Sunday, December 20, 2009

What You Need to Know as a Buyer in 2010!

False Illusions and What You Need to Know
Homebuyer Alert…
For prospective home buyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.
The first of these, the coming expiration of huge tax incentives, may be a bit more obvious to most borrowers. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time home buyers and up to $6,500 for repeat home buyers. The credit can be claimed only on contracts that close by June 30, 2010.
Secondly, beyond the waning benefit of the Federal income tax incentive, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low.
Rate Alert…
The lowest rates of 2009 were driven down to their attractive levels because of the Fed’s Mortgage Backed Securities (MBS) purchase program. Home loan rates have an inverse relationship with the value of MBS. When these securities trade higher on the market, rates move lower and vice-versa. So when the Fed originally agreed to be a big buyer, it helped provide a market for MBS, which helped keep prices high and, as a result, helped push home loan rates low.
And while the Fed continues that program through the end of March 2010, the reality is that the Fed‘s “extension” was really more of a rationing intended to prevent home loan rates from spiking as the program is phased out. It’s sort of like weaning the market off of its life-saving treatment instead of forcing it to go cold turkey.
Already, some in the media have mistakenly reported the extension of the program through March as good news, telling consumers that rates will continue to decline, and remain low into the spring. This gives a false sense of security that home buyers and refinancers simply cannot afford.
The problem is…
Those reports do not accurately report what’s going on or where rates are really headed. That can have a very costly impact on consumers who may miss out on historically low rates if they listen to these media outlets.
Here’s what’s really going on…

In May 2009, the Federal Reserve's purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.
Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.
Why is that important?
As the Fed now has fewer funds to last through the remaining months of the program, its ability to keep rates low will wane. As the Fed's program winds down and ends, we’ll likely see two things happen.
First, we will probably see higher levels of volatilitywith rates sometimes shifting dramatically in the middle of the day. That means it is more important than ever for buyers to work with a knowledgeable mortgage professional who has a finger on the pulse of the market at all times and can provide trusted, proven advice.
Second, since MBS will have less support from the Fed, rates are likely to rise over time.
In short, while rates are still very good, they may not be for long.
What should you do to protect yourself?
First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.
Second, don’t be fooled by media stories that only report the headlines and don’t understand the underlying implications of the Fed’s actions. If you ever hear something in the news but aren’t sure what it means to your situation, feel free to call or email me for in-depth answers and advice.
Finally, if you haven't yet explored how the current rate environment might benefit you or someone you know, let’s arrange a time to sit down and discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.
Jim Van Slyck
Mortgage Consultant
Thoroughbred Mortgage, LLC
An Affiliate of Wells Fargo Home Mortgage
MAC M6610-011
3 West Main Street, Suite 204
Elmsford, NY 10523
(914)224-6343 Tel
866-756-2303 Fax

Friday, December 18, 2009

Interest Rates - 2010

Mr. Bernanke declared that financial markets are now healthy enough to remove emergency aid programs. Policy makers agreed to keep interest rates “exceptionally low” for now. The Fed did indicate that it will discontinue its program of purchasing mortgage backed securities at the end of March 2010. Between now and then, it looks like the Fed will be buying at a rate of 50% less than what was typical throughout 2009. It all points to “exceptionally low” rates going higher in 2010. (Jim Vanslyck, Thoroughbredmortgage)

Tuesday, November 10, 2009

On November 6, President Barack Obama signed into law the extension and expansion of the current homebuyer tax credit, an important step in ensuring a real estate and economic recovery.

Thursday, November 5, 2009

Tax Credit Extension Has Passed The Senate & House!

Today, the U.S. Senate and House of Representatives passed an unemployment insurance bill, which includes an amendment that expands and extends the homebuyer tax credit. That bill will be sent to President Obama for his signature in the next day or so.

The bill would extend the present $8,000 tax credit for first-time home buyers through April 30, 2010. Current homeowners are eligible for a $6,500 tax credit through April 30, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years. If potential home buyers have a binding contract on or before that date, they will have until July 1 to close the transaction.

Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

Thursday, August 27, 2009

Market Update

In these tumultuous economic times, every sector of the real estate market is hurting. The one hardest hit by the economy remains the high-end market. The biggest change we are now seeing is the sharp decline in the rate of high-end home sales. Homes priced in excess of $1 million have seen a 70% decrease in sales throughout Westchester County.

According to statistics and the fact that in Armonk alone we have a little over 2 years worth of inventory, makes it a buyer’s market. The buyers with the most bargaining power are the high-end buyers. With less competition and more inventories to choose from, buyers in this price range feel empowered (I believe the majority of buyers regardless of price point feel this way). The result of this is the reason we are seeing sharp price reductions in the high-end market, and at times buyers offering anywhere from 20 - 40% below ask. The bottom line is we are seeing deals being contracted at 2002/03 price levels. A pragmatist would say that as more homes pass title and sale prices are recorded at these new levels, agents will be able to use these market comps to properly advise sellers with supporting statistics to reduce existing prices. One drastic difference in today’s market is that a comp from 6 months ago is already too old……….we are in a fluid market. There are many factors that can help stabilize the market but one of the most important is how sellers react to current statistics and the expertise provided by professionals.

Although location remains an important factor in the home buying process, in today's market, the buyer is more concerned with price. Buyers are simply looking for a good deal. We are still seeing homes sell very quickly, some with multiple offers when priced correctly from the start.

The most important thing I tell my sellers is - “We have two weeks to shine when we list your home.” In the current market with new homes continuously becoming available, it does not take long for a property to become stale. Once that happens, the seller will typically find themselves two steps behind in a spiraling decline with each price reduction. In the end, many of these listings sell for a much lower price than they would have had they priced the home to sell from the start. Sellers will play a key role in market trends for the remainder of this year and beyond. How they choose to market their homes will be an important factor in future home sales.


Every buyer is interested in value. Below are homes currently on the market that in my professional opinion, offer good value. Contact me at 914.806.6981 to discuss these properties in more detail and many more properties that may be of interest you. All properties below are Armonk schools (Bryam Hills).

1. MLS #2931756 - If you are looking for Value and Move In Condition you have found your home. With close to 4000 sq.ft. this post modern home that lives like a colonial is nestled on more than an acre of land. This pristine property has 4 spacious bedrooms and 2.1 baths and is located on a quiet cul-de-sac. Come see the value for yourself. - $1,350,000

2. MLS #2930519 - Be apart of Windmill. 6,000 sq.ft. colonial on over 2 acres of rare flat land. Spacious 5 bedroom home with 4.2 baths and in walking distance to the beach. Don't miss this! - $1,699,000

2. MLS #2927209 - Your castle awaits you. Boasting 10,000 sq.ft., 5 bedrooms, 7 bathrooms and over 7 acres. Short Sale, great price at $2,890,000. Must See!

3. MLS #2917994 – Detached single family home w/ 3 bedrooms in desirable gated community with pools, tennis, and clubhouse, built in 2001, over 3000 sq.ft. - $1,149,500 “very negotiable”

4. MLS #2930297 – 4 bedroom colonial home with over 4000 sq.ft, built in 1997 on over 3 acres. - $1,160,000

6. MLS #2909477 – 5 bedroom brick colonial located in the exclusive Thomas Wright development. Built in 1999 the home sits on over 3 acres and boasts over 5000 sq.ft. - $2,350,000 “very negotiable”