Zuckerberg Lands Dream Mortgage Rate

Mortgage rates have been at record lows in recent weeks, but for Mark Zuckerberg, the founder and CEO of Facebook, mortgage rates have been even sweeter.

Like millions of Americans have done in recent years, Zuckerberg decided to refinance his mortgage. But according to Bloomberg, the rate he got was amazing low: just 1.05 percent.

How did he do it? And can non-moguls get a similar deal? The key to understanding why Zuckerberg got such a great deal on his mortgage is that he didn’t get a conventional fixed mortgage. Rather, he decided to refinance his $5.95 million loan on his Palo Alto, Calif., home with an adjustable-rate mortgage.

Adjustable-rate mortgages, or ARMs, got a lot of notoriety during the housing boom. With lower interest rates, ARMs helped many homebuyers afford high-priced homes, because they often offered low teaser rates for an initial period of time. But after that teaser rate went away, borrowers were stuck making higher monthly payments, which many blame for what eventually cracked the housing bubble.

Even so, the average ARM, which locks in rates for one year at a time, carries a rate of 2.7 percent. What helped Zuckerberg get an even lower rate was his willingness to accept monthly resets of his interest rate. That means his monthly payments could rise as soon as August.

Despite that theoretical risk, few people expect interest rates to rise anytime soon. The Federal Reserve has said that it plans to keep rates low at least for the next couple of years, and many analysts expect an even longer period of low rates.

That said, there’s not much downside to the Facebook founder even if the Fed raises rates. That’s because Zuckerberg has a huge reserve of wealth behind his loan. Unlike most homeowners, he can simply sell assets and pay off his mortgage loan if the interest rate on his loan suddenly skyrockets.

How the Rest of Us Should Play the ARMs Race

The trend that most homeowners have followed recently is to get rid of adjustable-rate mortgages in favor of fixed loans. With average rates on 15-year mortgages at 2.86 percent and 30-year mortgages fetching 3.56 percent, ordinary homeowners don’t get much benefit from taking on the risk of an adjustable-rate mortgage.

Despite Zuckerberg’s cheap rate, trying to follow in his footsteps isn’t a smart idea for most homeowners. Refinancing to a fixed-rate mortgage will help you lock in affordable, predictable payments no matter what happens to interest rates in the future.

Phoenix Residential Market Report ~ July 2012

Phoenix Residential Market Report

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. Currently, the residential real estate market is experiences another buying frenzy that is caused without government intervention or relaxed mortgage underwriting standards. The real estate market has reached a level of equilibrium where demand exceeds supply and all buyers are rushing into the market to take advantage of low prices.

Since January 2012 (6 months ago), the average sold price has increased approximately +21.6% (up from last month), the average days on market have decreased approximately -18.2% (down from last month) and the number of transaction has increased approximately +31.4% (up from last month). The largest average price increase over the last 12 months was experienced in March from $168,961 in February to $184,078 in March.

The volume of REO purchases since January 2012 has decreased approximately -31.4% and the volume of short sales have increased approximately +26.2%. The volume of REO purchases are shrinking due to the increased volume of trustee sales, more banks are accepting short sale transaction and an existing supply of inventory is getting purchased at a faster rate.

The current supply of homes for sale on the market is 19,387 where a year ago there were approximately 48,000 homes on the market. Since the January 2011 (6 months ago), the number of homes for sale on the market has decreased approximately -18.7% (down from last month). As more and more buyers enter the market and as more of the supply of residential homes are exhausted, real estate prices will continue to increase at a faster rate (as currently experiencing).

Trying to “time the market” for the perfect time to buy is nearly impossible but there is no better time than now to purchase. Real estate prices are at an all time low (not for long), mortgage rates are at a historical low and the market is improving both in terms of prices and the overall economy. Time to buy is NOW!! Give us a call to discuss your best buying strategy, TODAY!!

National Economic Update ~ Continues To Improve

The Federal Reserve reported last week that consumer credit expanded in May by 8 percent over April to a total of $2.57 trillion, marking a $17.12 billion gain, the largest in five months.

Encouraging news in the economic sector was the growth in revolving debt, such as credit cards, which jumped by 11.2 percent to $870.2 billion. This followed a 4.9 percent drop in April and only meager increases earlier this year. Many experts hope that an increase in credit card use will spur consumer spending and help fuel economic recovery.

Non-revolving debt, such as car and school loans, grew 6.5 percent, slightly down from April’s 9.6 percent pace, to $1.7 trillion.

