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Weekly Market Updates Wednesday, February 03, 2010

Can we hit the reset button? We are being factitious, of course, but 2010 has not exactly gotten off to a rousing start. Last week's data releases only added to the perception that we are stumbling into the new year.
After three months of increases, sales of existing homes fell 16.7% to a seasonally adjusted annual rate of 5.45 million in December. Not only did the decrease in sales surprise most analysts, it was the biggest monthly decrease on records that date to back 1968, according to the NAR.
The subsequent release on new-home sales offered little solace. Sales fell 7.6% in December to a seasonally adjusted annual rate of 342,000, meaning the annual sales pace dropped to levels last seen in the first half of 2009 – an epoch most of us would like to relegate permanently to the past.
However, it might not be as bad as all that. Weather was a significant factor in the sales decline. National Oceanic and Atmospheric Administration data showed that December temperatures were three degrees below normal and that it was the 11th-wettest December on record. Bad weather, it is believed, drove many potential buyers to the sidelines.
Some market commentators fingered the first-time homebuyer’s tax credit as well, noting that it caused a surge in sales in mid-2009, but left the market shaky by year's end. They have a point. As we saw with the cash-for-clunkers program, federal tax credits tend to pull demand into the incentive period without increasing aggregate demand. Credits might be successful in stanching a downward spiral but they often fail to create sustained and growing demand.
The good news is that whether demand is growing or not, prices are stabilizing. In the existing home market, median home prices rose 1.5% to $178,300 in December, while inventories fell more than 6%.
In the new-home market, the median sales price rose 5.2% to $221,300 in December, posting the biggest gain in seven months. Moreover, the news on inventories suggests the increase will likely stick. There were an estimated 231,000 new homes for sale at the end of December, down from 235,000 in November, leaving supply at levels last seen in 1971.

We knew changes in FHA-insured loans were coming. Now it appears they are almost here. Last week, the FHA said it would tighten loan requirements on loans it insures. Specifically, it would raise the MIP to 2.25% – effective this spring – and then seek permission to increase the percentage again.
The FHA also proposed requiring borrowers with credit scores below 580 to put up a 10% down payment. Those with higher credit scores would still qualify for a 3.5% down payment. In addition, the FHA proposed reducing seller concessions to 3% from 6% of the mortgage. Both proposals will require a public comment period before taking effect.
We have been warning for the past month that anyone considering an FHA-insured loan should act now. We stand behind that warning. Fact is, any changes instituted by the FHA will only increase the cost of an FHA-insured loan.
Borrowers might be feeling a little dour over the prospect of paying more for an FHA-insured loan, but they are likely not feeling as dour as homebuilders are. The homebuilders' sentiment index declined again in January to 15, which means that only one in six builders thinks the market is "good.”
We could argue, persuasively, that homebuilders have done everything possible to set the stage for a recovery: they have culled inventories and cut new construction to a virtual standstill. For all of 2009, homebuilders started only 554,000 homes – the lowest since 1945. Back then, there were only 132.5 million Americans. Today, there are 307 million.
Higher prices would certainly help lift homebuilder spirits. On that front, things are improving. Radar Logic's monthly Residential Property Index (RPX) showed year-over-year price increases in eight of the 25 markets surveyed, the most since July 2007, when the RPX price composite peaked. Radar Logic said that increased affordability is helping to boost prices, as well as sales. On the latter, November home-sales volume increased year-over-year and month-over-month in all of the 25 metropolitan markets the RPX covers.
Low mortgage rates were no doubt a contributing factor to the sales rally. They remain low today. In fact, rates dropped (by a few basis points) across the board for the third-consecutive week. Do not expect much more, though; we have been saying that any improvements in mortgage rates will be incremental at best, and that has been the case.

Allow myself and my team to guide you through the buying process...Give me a call today for a Free Roadmap to HomeOwner Ship!!!

