Phoenix Real Estate Blog

Please take a moment to learn more about the Metro Phoenix Real Estate Market.  Our blog features interesting articles, market reports, and upcoming events in and around Phoenix.

 

March 1, 2014

Myths Claimed About Mortgages Not Always Accurate

Those applying for a mortgage for the first time may find it can be a daunting process. The information available either via Internet or even word of mouth can be misleading or flat out incorrect. Some of this information can be all that is needed to discourage buyers from seeking out a mortgage due to a fear of it being too complicated a process. Additionally, some of this misinformation can lead to potential buyers making unwise choices and suffering financially.

One of the first myths out there is that a buyer will need perfect credit to purchase a home in this market. For many people, that simply is not a reachable goal at the current time. Previous circumstance and ripple effect from the earlier housing crisis have left many with less than perfect credit.   The majority of buyers, about 28 percent of all applying for a mortgage fall in the area of good credit with a score of 650 to 750 according to Fair Issac Corp., a company that maintains the FICO scoring system. These scores are currently enough to get a decent rate, although the closer you get to 750 the lower the rate will be. For those who are below 650, it may be more difficult to find a mortgage with lower rates, but mortgages for these scores are available through smaller banks and larger lenders alike, including FHA lenders.

Another area that has been misrepresented is that of the down payment. For a while after the housing crash, lenders were requiring a down payment of 20 percent or more to obtain a mortgage. This practice left many without the funds to purchase a home and made home ownership out of reach. Recent relaxation of the rules for the lending criteria as well as new government programs can help people obtain a mortgage for as little as 3.5 percent down, a far cry from 20 percent.  This change alone has allowed many who were putting off purchasing a new home back on the playing field.

The challenges that have faced potential homeowners in the past have slowly eased to allow more to enter the market. It is a great time to purchase a home while rates are low and inventory in the Scottsdale housing market is high!

Feb. 24, 2014

Home Equity Lending Increasing in Arizona

For the past few years in Arizona, home remodeling projects seem to have been on hold. However, the past year has seen an increase in these types of projects and home equity lending has played a role. 

In December 2013, building permits in the Phoenix housing market were up 9 percent according to Buildfax, a database dedicated to the detail of construction permits. Additionally, the amount of builder remodeling permits requested were up from December 2012’s rate of 2,704,000 to 2,937,000 for the same time December 2013.  The west coast, including Arizona is one of the areas seen to be increasing remodeling projects at a rapid rate. According to the U.s Census Bureau, in 2013 over $130 billion was spent on home remodeling projects. This demonstrated a 3.1 percent increase over 2012. This increase is the highest seen in 2007 prior to the housing crash.

One reason for the remodeling increase is the return of higher property values in Arizona. CoreLogic, a real estate data reporting firm, estimated that at least two-thirds of all homeowners currently own properties which have 20 percent equity. The logical progression being that increased home equity has allowed homeowners to begin projects that previously were not a possibility due to decreased equity in properties. Compared to 2011, when only half of all homeowners had reported this type of equity holdings. The National Association of Home Builders as well as the Joint Center for Housing Studies at Harvard both has forecasted a steady increase in remodeling projects throughout the year ahead.

Feb. 12, 2014

Purchasing a Home After Divorce

The past few years those seeking a mortgage have had some challenges. Adding a divorce to the mix can increase those challenges as finances can be intertwined for years following. For those recently going through a divorce there are some very simple steps that can be taken to increase your chances of qualifying for the mortgage you are after.

One area to address immediately is that of finances. While divorces can be either amicable or disagreeable, separating each individual’s assets is a sound place to start. Each financial tie that you continue to keep shrouds your own financial picture with complexity and possible questions. When seeking a mortgage, having a clear-cut picture of your finances to present to a lender is an important step. There are two main other areas to address when obtaining a mortgage after a divorce.  One area is the previous mortgage one may have been a part of. Another is credit cards or other financial obligations that spouses may have shared previously. When issued a divorce decree, the courts do not send one to each person and their applicable financial obligations.  Often both spouses are listed on the mortgage deed for a home owned. Removing your name from these documents lets lenders know you are no longer responsible for the payments on the property. If your name is not removed and the other party still resides in the home but misses a payment or worse defaults on a loan, both parties credit is affected.  Do not assume that a quitclaim deed is the only exoneration needed to remove responsibility for a mortgage, not so. That removes the name from the deed of property but not the actual mortgage. Either the responsible party must refinance in their name only or you must prove to your new lender that you are no longer responsible.

