April 2012 Home Sales

According to the National Association of Realtors, NAR, April home sales which include single-family homes, townhouses and condominiums are up 10.0% from last year and are up 3.4% from March.  There is currently a 6.6 month supply of homes on the market if home sales continue at their current rate, 20.6% below last year this time when there was a 9.1 month inventory.   Foreclosures and short sales made up 28% of the home sales in April.  First-time homebuyers accounted for 35% of the April Home sales.  All cash purchases accounted for 29% of home sales in April.  The national median home sales price is up 10.1% to $177,400 in April from a year ago.

The chief economist, Lawrence Yun, said “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year.  With job growth, low-interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”

The housing market is turning around.  Compared to a year ago, home sales and housing prices are both up 10% and housing inventory is down 20%.  Click here to see Today’s Mortgage Rates.

 

The HUD 203K Purchase and Rehab Loan Program

If you are looking to buy a fixer upper, FHA has a loan for you!  FHA has a Streamlined 203(k) program which allows homebuyers to finance up to $35,000 into their mortgage to improve or upgrade their home before move-in.  This program is for single family homes as well as 1-4 unit housing.  There must be a minimum repair of $5,000 to qualify.

The following repairs are from HUD.gov and are covered under the 203K Program:

• Repair/Replacement of roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of flooring
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather-stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
• Accessibility improvements for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards
• Repair/replace/add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

The steps below are from HUD.gov and describe the typical step-by-step application/mortgage origination process for a transaction involving the purchase and rehabilitation of a property.

A. Homebuyer Locates the Property.

B. Preliminary Feasibility Analysis. After the property is located, the homebuyer and their real estate professional should make a marketability analysis prior to signing the sales contract. The following should be determined:

1) The extent of the rehabilitation work required;

2) Rough cost estimate of the work; and

3) The expected market value of the property after completion of the work. Note: The borrower does not want to spend money for appraisals and repair specifications (plans), then discover that the value of the property will be less than the purchase price (or existing indebtedness), plus the cost of improvements.

C. Sales Contract is Executed. A provision should be included in the sales contract that the buyer has applied for Section 203(k) financing, and that the contract is contingent upon loan approval and buyer’s acceptance of additional required improvements as determined by HUD or the lender.

D. Homebuyer Selects Mortgage Lender.

E. Consultant Prepares Work Write-up and Cost Estimate.

F. Lender Requests HUD Case Number.

G. Fee Consultant Visits Property. The homebuyer and contractor (where applicable) meet with the fee consultant to ensure that the architectural exhibits are acceptable and that all program requirements have been properly shown on the exhibits.

H. Appraiser Performs the Appraisal.

I. Lender Reviews the Application The appraisal is reviewed to determine the maximum insurable mortgage amount for the property.

J. Issuance of Conditional Commitment/Statement of Appraised Value. This is issued by the lender and establishes the maximum insurable mortgage amount for the property.

K. Lender Prepares Firm Commitment Application. The borrower provides information for the lender to request a credit report, verifications of employment and deposits, and any other source documents needed to establish the ability of the borrower to repay the mortgage.

L. Lender Issues Firm Commitment. If the application is found acceptable, the firm commitment is issued to the borrower. It states the maximum mortgage amount that HUD will insure for the borrower and the property.

M. Mortgage Loan Closing. After issuance of the firm commitment, the lender prepares for the closing of the mortgage. This includes the preparation of the Rehabilitation Loan Agreement. The Agreement is executed by the borrower and the lender in order to establish the conditions under which the lender will release funds from the Rehabilitation Escrow Account. Following closing, the borrower is required to begin making mortgage payments on the entire principal amount for the mortgage, including the amount in the Rehabilitation Escrow Account that has not yet been disbursed.

N. Mortgage Insurance Endorsement. Following loan closing, the lender submits copies of the mortgage documents to the HUD office for mortgage insurance endorsement. HUD reviews the submission and, if found acceptable, issues a Mortgage Insurance Certificate to the lender.

O. Rehabilitation Construction Begins. At loan closing, the mortgage proceeds will be disbursed to pay off the seller of the existing property and the Rehabilitation Escrow Account will be established. Construction may begin. The homeowner has up to six (6) months to complete the work depending on the extent of work to be completed. (Lenders may require less than six months.)

