Friday, December 30, 2011
What this means for those looking to finance the purchase of a home, or refinancing, is that they will pay about 0.1% higher in interest rate than they otherwise would have. Lenders' rates will be impacted a couple months in advance of the April 1 start date.
So a payroll tax cut is paid for by what amounts to a mortgage tax for new homeowners and those that refinance their existing home loans.
Friday, December 2, 2011
"GMAC Bank (GMACB) Correspondent Funding Approved Correspondent Clients
please note that effective Tuesday, December 6, 2011, GMACB will no longer
accept new locks for properties located in the Commonwealth of Massachusetts.
This change is necessary due to the complexity of transacting business in an
increasingly difficult legal environment in Massachusetts."
Tuesday, November 29, 2011
- Mortgage must currently be owned by Fannie Mae or Freddie Mac
- Mortgages must have been acquired by Fannie or Freddie prior to May 31, 2009
- Fannie & Freddie roll out the new guidelines on December 1, but it will take lenders a couple of months to implement the program.
- Program ends December 31, 2013.
Please contact me directly with questions related to refinancing under HARP. firstname.lastname@example.org
Sunday, October 16, 2011
Treasury rates and mortgage rates typically move in step. I've written about that many times. Back in February the spread between a 10 year Treasury and a 30 mortgage was only 128 basis points (1 basis point is 1/100th of one percent). As of last week that spread has increased to 199 basis points. The work the Fed has done should lower mortgage rates as the Treasury rates have fallen. But mortgages seem to be more expensive than they have been in the past relative to Treasuries. Why?
Fewer Loan Originators
One reason is that there are fewer loan originators than there have been in the past. There are fewer mortgage companies as many did not survive the financial meltdown. Also the mortgage broker segment (small companies that originated home loans and delivered them to wholesale lenders) has lost over 100,000 brokers since 2006. As rates drop it is more difficult for new loan originators to get into the industry to service the demand due to licensing requirements that went into effect last year in all fifty states.
Tighter Underwriting Guidelines
There are tougher requirements to get a loan today. A mortgage company only earns income on loans that close. Since more loans are cancelled or declined in process that creates extra expense for lenders without any offsetting income. Therefore the cost per loan rises and that expense is spread out among the loans that do close.
Compliance & Regulation
As a result of the real estate collapse and the financial meltdown new laws and regulation have been an albatross for mortgage companies. To avoid penalties lenders have to spend extra time and hire additional personnel solely for the purpose of ensuring customer disclosures and re-disclosures are accurate. In addition, rules concerning loan originator compensation that were born out of the Dodd-Frank Wall Street Reform Act have actually hampered loan originators' ability to compete and lower fees for their customers.
"Too Big to Fail" Got Bigger
The top five lenders control 65% of loan production, and they don't seem very interested to compete on rate. In fact, the limited capacity of a few major players encourages them to simply increase their profit margins as demand rises.
Rates are very low, and there are incredible opportunities to finance the purchase of a home or refinance. But these are the reasons why rates are not even lower than what they are.
Monday, September 12, 2011
There is some good news for veterans that are going to use their VA entitlement to obtain a VA home loan. The funding fee that funds the government's ability to guaranty VA loans is going down. The fee is dropping .5% or even more in some cases. For regular military veterans using their entitlement for the first time, the current fee of 2.15% will be reduced to 1.4%. The fee for veterans that have used their entitlement prior will be reduced from 3.3% to 2.8%. The above chart compares the current fee compared to the new fee for loans funded after September 30, 2011.
If you want more information about VA financing, please call me at 480-305-8509. Thank you.
Thursday, September 8, 2011
Have we hit bottom yet? When will prices RISE?
The two most common questions that all Real Estate Agents hear are:
"HAS THE ARIZONA REAL ESTATE MARKET HIT BOTTOM?"
"WHEN WILL PRICES START TO RISE?
NO ONE CAN PREDICT THE FUTURE....but we can take a look at Historical Data AND the Leading Indicators that help us to determine the state of the Arizona Real Estate Market.
Below is a Chart that shows THE PSYCHOLOGY OF A NORMAL REAL ESTATE CYCLE.
