Existing Home Sales Hit 5 Month High

The National Association of Realtors announced recently that Existing Home Sales, after falling to 10-year low in June, rebounded in July to a 5-month high. The report, which measures the month-over-month sale of previously owned homes, indicated sales of such homes increased 3.1 percent.

Bob Walters, Chief Economist for Quicken Loans, says “Declining home prices have created increased demand for housing, which could help stabilize the housing market. Securing financing in this restrictive credit environment remains a key challenge, however. Fortunately, FHA loans – with less stringent equity and credit requirements – have come into the forefront and are likely to play a leading role in helping the housing market recover.”

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How to Come Up With a Down Payment

Not long ago, no-down-payment loans were big for homebuyers. But now that lenders have tightened their standards, borrowers once again are expected to pony up some cash of their own for a down payment.

Many homebuyers have difficulty coming up with a down payment. Here are some ways to do it:

• Set up an automatic saving plan.
• Get a gift from your parents, grandparents, other relatives or friends.
• Sell a car, boat, motorcycle, collectibles or other assets.
• Liquidate stocks, mutual funds, savings bonds or other investments.
• Allocate your income tax refund.
• Take a loan from your 401(k) retirement plan and repay yourself with interest.
• Withdraw funds from your 401(k) plan, subject to taxes and penalties.
• Collect on a loan that you made to someone else.
• Get a bonus from your employer.
• Explore homebuyer programs for public servants if you qualify.
• Apply for a state or local government down-payment program.
• Use a private down-payment assistance program.

Lenders need to know how you obtained the funds and that you've had control of those funds for at least several months.

Gifts and seller's concessions are acceptable, up to the percentage allowed by the loan program, but borrowed money can't be used as a down payment, as it is debt that has to be repaid.

Two government-run programs are designed to aid homebuyers who haven't saved much for a down payment. The Federal Housing Administration offers mortgage insurance that allows qualified buyers to purchase a home with a 3% down payment, all of which may be a gift. The U.S. Department of Veterans Affairs offers a home-loan guarantee program that helps military veterans buy homes with no down payments.

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Real Estate: What Are Short Sales?

Short sales may mean major money to real estate buyers and easy exits for troubled homeowners. But if you're a first time homebuyer, our Money Talks editor Stacy Johnson explains, it's not as easy as some may want you to think it is. This video runs 1:33…

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Interest Rates: Will the Fed Hike Rates?

Even as they grappled with inflation worries, most Federal Reserve officials at their August meeting didn't believe the Fed's key interest rate was too low given harder-to-get credit conditions straining consumers and businesses alike.

The Fed, at its Aug. 5th meeting, decided to hold its key rate steady at 2% for the second straight meeting. Confronted by problems at every turn — rising unemployment, shaky growth, credit troubles and creeping inflation — the Fed took a gamble that once again the best move was none at all.

Some analysts believe, looking ahead, the next direction for rates is probably up. Fed Chairman Ben Bernanke recently signaled that rates would likely stay at 2% at the Fed's next meeting on Sept. 16, and probably through the rest of this year. Some fear that keeping rates at this level, a four-year low, could aggravate inflation down the road.

What do you think? Will the Fed be pressured into raising rates in the foreseeable future? Or will they play it low-key until after the elections in November? We'd love to hear your opinion. Just use the "comment" link below to sound off on this topic.

New Home Sales Rise: A Welcomed Sign for Housing

The sale of newly constructed homes in the month of July rose 2.4%, according to a report issued recently by the United States Census Bureau. This follows another report issued by the National Association of Realtors indicating that July sales of previously owned homes hit a 5-month high.

Although reports such as these are welcome news for the housing markets, possibly indicating that pent up demand for housing is beginning to express itself, no one seems to be signaling a housing recovery at this point either, as the overlying issues of tight credit guidelines and a substantial inventory of unsold homes continue to plague many market areas.