by Steve Randall 1/18/2016
California home sales rebounded last month Home sales in California rebounded in December after a weak November according to new figures from the California Association of Realtors. Sales of existing single-family homes increased 9.6 per cent from November 2015 and 10.7 per cent from December 2014. The seasonally adjusted annualized rate was 405,530. Condo sales increased 25.1 per cent in the month from November and were 10.2 per cent higher than a year earlier. Prices also increased with the median home price statewide reaching $489,310, up 2.6 per cent from November and 8 per cent from December 2014. “As we speculated, sales that were delayed in November because of The Consumer Financial Protection Bureau’s new loan disclosure rules closed in December instead, which led to the greatest monthly sales increase in nearly five years,” said C.A.R. President Ziggy Zicarelli. “Sales increased across the board in all price segments in December, but improvement in the sub-$500,000 market was more pronounced as many homes affected by the new loan disclosures were priced under the conforming loan limit.” The median number of days it took to sell a single-family home increased in December to 39.5 days, compared with 37.5 days in November and 44.1 days in December 2014.
By: Justin da Rosa16 Dec 2015
The Federal Reserve announced its benchmark rate target Wednesday afternoon and, as expected, raised the target for its benchmark rate. “Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent,” the Fed said in a release. “The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.” The Fed committee said economic activity has been expanding at a moderate pace; household spending and business investment have increased over the past few months. The decision was also influenced by ongoing jobs gains and declining unemployment. “The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen,” the Fed said. “Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced.” The Fed also set out a future plan for the rate. “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the Fed said. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
Bloomberg News Michelle Jamrisko Sales of previously owned U.S. homes retreated in October from the second-highest level since 2007 as lean inventory limited momentum in residential real estate. Closings, which usually take place a month or two after a contract is signed, dropped 3.4 percent to a 5.36 million annual rate, the National Association of Realtors reported Monday. Prices increased compared with October 2014 as the number of dwellings on the market decreased. A limited supply of available properties, particularly more affordable homes, has made for a slow and steady recovery in residential real estate. At the same time, steady employment growth, rising rents and low borrowing costs are bolstering prospects for the market. “Unless supply catches up, there will still be problems on the price side,” said Xiao Cui, an economist at Credit Suisse in New York. “We think that job growth and earnings growth have been promising this year and should help affordability.” The median forecast of 71 economists surveyed by Bloomberg called for sales at a 5.4 million annual rate. Estimates ranged from 5.09 million to 5.6 million. September’s pace was unrevised at 5.55 million, the second-fastest rate since February 2007. Compared with a year earlier, purchases increased 0.9 percent in October before adjusting for seasonal variations. Home Prices The median price of an existing home rose 5.8 percent from October 2014 to $219,600. The appreciation was led by an 8 percent year-to-year advance in the West. Prices have been bolstered by a dearth of supply on the market. The number of previously owned homes for sale dropped 2.3 percent in October from a month earlier to 2.14 million, the fewest since March. “This is disturbing,” Lawrence Yun, NAR chief economist, told reporters as the figures were released. Yun said he forecasts 5.3 million homes will be sold in 2015, the most in eight years. “Once we reach the spring buying season we might be faced with a notable inventory crunch.” At the current sales pace, it would take 4.8 months to sell those houses, compared with 4.7 months at the end of the prior month. Less than a five months’ supply is considered a tight market, the Realtors group has said. By Region Purchases declined in three of four regions, led by an 8.7 percent drop in the West, the Realtors’ data show. They were unchanged in the Northeast. Sales of existing single-family homes declined 3.7 percent to an annual rate of 4.75 million from a month earlier. Purchases of multifamily properties -- including condominiums and townhouses -- fell 1.6 percent. While housing starts declined more than forecast in October, a boost in permits indicates that builders should stay busy in the months ahead, according to Commerce Department data released last week. Residential starts declined 11 percent to a 1.06 million annualized rate from a 1.19 