New England Properties

The following blog post is being reprinted from Short Sale- How Will it Effect My Credit.  As a Massachusetts Realtor who is heavily involved in short sales, many sellers want to know what effect a short sale will have on their credit. 

The effects of a Short Sale on Credit Scores

Unfortunately a short sale will effect your credit scores.  Make no mistake, the “ding” to your credit score can be very minimal (50 points) to much higher (150 points or more).  This is also the case in a deed-in lieu of foreclosure. While a short sale can have less of or the same impact as a foreclosure on your credit, it has the benefits to your future financial health.  Please do not think a short sale will not effect your credit it will and it is irresponsible for someone to tell you otherwise.  Remember the how the short sale is reported can effect your credit score but equally important is how many late payments did you rack up while going through the process of a short sale.

There are many variables to how much your credit score will be impacted by a short sale.  The number of rolling late’s on your mortgage how your mortgage company reports the short sale to the credit agency as well as what your original credit score was.  It appears that the higher your score the harder your hit. These will be some of the factors in determining how much of an impact a short sale will have on your credit.

A key point to remember is, that many times, while struggling with your mortgage, you may be experiencing trouble with other lines of credit.  Every late you may have on credit card, car or student loan payments or any other line of credit, will impact your credit score.  The more late payments, of any type, that is reported to the credit bureaus, the more impact it will have on your credit score.  Many times by the time you are considering a short sale, a home owner will have already have had some serious impact to their credit score.

There is one significant difference between a foreclosure and a short sale.  A foreclosure stays on your credit for 7 years.  While your credit score may improve over time with both a short sale and a foreclosure, the foreclosure will be reported as a foreclosure and when applying for a mortgage and some other lines of credit they do ask the question if you have ever been foreclosed upon.  A foreclosure may impact your ability to get future credit in the intermediate term.

So, yes, a short sale will effect your credit, how much depends on many factors.

The bigger question to ask yourself is do you have another alternative?  For many underwater home owners a short sale may be the best and only alternative to an imminent foreclosure.  And, while yes, a foreclosure effects your credit there are other advantages to a short sale that makes it a better solution to a foreclosure.  Here is a recent article I wrote, Considering a Short Sale.

In a nut shell, if you are facing a future foreclosure and you see no way to stay in your home or it is not financially practical to stay in your home, a Short Sale is probably your best option, irregardless of the impact on your credit score.

Other short sale articles:

Considering a Short Sale
How Does a Short Sale Effect My Credit
Tax Consequences of a Short Sale
Should I stay in My House During a Short Sale
The Deficiency Balance
When Should I consider a Short Sale?
Who Pays the Fees in a Short Sale?
Chasing the Loan Modification

This post was printed by Kevin Vitali of EXIT Group One Real Estate.  If you are struggling with your mortgage call Kevin at 978-360-0422.  Kevin can answere your questions and help you decide what route may be best for you and your family.

Help for Homeowners Struggling with Their Mortgage Payments
Free Seminar on HUD’s Emergency Homeowner’s Loan Program

HUD is offering a limited-time loan program for unemployed and underemployed homeowners who are struggling with their mortgage payments. HUD launched the Emergency Homeowners Loan Program to help unemployed homeowners at risk of foreclosure in 27 states – including Massachusetts.

A new federal home loan program – the Emergency Homeowner’s Loan Program – is available to homeowners who had at least a 15 % loss in income as a result of unemployment or underemployment.

The Emergency Homeowner’s Loan Program offers up to $50,000 in interest free forgivable loans to homeowners who are struggling to make their monthly mortgage payments. Under the program, homeowners can receive a one-time assistance to bring their delinquent mortgage current as well as monthly assistance to help them pay their monthly mortgage payments. The rescue plan will pay only a portion of a homeowner's monthly mortgage, including mortgage payments or past due charges, principal, interest, taxes, insurance and attorney fees.

Struggling homeowners can receive assistance for up to 2 years or up to $50,000 – whichever comes first. The Emergency Homeowner’s Loan is secured by a lien against the homeowner’s primary home. However, if the loan is paid on time every month, the loan is forgivable over a 5-year period.

