November Pending Home Sales/Weekly Unemployment Claims

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: November Pending Home Sales/Weekly Unemployment Claims
KEY DATA: Pending Sales: +7.3%/Weekly Claims: 381,000 (up 15,000)
IN A NUTSHELL: “Most housing reports are looking up but prices are still in the dumps.”

WHAT IT MEANS: It is hard to get really strong growth if home construction remains weak, so any good news about that sector should be trumpeted. So here is today’s blast: Housing sales are beginning to climb. The National Association of Realtors reported that pending home sales, which are contract signings, jumped in November to the highest level since April 2010. Since that was when the government’s “first time, long time” buyers’ incentives were in place, it looks like we are now in the midst of a real, not policy-hyped recovery. Improvement was seen in all regions with the West and Northeast leading the way.
In a separate report, unemployment claims jumped last week. That was expected though the rise was somewhat more that predicted. Still, the trend is down as the four week moving average fell fairly sharply. It is now at a level that tends to signal declining unemployment rates.

MARKETS AND FED POLICY IMPLICATIONS: Most housing data have been coming in better than expected and that is an indication that the log jam is beginning to break. The jump in pending home sales should lead to a further rise in sales over the next few months. With affordability at a record high, if we can only make it a little easier to get a mortgage we just might see the sector show some real strength. Unfortunately, the huge number of distressed houses overhanging the market will continue to put downward pressure on prices and limit the uptick in home construction. Still, this report adds to the belief that the weakest link in the economy, housing, is starting to come out of it.

Next week is a big one as we get the December jobs report on Friday. While the rise in the claims number is a warning that the labor market is still not strong, there are real hopes the payroll numbers will be quite solid. The bigger question is the unemployment rate, which gapped down in November. A modest rise, which is expected, would be a positive sign that conditions are firming and that seems to be the message coming from the claims numbers. So we are ending the year on an up note and I want to wish everyone a

HAPPY NEW YEAR
RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

Buying A Home With Bad Credit

Buying A Home With Bad Credit

When it comes to buying a home, having bad credit is not the end of the world. Your future doesn’t have to be defined by your past. Whether you have suffered from a bankruptcy, foreclosure or some type of financial hardship that resulted in late or missed payments, there are lenders who specialize in financing for those with less-than-perfect credit. You will likely have to produce a larger down payment and/or pay higher interest rates than someone who has good credit, but the important thing to know is that buying a home is an option for you.

Bankruptcy & Foreclosure

If either a bankruptcy or foreclosure is on your credit report, it could take some time before you can qualify for a good interest rate on a mortgage. FHA loans, which are especially desirable for those with past credit problems and first-time home buyers, are backed by the government and offer a low down payment and interest rate option for those who qualify. Although the notation remains for up to 10 years, individuals with a bankruptcy or foreclosure on their credit report may qualify for an FHA loan after two years. Some mortgage lenders may approve a loan sooner, but the interest rates will be higher and the required down payment may be as much as 35 percent of the purchase price of the home.

Cleaning Up Your Credit

Even if you have bad credit, it’s important to check your credit report from each of the three major credit reporting agencies – TransUnion, Equifax and Experian – before applying for a loan. If anything is inaccurate, file a dispute with the reporting agency and request a correction. You can request a free copy of your credit report every 12 months.

In addition to correcting any inaccuracies on your credit report, it’s important that you know what can help or hurt your chances of obtaining a loan. You can start improving your credit by avoiding the temptation to apply for new credit right before submitting a mortgage application. Multiple inquiries will cause your FICO score to drop, and lenders will rely on this information when deciding whether or not to issue your loan and how to calculate your interest rates. With past credit problems, most lenders will want to see that you have rebuilt your credit history with 1-3 major credit cards and timely payments over a two-year period.

Money Matters

When it comes to obtaining a home loan, a healthy bottom line will help the lender to see you as being creditworthy. It’s important that you have sufficient income, along with the ability to prove steady employment for at least one year (longer is better) preceding your loan application. Most lenders will request a copy of your tax returns for the two most recent years, along with current pay stubs. If you have money for a down payment, this will also work in your favor.

