Moving? Here are our tips for choosing the right community

Let’s face it, moving is stressful. To reduce stress when you’re moving from another state, another part of Georgia or another city or town around metromailbox Atlanta, start by narrowing down the ideal community for you and your family.

For starters, consider your commute. There’s no denying the traffic issues Atlantans face, especially if they live outside the perimeter and commute downtown. If you’re moving because of a job, you may want to consider the time you’ll spend getting to and from work first and foremost. Now that we’ve cleared that up, let’s see how you can narrow down your choices so that when you’re ready to look at homes with your Realtor, you can pinpoint specific neighborhoods.

Here are some things to consider when moving to Atlanta:

  • Do you have children or are you planning to have children anytime soon?
    Research the school systems. Even if you’re single, living in an area with a much sought-after school system raises your property value.  Great Schools.org is one resource – http://www.greatschools.org/
  • What type of home do you want? Are you interested in a single-family home or an apartment, townhouse or co-op?  Do you want acreage or no maintenance? Match your home to your lifestyle. Are you looking for home with historic charm, or new development? Do you like the protection of an HOA, or want more freedom?
  • What does your ideal community have close by?  If you’re an outdoorsman, own a boat or love to mountain bike, you’ll want to be closer to lakes, forests and parks. If you love to eat out and shop, maybe you’ll want to be closer to stores and restaurants, maybe even have those amenities within walking distance of your front door…
  • What are the redlines?  Allergy sufferers or asthmatics may want to avoid industrial areas. Noise haters may want to steer clear of high traffic roads, highways, even college campuses… decide what’s a deal breaker for you.
  • Other considerations: be sure to review an area’s crime rate, police coverage, fire protection and location of medical facilities. If you are older, or have older parents living with you, a hospital nearby may be a must-have on your list.

Once you’ve narrowed down the areas based on the research and criteria above, there’s no better way to get a true picture of the neighborhood than to visit it (and you may want to visit during the weekend, and weekdays at different times of the day if possible).

  • What’s your first impression? Are the streets wide and well lit? Are they clean and well maintained? Are the homes and businesses kept up or run down? Do people look happy, friendly and energetic?
  • Picture yourself here. Do you see your family having dinner at the local café? Are the kids excited that the school has a big playground? Do you see yourself working out at the gym?
  • Talk to people! What better way to get a first-hand impression. Visit the local market and strike up a conversation with another shopper. Talk you your waitress, stop at a house that is for sale and greet the next-door neighbors…
  • Watch out for redlines and warning signs…. Are there several houses for sale on each block? Are homes and businesses vacant? Look for things that may cause your home value to decrease over time.

Once you’ve found the perfect community, you should apply some of the same principles to finding your ideal home.

  • How much can you afford to spend on a home? Use The Mortgage Guys handy mortgage calculator to see how much you can afford.  Apply Now for pre-approval to boost your bargaining power on the new home.
  • Compare your loan options. Read our Mortgage Basics blog post to find out what mortgage is right for you. http://www.mortgageguysatlanta.com/2011/12/19/mortgage-basics/
  • Find a licensed Realtor in your ideal community to help you find the perfect house!

What is Mortgage Insurance?

One of the most asked questions, especially from 1st time homebuyers, concerns mortgage insurance. Typically buyers want to understand what it is, exactly, why they need it, and do they have to pay it for the entire term of their home loan.question1

So… what exactly is mortgage insurance, aka private mortgage insurance or PMI?
PMI is insurance that protects the mortgage lender against default on the note by the borrower. As the borrower, you pay the PMI premium, and your lender is the beneficiary of the policy ensuring that if you stop paying your mortgage, the lender is paid by the insurance company.

Who needs PMI?
You do, if your down payment is less than 20 percent of the appraised value or sale price, you will be required to buy mortgage insurance

How much does it add to your payment each month?
Well that varies depending on the size of your down payment, the loan amount, your credit score and the loan program, but you can generally figure on paying between .4% and 1.5% of the loan amount annually.  To determine the monthly amount, divide that number by 12.

How long do you have to pay for PMI?
This answer, once again, varies. It depends on how your mortgage is worded, and some lenders offer programs that allow you to pay the entire insurance premium in a lump sum at closing. But generally if you have a conventional mortgage, you’ll pay for a minimum of the first year of your loan. Once you pay down the balance of your mortgage below 80% of the original purchase price or value, and you’re current on payments, you can request that your lender remove the insurance. You will generally need to have your home re-appraised, which in some cases a change in value will help you meet the equity requirement and get your PMI removed. Once your equity ratio reaches 78% as scheduled, the HPA act requires lenders to remove your PMI under specific rules. FHA loans require you to pay mortgage insurance for at least the first five years, and in order to have it removed, your loan balance must be down to 80% of the original purchase price or value – a new appraisal will not be accepted.

