How To Identify The Best Deals In Today’s Housing Market

The US housing recovery is opening the door for homebuyers to find affordable property across the country.  There are some states that reported a more prominent turn around than others, and some Americans are in the market for more than one property, depending on the region of the country.  In some cases, people are even looking outside the US for a getaway home in another nation, particularly a cottage in neighboring Canada.

You may be wondering how to find markets where housing is affordable, and how to secure a home loan in the post-recessionary world.  While access to credit is definitely tighter in today’s market than access four years ago, you can still effectively find ways to secure an affordable mortgage.

Homebuyers in the south and the Midwest will on average, find better opportunities to buy than in other markets.  States such as Nevada and Arizona were some of the hardest hit markets during the housing crash, which resulted in the value of properties plummeting.  However, with the housing rebound fully underway, homes in these very states are now more affordable than other regions across the country.

Due to the diversity of the housing recovery, thousands of Americans are using the internet to compare mortgage rates by state.  Online comparison websites proved particularly popular for personal shopping over the years, and the same online comparison process now includes personal financial products and services such as mortgages.  In only a few minutes of browsing the web, you can compare the best advertised mortgage rates from various providers to get the best deal.

If you are planning to relocate to a different state, online mortgage shopping is even more invaluable.  You can view the best deals in the region you are relocating to without having to set time aside to physically travel there for a negotiation.  Instead, the application can be done within your own home, saving you the hassle of back and forth discussions.

You may even be in the market for a second home, or looking for a location that serves as a vacation getaway.  For example, many Americans choose to get a cottage in Canada, as the Canadian wilderness and national parks are internationally acclaimed for their rich heritage and beauty.  The same online mortgage comparison can be completed using a Canadian affiliate website, which means you can save yourself the trip across the border and put in an offer on a getaway property without leaving your own city.

The housing market went on a traumatic rollercoaster ride over the last few years, and even with the recovery fully underway, people understand that the market will never be the same again.  But you can still find the best opportunities to buy at the most affordable options with a little help from the web.  The internet is a valuable tool for anyone who knows how to use it to their advantage, which is all the more rewarding when the tool helps you buy your dream home.

$50 Sharebuilder IRA Bonus

Brokerage Sharebuilder is offering a $50 bonus to new clients who open an IRA by April 30, 2013. Check offer below for more details: (source: Sharebuilder)

Offer Details:

1) Open a new ShareBuilder Individual Retirement Account (IRA) using promotion code SBFEB50IRA by 4/30/13.
 2) Deposit $5,000 by 5/31/13. Subject to restrictions listed below, ShareBuilder will add the $50 bonus to your IRA within 60 days of the qualifying deposit(s).
3) The assets in the IRA must stay there for at least 9 months

For more information on this brokerage deal, check out Sharebuilder promo page from this link.

What is FDIC insurance?

FDIC or the Federal Deposit Insurance Corporation is created by the US Congress to insure the safety of deposits in participating members’ banks up to $250,000 per depositor per bank. Also, accounts in different ownerships (such as beneficial ownership, trusts, and joint accounts) are considered separately for the $250,000 insurance limit. Under the Federal Deposit Insurance Reform Act of 2005, Individual Retirement Accounts are insured to $250,000.

The FDIC was started after the Great Depression as several thousand banks failed after major runs on the banks. Many depositors lost large chunks on their principal. In order to prevent people from withdrawing their savings from banks which are deemed unstable by the general public, the FDIC started guarantying the principal which the depositor has at each individual bank up to a certain limit. The FDIC limits have been raised from the $10,000 in 1933 to $250,000 in 2008.

To receive this benefit, member banks must follow certain liquidity and reserve requirements. Banks are classified in five groups according to their risk-based capital ratio:

Well capitalized: 10% or higher
Adequately capitalized: 8% or higher
Undercapitalized: less than 8%
Significantly undercapitalized: less than 6%
Critically undercapitalized: less than 2%

When a bank becomes undercapitalized the FDIC issues a warning to the bank. When the number drops below 6% the FDIC can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the FDIC declares the bank insolvent and can take over management of the bank. The FDIC insurance only covers deposits in US banks only. If you hold dollars in a foreign bank, your deposit is subject to the laws and regulations of the country. You need to do a very thorough forex analysis of the country's currency, before you move your money there, in order to prevent the risk of it being translated in the local currency, should the country face an economic emergency. This happened in Mexico in the 1980's, when dollar deposits were converted to peso's at the official market rate. At the same time however, the "black market" or actual rate was much higher, leading to steep losses for savers.

The Federal Deposit Insurance Corporation (FDIC) ensures that depositors recover 100% of their principal plus any interest rate accumulated in arrears before the collapse of the bank. This guarantee makes the banking system more stable and less prone on runs on the banks spurred by rumors.