P. Releases from Rehabilitation Escrow Account. As construction progresses, funds are released after the work is inspected by a HUD-approved inspector. A maximum of four draw inspections plus a final inspection are allowed. The inspector reviews the Draw Request (form HUD-9746-A) that is prepared by the borrower and contractor. If the cost of rehabilitation exceeds $10,000, additional draw inspections are authorized provided the lender and borrower agree in writing and the number of draw inspections is shown on form HUD-92700, 203(k) Maximum Mortgage Worksheet.

Q. Completion of Work/Final Inspection. When all work is complete according to the approved architectural exhibits and change orders, the borrower provides a letter indicating that all work is satisfactorily complete and ready for final inspection. If the HUD-approved inspector agrees, the final draw may be released, minus the required 10 percent holdback. If there is unused contingency funds or mortgage payment reserves in the Account, the lender must apply the funds to prepay the mortgage principal.

 

Mortgage Market News for Week Ending May 18, 2012

Mortgage Market News for Week Ending May 18, 2012

Mortgage Rates Improve on Greek Concerns

Once again, the primary influence on mortgage rates was the uncertainty in Europe. Mixed economic data released this week was roughly neutral. Investors seeking relatively safer assets pushed stocks lower and mortgage rates to record low levels.

In Europe, the focus was primarily on Greece this week. Greek political leaders remained very divided and were unable to form a coalition government following last week’s elections. There is little support for the bailout package, which requires severe austerity measures, and it’s not clear what position a new government will take. Statements from EU officials suggest that Greece must comply with its austerity agreement to receive further aid. Without aid, Greece likely will be forced to leave the European Union (EU). As a result, Fitch again downgraded the debt of Greece.

The turmoil in Europe has been positive for US mortgage rates for two main reasons. First, economic growth in the region has slowed, which reduces future inflationary pressures. In addition, investors have responded to the uncertainty by shifting to relatively safer assets, including US mortgage-backed securities (MBS). The economy of Greece is very small, but the increasing possibility that Greece will exit the EU calls into question the stability and the benefits of the monetary union, causing a wide range of problems outside of Greece. Bond yields in other troubled European countries have risen, creating a further drag on economic growth. People are beginning to withdraw their money from banks in these countries, increasing the risk of bank failures. Europe’s issues will not be resolved quickly and will continue to influence US markets for quite a while.

 

Week Ahead

Next week, Existing Home Sales will be released on Tuesday. New Home Sales will come out on Wednesday. Durable Orders, an important indicator of economic activity, will be released on Thursday. Consumer Sentiment will round out the schedule on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. There will be a G8 meeting over the weekend. If the meeting results in an unexpected coordinated policy action to support Europe, it would impact US markets as well. Mortgage markets will close early on Friday in observance of Memorial Day.

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com
To learn more about the newsletter, please call 800-627-1077
All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.

FHA’s $100 down Purchase Program

FHA typically requires a 3.5% down-payment for purchases but if you are purchasing a HUD owned REO home between now and October, you don’t need anything but $100 down-payment.   The goal of the $100 down-payment loan program is to turn foreclosed homes into owner-occupied homes. 

This program is for owner occupied borrowers only (no investors) and can be combined with the 203K loan program.  The 203K loan program is a FHA loan program which allows for a mortgage loan to include up to an additional $35,000 towards home repair or upgrades.  The list below contains the FHA 203K approved home repairs:

• Repair/Replacement of roofs, gutters and downspouts
• Repair/Replacement/upgrade of existing HVAC systems
• Repair/Replacement/upgrade of plumbing and electrical systems
• Repair/Replacement of flooring 
• Minor remodeling, such as kitchens, which does not involve structural repairs
• Painting, both exterior and interior
• Weatherization, including storm windows and doors, insulation, weather stripping, etc.
• Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
• Accessibility improvements for persons with disabilities
• Lead-based paint stabilization or abatement of lead-based paint hazards 
• Repair/replace/add exterior decks, patios, porches
• Basement finishing and remodeling, which does not involve structural repairs
• Basement waterproofing
• Window and door replacements and exterior wall re-siding
• Septic system and/or well repair or replacement

Click here to Apply.