The next Chart shows how THE NORMAL REAL ESTATE CYCLE HAS CHANGED.
We had a DIP from 2010 - 2011, so we are in a bit of a pickle...instead of being in the "HOPE" area of the cycle, we digressed a bit. But read on..there is a light at the end of the tunnel!
The Chart below shows Average Sales Price per Sq. Ft. from January 2001 - August 24, 2011.
Although we were at the Top of the Market in 2005, in 2006 - there were NEGATIVE SIGNALS of the Leading Indicators (i.e. Increase in Inventory) that forecasted a drop in the market.
Right now - there are POSITIVE SIGNALS from the Leading Indicators outlined below.
LEADING MARKET INDICATORS THAT SHOW THE MARKET WILL GET BETTER:
**NOTE: # 1 - 6 have to be in a favorable position for Prices to Rise.
1. Cromford Report Index - this shows Supply & Demand.
2. Days Inventory - How long a home stays on the market before it is sold
3. Pending Listing Count - This is the number of Homes on the Market that have Offers and are due to close escrow. It is the best indicator of increased sales
4. Contract Ratio - 100 x (Pending Listings + AWC Listings (Home that has an offer but it is contingent on something)/Active Listings (contract ratio of above 50% is a "HOT" market)
5. Monthly Sales Volume Self-explanatory
6. Listing Success Rate - # of properties listed vs. # of properties that are actually sold
7. Pending $/SF
8. Sales $/SF
#1. CROMFORD REPORT FOR ALL OF ARIZONA - SUPPLY & DEMAND
**Michael Orr created the Cromford Index which measures Supply & Demand. It is adjusted seasonally and yearly.
SUPPLY & DEMAND: It's basic economics..when there are more Buyers (HIGH DEMAND) than Homes for Sale (LOW SUPPLY), PRICES RISE - SELLER'S MARKET.
When there are more Homes on the Market (HIGH SUPPLY) than BUYERS buying (LOW DEMAND), PRICES FALL - BUYER'S MARKET.
The Economy, Government, Interest Rates, the Ability to Secure A Loan, Emotions, Psychology of the Buyers/Sellers all affect Supply & Demand and therefore affect Price.
Each City/Area has a story..but overall, Arizona is in a SELLER'S MARKET.
THE GOOD NEWS: Supply is at 83% (LOW) and Demand is at 128% (HIGH) which computes to a Cromford Index of 154! It is at its highest since October 2005!
If we look at a more detailed Graph, we see that we have been in a SELLER'S MARKET since the beginning of 2011.
Prices don't start to rise for 12 - 15 months after there is a change in Supply & Demand. If we only look at Supply & Demand, prices will start to rise in January/February 2012.
NOTE: Prices dropped 12% in July 2010 because it was the end of the Buyer's Tax Credit.
#2. DAYS INVENTORY, - this is how many days it takes to sell a home. The calculation is: 365 x (Active Listing Count/Sales Per Year).
As we can see, the time it takes to Sell a Home has been decreasing at a very quick rate since October 2010...which coincides with the Cromford Report (Demand > Supply = Seller's Market).
#3. PENDING LISTING COUNT -
A good sign, Pending Listings are approximately 20% higher than 2010.
Below we are comparing Pending Listings of 2011 to 2004 & 2005 when the market was good...and 2007 & 2008 when the market was bad. Currently, we are way above 2004 & 2005...and sales in Arizona usually slow down during the hot summer months....but it looks like we are on a good trajectory.
#4. CONTRACT RATIO -
The Contract Ratio is how many homes on the market get offers vs. how many homes remain active.
The higher the number...the HOTTER the market.
A Normal Ratio is 30 - 40. Currently, the Arizona Market is at 95 and has been in a HOT market since March 2011. It doesn't SEEM like we are in a HOT market, right? It is because there was such a huge inventory of homes AND, most of the homes being purchased are at the lower end of price scale (i.e. foreclosures/short sales etc.). Again...it takes 12 - 15 months from the change in Supply & Demand (January 2011 is when we stepped into a Seller's Market without dipping back down to a Buyer's Market) for prices to increase.