Employment
The Employment and Training Administration reported last week that initial claims for unemployment insurance filed in the week ending July 7 dropped to 350,000, a decrease of 26,000 from the previous week’s revised figure of 376,000. The four-week moving average was 376,500, a decrease of 9,750 from the previous week’s revised average of 386,250.

The Administration also reported that the total number of insured unemployed Americans for the week ending June 30 dipped to 3.304 million, a decrease of 14,000 from the preceding week’s revised level of 3.318 million. The four-week moving average was 3,308,500, an increase of 1,250 from the preceding week’s revised average of 3,307,250.

Manufacturing and Trade
Turning to trade, the Census Bureau and Bureau of Economic Analysis jointly reported last week that total May exports of $183.1 billion and imports of $231.8 billion resulted in a goods and services deficit of $48.7 billion, down slightly from April’s revised deficit of $50.6 billion. May exports were $0.4 billion more than April exports of $182.7 billion. May imports were $1.6 billion less than April imports of $233.3 billion.

In May, the goods deficit decreased $1.6 billion from April to $63.5 billion, and the services surplus increased $0.3 billion from April to $14.8 billion. Exports of goods were virtually unchanged at $130.7 billion, and imports of goods decreased $1.6 billion to $194.3 billion. Exports of services increased $0.3 billion to $52.4 billion, and imports of services increased $0.1 billion to $37.5 billion.

On an annual basis, the goods and services deficit increased $1 billion from May 2011 to May 2012. Exports were up $7.4 billion, or 4.2 percent, and imports were up $8.4 billion, or 3.8 percent.

PositionRealty.com
Office: (480) 213-5251

Mortgage Fraud Cases Post 35% Decline

For two years in a row, the number of residential mortgage fraud cases have fallen, according to the LexisNexis Risk Solutions Mortgage Fraud Report. In fact, in its latest report, from 2010 to 2011, mortgage fraud cases dropped 35 percent.

Reseachers tracked the number of cases reported by financial institutions of mortgage fraud and misrepresentation by mortgage industry professionals. They say the decrease could be partially attributed to a drop in mortgage originations and sales of new and existing homes reflected in that time period. Also, they note that fewer mortgage fraud schemes seem to be occurring when buyers try to get a loan, such as with a buyer falsifying information on their loan application.

The mortgage fraud cases that seem to be more prevalent nowadays tend to center around the buying and selling of a foreclosure, the FBI reports. Also, cases where buyers and sellers collude in a home sale or purchase transaction are on the rise.

Mortgage fraud is far from a problem that is going away for the industry. While the number of cases decreased, reports of suspected mortgage fraud activity soared 31 percent last year, according to the Financial Crimes Enforcement Network. But researchers add that number may reflect an increase in recent investigations over loans made during the housing boom.

The states with the highest reported cases of mortgage fraud are Florida, Nevada, Arizona, Michigan, and Rhode Island, according to the LexisNexis study.

PositionRealty.com
Office: 480-213-5251

Phoenix Leads The Pack In The National Real Estate Recovery

The Phoenix metro housing market continues a strong rebound in 2012. Factors for the rebound? Diminishing supply of homes, fewer foreclosures, record low mortgage rates, out of town cash investors, pent up demand from buyers that have been waiting and the fact that the Valley of the Sun is a good place to live.

The Phoenix Business Journal reported on July 16 that the Phoenix metro area is among the leaders in the nation in price recovery for residential housing. For more information and the Phoenix Business Journal article dated: http://www.yourwestvalley.com/valleyandstate/article_073b4758-cf89-11e1-a55a-001a4bcf887a.html

As reported, “Economists say the upward trend in the Phoenix area may serve as a beacon of hope for other cities across the nation that suffered when the housing bubble burst.”

Meanwhile, buyers are witnessing multiple offers and bidding on homes above the list price.

PositionRealty.com
Office: (480) 213-5251

Commercial Due Diligence: How to Find the Stuff You Need

Due diligence is extremely important, regardless of the type of property you’re thinking of buying. In development property and land deals, buyers start the fact-gathering process with their first encounter with the property and it continues until they either bail out of the deal or go to settlement.

Here’s a list of sources of information (people, places & things) that are good starting points if you’re trying to research a property.