million pace the prior month. Permits for single-family home construction, the largest and most economically significant part of the market, climbed to a 711,000 rate, the strongest since December 2007. Labor Market A faster hiring pace is supporting Americans who are weighing a home purchase. Payroll growth surged in October, with the 271,000 gain exceeding all estimates in a Bloomberg survey of 93 economists. Last month’s advance lifted the monthly average so far in 2015 to 206,000. That compares with a 260,000 last year that was the best since 1999. Borrowing costs also have provided a cushion for those who can secure credit. The average 30-year fixed mortgage rate was 3.97 percent in the week ended Nov. 19, according to Freddie Mac data. That’s close to the 3.83 percent average so far this year, and compares with the 6.06 percent average in the five years leading to the last recession. Existing home sales, which are tallied only when purchase contracts close, account for more than 90 percent of the residential market. A timelier barometer is new-home purchases, because they are tabulated earlier in the process, when deals are signed. Economists project those sales rose to a 500,000 pace in October after 468,000 the prior month, according to the Bloomberg survey median ahead of Wednesday’s report from the Commerce. For a mortgage refinance quote, home purchase quote, home equity line quote, or insurance quote visit www.mtgbroker4u.com or call Todd 619-758-4035
"The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now," Lawrence Yun, chief economist for the National Association of Realtors said in a release. "As a result, current homeowners are using their increasing housing equity towards the down payment on their next purchase." The original forecast was for 5.48 million units this year. The median home price last month was $234,000, up 5.6% year-over-year. July also marked 41 consecutive months of year-over-year gains.
Those gains, however, could eventually have a negative impact on originator business, as sales are expected to slow. "Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," Yun said. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."
First-time buyers – are struggling to purchase. "The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," Yun said. "Rising rents and flat wage growth make it difficult for many to save for a down payment, and the death of supply in affordable price ranges is limiting their options." These latest figures strengthen economists’ argument that the Fed will move to increase its benchmark rate at next month’s meeting.
Authored By Scott Sheldon, Credit.com on July 29, 2015 6:00 AM
As the Consumer Financial Protection Bureau strives to create more transparency within the mortgage industry, there are crucial homebuying truths that endure — and knowing what they are can help you to be better informed as a homebuyer. But don't expect to hear them from your bank.
1. You Can Get a Better Deal Elsewhere
Fannie Mae and Freddie Mac publish mortgagee guidelines that banks use to originate loans. In addition, individual banks may place additional credit requirements on these guidelines to minimize their risk. Let's say that Fannie Mae has a maximum debt-to-income ratio of 45%, but the bank that you're applying with has a maximum debt ratio of 43%, conforming to the CFPB's definition of a 'qualified mortgage.' Your bank will likely never tell you can get a better deal elsewhere, even though you probably can. When you work with a bank, you are limited to their programs and their products. Direct lenders, brokers and some smaller banks have access to more credit, which ultimately dictates whether or not your loan will move forward.
Caveat: A better loan offer elsewhere is not a better offer if it won't close because you are unable to meet the loan guidelines. So make sure that you can meet the requirements of that "better deal" before you go for it.
Ready to get started. Quick online application.
2. Time Is Not Your Friend
Once you've locked in your interest rate, the clock is running – and time is now indeed money. Let's say you're nearing the end of your 30-day interest-rate lock, and you need an additional 15 days. Your lender might charge you as much as 0.25% of the loan amount – on a $300,000 loan, that's $750 more in fees because you took an additional week to get your financial documentation back to the lender. Lock fees vary, as do rate lock policies among banks. Be informed, ask upfront. After you have chosen to lock your rate, get your financial documentation back to the lender in 24-48 hours as needed in the process. While this is recognizably an inconvenience, it will ensure that your loan closes in the timeframe in which the interest rate is locked.
FYI: The reason why interest rate lock extensions cost you is because if interest rates go up and you're locked in at lower rate, your loan is less profitable, and therefore less desirable, to the end investor.
Know when to lock. Get the free Daily Rate Lock Advisory.