#5. MONTHLY SALES VOLUME -
If we compare 2003 to 2007, we see that Sales Volume rose to record levels in 2004 & 2005 and dropped in 2006 & 2007.
Sales Volume was down at the beginning of 2008, but rose to 5,000 by the end of the year.
The beginning of 2009 and 2010...volume reached a high of 9500 and didn't drop below 6500 the rest of each year.
In 2011, we are at around the same volume as we were in 2004 & 2005. We dipped below 2004 levels during the summer...but all indicators say that we should hold steady.
#6. LISTING SUCCESS RATE - this is the number of homes that are listed by a Realtor and then Sell.
As you can see, in 2008, only 1 in 4 homes sold that were listed. TODAY, 3 in 4 homes (approx. 75%!) are selling.
The historic norm is 65%!
People "in the know" are Buying in Arizona. They know we have reached the bottom and prices will start to rise soon.
#7 PENDING PRICE/SQ. FT. - this allows us to forecast sales about 30 days ahead with reasonable accuracy.
WHAT? PENDING PRICES/SQ. FT. HAVEN'T RISEN AND IT LOOKS LIKE THEY ARE FALLING????
1. There are More Buyers than Sellers. HIGH DEMAND + LOW INVENTORY = Seller's Market
2. The Number of Days it takes to sell a house is way down
3. Pending Listings are 20% higher than 2010
4. The Contract Ratio is at 95%....a hot market is above 50%!
5. Sales Per Month are at the same levels as 2004 & 2005
6. 3 out of 4 listings are selling compared to 1 out of 4 in 2008...
So why haven't prices risen?
It takes time for the market to recover...just as it took time from the top of the market...and negative indicators in 2006 - for prices to hit bottom. Again, most of the homes being purchased are the lower priced homes..plus the foreclosures and short sales need to be bought up.
Currently, there are approx. 4,500 foreclosures on the market and 8,000 Pending Foreclosure Sales. In a normal market, there are approximately 1,200 foreclosures at any one time....so we are not far off from Normal!
Prices are at the lowest level ever. Investors know this and are Buying up the market (35-42% of Buyers are CASH Buyers)....
All indicators say that the Arizona Real Estate Market is recovering and prices start to rise in early 2012, so if you are thinking of
BUYING... THE MESSAGE IS:
All of the information presented above focuses on Maricopa County.
Scottsdale is one City that has held its prices better than other Cities. Its Cromford Index is at 166.9 (indicating a Seller's Market)..much higher than the 154 for Maricopa County.
So, if you want to Live in Scottsdale....BUY NOW!
FROM MICHAEL ORR OF THE CROMFORD REPORT (AUGUST 16, 2011)
The Main Trends we currently see are:
* Banks have increased their asking prices for REOs (Lender Owned Properties) as they become scarcer
* Short Sales are getting cheaper and easier to close, though far fewer remain Active without an Offer
* Normal sales include a higher proportion of "flips" rather than owner occupier sales and therefore Average Prices are falling
* HUD homes are selling like hot cakes (which also brings pricing averages down)
So we shouldn't expect to see good news from pricing numbers for a while yet (i.e. January 2012). For those who would like some good news here is a selection:
* Pending Listing counts dipped after the Spring Peak but remain strong for the time of year
* Expiry and Cancellation rates are very low
* Active Listing Counts are moving sideways whereas they would normally be increasing at this time of year
* The Supply Versus the Annual Sales rate is lower than at any time in the recent past with the exception of the bubble years 2004 and 2005.
Blog Post Created by:
Marcia K. Canady
Lone Mountain Development, LLC
Monday, August 29, 2011
Recently there have been some headlines suggesting that the Obama Administration is working on a program to help underwater homeowners refinance to lower rates. These news stories have made the phones of thousands of mortgage loan originators ring. Unfortunately most of the calls end with, "I'm sorry there is nothing I can do to help you right now."