VA Jumbo Loans

VA offers VA Jumbo loans, which are loans that are greater than $417,000.  VA Jumbo loans out perform Non-VA Jumbo loans in that VA loans require less down-payment, offer great low fixed interest rates and do not require monthly mortgage insurance.

VA Jumbo Loans do not require a down-payment on any amount below $417,000.  The borrower is required to pay 25% down payment on any amount above $417,000.  For example: on a $450,000 loan, the borrower would be required to pay a 25% down-payment on $33,000 which would be $8,250 (less than 2% of the total loan amount).

The borrower is required to pay an upfront one-time funding fee on VA Jumbo loans.  The first time VA eligibility is used, the funding fee is 2.15% of the loan amount.  The second time VA eligibility is used, the funding fee is be 3.3%.

There is a minimum Credit score of 640 required for loans above $650,000.  Manufactured homes are not eligible for the VA Jumbo program.

If you are considering obtaining a VA Jumbo loan, contact an experienced and knowledgable loan officer.

Apply for a VA Jumbo Loan.

The HARP 2.0 Mortgage Insurance Advantage

Mortgage insurance is insurance paid by you on behalf of the lenders or investors to protect them from loss due to a default on the mortgage loan.  Mortgage insurance is typically required on all FHA loans and on all Conventional loans where there is less than twenty-two percent equity.

For the HARP 2.0 program, Mortgage insurance is transferable from one servicer to another.  This is a big deal and is saving eligible homeowners big money.  Homeowners who have Single Premium Mortgage Insurance are coming out saving biggest on this deal.  Single Premium Insurance is when you pay all of the Mortgage Insurance in cash upfront by taking a slightly higher interest rate or bringing the additional cash to close.  With the HARP 2.0 refinance, you are able to refinance with an amazing low-interest rate and are either being waived the monthly premium or are able to transfer the same mortgage insurance that the existing loan has now.  Mortgage insurance is more expensive now than it was when the MI would have been obtained on a HARP eligible loan.

What is HARP 2.0

HARP 2.0 is the second version of the Home Affordability Refinance Program and was rolled out mid-March 2012 and offers homeowners to take advantage of historically low-interest rates regardless of appraisal value.  HARP 2.0 does not have a maximum loan-to-value (LTV), the ratio between the loan balance and the property value.

HARP 2.0 Eligibility Requirements:

• Must be current on their mortgage payments
• The mortgage loan must be owned by Fannie Mae or Freddie Mac and originated prior to June 1, 2009

What you should know:

Each bank or lender sets specific underwriting guidelines for servicing HARP 2.0 loans.  While one bank may underwriting loans with a maximum LTV of 105%, another bank is underwriting loans with a maximum LTV of 150% and others might have an unlimited amount of LTV.  It’s important to work with an experienced loan officer who has access and knowledge of multiple lenders as available loan programs vary from Bank to Bank.

Banks are being flooded with loans to underwrite so you may experience longer than usual turnaround times.  If you are interested in refinancing you need to go ahead and apply now.

Click here to obtain a HARP 2.0 refinance quote now.

Mortgage Market News

Mortgage Market News for Week Ending May 11, 2012

European Elections Favor Challengers

This week saw increasing uncertainty in Europe, leading to lower stock prices and strong demand for the US Treasury auctions. Ordinarily, these factors would result in improved mortgage rates, but mortgage rates ended the week nearly unchanged from last week.

In closely watched elections on Sunday, voters in France and Greece strongly favored the candidates who opposed austerity measures. The results confirmed that political opposition to austerity is strong in many countries, and there is growing disagreement about the best approach to solve Europe’s problems. In Greece, the government struggled to reach a consensus, leaving in question the future of required austerity measures. EU officials threatened to withhold their next aid payment, and the possibility that Greece could leave the European Union has increased.

The high level of uncertainty in Europe caused investors to worry about the pace of global economic growth. During the week, investors moved away from risky assets in general, sending US stock markets lower. US bond markets are normally a beneficiary of such a flight to safety, but neither Treasuries nor mortgage-backed securities (MBS) posted gains this week. With rates near record lows, investors appeared to be reluctant to purchase bonds at lower yields.

