What to expect when you’re expecting to purchase a home in the current “Buyers Market” when applying for a loan…

A play on a book title but an appropriate subject to discuss… the first word(s) that comes to mind is extra scrutiny if you are applying for a mortgage.  Gone are the days of “I have good credit rating and I have a million dollars in the bank I want to state my income.  All lenders are turning a critical eye to the haves as well as the have not’s and will continue to do so for the foreseeable future.

To shed a positive light on an otherwise gloomy statement is that mortgage applications ticked up in the 3rd quarter as rates dipped again.  Rates have slowly risen and applications have trickled off somewhat but there is still a healthy application rate as the looming deadline for the First Time Homebuyer’s tax credit approaches.

Investors cannot be left out of the equation and are making up a lion share of purchases below the $100,000 mark as they are able to purchase with cash and close quickly.  With lending guidelines and turn times for loans increasing due to new legislation such as: Home Valuation Code of Conduct – lengthening the time it takes for appraisals being performed, “3/7/3” rule regarding disclosures and effectively ruling out a quick close if financing is required and lastly on the State level legislation regarding the “Nevada Good Funds” rule that puts holds of up to 10 days on certified funds physically brought to title companies at the time of close, you can see why sellers are often opting for cash buyers who are only slightly impacted and can close quickly in this price range.

Historically low interest rates are also headed to higher ground as the Fed begins to wind down their purchases of Mortgage Backed Securities and it will be left to the open market again to dictate interest rates.  What that equates to is that the insulation from the Stock Market fluctuations will also come to an end because in a typical market (one without the assistance of the Fed buying the MBS’) stocks and bonds fight for the same dollar.  So as the stock market goes the inverse happens to the bond market – a run up in the stock market means a rush of money out of the bond market and a byproduct of that money flow is higher interest rates.

So now you ask- I am looking to buy what can I do to position myself as a strong buyer?  -Get pre-approved not pre-qualified the difference between the two is your documentation has been reviewed and the other is that you have simply had a conversation discussing your situation. 
-Meet your lender and provide them all of your income and asset information so that the lender can write a stronger approval.
-Expect to re-submit up-to-date pay stubs and bank statements more than once throughout the process to show that you are still qualified. 
-DO NOT MAKE ANY NEW LARGE TICKET PURCHASES during the process on your way to closing.  Wait to buy your furniture and any appliances you may be eyeing until AFTER your Real Estate Agent slides you your keys.

There is a lot to digest here but the take away of this article is to get in the game NOW.  If you are considering buying now is a great time to go and get pre approved. PHH Mortgage charges nothing for you to get pre-approved and you’ll be surprised how easy it is to accomplish.  Investors are not the only people buying homes there are plenty of people just like getting in the game and winning some great properties at great prices with great mortgage rates.  With all of the changes that are coming this may be the best chance you have to realize the American Dream of home ownership!

Dave Reichert CMP

PHH Mortgage

From a recent U.S. News and World Report article we find that Las Vegas is considered to be undervalued by 41%!

Las Vegas. After a dizzying run-up in prices, Sin City has become a cautionary tale for real estate investors everywhere. Since its 2006 peak, Las Vegas home values have plummeted by more than 50 percent. And today—at $77 a square foot—existing homes are actually priced below the cost of building materials, says Steve Bottfeld, the principal of Las Vegas-based Marketing Solutions, which specializes in real estate economics. "That's truly undervalued," he says. Although the market may be depressed today, several factors will support strong housing demand in Las Vegas over the long haul, Bottfeld says. The opening of MGM Mirage's CityCenter, which is expected later this year, will bring new jobs. The city's enviable climate—hot summers and mild winters—and its exciting downtown district will continue to attract residents. And the best-in-class architectural design of area properties will appeal to would-be buyers. "We are on the bottom of prices at this point," Bottfeld says. "There is no question that the residential market in Las Vegas is undervalued." The median single family home price in Las Vegas was $140,000, in the first quarter, which IHS Global Insight considers 41 percent undervalued.

We continue to see a frenzied pace of sales and buyers are realizing how attractive real estate values are in Las Vegas.  One of our neighbors from SoCal purchased their second home in our community (one is for an investment and the other will eventually be a 2nd home).  Even with the reduction in values in SoCal it shows that Las Vegas remains for affordable.  Here's some fast stats as of today:

• 12,331 active listings with 40% short sales and only 21% REOs (more REOs are on the way) 
• 13,599 pending and contingent sales with more than half (7,110) being short sales 
• Nearly 13,000 sold in the past 90 days.
  

For the complete article and the list of the top 10 most undervalued cities in America: http://www.usnews.com/articles/business/real-estate/2009/07/16/americas-10-best-undervalued-places-to-live.html

Check out this valuable article from the National Association of Homebuilders on the tax benefits of homeownership.  With affordability in the Las Vegas market increasing daily, more and more first time buyers will continue to pursue ownership.  For real estate professionals and potential home buyers, the following offers some great advice and additional resources (click on the links).

Home builders can use new research from NAHB economists as a source of information for their prospective customers on the tax benefits of homeownership.

“Purchasing a home is typically the largest purchase and among the most important financial decisions a family makes,” said Robert Dietz, NAHB’s director of tax issues. “There are numerous factors that influence the home buying decision, and among the most important are the tax benefits that help offset some of the cost of homeownership.”

A March 27 article by Dietz — “The Tax Benefits of Homeownership” — examines how the tax benefits reduce the cost of homeownership for individual home owners and buyers for certain mortgage amounts and income levels.

Those benefits include deductions for mortgage interest and real estate taxes, the capital gain exclusion for the sale of a principal residence and the newly enacted $8,000 first-time home buyer tax credit.

For example, a new home-buying married couple with an annual $80,000 income and initial mortgage of $250,000 can save more than $11,000 in the first five years of homeownership from their mortgage interest and real estate tax deductions.

Assuming the couple resides in the home for 12 years, which is the average period of ownership, these tax savings grow to more than $25,000 for the period they have owned the home. Combined with the capital gains exclusion, the estimated total savings associated with homeownership exceed $52,000 over that span of time.

The research findings have been summarized in an “Opportunity Knocks for Home Buyers” brochure that can be a useful selling tool for builders and marketing professionals in the real estate industry.

Click here for further information on the NAHB Web site on the tax advantages of homeownership.

Consumers can find comprehensive information on the $8,000 first-time home buyer tax credit — available for qualified purchases this year before Dec. 1 — at www.federalhousingtaxcredit.com.

Coldwell Banker Premier Realty has recently published the 2008 Las Vegas Valley Real Estate Report. This report is useful for investors, home buyers or sellers, developers or anyone curious about the Las Vegas Valley residential market.

The report details:

• Existing Home Sales
• Days on Market
• New Home Sales
• Pricing
• Foreclosures
• Short Sales
• Vacancy Rates
• Owning Vs. Renting
• Luxury Home Sales
• Luxury Home Features

The report also discusses taking your money further in the residential market as well as some notable sales. The report utilizes crisp graphics and photos within a thoughtful narrative. If you would like this emailed to you, just register and we would be happy send this to you. Enjoy!

The real estate market in the Southwest U.S has frequently been in the news. We are a real estate sales, marketing, investment and consulting firm with a lot of experience in the Northwest, Southwest and particularly Las Vegas. We have found that there is a lot of interest in the Las Vegas housing market as well the regional economy so we have established this blog to discuss and elaborate on market conditions, current real estate topics and generally to feed the hunger for reliable, current information related to real estate.