I just wanted to put this article out there for everybody. There are still programs to help underwater homeowners. Read and let me know what you think!

California’s Principal Reduction Program Expands Its Reach

The Principal Reduction Program that functions under the Keep Your Home California program experienced a 47 percent increase in participation from the fourth quarter of 2011 to the fourth quarter of 2012, according to the Treasury.

Treasury attributes this jump in the program’s reach to recent changes that allow Keep Your Home California to finance principal reductions in their entirety rather than offering a dollar-for-dollar match to participating servicers.

Under the revised approach, about 60 mortgage servicers have opted to participate in the program, including Bank of America, JPMorgan Chase, and Wells Fargo, according to Treasury.

The Principal Reduction Program is an integral part of the Keep Your Home California program, which debuted in February 2011 and is funded through Treasury’s Hardest Hit Fund.

“By curbing mortgage debt and lowering monthly payments, homeowners are able to stay in their homes and breathe a bit easier,” Treasury stated last week.

In fact, according to Treasury, “one of the best ways to help financially strapped, underwater homeowners may be through a mortgage loan principal reduction.”

About 30 percent of California homeowners are underwater on their mortgages, according to Treasury. Eligible underwater homeowners facing financial hardships may apply for principal reductions and have their loan-to-value ratios reduced to between 105 percent and 140 percent.

On average, the Principal Reduction Program in California has reduced participating homeowners’ monthly payments from about $320,000 to about $223,000.

Thus far, about 1,000 homeowners have been assisted through the Principal Reduction Program, and about 25,000 homeowners have received assistance through the broader Keep Your Home California set of programs.

Aside from principal reductions, Keep Your Home California helps struggling homeowners in three ways. Homeowners who have lost their jobs may apply to have their monthly mortgage payments paid on their behalf for up to nine months in amounts not to exceed $3,000 per month.

Homeowners who have suffered financial hardship and fallen behind on payments can apply for financial aid to help cover missed payments and bring them current on their loans.

Lastly, homeowners who agree to a short sale or deed-in-lieu may receive assistance with their transitions to their new living arrangements.

In total, $2 billion of the total $7.6 billion allotted to the Hardest Hit Fund has been designated to the state of California. The Golden State is one of 18 states to receive funding from the federal program.

Are you dying to go on a dream vacation or get behind the wheel of a new car, but your monthly mortgage payments are holding you back?

Good news: There are some smart ways you can pay off your mortgage faster and get closer to financial freedom.

Keep reading to learn more…

Refinance to a 15-Year Mortgage Term

It’s pretty common for people to initially sign a traditional 30-year mortgage, meaning you have 30 years to pay back the amount owed.

However, if you can afford higher monthly payments, then you’ll want to seriously consider refinancing to a shorter term loan, which generally has a lower interest rate, according to the Federal Reserve‘s mortgage refinancing guide, published on their website.

What’s more, with a 15-year loan, “you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month,” the Federal Reserve adds.

Here’s an example, courtesy of the Federal Reserve, to help prove out this point:

As you can see, with a shorter-term loan, you’ll pay off your mortgage faster, and save a ton of money in interest. That’s a win-win situation, right?

[Ready to switch to a short-term mortgage? Click to compare rates from multiple lenders now.]

Make Extra Payments, When Possible

Did you receive a raise or fall into some unexpected extra cash? Well, instead of spending it right away, consider making an extra mortgage payment or simply increasing the amount you typically pay.

Just consider this advice from the website of Massachusetts’s Office of Consumer Affairs & Business Regulation:

“If you are unable to send a full extra monthly payment at one time, increase the monthly payment you are sending. To achieve the greatest benefit, the increase should be at least 1/12th of a normal monthly principal and interest payment.”

And even if you can’t do this every month, every little bit can help if you’re smart about it, says Mitchell D. Weiss, an adjunct professor of finance at University of Hartford‘s Barney School of Business.

“When you pay more than your loan requires, and when you designate extra payments to be applied against the principal balance of your loan, you end up reducing that balance at an accelerated rate,” he says.

