Tuesday, February 28, 2012

IMPORTANT: Information that will affect FHA BUYERS!

Here is some IMPORTANT information that will affect FHA BUYERS!

FHA is Increasing the Upfront MIP from 1.0% to 1.75%.  It is also increasing the Monthly Insurance Premium from 1.15% to 1.25%.  Both increases will take affect with case numbers assigned on or After April 1st.

That means for a Purchase Price of $150,000 the increase will raise the monthly mortgage payment by approx $18 per month.  Although the announcement says the Upfront Premium will add approx $5 per month to the average borrower, it conveniently left out the additional 0.1% increase in the Annual MIP which raises it another $13 per month.

Buyers have to have accepted purchase offers prior to March 31st.

New premium structure will help protect FHA’s MMI fund
WASHINGTON – As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante today announced a new premium structure for FHA-insured single family mortgage loans.  FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent
These premium changes will impact new loans insured by FHA beginning in April and June of 2012.  Details will soon be published in a Mortgagee Letter to FHA-approved lenders.
“After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante.  “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or after April 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012.
The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or after April 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.
Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.


For Mortgage Questions or needs contact Jeff Armstein or Real Estate Questions or Needs contact Joseph D'Ambrosio at the number below,

"Opening The Door To Opportunity and Your Future Home..."
Jeffrey Arnstein                        Joseph D'Ambrosio
Senior Mortgage Banker                     Executive Sales Associate
AmeriFirst Financial, Inc.                    Keller Williams Northeast Reality
15111 N. PIMA RD Suite 110             2005 W. Happy Valley Rd #150
Scottsdale, AZ 85260                         Phoenix, AZ, 85085
(602) 363-6030                                   Cell: 623-810-4824
Email: jarnstein@amerifirst.us           Email: joseph.dambrosio@kw.com
                                                            Website: www.Arizona-HomeBuying.com
                                                            Website: www.Arizona-HomeBuying.kwrealty.com

Wednesday, February 15, 2012

What You Need To Know When Buying Your First Home.

Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.
Before You Start:

  • Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
  • Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
  • Think about your lifestyle and how it might affect your choice of home and neighborhood.
  • Do a little research on current home prices in the neighborhoods you plan to target.

Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.
Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment0% - 20% of purchase price
Home Inspection$200 - $500
Points$1,000 and up for 1% - 3%
Adjustments3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.

  • Buying a home can mean building significant value through the years.
  • Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
  • Pre-qualifying with your lender is a good way to determine how much house you can afford.
  • You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
  • In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
  • Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
  • Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
  • Remember to consider resale value when buying your home.

Wednesday, February 8, 2012

What's hot and not in home styles this year.

What's hot and not in home styles this year.


This year's designated New American Home is being featured as part of the International Builder's Show.
Photo: flickr | International Builders' Show

Modern gets the thumbs up.
Spa-like and eco-sensitive, the  “New American Home 2012” being unveiled in Orlando this week by the National Association of Home Builders in conjunction with the International Builders’ Show, is a warmer take on the classic “White Box” of mid-20th century modern design.
“A lot of people want a spa feeling and a spa look that’s very analogous to modern,” said Luis Juaregui, a Texas-based American Institute of Architects accredited architect. The 4,200 square foot, $3.5 million gray stone and glass home has free flowing entertaining spaces,  floor to ceiling sliding glass doors, a stone staircase with open risers, clear glass balustrades and clean geometric lines, tempered by dark wood cabinets, area rugs and soft furnishings.

Still, to fit into more traditional looking neighborhoods, architects are increasingly going hybrid, mixing distinctly modern, techno-savvy interiors with colonial details, Tudor-style roofs or Craftsman-inspired touches on the exterior.
A home to call one’s own has long been part of the American Dream. But as tastes, technologies and regional preferences change, propelled by demographics and the socio-economic climate, the style, scale and comforts of that coveted real estate evolve.
During the bigger- is-better 1980s and 1990s, homes ballooned in size.  Compact single story ranch and cape cod styles gave way to ever grander two-story neo-colonials. When the economic bubble burst, they retrenched. These days, downsizing is cool; supersized McMansions towering over smaller homes are not.