How can you avoid taking out PMI?

Well there are some options, if you qualify or can manage it. Veteran can apply for VA loans, which has no private mortgage insurance. USDA loans have mortgage insurance but at reduced rates.  Another option… put down more than 20% as a down payment. Sometimes taking a higher interest rate will eliminate the PMI requirement (lender paid PMI), just do the math to figure out if this option will help your bottom line payment each month. See if you’ll qualify for a combination loan (80/10/10) which includes an 80% first mortgage, 10% down payment, and 10% as a second mortgage. Some banks or lenders offer special loans for certain occupations which may not require PMI. It doesn’t ever hurt to ask!

Bottom line, what’s in it for me?

PMI enables borrowers with less cash to have a greater opportunity to buy a home. Because of PMI, you could potentially purchase a home with as little as a 3-5% down payment.

The Homeowners Protection Act of 1998, or “PMI Cancellation Act”, signed into law by President Bill Clinton protects homeowners rights with regards to mortgage insurance – you can read more about the law here – http://www.federalreserve.gov/boarddocs/caletters/2004/0405/CA04-5Attach1.pdf

The Mortgage Guys welcome your questions regarding your Atlanta home purchase, home mortgage, or refinance. Contact us today!

 

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George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

 

Mortgage Guys Top Tips for a Smooth Move

Now that you’ve sold, or bought, and of course we hope you’ve worked with The Mortgage Guys on your mortgage, it’s time to think about organizing your move. Whether you’re going around the block or around the world, taking just the clothes on your back or a tractor trailer full of possessions, you’ve got to be organized in order to make the transition a smooth one. The Mortgage Guys have gathered our Ten Top Tips for a smooth and stress-free move:

1-      Plan Ahead – doesn’t matter if you’re move date is in a week or six weeks – planning can take the edge off for you and your family. Create a moving notebook and devote a page to each week (or each day) from now until the move and decide what you’ll accomplish, listing the tasks on each page of the book.

2-      Room Sweep – go room to room in your current place and decide what you’re taking and what you’re selling, donating, or throwing away. These decisions will help you decide whether you’ll need a rental truck or a moving company.  If you’re planning a yard sale, set aside items to sell as you go through the house.

3-      List Resources – make a list of the phone numbers, websites and addresses of the companies you’ll need to help you move (moving companies, rental companies, shipping companies, storage companies, cleaning companies). List out the phone numbers of utilities, schools and other services in your old and new locations.

4-      Gather the Goods – head to the store to gather up what you’ll need for packing (boxes, plastic bags, bubble wrap or other wrapping material, a thick marker pen, color coding stickers, packing tape). You can be creative with packing materials and save money too. Use household items like sheets, towels, grocery bags, and newspaper to pad boxes.

5-      Friendly Folders – create folders or files for all your moving-related expenses and receipts, family records (such as children’s medical and school records), and account information with national companies (cell phones, satellite TV, insurance company, bank etc).

6-      Spread the Word – start a “change-of-address notification” list. Include everyone you do business with, from service people to health care providers as well as your neighbors and friends. Don’t forget to file a “change of address” form with the U.S. Postal Service.

7-      Prepare the Family – if you’re moving more than 10-15 miles from your current home, take children on a farewell visit to some of the places that hold happy memories or hold a going-away party for them and their friends, and for the adults, maybe hold a pot-luck dinner or barbeque.  Make arrangements with a friend or neighbor to watch kids and pets on moving day. This will ease their stress and yours as the truck is loaded.

8-      Go Treasure Hunting – If you’ve hidden any valuables around the house, be sure to dig them up (check the attic and crawl spaces too). Also remember to pick up any dry cleaning, shoe or jewelry repairs, and return library books, movie rentals, etc. Be prepared to carry valuables such as jewelry, collectibles, and medicines with you instead of packing them to go with the movers.

9-      Touch Up – check each room of the home for things you need to repair and or clean. Fix major nail holes, replace burned out light bulbs, clean carpet and floors, and wash down spills in refrigerator. Or, if time is tight, hire a cleaning company to come in and do a quick clean after the movers leave to make sure that everything is clean and ready for the new owners.

