

Be aware that if the seller is unscrupulous, he or she can refuse to sell at the end of the lease-option period. – This means that all the above-market rent money paid will be lost. A seller may also try to back out of the contract if the real estate market has appreciated rapidly and the property significantly increases in value. Of course, neither of these actions is legal, but if the buyer doesn't have the financial resources to hire a lawyer, there won't be much recourse against dealing with a shady seller.

Understand that if the market declines, the buyer will still have to pay the higher price stipulated in the contract to own the home. – However, if the price is too high, the lessee can just walk away and shop for a different property. However, the buyer will lose that portion of the rent that would have gone toward a down payment, so it's important to do the math necessary to determine whether walking away is the best option.

Talk to a mortgage broker and ensure that you're in a position to buy the property. – Even if the lessee decides to buy the house, it is possible that he or she will not qualify for the mortgage loan required to make the purchase. Finding this out before entering a Long Island NY lease purchase agreement, therefore, can save a lot of grief down the line.

Obtain a condition of title report. – This can help a buyer learn how long the seller has owned the property. The longer the seller has owned it, the more equity and stability he or she should have built up in it.

While Long Island NY lease purchase arrangements can have many potential pitfalls, they can be a win-win situation between a trustworthy seller and a prudent, financially responsible buyer. If you can find an arrangement that you can agree on and a house that you'd like to own one day, this could be the perfect way for you to step out of your apartment and put down some roots.

It is also strongly advisable to find yourself a buyer's agent or broker to help you with this whole Long Island NY lease purchase agreement. They will have experience dealing with the pro's and con's, and can point out things you may never think of on your own.

Long Island NY Real Estate News – November 2014

Long Island NY Real Estate News - November 2014

In our Long Island NY Real Estate News for November 2014:

Pending Long Island NY Home Sales Up Slightly in September

Pending Long Island NY home sales ticked up slightly in September after dropping in August, as it remained difficult to qualify for mortgage financing.

Nationwide, The National Association of Realtors' Pending Homes Sales Index, which is based on contracts signed for previously-owned homes, rose 0.3 percent over the past month to 105. Signings of existing homes were higher in September than year-ago levels, the first time in 11 months that year-over-year contracts have risen.

Housing supply for existing homes was up in September six percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year.

Many pending Long Island NY home sales are falling through because buyers are unable to get a mortgage.

Tight credit and price increases through the middle of 2013 have limited buying activity. About 15 percent of the real estate agents surveyed for the index said they couldn't close deals because many buyers were unable to obtain a mortgage.

Pending Long Island NY home sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Ahead of next week's congressional election, the affordability woes even have something of a political tinge, according to new analysis by the real estate data firm Trulia.

In heavily Democratic communities, the median price for a home costs $227 per square foot. That's nearly double the price of $119 per square foot in areas that vote Republican. This has encouraged Democrats to loosen lending standards, while Republicans have largely opposed such measures for encouraging consumers to become highly leveraged.

When the Securities and Exchange Commission voted 3-2 recently to adopt new mortgages rules, the two Republican commissioners, Daniel Gallagher and Michael Piwowar, opposed adoption.

Because Democratic housing markets "are less affordable, have lower homeownership, and have greater income inequality, political leaders in Democratic-leaning and Republican-leaning metros may push for different policies," according to Jed Kolko, chief economist at Trulia.

Be sure to get out and vote on Tuesday!

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Long Island NY Mortgage Rates and Requirements

Long Island NY mortgage rates remain near historic lows, at or around 4 percent, give or take a fraction up or down.

Freddie Mac says the average rate on a 30-year fix in the week ending Oct. 30 was 3.95 percent, up from 3.92 percent the previous week. They're still near the lowest 30-year rates since June 2013. The record low for 30-year rates was 3.31 percent in late 2012.

As we continue to say each month when updating the Long Island NY mortgage rates here, if you're close to closing on a home, or have tight debt ratios/cash to close, lock in your rate and don't look back!

Meanwhile, Fannie Mae, Freddie Mac and their regulator the Federal Housing Finance Agency are close to an agreement that would allow them to buy mortgages made to borrowers with less-than-pristine credit and for purchases with as little as 3 percent down. The agreement would provide lenders who sell mortgages to Fannie and Freddie protections against later charges that they had knowingly made bad loans.