3. You'd Better Have a Ton of Equity
Equity is a crucial factor when applying for a mortgage. If you intend to get the absolute lowest possible interest rate the market will bear you're going to need a minimum of 30% equity in your home — ideally more. Mortgage pricing adjusters (factors that drive mortgage costs) — like occupancy, credit score and loan-to-value — begin after a loan to value of 65%, or 35% equity. That means if you have 35% equity to finance a loan for an owner-occupied home, the pricing is going to be quite a bit better than if you have 25% down, for example. Loan officers will normally tell the borrower the minimum amount they need to get a mortgage, but not necessarily the minimum amount they need to get a mortgage with the best possible combination of rate and fees.
Here's a nifty calculator you can use if you want to see how much home you can afford. Your credit score has a big impact on that number, so you can see where you stand by getting your free credit scores once a month on Credit.com.
4. Appraisers Hold All the Cards
Mortgage professionals who work in a non-banking capacity will be more likely to tell you that appraisers do hold all the cards. Loan professionals who work for a bank have more rules and requirements for originating than non-bank loan officers. Additionally, many bigger banks own the appraisal companies, subsequently getting a piece of the appraisal revenue. The Home Valuation Code of Conduct that arose in the aftermath of the financial collapse took away the ability for loan officers to have any direct access to appraisers, including the ordering and scheduling of the appraisal. Currently, the entire appraisal process is automated to meet federal compliance regulations.
Now, you may qualify for a mortgage on paper with your credit score, income, credit and debt, but the appraiser's opinion of your home's value can kill your mortgage, even though a different appraiser's opinion of value may give you a green light. Even a $5,000 difference in value is enough to throw a loan off-course. Should your appraised value not meet expectations, you do have recourse. Ask a real estate agent friend to pull comps identifying neighboring houses not included in the appraisal report. Next, ask your bank to have a "re-consideration of value" performed with the new information. In most cases, it's a 50/50 shot, as the loan industry has been forced to give appraisers absolute power.
The more clarity and understanding consumers have about the loan process, pricing and general guidelines, the more information they will have to make an educated choice. Always best to continually ask questions — and then some — throughout the transaction.
The housing data released this week was encouraging. May Existing Home Sales rose 5% from April to the highest level since November 2009. They were 10% higher than a year ago, and many of those were first-time buyers. May New Home Sales increased 2% from April, a 20% increase over last year, and the highest level since February 2008. A tight supply of homes for sale prevented even better results. Recent data on housing starts and building permits suggest that builders are ramping up production.
Looking ahead, investors will remain focused on the situation in Greece. In the U.S., the important monthly Employment report will be released on Thursday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, Pending Home Sales will come out on Monday. ISM Manufacturing will be released on Wednesday. Mortgage markets will close early on Thursday and will be closed on Friday in observance of Independence Day.
By AJ Smith June 5, 2015 2:06 PM
Buying a home can be complicated, and it is likely the biggest financial decision you will face in your life. The housing market is changing all the time, and there are lots of antiquated sayings or supposed "rules" that you will hear about. If you are in the process of buying your first home, it's important to know which sayings are helpful and which are just myths.
Here are some common misconceptions about homebuying.
1. Buying Is Always Better Than Renting
Even if you are planning to settle in one place for the foreseeable future, renting may still be the smarter option for you. This is usually because buying a home requires a bigger upfront payment that you may not be ready to make. Also, in some areas monthly rent payments may actually be lower than monthly housing payments. Using a rent versus buy calculator can help you see which option is better for your specific situation.
2. You Must Have a 20% Down Payment
The bigger a down payment you can make, the less you will have to finance with a mortgage. This in turn means you pay less in interest and can often put you in a better position. However, you can secure a loan with less than 20% down. Just be aware that you may have to deal with the added cost of private mortgage insurance, which protects the lender in case you default on your loan.
[ Wondering what kind of interest rate you might qualify for? Click to compare rates now.]
3. Real Estate Will Go Up in Value
Historically, home values have risen, but that doesn't mean you'll make money on your purchase. The past decade has shown just how volatile home values can be, and if you find yourself in the situation where you have to sell during a downturn in the market, you may get less money than you paid when you originally purchased the home. That's even before you consider transaction costs, which can be considerable.