10-   Final Sweep – after the truck is loaded with all of your furniture and boxes, do a last check of:

–  Water shut off?

–  Furnace shut off?

–  Light switches turned off?

–  All utilities set for disconnection?

–  All windows and doors are closed and locked?

–  All spare house keys and garage door openers left for the new owners?

–  Mailbox empty of your mail?

–  Have you left anything at all inside, or out?

 

 

 

 

 

 

 

 

 

 

 

 

Moving is less of a chore when you get organized and check off tasks as you complete them. Once you arrive at your new home, your planning will make the relocation easier, but be sure to start into a routine as soon as you can – this is especially important for kids. We also found this a great Infographic to help you remember to de-stress and move smooth!


George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

 

 

Get your Atlanta Home Ready to Sell FAST – Home Staging Basics

Photo credit: http://wickerandstitch.blogspot.com

When you start thinking about putting your Atlanta home up for sale there are many considerations, from where you’re moving, to who’s listing your property, to who’s handling your mortgage. Before you take the next big step and actually list your home it’s important to get it ready to sell, especially as the Atlanta real estate market begins to change.

The Mortgage Guys have listed 10 basic tips for getting your home in tip-top shape for sale. Here’s how to create a “move-in ready” home that will sell faster and for more money:

  1. DECLUTTER!
    Remove furniture – makes the house look bigger! Whatever you can live without send to a local storage unit with a month to month rental. A de-cluttered home says there’s plenty of storage space available. Remove knick-knacks – especially personal items, photos, religious items. Buyers want to see themselves in a house, so making your home more generic will help them achieve that feeling. And clean out your closets, bathroom drawers and kitchen cabinets because every buyer considers available storage space.
  2. OUT WITH THE OLD!
    If your furnishings are old, outdated and worn, it might be worth the trouble and expense to replace them with new or gently used furnishings in light, neutral colors and updated styles. Consider visiting a local consignment shop for replacement items from sofas to bedding, accessories to art. This may include updating appliances in your kitchen to stainless steel, which are much in demand.
  3. CREATE PURPOSE!
    Rooms look bigger if you bring furniture in from the walls and create conversation groupings of chairs and sofas, giving furnishings a purpose. And while you’re at it, make sure that every room has a purpose and adds overall value to the home and is easy for the buyer to recognize the purpose of the space.
  4. FIX IT!
    Make cosmetic repairs to woodwork, trim, walls and doors. Ensure carpets are clean and wood floors are finished and without scuffs, scratches and dents. Finish unfinished projects and put tools and ladders out in the garage or shed.
  5. PAINT!
    Enlarge the look of rooms by painting adjoining rooms with the same color, creating one larger space. Choose lighter more neutral colors appropriate to each space- bold colors have been known to reduce sales price offers. However, some rooms, like bedrooms can benefit from deeper tones that make the space feel warm, romantic or intimate.
  6. LIGHT IT UP!
    Check to ensure all fixtures have the maximum wattage bulbs in them so that when the Realtor shows your home, they can truly show off the warmth and functionality of the house. Be sure that you have task lighting in the kitchen, ambient lighting in the bedroom, and some accent lighting throughout.
  7. ODD IS IN!
    Interior designers recommend accessorizing with odd numbers, especially three. Arrange your odd counts asymmetrically (in a triangle rather than a row). Choose groupings of varied heights and widths, but select items to group based on a common theme (color, texture…).
  8. FRESHEN UP!
    Bring in freshly cut flowers, stems or greenery from your garden and make them a focal point in your kitchen, dining room, even the bathrooms.
  9. CLEAN IS GREEN!
    A clean home will demand a higher price. Hire a professional cleaning service if you need the help, but be sure to get floors, windows, counters and other surfaces spotless before showing your home. Pet areas need extra attention to prevent unfriendly odors from scaring potential buyers away from your property. Neutralize odors (including the litter box), and add homey scents by baking cookies just before potential buyers come through. The best bet is to make your dough ahead, shape into balls, and freeze. Then just pop a dozen in the oven an hour or so before the appointment.
  10. DON’T NEGLECT THE CURB APPEAL!
    Outside your home requires attention as well. Clean debris from plant beds, mow the lawn and trim bushes and shrubs. Plant brightly colored annuals along walkways or in pots near the entrance. Nothing says “move in ready” like freshly mulched beds. Fertilize the lawn to green it up, same with plants. If you have a porch, add a rocker or two with plush pillows and a book or magazine. You only get once chance at that first impression!