Another area those seeking a mortgage should address is credit cards and joint accounts held with the other party.  These accounts should be closed or placed in the name of the person assuming the card or obligation. Again, if there is failure to do so and the other party misses a payment or defaults, both people’s credit is affected.

Of course there may be things that must remain tied to the other person, including alimony or child support payments.  Having a tangled financial picture can make it difficult for lenders to separate the information and thus may deny the loan. Being as transparent as possible and separating as many areas of finance from the previous spouse is the way to give yourself the best opportunity to obtain the mortgage you seek after a divorce.

 

 

Feb. 4, 2014

Phoenix Home Prices Dip with Overall National Decrease

The Phoenix housing market has experienced its own shares of highs and lows in the past few years. However, as a whole the area has experienced a rapid recovery of the housing market and a strong recovery at that. Home values that had previously sunk to new lows for homes in the Phoenix housing market have steadily gained back equity and those previously stuck in a home with upside down equity are experiencing an upswing. With this upswing has come an increase in inventory of the market as well as increased interest in the housing market in Phoenix. However, across the nation, December numbers demonstrated a decrease in sales nationally at the end of the year.

CoreLogic, a real estate data provider reported that prices have dipped 0.1 percent in December, making that the third straight months drop in values following almost a year of steady price increases.  While these numbers are accurate, they may not be as obvious in the Phoenix housing market, as these homes continue to sell for increased value comparatively. In 2013, home values, especially in the Phoenix market saw increases of a good eleven percent from the previous year. Even with a slight decrease in values and prices, the Phoenix market continues to experience a healthy recovery to a housing market that has weathered some significant storms.

While homes in Phoenix may not be experiencing rapid growth in value at the current time, the values of homes in the area have risen significantly. Despite a lull in purchasing, which is often seen in the winter months, the Phoenix housing market continues to see positive recovery in the market.

Jan. 30, 2014

Finding an Affordable Home in Desert Ridge

First time home buyers can face any number of challenges when looking to find a home they can afford in today’s housing market. For those looking to purchase in the Desert Ridge area, there has been the assumption that they may be priced out of that market which may not actually be the case. While experts agree, there is no substitute for a good credit score and a positive financial history, there are also a variety of strategies that can open doors in areas that may seem out of reach. Finding a home one can afford in the area they desire is not out of question.

Assuming that one needs a substantial down payment in order to purchase a home is the first mistake some make. The reality is that even in today’s housing market, post crash, there are a number of options available to borrowers that do not include a 20 percent down payment. Programs such as FHA mortgages allow buyers to purchase with as little as 3.5 percent down.  Those as well as conventional mortgages that accept as low as 5 percent are good options for buyers.  Borrowers must have a good credit rating, but the down payment is well within the reach for many. Another way buyers looking in the Desert Ridge area can increase their chances of finding an affordable home is to look through foreclosure listings and HUD homes in the area. While buying a foreclosure is not the route for everyone, it is much more of a streamlined process than before. Borrowers looking in the Desert Ridge area may find there are options that open up their search in this area. One last thing potential buyers can do to seek out affordable homes is to include homes that may not meet all of the criteria, or need a little TLC. For those willing to put a little elbow grease or design into a home, the options are endless. The Desert Ridge area is a popular one and one that remains a favorite.

Finding a home in an area that has see price increases, such as Desert Ridge, can be a challenge. With some concessions and adjustments, not to mention a little strategy, home owners are sure to find that perfect property in Desert Ridge.

Jan. 27, 2014

Obtaining a Mortgage Getting Easier In Arizona

For homebuyers in the Phoenix area, the past few years have presented some challenges when it came to obtaining a mortgage. The previous housing crisis had forced lenders to become more stringent when it came to qualifying for and obtaining a mortgage. Five years later, potential homebuyers in the Phoenix area can breathe a little bit easier, as the restrictions have loosened their restrictions. CoreLogic, a real estate data firm has reported where previously certain buyers had little to no chance of approval, current standards have shifted and mortgages are becoming easier to qualify for.

Post crash, lenders had been requiring larger down payments that had been requested in the past. New data demonstrates that for borrowers with a high loan to value ratio, it is possible to purchase a home or refinance with a smaller down payment than before. Additionally, for borrowers with a high debt to income ratio, the ability to get a mortgage is actually easier than it was in 2003.