407-583-4872 Extension number 1

Because the shift has begun, there will be great economic changes in the US and here are the top 10 trends of what you can expect in the next decade in America, starting in 2010:

1. High Taxes, Lower Social Security Benefits.

The federal debt which in reality has reached $73 trillion, will force the Federal Government to raise taxes as well as lower their spending. The first damaging hit to Americans will be the Social Security benefits. Expect this to lower at some point in your long-term future. It is up to you whether you want to save your family’s financial future or not. But it is now the time for you to have as much cash to be able to go through rougher times. Leave your credit cards and get out of debt. Start saving money and invest in gold.

2. The value of the US$ will continue to decline.

Because of the $73 trillion national debt, foreign investors suspect that the federal government is deliberately letting the dollar decline. The advantage for the US government is that the relative value of its debt will be less. Consequently, investors are now diversifying their portfolios with other currency such as the Euro. Just as private sectors are backing up their asset with gold, China is planning to cause gold price to return back below $1,000 to then buy 10,000 kg of gold from the IMF. With all this and foreign investors switching to other currencies, the US import prices will rise, the export prices will lower and the overall economic growth will be spurred.

3. Economic uncertainty will stay.

It will be required by businesses to have people on board who are able to forecast their entire business every month. A lot of things will happen really fast and unexpected. They will lose key customers or suppliers to bankruptcy,  bank will refuse to give loans, demands and sales will decrease. In order to survive, businesses will have to be able to forecast their future monthly and accurately in this uncertain economy.

4. The employment strategy will change.

Just as individuals are urged to save their cash, business will too. Those who can keep their overhead cost low, remain flexible in the uncertain economy and keep from paying higher health care benefits, will remain in business. In order to do these, businesses will only hire freelance or part time workers. Some will even outsource from other countries in Asia or Eastern Europe as employment cost will be cheaper compared to hiring Americans.

5. The world’s best customer will drag businesses down.

Because of the credit bubble, both the government and the American consumers are maxed out. They are all so deep in debt that neither of them will be buying much from China or other exporters. Countries who were relying partly from the US spending, will now have to develop their own consumer-based economy. However, countries who almost completely 100% relies on the US spending, will be dragged down even worse if they are not able to find a replacement for the world’s best customer. In the US, American businesses will have to learn how to supply needs of emerging markets outside the US.

6. Real estate, property and mortgage businesses will stay flat.

There are 8 months of unsold homes, and 15 months of “shadow inventory” – homes headed for the foreclosure pipeline. There are hundreds of thousands in the foreclosure list and a million more will be added into the list in the next year. Housing prices will not recover for the next few years based on this. Real estate businesses that have a better chance to survive are the ones who offer housing for low-income people. People will no longer decide where to live based on best investment option. Rather they will chose their homes based on what they like and the best deal that comes along. Because people will turn to lower income houses, their homes will no longer be used to get a second mortgage to pay for homes and furniture. This will keep consumer spending low for years to come.

7. More and more people will retire late.

Because of the recession more and more people will have to delay retirement in order to keep working as long as they can.

8. China replaces US as the world’s largest economy

Currently the US and EU’s economy grow at 3% while China’s economy is at 9%. If this continues to happen, in 2019, China will be the world’s largest economy, replacing the US. Here, the shift of economic power will then happen.

9. More leadership from emerging market countries will appear

The group of the leaders of the world’s developed economies, G-7, was forever changed by the group called G-20. This group are comprised not only by the world’s developed economies but includes also recession-resistant countries such as Brazil, China, India, Malaysia and Indonesia. The reason why these countries did not shake in the credit crunch is because their banks were more regulated. In the next decade, you will see more leadership coming from emerging market countries.

10. Less war

War is seriously expensive. the US have been spending $600 – $700 billion each year to fund their war between 2006-2008. This year the US spending on war went down to $500 billion. Although I personally doubt that due to the national debt, the US will no longer go out and fight other countries, the US really can’t afford to wage war anymore. If it will not trigger world peace, at least there will be “less war”.

How does a living trust work?