In order to be eligible for the Emergency Homeowner’s Loan, homeowners must apply by July 22, 2011. You can find an application for the Emergency Homeowner’s Loan online on the Neighborhood Housing Services website at www.neighborhoodhousing.org.

Two area workshops hosted by Neighborhood Housing Services of the South Shore are available to help you learn more about the Emergency Homeowner’s Loan Program:

• 2 p.m. – 8 p.m., July 6, 2011 at the Massasoit Conference Center, located at 770 Crescent Street (Rte 27) in Brockton

• 8 p.m., July 11, 2011 at the Thomas Crane Public Library, located at 40 Washington Street in Quincy

For more information about the Emergency Homeowner’s Loan Program, contact Neighborhood Housing Services of the South Shore at (508) 587-0950.

Banks Helping Homeowners Avoid Foreclosure?

Homeowners with Option ARM mortgages (sometimes called ‘Pick-A-Payment’ or ‘Neg Am’ (short for negative amortization) Loans) are getting unexpected help from 2 large banks to help them avoid foreclosure – JPMortgage Chase and Bank of America.

JPMortgage Chase and Bank of America?

Stung by the federal government for not doing enough to help homeowners who are struggling with their mortgages, both JPMortgage Chase and Bank of America are quietly helping homeowners who are underwater on their Option ARM mortgages avoid foreclosure by modifying their loans – even if they are not in default or haven’t otherwise asked for it.

These big banks are providing help to those they feel are “at risk” of defaulting on their Option ARM mortgages by easing the terms of the mortgage. While the banks are not reducing the balances owed on the mortgages, they are using all other available means to help homeowners who are underwater avoid foreclosure – either by waiving prepayment penalties, by refinancing current mortgages into more stable fixed-rate mortgages, by lowering the interest rates, by postponing some of the balance owed, or by extending the term of the loan.

The banks are not reducing the balances owed on the mortgages as that would be unfair to those who are making their mortgage payments on time. It would also be impractical because so many mortgages are securitized into pools owned by investors.

The questions remain, however: Why are these particular homeowners - the ones with the Options ARM mortgages - getting mortgage relief – even if they haven’t asked for it – while so many others who have asked for help are not? And how many of those who did not get help wind up losing their homes to foreclosure?

If I was the lucky homeowner who received unsolicited help from the bank, I’d be elated. However, if I was the unlucky homeowner who had to constantly deal with different representatives from these banks every time I called, was told repeatedly that my documents were either ‘lost’ or never submitted, or worse yet - lost my home to foreclosure because the bank wouldn’t modify my mortgage loan, I’d be angry.

It seems to me that if the banks have time to deal with homeowners who have never asked for a mortgage modification, then they have time to deal with all of the others who have already requested it and submitted their document.

Original article source: Massachusetts Real Estate Blog

As a Realtor who has been heavily involved closing Massachusetts short sales over the last five years, one of the questions that I get asked quite often from home sellers is how long will it take before I will be able to buy a home again.

Of course what people really mean is how long before I will be able to get another mortgage.

The answer to this question does not have any clear cut and dry answer. There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale.

Going through either a short sale or a foreclosure has the potential to seriously impact ones credit.  Government entities Fannie Mae, Freddie Mac and FHA do not directly loan money to individuals but are the governing body that work with lenders to guarantee loans and free up money to provide mortgages.

Banks typically have the authority to lend to whoever they want but will generally follow the guidelines set forth by these entities. There are some lenders of course that will take greater risks with some borrowers than others.

In the link provided below the general guidelines that FHA, Fannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure are discussed.

See Getting a mortgage after short sale and foreclosure for a complete understanding of how your credit will be impacted, as well as the time period before a borrower will be able to get financing to purchase another home under these scenarios.

The credit impact of both short sales and foreclosures are explained in depth. There is also a comparison between FHA, Fannie Mae and Freddie Mac loans. There is a lot of misinformation online about the difference in credit impact between a short sale and foreclosure.