Creative Financing

In some cases, a conventional mortgage loan may not be available no matter how hard you try. Owner financing is one way that individuals, who may not otherwise qualify for a traditional mortgage loan, can purchase a home. This type of financing is offered by the owner and may include interest rates comparable to other loans, flexible down payment options and no credit check. Your REALTOR® can assist you in finding homes that offer alternative financing options.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

September Existing Home Sales

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: September Existing Home Sales
KEY DATA: Sales: -3.0%; 1-Family: -3.6%; Condos: +1.8%

IN A NUTSHELL: “The housing market just cannot get any traction despite record low mortgage rates.”

WHAT IT MEANS: I was nice to see that housing starts improved but for the market to really be solid, the existing home segment must improve. This is where most of the action takes place and right now it is largely treading water. Existing home sales eased back in September, according to the National Association of Realtors. A rise in condo and co-op purchases couldn’t offset a decline in single-family sales. The only region where demand improved was the Northeast. Contract failures, which are usually due to an inability to secure a mortgage, remained high. As long as distressed homes affect appraisals and credit standards remain tight, sales are not going to gain much traction. Housing prices were down over the years despite a decline in the share of homes sold that were distressed.

MARKETS AND FED POLICY IMPLICATIONS: There are so many hurdles facing the housing market that it is hard to see when conditions will return to “normal”. In addition to appraisal and credit issues, lots of households don’t even have the equity to make a move. With job growth weak, mobility is limited and that too slows the market. Still, the mortgage rate is so low and affordability so high that you would think conditions should be improving a little. It just doesn’t look that way as the September sales pace is pretty much what we have seen all year. Sometimes it has been higher, other times lower but it seems that roughly a 5.0 million unit annualized sales pace is where demand seems to wander around. In September, the pace was 4.91 million. So once again it needs to be pointed out that the economy will have to make do without housing pushing things upward. That means the slow, steady, grinding recovery is likely to stay that way for quite a while.
RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

August New Home Sales

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: August New Home Sales
KEY DATA: Sales: 295,000 unit annualized (down 2.3%): Median Prices (8 ’10-8 ’11): -7.7%

IN A NUTSHELL: “Builders are not building, supply is falling, distressed homes are too cheaply priced and it is difficult to get a mortgage and people are surprised that housing sales are going nowhere?”

WHAT IT MEANS: It would be nice if housing sales pick up but it didn’t happen in August, at least for new homes. Exiting house sales did improve and that is indeed the issue for builders. With so many distressed houses on the market selling for such low costs, frequently below replacement cost, it is extremely difficult for developers to compete. To do that, they have to down sell and that is what is happening. Forty seven percent of the newly built homes sold went for less than $200,000. The sales decline in August was propelled by a sharp cut back in the Northeast and West and a more moderate decline in the South. The Midwest posted a solid increase. Prices are falling but that probably reflects the need to build smaller, less luxurious and less costly homes in order to match the homes that are on the market.

MARKETS AND FED POLICY IMPLICATIONS: The new home market is in the dumps and there is little reason to think it can right itself anytime soon. The problems are huge: Distressed houses are selling for prices that are at times impossible to match, appraisals are difficult because comparables are often distressed houses, many households don’t have much or equity any left in their homes so they cannot trade up or down to a new house and financial institutions are cautious in their lending, partly due to regulatory issues. We are going to have to get used to a slowly improving market at best. That does not bode well for the economy or jobs as this sector generates so many new positions. Indeed, the housing and credit issues seen here are a clear indicator of why this recovery always was going to be and for a while will continue to be disappointing. Anyone who says we can have a strong recovery without housing is missing the point. But we can have a recovery anyway; it’s just that it will not live up to hopes or expectations. Since it is doubtful the overhang of distressed houses will be alleviated anytime soon and housing construction will not soar until that happens, we need to get used to what the economy is capable of and that, unfortunately, is only moderate growth.
RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

September 21, 2011 FOMC Decision

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

September 21, 2011 FOMC Decision

“To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities.”