Average 30 yr fixed rate:
Last week:	-0.05%
This week:	0.00%

Week Ahead

Next week, Retail Sales and CPI will be released on Tuesday. Retail Sales account for about 70% of economic activity. The Consumer Price Index (CPI) is the most closely watched monthly inflation report. CPI looks at the price change for those finished goods which are sold to consumers. Housing Stats and Industrial Production will come out on Wednesday, along with the detailed Minutes from the April 25 Fed meeting. Philly Fed, Leading Indicators, and Empire State Manufacturing will round out the schedule.

 

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com
To learn more about the newsletter, please call 800-627-1077
All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.

 

Mortgage Market News

Mortgage Time

Mortgage Market News for the week ending May 4, 2012

Employment Falls Short

Weaker than expected global economic data and continued uncertainty in Europe helped push mortgage rates down to record low levels.

The data released this week in the US, Europe, and China generally reflected a slowing pace of economic growth. Spain became the eighth euro zone country to officially enter into recession, meaning that roughly half the members have seen at least two consecutive quarters with contracting economies. Even Germany’s economy is showing signs of weakening. Economic strength in the US early in the year has been waning recently as well. As usual, what’s bad news for the economy was good news for mortgage rates, as slower economic growth reduces inflationary pressures.

Friday’s important Employment report fell short of expectations. Against a consensus forecast of 170K, the economy added just 115K jobs in April, but the figures for prior months were revised higher by 53K. The Unemployment Rate unexpectedly dropped from 8.2% to 8.1%, the lowest level since January 2009, but the decline was mostly due to people leaving the labor force. Following a strong start to the year, the trend has been slowing, with net job growth over the last two months significantly lower than during January and February.

Average   30 yr fixed rate:
Last   week:	-0.02%
This   week:	-0.05%

Week Ahead

Friday will be the biggest day next week for US economic data with PPI and Consumer Sentiment. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products. The Trade Balance and Import Prices will be released on Thursday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. There will also be important elections taking place on Sunday in both France and Greece. The elections may reflect the level of support for austerity measures.

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com.  To learn more about the newsletter, please call 800-627-1077.   All material Copyright © Ress No. 1, LTD and may not be reproduced without permission.

CLICK HERE TO OBTAIN A MORTGAGE RATE QUOTE.

Now Accepting Applications for Streamline Refinance

The wait is over for the new FHA Streamline Refinance Program set to start June 11, 2012.  Raleigh Mortgage Group is now accepting applications and has multiple lenders who are encouraging early submission for these modifications.  The lenders are preparing for the increased volume the new FHA streamline refinance program will bring.  The interest rate can now be locked-in and the file can be underwritten while the case number will be requested on or after the June 11th date.

There are approximately 3.4 million homeowners that can benefit greatly from the new FHA Streamline Refinance program.  The “streamline” refers to the minimal amount of documentation and underwriting needed.  Streamline refinancing can be done without an appraisal or income verification (meaning NO W2′s, pay-stubs, tax returns, or bank statements required) .  There are no loan-to-value (LTV) restrictions on streamline refinancing which is significant for underwater borrowers whose loan amount may exceed the current value of their home.  The Streamline Refinance upfront fee of 1% will be reduced to 0.01% of the total loan amount. And the annual fee will be lowered from 1.15% to 0.55% of the total loan amount.

The Eligibility Requirements for a streamline refinance are:

• 620 minimum credit score
• The loan must already be FHA insured and endorsed on or before May 31, 2009.
• Borrowers must be current on their mortgage payments with no late payment in the previous 12 months.
• The refinance must result in a lowering of the borrower’s monthly principal and interest payments.

By refinancing through this streamlined process, the average qualified FHA-insured borrower will save approximately $3,000 a year or $250 per month, on top of any savings from refinancing to a lower interest rate.

If you would like to take advantage of the FHA Streamline Refinance Program, click here to apply now. 

Interest Rates Drop to Record Lows for 2012

According to Freddie Mac’s Primary Mortgage Market Survey, already record low-interest rates dropped to their lowest this week for 2012.  The survey released today shows the average 30 Year Fixed Rate Mortgage is 3.84% with 0.8 points and the average 15 Year Fixed Rate Mortgage is 3.07% with 0.7 points.

Freddie Mac sends out mortgage rate survey forms every Monday and receives most responses back on Tuesday.  Those results are released each Thursday.

If you are thinking about purchasing a home or refinancing your existing mortgage loan, click here for a free rate quote.