THE BUZZ

Although the overall trends are positive, Lawrence Yun, NAR’s chief economist, concedes that contract failures remain a problem. As much as one-third of all escrows are affected by contract delays or failures because of appraisal discrepancies and loan contingencies. But Yun says that home buyers are not giving up, saying that many buyers successfully complete the sale after a contract delay, while others stay in the market after a contract failure and make another offer.

“Housing affordability conditions are too good to pass up,” he said. “Our hope is lending conditions will gradually improve with sustained increases in closed existing-home sales.” If you are considering buying, I suggest we meet and talk about the best way to assure your loan will go through smoothly. Working with top professionals has never been more important.

JUST ASK CAROLYN

Q: Can you help me with real estate in other areas of the state or country?

A: Absolutely. I work closely with agents from all over. It does not have to be local or just in our state. The benefit of working with a referral agent is you’ll receive more personal service and attention since they’re accountable not only to you, but to me as well. What’s more, you can call me at any time. I am your advocate. I will intercede for you. For moving, remember that our company has a list of preferred service providers, including cleaning services and movers. I have my favorites too.

If you know anyone who is thinking of relocating, please feel free to have them contact me. Referrals are always appreciated and I am committed to giving you and your friends the best service possible.

Forecast for the Week: The second half of the week heats up with news on the housing market and the state of the economy. Plus, the Fed meets.

View: A fee increase is coming that will impact home loan rates. Be sure to read the details below.

• We’ll see a double dose of housing news with Pending Home Sales on Wednesday and New Home Sales on Thursday.
• As usual, Initial Jobless Claims will be released on Thursday. Last week’s read came in at 352,000, a drop of 50,000. That’s the biggest decline since September 2005!
• We’ll also see two important reports that will show us how the economy is doing. Thursday brings the Durable Goods Report, which gives us a read on big ticket items. This will be followed by the first reading on Gross Domestic Product (GDP) for the Fourth Quarter of 2011 on Friday.
• Finally, Consumer Sentiment will also be released on Friday.

In addition to those reports, the Federal Open Market Committee will hold a two-day meeting this week. The meeting will begin January 24 and end with a policy statement at 12:30 pm ET on January 25. There is no chance of a rate hike, but I will be listening for any hint of a third round of Quantitative Easing (QE3).

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Fee Increase to Impact Home Loans

In December 2011, Congress reached a last-minute deal to fund the payroll tax cut extension. The payroll tax extension will provide a 2% tax reduction for individuals making up to $106,800, so the tax extension will be very helpful for many Americans who are struggling during these tough economic times. But like so many things in our tangled economy, there’s a flip side. In this case, the tax cut deal has a rippling effect that will impact the mortgage world.

Here’s what’s happening and what it means to home loan rates:

What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a mandate to Fannie Mae and Freddie Mac (the nation’s largest providers of mortgage money) to increase their guarantee fees or “g-fee’s” by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximately 4.10%. But as you probably know…home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congressional Budget Office recently estimated that the increase will ultimately pay for about $35.7 Billion of the cost of the payroll tax extension.

What exactly is this “g-fee”? The guarantee fee or “g-fee” is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk…which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Who will this impact? The change will impact all new borrowers of Fannie Mae and Freddie Mac loans. The bill will also impact Federal Housing Administration (FHA) loans by increasing the annual mortgage insurance premium that borrowers pay by one-tenth of a percent.

When will it start? Officially, the increase to guarantee fees will begin on April 1, 2012. However, the increase is already starting to be seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until April…and therefore will need the increased g-fee priced in earlier.

How long will this be in effect? The increase will be effective through October 1, 2021.

The bottom line is that the g-fees will be going up…and this will impact homebuyers looking to obtain a home loan through Fannie Mae, Freddie Mac and FHA.

The good news is that home loan rates are still at historic lows right now, and it’s a great time to purchase a new home or refinance. If you or anyone you know has any questions, please call or email!

I stumbled upon an article on MSN that I think will be a big eye opener for homeowners thinking about remodeling their homes.

According to the article, the price of remodeling has gone down, which is good news for homeowners planning on making improvements on their homes.