Like a corporation, a trust is regarded in law as something separate from the people who create it. Therefore, a trust can hold property, sue and be sued, enter into contracts and conduct business in its own name. The assets and liabilities of a trust are separate from the assets and liabilities of its beneficiaries. A trust can obtain its own taxpayer identification number and file its own tax returns.

When you transfer assets to a living trust, those assets no longer belong to you (even though they may be under you control if you are the trustee). it is the shifting of assets to a new owner that enables a living trust to avoid probate and avoid some kinds of creditor claims.

How is a living trust viewed for income tax purposes?

During your lifetime, any living trust created by you is disregarded for tax purposes. That is, the income of the trust is reported on your personal income tax return. A living trust does not file its own separate tax return until after you die. Therefore, typically, a person would not apply for a taxpayer identification number for a living trust until after the death of the grantor.

How is a living trust viewed for estate tax purposes?

A living trust is also disregarded for estate tax purposes. Just because assets held in trust avoid probate does not mean they avoid estate taxes. The assets of your living trust will be included in your estate for the purpose of determining if any estate taxes are owed.

It is possible for a pair of living trust to be set up to minimize estate taxes for married couples, but this makes for a highly complex and technical living trust agreement which is only required for people having an estate in excess of the federal unified credit against estate taxes. The amount of this credit is 2,000,000 in 2007 and 2008 and 3,500,000 in 2009. the living trust agreement we provide does not include any estate tax planning, so it is not designed for people who have estates larger than the credit against estate taxes.

What is Probate?

Probate is the legal process of transferring your assets to your heirs and paying any debts you owe after you death. The process is administered by a probate court judge and is a function of state law.

How does a living trust avoid probate?

A living trust avoids probate by transferring your assets now, during your lifetime, to the trustee. At your death, the assets already belong to the trust, so they are not included in your probate estate.

How do I transfer property into my living trust?

At the back of your trust document there will be a schedule for you to complete which lists the items of property you want to transfer to the trust. For non-titled assets, it is generally sufficient to list these items specifically (my diamond ring) or as a group (all my jewelry). But some things, like bank accounts and investment accounts, cannot be transferred this way. You may still want to list them in your asset schedule, but in addition to that you will need to contact your financial institution and make a formal change of the names on your account, or open new accounts. Only when this is done will these kinds of assets be transferred into your living trust.

Are there some kinds of assets I should not transfer to my living trust?

Possibly. Some common examples include insurance policies, retirement plans, and jointly held assets. Both insurance policies and retirement plans have a beneficiary designation procedure which normally allows you to name a primary and a secondary beneficiary. People often name a spouse or children as primary beneficiaries and their living trust as a secondary beneficiary.

There may be reasons to avoid naming the trust as a beneficiary at all, such as when you want a particular benefit to be distributed in a different manner than your trust assets. Jointly held assets usually don't need to be transferred to your living trust because the joint owner gets those assets in full automatically by operation of law. However, joint assets are not sheltered from creditor claims. If you have questions about what assets to put into your living trust, check your financial advisor.

Does having a living trust mean I don't need a last will?

No. You still need a pourover will to collect any assets not transferred to your trust during your lifetime, and transfer them to the trustee so your distribution plan can be put into effect. In addition, there are some things you cannot do a in a living trust, which can only be done in a last will, such as naming a guardian for any minor children.

Household expenditures have always occupied the majority of dollars spent when GDP is calculated. Roughly 70% of the United States GDP's composition is the result of end consumption. The Remaining 30% is divided up with approximately 20% to government expenditure and 10% to business investment.

While it is true that the calculated personal savings rate (PSR) has, in general, fallen noticably between the 1960s and the early 2000s (1960s PSR were roughly 7-8%; year 2000 PSR were generally 2-3%). During the recssion that began in December, 2007 the savings mentality was sparked as evidenced by a PSR of 4.9% after 20 months into that recession.

The stock crash of 1929, usually cited as the beginning of the Great Depression, was preceded by the Roaring '20s, a period when the American public discovered the stock market and dove in head first. The crash wiped out many people's investments and the public was understandably shaken. when bank failures erased the savings of those who weren't even invested in the stock market, people were shattered. Although the market cras was unavoidable, the bank failures could have been prevented with better regulation.

