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Housing Affordability Reaches Records

Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of REALTORS®.

NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time the quarterly index broke the 200 mark; recordkeeping began in 1970.

NAR President Moe Veissi said market conditions are optimal for home buyers. “For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” he said. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”

Veissi noted home sales would be much higher if lending standards would return to normal.

The index shows the median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.

A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.

Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a down payment of 10 percent. This index means the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.

“It’s never been easy to buy a first home because of the cash required for downpayment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi explained.

Most first-time buyers choose a loan with a lower down payment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no down payment.

Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012 the index is projected to set an annual record, averaging 191 for the year.

Source: NAR

If you are looking to buy then go to http://www.wmsloans.com for financing andhttp://www.goldshieldrealty.com for real estate services.

 

More Renters Are Finding It's Cheaper to Buy

With rising rents, more renters are being swayed into home ownership, even in pricey housing markets like New York. 

For example, one New York renter said he started looking into owning a home when his landlord tried to increase his rent by 13 percent when his lease was up for renewal. He found that he could buy a home and get the same amount of space for cheaper than continuing to rent, plus he’d be building equity. 

Other renters are starting to see that buying may be a better option for them, too. 

Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent. 

"Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices," Humphries told Investors Business Daily. Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months. 

Affordability in housing has been at record highs from the combination of falling home values and record-low mortgages. Humphries says that housing prices have rolled back to 2003 levels. 

"That increased affordability in the face of rising rental prices will begin to get buyers off the fence this year,” Humphries says. "What's been keeping buyers on the fence is a crisis of confidence. People who don't have a job, or who are worried about losing their job, don't buy homes. They also don't want to buy an asset they think is rapidly depreciating.”

National Association of REALTORS®’ Chief Economist Lawrence Yun says the tighter restrictions from lenders are also preventing many potential buyers from securing financing in order to buy. But for those who are able to qualify, Yun says “it’s better to get in now” than wait. 

Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)

If you are looking to buy then go to http://www.wmsloans.com for financing andhttp://www.goldshieldrealty.com for real estate services.

 

Home Buying Gets Another Boost in Affordability

For home buyers or refinancers, borrowing costs for home ownership just got a little cheaper as mortgage rates took another dip to new all-time record lows this week, Freddie Mac reports in its weekly mortgage market survey. 

"Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at average rates for May 2012: 

• 30-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.8 point, reaching a new historical low. The previous record for 30-year rates was 3.87 percent, which was set on Feb. 9 of this year. A year ago at this time, rates averaged 4.71 percent. 
• 15-year fixed-rate mortgages: averaged 3.07 percent, with an average 0.7 point, another historical low. The previous record for 15-year rates was 3.11 percent set on April 12 this year. A year ago at this time, 15-year rates had averaged 3.89 percent. 
• 5-year adjustable-rate mortgages: averaged 2.85 percent, with an average 0.7 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 3.47 percent. 
• 1-year ARMs: averaged 2.70 percent this week, with an average 0.6 point, also registering at a new all-time low. Last year at this time, 1-year ARMs averaged 3.14 percent. 

Source: Freddie Mac

If you are looking to buy then go to http://www.wmsloans.com for financing and http://www.goldshieldrealty.com for real estate services.

BofA Offers Up to $30K to Owners for Short Sales

In an effort to curb foreclosures, Bank of America is offering some of its defaulting home owners relocation assistance of anywhere from $2,500 to as much as $30,000 if they agree to complete a short sale. Bank of America and other banks increasingly are becoming more willing to complete short sales than in the past, seeing it as a much less expensive alternative than if a home owner falls into foreclosure. With a short sale, banks are able to get ownership of the property more quickly, which tends to allow banks to keep the homes in better condition for resale and avoid costly other fees. Also, studies have shown that short sale properties tend to sell for more than properties in foreclosure. As such, more banks have tried out special offers to struggling home owners to get them to pursue a short sale over foreclosure. Bank of America first began piloting its short sale relocation program in Florida last year, offering up to $20,000 to home owners who agreed to complete a short sale. JPMorgan Chase piloted a program that offered some home owners up to $35,000 to complete a short sale. Bank of America has now rolled out the program nationally. To participate, home owners must get preapproval on the sales price of the home. The sale also must close by Sept. 26, 2013. "This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive. Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) and Bank of America

Survey Shows More Reason to Buy Than Rent

Thirty-three percent of Americans say they expect home prices to rise in the next 12 months, the highest level in more than a year, according to Fannie Mae’s March 2012 National Housing Survey of consumer attitudes about the housing market.

The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it's a good time to sell a home also increased one point to 14 percent in March.

Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date. 

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.” 

Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (May 6, 2012)

Read More

Buying is Cheaper Than Renting in Nearly All Major Cities

If you are looking to buy then go to http://www.wmsloans.com for financing andhttp://www.goldshieldrealty.com for real estate services.

 

Bernanke: Mortgages Still too Difficult to Get

Even creditworthy borrowers are finding it difficult to get a mortgage nowadays and it’s unlikely banks will ease their standards anytime soon, Federal Reserve Chairman Ben Bernanke told a banking conference in Chicago Thursday. 

While banks have made huge strides in improving their balance sheets and overall lending (such as for credit cards and auto loans), banks continue to be extra cautious when it comes to issuing new mortgages, he said. Even borrowers coming with a 20 percent down payment on a home purchase may face hurdles unless they have stellar credit, he said. 

"A return to pre-crisis lending standards wouldn't be appropriate," Bernanke said in referencing how banks prior to the housing crisis were issuing mortgages with little or no documentation for jobs or incomes. "However, current standards may be limiting or preventing lending to many creditworthy borrowers."