Rate Decision: Fed funds rate maintained at a range between 0% and 0.25%

The FOMC met today and announced it would drive down longer term rates. With the economy recovering slowly and with “significant downside risks to the economic outlook, including strains in global financial markets”, it was deemed necessary to do a lot more than had already been done. Indeed, the size of the program, $400 billion of purchases of assets with maturities of six years or longer offset by sales of assets with maturities of three years or less, is somewhat greater than expected. But given the warning that the modest recovery could get worse, a large program made sense. You either go all in at this point or fold your cards and the Mr. Bernanke has gone all in.

Will this so-called “operation twist” work? Clearly, the emphasis on driving down longer term rates is an attempt to get mortgage borrowing and capital spending going a lot faster. But businesses are flush with cash already and it isn’t rates that are stopping them from hiring or investing more. Companies are just uncertain about the direction of the economy and demand is not growing fast enough to require greater job growth. Households are reducing their debt, not adding to it, and as we saw from today’s National Association of Realtors existing home sales report, failed contracts are growing. That is more an issue of appraisals and cautious lending practices than rate levels.

Where this will work is in the refinancing sphere. If you can get the refinancing done, the additional cash flow will help both consumer and business spending. On the mortgage side, the lowering of rates coupled with the Fed’s decisions to “reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities” should drive down mortgage rates to levels that will entice an awful lot of potential buyers and refinancers. Again, with the issue being appraisals not rates, this may not work that well but you have to give then kudos for trying to help the housing market.

Looking outward, once confidence returns, the lower rates, which should continue well into 2013, will become a major positive. As the economy improves and the desire to borrow grows, the extraordinary low rates will likely lead to rapid increases in borrowing. But that is likely to be in the future, not in the next six months. And it is that potentially strong growth in borrowing that presents the risk of inflation ramping up. But again, that is not right now.

The Fed is in a tough position. Fiscal policy is becoming more restrictive just as the risks to a disappointing recovery from Europe ramp up. The Fed Chairman is betting that any future (2 years or more down the road) inflation pressures can be handled. Instead, Mr. Bernanke wants to do whatever he can to prevent a double-dip. Given the state of confidence and the political gridlock, I believe the risks are worth taking even though three members of the FOMC differed and cast dissenting votes.

One final comment: Politicians of all stripes are taking shots at the Fed. That is their right but it shouldn’t be happening. You cannot say that the recovery is too weak and jobs have to be created and then do nothing, especially if there are dark clouds out there that could rain on the limping parade. Demanding that the Fed to “don’t just do something, stand there” is not reasonable and probably self defeating. The last thing a Fed Chair wants to be perceived as being is intimidated by politicians. An independent Fed, even a wrong-headed Fed, is a lot better than a politically driven Fed and you can be sure that this and every other Fed has not been politically driven.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

August Existing Home Sales

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: August Existing Home Sales
KEY DATA: Sales: +7.7%; 1-Family: 8.5%; Condos: 1.8%; Median Price (from 8 ’10)): -5.1%

IN A NUTSHELL: “The housing market is not robust but the rise in existing home sales shows we shouldn’t simply dismiss it.”

WHAT IT MEANS: Wonder of wonders, miracles of miracles, housing sales actually rose solidly in August. Granted the level is still nothing to make realtors smile, but improvement is not something to make light of. The sales rate was the highest since March, a period when confidence was rising and the job market was improving. The biggest gain was in the single-family segment as condo sales rose more slowly. Investors are a large part of the improvement as the large overhang of distressed homes is creating a lot of opportunity, especially for those with case. The sales of these properties accounted for 31% of the total, according to the National Association of Realtors. One of the big impediments to getting sales to really pick up is the mortgage/appraisal process. The Realtors said that 18% of the contracts failed because of low appraisals. That is likely the reason for the rising share of all purchases being distressed homes. It’s hard to get a decent appraisal for a “normal” property if the competition is a foreclosed home. Indeed, the sharp decline in prices over the year may be due to the shifting of the market into distressed homes. Geographically, all regions were up but there was a huge rise in the West. That came after a large decline in July so when you average the two months, the West is really not having a sudden return to happy days again.

