Source: The Wall Street Journal
Just a year ago, 30-year, fixed-rate jumbo mortgages were hard to find in some high-price markets. Now, many lenders are offering fixed jumbos – with very competitive rates.
Making sense of the story
- A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. The conforming loan limit is $417,000 in most parts of the United States, but is $625,500 in the highest-cost areas, which includes California.
- During the mortgage crisis, the vast majority of jumbos were adjustable-rate mortgages and hybrid adjustable-rate mortgages, which started at low fixed rates and switched to adjustable interest rates at the end of a set time period – typically of five, seven, or 10 years.
- With the renewal of the secondary market for jumbo mortgages, more lenders today are willing to offer fixed-rates. Packaging the loans into mortgage-backed securities that are sold to investors can lessen the risk to lenders.
- While interest rates for jumbo mortgages are significantly lower than a year ago, hybrid ARMs remain attractive to borrowers with other financial priorities.
- The general wisdom when deciding between an ARM and a fixed jumbo is the same as with any mortgage. Borrowers should consider the length of time they plan to live in the house. If the length of time is near or less than the length of the ARM, then borrowers will save money with the ARM.
- Still, borrowers should keep in mind that some lenders will push hybrid ARMs because the lender stands to reap a higher return on investment. Additionally, lower ARM interest rates and monthly payments can free up cash to purchase stocks and other assets.
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http://online.wsj.com/article/SB10001424127887323744604578473142067499304.html?mod=WSJ_RealEstate_MansionWeekly
The number of U.S. housing markets on the mend rose by five to a total of 263 in June, according to the National Association of Home Builders/First American Improving Markets Index. The list includes entrants from 49 states and the District of Columbia.
The Index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment, and house prices for at least six consecutive months. Nearly 30 (29) new markets were added to the list while 24 others were dropped from it this month. New entrants included such geographically diverse metros as Salinas, Calif.; Sioux City, Iowa; Chicago, Ill.; Topeka, Kan.; Baton Rouge, La.; Laredo, Texas; and Philadelphia, Pa.
“This is the fifth consecutive month in which the IMI has designated more than 70 percent of U.S. metros as improving,” observed NAHB Chairman Rick Judson. “While that’s a good sign that the housing recovery is on solid footing, we know that various challenges are slowing its progress – including continuing issues with credit availability for builders and buyers, as well as appraisals that aren’t keeping up with the rising cost of construction.”
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Source: DSnews
Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according to Zillow.
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http://www.dsnews.com/articles/buying-more-affordable-than-renting-in-64-of-metros-after-3-years-2013-05-16
Sales of new single-family houses increased 2.3 percent in April to a seasonally adjusted annual rate of 454,000, according to estimates released jointly by the U.S. Census Bureau and the Dept. of Housing and Urban Development. This is 29 percent above the April 2012 estimate of 352,000.The median sales price of new houses sold in April 2013 was $271,600; the average sales price was $330,800. The seasonally adjusted estimated number of new houses for sale at the end of April was 156,000, representing a supply of 4.1 months at the current sales rate.
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Source: CNN Money
The mortgage interest deduction is one of the most-expensive tax breaks on the books, but its benefits are distributed unevenly across the country, according to a new report by the Pew Charitable Trusts.
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http://money.cnn.com/2013/05/10/pf/taxes/tax-reform-mortgage/index.html
The national negative equity rate fell in the first quarter, to 25.4 percent of all homeowners with a mortgage, according to the first quarter Zillow® Negative Equity Report. But another 18.2 percent of homeowners with mortgages, while not technically underwater, likely do not have enough equity to afford to move.
Slightly more than 13 million homeowners with a mortgage were in negative equity, or underwater, at the end of the first quarter, owing more on their mortgage than their home is worth. But when including homeowners with less than 20 percent home equity, the “effective” negative equity rate at the end of the first quarter was 43.6 percent, or a total of 22.3 million homeowners. These homeowners likely cannot afford a down payment for a new home, tying them to their current homes and contributing to inventory shortages.
Among the 30 largest metro areas covered by Zillow, those with the highest effective negative equity rate, including homeowners with 20 percent equity or less, include Las Vegas (71.5 percent); Atlanta (64.1 percent); and Riverside, Calif. (59.7 percent).
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Source: Los Angeles Times
Violations of a landmark mortgage settlement alleged by New York’s attorney general are also widespread in California, a housing advocacy group says.
Read the full story: http://www.latimes.com/business/money/la-fi-mo-mortgage-violations-california-20130506,0,7934465.story
Realtor.com released its April data showing that the U.S. housing market is on its way to a broad-based recovery, an accelerated trend since March. The home-buying season shifted into high gear last month as inventory and home list prices on Realtor.com® increased 4.12 percent and 2.63 percent, month over month, respectively. As of April, homes are on the market nationwide approximately 81 days—a decrease of nearly 11 percent since April 2012—highlighting that while new homes are entering the market, they are not available for long.
Despite the increase in inventory month over month, nationwide inventory declined on an annual basis in all but 11 of the 146 markets Realtor.com® monitors. Approximately 36 markets registered a decrease of listings by 20 percent or more, still highlighting near records lows of available homes.
Approximately 37 markets experienced a decline in list price since last year, a figure that has been improving throughout the home-buying season. The number of markets throughout the nation experiencing a steady or slight decline in median list prices is decreasing throughout the home-buying season, another positive signal for the overall housing market recovery. In April, median list prices increased in 109 markets
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Source: The New York Times
In a housing market starved for inventory, buyers are stepping over one another to bid on desirable properties. But a high bid may not be enough – sellers also are seeking offers without mortgage contingencies.
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http://www.nytimes.com/2013/05/12/realestate/sellers-seek-offers-without-mortgage-contingencies.html?ref=realestate
Source: The New York Times
Retirees trying to obtain a mortgage may find that a pristine credit history and healthy retirement accounts are not enough. Lenders also are looking for a consistent monthly income in line with their usual debt-to-income standards.
Making sense of the story
- Many lenders measure income by looking at dividends. Lenders generally want to see a regular annual amount on the tax return paid out over at least the last two years.
- As far as part-time work, which some retirees decide to pursue, when the borrower applies for the loan, they need to be able to confirm that they are actually employed at that moment. Once the employment situation has been verified, lenders are likely to include the pay as income, but may still require a two-year work history.
- Social Security income is always counted. Borrowers should be aware that Fannie Mae guidelines allow lenders to increase that income by 25 percent if the beneficiary isn’t paying taxes on it.
- Some retirees may qualify for a mortgage loan by working with a portfolio lender who does not verify income. The downside to this option is that the interest rates and down payment requirements are higher.
- Some lenders qualify income-deficient, asset-rich retirees by using a program known as asset depletion. In this situation, the lender takes a fraction of the borrower’s assets, amortizes it, and applies it as income.
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http://www.nytimes.com/2013/05/05/realestate/qualifying-for-a-loan-after-retirement.html?_r=0&adxnnl=1&ref=realestate&adxnnlx=1368034577-7AifLG8QdxFgnfbsjA/YFw