The extra time you spend preparing your home for sale in the Atlanta real estate market can certainly help your house stand-out from other available properties. Staged homes sell faster and for more than their counterparts, so get moving!


George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

 

What Exactly IS a Streamline Refinance

While qualifying for a mortgage refinance is generally a lot harder than it has been in the past, there are some options available. One such option is the Streamline Refinance…

While guidelines and rules vary by lender, here’s a basic list of features:

  • Your current mortgage must be current on all payments
  • You must be receiving a clear benefit from the refinance
  • You may not take cash-out on the loan
  • Often there are minimal credit requirements and less paperwork meaning the process is faster and less expensive

Current mortgage – up to date and current is the number one requirement, meaning this path is not one for anyone who’s behind or in any danger of foreclosure. Clear benefit means your rate has to drop enough to cover all related fees, or convert from an adjustable to a fixed-rate loan.

What type of mortgages can be streamlined?

FHA – makes it easy to refinance your current FHA mortgage in good standing to a lower rate. FHA has permitted streamline refinances on insured mortgages since the early 1980s. What makes this process streamlined? There is no appraisal, so you can be underwater in your home by a little or a lot, and still be able to refinance your home. Keep in mind that you have to be either lowering your monthly payment or converting from an ARM to fixed rate loan, and you cannot take any cash out on the loan when you do an FHA streamline-refinance. Record low mortgage rates make this option very attractive to borrowers.

VA – also has streamline refinance option for current VA borrowers called the Interest Rate Reduction Refinancing Loan or IRRRL. With the VA’s options, as with the FHA loan, you must be paying less each month or going from an adjustable to fixed rate loan, and again, don’t expect cash back. The VA streamline refinance doesn’t require an appraisal or much credit work and with this loan, you can refinance at no cost as the option to roll the costs of the new loan into the new mortgage. Since VA borrowers have already taken care of their Certificate of Eligibility, the process is much easier and faster than an initial VA mortgage loan.

HARP – is a new mortgage program for homeowners who owe more on their home than the home is worth (also known as underwater). HARP (Home Affordable Refinance Program) and HARP 2.0 offer refinance options for Fannie Mae and Freddie Mac loans older than June 1, 2009, with the loan to value ratio of 80% or more. You must be current on payments of your existing loan. This loan carries limited fees and closing costs. It is possible to have a loan servicer (the financial institution that collects your monthly mortgage payments and has responsibility for the management and accounting of your loan) to be different than the owner of your mortgage.  To see if your loan is owned by Fannie Mae or Freddie Mac, visit their websites – Fannie Mae   Freddie Mac

Easy = Best?

While a streamline refinance may be the easiest option, it may not be the best option for you and you should shop different options other than your current lender or loan type to find the best rate/cost of the loan especially if you’re not underwater, not in a credit situation, and working at the same job for 2 or more years. Savings on a lower rate may offset the additional time and paperwork required for a more conventional approach to refinancing your home. Call The Mortgage Guys to discuss your options for refinancing your Atlanta home!

 


George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

Is NOW a Good Time to Refinance my Home?

When I listen to the radio or turn on the television these days, there are many commercials touting historically low interest rates are and that it is a great time to refinance my mortgage.  Well the truth to the matter is “Rates are great!”   Rates are at historic lows and refinancing today could make a big difference in the amount of interest you will pay over the life of your mortgage.  But the real question should be, is it right for me?  And then the answer is, it all depends.

There are several factors that need to be explored such as the cost, the reduction in interest rate, the reduction in the term of the loan, will the new loan require mortgage insurance and most of all, can I even refinance my home today based on the current market value of my home (appraised value).

There is a formula called the break even analysis where you divide in the closing costs by the amount you will save each month and this will tell you in months the amount of time it will take to recapture your closing costs.  So let’s say the closing costs to refinance your home is $3,200 and you are saving $180 per month.  Your break-even would be approximately $3,200/$180 or 17.78 months.  This will give you an idea if it makes sense to go forward.  The next crucial question is how long do you think you will own the home.  If you think you will own it for at least another 18 months, then it makes senses to look further.