CoreLogic reported that those borrowers with low credit scores, 620 or lower, are those who experience little to no chance of qualifying for a mortgage. Only 0.3 percent of all mortgages are obtained by those with scores below 620 compared to 29 percent of the market 10 years ago. For the past year, the average credit score for those holding a first lien mortgage was 749 in contrast with the average score of 10 years ago which was 710. While there is no reason given for why credit is seemingly easier to qualify for at this time, there is suspicion that it is tied to the recent popularity of FHA home loans. Through government programs, those with higher credit scores but little down payment can now qualify. In the Phoenix housing market, the time could not be better to seek out a new home. With financing available and little down payment needed, many are finding their dream home is attainable once again.

Jan. 23, 2014

Preparing your Finances for Buying a Home

With the new-year, new mortgage rules for lenders have come into effect. Rules put in place to protect borrowers from bad lending practices have also forced them to have their financial house in order before seeking a mortgage. Arizona borrowers, along with others across the nation, will have to have their assets, debts and income verified by lenders before they will be able to be approved for a new home loan. If the numbers do not support the borrower making the loan payment, the loan will not be issued.

The housing crashes that Phoenix homebuyers faced in years past were a major motivator in the change in rules. While having your finances in order used to be a good suggested practice, now doing so is a necessity.  Having a frank discussion with your real estate agent, tax and financial advisor is a great place to start. After doing so, there are four other steps you can take to become prepared to apply for a home loan.

Six months to a year before beginning their home search, potential borrowers should get a copy of their credit report to review it for any discrepancies. New lending guidelines require a credit score of 740 or better to receive a loan with the lowest rate with a low down payment of only 3%.  The better credit score equates to the better the loan rate and amount needed down. Beyond that, borrowers must have a score of no less than 620 to be approved for a loan in the first place. By being proactive and checking your score, borrowers can check for inaccuracies, repair any items needed and improve the score as a whole.

During that time period, it is best to pay off debt, pay bills on time and not take out any new lines of credit.  Another move to better position a borrower for the best rate is to begin to document the income of the borrower. Continuity of income is also a factor as lenders will look to see if your employment is steady with steady income. Having been at a place of employment for two years or longer is a great way to demonstrate job history and good credit. Lenders will look back two years to examine borrower practices, thus having a positive earning history is always a benefit.

Another thing a borrower should plan on when seeking a mortgage is to have some cash set aside not needed for home purchase. Lenders want to see evidence that the individual applying for a loan also has cash set aside for other needs. This can be in the form of a savings account retirement fund or monetary gift. Bank statements for the last 60 days are standard documents needed.  Additionally, a down payment of 3.5-20% will also likely be required and lenders look to see that the borrower has cash reserves past that to cover expenses incurred in the home.

The best preparation one can do for an upcoming home purchase is to be aware. Being aware of what mortgage they will qualify for and which they can afford is a major factor. Three months before purchasing a home, borrowers should research and understand the different mortgage options available to them. Deciding what type of loan will meet the needs best is a good place to start. Buying a home can be a longer process, but for those prepared ahead of time, it can streamline the process.

Knowing the parameters of a loan that meets the needs and limits of the borrower can be the best way to ensure a long and positive experience in the home. 

 

Jan. 20, 2014

Majority of Scottsdale Homeowners see Positive Home Values

According to information recently released by the government, home values nationally have risen to levels concurrent with those seen in 2006. For those homeowners in the Scottsdale housing market, these numbers are a welcome sight. Following the housing crash of 2009, prices for homes in Scottsdale plummeted leaving many homeowners underwater in their mortgages. These new figures bring a majority of those previously affected back to the positive equity in their homes they had seen prior.  Home values and selling prices gained 8.2 percent in amount in the time proceeding October of 2013. The Federal Housing Finance Agency reported that the purchase only index had risen to a level of 207.2. Comparatively the last time these numbers were seen was in the spring of 2005.

In the Scottsdale area, a number of homeowners had seen their home’s value decrease to the point they were underwater in their current mortgage. As of December 2013 the reported numbers represented a decrease of 50 percent among homeowners who were upside down in their mortgage. By the third quarter of this year the number of homes nationally that were underwater in their mortgage was down from 12.1 million to 6.4 million. Concurrently with this increase was an increase of 55 percent in the average increase of home values of residential properties. This trend was especially evident in the Scottsdale area where the prices of homes, while not drastically increasing, have seen a steady positive return.

The changes in home equity have had a positive impact extending to other areas as well. The increase in home values translated into a large number of homeowners being able to either maintain their residence or place the home on the market. When not encumbered by negative equity, a variety of choices became available for Scottsdale homeowners. The increased amount of home equity will allow more homeowners to refinance or obtain home equity lines of credit which had all but disappeared the past few years.