Critics warn that looser credit standards and lower down payments will only lead the industry into another crisis of borrowers unable to make payments, or homes that slip too easily underwater.

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Bond Tapering is Officially Over

Bond tapering is now officially over. The Federal Open Market Committee (FOMC) officially decided to conclude its more than two-year-old asset purchase program earlier this week due to the substantial improvement in the outlook for the labor market and strength in the broader economy.

The Fed's decision to end its third round of bond buying had been expected. It has gradually pared the purchases from $85 billion in Treasury and mortgage bonds each month to $15 billion. And the Fed had said it would likely end the program after its October meeting if the economy continued to improve, which they say it has.

Supporters have said the bond buying helped invigorate the economy and reduce the unemployment rate, which peaked at 10 percent during 2009, to the current 5.9 percent.

The Zero Interest Rate Policy, on the other hand, remains in full effect. The federal funds rate will maintain the current 0 to 1/4 percent target range.

The Fed has said it won't begin selling its holdings until after it starts raising short-term rates.

Most economists have predicted that the Fed's first rate hike won't occur until next summer. Some foresee no increase until fall, in part because of fears that the global economy is weakening and could threaten the U.S. economy.

Former Federal Reserve Chairman Alan Greenspan said he doesn't think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

We'll be watching the markets closely for you to see how the end of the bond tapering will affect interest rates and mortgage availabilities going forward.

Long Island NY Real Estate News – October 2014

Long Island NY Real Estate News - October 2014

In our Long Island NY Real Estate News for October 2014:

Pending Long Island NY Home Sales Slip in August

Pending Long Island NY home sales slid backwards in August after improving in July, underscoring the unsettled state of the residential real estate market.

Pending Long Island NY home sales slid in August after increasing in July

Nationwide, The National Association of Realtors' Pending Homes Sales Index, which is based on contracts signed for previously-owned homes, fell 1 percent in August from July and is 2.2 percent lower than August 2013. Pending sales mirrored a drop in settled purchases of previously-owned homes during the month. Those settlements were for contracts signed earlier in the year.

The pullback of pending Long Island NY home sales in August followed a 3 percent gain in July. The July advance numbers had improved on June's 1 percent decline after three months of gains in March, April and May.

Some blame August's decline on the market's improvement since the Great Recession. NAR chief economist Lawrence Yun said, "Fewer distressed homes at bargain prices and the acknowledgement we're entering a rising interest rate environment likely caused hesitation among investors last month. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home."

Those first-time buyers may face higher mortgage rates in coming months, but they aren't out of reach just yet. Speaking of mortgage rates and how they may affect Long Island NY home sales…

 

Long Island NY Mortgage Rates Near 3-Week Lows

Long Island NY mortgage rates have fallen to the lowest levels since September 9th.

According to the Primary Mortgage Market Survey released by Freddie Mac, average fixed-rate mortgage rates decreased slightly, a week after making their biggest one-week gain of the year.

30-year fixed-rate mortgages (FRMs) averaged 4.20% with an average 0.5 point for the week ending September 25, 2014, down from last week when they averaged 4.23%. A year ago at this time, 30-year FRMs averaged 4.32%.

15-year FRMs this week averaged 3.36% with an average 0.5 point, down from last week when they averaged 3.37%. A year ago at this time, 15-year FRMs averaged 3.37%.

Tomorrow, the jobless claims figures come out. New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. These numbers could impact Long Island NY mortgage rates if the job numbers are not in line with expectations.

As we said last month when updating the Long Island NY mortgage rates here, if you're close to closing on a home, or have tight debt ratios/cash to close, lock in your rate and don't look back!

 

Long Island NY Home Price Gains See Significant Slowdown

Long Island NY home price gains saw their smallest annual gains since late 2012 in July.

The 20-city S&P/Case-Shiller index released yesterday (September 30) indicates that prices rose 6.7 percent in July from a year earlier. That is the smallest year-over-year increase since November 2012. It's also a continuation of a slowdown in Long Island NY home price gains.

The report indicates that as of July, average home prices are back to autumn 2004 levels.

While the year-over-year figures are trending downward, Long Island NY home price gains are still rising month-to-month, although at a slower rate than what we are used to seeing over the past couple of years. Home prices are still rising two or three times the rate of inflation, said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.

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