Below is a top 10 list from the article:

“Here are Remodeling’s top 10 projects. You’ll notice that these are not ambitious, vanity jobs. All are projects that replace worn or aged home components, bring parts of the home up-to-date or add living space without expanding the home’s footprint:

1. Replacing exterior siding with upscale fiber cement. Siding pays back a whopping 78%, on average, of the $13,461 average cost. The most cost-effective thing you can do to your home this year is to replace old siding with new, higher-end fiber cement.
2. Replacing an entry door with a midlevel 20-gauge steel door is an inexpensive upgrade at $1,238 on average, but it pays back 73% and greatly improves curb appeal.
3. A midrange attic bedroom remodel involves popping out a dormer for a 5-by-7-foot bathroom with shower, insulating and finishing the walls and ceiling, adding four windows, extending the heating and air conditioning and improving wiring and lighting. The payback is 72.5% on the $50,148 expenditure. More living space is being sought as adult children are driven back to their parents’ homes by the shaky economy and as older parents join the households of their adult children. (The Census Bureau says 18% of American households aredoubled up now, up from 17% in 2008.) An attic remodel is the cheapest way to add space and a bathroom within the house. A basement remodel is the next most cost-efficient way to add living space, although code requirements for headroom and exterior doors make that project more complicated and more expensive, Alfano says.
4. A midrange minor kitchen remodel paid back 72.1% of the $19,588 investment. Included are new laminate countertops and new sink, faucets and appliances. The floor is untouched and cabinets are kept in place but refaced with new hardware added. “You’re taking what’s there and giving it a face lift,” Alfano says. “The kitchen really looks good and the average cost for this is under $20,000 – less than what a lot of people would pay for a car.” In today’s austere climate, kitchen and bath remodels are pale imitations of the lavish vanity projects from the housing boom. Most consumers are shunning the expensive spa baths and chef’s kitchens that involve moving electrical services, plumbing and walls.
5. A midrange garage door replacement may not be high on many wish lists; it’s one of those jobs that you do because it’s needed. But it adds curb appeal and function, and it pays back 71.9%, on average, of the $1,512 average cost.
6. A high-end garage door replacement recoups almost as much: 71.1% of the $2,994 average cost.
7. A new wood deck earns back 70.1%, on average, of its $10,350 cost at resale this year.
8. New foam-backed vinyl siding replacement keeps the house warm and pays back 69.6% of its $14,274 average cost. The average project involves 1,250 square feet of siding, including trim.
9. New midrange replacement vinyl siding upgrades the look of the home and pays back 69.5% of the $11,729 average price.
10. Upscale vinyl replacement windows have a 69.1% payback on the $14,328 cost. The project involves replacing 10 double-hung 3-by-5 windows. The new windows are low-emissivity glass and are insulated with simulated wood-grain trim.”

And below is the chart that shows the average return on remodeling investments through the years:

Source: Remodeling Magazine’s 2011-2012 Cost vs. Value Report

For more information about this article, just click on the link below.

Link To Original MSN Article

During the colder months and shorter days of winter, below are some things to consider when staging your home for sale:

Turn up the heat – Crank up the heat a notch or two to make your home cozier. Then, set it back to normal when buyers arrive. This ensures for a comfortable, quiet house. If you have a gas fireplace, light it. For a wood burning fireplace, if you’re not going to be around, set the hearth with wood for a fire without actually lighting it.

Let in the light – During the shorter days of winter, show your house during the day when the sunlight is at its brightest. Pull up the blinds and draw the drapes on every window. Clean lamps and fixtures. Swap out low-voltage bulbs for the brightest your fixtures will accommodate. Then, turn on every light in the house, including appliance lights and closet lights. Place spotlights on the floor behind furniture in dark rooms. Put indoor and outdoor lights on timers so when you’re absent, the house will still appear welcoming when prospective buyers drive past at night.

Get your windows washed - Buyers respond to first impressions and windows are one thing you may not even consider. In winter, strong sunlight can reveal grime and dirt and give the house an appearance of neglect.

Set the scene – Even with the holidays over, you can still use dried arrangements and winter wreaths, anything appropriate to the season. Consider the small things that make you feel like you’re home. Put a warm throw over a sofa, fold back a thick comforter on the bed and put classical music on the stereo.