The challenges of getting a mortgage have been cited by real estate professionals and economists as one of the biggest obstacles standing in the way of a full housing recovery. 

An estimated 10 to 20 percent of creditworthy home buyers are being locked out of the housing market because of tightened credit conditions, U.S. Housing Secretary Shaun Donovan told Reuters.

Source: “Credit Easing in U.S., Fed Chairman Says,” The New York Times (May 10, 2012) and “Bernanke: Even Worthy Borrowers Can’t get Mortgages,” Reuters News (May 10, 2012)

 

Obama Calls for Changes to Make Refinancing Easier

Late last week, President Obama said more home owners are taking advantage of government programs to refinance into ultra-low mortgage rates, but there's still more Congress can do to make refinancing easier for home owners. Refinancing applications have soared 50 percent since October as more home owners seek to take advantage of refinancing programs. President Obama, speaking in Las Vegas on Friday, said that legislation introduced by Democrats in the Senate seeks to remove additional barriers that would allow even more underwater home owners to refinance into new mortgages. The legislation includes waiving a requirement for home appraisals when refinancing, which can add to the costs of refinancing. Additionally, the proposals include expanding the refinancing program for home owners current on their mortgages who don’t have government-backed mortgages by Fannie Mae or Freddie Mac. Obama also has called on a proposal that would waive closing costs for refinancing home owners who apply their mortgage savings to their principal. “I’m calling on Congress to give every responsible home owner a chance to save an average of $3,000 a year by refinancing their mortgage,” President Obama said. Obama made his comments on Friday in Nevada, an election battleground state where six out of 10 home owners are underwater on their mortgages. Source: “Obama Returns to Topic of Economic Recovery,” The New York Times (May 11, 2012); “HUD: 3 Bills Will Complete Obama Refinancing Initiative,” HousingWire (May 11, 2012); and “Obama Touts Mortgage Relief in Swing State Nevada,” Reuters News (May 11, 2012)

If you are looking to buy then go to http://www.wmsloans.com for financing andhttp://www.goldshieldrealty.com for real estate services.

How Low Will Mortgage Rates Go?

For the second consecutive week, fixed-rate mortgages reached new all-time records lows, offering another big boost to home buyer affordability. 

The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week. 

Here’s a closer look at mortgage rates for this week:

• 30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac. 
• 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent. 
• 5-year adjustable-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent. 
• 1-year ARMs: averaged 2.73 percent, with an average 0.5 point, rising from last week’s 2.70 average. A year ago, 1-year ARMs averaged 3.11 percent. 

Source: Freddie Mac

 

Is Housing as Cheap as It'll Ever Get?

Home buyers who want a bargain may want to act now because the housing market is in the midst of a turnaround, economists say.

Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys. 

But the housing deals aren’t expected to stick around much longer.

An improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say. 

Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capital’s Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney.

Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data.

"Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000," Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney.

Loan Rates, Demand Predictions

Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards. 

The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.  

Source: “Buying a Home Won't get Much Cheaper,” CNNMoney (May 3, 2012) and “Time To Trade The Lease For A Mortgage?” NPR (May 1, 2012)

 

FHA Streamline Refinance Change June 11, 2012

FHA wants more homeowner’s to be able to refinance to a lower FHA Mortgage Payment.  Because of this, they are putting in a new “tier” for FHA PMI for refinancing your FHA loan! 

Effective June 11, 2012, FHA will lower its Upfront Mortgage Insurance Premium (UFMIP what we refer to as the FHA PMI premium) for certain FHA Borrowers with a DROP to just .01 percent.

IF YOU WANT TO REFINANCE A FHA LOAN – THIS IS HUGE!  We’ve had trouble in recent months making a FHA Streamline make sense for some homeowners because of the RISING cost of FHA PMI.  With this recent slash to only 0.1% –Many more people will save THOUSANDS of dollars using the 2012 FHA Streamline Refinance Program!

If you want to know if you might qualify for this new program remember these few rules:

• You must be current on your existing FHA Mortgage (USDA, VA and Conventional loans do not qualify)
• Your current FHA mortgage must have been endorsed prior to May 31, 2009.
• Additionally, FHA says that to qualify:
  • Employment verification is not required with an FHA Streamline Refinance
  • Income verification is not required with an FHA Streamline Refinance
  • Credit score verification is not required with an FHA Streamline Refinance
  • A new appraisal is not required with an FHA Streamline Refinance

FHA changed it’s guidelines so that VERY little is required to qualify, however, in North Carolina, we have our own State mandated standards, so again – many NC Banks can not offer this program the way FHA intended for it to work – WE DO!

MONTHLY Insurance for the FHA 2012 Streamline Refinance Program:

 For the “2012″ Streamline FHA Program,  FHA will also charge an annual premium of .55 percent (which you divide by 12). This is NOT significant for those with mortgages taken out prior to May of 2009, as your current monthly mortgage insurance for FHA is .55 percent. 

*Regarding No Credit Score.  Generally we need at least a 640 FICO credit score to avoid some minor additional verifications and documentation.  However we have the ability to do a NO CREDIT SCORE refinance under this program allowing you to refinance with a FICO score UNDER 600 (there are some additional guidelines that may also apply).

If you are interested in getting more information about refinancing your FHA mortgage, let us provide you with a FHA Streamline Refinance options!  We will give you the best mortgage rate today and the lowest cost!  Call Darren Orshoff at (888) 967-4968 today for a free no obligation consultation.  We are a no lender fee broker specializing in Government loans with no fees and also have direct lender contacts so that if you need it you can have your loan decision in days instead of weeks or months...and we would love to be YOUR lender today!