In 2009 the federal government rolled out the Home Affordable Refinance Program (HARP) which is designed to do what the current headlines propose. A homeowner can be as much as 25% underwater on their current loan and still be eligible for a refinance, but only if their current mortgage is owned by Fannie Mae or Freddie Mac. There are some discussion of a new program that expands the HARP guidelines, but there doesn't seem to be anything of substance at this time.
Something that needs to be addressed are adjustable rate mortgages or ARMs. There are a lot of homeowners that can only afford their home because they have an ARM today, and that rate has adjusted so low (sometimes below 3%). However, their interest rate will begin to adjust up in future years. No one knows exactly when, but Fed Chairman Ben Bernanke states that rates will remain low through 2013.
Thursday, August 11, 2011
Saturday, August 6, 2011
How does this news impact mortgage rates? We won't know for sure until the market opens on Monday, but logic tells us that rates must rise. If Treasury securities are now more risky, then investors will demand a higher yield. Treasure rates which are the benchmark for other bonds will rise. Investors that buy debt should also demand higher yields on corporate bonds and mortgage backed securities.
We'll be anxiously awaiting investors' reaction on Monday morning when the market opens.
Tuesday, July 12, 2011
- Single Family Detached (excludes condos, attached homes, 2-4 units) sales accounted for 9,340 transactions. With 16,968 active listings there is a supply of 1.8 months.
- 41% of single family homes were purchased with cash
- Lender and HUD owned sales accounted for 42% of single family transactions
- Short sales accounted for 25% of single family transactions
Thank you to Fletcher Wilcox of Grand Canyon Title Agency for the data. If you have any questions or desire more details about these figures please contact me at 480-305-8509 or email@example.com.
Friday, May 27, 2011
Monday, May 23, 2011
Tuesday, May 17, 2011
- 80% Loan-to-Value (LTV) for Purchase transactions (20% down payment)
- 75% LTV for refinances
- Housing Expense to Income Ratio of no more than 28%
- Total Debt to Income Ratio of no more than 36%
- No current late payments on credit
- No late payments of more than 60 days in past 24 months
- No collections or judgements in past 36 months
- No pre-payment penalties, limits on balloons and ARMs
Knowing that Congress and the Administration will not back-track on credit risk retention, I would recommend an alternative definition of QRM that allows for up to 95% LTV with mortgage insurance and throw out the housing expense and debt to income ratio portion of the definition. We are continuing to close the door on the American Dream. And yes, homeownership is still a noble dream for many Americans. We can help people achieve it responsibly.
Sunday, May 8, 2011
I find it interesting to see what celebrity homes are on the market. What would it be like to live in a home once owned by Don King or Mel Gibson, or the house from Home Alone? Here are some dwellings with the "It Factor" that you can own, if you have what it takes. Mainly that's just money.
Wednesday, April 20, 2011
Friday, March 4, 2011
Thursday, March 3, 2011
ARE YOU READY FOR SOME FOOTBALL!!??
Perhaps not this season. The owners and players are currently working to renegotiate the collective bargaining agreement and avoid a lockout. I subscribe to Freakanomics Radio podcasts and found this episode to be a great explanation of the issues at hand.
Millionaires vs. Billionaires | Freakonomics Radio
Friday, February 18, 2011
Tuesday, January 25, 2011
Thursday, January 13, 2011
Many people are aware of the home loan program for veterans created by the Veterans Administration. The VA loan program allows veterans to finance 100% of the purchase of a home for their primary residence. It's really the only zero-down mortgage that still exists.
There is also another benefit for military personnel that have recently served. Remember the first-time home buyer tax credit? That expired for us civilians last spring. But for military personnel that were deployed between January 1, 2009 and May 1, 2010 they have until April 30, 2011 to purchase a home to qualify for a tax credit of up to $8,000.
Here is a list of the reasons why Veterans and active military personnel have an amazing home buying opportunity:
- Tax Credit of up to $8,000 for purchasing a home by April 30, 2011
- Historically low interest rates
- Home prices reduced by 50% or more from their highs a few years ago
- Zero down payment required for those eligible for a VA home loan
If you or someone you know is a veteran or active duty military and is interested in buying a home. Please contact me at Homeowners Financial Group. 480-305-8509 or firstname.lastname@example.org.