Weiss emphasizes that the key is to direct whatever extra payments you make to be applied against the principal, or the total amount borrowed.

“Don’t let the bank apply them against future payments or you’ll be giving them the gift of interest they haven’t yet earned,” he adds.

Protest Your Property Taxes and Examine Your Insurance

“Your monthly mortgage payment includes four things: your principal, interest, property taxes, and insurance – which is collectively called your PITI,” says Paula Pant, founder of AffordAnything.com, a money management website.

Most people tend to focus on the principal and interest when they’re looking to pay down their mortgage faster, says Pant. The amount you pay in property taxes and insurance, however, is often overlooked and this could be a big mistake.

Why? Because “if your property tax rate was set during the heady boom days of 2007, you might be paying taxes based on an assessment that’s no longer valid,” Pant says.

For that reason, “it’s worth it to protest the assessment with your county to see if your rate should be re-adjusted to reflect today’s lower home values,” adds Pant.

However, this does not mean you need an appraisal. In fact, Pant says that is one of the most common misunderstandings about how property taxes are charged.

Instead, you should have an assessment done by the county, as they’re the ones that determine your tax rate, she says. To get the process started, call your local county line or send them an email with your intentions.

If your property taxes are lowered after the assessment, you can continue to make the same monthly payment, and more of your money will be applied towards the principal and interest, which will help you pay down that loan much faster, says Pant.

And as Pant mentioned earlier, you’ll also want to review your home insurance.

“Re-investigate your insurance,” says Pant. “If you opt for a higher deductible, you could get a lower premium, which will result in a lower monthly mortgage payment.”

Similar to decreasing the amount you pay in taxes, this money will go directly toward the principal and interest, which…you guessed it: speeds up how long it’ll take to pay back your loan.

Source: Yahoo Homes

First-time home buyers are playing a larger role in the housing market, but they’re finding big changes.

Thirty-nine percent of home sales nationwide were from first-time home buyers during the 12-month period ending June 2012, according to the National Association of REALTORS®. That’s up from 37 percent a year earlier.

But while first-time home buyers once had a huge inventory of homes to choose from, now they’re finding tightened supplies and steeper competition for what’s left.

Housing inventories are hovering at record lows in many markets, limiting supply. First-time home buyers face increased competition from investors, who are often trying to snatch up the same bargain-priced housing deals. Investors often make all-cash offers, too, which makes it difficult for buyers requiring financing to compete against them. Also, banks have tightened up their underwriting standards, creating more hoops in just qualifying for financing.

It’s not easy to be a first-time home buyer, some say. But first-time home buyers are critical to a healthy housing market. They allow existing home owners to sell and trade up into larger homes.

To respond to the changing housing market, first-time home buyers may need to broaden their search and be more “flexible and compromise,” says Chip Rowand, a Broward County, Fla., real estate professional.

Also, first-timers shouldn’t automatically settle for a Federal Housing Administration mortgage due to the low down payment requirements (usually 3.5 percent of the purchase price). The FHA can have several restrictions that makes some sellers prefer buyers who offer cash or who are using conventional loans, says Stephen B. McWilliam, president of Greater Fort Lauderdale (Fla.) REALTORS®. Some conventional loans require just 5 percent down and so may serve as an option for first-timers.

First-timers also need to be able to act fast and be able to have their financing processed quickly if they are going to stay competitive. Some banks won’t sign off on mortgages for eight to 12 weeks. But some sellers won’t wait that long. Some housing experts suggest first-timers look into working with a community bank or local mortgage banker, which often don’t have as long a wait.

Source:Realtor mag

Consumers’ online experiences are increasingly influencing their homebuying activity offline, according to a joint study from search giant Google and the National Association of Realtors.

The report, “The Digital House Hunt: Consumer and Market Trends in Real Estate,” includes custom research from NAR’s 2012 Profile of Home Buyers and Sellers as well as internal Google data and research conducted by Google and third-party marketing firm Compete.