MARKETS AND FED POLICY IMPLICATIONS: This was a good report as sales rose. But it also showed the problems the housing sector is facing. As long as non-distress homes have to compete with so many distressed homes, the mortgage process will restrain sales. You just cannot get a mortgage even if the comparables are just not comparable. That is a glitch in the system that it seems no one wants to touch but it is real and an issue. The rising share of distressed homes also points out the problems of prices, which everyone likes to look at. As the distribution gets skewed toward these lower priced homes, the price measure will be depressed. This report will likely be a tree falling in the forest as the FOMC is meeting and that is the focus of everyone’s attention, at least today. Despite the growing criticism of the Fed, the Committee is going to do what it thinks it should do, not what politicians think should be done. And that is the role of the Fed: To be an independent rudder to an economy that is too often driven adrift by the politics of fiscal policy. If leaning against the wind sometimes gets difficult, so be it. I have been critical of the Fed in the past and I certainly will be critical of it in the future but the members are non-political and above reproach. It is crucial that we support an independent Fed. Think of the messes we would get into if the politicians ran both fiscal and monetary policy.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

July Existing Home Sales

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: July Existing Home Sales
KEY DATA: Sales: -3.5%; July ’10-July ’11: +21%

IN A NUTSHELL: “”Housing continues to wander aimlessly along despite historically low mortgage rates.”

WHAT IT MEANS: The housing market is still not showing any signs that it is gaining traction. The National Association of Realtors reported that existing home sales fell in July as a large decline in the West offset modest increases in demand in the Northeast and Midwest. There was a small drop in the South. Condo sales are holding up but the stressed out, foreclosure dominated single-family segment continues to drop. Prices are easing as well but some of that may be the continued impact of distressed homes rather than the give and take of buyers and sellers for non-distressed homes. Sellers are recognizing the problems in moving homes by holding houses off the market and the inventory is falling.

MARKETS AND FED POLICY IMPLICATIONS: The Realtors commented, as have most observers of the market, that the appraisal process is causing negotiated deals to fail. If the contract price is not supported by appraisals, which may be affected by distressed homes and limited realistic comparisons, the mortgage will not be written. Only the best borrowers are getting mortgages and that is not enough to drive the market forward. Anyone who has tried to refinance lately, and I am one of those people, know how ridiculous the appraisal process can be. During the bubble, every home seemed to meet the appraisal standard and that ebullience help inflate the bubble. Now we have the opposite where it is frequently impossible for sellers to get a reasonable price even when buyers are willing to pay that price. And with banks so worried about loans failing, the conservative nature of the lending process is and will continue to limit the ability of the housing market to recover. This report, coupled with a rise in inflation, a jump in unemployment claims and a sharp drop in the Philadelphia Fed’s regional survey is only adding to the worries about Europe. European growth is faltering as the cure for their debt and deficits issues is killing growth. But that is no surprise. In the short term, budget cuts reduce economic growth and that is happening with a vengeance in a number of European nations. So why are so many people surprised when European growth numbers are weak? Got me. But that slowdown has implications for the rest of the world, especially if some European banks run into trouble. U.S. banks are linked to European banks and that creates worries that the financial sector will be hit again. That hurts confidence about future U.S. growth. Still, a double-dip recession is hardly baked in the cake and I will remind people that Wall Street and Main Street are not one and the same anymore.
RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

Finding A Mortgage Broker

Finding A Mortgage Broker

If you are in the market for a new home, or looking to refinance your existing mortgage, then you will want to consider the option of hiring a mortgage broker rather than an individual lender or lending institution. With times being as tough as they are for so many people, and the instability of the financial markets, shopping around for the best deal in a mortgage is of vital importance. A mortgage broker is a one-stop mortgage option that can save you time, and most importantly, money. Here are just a few reasons you should consider a mortgage broker.

Who Are Mortgage Brokers?

Mortgage brokers are financial professionals who are paid a commission to match lenders and borrowers. They usually work with dozens of lenders as freelance agents and can match you with a lender than offers the best mortgage for your financial situation and personal needs. They are qualified to evaluate your credit situation, offer you a variety of loans from different lenders, and can submit the home buyer’s application to one or more lenders. A good mortgage broker is able to find a lender to suit a buyer with just about any credit rating.