Lets start saving again America...

Whether it's a buyers market or a seller's market, all homebuyers have on thing main thing in common, they dont want to get ripped off. Below are 10 tips for getting a fair price on a home.

1. Research recently sold, comparable properties
2. Check out comparable properties that are currently on the market
3. Look at comparables that were on the market recently but DID'NT sell
4. Consider market conditions and appereciation rates in the area
5. Are you buying a for-sale-by-owner property?
6. What is the expected appreciation for the area?
7. What is your real estate agent's opinion? (honest opinion)
8. Does the price fell fair to you?
9. Test the waters
10. Get an appraised value and a home inspection

For detailed information about each of these 10 tips, give us a call or email us at NBonilla1@aol.com

What is a Motivated Seller?

A motivated seller is someone who is desperate to sell his or her property and is very flexible or willing to negotiate a favorable price and terms. Finding a motivated seller can be as easy as reading the “Real Estate for Sale” section of the classifieds. But, an unsuspecting investor can also find his/herself on the wrong end of a hard sell by a savvy real estate agent or property owner. To find a distressed, bargain property you need to locate a seller with the right motivation to sell. Motivations can include:

1. Probate
2. Bankruptcy
3. Neglect
4. Abandonment
5. Absentee ownership
6. Mismanagement
7. Divorce
8. Illness
9. Unemployment

These motivates sellers have little choice than bargaining with a potential buyer. They must sell the property and need a buyer to come along. Why shouldn’t it be you?

Please allow me to help you get financed today for a home… call me today or fill-out a online application to get pre-approved today.

Nancy Bonilla-Ingles

Paramount Mortgage Funding, Inc.

Winter Park, Florida 32792

Need help in financing a foreclosed property… contact me today and let me be of service to you.

Below is some information on buying foreclosure property.

1. Don’t argue with the homeowner. Time is on your side.
2. Stay in contact. Let the homeowner see that you are interested in his or her welfare. Discuss alternatives with the debtor: foreclosure, bankruptcy, refinancing, sale, rent with option to buy back.
3. Ask questions. Estimate your costs to cure the loan and make repairs.
4. Don’t believe everything the homeowners tell you. They may say the delinquent payments have been brought current when they really haven’t
5. Warn the seller not to sign an “Exclusive Right to Sell” agreement with a real estate broker. This will jeopardize their position to deal freely with you, or anyone else, especially as the foreclosure deadline draws near. If they insist on listing the property with a real estate agent, ask them to include a release clause so you can buy the property directly without paying a commission.
6. Appraise the home “out loud.” Walk around the house, saying, “Lets see, we’ll have to paint this room. Redo the tile in here. Wallpaper the kitchen.” Don’t address the homeowner directly as this will cause conflict.
7. When the owner doesn’t want to deal, move onto the next foreclosure. If this home is not for sale today, it will be within one year. Eighty to ninety percent of them are.
8. Let the owner know that you are working with limited capital, and you only purchase one home at a time. So time is of the essence for both of you.
9. Remind the homeowner that if their home goes into foreclosure they will ruin their credit rating. It will hinder any future purchases on a time payment plan.
10. Get the signatures of all owners (e.g., both the husband’s and wife’s) on the equity purchase form when buying a house in foreclosure. Make sure you have the signatures of any party you even suspect of having interest in the property. Consider using getting the owners to sign a quitclaim deed as an alternative approach.
11. Remind the homeowner that each day they wait they are getting further behind on the payments. Late charges are accumulating which can create a situation in which you—or anybody else—will have a more difficult time taking over the property and saving the homeowner’s credit. The property taxes are also accumulating.
12. Don’t overbuy into a neighborhood where you would own the most expensive home. Always try for the worst house in a good neighborhood.

Hope this information can be of service to you…if you’d like additional information please contact me via email at NBonilla1@aol.com or at 407-583-4872 Ext. #1 to discuss further.