One of the most challenging obstacles to refinancing your home today is the appraisal process.  Unfortunately, the values of homes have dropped considerably in the past 5 years.  According to Trulia, real estate prices covering all properties in the Atlanta area have depreciated 20.1% over the past five years.  Since real estate trends are very localized, some area have been depreciated far more.  In order to refinance you home using standard loan products, you will have to have a minimum of 5% equity in your home.  So if your house appraises for $200,000, the maximum loan you could get would be $190,000. The good news is that there are several programs available for homeowners with little or no equity left in their homes.  So depending on the type of mortgage you currently have, you might be in luck.

If you currently have a FHA or USDA mortgage, there is a streamline refinance that does not require an appraisal which is a great option.  Depending on when you current FHA mortgage was endorsed by FHA can make it a fantastic option or just a pretty good option.   If your loan was purchased by either Fannie Mae or Freddie Mac and you closed on the loan prior to May 31, 2009, you may be eligible for a HARP (Home Affordable Refinance Program) refinance.  The main feature of a HARP refinance is that it allows you to refinance you home even if you are upside down on your mortgage.  To see if your loan was purchased by either, go to http://www.knowyouroptions.com/loanlookup for Fannie Mae properties and https://ww3.freddiemac.com/corporate/ for Freddie Mac properties.  There are many rules governing these programs, so it is best to speak with a mortgage professional regarding your options.

 

George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

Why to Buy… the emotions and economies of renting vs. buying a home

Today’s reduced home prices, low mortgage rates, and solid home inventory have made buying a house attractive, and many Atlantans are asking themselves if it’s the time to give up renting to buy their own home. Making the move from renting to home ownership is an emotional decision, and also very much a financial one.

While setting down roots is often considered a natural step, job responsibilities, family ties, and personal satisfaction can weigh heavy on the decision to give up the flexibility of renting under a 1 year lease, to the 15 or 30 year commitment of a mortgage. Personality and time commitments play a big part in the decision of what type of home to buy as renters are accustom simply making a phone call to fix maintenance problems, and to having all outdoor maintenance, landscaping and yard work done for them. Home ownership comes with a certain degree of upkeep which varies based on whether you buy a condo, townhouse, single family or ranch-style property.

If you’re not a handyman (or handywoman), consider the costs of modernizing and redecorating as you’ll need to hire out, so you may want to just look at move-in ready homes. Consider your out of pocket costs will be to get into the new home (keeping in mind what you’d “love to have”), then talk to the mortgage professionals here about what you can truly afford month to month. You also want to be sure that the home you buy is one you’ll be happy in for years to come. Don’t make the mistake of convincing yourself that home buying a short-term commitment.

Emotions matter…i f you’ve just gone through a big life change such as marriage, a newborn, divorce, job change, or a death in the family, taking on the responsibility of owning a home might not be the best decision today.

When considering a move from a rental unit to a home, you need to find a neighborhood and a house that suits your lifestyle, commute time, and budget. You may want to live in Woodstock, but don’t want to spend the commute time to get to your south Atlanta job because you have young children in daycare. Regardless of where you decide to live, be sure to have your Realtor share the sales price trends of homes in the neighborhoods you’re considering, after all, a home is an investment.

Buying a home is in fact one of the biggest investments you will make – ever.  So…armed with good credit, a stable job, and cash in the bank, making that investment may very well be a wise financial decision.

The Pros

For Renting:

  • Flexibility (relocating is easier)
  • Can invest money elsewhere (stock market)
  • No upkeep fees (drippy faucets, broken appliances, etc.)

For Buying:

  • Tax-breaks (mortgage interest and property tax deductions)
  • Potential for building equity (traditionally 4-5% annually)
  • Emotional satisfaction/pride
  • Security, stability, comfort

 

The Cons

For Renting:

  • No equity
  • Annual rent increases

For Buying:

  • Property taxes
  • Upkeep
  • Mortgage costs
  • Loss of flexibility should you want to move

If you are on the fence about whether to buy or rent, use what’s called the rent ratio, an over-simplified starting point. Take the purchase price of a house and divide it by the yearly cost of renting. The New York Times has a great calculator to help you in your decision making process: http://www.nytimes.com/interactive/business/buy-rent-calculator.html.

You may also want to read our Tips for First Time Home Buyers blog post – http://www.mortgageguysatlanta.com/2012/07/26/tips-for-first-time-home-buyers/

All in all the decision to assume a mortgage and buy a home is a very personal one. But armed with accurate information, it’s a decision you can feel good about. Contact Atlanta’s Mortgage Guys before you tear up that rental agreement, and we’ll help you review your options so you can make the best choice for you.