There are many that try to paint a picture that the credit impact of a short sale is far less damaging to ones credit when that is in fact not the case. The benefit in a short sale lies more in the fact that you may be able to get a mortgage quicker in the future. Credit scoring with missed payments is nearly identical when comparing short sales and foreclosures according to MY FICO.

___________________________________________________________________________________________________

About the Author: The above Real Estate information on Getting a mortgage after a short sale was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!

For Massachusetts Real Estate information see Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service Real Estate short sales in the following towns in and around Metrowest Massachusetts: Hopkinton, Milford, Upton, Bellingham, Southboro, Westboro, Ashland, Holliston, Mendon, Northboro, Shrewsbury, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Framingham, Natick and Douglas MA.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 25 years.

The Trend in Home Sales in Berkley MA - Improving, or...?

Home prices in Berkley on average are rising - but barely! Home prices are up just 0.3% since August of 2009.

The current average listing price of homes for sale in Berkley MA is $401,390, up 2.0% from a month ago. Compare this to the current median sales price of $272,850 - where half of sales are above this amount and half below it.

Below is a chart of the trend of median prices of homes for sale in Berkley MA over the past 5 years through August 2010:

Berkley Recently Sold Homes

The number of sales for all homes for sale in Berkley is unchanged from year ago levels:

Berkley Recently Sold Homes

So what does all this mean? Well, if you're looking for a home in Berkley, you better not wait too long. While sales overall are flat, prices of homes are beginning to rise.

You can still buy a home with no money down with a VA Loan or with a USDA Rural Development Home Loan. With the FHA Mortgage program, you can purchase a home with as little as 3.5% down. With a MassHousing loan, you can purchase a home with as little as 3.0% down. When you're ready to buy a home, find out how much house you can afford to buy in Berkley or in the surrounding area.

Be sure to contact me, Lew Corcoran, toll free at 1-800-941-5616, when you're looking to get pre-approved for a purchase of your next home in Berkley or in the surrounding area. Otherwise you may end up frustrated, disappointed and, unfortunately, perhaps misled.

Mortgage Rate Forecast for September 14, 2010 - Improving, or...?

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities (MBS) Are Doing Today:

• The price of the FNMA 30-Year 4.0% MBS coupon opened at 102.56 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.0% MBS coupon was trading at 102.75 - up 6/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage rates. I expect that mortgage rates will be as much as 0.125 points better in price this morning as compared to yesterday afternoon.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days from 8-15-2010 to 9-14-2010:

Economic Reports, News, and Events Affecting Mortgage Rates Today:

• Retail Sales Report - Consumers are still spending. Retail sales rose 0.4% in August, slightly better than expected, and follows a revised 0.3% increase in July and a 0.3% decrease in June. When auto sales are excluded, retail sales rose 0.6%. When auto and gasoline sales are excluded, retail sales rose 0.5%. Overall, retail sales are up 3.6% from this same time last year. The retail sales report measures consumer spending by tracking sales at retail establishments. This is one of the more important reports we see each month because consumer spending makes up two-thirds of the economy. The retail sales report shows that consumers are still spending, and provides comfort to retailers who are concerned about a possible double-dip recession. This report had no impact on the mortgage market or mortgage rates this morning.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past 5 years:

Mortgage Rate Forecast:

Mortgage rates are coming off their historic lows as the overall economic outlook is beginning to improve. Given the most recent economic and job reports, it now appears that mortgage rates are as low as they will ever go.

If you're thinking about refinancing your mortgage and if these low mortgage rates make sense to you, then take advantage of them while you can. If you're happy with the mortgage rate being offered to you today and if you don't want to risk mortgage rates moving higher, then you should apply and lock in now. It's better to have locked when you should have floated than it is to float when you should have locked.

Are you in need of a mortgage to purchase a home? Or want to refinance an existing mortgage into a lower permanent fixed rate? Or want to take cash out of the equity of your home? Or consolidate debt and reduce the monthly bills? Then be sure to request a mortgage rate quote today!