The products covered by the FDIC limits of $250,000 include savings accounts, checking accounts, certificates of deposits, Outstanding Cashier's Checks, Interest Checks, and other negotiable instruments.

Time for the Carnivals:

Carnival of Wealth, Sequestration Edition

Chase $125 Offer

Chase is offering a $125 cash bonus offer to new clients, who open a checking account by April 6, 2013. Check offer below for more details: (Source: Chase)

Offer Details

In order to receive the cash bonus:

1) Open a new Chase Total CheckingSM account by April 6, 2013 either at Chase branches or online
2) Deposit $100 or more within 10 business days of account opening;
3) Have your direct deposit made to this account within 60 days of account opening. Your direct deposit needs to be an electronic deposit of your paycheck, pension or government benefits (such as Social Security) from your employer or the government.
4) The bonus amount is taxable, and a 1099 will be sent early in 2014 if cash offer is earned
5) In order to avoid paying monthly fees for this checking account, savers need to

   A) Have monthly direct deposits totaling $500 or more made to this account; OR,
   B) Option #2: Keep the daily balance in your checking account at or above $1,500; OR,
   C) Option #3: Keep an average daily balance of $5,000 or more in any combination of qualifying Chase checking, savings and other balances.

For more information on this bank promo deal, check out Chase bonus page from this link.

Top tips for first home buyers

By Betsy Fallwell

When people talk about the most exciting times of their lives, they’re quick to mention graduations, weddings, the births of their children. I’d add one more milestone to that list: the purchase of your first home.

For me, buying our first place was an emotional experience. The first time my husband and I pulled into the driveway of what would ultimately become our new home for a showing with our real estate agent, I burst into tears. They were not unlike the tears I shed when I tried on the dress that would be my wedding gown for the first time; they were tears that fate had brought me to the perfect place at the perfect time, and that I had found something that was meant specifically for me.

But for many first home buyers, finding the right place is an emotionally taxing experience. By arming yourself with as much information as possible before signing on the dotted line, you’ll ensure for yourself a smooth process.

Educate Yourself

Back when we bought our home in 2006, banks were basically giving away mortgages. Not anymore. Thanks to the mortgage meltdown, home loans are more difficult to come by than ever these days. That’s why you need to equip yourself with the right information from the right sources.

Many institutions offer free seminars and classes designed to educate first home buyers about the process. Real estate agents will often hold educational programs on weekends or in the evenings, as will some banks, lenders, and mortgage brokers. Not only can these free programs help you learn more about the housing industry, but they can also put you in touch with professionals who can help you navigate it.

Work with the Pros

Just like you shop around for your first home, you’ll also want to shop around for the right team: that means a mortgage broker and a real estate agent. Because a home buyer is not responsible for paying these professionals their commissions, there’s no reason first home buyers have to go it alone.

A mortgage broker introduces borrowers to a variety of home loan products from a variety of lenders. Unlike the bank’s mortgage office, an independent broker can show you home loans from multiple companies, saving you time and – eventually – money. Your broker may also show you home loans that are specifically designed for first home buyers, like the FHA program. Their commission is paid by the lender whose mortgage you ultimately choose.

A real estate agent helps you navigate the housing market, taking stock of your needs and wants, as well as your budget. Some are called Realtors, because they are part of a specific trade organization, but don’t be fooled; most real estate agents have the same education, experience, and certifications as a Realtor. These pros receive their commission – usually 3% of the purchase price – from the property’s seller.

Set the Groundwork for Your Loan

Before you start shopping for your first home, spend some time with your mortgage broker going over your finances. Your broker will determine how much you’ll qualify for, using something called a debt-to-income ratio. This is a basic comparison of your debts to your income, and determines whether you’re a strong candidate for a loan. Once you’re pre-approved for a loan, you’ll be ready to start shopping, all while knowing how much you can spend.

But remember that knowing how much the lender says you can spend it not the same as setting your own budget. A lender may approve you for a $250,000 mortgage, but you may be more comfortable with monthly payments on a $200,000 home loan.

Separating Needs vs. Wants

This is one of the toughest parts for first home buyers. When they start out, they’ve got dreams of grandeur: massive homes on manicured lots, tons of room inside, plus lots of upgraded features. But the fact is, if you’re coming into the buying process with a small budget, you might have to give up on some of those added features.

This is where differentiating between a “need” and a “want” comes into play. A need is something you can’t change about the property (at least not without a major overhaul). They include things like:

·         The property’s location

·         The size of the lot

·         The topography of the lot

·         The aesthetics of the neighboring houses (which can have an impact on your property value)

·         The basic footprint of the house (ie, you can’t make a 2-story a ranch)

·         The basic floor plan (yes, this can be changed, but usually costs tens of thousands of dollars)

Then there are wants. These are things you can more easily change if they don’t live up to your preferences, like:

·         Type of flooring

·         Paint color

·         Countertop material

Focus on the needs, and consider any wants a bonus.