HUD provides a score card for the health of the nation’s housing market. The most recent score card shows that while affordability of housing is still extraordinarily high, there is a lot of inventory held off the market. Additional good news is that there has been a lot of refinance activity including people trying to get out from under mortgages that they can’t afford. You can read the full national housing scorecard here.
Another great email from my favorite mortgage broker.
Happy Tuesday-
Rates have been going up the last 7 days, but are still hovering around 3.875% for 30 year fixed and 3.375% for 15 year fixed loans.FHA announced not only fee hikes, but but a proposal to reduce seller’s concessions from 6% to the lower of 3% or $6000. This means FHA buyers will no longer have their sellers pay all the closing costs, including the very hefty up-front MIP and the escrow account reserves. It could price some first time buyers out of the market – not the best news for a market in recovery. If you’d like to have your voice heard here’s the link to post a comment- you have until March 22nd 2012, so the sooner the better- http://www.regulations.gov/#! submitComment;D=HUD-2010-0063- 0908 I will be in Washington DC March 18-21, lobbying our Senators and Congressional reps – we are asking them to adjust some of the Dodd-Frank legislation to allow us more flexibility in reducing (yes!) mortgage broker fees, and allow us to get paid on loan transactions where the borrower chooses to get the lowest rate possible. These are make-sense changes that are very necessary so that we can give borrowers the best loans.As always, I am here if you have any scenarios you have- Residential, Commercial, FHA, VA, Homepath, or any other mortgage – I will always strive to deliver low rates, low cost and the best service possible.
Take care,–
Einat SadotBranch Manager
My favorite mortgage broker sent me this mortgage update that has some great information about rates.
Rates are holding steady - 3.875% for 30 year fixed loans, and 3.25% for 15 year fixed loan. FHA loans are at 3.75%, and Jumbo loans- those over $625K, are at around 4.5%.There is some less fortunate news on the FHA loan front- starting April 1st, FHA fees will be going up. The one-time upfront MI is going to 1.75% (from 1.0%), and the monthly MI is going to 1.25% for loans up to $625K (from 1.1%), and to 1.45% for loans from $625K-$729K (from 1.1%). Obviously FHA is shying away from loans over $625K… This will significantly raise the costs of FHA Loans. If you are planning on using an FHA loans it’s best to find a house soon!There is an alternative – Conventional loans with MI- on a SFR purchase- 5% down with MI is available up to $625K, and on condos 10% down with MI is available up to $625K. Conventional MI is cheaper than FHA’s- usually around 0.6%-0.75%, and there’s no one-time upfront MI to deal with.You may have also heard that HARP 2 - the improved government refinance of Fannie and Freddie loans, is kicking in this month. Homeowners who are underwater but current on their mortgages can refinance no matter how deep underwater they are- it is now unlimited. Income requirements have also been loosened up.Lastly, we are doing a lot of commercial loans right now- with rate as low as 3.2% for owner occupied properties to 4.25% for apartment buildings it’s the right time to buy.Please don’t hesitate to call with all your loan scenarios and questions.
All the best,
– Einat Sadot, Branch Manager
The Los Angeles home market is tight. Right now there aren’t very many properties available to first-time and move-up buyers. This is a result condition of low priced homes and the difficulty getting loans for fixers.
A new pilot program by Fannie Mae will sell foreclosed properties to investors and non-profits as rentals. This seems to be a good idea, because it will get vacant units filled. The problem is that there are plenty of rental units currently available, but there are few affordable homes available for first-time buyers.
Policies like these are short-sighted because they focus on the wrong thing. They are focused on filling vacant units that are foreclosed, but they actually take demand away from other rental units. The real concern should be to make funding available for people to fix up a home so they can buy it. There are programs available for fixers, but they are nearly impossible to get and therefore are underutilized.
Talk to your representatives about making policies that make sense and aren’t short sighted.
