The World of Mortgage Blog - According to Kimberly and Cathy

Some Nifty Charts On Historical Interest Rates!

We hope these charts provide food for thought for anyone wondering if now is a good time to get off the fence regarding a home purchase or refinance. They are all really good charts but the
last one is a great example for the first time home buyer. 

 

 

A Couple Of Thoughts On Mortgage Interest Rate Trends...

1. The short answer is ‘not much’ (rates are continuing in the mid 3’s) and here is the ‘why’….
   1. Stock market is performing well – this is typically bad news for mortgage interest rates
   2. Concerns over the EU and Cyprus debt woes – this is good news for mortgage interest rates (caused by a flight to the safety of the US bond market)
   3. Our mixed economic news causes a tug-of-war with mortgage rates

                       i.      When we get good news in the economy this generally causes interest rates to go up

                      ii.      Bad unemployment figures, for example, cause rates generally to trend downward

….And the back and forth continues while the interest rates remaining fairly consistent. 

 

Here are a couple of interesting tidbits to pass along:

• The number of underwater mortgages has declined by almost 12% since the peak at the end of 2011
• Freddie Mac predicts that interest rates will likely go lower this spring – and home sales will jump 10% in 2013
• Fannie and Freddie have extended the HARP refi program till 2015 (but they’ve kept in place the requirement that the current mortgage lien must have been purchased by them prior to June 2009 in order to be eligible)

FHA MI Effective 4/1/2013

Short and Sweet:

 

1)       The monthly mortgage insurance will be going up ever so slightly

2)        The monthly mortgage insurance payment will NO longer be removed during the term of the loan – no matter the equity growth over the time.

Financing Options To Hold Together A Deal On A Distressed Property

Good afternoon – We know there are some homes out there that are less than perfect.  Here are some options available for working through DISTRESSED properties:

1.         Easiest option – FHA 203K Streamline rehab loan.

-Get some bids, up to $31,500.  Have the appraiser include it in the value, and add it to the loan amount. 

-Work done after closing.

2.         Another easy option – FHA loan appraiser calls out some work.

-Add the cost of the work into the loan.  Work can’t be more than $5000 and the home must appraise high enough to cover the additional cost.

-Work done after closing. 

3.         Escrow Holdback – only works for cosmetic issues.

-Get three bids and we hold 1.5% in escrow. 

-Work must be completed shortly after closing.

4.         A full 203k (rehab) is another option and they can borrow up to the FHA loan limits in your county.

-Must keep the existing foundation – but the project can be major in scope if needed. 

-If you’ve got a huge construction issue/remodel/repair consider a construction loan. 

-Usually requires 25% down on the home price and funds 100% of the construction cost.

-Buyer can do the work themselves.  Pays monthly interest only payments on the amount drawn.

 

We’re trying to keep this short and sweet so if you have any questions on any one of these options give us a call/email.  Have a great day!

Case Shiller Report from Cathy Pizzini and Kimberly Terry

We hope this Chart helps you get some buyers off the fence!  Give us a call or email if there's anything we can do for you!

Jumbo Loan Financing Options **New Options Available**

With the High end market heating up a bit, we thought it would be timely to share some financing options available from Evergreen Home Loans.  Many of you know that Kimberly and I are licensed in WA, CA and ID so we will include info on all three areas. 

 

If you have a unique property or buyer please give us a call – we’ve got 5 or 6 top-notch Jumbo guidelines that we can pick and choose from to find you the winning combination for your transaction.  Many of these options are internal to our bank (we underwrite internally), some of them are broker relationships we’ve developed….but options we do have. 

 

Generally:

• Buyers need 700 FICO scores (but we have one investor that will go off the primary wage earner’s credit scores and the secondary wage earner can be lower)
• Buyers will need some sort of reserves after closing – these are funds not used for the transaction but are available in an emergency after closing to pay the mortgage
• Buyers will have a minimum down of 10-15%
• Debt-to-income ratios will need to be below 41%-45%

 

Some Funky Stuff:

• Loans over $5M
• Hobby Farms
• Cross Collateralization with other properties – to reduce the down payment on the new purchase
• Using “Pledged Assets” for a portion of the down payment – investment funds don’t have to be liquidated

 

Primary Residence

• Up to 90% LTV (WA/ID) – we have two different NO PMI options available – up to $835,000 price
• Up to 85% LTV (WA/ID)- $1,175,000 price
• Up to 85% LTV (CA) – again, no PMI options are available – to $1,175,000 price

 

Second Homes

• 20% down – multiple different options available

New Home Sales Chart & Mortgage Info!

Download New Home Sales Nov 2012

Above is a recent chart showing the increase of New Home Sales.  Feel free to share with your clients.

On a good note:

HARP Refinances dropped 18.5% in October even with record low rates.  This will be beneficial to all your purchase transactions because you won’t have as much competition for closing with fewer refinances in process.

Side Topic:

Will the Mortgage Forgiveness Debt Relief Act of 2007 be extended by Congress by the end of the year?  If not, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction. That means if someone owes $150,000 on their home and it sells for $100,000 in a foreclosure auction, they could owe taxes on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for amounts that were forgiven in short sales and principal reductions." Attached is the link.  Enjoy the read.

USDA - Updated Rules Allow For Some Out-Buildings!

Many of you have had clients that are approved for a USDA loan, they find a property and because there is a man-cave/detached garage the property is immediately disqualified from USDA financing.  WELL, NO MORE! They’ve changed the rules.  Here’s the scoop:

 

1. The property must be residential in nature.  They still won’t allow farm service buildings or buildings intended for commercial use. They don’t want to finance a property that is intended to be used to produce income. 
   1. What’s acceptable: A garage or storage shed for consumer use.   
   2. Farm related property still will not work.  
   3. Let’s say the price is $150,000 and your client intends to go USDA 100% financing. 
      1. The appraiser brings in the 24x24 detached garage at a value of $7,000 and an overall value of the $150,000
      2. Financing will be based on $150,000 less $7,000 or $143,000. 
      3. So the buyer will have to bring in the $7,000.

 

Reasons why a borrower may still want to go USDA even though they have to come in with the funds for the value of the out-building:

• USDA has lower monthly mortgage insurance than FHA
• USDA has lower monthly mortgage insurance than a standard conventional loan and depending on the buyer’s credit scores, rates can be lower the a standard conventional loan (because of the risk based pricing)

 

There is more to this new announcement from USDA but we don’t want to get too deep in the weeds.  If you’re interested in knowing more, please call or email and we’ll provide more detail. 

Programs That Generate Business!

WA STATE HOUSING:

• Home Advantage Program allows 100% financing –
               Down Payment interest rate is 0% for 30 years! No monthly payment on 2^nd loan.
• Income limits for ALL COUNTIES now $97,000
• Competitive Interest rate changes daily - buyer required to take 1^st Time Buyer Class

IDA MORTGAGE:

• Various Options for 100% financing or Low Down Payment Programs
• Income limits for ALL COUNTIES $90,000
                         DPA available with income to $90,000 and good credit
• No PMI and Low PMI options (great option as compared to FHA) – **Income limits are lower & need stronger credit.
• Competitive Interest rate changes daily
   

Updated Mortgage Interest Rate Charts!

We hope these charts provide food for thought for anyone wondering if now is a good time to get off the fence regarding a home purchase or refinance.

(Feel free to print these charts and use them with customers.)

Please give us a call or email if there's anything we can do for you!