The Fed has cut a key interest rate to a point between 0.00% and 0.25%. This rate cut will likely be the last until the economy picks up. Will the rate cut help individuals who are looking to buy a house or car? Read below:
http://news.yahoo.com/s/ap/20081217/ap_on_bi_ge/financial_meltdown_34
Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report on Monday showed.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in April and seen as a key barometer of future housing activity, increased 6.3 percent to 88.2 from an unrevised 83.0 in March. Despite the uptick, sales were 13.1 percent lower than a year ago.
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Below are 7 tips that will help homeowners prepare for an appraisal and thus help put their minds to ease:
1) Housekeeping: Always make sure that your home is clean and presentable for the appraisal inspection. While the appraiser may be able to ignore homes that are untidy, your lender may not do the same. Underwriters and desk reviewers look at interior and exterior pictures to see what condition your property is in. You do not want them to have a bad impression of your home or else they will form a certain bias against your property. Make sure the floors are clear of any mess, the beds are neat, and the bathrooms are clean. It helps to hide as much of the everyday clutter as possible.
2) Easy Access: An appraiser must inspect every room inside your home or the appraisal will be incomplete and thus he or she will have to make a second trip out to the house. If one of the rooms is usually locked, it is important that the occupant of that room is able to unlock it for the short inspection period. This usually will only take a few minutes.
3) Renovations: Make sure that any work that is being done to the property (such as adding rooms, wiring, plumbing, etc.) is complete by the time of the appraisal inspection. This will undoubtedly delay the appraisal and may even cause the value of your home to drop. Let your appraiser know of any work in progress while setting the appointment.
4) Minor Repairs: It would be a good idea to make some minor repairs prior to the appraisal inspection. Things such as a rusty faucet, cracked window, or broken light bulb may be hard for some appraisers to ignore. A lack of adequate lighting may even hinder your appraiser's ability to take interior pictures of your home. These types of repairs are normally easy and will not cause a financial burden and instead will help form a good impression of your property.
5) List of Improvements: It is a good idea to present your appraiser with a list of improvements that you have done to the property. Be sure to include everything and try to have it ready for the appraiser when he shows up. Don't leave out anything. Let your appraiser look through all the improvements and he or she will allocate the proper value to those improvements. Don't belittle any improvements that you have done to the property.
6) Documentation: Have any needed documents ready for when your appraiser shows up. If you have made any additions or improvements to your home that may have necessitated city permits, be sure to have those documents on hand. If you pay Homeowner's Association (HOA), have a statement ready. When making the appointment, ask the appraiser what documents you need to have ready, if any. Often times no documents are needed for the appraisal.
7) Be there: Appraisers are always on the go so it is important that you are available during the time for which you scheduled the appraisal. The next available appointment may not be for days, plus with today's gas prices being what they are, who knows how much the appraiser may charge you for gas surcharge.
Finally!!! We finally see signs that our government really cares about the mortgage mess that we're in and that they are ready to step up to the plate in order to help those who are having a hard time making their mortgage payments:
(From the Associated Press)
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under a new initiative the Bush administration announced Tuesday. Dubbed "Project Lifeline," the new program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus on previous relief efforts.
The program was put together by six of the nation's largest financial institutions, which service almost 50 percent of the nation's mortgages. These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. They will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to the homeowner. "Project Lifeline is a valuable response, literally a lifeline, for people on the brink of the final steps in foreclosure," Housing and Urban Development Secretary Alphonso Jackson, said at a joint news conference with Treasury Secretary Henry Paulson.
He said the goal was to provide a temporary pause in the foreclosure process "long enough to find a way out" by allowing homeowners and lenders to negotiate a more affordable mortgage. Paulson said that the new effort was just one of a number of approaches the administration was pursuing with the mortgage industry to deal with the country's worst housing slump in more than two decades.
In December, President Bush announced a deal brokered with the mortgage industry that will freeze certain subprime loans, those offered to borrowers with weak credit histories, for five years if the borrowers are unable to afford the higher monthly payments as those mortgages reset after being at lower introductory rates.
"As our economy works through this difficult period, we will look for additional opportunities to try to avoid preventable foreclosures," Paulson said. "However, none of these efforts are a silver bullet that will undo the excesses of the past years, nor are they designed to bail out real estate speculators or those who committed fraud during the mortgage process."
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Fed slashes rates to blunt economic slowdown
By Mark FelsenthalWed Jan 30, 6:20 PM ET
The Federal Reserve cut U.S. interest rates by a hefty half-percentage point on Wednesday as part of an ongoing aggressive effort to halt a sharp slowdown in an economy hit by a housing slump and a credit crunch.The Fed's action takes the bellwether federal funds rate to 3 percent, the lowest since June 2005, and comes just eight days after the central bank slashed rates by three-quarters of a point.
The cumulative 1.25 percentage point reduction in the interbank overnight rate in less than two weeks ranks among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank. "The Fed has clearly decided that pulling out all stops to stabilize financial markets represents its main priority," said Lena Komileva, an economist at Tullett Prebon in London. The vote to lower rates, which was widely expected, was not unanimous. Dallas Federal Reserve Bank President Richard Fisher dissented, preferring to hold borrowing costs steady.
U.S. stock markets initially rallied in response to the rate cut, but renewed credit crunch fears erased the gains by the close. The Dow Jones industrial average finished down 37 points at 12,442. The dollar also moved lower, as did prices for longer-dated U.S. bonds, which are sensitive to inflation.
VICIOUS CREDIT CYCLE
The Fed's action came on the heels of a government report showing that the economy grew at a weak 0.6 percent annual pace in the last three months of 2007 as consumers curbed spending and homebuilding plunged. Growth of 2.2 percent for all of 2007 marked the economy's weakest expansion in five years. At the same time, a report showing private-sector employers added three times as many jobs as expected in January and a report earlier this week showing a big rise in orders for U.S.-made durable goods pointed to some economic resilience.
With a burst of aggressive rate cuts, the Fed is displaying its predilection for taking preventive action to halt what might become a vicious cycle of tighter credit or financial market turmoil amplifying a slowdown in economic activity. "Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the Fed said. "Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets."
However, the central bank also repeated that it would be monitoring inflation developments carefully, even though it expects inflation to moderate in coming quarters. In August, rising defaults on U.S. subprime mortgages led to a seizing up of credit markets. While conditions have improved, aftershocks from the subprime mortgage crisis have continued and financial markets remain volatile. At the same time, the housing market continues to plummet. Sales of new single-family homes fell 4.7 percent in December to their lowest level since 1995, the government said on Monday. For all of 2007, sales were off a record 26 percent.
(Additional reporting by David Lawder in Washington and Jennifer Coogan in New York; Editing by Diane Craft)
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