The federal government has repeated stated that there needs to be investigations of bank that have foreclosed on homes. This is due to the complaints about fraud in the foreclosure process. The federal government hasn’t been able to get a grasp on how big the problem is because they claim that it is not easy to measure.
San Francisco’s assessor decided that it was worth studying and found the money to audit the files of a handful of properties that had been foreclosed upon. The audit included 382 homes and resulted in some fairly shocking findings.
The audit found that 99% of the loans had one or more irregularities. Additionally, there were clear violations of the law in 84% of the loans. If these are the results from a small scale audit, I can only imagine the number of people who have be impacted by the activities of banks.
I think it is time for policy-makers to get tough with banks and not just pay lip-service to the appease their constituents.
Normally people accept the idea that lower home prices are bad because people who already own homes may have lost value in their home. However, there is an upside to lower prices. The upside is that more people can afford to by homes or can buy homes that are nicer or better located.
A recent report on the affordability of homes in California was released and shows that more people can now afford to buy a home. Affordability has to do with the price of homes available and the interest rates that people can get on home loans. We are now at the record level for affordability that was seen in 2009.
Existing home owners should also be happy that affordability is up, because it means that more people can afford to buy. Hopefully this will lead to fewer properties on the market and fewer vacant units. More people in homes means better neighborhoods. So, in the long-run the current low prices will rebound and more homes will be occupied.
Record low interest rates mean that it is a great time to get a loan. However, the other factor that comes into play when deciding to buy or invest in a home is the price level of homes. As we all know, home prices have come down dramatically in nearly every market. This is in part due to the high number of properties available for sale and the, relatively, low number or buyers.
There may be a change on the horizon. While most people do not expect home prices to shoot up any time soon, there may be more stability and possibly some minor increases in prices. This is a result of the lower levels of available homes. A recent article in the Wall Street Journal stated that inventory levels dropped by an average of 22% nationwide. Of course the amount of change in the housing inventory varies depending on the city and state, but the trend is fairly evident. If this trend continues, it should be expected that prices would increase, even if it may be slightly.
Maybe we are on the road to recovery???
The average 30 year fixed rate for January 19th, 2012 is 3.88%. According to the Primary Mortgage Market Survey (PMMS), published by Freddie Mac this is the lowest since the inception of the survey in 1971.
To gain an understanding of what this low interest rate means, you have to think about what it translates into based upon a particular loan amount. To keep things simple, I will use a loan amount of $100,000 for this example. At a fixed interest rate of 3.88% on a 30 year loan, the payment is $471 per month.
If you compare this to the 7.00% interest rate in January of 2002 (10 years ago) you would have had a payment of $665 per month for a $100,000 loan.
Going back even further, to January 1982, the interest rate was 17.48% which translates to $1,465 per month for a $100,000 loan.
These super low interest rates and the huge drop in home prices makes right now a great time to buy. In many cases, rental costs are higher than the cost to own.
In order to continue the payroll tax cut there is going to be an increase in the fees charged to borrowers using Freddie Mac and Fannie Mae guaranteed loans. While the payroll tax cut is a good thing for people who rely on every penny to survive, the way congress and the president decided to pay for it is to increase housing costs to people who are trying to buy homes using low down-payments.
Here’s how it works. The guarantee fee, kind of insurance, on Freddie Mac and Fannie Mae loans will increase by 10 basis points (0.1%). This will translate to about $10 – $15 per month on a $200,000 loan. While this is not a tremendous amount of money, it does add up. Most people using these types of government loans already have limited funds for monthly payments and down-payments. That is why they are using the government backed loan. It seems silly to cut the payroll tax and then increase fees on the same group of people.
The increase is due to take place April 1st, 2012 and that’s no April fool’s joke. Take a moment to tell your representatives to find a different way to fund the payroll tax cut. The only way to get the economy back on track is to get housing back on track. Hurting first-time buyers is not the way to do it.