Sales & Ownership Data

Tax assessor information is available in several forms. For every piece of data, there is a primary source. The primary source is likeliest to be the most accurate and current source of information. For real estate documents that are recorded, such as deeds, liens, restrictive covenants, easements and subdivision plans, the primary source is the actual record of filings maintained by the applicable governmental department as well as the documents themselves and the recording information shown on them. These are usually kept at the courthouse for the county in which the property is located (Recorder of Deeds or Tax Assessment Dept.). People usually use title insurance companies who send searchers to the various courthouses to look up records. The deed contains the legal description of the property, which sets forth the property’s actual dimensions.

You can also search in free or fee-based databases that allow you to get information on properties nationwide or in a particular geographic area, such as: http://www.searchsystems.net; http://www.realquest.com; http://www.brbpub.com/pubrecsites.asp. These are great tools as long as you remember a couple of things. They should never be used as a substitute for hands-on research and inspection if you need results that are current and absolutely accurate. No database, even a governmental one, is a primary source of information. The governmental database, however, may be the next best thing to the primary source depending on the manner in which it was created and the frequency with which it is updated. When title companies insure property title, they do not rely exclusively on databases. They send people to where the records are maintained to physically search them. Real estate appraisers do not just use databases. They conduct additional due diligence and physically inspect the properties involved.

For several reasons, the farther you move away from the primary source of information, the greater the likelihood that the information may not be current and accurate. There is the time factor. The information has to pass from the primary source down the line through other people or organizations. In addition, there is the “garbage in, garbage out” principle. The integrity of any database, governmental or not, hangs on the thoroughness and competence of the people responsible for compiling and maintaining it. Databases can save you a tremendous amount of time and effort. You can use them most effectively as screening tools and to gather information subject to confirmation and further research if the situation or property warrants it. In addition, they are invaluable in identifying contacts if you need additional details or clarification.

If you want to find out who owns the property but don’t know the address, one way to be able to identify the property is to go to the municipal building and look at the tax maps or tax plats of properties in the municipality. By process of elimination, you should be able to identify the property (thus giving you the owner name, address, parcel identifying number). It’s a good idea to take a copy of the tax map with you when you return to the property since this will help you to pinpoint its location by counting parcels on the map from intersecting streets or other landmarks, particularly if the property is vacant land. Again, be aware that some of the information in the database or on the tax maps may not be accurate, particularly the size & shape of parcel, zoning classification, and whether the property’s serviced by public utilities.

New Construction Communities

If you want to find out who is or will be building in an area, take one municipality at a time and get the list of approved subdivisions and land developments from the municipality (manager’s office, code enforcement or land development offices). Then you can visit the new construction sites, talk with the site agents and get brochures. If the jobs haven’t started yet, you can go to the builders’ websites for preview information.

Municipal Records

You can identify properties that have applied for rezoning or subdivision & land development approval by requesting a list from the municipality of the properties. After you decide which properties you want to investigate further, make an appointment to review the development files and plans at the municipal office. This is public information, and anyone is entitled to review materials relating to actions taken by a municipality in public meetings and hearings. This can be an excellent source of information on owners who may be thinking of selling their properties.

Utility Maps

Checking the street for manhole covers and hydrants won’t necessarily give you correct information about whether a property can be serviced by public water and sewer. Instead, consult the mapping available through the municipal or regional sewer & water authorities, county or regional planning commission and private water companies.

Zoning

Each municipality adopts a zoning ordinance and zoning map for the properties within its borders. This material is available for review or purchase at the municipal office or through private vendors. Always make sure you’re looking at the most current ordinance and map since these are amended periodically. In addition, read the whole ordinance and not just the section on the particular zoning classification because the ordinance contains provisions that apply across the board on issues like definitions of terms used, accessory uses & structures, signage, and minimum frontage requirements.

The zoning officer (a/k/a code enforcement officer) at the municipality is the one to whom you should direct your questions about the zoning ordinance or map or if you want to find out anything about a property that may have happened in the past, like granting of variances, special exceptions or conditional uses.

Proposed Highways & Facilities

Depending on the nature (federal, state, local), you can access information through the municipality, county/regional planning commission, municipal comprehensive or “master plan” and federal or state agencies.

Profile Data of Area or Municipality

Municipalities and county or regional land planning agencies prepare comprehensive or master plans as a primary tool for their land planning. These plans contain a wealth of information pulled from various sources including US Census Bureau, Dept. of Labor, US Dept. of Agriculture soil surveys, FEMA floodplain mapping. In addition, you’ll find data about natural resources, statistical data on housing stock and non-residential developments, existing and proposed roads, transportation facilities, utilities, plants, commercial operations, hospitals and schools. Be sure to check out the proposed land use map and accompanying text. Here you might find clues for future growth areas and even potential for successfully rezoning particular properties. The master plans are available at either the municipal office or the county/regional planning agency.

