FHA has launched a refinancing program to assist homeowners who owe more on their mortgages than their home is worth. Beginning Sept. 7, the agency will offer qualified non-FHA borrowers the opportunity to refinance with an FHA-insured mortgage on their primary residence. Borrowers must be current on their existing mortgage, qualify under FHA underwriting requirements, and have a credit score of at least 500. The first lien holder must agree to write off at least 10 percent of the remaining amount owed under the mortgage, bringing the combined loan-to-value ratio of all mortgages to no more than 115 percent. The LTV for the new FHA mortgage may not exceed 97.75 percent. The Treasury Department will provide incentives to second lien holders who agree to forgive all or part of their liens.
For complete details on this great new program, please contact me or click here to see the full report for yourself!
In a recent realtor research piece regarding Berks County we are finding that our prices are actually above the level from 12 months ago. On average in Berks County homes have appreciated 1.7% this year and 4.5% over the last 3 years. This is in contrast to the total US where over the last 3 years homes have actually dropped 22.1%.
The reality is then that in Berks County we have had a modest improvement in equity as opposed to the decline of the national market. The most difficult concerns are the job losses in Berks County which will decrease the demand for housing. The good news is that lay offs in Berks County are declining which could help buyer confidence.
Reading’s unemployment situation is worse than the national average. For those that want a complete report we offer the following report. Click on the link below to view our comprehensive report.
http://www.c21callfirst.com/files/misc/reading_market_2010.pdf
Mortgage rates drop to new low of 4.57 pct. Average rates on 30-year fixed mortgages decline to 4.57 percent, lowest level in 5 decades!
Mortgage rates fell for the second straight week to the lowest point in five decades. But many people either don’t qualify for new mortgages or have already taken advantage of the low rates this year.
As a result, the housing market and the broader economy may not benefit much from the lower rates.
The average rate on a 30-year fixed mortgage dropped to 4.57 percent this week, mortgage company Freddie Mac reported Thursday. That’s down from the previous record low of 4.58 percent set last week.
It’s the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.
Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.
However, low rates have yet to fuel home sales. The housing market has slowed since federal tax credits for homebuyers expired at the end of April. And the latest decline in mortgage rates is unlikely to boost the market.
Mortgage rates have hovered near record lows for some time, so most people who can afford to buy homes or qualify to refinance their loans have already done so in the past 18 months. Doing so again wouldn’t be worth the cost for most.
Meanwhile, millions of Americans are unable to take advantage of the low rates. Many have seen the value of their homes plummet and have little or no equity. Or they lack good credit or steady income to get or refinance a mortgage.
Overall mortgage applications increased last week from a week earlier, the Mortgage Bankers Association said Wednesday. But they still remain 35 percent below last year’s levels.
Rates could go lower and still not budge the housing market, analysts say. That’s because a person without a job can’t afford a home and a person worried about losing their job is unlikely to purchase, too, said Greg McBride, senior financial analyst with Bankrate.com.
“And if an $8,000 tax credit didn’t get buyers to take the plunge, saving $50 a month on a mortgage payment probably won’t either,” he said.
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Rates on 15-year fixed-rate mortgages increased to an average of 4.07 percent, up from 4.04 percent last week. That was the lowest on records dating to September 1991.
Rates on five-year adjustable-rate mortgages averaged 3.75 percent, down from 3.79 percent a week earlier. That was also the lowest on Freddie Mac’s records, which date back only to January 2005.
Average rates on one-year adjustable-rate mortgages fell to 3.75 percent from 3.80 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac’s survey averaged 0.7 a point
Article Courtesty of J.W.Elphinstone, AP Real Estate Writer, NEW YORK (AP)
‘It seems we’re at a fork in the road: will housing finally begin to recover or is there more trouble
ahead?’
National and local commentators seem to be filled with welcome optimism regarding the recovery of the economy and its impact on housing markets. New home sales were up 14.8 percent in April for the second straight month and sales were nearly 50 percent higher year-over-year, according to CNNMoney.com. Toll Brothers, a major builder of residential communities, is reportedly buying large amounts of land in anticipation of a better future for home building.
It’s also widely reported that new jobs are being created. This aids in strengthening demand for real estate. A recent report of nearly 100 economists agreed that the economic recovery is underway and housing may show signs of recovery by 2011.
