In fact, homebuilder confidence in the single-family homes market increased for the fifth consecutive month in February, reaching a four-year high.  “This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging,” said NAHB Chief Economist David Crowe in the National Association of Home Builders/Wells Fargo press release.

“Builder confidence has doubled since September as measured by the HMI,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth.”

HousingWire is also reporting construction of multifamily housing increased by 14% to an annualized rate of 175,000 in January and building permits inched up 0.7% to an adjusted rate of 676,000.

Before the end of the year, Congress and the President agreed to extend the payroll tax cut. In that bill, there were two items of interest for those involved in real estate.

1.) The hike in the Guarantee Fees charged by the GSEs Fannie Mae and Freddie Mac.

The 10 basis point increase in the fees has translated to a .375% to .5% increase in mortgage rates for conventional loans. Many customers who started their loans a couple of months ago are being “surprised” with higher than expected rates. Heck, everything you read in the papers says rates are at historic lows and will likely stay there through 2014. Many consumers feel as if their lender is being unscrupulous. However, your lender has fallen victim to the increase in Guarantee Fees and how the secondary market is passing on the cost. What looks like possible lender greed is just a passing on of the increased expense imposed by the government. Sadly, the increased revenue isn’t even being used to help aid an ailing Fannie Mae or Freddie Mac. It is being turned over to the US Treasury to cover the temporary extension of the payroll tax cut.

2.) Permission for HUD to increase the insurance premiums they charge on FHA loans.

If you remember, HUD charges two insurance premiums – a monthly one and an up-front one that is usually added into the loan. Most recently, they reduced the up-front mortgage insurance premium (UFMIP) and dramatically raised the monthly fee (MMIP). It is widely anticipated that, maybe as soon as April, we will see a hike in the UFMIP with no adjustment to the MMIP. While this will help shore up the reserves in the insurance fund, it will simultaneously make buying a home more expensive. No one knows the effective date or amount of the increase. Buyers should look to buy before the increase in fees.

We always hear how our government officials tuck away things in their bills. In this case, while the headlines during the holidays praised Washington for preserving the payroll tax cut, they may have hurt us more in the long run.

Reality Check One: Who is Your Target Market?

If the property is a good fit for your target market, it doesn’t matter if you wouldn’t live there. A renter may enjoy the property.

Reality Check Two: Are You Emotionally Involved?

Emotions shouldn’t be involved in buying a rental property, but it’s something to be wary of. If, at any point in the negotiations, you feel you can’t walk away from the deal, you need to take a step back and review everything! When your emotions are involved, you can’t make rational decisions. It is also a good idea to have a trusted adviser to bounce ideas off and receive confirmation when the property is good.

Reality Check Three: Are the Numbers Really What They Say They Are?

The numbers might look good on paper, but will the rent cover all the expenses? Make sure the numbers are what the sellers say they are. Get copies of any leases to verify rents. Check market rental rates for the area to make sure the current tenants aren’t under or overpaying. And make sure you obtain copies of the bills you’ll be responsible for (taxes, utilities, insurance, etc.).

Reality Check Four: Are You Judging the Book by Its Cover?

Many opportunities are missed because a property makes a negative first impression. The best deals are often those that look rough but can be easily rehabbed. Some properties may need a major face-lift to maximize its potential – but don’t judge a property strictly on its looks or you may miss out on a deal that could pay off big in the long run.

I have long been a proponent of referrals when choosing whom to do business with. But even with a referral, you owe it to yourself to do some homework. In terms of a mortgage, you have always had the Better Business Bureau and local regulators (like state banking departments) that you could contact. Over the past few years, the internet search engines have become popular ways of finding information beyond a company’s or a loan officer’s website.  Two other places I strongly recommend you visit online (one for the company and one for loan officers) are:

1.) https://entp.hud.gov/sfnw/public

This is the website for HUD’s Neighborhood Watch. Neighborhood Watch is where HUD publishes a lender’s loan performance on FHA loans and how it compares to the national and local averages.