Real estate-related searches on Google.com rose 253 percent over the past four years and 22 percent on annual basis in the third quarter, according to internal Google data. Of the latter, about one-fifth of such searches occurred on mobile devices — a 120 percent year-over-year increase.

Nine out of 10 house hunters searched online during the homebuying process with 52 percent choosing that as their first step in the process, the report said. Those who used search engines were 9 percent more likely to take an action on a real estate brand website than those who did not search and those who searched performed an average of 11 searches prior to taking an action, the report said.

Google and Compete tracked the behavior of users who completed a specific desired “conversion activity” at a real estate website during second-quarter 2011 and second-quarter 2012.

These activities included registering to buy or sell a home, sharing a listing, submitting a lead form, using a mortgage calculator, viewing a contact phone number, or viewing directions to a home or agent office. Google and Compete backtracked 90 days from the time a user completed one of these actions to uncover behavior patterns that lead to the activity.

In 2011, the companies tracked behavior for home shoppers in general. In 2012, they tracked new-home shoppers specifically. The real estate websites considered included brokerage websites and listing aggregators.

The report’s findings included insights on how house hunters are using online search, mobile devices, and video more and more in their homebuying endeavors.

“Increasingly, online technologies are driving offline behaviors, and homebuying is no exception,” said Patrick Grandinetti, Google’s head of real estate, in a statement.

“With 90 percent of homebuyers searching online during their homebuying process, the real estate industry is smart to target these people where they look for and consume information — for example, through paid search, relevant websites, video environments, and mobile applications.”

Nearly 7 out of 10 home shoppers who took action on a real estate brand website began their research with a local term on a search engine, i.e., “Houston homes for sale,” the report said, and 52 percent of those who took action on a real estate brand site came directly from a local search on a search engine.

New-home shoppers were most likely to use a mobile search engine at the beginning of their search process, use general news websites and maps in the middle, and use mobile applications throughout the process.

Source: Yahoo Homes

A tax break for forgiven mortgage debt that was set to expire Dec. 31 was extended by lawmakers when they dodged the “fiscal cliff” this week.

The tax break, which has been extended to the end of 2013, allows home owners facing short sales, reduced loan principals, or foreclosures to avoid paying taxes on any debt still owed to the bank. Otherwise, the debt would have been taxed by the IRS as income.

The tax break first took effect in 2007.

Home owners had rushed to complete short sales before the end of the year out of fear that the tax break would not be extended.

In Florida, short sales have sold on average for about $103,000 less than what the home owner owed. As such, a typical home seller in that state in, say, the 25 percent tax bracket who completed a short sale in 2013 would have been faced with a $25,725 tax bill if the extension had expired.

Source:DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 04, 2013

Home owners are desiring bigger spaces again, following five years of downsizing trends.

Average sizes of newly built homes increased 3.7 percent last year over 2010, according to U.S. Census Bureau data. That marked the first increase since 2007. And builders are reporting higher demand for larger homes this year.

A recent survey by PulteGroup showed that 84 percent of home owners between the ages of 18-59 have no intentions of downsizing, even among Baby Boomers.

“There appears to be a renewed sense of optimism in housing,” says Deborah Meyer, PulteGroup’s chief marketing officer. “Homebuyers, regardless of their stage of life, still want and need larger homes. Consistent with our consumer research, the survey results show that today’s buyers are equally focused on more efficient use of the spaces within their homes.”

The need for more space may be coming from the growing number of people living under one roof, as multi-generations move in together.

A recent survey by the American Institute of Architects shows a higher demand for multi-generational housing. The survey also showed more home owners upsizing their current homes.

Fifty-eight percent of architects reported higher interest in additions and remodels, which is up from 35 percent one year ago. Kitchen and baths topped the list.

While the desire for larger homes bodes well for home builders, “they may also add optimism to the upper end of the market, and all those so-called “McMansions”—generally considered in the 3,000- to 5,000-square-foot range—many of which lost significant value during the housing crash,” reports CNBC’s Diana Olick.

