A brighter spot in the financial gloom

<span class=”Apple-style-span” style=” line-height: 13px; font-family:arial;font-size:12px;”><h2 style=””><span class=”Apple-style-span” style=”font-weight: normal;”><span class=”Apple-style-span” style=”font-size: small;”>Locally, lower interest rates have more people turning out for open houses and making deals to buy property.</span></span></h2><p class=”byline” style=”font-size: 10px; color: rgb(102, 102, 102); margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; “>By Alan J. Heavens</p><p class=”byline lastline” style=”font-size: 10px; color: rgb(102, 102, 102); padding-top: 0px; padding-right: 0px; padding-bottom: 0px; padding-left: 0px; margin-top: 0px; margin-right: 0px; margin-bottom: 12px; margin-left: 0px; “>Inquirer Real Estate Writer</p><div class=”body-content” style=”font-size: 12px; “>Almost like an electrical jolt that restarts a failing heart, the drop in interest rates resulting from the government’s takeover of Fannie Mae and Freddie Mac has sparked life back into the flagging local real estate market.<p>Over the last few Sundays, open houses have been better attended than in recent months, and more deals are being struck, real-estate agents say. Mortgage business also is up, brokers report. And this is occurring despite almost daily upheaval in the financial markets, combined with an economic downturn that only seems to be deepening for many Americans.</p><p>The lower interest rates, no matter how fleeting, seem to be enough to get prospective buyers – especially those with secure jobs – out and looking at houses, local real estate observers say.</p><p>”I had 16 to 20 people at one of my open houses, which was very refreshing,” said John B. Badalamenti, an associate broker at the Weichert Realtors’ Collegeville office. “Buyers seem to be more optimistic than they have recently. The next few weeks, however, should really be telling.”</p><p>Art Herling, Long & Foster Real Estate regional vice president, said open-house traffic, “especially among first-time buyers,” is three to five times higher than at any other point so far this year.</p><p>Added Jerome Scarpello of Leo Mortgage in Spring House, “My phone has been ringing off the hook.”</p><p>This revival comes in contrast to a summer when home sales were down almost 25 percent from last year.</p><p>Yesterday, interest rates averaged 5.875 percent with zero points nationwide – down about a half-point from 6.35 percent before the takeover was announced, though higher than the 5.78 percent average during January’s mini-refinancing boom. (Weekly averages are surveyed every Thursday by Freddie Mac.)</p><p>Treasury Secretary Henry M. Paulson Jr.’s proposed broader bailout plan is designed to help financial institutions on the brink of failure, analysts say – not homeowners facing foreclosure or loss of equity in their homes. But Paulson contends that the plan would help both current and future homeowners by restoring confidence in the nation’s mortgage system.</p><p>U.S. Sen. Christopher J. Dodd (D., Conn.) wants to expand Paulson’s bailout plan by allowing judges to modify the mortgages of homeowners in bankruptcy so they can keep their houses, and require the government to come up with a systematic approach to prevent mortgages acquired in the bailout, including Fannie Mae and Freddie Mac loans, from being foreclosed on.</p><p>The mortgage rate a buyer is able to obtain depends on a variety of factors, including credit score and the size of the down payment. With a 700 credit score and a 20 percent down payment, a buyer can get the best 30-year fixed-rate mortgage being offered.</p><p>The drop in rates was well-timed for Krikor Panossian, a 24-year-old chemical engineer who just found a house after a year of shopping.</p><p>”It’s a buyer’s market, and there’s plenty to choose from,” said Panossian, who looked at 30 houses before deciding on a three-bedroom, single-family home in East Norriton listed at $230,000 after a year on the market.</p><p>Panossian saved money living with his parents in Oreland after graduation, was preapproved for a mortgage, had good credit, and was able to put 10 percent down – three key ingredients for a rate below 6 percent.</p><p>Jim Mooney, 34, of Jenkintown, a financial adviser for Wachovia Securities, wants to buy a house and thinks a 30-year fixed rate under 6 percent would be a bonus.</p><p>”I’ve been looking for nine months – in the near suburbs to avoid the city wage tax, within a 20-minute commute to the job, a house instead of a condo so I don’t have to pay association fees,” Mooney said.</p><p>He’s found something in his $200,000-to-$275,000 price range, but acknowledged concerns about the economy. “To be honest,” Mooney said, “what’s happening is giving me pause.”</p><p>Does it make more sense to buy now, or to wait for even lower interest rates?</p><p>”It’s a very good time to carefully get to know the neighborhoods you’re interested in, and while I’d be patient, if you find the ‘perfect’ home, buy it,” said Mark Zandi, chief economist for Moody’s Economy.com.</p><p>Zandi believes the lower interest rates will have a bigger impact on refinancing first. As if delivering proof, the Mortgage Bankers Association showed an 88.1 percent boost in refinance applications nationally for the recording week that ended Sept. 17.</p><p>Anthony Tirendi, 67, of the city’s Bustleton section, had been tracking rates since June, after he and his wife, Sandra, 65, decided to cash out some equity from the house they’ve lived in almost 40 years.</p><p>”I just wanted a little cash in my pocket, and we wanted to do some upgrades to the house,” said Tirendi, who retired in 2003 after 42 years delivering Tastykake products to retailers. He was able to refinance at 5.875 percent.</p><p>The Tirendis paid $21,000 for their house in the early 1970s. The neighborhood median price now, according to Zillow.com and based on recent sales, is $221,000.</p><p><span class=”Apple-style-span” style=”font-weight: bold;”>For those who want to buy homes, lenders say, private mortgage insurance – which covers the difference between a buyer’s down payment and a 20 percent loan-to-appraised-value ratio – is more expensive to obtain because of substantial foreclosure losses. But while credit remains tighter generally, “people . . . with a down payment and good score can get a conventional loan,” said Philadelphia mortgage broker Fred Glick.</span></p><p><span class=”Apple-style-span” style=”font-weight: bold;”>Loans from the Pennsylvania Housing Finance Agency require $1,000 of a buyer’s money, a 3 percent down payment, proof of income, and a 660 credit score (based on family size and the HUD median income for the county in which the house is located).</span></p><p><span class=”Apple-style-span” style=”font-weight: bold;”>The Veterans Administration still provides 100 percent financing, and there is no minimum score for acceptance, but “they usually want good scores,” Glick said. FHA loans will require 3.5 percent down beginning Jan. 1, with a 580 minimum credit score.</span></p><p>In the Philadelphia area, median prices have been down or slightly lower over the last six months, according to Prudential Fox & Roach’s HomExpert Market Report.</p><p>Prices have fallen only 4.4 percent regionwide since 2007, according to the Keystone Research Organization. By contrast, prices in Southern California plunged 34 percent in a year, MD DataQuick reported, with foreclosures accounting for 46 percent of all resold properties in August. (DataQuick does not track sales in the Philadelphia region.)</p><p>”House prices may weaken a bit more before they rise,” Zandi said, “but if you are going to live in the home more than two to three years, that won’t matter appreciably.”</p></div></span>

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