Why A Broker Can Work For You

While the idea of a commission fee paid to a broker may not seem worth it, in most cases this cost is passed back to the lender. Brokers provide a service to lenders which saves them time and resources, and often they are willing to absorb this cost. Lenders who work with brokers are also more aware that their offer will be competing with other offers from different institutions, and in many cases this means that you are getting the most competitive rates and terms available.

A mortgage broker can definitely find a mortgage that can work for you, but as in hiring any professional, be sure you are certain they are qualified to give you advice and services you are requesting. Your REALTOR® can give you the names of reputable brokers in your area, and there are also a number of organizations that monitor the profession.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

How Much House You Can Afford

How Much House You Can Afford

There are a number of factors that can contribute to the affordability of a house and, as a potential homebuyer, it’s important that you know what type of mortgage payments are within your budget.

Debt-To-Income Ratio

As a homebuyer, your first consideration will be the amount of your monthly mortgage payments. If you owe a lot of debt, lenders may consider you to be a high credit risk, which makes debt-to-income ratio a leading factor in determining how much of a house you can afford.

Most lenders will discount any loans that you will have paid off within one year when determining how much of a home you can afford. As a general rule, your mortgage payment should not exceed 25-30 percent of your monthly take-home pay.

Loan Term

Although you will end up paying more interest in the long run, you will find that you can afford a more expensive house if you request a loan term of 25-30 years, compared to a shorter term of 15 years.

Interest Rates

When you look at an interest rate, all you see is a number. Hopefully, it’s a single digit that’s comparable with current market rates. Most homebuyers already know that their interest rate affects their monthly payment which, in turn, is determined by the borrower’s income. Lower interest rates mean that you can afford a larger principal loan amount, which means a more expensive house.

Credit History

Because your past credit history will play a large role in determining your interest rates, it will also impact the affordability of a house. For instance, a buyer who pays six percent interest will save a considerable amount of money over a buyer who pays eight percent interest on their home loan. It may not seem like much now but, when averaged over time, the savings could be tremendous.

Down Payment Amount

Believe it or not, the amount of your down payment will not only show the lender how serious you are about buying a home, but it will also affect your ability to afford a particular house. For instance, if you were to qualify for a home loan of $200,000, but your dream home was currently listed for $250,000, a down payment in the amount of $50,000 would get you into the home.

The above scenario is just an example, but it does show how a down payment can affect the price of the home that you are able to afford. Some lenders may only require a five percent down payment, but you are free to pay as much above that as you wish. A larger down payment can also reduce the principal loan amount, which thereby reduces the monthly mortgage payments.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

Avoiding Mortgage Fraud

Avoiding Mortgage Fraud

Unfortunately, fraud and identity theft are increasing at an alarming rate every year, and mortgage fraud is one of the most important types of fraud from which you will want to protect yourself. So what constitutes mortgage fraud, and how can you prevent this from happening to you?

What Is Mortgage Fraud?

Essentially, mortgage fraud is defined by the FBI as any material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan. There are several different types of mortgage fraud, and each is a serious offense that can have a huge impact on you and your credit. Here is a basic list of the most common types of mortgage fraud.

Undisclosed Kickbacks—This includes any financial deals between a buyer and seller that are not included in the mortgage documents.

Falsifying Income—Inflating your income is a serious offense on any loan document, especially a mortgage.

Undocumented Non-Owner Occupancy—Rates and other fees can be higher for income and rental properties, but resist the temptation to hide this fact in order to save money.

Inflated Purchase Price—In some cases this method is used to obtain a higher appraisal of a property, but it is illegal and may cost you your home.

How To Protect Yourself

The purchase of your home will probably be the greatest financial investment you will ever make. Ensuring that you know what constitutes mortgage fraud is half the job, but it is also important to know how to protect yourself from professionals who may not have your best interests in mind. In general the best method is to ensure that your real estate agent and mortgage lenders are professionals with considerable experience, professional credentials, and good references. It is also important to keep in mind that if an offer seems too good to be true, or if you feel that your REALTOR® or lender has given you advice that sounds as if it might fall under the category of mortgage fraud, you seek the advice of another professional. In this way you can avoid getting yourself into what may be a potential financial disaster.

Your property is not only your home, but also your greatest asset, and losing it to mortgage fraud can be avoided when you are armed with these facts.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com