Source: Realtormag.com

Fixed-rate mortgages continue to hover near their record lows, keeping home buyer affordability high, Freddie Mac reports in its latest weekly mortgage market survey.

“Mortgage rates were little changed and near record lows this week amid indicators of stronger economic growth and signs of tame inflation,” says Frank Nothaft, Freddie Mac’s chief economist.

The following are national averages on mortgage rates for the week ending Dec. 6, according to Freddie Mac.

• 30-year fixed-rate mortgages: averaged 3.34 percent, with an average 0.7 point, rising from last week’s 3.32 percent average. The record low for 30-year rates was set last month, averaging 3.31 percent. A year ago, 30-year rates averaged 3.99 percent.
• 15-year fixed-rate mortgages: averaged 2.67 percent, with an average 0.6 point, rising from last week’s 2.64 percent average. The record low for 15-year rates was also set last month, averaging 2.63 percent. Last year at this time, 15-year rates averaged 3.27 percent.
• 5-year adjustable-rate mortgages: averaged 2.69 percent, with an average 0.6 point, dropping from last week’s 2.72 percent average. A year ago, 5-year ARMs averaged 2.93 percent.
• 1-year ARMs: averaged 2.55 percent, with an average 0.4 point, dropping from last week’s 2.56 percent average. A year ago, 1-year ARMs averaged 2.80 percent.

Source:Realtormag.com

Developers are hoping that a new FHA change that is more friendly toward allowing mixed-use developments will help to revive condo sales, The New York Times reports.

In September, the FHA approved a rule change that permits government-insured mortgages for condos in mixed-use buildings containing commercial of up to 35 percent. That’s up from a previous 25 percent limit. But the FHA says it may even be willing to grant exceptions to projects that have as much as half of their space designated as commercial.

“The new FHA ruling strengthens the attractiveness of condos as an option, because it increases the field of potential condo buyers,” Katharine Kelly, director of such a development in Atlanta, told The New York Times. The FHA insures mortgages and offers programs for first-time home buyers, which include low down payment requirements such as of 3.5 percent.

The move has been viewed by some in the industry as a big step in helping to spread the development of mixed-use developments that both younger and older buyers have shown recent preferences for.

“We’ve learned that this mixing of development makes for a better urban design, so towns and cities are designing codes to encourage it, and the market is showing interest,” says John K. McIlwain, a senior resident fellow at the Urban Land Institute. “We’re going to see a lot more mixed use, whether it’s in the urban central city or suburban town centers.”

Also among some of its recent changes effective this September, the FHA has recently increased the number of units that investors can own in a development to 50 percent — that’s compared to 10 percent previously. However, the rest of the building must be owner-occupied.

Source-Realtormag.com

Fixed-rate mortgages dropped to new all-time lows this week, pushing homebuyer affordability even higher for those who can qualify.

“Fixed mortgage rates eased this week to record lows on indicators of higher consumer confidence and wholesale prices,” Frank Nothaft, Freddie Mac’s chief economist says.

The following are the national averages with mortgage rates reported by Freddie Mac for the week ending Nov. 15:

• 30-year fixed-rate mortgages: averaged a new low of 3.34 percent, with an average 0.7 point. The previous record low was 3.36 percent, set the week of Oct. 4. A year ago, 30-year rates averaged 4 percent.
• 15-year fixed-rate mortgages: averaged a new low of 2.65 percent, with an average 0.7 point. Its previous record low was 2.66 percent, set during the week ending Oct. 18. A year ago, 15-year rates averaged 3.31 percent.
• 5-year adjustable-rate mortgages: averaged 2.74 percent, with an average 0.6 point, rising slightly from last week’s 2.73 percent average. Last year at this time, 5-year ARMs averaged 2.97 percent.
• 1-year ARMs: averaged 2.55 percent, with an average 0.3 point, dropping from last week’s 2.59 percent average. A year ago, 1-year ARMs averaged 2.98 percent.

Source- Freddie Mac