As we mentioned back in December, NAR’s very own Realtors Confidence Index showed that 39% of recent buyers purchased a home with a Federal Housing Administration-insured loan. FHA Loans play a vital role in the housing market at the moment.

FHA financing provides affordable mortgage financing to homeowners, particularly first time homebuyers. With Condo’s as we recently wrote about there will be some changes coming in the new year which could change the dynamics of condo sales financed using FHA insured loans. However something which has been rumored over the last few weeks with regards to changes has been announced. Realty Times says that “FHA is tightening up its standards for home buyers – but the changes are not as tough as some analysts had feared – especially on downpayments.”

They have made an increase in the “upfront” mortgage insurance premium charged all borrowers. Under the new plan, which will take effect shortly, FHA applicants will be charged a higher entry fee on insurance: An upfront premium of two and a quarter percent (2.25%) of the loan amount, instead of the current one and three quarters (1.75%)percent premium. But there will be no immediate increase to FHA’s current annual insurance premiums of zero point fifty five percent (0.55).

Also, applicants with FICO credit scores below 580 will now have to make downpayments of at least 10 percent, up from three and a half percent currently. But most lenders who offer FHA insurance mortgages already require a minimum score of 620.

Thankfully the minimum downpayment level of 3.5% remains. But seller concessions of 6% have been slashed in half to 3%.

It is hoped that as the economic recovery and housing recovery continue that restrictions can be relaxed further.

With prices being at their lowest for years in some parts of the region and FHA financing remaining an excellent opportunity for buyers, now really is the best time to buy a property in Ann Arbor.

Click here to search Ann Arbor Real Estate using our complimentary Ann Arbor Real Estate MLS Search service. Alternatively please contact Kathy Toth and the team if you need more specific assistance in your Ann Arbor Real Estate needs.

www.KathyToth.com
Keller Williams Realty

When applying for a mortgage it can be quite daunting, particularly with a lot of the changes in the last couple of years.

With rates so low the number of applications is on the rise and the documentation requirements becoming more laborious it is no wonder there is confusion!

However, when it comes to securing a loan in the present market, DOCUMENTATION & PREPARATION IS KEY! Flooding lenders with the right paperwork really helps increase your chances of getting that loan!

Lenders want more paperwork than ever so make sure you do your best to prepare a great pack of financial’s to “Sell yourself” to a lender, showing them you are not a credit risk.

Also, doing a bit of background research on the loan products on offer is a great idea. Borrowers tend to simply look at the Annual Percentage Rate (APR) and don’t consider all the necessary facts to make the best choice. So dig deeper! Look at total closing costs, any additional fees on top of discount points as well as the flexibility of the mortgage product.

Work with a broker who understands your needs and who wants to work with you – with a great broker, a great real estate agent and a pack of prepared documentation you have the best chances of getting a great loan and making it work.

Click here to search Ann Arbor Real Estate using our complimentary Ann Arbor Real Estate MLS Search service. Alternatively please contact Kathy Toth and the team if you need more specific assistance in your Ann Arbor Real Estate needs.

www.KathyToth.com

Keller Williams Realty

Federal Reserve released their Beige Book. It’s their report based on observations and comments from business insiders on the state of the economy.

Regarding comments in the report for Real Estate and Construction citing real estate market remains weak, agents in the New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco Districts reported an increase in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market……

1. It’s no surprise that declining house prices are improving home sales. There are so many steals to be had, this is fueling our market.
2. Tax credits for first time home buyers expire December 1, 2009. If you are a first time buyer and haven’t at least started thinking about buying a home or at least talking to a lender about getting preapproved and starting to look for a house. We are seeing many of these buyers writing offers.
3. Interest rates are cited as one of the factors that are encouraging residential sales during this period. What will be a very telling is what effect the bump in interest rates will have on purchases. First time home buyers won’t be affected as much as the trade up buyers looking at moving up who might find it more expensive if the rates rise.

The average sale price of single-family homes for the area was up more than 8 percent over May of 2008, according to the Ann Arbor Area Board of Realtors®. The average home in Washtenaw County sold for $236,897 in May, compared to $217,849 in the same time period last year.

It was an improvement from April when the average sale price was $145,611 vs.$222,798 in April 2008. Trends are more important than a slight blip. I have posted the Housing Trends for Ann Arbor Real Estate Market and will be posting those for some of the other areas in Washtenaw County.

Consumers can buy homes listed by banks, for-sale-by-owner and government departments, like HUD. So inventory may actually be up – in the most distressed markets of the country where shadow inventory isn’t represented by REALTORS®. Fannie Mae and Freddie Mac, among the biggest owners of foreclosed homes, typically have only about 35% to 50% of those homes listed for sale at any given time, according to industry estimates.” How many is that? If Fannie Mae only has 1000 foreclosed homes, then 350-500 of them on the market isn’t a problem, is it? Unless the Government Sponsored Entities actually own a million foreclosed homes, which means the real fun hasn’t even started, with or without improvements in listed inventory. So here is my table for absorption for several key areas in the Washtenaw County Real Estate Market that I track.