Stephen Melman, director of economic services at the National Association of Home Builders said that houses shrank about 10 percent from their 2,500 square foot peak in 2007, and are expected “to get smaller and more efficient” with open floor plans, master bedrooms on the first floor and dining rooms distinguished only by a chandelier or architectural detail. One-story ranch homes, post World War II suburbia’s signature easy style, are slowly regaining favor, thanks to first time buyers with tiny tots and aging baby boomers seeking accessibility.
Craftsman style homes, popular before World War II, are also enjoying a revival, said Gary D. Cannella, an architect in Bohemia, N.Y.  “It’s the style not the size.” Adaptable to sizable abodes or small bungalows, these one or one and a half story homes boast  low-pitched rooflines, tapered columns, oversized eaves, gables and the front porches “that everyone wants and no one sits on.”
The split level, a hallmark of suburbia in the Brady Bunch era, is nearly obsolete. Despite the aerobic benefits of tri-level living, “all you do is walk up and down stairs all day long,” Cannella says. “You can’t go anywhere without steps.”
Here are the hot and not-so-hot home styles for 2012:

What's Hot in 2012

Style: Modern
Price: $399,000 to $29 million

The New American Home in Winter Park, FL looks ready for entertaining.
Photo: flickr | International Builders' Show

Description: Aligned with the mid 20th-century counter classic design movement, modern is characterized by no fuss floor plans with combined dining, relaxing and entertaining spaces,  clean, geometric lines, low slung roofs, and technologically advanced materials like concrete, steel and glass.
Why They Are Appealing:  Easy, functional and bright, with walls of glass and open spaces, today’s modern is eco-sensitive and forward thinking, with state of the art kitchens and “smart house” technologies, though developers often prefer modern interiors with more traditional skins.
Where You’ll Find Them: Nationwide, with striking examples in the Hamptons, Santa Monica and other tony beach environs.
Style: Neo-Mediterranean
Price: $300,000 to $6 million-plus

Neo-Mediterranean home styles are becoming the Sun Belt standard.
Photo: Jauregui Architect

Description: Red tile roofs, stucco walls, archways, towers and heavy wooden doors with a Spanish or Tuscan flavor.
Why It’s Appealing: The Southern European style and materials work well in warmer climates and match the landscape. 
 Where You’ll Find It: California, Florida, Texas, Southwest
The Flip Side: While northern European style homes are vanishing from the Sun Belt, in chillier climates such as the Northeast, two story center hall colonials still reign.
Style: Craftsman
Price: $249,000 to $2.8 million

Craftsman-style homes have become an American classic.
Photo: flickr | roarofthefour

Description: Often referred to as Arts and Crafts bungalows, Craftsman-style homes have low-pitched roof lines, overhanging eaves supported by decorative brackets, gables, front porches with tapered square columns,  exposed roof rafters, handcrafted wood and stone flourishes.
Why They are Appealing: This one to one and a half story style shouts cozy. With an emphasis on natural materials and decorative details, it works well for larger homes and small bungalows.
Where You’ll Find Them: coast to coast

What's Not So Hot in 2012

Style: McMansions
Price: $350,000 to $10 million +

McMansion's were a sign of success before the bubble burst.
Photo: flickr | FunnyBiz

Description:  Sometimes called colonials on steroids or oversized neo-eclectic houses, these super-sized jumbles of   styles and decorative details from colonial to Victorian, have  brick, stone,  vinyl or composite veneers.  A product of the  latter part of the 20th century and the knock-down era of the bubble before the burst, they often replaced smaller homes on lots  not suited to their hulking size.

Why they are not appealing: Pretentious, over-sized energy guzzlers, overshadow surrounding homes and out of sync with the economic climate’s downsizing trend. 
 The Flip Side: Well-designed mansions on properly sized lots and in appropriate settings such as golf course or lakefront communities are still hot.

Style: Split Levels
Price: $91,900 to $2,850,000

Split-level homes, with many steps, have lost market appeal.
Photo: flickr | Sportsuburban

Description: A Ranch style house divided into at least three parts by short flights of stairs leading up on one side, down on another, dividing entertaining spaces  from private areas such as bedrooms and separating formal rooms from more casual playrooms and dens. 

 Why they are not appealing: This darling of the 1950s, 60s and 70s is outdated and complicated to maneuver with steps at nearly every turn.
Where You’ll Find Them: 1950s/60s/70s suburban subdivisions nationwide.

 Style: Victorian
Price: $299,000 to $2,850,000

Victorian homes are charming, but almost no one builds them like this anymore.
Photo: TBoard

Description:  Turrets and towers, wraparound  or granny porches and gingerbread trim with Queen Anne, Gothic or  Italianate flourishes  are the hallmark of these turn- of-the-20th-century two and three story homes with plenty of nooks and crannies. Why They Are Not Appealing: While it’s hard not to love their colorful eccentricities, Victorians are challenging to rehabilitate or maintain. Their warrens of small rooms aren’t conducive to 21st century lifestyles.
Where You’ll Find Them: Urban neighborhoods, historic districts, small towns, older suburbs 
 The Flip Side: Newer neo-eclectic homes borrow whimsical features from true Victorians, touting turrets, towers and porches in maintenance free materials.

By Marcelle Sussman Fischler, Yahoo! Real Estate
February 6, 2012

Tuesday, February 7, 2012

Paradise Valley Real Estate Luxury Home Market Update | January 2012

January 2012 Positive News for The Luxury Home Market

Paradise Valley Real Estate Market Update | January 2012

The Two Charts below show Average Sales Price per Sq. Ft. from 2002 – 2012 in all of Maricopa County (Graph 1) and Paradise Valley (Graph 2).