Floodplain Maps

To determine if the property is in an area subject to flooding, consult floodplain maps. These are available through either the municipality, county/regional land planning agencies, or FEMA (http://www.fema.gov).

Expired Listings Get a New Life

The big drop in inventories of homes for-sale in Scottsdale and Phoenix is helping once-expired listings finally get sold. Sellers are finding re-listing their properties may offer them more luck now than a few months ago, real estate professionals report.

Nationwide inventories of single-family homes, condos, townhouses, and co-ops has fallen about 20 percent in the last year, according to Realtor.com. Inventories are at some of their lowest levels ever observed. Meanwhile, more buyers are coming off the sidelines, wanting to take advantage of record low mortgage rates and low prices, but are finding fewer properties to choose from.

As such, some real estate agents are soliciting once-expired listings to convince sellers that they can give them a successful second chance at making a sale. For example, in Phoenix, one broker, who realized the value of expired listings, offered 25 iPads to her real estate agents who brought expired listings from competitors.

“Think about this … every single listing is now twice as prominent and important as it would have been back in the day of 100,000 available listings,”. “Each listing today is worth two listings two years ago.”

Many real estate professionals take a listing for 90 days and if it doesn’t sell, then it expires. Several MLSs require that expired listings stay off the market for at least 90 days to prevent agents from continually relisting properties and hiding the actual accumulated days on the market, reports RISMedia.

Some agents report that they’ve had some luck at taking an expired listings and then selling them within five days of coming back as a new listing. But others caution it’s not as easy as just relisting the property. Many of these expired listings may need to address possible flaws that may have held them back in the first place — such as not priced right for the market or not in the right condition — before they return to the market, if they hope for a better outcome.

PositionRealty.com
Office: 480-213-5251

More Borrowers See Mortgage Payoff Possible

More borrowers are shortening their mortgage terms, and are considering paying off their mortgage a possible feat. Record low interest rates has allowed more borrowers to refinance their loans from 30 years to 15- or 20-year terms.

A recent Freddie Mac report shows that 31 percent of recent refinancers shortened their loan terms, which is the second highest level since 2002.

“Historically low rates and an average three-quarters of a percentage point difference between 30- and 15-year mortgage fixed-rate mortgages are important drivers for moving to a shorter term,” Frank Nothaft, Freddie Mac’s chief economist, told The New York Times.

Fifteen-year fixed-rate mortgages reached a new record low last week, averaging 2.97 percent, according to Freddie Mac’s weekly mortgage market survey. The 30-year fixed-rate mortgage also reached a new record low last week, averaging 3.75 percent.

People are paying off their mortgages at a faster rate because they feel the real estate market is improving and real estate prices are increasing once again. Before no one wanted to pay down their mortgage when every month they were losing equity.

PositionRealty.com

Low Appraisals Continue To Cause Transaction To Fall Through

Phoenix Home appraisals coming in for lower than the agreed upon selling price of a home is making it difficult for some home buyers to take advantage of the market.

About one-third of real estate professionals say low appraisals have caused a transaction to fall through, be delayed, or have to be re-negotiated, according to National Association of REALTORS® housing data from April.

The main culprit for the disconnect? Many housing experts blame it on appraisers continued use of distressed sales as comparables when conducting valuations.

The low appraisals have caused many borrowers to stay “in a holding pattern for extended periods” because it’s difficult to find comparable sales to support the appraisal value.

Ron Phipps, NAR’s immediate past-president and real estate broker in Warwick, R.I., told The Wall Street Journal that about half of his home sales have had appraisal problems.

To help counter low appraisals, appraisers say it’s perfectly acceptable for borrowers to point out home improvements to an appraiser during the inspection process and to provide comparable sales to justify what they think the valuation should be.

In cases of seemingly lowball appraisals, borrowers can also request an appraisal review from their lender. Some lenders may even grant a request for a second appraisal to be completed if the first one can be shown to be inaccurate based on comparable sales.

In the Phoenix real estate market, values are starting to increase but appraiser continue to be conservative in their valuation by using older sales comparable or using distressed foreclosure sales. This is making transaction fall apart when the property is valued at a higher price than stated by the appraiser. The market is in a transition phase and will take a few months before appraisers start to be less conservative on their valuations.