Live on the Red Line - Real Estate

FHA Program Offers Purchase, Renovation Aid

The Federal Housing Administration is encouraging use of its little-known 203(k) loan program.

The 203(k) lets an owner-occupant borrow money for both the purchase and renovation in one loan, and put down only 3.5 percent.

The program requires the use of credentialed contractors and can include cosmetic improvements as well as major renovations like replacing plumbing or electrical. Completing the application process requires patience, says Nancy Hammock, an associate with RE/MAX Properties in Western Springs, Ill.

But in this lending environment, more homebuyers are finding 203(k)s worth the hassle. In fiscal 2008, the government insured about 6,700 of the 203(k) loans. This year, more than 11,000 loans have already been insured, according to the Office of the Comptroller of the Currency.

Source: Chicago Tribune, Mary Ellen Podmolik (08/14/2009)

Federal Reserve: Recession Ending, Rates Left Alone

The Federal Reserve ended its policy-making meeting Wednesday with the declaration that the recession is ending and it would move toward more normal policies.

The Fed said, “Economic activity is leveling out.” It added that it expected inflation would remain “subdued for some time.”

The Fed said it will keep the short-term key interest rate near zero, but it will end its program to buy $300 billion worth of Treasury bonds by the end of October. Buying bonds was one of the Fed’s efforts to drive down the cost of home mortgages.

“In a way, it’s more of a thumbs-up than if they had said they were continuing the Treasury-buying,” said Edward McKelvey, an economist at Goldman Sachs. “They’re saying that things are going according to plan, and that the policy is O.K.”

Source: The New York Times, Edmund L. Andrews (08/12/2009)

Mortgage rates lowest in at least 39 years!!!

Long-term mortgage rates this week reached the lowest level since at least 1970, falling for the third consecutive week.

Freddie Mac’s weekly rate report says the average 30 year fixed-rate mortgage fell to 4.78 percent, matching a low set April 7 and the lowest 30 year mortgage rates have been since Freddie Mac started keeping track in 1970.

Adjustable rate mortgages also eased, but one year adjustable-rate mortgages are averaging rates nearly the same as 30 year fixed rates, at 4.77 percent.

“Mortgage rates for 30 year fixed-rate mortgages, the most popular loan among homebuyers are families seeking to refinance, are more than 1.6 percentage points below the recent peak set at the end of October 2008,” says Freddie Mac (NYSE: FRE) chief economist Frank Nothaft. “For a $200,000 loan, this means a monthly savings of almost $212 in mortgage payments or over $2,500 a year.”

Freddie Mac says borrowers who refinanced their mortgages in the first quarter reduced their mortgage payments by about $2.5 billion over the coming year.

There are growing signs the housing market may be on the mend. Existing home sales stayed near their four month average in March, while sales of new homes were stronger than expected last month. The inventory of unsold new homes fell to the lowest level since January 2002.

_{Washington Business Journal}

38-Year Low for Mortgage Rates!

The average interest on a 30-year mortgage fell to a 38-year low of 4.85 percent during the week ending March 27 from 4.98 percent the prior week, Freddie Mac reported.

The decrease came on the heels of the Federal Reserve's announcement that it plans to purchase another $750 billion in mortgage-backed securities and up to $300 million in Treasuries. President Obama says refinancing is now possible for 40 percent of mortgages and encourages home owners to reap the benefits of the record-low rates.

Source: Boston Globe (03/27/09)

Mortgage rates fall!

Mortgage rates fell this week as President Barack Obama pledged $275 billion to reduce foreclosures.

McLean-based mortgage buyer Freddie Mac reported that the rate for a 30-year fixed loan fell to 5.04 percent from 5.16 percent in the previous week. For the same week last year, the rate was 6.04 percent.

In the week of Jan. 15 the rate had dropped to 4.96 percent, the lowest on record. This week’s 15-year rate dropped to 4.68 percent from 4.81 percent last week.

Video: FHA loans Q & A

Click on the link below to learn more about FHA loans, and how they can help you become a homeowner:

http://link.brightcove.com/services/link/bcpid1785312249/bclid1745181342/bctid1887809126

Mortgage Rates Hit RECORD LOWS!!!

Rates on 30-year mortgages fell to a record low for the third straight week, and borrowers took advantage of the drop, translating to high numbers of new applications.

With the Federal Reserve on the verge of pouring hundreds of billions of dollars into the devastated U.S. housing market, mortgage rates have plunged to their lowest level since Freddie Mac started tracking the data, in April 1971.