Although we were at the Top of the Market in 2005, there were NEGATIVE SIGNALS of the Leading Indicators (i.e. Inventory) that forecasted a drop in the market in 2006.

The Paradise Valley Market was not hit as hard as the whole of Maricopa County and according to the Leading Indicators (as outlined below), Paradise Valley is in recovery.

Good News!


# 1 - 6 have to be in a favorable position for Prices to Rise.

1. Cromford Report Index - this shows Supply & Demand.

2. Days Inventory – 365 x (Active Listing Count) / Sales Per Year - This is the Average Number of Days it takes to sell the current inventory (based on Annual Sales)

3. Pending Listing Count - This is the number of Homes on the Market that have Offers and are due to close escrow. It is the best indicator of increased sales

4. Contract Ratio - 100 x (Pending Listings + AWC Listings (Home that has an offer but has a Contingency)/Active Listings - Contract Ratio of above 50% is a "HOT" market

5. Monthly Sales Volume – Level of Sales/Month

6. Listing Success Rate - # of properties listed vs. # of properties that are actually sold

Numbers 1 - 6 need to be FAVORABLE before prices rise (#7 & #8)

7. Pending $/SF

8. Sales $/SF


**Michael Orr created the Cromford Index which measures Supply & Demand. It is adjusted seasonally and yearly.

An index of 100 = a balanced market
Above 100 = a Seller’s Market (More Buyers than Homes on the Market)
Below 100= Buyer’s Market (More homes on the market than Buyers)

Maricopa County has been in a Seller’s Market since January 2011 with a Cromford Index of 154…the highest it has been since 2005!


In late June 2010, Paradise Valley became a Seller’s Market, just above the 100 index mark.

Generally it takes 12 - 18 months for prices to Rise after a Change in Supply & Demand, however, since prices went up so steeply and the Real Estate Market was so crazy, it may take a little longer.

The good news, prices in Paradise Valley have remained somewhat stable throughout 2011. And, the Average Annual Sales Price for Paradise Valley is at 2004 levels (with the Price/Sq. ft. at 2003 levels).

As of January 12, 2012, Supply (Inventory) has dropped to an extremely low level (81.6) and Demand has shot up to 125.6, giving Paradise Valley a Current Market Index of 153.9.

Low Supply, High Demand = Prices Increase.


Calculation: 365 x (Active Listing Count/Sales Per Year)

The graph below shows that the Number of Days it will take to sell all of the homes on the market has been decreasing since March 2011.

DAYS INVENTORY is at the same level it was in July 2006.

In Paradise Valley, Days Inventory was at it's lowest in August 2005....and prices hit their peak in February 2007.

So, we are moving in the right direction.


Below we are comparing Pending Listings from 2004 to 2011.

Currently, in Paradise Valley, 2010 and 2011 Pending Listings are at a higher level than in 2008 and 2009 and moving toward 2004 & 2005 levels.


The Contract Ratio compares how many homes on the market receive offers VS. how many homes remain active.

The higher the number...the HOTTER the market.

A Normal Ratio is 30 - 40. Currently, the Arizona Market is at 95 and has been in a HOT MARKET since April 2011.

FYI - A group of approximately 200 Luxury Agents in Paradise Valley meet every two weeks to discuss the Real Estate Market and Tour Homes. It is apparent in the last year that sales in Paradise Valley and picked up considerably!

More good news!


In May/June 2011, Sales Volume in Paradise Valley almost reached the same level as 2004/2005.

2006 to 2009 Sales were way below 2010, with 2009 dipping down to 6 Sales/month

It looks like 2012 is mirroring 2005 to date.

Because indicators #1 - #4 are favorable…we expect the Monthly Sales Volume to continue to rise.


This is the number of homes that are listed in the MLS that SELL.

For Maricopa County, at the beginning of 2008, only 1 in 4 homes sold that were listed. TODAY, 3 in 4 homes (approx. 75%) are selling. YIPPEE!

The historic norm is 65%!

For homes between $400,000 and $800,000, the Listing Success Rate is at approx. 55% rising from 12% in 2009.

For homes over $800,000, Listing Success Rate is currently at 44%, and continues to rise.

The Market is definitely on the mend!


The previous 6 Leading Indicators all point to a recovery in the Real Estate Market.

As indicated earlier, when there is a change in Supply and Demand…it takes approximately 12 – 18 months before prices start to rise.

The Chart below shows that List Price/ Sq. Ft. of Pending Listings has held steady in 2011. The Paradise Valley Market changed from a Buyers Market in June 2010...18 months ago.

All of the 6 Leading Indicators are FAVORABLE and we should start seeing prices rise in Paradise Valley in 2012.

So, if you are BUYING, BUY NOW.