The Trend in Home Sales in Somerset MA - Improving, or...?

Home prices in Somerset on average are falling - but not by much! Home prices are down just 0.6% since July of 2009.

The current average listing price of homes for sale in Somerset MA is $302,066, down just 0.6% from a month ago. Compare this to the current median sales price of $223,000 - where half of sales are above this amount and half below it.

2 and 4 bedroom homes are selling for less than they were while 3 bedroom homes are selling for more. Prices of 2 bedroom homes are down 7.1% from year ago levels while prices of 4 bedroom homes are down 32.5%. However, prices of 3 bedroom homes are up 5.9% from a year ago. Below is a chart of the trend of median prices of homes for sale in Somerset MA over the past 5 years through July 2010:

Somerset Recently Sold Homes

The number of sales for all homes is down 56.9% from year ago levels:

Somerset Recently Sold Homes

So what does all this mean? Well, if you're looking for a home in Somerset, you can probably find a bargain in 2 and 4 bedroom homes as prices are down. Still, lowball offers won't cut it in a market like this.

But if you're looking for a 3 bedroom home, you better not mess around too much. While sales overall are falling, prices of these homes are climbing. Still, sellers aren't in control of the market either, so both buyers & sellers should be reasonable when negotiating.

You can still buy a home with no money down with a VA Loan. With the FHA Mortgage program, you can purchase a home with as little as 3.5% down. With a MassHousing loan, you can purchase a home with as little as 3.0% down. When you're ready to buy a home, find out how much house you can afford to buy in Somerset or in the surrounding area.

Be sure to contact me, Lew Corcoran, toll free at 1-800-941-5616, when you're looking to get pre-approved for a purchase of your next home in Somerset or in the surrounding area. Otherwise you may end up frustrated, disappointed and, unfortunately, perhaps misled.

How Do Mortgage Rates Affect the Purchase of a Home?

There are many factors which determine how much you can afford to purchase - things such as income, down payment, outstanding debt, credit scores, and mortgage interest rates.

Some of the determining factors in qualifying for a purchase of a home is income and debt. Lenders will, in part, use debt-to-income ratios to determine how much mortgage you can afford. Generally, most lenders will limit your "front end" or housing ratio to no more than 31% of your gross income. (For self-employed borrowers, that will be 31% of their net income.)

The housing ratio will include the monthly principal and interest payments, 1/12th of your annual property taxes and homeowner's insurance premiums, as well as any mortgage insurance premiums and/or homeowner's association dues. The greater income you have, the more house you can afford to purchase. 

The "back end" or total debt ration will include not only your housing payments, but other monthly debt obligations as well - obligations such as car loans, student loans, credit card payments, and so on. The more debt you have, the less house you can buy.

Another factor to consider is the term of the mortgage and the interest rate. Both the term of the mortgage as well as the interest rate will have an impact on your total monthly mortgage payment. The longer the term, the more house you can buy because your payments are stretched out over a longer period of time. And, the higher the interest rate, the less house you can purchase with a given income because you will have higher monthly mortgage payments.

To show you the impact mortgage rates have on how much house you can afford to buy, take a look at the following charts.

The first chart is the mortgage affordability chart. For this example, I used an annual income of $75,000, a front end housing ratio of 31%, and assumed that property taxes and homeowner's insurance premiums on a monthly basis consume 25% of the monthly housing payment.

The chart shows that for a 30 year fixed rate mortgage at 4.5%, you can afford a $286,790 mortgage. At 4.0%, you can afford a $304,373 mortgage. That's a $17,500 difference. But at 5.5%, you can only afford a $249,005 mortgage.

What does that mean for the purchase price? Assuming a 20% down payment, for a 30 year fixed rate mortgage at 4.5%, you can afford a home for a sales price of $358,488. At 4.0%, you can afford a home with a sales price of $380,467 mortgage. That's almost $22,000 more house you can buy. But at 5.5%, you can only afford to purchase a home for $311,256.

