The Freddie Mac Primary Market Survey just released shows that the interest rate for 30-year fixed-rate mortgages averaged 3.94%! This is the first time in the history of this report that the reported interest rate was below 4%.
In a separate survey from the Mortgage Bankers Association, indications are that, potential borrowers were unable or unwilling to take advantage of these low rates. The demand for purchase loans and refinance loan dropped last week.
It is obviously an excellent time to borrow and those qualified to do so should take advantage of a market that only comes along once in a lifetime. Granted, lenders are far more selective in approving loans in our present market and the loan process can take more time. However, the savings are incredible.
Rates on 15-year fixed-rate mortgages averaged 3.26%
Select this link for the full Inman News Story:
Obtaining a new real estate loan is more difficult than ever. Banks, investors and the government have changed their tune since the high flying, no holds barred financing frenzy of the first six or seven years of this century.
In the current market, you actually have to have an income and assets and you have to produce concrete proof of their existence. The days of the NINA loan (No Income, No Asset–the borrower with a decent credit score did not have to produce proof of an income or of any assets to get a loan) are gone forever. The pendulum has returned past center and is now at the other end of its swing.
Naturally, now that loans are more difficult to get the market has adjusted to the much lower volume with lower interest rates. However, underwriting guidelines are as tight as a drumhead and only the most qualified are approved. Some of you may remember the old line often used in the movies from the 1930s, “you can’t get a loan from a bank unless you can prove to them that you don’t need the money.”
Lenders are looking for borrowers with credit scores in the 700s, the higher in the 700s the better. Many want a buyer to put 25% down, not the 20% that they have required for decades.
So how, you may ask, is a homeowner paying a high interest rate going to qualify for a refinance loan in this market? Unfortunately, unless that homeowner’s circumstances meet the stiff underwriter guidelines, they can’t. A good loan consultant will be able to determine if their situation may result in a loan approval before the lengthy process begins.
If the lender rejects your application, what can you do? The answer is; it depends on your situation. The first thing to do is consult with your loan consultant and make sure that you understand the reasons for the denial.
Shop Around: You may be able to apply to another lender. Although the primary guidelines are the same with almost all lenders, there may be some slight differences. Some commercial banks and credit unions service their own loans and can be more forgiving about certain issues than will be the large banks who sell their loans on the secondary market.
Low Credit Score: Credit reports are notorious for their inaccuracy. If there are errors on your credit score that have a negative impact on your score, you can get them corrected in a little over a month. You can also work with a loan consultant to fix some of the other problems listed on your credit report, but that can take much longer. Paying down credit card and other loan balances usually helps.
Equity Too Low: This is a common problem today. The market value on almost everyone’s home is down. It is difficult to get an appraisal for a higher value and appraisals cost $ 350 or more in most instances. If you have access to funds, you could do a cash-in mortgage, in which you contribute more cash to increase your equity position, making a refinance more acceptable to a lender.
Debt-to-income ration to high: Lenders do not want a borrower’s debt service to exceed around 40%, that means not only housing costs, but monthly payments on credit cards, store cards, auto loans, student loans, alimony and child support as a percentage of your gross (before taxes) monthly income. The government wants that ratio below 31%.
Paying down account balances is the only way to improve this ratio. One must also stop adding to those accounts to maintain an acceptable level.
Jack Guttentag of Inman News has written an excellent article on this subject. Select this link to access that article:
According to a recent real-estate market forecast from Veros Real Estate Solutions, 40 percent of major metropolitan areas will see appreciation in home prices over the next year. Veros looked at the median price tier in cities of 500,000 or more and expects a 2.5-to-3.5 percent increase in values between December 2010 and December 2011 in select markets. Eric Fox, Veros’ vice president of statistical and economic modeling, said, though things aren’t happening quickly, they are getting better and, even in depreciating areas, the forecast remains much better than those from a year ago. More here and here.
El Dorado Hills and Folsom are included in the Metro Area under discussion.
JUST REDUCED– HUGE REDUCTION–SELLER MOTIVATED! CALL FOR CURRENT PRICING!
This secluded get-away is conveniently located only five minutes from Highway 50 and 1.5 miles from Jenkinson Lake, just south of Pollock Pines, an ideal combination of convenience and privacy. There is paved road access all the way to the parcel. Lake Tahoe is slightly over one hour away and San Francisco is just over 2.5 hours away.
Much of the preparation is been done for a buyer planning to build their halcyon dream home. There is PG&E power to the parcel, a highly productive well in place and a perk test report available. The roughed in building pad may be used. However, a recently refurbished logging road rambles across the parcel, providing easy access to much of the property, facilitating selection of any number of building sites.
The area consists of up-scale custom-built homes set on bucolic parcels of just over four acres. Potential exists to split this parcel into three (buyers considering that option should consult El Dorado County for more definitive information).
The present owner had obtained approval to harvest timber from this parcel but never exercised that option. A buyer may be able to obtain similar approval and collect the associated income (buyers considering that option should consult the Department of Forestry for requirements).
A buyer may be able to harvest the timber, split the parcel and build on one of the divided plots. Possibilities abound!
Buyers looking to get away from the noise, traffic, crime and heat of the city or the valley may wish to consider moving to this stunning foothill location. Become a modern day Paul Bunyan!
Feel free to call (916) 337-0658 with questions or to make an appointment to view this unique property.
We are inundated with marketing material promising that if we only buy X product we will lose weight, develop Schwarzenegger-like bodies or grow hair where none has grown for decades. Naturally, we tune out and go about our daily activities.
However, for the very narrowly defined guidelines, the U.S. Department of Housing and Urban Development has a program that allows those qualified to buy homes for 50% off the asking price. In many cases, qualified buyers can also obtain FHA financing on their purchase and may only have to put a $ 100 down payment!
Now, you ask, what is the catch?
- It is simple; to qualify the buyer must be a first responder (Law enforcement officer, fire fighter, emergency medical technician) or a teacher.
- They must be employed in the qualifying position full time
- They can not have owned a home for the past twelve months
- The property MUST be their only residence
- They have to agree to live in the property for at least three years
- Only specific HUD homes qualify
A HUD home is one in which the previous owner had an FHA guaranteed loan. That borrower defaulted on the loan and the lien holder foreclosed on the property. (Once the lien holder completed the foreclosure process they have the option to sell the property as an REO-bank owned home–or they can transfer the deed to the Secretary of Housing and Urban Development in exchange for the FHA insurance coverage.) Once HUD has title, they market the home as a HUD home. http://www.Hudhomestore.com
Those homes located in areas that HUD determines are eligible qualify for the Good Neighbor Next Door Program. Those are the homes available to qualified buyers at 50% off the asking price!
The qualifications are very narrowly defined and the homes may need some work. However, if you can buy a $ 200,000 home for $ 100,000 with only $ 100 down, there is little room to complain.
Note that not all Realtors are qualified to represent buyers in the purchase of a HUD home. Naturally, we are. So, if you, a family member or friend are qualified for this program, give us a call. We will be happy to help you find properties that qualify and represent you in their purchase.