The positive increases in home values have had a positive impact on the area of Scottsdale and Arizona as a whole. These increased values have increased choices for homeowners while helping maintain the economy as a whole.

Jan. 9, 2014

Important Questions to Ask Your Lender

With the housing recovery gaining ground each month, more and more individuals are seeking out a mortgage to purchase a home. For those not in the mortgage business, it can be a very unfamiliar territory.  Asking the obvious questions of closing costs, APR and down payment are pretty standard. However, to really be on top of your loan and its requirements there are a few other questions that should be asked as well.

First, is the source of the loan a mortgage lender or mortgage broker? A mortgage lender is the direct source of funding and has the authority to approve and underwrite a loan. A mortgage broker is an individual who represents a number of different lenders. Each has its advantages depending on the needs of the borrower. Mortgage brokers have a variety of choices to present to the customer and often can find the best rates. A mortgage lender may be quicker and can be a good choice if the terms are competitive. 

Second, what are the total closing costs associated with the loan that include no points? Points are an area that few consumers understand entirely as they are not discussed as often as actual APR’s. Discounted points can allow a borrower to buy a rate that is lower through payment of higher upfront fees. However, if you are looking at a number of lenders it can be an area that gets even more confusing.  The best course of action is to ask the lender to prepare a quote that includes a rate with zero points. Borrowers can branch off from there with questions about payment for rates that include payment of one or two points to get started.  Along with the points discussion is the question as to the break even date for buying points.  Making decisions about paying down your rate in points is important. It helps the borrower to know when the loan would essentially break even or recoup the costs paid up front. 

Another important question is that of down payment and how much the amount will affect the loan costs.  At times, the old standard of 20 percent (which was the new standard for the housing crisis) has eased a bit. Often with a 5 or 10 percent down payment borrowers can also get a great rate.  New government programs and lenders competing for business have all helped the market evolve making it easier to purchase a home.

A final question to ask is who will be the servicer of the loan? Many mortgages are given to a larger bank to handle the billing and servicing of the loan. Servicing entities can be completely separate from the actual mortgage lender. Servicing companies may have different rules when it comes to payment schedules and fees. Since the borrower has no control once the loan is transferred, knowing ahead of time what the original lender plans to do.

Understanding the terms of your mortgage is something all homeowners should be on top of. By asking questions before committing to a specific lender, borrowers can avoid surprises later.

 

 

Jan. 7, 2014

Commercial Real Estate Making a Comeback in Phoenix

Commercial real estate, in the Phoenix area, had taken a hard turn during the housing crisis, is making a drastic comeback in the Phoenix area as of late. An area that had been mostly hands off with investors for the past few years is steadily gaining popularity at a rapid pace again.  In what is considered one of the real estate industry’s most influential survey’s, “Emerging Trends in Real Estate”, Phoenix gained significant ground moving to rank 25, up eight spots from the year before, as a list of one of the best places for investors to invest their money. There are a number of factors that contribute to the popularity of the area including low business costs and the growth seen in the Valley, both population and employment based.

In 2014, it is expected that Phoenix’s population will grow 2.6 percent as reported by the PwC and Urban Land Institute. These numbers are slightly higher than local estimates.  This is in line with increased employment figures which project that the number of jobs in the Phoenix area will go up by almost 2.4 percent. Included in these estimates is the growth in the professional sector increasing the likelihood that the need for office space in the Phoenix area will likely increase.

Investors see these numbers as a positive sign in the real estate market, especially with the increase in jobs projected. “We’ve seen several major employers bring their operations to the Valley or expand existing operations,” said Craig Henig, senior director of CBRE Phoenix. “We’re back on the map as an attractive place for major companies. Apple, in particular, was a big win. Now that they’re invested in the Valley, we’re going to see suppliers for the tech giant migrating here, too.”

Office vacancy rate in the Phoenix area has decreased to 22 percent in the past few months according to research done by metro Phoenix brokerages. At one time in 2009, those same rates were closer to 27 percent. The more the demand increases the higher rental rates increase for office space. “We are forecasting office-rent increases in 2014 of between 2 and 4 percent, with more robust growth in 2015,” said Bob Mulhern, managing director of real-estate brokerage Colliers International in Phoenix.

The predictions of CBRE are thought to be very enticing to developers in encouraging them to build new office space.  At the current time almost 700,000 of office space is under construction and additional areas are expected to begin in the coming year.