4. A 30-Year Fixed Mortgage Is Best
While many first-time homebuyers go for the conventional 30-year loan, there are other mortgage options worth considering like an adjustable-rate mortgage or a shorter-term fixed-rate loan. If you can afford a shorter term, you will spend less on interest. If you can't afford the higher monthly payments, then maybe you should go with the 30-year option.
5. Down Payment + Monthly Payments = Total Home Cost
If many of your peers have houses, you may be gauging your ability to afford a home incorrectly. Your credit score, debt load, income and a number of other factors go into your home affordability. (You can check your credit scores for free on Credit.com to see where you stand.) A common misconception is that the main cost after down payment is monthly principal and interest payments, which you can predict. In reality, you will also incur upfront closing costs, maintenance and repairs, homeowners insurance and property taxes so important that all of these are worked into your budget when you become a homeowner.
Whether they are pushing you to buy too soon, too much or the wrong way, it's a good idea not to fall victim to these common myths. The important thing is to make the right decision for you in your specific situation.
FHA premium cut could benefit 2.4 million homeowners
One in three Federal Housing Administration borrowers would benefit from refinancing.
That’s the conclusion of a study conducted by the Housing Finance Policy Center at the Urban Institute.
The Center’s Laurie Goodman, Karan Kaul and Jun Zhu took a closer look at the impact of the premium cut on FHA refinance volumes and have concluded that roughly 2.4 million current FHA borrowers could benefit from refinancing.
They started with 6.6 million existing FHA loans and excluded the following three categories of loans:
After excluding pre-June 2009 originated, delinquent, modified and mortgages with a maximum term of 15 years, (total 2.2 million), they estimated that roughly 4.4 million FHA borrowers could be candidates for refinancing.
In general, they found, borrowers stand to save money by refinancing if the new mortgage rate and the new FHA premiums, combined, result in a 0.75% reduction or more in annual mortgage costs.
“We used this as the base for our final estimate, assuming that the majority of borrowers would adopt this threshold,” they write. “Some borrowers are more conservative, of course, and might wait until their annual mortgage cost savings hits 1% to refinance, resulting in less refinance activity. Other borrowers are aggressive and might jump in when they stand to gain only 0.5%, which would result in more refinance activity. We’ve estimated these higher and lower triggers as well to give a clearer sense of the full range of potential refinance activity.
“Under our 0.75% threshold which we expect the majority of borrowers to adhere to, we estimate that roughly 2.4 million FHA borrowers could lower their mortgage payments even after accounting for refinancing costs. This represents over a third of the 6.6 million FHA borrowers,” they write.
Using a more conservative threshold of 1%, roughly 1.7 million borrowers could save money by refinancing.
At the more aggressive 0.5% threshold, their estimate rises to over 3 million.
“Our estimates are also based on the current FHA mortgage rate. A continued decline in rates could make refinancing appealing to a greater number of borrowers and would raise our estimates, whereas an increase in rates would lower them,” they write. “Other unknowns such as borrowers’ expectations of future mortgage rates can also affect refinance activity. If a large number of borrowers decide to wait in anticipation of even lower rates in the future, that would further reduce refinance volumes. Given what we know today, however, one in three FHA borrowers could certainly lower their monthly payments by refinancing.”
LOW DOWN PAYMENT MORTGAGE OPTIONS RETURN
By: Brena Swanson Source: www.housingwire.com/articles/32959
New programs are starting to allow first-time homeowners back into the housing market, except this time, new regulation will help prevent the same type of lending that spurred the financial crisis. Per CNNMoney:
“It’s one of the things that’s inhibiting first-time homebuyers,” said Rob Chrane, president of Down Payment Resource. “There are a lot more people who can qualify for a home loan that don’t realize that they can.”
Two big factors that are playing in to the recent ease is the Federal Housing Finance Agency’s new down payment programs and the Federal Housing Administration’s reduction in mortgage insurance premiums.
In October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.
At the beginning of the year, the Obama Administration directed, via executive action, the FHA to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.
FHA monthly mortgage insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.
“We’re starting to get back to what’s reasonable,” said Hsieh. “The crisis has shaken the market so much that there is no doubt there was an overreaction.”
However the article did caution that while a shift toward loans with lower down payments has drawn criticism from some politicians, the new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market.