If mortgage rates rise, and if your income doesn't, you won't be able to afford to buy as much house as you can now. In the following chart, you can see the effects that interest rates have if your income remains the same.

In this example, I used a $300,000 mortgage and a $375,000 purchase price - again assuming a 20% down payment. At an interest rate of 4.5%, you need to earn only $78,454 annually. But if you wait until mortgage rates go up to 5.5%, then you will need to earn $87,916 annually. You will need a 12.1% raise in your income to be able to afford the same house at the higher rate.

The purpose of the charts isn't to show you how much home you can afford to buy based on a particular income, mortgage term and interest rate. Rather, these charts show you how much your buying power can be affected as mortgage rates change - either up or down.

If you're thinking about buying a home, now may be more advantageous to you than if you continue to wait. Why? Mortgage rates are at their lowest in more than 50 years. In addition, prices of homes have come down quite a bit in many areas over the past few years, thus making many homes much more affordable today.

Please contact me if you have any questions about the mortgage analysis.

The Trend in Home Sales in Middleboro MA - Improving, or...?

Home prices in Middleboro on average are falling! Home prices have fallen 13.5% since June of 2009.

The current average listing price of homes for sale in Middleboro MA is $300,352, down 1.4% from a month ago. Compare this to the current median sales price of $215,000 - where half of sales are above this amount and half below it.

Prices of 2 bedroom homes are up while prices of 3 and 4 bedroom homes are down. Prices of 2 bedroom homes are up 16.9% while prices of 3 bedroom homes are down 14.3% and 4 bedroom homes are down 20.0% from year ago levels. Below is a chart of the trend of median prices of homes for sale in Middleboro MA over the past year through June 2010:

Middleboro Recently Sold Homes

While cyclical, the number of sales for 2, 3 and 4 bedroom homes have been relatively flat over the past several years. However, sales of 2 and 3 bedroom homes have been increases over the past several months while sales of 4 bedroom homes have been declining:

Middleboro Recently Sold Homes

So what does all this mean? Well, if you're looking for a home in the town of Middleboro, you better not mess around too much. Overall, sales are relatively flat, and prices of homes have fallen in the past year. While sellers still aren't in control of this market, buyers should still be reasonable in their offers when negotiating.

You can still buy a home with no money down in Middleboro with a VA Loan or with a USDA Rural Development Home Loan. With a MassHousing loan, you can purchase a home with as little as 3.0% down. And, with the FHA Mortgage program, you can purchase a home with as little as 3.5% down.

Be sure to contact me, Lew Corcoran, toll free at 1-800-984-3341, when you're looking to get pre-approved for a purchase of your next home in Middleboro or in the surrounding area. Otherwise you may end up frustrated, disappointed and, unfortunately, perhaps misled.

Mortgage Rate Forecast for May 25, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 102.08 this morning - up 1/32 from yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 102.39 - up 10/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.25 points better in price this morning as compared to yesterday.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 4-25-2010 to 5-25-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Consumer Confidence Index (CCI) - consumer confidence for May rose 5.4 points to 63.3 - better than the 57.9 reading that was expected. The reading was 57.9 in April, 52.5 in March, and 46.4 in February. Posted by the Conference Board, this measures consumer willingness to spend. As a comparison, a reading of 80 or better is considered a signal of economic health. Retail sales typically move in tandem with consumer optimism. Because consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market traders and can have a significant influence on the mortgage market. If consumers are less confident in their personal financial situations, they are less likely to make large purchases. Despite the higher CCI readings, this report had no impact on mortgage rates this morning because of the ongoing debt crisis in Europe.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Prices of mortgage backed securities are at their highs of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed within 63 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 35 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.50% with 1 point yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.50% with 0.375 point today.

If I were applying for a mortgage today, I would lock the rate as mortgage rates are already at their lows for 2010, and they're probably as low as they're going to go. While it's possible that mortgage rates could go even lower with the ongoing economic crisis in Europe, it won't be by much, and I would not risk the chance waiting for it.

Be sure to check out today's mortgage rates.