But there is reason to be cautious. The very same news outlet, CNN.com, also ran a piece called “Think Housing is Recovering? Think Again.” It seems we’re at a fork in the road: will housing finally begin to recover or is there more trouble ahead?
Despite all of the good news for housing, one major problem remains — the huge inventory of housing already on the market and the expected additions to it. Many widely cited economists expect further price reductions where supply is an issue. Moody’s Economy.com predicts an average price decline of an additional 10 percent in 2010. Those raising concerns indicate that the misleading indicators showing strong recoveries in March and April stem from the now- expired tax credits and current low interest-rate levels.
It’s an empirical fact that sales drop off directly after the expiration of tax credits. It happened with the “cash for clunkers” program and it’s expected to happen in residential housing. The increase in activity is stimulated by the government program, not necessarily in the form of additional purchases, just accelerated ones. In the period which follows the program, there are fewer purchasers left since they moved faster to get the rebate. Thus, the expectation is for a sluggish second half of 2010 in housing markets.
In addition, we continue to see low mortgage rates, typically a sufficient condition for strong housing demand. But not in this recession. The Fed finished purchasing mortgages and mortgage-backed securities this spring and the conventional wisdom is that this has kept interest rates lower than they would have been without the program. Yet the number of borrowers seeking a mortgage has fallen to its lowest level since May 1997.
As a result of these two factors — tax credits and artificially low interest rates – the Federal Housing Administration’s (FHA) David Stevens noted on CNNMoney.com, “This is a market purely on life support sustained by the federal government.” Without a reduction in unemployment or growth in household income, house prices will remain flat or perhaps “double dip” (i.e., a new round of price declines will occur after recent months of stabilized prices).
Meredith Whitney, a highly visible New York banking analyst, predicts that prices will be falling again due to the tremendous pressure from additional foreclosures coming in the months ahead. Moody’s predicts 1.9 million foreclosures in 2010 and more than a million in 2011. With the inventory already on the market, prices cannot be expected to rise. Also, with the recent rising optimism sellers are reportedly ready to come back to the market, a trend that will further dampen.
We can hope that the housing market in the future will be different than it is now but it will take some time. Slow growth with high unemployment is like this.
Have you signed an agreement of sale before April 30th and are you eligible for either the $8000 or $6500 tax credit? I believe that congress will approve an extension for settlement from June 30th to September 30th. That does not mean that people are still going to be able to buy a home and receive the credit, but only those that had the agreement in and signed by both parties prior to April 30th will be eligible.
Have you or anyone you know finding difficulty in settling before the June 30th deadline due to mortgage companies being overwhelmed?
Several years ago drywall purchased from China was unknowingly used in many homes although not a lot in Pennsylvania. This defective drywall emits noxious fumes that corrode pipes and air conditioning coils. The government has now determined that the cost of replacing the drywall and repairing damaged pipes and appliances can be taken as a casualty loss. While this does not mean that anyone is getting a free ride who had to suffer because their home was built utilizing this drywall, but at least the money recouped in the loss can pretty much cover in most cases the cost of replacement and making the home safe for families.
Good News, we have just learned that securitized loans are back through Fannie Mae, Freddie Mac and FHA. As long as these three are available to buy and guarantee conventional loans, the housing market should continue to move forward. This is certainly good news for all of us!
After a real boom in sales for March and April and folks wanting to take advantage of the federal tax credits, the new mortgage applications sank about 27% to be the lowest in about three years. This was actually not unexpected as there was such a surge of new homebuyers coming into the market who stepped up their home search to take advantage of the home buyer’s tax credits. In order to take advantage of them the agreement of sale had to be executed prior to May 1, 2010 and settlement has to occur prior to July 1, 2010.
As Spring arrives it is expected that home sales will go up. There are certainly lots of opportunities to purchase homes at this time. The interest rates have in general gone down and there is enough inventory of homes for buyers to make a wise purchase. We have to believe that our market here in Berks County will see a steady increase.
Continued unemployment and belt tightening in our country as well as in our area continues to keep some people out of the market place. As the economy recovers and more and more people have confidence in our economy, we expect that the home purchases in our area will increase.
I will continue to keep you informed as the market grows and changes.
Welcome to my new real estate blog. Here I will keep you up to date on the commercial and residential real estate world as well as other tips and interesting articles.
This blog strives on your support and participation. Please feel free to join in and offer your thoughts and comments.
I look forward to hearing from you!
-Skip
