Massachusetts REALTORS® Praise Senate Passage of Bill to Delay Flood Insurance Rate Hikes


WALTHAM, Mass. – January 30, 2014- Massachusetts REALTORS® applauded U.S. Senate passage today of the Homeowner Flood Insurance Affordability Act, S. 1926. In a 67-32 bi-partisan vote, the bill would require a four year delay in implementation of costly flood insurance rate increases resulting from the 2012 Biggert-Waters Act.

The measure now goes to the House of Representatives. Realtors have been actively advocating for reform since the dramatic increases in flood insurance premiums became known.

“This legislation will help homeowners across the country and especially here in Massachusetts where they are seeing extreme increases in their premiums,” said 2014 MAR President Peter Ruffini, regional vice president at Jack Conway & Co., in Norwell. “This delay would provide the Federal Emergency Management Agency (FEMA) with the time to complete an affordability study and research the true impact of the law as we have experienced it here.”

Data from the National Association of Realtors® shows that through January 2014, just four months into the law’s implementation, more than 40,000 home sales were estimated to be either delayed or canceled because of increases and confusion over flood insurance rates. The Biggert-Waters Act of 2012 was meant to stabilize National Flood Insurance Program rates.

“The unintended consequences of the Biggert-Waters Act, along with incomplete FEMA flood maps and inconsistent rate calculations, led to huge premium increases for many policy owners across the country. We applaud the support of Massachusetts Senators Warren and Markey and thank bill sponsors, Sens. Bob Menendez, D-N.J., Mary Landrieu, D-La., and Johnny Isakson, R-Ga. We now look to the House of Representatives to take up the bill in the same bipartisan manner” said Ruffini.

About the Massachusetts Association of REALTORS®: Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 19,000+ members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.

Today’s Rates

MBS are down -1/32 (FNMA 30-yr 4.0 at 104.18), around 3/32 above morning levels, but 2/32 below the high for the day. Favorable repricing was seen. Fourth quarter GDP came in a little stronger than expected. Demand was weaker than average for the 5-year Treasury auction, while it was close to average for the 7-yr auction. The Dow is up 110 points. Tomorrow, Personal Income, Core PCE inflation, Consumer Sentiment, and Chicago PMI manufacturing will be released.

December Pending Home Sales dropped 9% from November, far below the consensus for a decline of just 1%, to the lowest level since October 2011. Pending Home Sales were 9% lower than one year ago. Unusually bad weather likely was a factor in the results, though. Freddie Mac reported that average mortgage rates fell in the week through January 30, with 30-yrs hitting 4.32%, from 4.39% the prior week.

Tom Coburn
NMLS# 703910
Executive Mortgage Banker
William Raveis Mortgage, LLC

Phone: 508.380.7975


Federal Rule: Ability to Repay
Lenders must determine that a borrower has the income and assets to afford to make payments throughout the life of the loan. To do so, the lender may look at your debt-to-income ratio, which is how much you owe divided by how much you earn per month, including the highest housing payments you would be required to make under the terms of the loan. To calculate your debt-to-income ratio, add up all your monthly obligations — including student loan, credit card and car payments, housing costs, utilities and other recurring expenses — and divide it by your monthly gross income.
In an effort to put an end to no- or low-doc loans, where lenders issue risky loans without the necessary financial information, lenders will be required to document and verify an applicant’s income, assets, credit history and debt. Underwriters must also approve loans based on the maximum monthly charges you face, not just low “teaser rates” that last only a matter of months, or a year or two, before resetting higher. William Raveis Mortgage has been following these rules for years as part of its business practice, however, the main difference is an increased level of documentation is now required.

Federal Rule: Qualified Mortgage
To make sure you aren’t taking on more house than you can afford, your debt-to-income ratio generally must be below 43%. This rule is not absolute. Banks can still make loans to people with debt-to-income ratios that are greater than that if other factors, such as a high level of assets, justify the risk. Qualified mortgages cannot include risky features, such as terms longer than 30 years, interest-only payments or minimum payments that don’t keep up with interest so your mortgage balance grows. Upfront fees and charges cannot add up to more than 3% of the balance. That includes title insurance, origination fees and points paid to lower interest rates. Fannie Mae and Freddie Mac will permit loans over 43% if these factors
are present.

Tighter Guidelines on the Amount You Can Borrow
In January of 2014, a new mortgage rule from the Consumer Federal Protection Bureau (CFPB) goes into effect. The rule, which impacts the entire industry, introduces a concept that will discourage lenders from making mortgage loans where the debt to income ratio exceeds 43%.

So what does this mean? If these rules were in effect last year, roughly one-fifth of all home-owners would have to either increase their down payment or buy a less expensive house. William Raveis Mortgage estimates that the implementation of this rule alone could potentially impact the maximum amount that a buyer could borrow by about 5%.

Negative Impact to Interest Rates
It is widely assumed that interest rates cannot stay at historical lows. The Fed has already begun pulling back on their strategies that have kept rates artificially low for the past couple of years, and we have seen rates jump upwards in excess of 1% since the summer. In addition to the financial market factors that will push rates upwards, there are regulatory and government factors that will negatively impact rates as well. Firstly, the role that Fannie and Freddie play in the mortgage market will be diminishing. We have seen these entities decrease their maximum loan amounts. The government is hoping that private investors will fill the void, but with few entities in this arena, we can expect that private investors will want a higher return on their investment – pushing interest rates to borrowers upward.