A compare ratio of 100% means “average” performance. Numbers greater than 100% are below average. And a ratio under 100% is above average. Understand that the Neighborhood Watch numbers measure the quality performance of FHA loans only. Further, be aware that HUD recently stated that lenders with compare ratios over 200% were subject to suspension from being able to participate in the FHA Program, and lenders between 150-199% were going to be scrutinized very closely and subject to audit. Be wary of “riskier” lenders.

When you go to the website, click on the “Early Warnings” tab and either research an individual lender or look for a list of lenders in an area, and then just follow the instructions. Remember, many lenders nationally have similar names, so make sure you have the right lender.

2.)  www.nmlsconsumeraccess.org

Here you can search for loan officer and company licensing status. Recognize that loan officers are individually licensed now. Those who have taken the required courses, passed the required tests and been approved by their respective state licensing authority have all that information verified on this website, along with their employment history. Loan officers who work for federally chartered institutions (like banks) have not yet been required to take the classes and pass exams and are listed on the site with their license number and their employment history.

Make sure you are dealing with a loan officer who is licensed! Ask questions if they have a lot of job changes.

There has been a cleansing in the mortgage industry over the past few years, but there are always a few bad apples in any large group. These websites may help you identify mistakes you can avoid when choosing whom you do business with.

Passed on July 30, 2008, the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act was created to develop and maintain a federal registration system for individuals and businesses engaged in originating residential mortgage loans.  Subsequently the Nationwide Mortgage Licensing System (NMLS) was established and has been operational since January 2011.

At first glance this law appears to meet its goal of enhancing consumer protection and reducing fraud through the setting of minimum industry standards for the licensing and registration of licensed mortgage loan originators.  All loan originators, regardless of employer, are required to register with and provide fingerprints to the NMLS for submission to the FBI for a criminal background check.  The registry is available to the public – anyone interested is able to look up employment, address and licensing information on individuals and employers at www.nmlsconsumeraccess.org.

The SAFE Act has additional requirements to further assist in increasing protection and reducing fraud, including pre-licensing education, additional annual education and passing a written qualified test.  However, one major issue with the SAFE Act is these additional requirements only apply to state-licensed mortgage loan originators.  Originators employed by an insured depository or its subsidiaries are not required to take any education or pass a test.

The lack of education and an exam for insured depository originators causes the SAFE Act to fall short of its goals.  It’s possible and likely that individuals not capable of passing the required exam will simply apply for employment at a local bank where they aren’t required to take the exam in the first place.  Further, the lack of continued education means originators at depository institutions may not be up to date on the ever-changing mortgage industry.

For anyone interested in purchasing or refinancing a home, be sure to consult a state-licensed originator that meets ALL of the requirements of the SAFE Act.  You can be confident they are putting you in the best situation for your individual scenario and you’re not dealing with an originator that wasn’t able to pass the exam.

(Guest Post written by Jen Conley, a Benchmark Partner and Ohio VA Loan Specialist)

That’s down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006.

Undoubtedly, the decline in vacancies is an offshoot of fewer foreclosures in 2011 combined with a slight uptick in home sales for the year.

RealtyTrac reports foreclosure starts were down 39 percent from 2010. And while new home sales had their worst showing in recorded history, the National Association of Realtors tracked a 1.7 percent annual increase in existing-home sales.

Paul Diggle, property economist with Capital Economics, says it’s another sign that excess inventory – at least the visible inventory – is slowly but surely being cleared. It

“leaves the visible inventory at a level consistent with house prices bottoming out later in the year,” according to Diggle.

The Census Bureau also reported that the nation’s homeownership rate dropped to 66.0 percent – its lowest level in nearly 14 years – as the housing downturn has eaten away at the share of Americans who are willing and able to own their own home.