1.    Months supply decreased for Dexter, Chelsea and Saline while Ann Arbor months supply increased slightly.  Without actual sales data, or sold pricing trends, inventory data is pretty much meaningless. It’s like saying that because there are less Michigan cherries at the grocer’s today, things are improving in the cherry business, when in fact, the reason there are less cherries today is that they were all rotten yesterday. The grocer threw them out to reduce his inventory; he didn’t sell them. So without analyzing sold data, the decreases in inventory may have come from homes leaving the market un-sold. Now I want to bake a cherry pie. Do you want a slice?

Financing options for site condos are limited thanks to quirks in state and federal law that are preventing the use of Federal Housing Administration funding in unfinished housing developments that were subdivided as “site condos,” lenders, Realtors and builders say.

What is a site condo?

Site condos are single-family housing developments subdivided under the Michigan Condominium Act of 1978, allowing for a quicker division of land than the older Michigan Plat Act. Site condos are divided into “units” instead of separate lots, and each buyer owns a share of the project’s common areas.

FHA has become one of the most important sources of financing in recent months as buyers take advantage of relatively high loan-to-value ratios and low down-payment requirements.

However, occupancy requirements set by the FHA mean those benefits are not available in projects with land splits done under the Michigan Condominium Act.

In order to qualify for FHA loan guarantees, the development must be 90 percent sold and 51 percent owner-occupied. But that applies to total units, not just homes that have been built. So in a 100-unit project, 90 units must be built and occupied before FHA financing is available. Also the homeowners association has to have been in control for at least 12 months.

FHA loan limits were recently raised, which would allow them on many more subdivisions if not for the occupancy requirements. An example of a site condo in the area is include Peters Building’s Copper Meadows in Dexter Township.

One recent buyer in a Peters subdivision had to scramble after finding out FHA wasn’t available, said assistant Keller Williams broker Kathy Toth. Jennifer Marshall, a client care manager in Toth’s office, said the buyer used a different loan product that didn’t have terms that were as good. “If you don’t have the money to put down, if somebody can’t get FHA they may not qualify for another loan,” Marshall said.

Many buyers are not aware that the single-family home they’re interested in is actually classified as a condominium. What makes it particularly troublesome for Michigan is that it is the only state that uses the term ’site condo.’”

The Housing and Urban Development rule on FHA loans and condos dates back to 1996. HUD is considering changing its rules on site condos to accommodate the situation in Michigan, sources said.

Subscribe to our RSS feed to keep up to date on our local real estate news in Ann Arbor, Michigan. Or follow us on Twitter for more regular updates.

Click here to search Ann Arbor Real Estate using our complimentary MLS Search service. Alternatively please contact Kathy Toth and the team if you need more specific assistance in your Ann Arbor Real Estate needs.

Home Buyer Seminar Pre Approval April 22, 6:30 pm 355 S Zeeb Ann Arbor, MI 48103

 Some inventory got gobbled up but there’s a new wrinkle in the home sales market! 

Interest in the Ann Arbor Home buying market for April 2008 is up but a new problem is putting the brakes on buying a home: FINANCING!   

Indications are that mortgage companies are taking longer to finance or are refusing to finance loans.  So some homes that go under contract are taking longer to close or don’t close because of financing issues. 

For months now, we’ve been watching mortgage companies tighten requirements to get a loan. Now we’re seeing hard proof that even lower interest rates won’t help buyers if the mortgage companies won’t grant those potential buyers home loans. The problem stems from several years of home loans being granted to people who did not have the credit history to support those loans.

 With so many home loans ending up in foreclosure and the government cracking down on mortgage companies who made those loans, home buyers in 2008 are paying the price for the past mistakes of the mortgage industry.  

I recently had to scramble to provide extra comparable information to an appraiser to help a home appraise to no avail. So we had to renegotiate. 

The number of homes sold March 2008 compared to March 2007 is still down. As of today homes for sale in various school areas are: 

Chelsea:  210, Dexter: 266,  Ann Arbor: 806, Ypsilanti: 344, Saline: 277 

With the potential of another drop in interest rates coming and a positive feeling in the Ann Arbor Real Estate housing market, Ann Arbor may end up leading the State of Michigan in home sales recovery. 

 Now all we need are lenders to loosen lending guidelines so that people who are legitimately qualified to get a loan can buy a home.  Join us to get pre approved at our Home Buyer Seminar April 22 at 6:30 pm to talk to United Bank and Trust at 355 S. Zeeb  Ann Arbor, MI 48103  You can RSVP 734-845-6542. 

Click here to search all listings in Michigan with pictures and tours – FREE!

Kathy Toth and Team www.KathyToth.com Keller Williams Realty