Low rates are a great opportunity for refinancers with solid credit and plenty of equity. But those in danger of foreclosure are still sidelined, and defaults are expected to keep rising.

Freddie Mac reported Wednesday that the average rate on 30-year, fixed-rate mortgages dropped to 5.1 percent this week from the previous record low, 5.14 percent, set last week.

It was the ninth straight weekly drop. Thirty-year rates have plunged by about 1.4 percentage points since late October, according to Freddie Mac's data. For a borrower taking out a $200,000 loan, that means a savings of more than $170 in monthly payments, according to Frank E. Nothaft, the McLean mortgage finance company's chief economist.

Meanwhile, mortgage applications last week remained at the highest level in more than five years, the Mortgage Bankers Association said.

The trade group's weekly application index was essentially unchanged for the week ended Dec. 26. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

More than 80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said.

Interest rates have plunged since the Federal Reserve pledged last month to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market.

Starting this month, The Fed will buy up to $500 billion in securities guaranteed by the government-controlled home-loan giants Fannie Mae and Freddie Mac and of Ginnie Mae, a federal agency.

"It's a huge number," said Derek Chen, an analyst at Barclays Capital, who noted that mortgage rates are still high when compared with yields on long-term Treasury debt.

With the Fed and the Treasury Department buying up a significant portion of the new mortgage securities issued by Fannie Mae and Freddie Mac next year, that gap, or spread, could narrow.

If that happens, mortgage rates could fall further, possibly as low as 4.5 percent, Chen said.

The average rate on a 15-year, fixed-rate mortgage, a popular refinancing tool, dropped to 4.83 percent this week, the lowest level since March 2004. That rate was 4.91 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages rose to 5.57 percent from 5.49 percent. Rates on one-year adjustable mortgages fell to 4.85 percent from 4.95 percent.

The rates do not include add-on fees known as points. The nationwide average fee for 30-year, 15-year and five-year mortgages was 0.7 point last week, compared with 0.5 point for one-year adjustable mortgages.

[AP 1/3/09]

New Housing Bill...more info

As expected, the President today signed the Housing and Economic Recovery Act of 2008 in to law. Thanks to our leadership on this issue, I am please to report that this bill includes the tax credit we lobbied hard to make a reality.

 

The passing of this legislation is great news not only for us as real estate professionals but also for the homebuyers and sellers we serve. This new law will help bolster the housing market and keep us on the path to recovery by providing:

 

·         A homebuyer tax credit for first-time buyers;

·         Permanently increased loan limits;

·         Assistance for more than 400,000 homeowners at risk of foreclosure;

·         The addition of a standard deduction for real property taxes;

·         Financial backing for Fannie Mae and Freddie Mac

 

As I told you several weeks ago, I remain convinced that we have reached the bottom of the market and will begin to see gradual improvement. Today’s passing of the new housing bill only strengthens my confidence that we are turning a corner.

The Housing & Economic Recovery Act of 2008

Today, President Bush signed H.R. 3221, the “Housing and Economic Recovery Act of 2008” into law. The bill was passed by the House of Representatives in a 272-152 vote and approved by the Senate in a 72-13 vote.

According to the Wall Street Journal, lawmakers have described the bill as the "most important piece of housing legislation in a generation." Intended to stabilize the housing market, the bill includes long-sought reforms for the Federal Housing Administration, a tax credit for homebuyers, nearly $4 billion in grants to cities and states to buy and rehabilitate foreclosed homes and a Treasury Department proposal to help restore confidence in Fannie Mae and Freddie Mac.

Lawmakers are already pressing regulators and lenders to prepare now so the program can begin without delay when it goes into effect October 1.

Facing Foreclosure?

If you are facing foreclosure, here are several tips:

• Don’t hide. Open the mail; answer the phone. Respond.
• Be proactive. Contact the bank or lending institution and discuss your financial situation.
• Know your mortgage rights. Review loan documents so you know what your lender may do if you can't make payments.
• Avoid foreclosure prevention companies. Don’t pay money for foreclosure advice.
• Contact a HUD-approved housing counselor. The US Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. They’ll help you understand the law and your options, organize your finances and represent you in negotiations with your lender if assistance is required.
• Prioritize spending. After health care, keeping your home should be your first priority. Review your finances and see what spending can be cut in order to make your mortgage payment. Look for optional expenses - cable TV, memberships, entertainment - that can be eliminated. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
• Use other assets. Do you have assets such as a second car, jewelry, a whole life insurance policy-that can be sold to help reinstate the loan? Can anyone in the household bring in additional income?