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A real estate agent can help you understand everything you need to know about the home selling process.

Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS® (NAR) are properly called REALTORS®. They proudly display the REALTOR “®” trademark on their business cards and other marketing and sales literature.

REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reported that 84% of home buyers would use the same REALTOR® again.

Real estate transactions are one of the biggest financial dealings of most people’s lifetime. Transactions today usually exceed $250,000. If you had a $250,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $250,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR® when you are selling a home.

If you’re still not convinced of the value of a REALTOR®, here are more reasons to use one:

  1. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace as well as the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
  2. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property.
  3. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over half of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer.
    Your REALTOR® acts as the marketing coordinator, distributing information about your property to other real estate agents through a Multiple Listing Service (MLS) or other cooperative marketing networks, open houses for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.
  4. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. NAR studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
  5. Your REALTOR® can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing – and a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
  6. Your REALTOR® can help close the sale of your home. Issues may arise between the initial sales agreement and closing (also called settlement or escrow), for example, unexpected repairs might be required to obtain financing or a title problem is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing.

Today’s Interest Rates

Interest rates should improve today as a result of the week Dec 2013 jobs report.

Here are the details:

A big miss in the Employment report caused MBS prices to jump this morning. Against a consensus forecast of 200K, the economy added just 74K jobs in November. This was the smallest monthly increase in jobs since January 2011. Given that several other labor market indicators showed greater strength in December, some economists feel that bad weather was a major factor in the shortfall, as the construction sector was particularly weak. Upward revisions to the November data also offset the December results a bit. In another twist, the Unemployment Rate declined from 7.0% to 6.7%, well below the consensus for a flat reading of 7.0%, and the lowest level since October 2008. Looking below the surface, reported job gains accounted for just 0.1% of the decline, while a large number of people leaving the labor force was responsible for the remaining 0.2% decline. Average Hourly Earnings, a proxy for wage growth, fell slightly short of expectations. The Dow is up 25 points. No more economic data will be released today.

Courtesy of:
Tom Coburn
NMLS# 703910
Executive Mortgage Banker
William Raveis Mortgage, LLC

Phone: 508.380.7975

Getting Ready to Sell Your House

Selling Step 1: Evaluation: Get Ready to Sell Your Home

Millions of homes are sold each year, and while each transaction is different every seller wants the same thing – the highest price with the least amount of hassle and aggravation.

Home selling is more complex than it used to be. As a seller you need to be aware of a range of issues and deal with many complex forms. You also need to know that buyer agents represent buyers and are working to get the best deal for their buyer clients.

Successfully selling your home requires experience and training in areas such as real estate, marketing, financing, negotiation and closing – this is the very expertise The Walsh Team offers.

Know Why You Want to Sell Your Home

First, you should have a clear idea why you want to sell your home.
Selling a home is an important matter and there should be a good reason to sell, such as moving to a new community, needing more space, retiring to a smaller home or moving closer to family. Your reason for selling can impact the negotiating process so it’s important to discuss your needs and wants with us in private when we list your home.

To get an idea of whether it’s a seller’s market or a buyer’s market, many people start by looking at online or printed real estate guides to research the current market and the price of comparable properties. We offer a complete Market Analysis to help take out a lot of the guess work.

Is Your Home Ready to Be Sold?

The home-selling process typically starts a few months before a property is made available for sale. For best results when selling your home, you need to look at your home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.
Ask yourself: “If I were buying this house, what would I want to see?” The goal is to show a home which looks good, maximizes space and attracts as many buyers – and as much demand – as possible.

When Should You Sell?

The marketplace tends to be more active in the spring because parents want their children to be settled and enrolled before the beginning of the school year. Spring is also when most homes are likely to be available.
Generally, the selling market is more active from Labor Day to early December, and then January to about May. Summer and Christmas are usually the slowest times of the year for house sales.

Owners are encouraged to sell when there is a need or desire to sell, the property is ready for sale and the seller has chosen a REALTOR® to work with.

How Do You Improve Your Home’s Value?

Ideally, you want to be sure that your property is competitive with other homes available in the community. We see many homes and can provide home-improvement suggestions that are consistent with your local marketplace and cost-effective in terms of what you will be able to recoup through the sale.

The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. In terms of improvements, this means you want a home that fits in with the neighborhood but that is not overimproved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would likely be more difficult to sell.

Improvements should be made so that the property shows well, is consistent with the neighborhood and does not involve capital investments that cannot be recovered from the sale. Furthermore, improvements should reflect community preferences.
Cosmetic improvements, such as carpeting, paint, wallpaper and landscaping, help a home ” show” better and often are good investments. Mechanical repairs, which ensure that all systems and appliances are in good working condition, are required to get a top price.

Prepare yourself to sell your home by evaluating why you want to sell, and when to sell and by improving your home and property to enhance its value to buyers.

We will give you valuable expertise and advice to guide you through the complex process of selling your home.