Friday Facts October 15, 2010

October 15, 2010

Nationwide, the average number of days to foreclosure is 461.
Jack Guttentag in Inman News points out that before the financial crisis, compliance with underwriting rules was subject to casual spot checks. Today, every loan is carefully scrutinized and those that don’t pass muster must be repurchased by the seller. The loss in a buyback wipes out the profit on about 8 loans of the same size.

We always say that now is a good time to buy. Well, Bernice Ross in Inman News gives the reason why. If interest rates increase from 4.42% to 5.42% on a $200,000 loan, the buyer will pay $43,802 or 27% additional interest on the life of a 30 year loan. If the interest rate increases from 4.42% to 6.42%, the buyer will pay $89,908 or 56% additional interest.

Remember that FHA loans are assumable. Interest rates will rise and the ability of a seller to transfer a loan and it’s financing terms (including rate) to the new buyer will have value.

Mary Umberger in Inman News gave a few tips for dealing with low-ball offers:
1. It’s critical in this market for sellers to be prepared for the possibility of an unacceptably low offer.
2. Low-ball offers may have any number of motivations and sellers shouldn’t automatically presume they stem from some one’s desire to be insulting.
3. There is debate as to whether a low-ball offer should be countered. Her advice is to counter slightly, reinforcing the asking price, but showing a willingness to “talk”.