The fourth-quarter homeownership rate gave up almost all of the previous quarter’s gain, Diggle noted.

“What’s more, despite median mortgage costs being more affordable than ever and early signs that mortgage credit is becoming more available…the seven-year downturn in homeownership may still have further to run,” he warns.

The flipside, Diggles says, is there are more households in the rented sector and fewer properties lacking tenants, which is helping to drive rents, and therefore landlords’ returns, higher.

He expects rental value growth is to hit 3 percent this year and average rental yields to rise to around 5.5 percent.

With house prices still falling for now, Diggles says it will be a while yet before homeownership is once again seen as an essential part of the American Dream, and that’s despite the fact that owning now seems to make greater financial sense than renting.

The drop in the homeownership rate pushed the share of households in rented accommodations up, from 33.6 percent at the beginning of 2011 to 34.0 percent in the fourth quarter. The ratio of homes in the rental sector that were vacant also fell, to 9.4 percent.

(Homeownership and Vacancy Rates Drop article courtesy of DSNews.com)

That’s down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006.

Undoubtedly, the decline in vacancies is an offshoot of fewer foreclosures in 2011 combined with a slight uptick in home sales for the year.

RealtyTrac reports foreclosure starts were down 39 percent from 2010. And while new home sales had their worst showing in recorded history, the National Association of Realtors tracked a 1.7 percent annual increase in existing-home sales.

Paul Diggle, property economist with Capital Economics, says it’s another sign that excess inventory – at least the visible inventory – is slowly but surely being cleared. It

“leaves the visible inventory at a level consistent with house prices bottoming out later in the year,” according to Diggle.

The Census Bureau also reported that the nation’s homeownership rate dropped to 66.0 percent – its lowest level in nearly 14 years – as the housing downturn has eaten away at the share of Americans who are willing and able to own their own home.

The fourth-quarter homeownership rate gave up almost all of the previous quarter’s gain, Diggle noted.

“What’s more, despite median mortgage costs being more affordable than ever and early signs that mortgage credit is becoming more available…the seven-year downturn in homeownership may still have further to run,” he warns.

The flipside, Diggles says, is there are more households in the rented sector and fewer properties lacking tenants, which is helping to drive rents, and therefore landlords’ returns, higher.

He expects rental value growth is to hit 3 percent this year and average rental yields to rise to around 5.5 percent.

With house prices still falling for now, Diggles says it will be a while yet before homeownership is once again seen as an essential part of the American Dream, and that’s despite the fact that owning now seems to make greater financial sense than renting.

The drop in the homeownership rate pushed the share of households in rented accommodations up, from 33.6 percent at the beginning of 2011 to 34.0 percent in the fourth quarter. The ratio of homes in the rental sector that were vacant also fell, to 9.4 percent.

(Homeownership and Vacancy Rates Drop article courtesy of DSNews.com)

Given that it’s Superbowl Week (Go Giants!), I thought we might go with a football theme today. I can’t tell you how many different people I hear proclaim that they are the quarterback of the real estate transaction – the agent, the loan officer, an attorney, accountant or financial planner. But for goodness sake, the buyer/borrower had better be the one calling the shots. Not that everyone else doesn’t play an important role, but the buyer/borrower is the one most impacted by the choices made.

Here’s my opinion of how the team works best:

• Head Coach (Your Loan Officer) – Your loan officer should be the Head Coach. After careful analysis of your income, credit and assets, this is the person in the best position to make sure you are playing to your strengths and minimizing your weaknesses.  Your loan officer can discuss the economic realities of homeownership, while listening to your quality of life concerns. (How often you’ll be able to eat out or vacation, for example.) The loan officer can set up the game plan.
• Offensive Coordinator (Your Real Estate Agent) – Your real estate agent is your offensive coordinator. Armed with the game plan (which includes your limitations), the agent calls the plays, counseling you on the geography, the competition, the best ways to negotiate your way to your personal touchdown. Agents know the playing field (the inventory and the market). If you hire them to represent you, they can disclose the weaknesses of your competition (the seller).
• Offensive Line (Your Attorney, Accountant and Financial Advisors) – Your attorney, accountant and financial advisors are your offensive line. They are there to protect you from the blitzes that come from outside (sellers, title issues, tax consequences, and protecting your assets). Not the glamour positions, but vital to any success you are going to have.
• Running Backs and Wide Receivers (Your Friends and Family) – Your friends and family are the running backs and wide receivers. They often receive the glory and attention, but honestly, if everyone else doesn’t do their job, they rarely ever see success. Bad game plans, weak play calling, poor execution on the offensive line or by you, as quarterback, leave them merely as names on the roster.

As with any team, communication is the most important component to getting the desired results. Being the center of the action on the field, the quarterback (you) needs to honestly talk with your coaches and coordinators, so they can help direct you on the proper play calling. Simultaneously, you need to heed the feedback from your offensive line, running backs, and receivers to filter wise advice from emotion. Be the quarterback of your own home-buying process and you’ll be more likely to realize your dreams (and not the dreams of someone else).

I have seen estimates stating that 29% of deals that go to contract and require a mortgage, don’t close. That number boggles my mind. It means that even after a buyer and seller come to terms on a sale (not an easy feat these days), 3 out of 10 transactions fall apart. What are some of the more common reasons?

• Appraisal issues – In many markets, we are still seeing declining values. Appraisers are in a difficult position, and with so many transactions (including seller’s concessions to assist buyers with closing costs) values aren’t always coming in at sales prices.
• Short Sales not being approved by the current lender – With so many sellers owing more than their home is worth, buyers’ proposals need to be sanctioned by the lender (who will be receiving less than they are owed). Some of the offers are too low, but often, the lender isn’t local and they really don’t know what the property is worth today.
• Bad pre-approvals from the loan officer – Today, loan officers who are not reviewing tax returns, analyzing bank statements, and asking for detailed explanations and documentation on credit blemishes, are truly hurting the customers. Issuing pre-approvals based on the representations of the customer is reckless and a cause for dismay later.
• A lack of transparency – Whether it’s a seller or agent not disclosing property issues, or a buyer trying to sneak things by an underwriter, too many people think they can cut corners. That is not the world we live in anymore. Everything is uncovered. Being honest in the beginning, gives you the best chance to overcome obstacles.

It is clear by the numbers that closing loans can be more difficult today. However, with proper planning and integrity, many of the challenges can be dealt with early and successfully. Agents documenting values of the homes, loan officers doing complete reviews of the loan profile up-front, and everyone telling the truth helps get deals to a successful conclusion and avoids horror stories.

• Putty knife
• Tube of caulk
• Caulking gun

1. Start by using a putty knife to scrape the joint where the window frame and wall join to remove any old caulk or dirt.

2. if you have a wire brush, go over the area you just cleaned. This will help the caulk adhere.

3. Grab your caulk gun and open up the end to insert the caulk tube into the gun. Cut a small diagonal hole at the end of the tube, using a razor knife or utility scissors.

4. Use a nail and push it into the opening you just cut to break the seal (if it isn’t broken). Squeeze the caulk gun trigger until caulk starts to come out through the tip. Press the release latch at the other end to stop the flow of caulk.

5. Set the flat part of the tip at the end of the window frame where it meets the wall. Squeeze the trigger slowly, pulling the caulk gun along the joint, making a thin, flat, even line of caulk. Don’t stop moving the gun as you lay the caulk. Press the release latch when you get to the end of the line to stop the flow of caulk.

6. Repeat for each area around the window, everywhere that two different materials meet, whether there is a gap or not. Immediately wipe up any extra caulk with a damp cloth. Let the caulk set overnight. You can also use you finger or a tool to smooth out the caulk and ensure all gaps are covered.