George Beylouny is a licensed loan originator and the Branch Manager for Silverton Mortgage Vinings.  He can be reached at 678-428-6514, George@mgatl.com or  www.mortgageguysatlanta.com

Shadow Inventory: Part Three of Three

For the last three weeks on the Mortgage Guys blog, we’ve been discussing shadow inventory and how it effects the housing market. Shadow inventory refers to the amount of unlisted bank-owned homes that are not yet on the market as well as homes in preforeclosure that are likely headed to a trustee sale and will become bank-owned themselves.

This week, we’ll discuss how new construction helps the outlook of the current real estate market. According to part three of the Wall Street Journal article, new home building has been as its lowest levels since World War II in 2009, 2010 and 2011. This has helped to offset the potential damage from elevated levels of foreclosed properties, because there are fewer new homes available on the market.

Additionally, according to the article, Census data shows the share of vacant homes for rent is down to the lowest level in 10 years, which has a vacancy rate of 8.6 percent. The vacancy rate of homes for sale is down to 2.1 percent, the lowest in six years. However, most financial advisers argue that new construction is still just relatively small amount of the overall housing inventory.

Hopefully, these three posts will help homeowners gain more insight into the housing market. If you have more questions or concerns, don’t hesitate to contact The Mortgage Guys in Atlanta, GA. We’re happy to sit down with you to discuss a variety of financing options that will suit your family best.

Part One: Shadow Inventory: What is it and Should We Worry? 

Part Two: Shadow Inventory: Part Two of Three

Shadow Inventory: Part Two of Three

Last week on our blog, we introduced the first of three blog posts examining a Wall Street Journal article that takes a deeper look into shadow inventory, and how it effects the housing market. We introduced shadow inventory as the amount of unlisted bank-owned homes that are not yet on the market as well as homes in preforeclosure that are likely headed to a trustee sale and will become bank-owned themselves.

The Banks’ Involvement Bank bag full of dollar bills

How banks dispose of shadow inventory and whether there are enough buyers willing to purchase these homes is worrisome to many financial advisers. Bank-owned foreclosures began rising again 2010 after a drop in the volume of bank-owned properties throughout 2009. Since September 2010, banks have been slowing down the foreclosure process, particularly in judicial states where courts are overwhelmed by the number of cases and banks have struggled with documentation of the mortgages they own.

Additionally, non-judicial states have recently passed laws imposing new requirements on banks before they foreclose, which is likely to further slow the process.

Shadow Inventory in Concentrated Markets

As previously stated in the part one of the article, shadow inventory isn’t a national phenomenon. It is concentrated in particular markets, and even in submarkets of those markets. These markets are very specific, and only in certain areas.

Stay tuned for next week’s blog post where we analyze the last of these three posts from The Wall Street Journal. If you have any questions or concerns about shadow inventory and how it effects the surrounding housing market in Atlanta, don’t hesitate to contact The Mortgage Guys.

View the first blog post: Shadow Inventory: What is it and Should We Worry?

Photo courtesy of Flickr.

Shadow Inventory: What is it and Should We Worry?

In a recent article by The Wall Street Journal, called Shadow Inventory: It’s Not as Scary as It Looks, author Nick Timiraos stated that shadow inventory isn’t as scary as it sounds. What does this mean for the recovering housing industry, and home sales going forward?

Shadow inventory refers to the amount of unlisted bank-owned homes (REOs) that are not yet on the market as well as the homes in in preforeclosure that are likely headed to a trustee sale and will become real estate owned properties themselves.

Half million dollar house in Salinas, Californ...

According to the article, there are a few reasons why shadow inventory isn’t as scary as it sounds. Broken down, these are as follows:

  • It’s concentrated in a handful of markets, which means that it isn’t a national phenomenon
  • It is being offset by improved demand, particularly from investors.
  • The housing vacancy rate is low, a product of very little new home construction over the past few years that could counterbalance continued high inventories of foreclosed homes.

As far as actual numbers, there are a wide range of estimates of shadow inventory. A common measure are loans that are either in the foreclosure process or that are three months or more delinquent. These are mortgages that are among the most likely to ultimately become bank-owned properties.

Over the next two weeks, we will be looking at the additional posts linking to this article, further discussing the housing market and what this means for current homeowners and potential homeowners alike. Have more questions? Contact The Mortgage Guys in Atlanta, GA and we can sit down address your concerns about the current housing market and your situation.

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