Posts Tagged ‘refinancing’
Friday, December 28th, 2012
There has been a lot of speculation as to what will happen in the real estate market as we head into a new year. Here is my take on real estate market resolutions for 2013:
Home prices will rise, slowly. Based on the current market and the rise in prices in 2012, especially toward the end of the year, I believe that prices will continue to rise, although at a very slow pace. People who are thinking they should wait to sell in order to make a big profit will be waiting a long time, but those who see the opportunities – demand, low inventory and continued historically low interest rates – have the chance to sell in what will slowly become (if it’s not already) a seller’s market. Those homes that show very well and are well-maintained will garner the most interest and could set trends for neighborhood comparables.
Interest rates will remain low. Because of continued uncertainty with the economy interest rates have to remain low. If the feds raise them at this volatile point, when Americans are just beginning to feel comfortable spending again, albeit cautiously, it would be devastating. I do not believe that such a risk is healthy and thus I think rates will stay low for some time.
Inventory will rise. This one is hopeful, but I truly believe that due to the fact that markets are becoming seller’s markets, more people will decide to list their homes in the coming year. 2012 was a difficult year for inventory in most areas, and San Diego county was no exception. Multiple offer situations on the first day properties listed were not uncommon, and many buyers ended this year without the new homes they so desired, feeling frustrated. I think savvy homeowners will see the silver lining in selling their homes as we head into the new year.
Distressed sales will slow. Many lending institutions and federal and state governments vamped up programs in 2012 to assist troubled homeowners, and the numbers from many of these programs indicate that they are working. There are still many more people who need assistance, but I believe that we will see fewer foreclosures. Most banks seem to have warmed to loan modifications and short sales, bypassing the rush to foreclose.
More underwater homeowners may be able to refinance in the future. There is finally a rumbling about extending refinancing programs to those non-equity homeowners who fall outside of the Fannie Mae/Freddie Mac loan requirements – this could be HUGE and prevent a slew of foreclosures and even short sales down the road…this will be the real estate story at the top of my watch list in 2013.
All in all, the housing market it improving. It is important to mention, as I always do, that every market is different. If you want specific information about your area/market, consult with a qualified local agent before making any decisions about buying or selling real estate. One more caveat – keep in mind that market improvement is relative. The above analysis is based on numbers that show improvement in the local San Diego market, as well as reports from trusted sources and personal experience working in the local market.
I think 2013 will be a great year for real estate. Please let me know if I can provide any information about your San Diego home sale or home search, and have a very happy New Year!
Wednesday, October 26th, 2011
Recently the Obama administration announced changes to the Home Affordable Refinance Program (HARP) that are aimed at helping homeowners refinance mortgages, even when there is no equity in their homes. Their goal is to help the millions of homeowners and prevent more foreclosures, but what is involved and will it really work?
Some of the changes to HARP include the following:
1.Â Fee reduction. Many of the fees associated with refinancing will be reduced.
2. Current loan to value cap on fixed rate home loans will disappear. This was the reason many homeowners could not take advantage of HARP initially, since the value of their homes had decreased significantly.
3.Â Reduced underwriting guidelines. Some of the changes almost hint at a stated income situation, with a verbal income verification…but we will have to wait and see the specifics when they are announced.
4. Â Appraisal changes. The new plan will have a valuation system for appraisals, called “automated valuation,” which will do away with the need for new appraisals, and hopefully avoid appraisal issues that have plagued refinancing in the past.
There are a few caveats, most importantly that the homeowner has to be current on their mortgage. The home also must be a primary residence, and borrowers will be able to shop rates with other lenders, not just the lender who currently holds their loan. More details will be revealed next month. Some of these changes sound promising, and I do believe that more homeowners will get to take advantage of the lower rates without these restrictions, but the big question is:
Will the new HARP really help the housing market?
I have to say no to this. While this is a nice plan to help some more people get into lower mortgages, the fact is that it does not shine the light on the bigger problem in real estate – homeowners who have fallen behind on their mortgages. The new HARP offers no help to these people, and their homes will likely turn into a big future foreclosure wave. The negative equity in these homes is so great that neighborhoods will continue to be effected by their foreclosures, with comparables continuing to drop.
The other big problem I see with the new program is that it has to be implemented by the banks. Although some banks, like Bank of America, claim to embrace the new program, chances are we will still face many hurdles from the banks with implementation. Banks areÂ simply too scared to refinance many mortgages, and the re-default rate is high, making them risky.
While I think the new HARP plan can help some homeowners, I think it is just the beginning. I stand by my opinion that housing must be fixed if we ever want to see the economy improve. We need MUCH more than what HARP can do. We need to help the millions of people who are unable to pay their mortgages, prevent the wave of foreclosures down the road, and find ways to deal with the heavy inventory currently owned by the lenders that is not yet on the market. To do this, we need the cooperation of the major lenders in formulating plans to help these people.
What do you think?
Saturday, May 28th, 2011
More Homeowners Refinancing into Shorter-Term Mortgages. A new study recently revealed that many homeowners are refinancing into shorter term loans. The advantage is that the mortgage will be paid off in a short time, which is appealing to those who face retirement in the next 10-15 years. Some rates are as low as 2.99 or 3%, with 7-10 year terms. The trick of course is that you must have equity in your home to be able to qualify for a refi, and then must be able to afford the higher payments. This trend shows that home ownership is still very much desired, which is a good sign.
Home Insurance Premiums are on the Rise. While home prices are falling across the U.S. those who plan to buy need to be aware that home insurance is on the rise. Some of the largest insurance companies have indicated they have or will be raising rates. This is partly due to the slew of natural disasters our country has experienced recently, such as the hurricanes and tornadoes in the mid-western states, floods in the south, and earthquakes/tsunami in Japan and elsewhere. Different areas will experience different increases, depending on risk factors.
Great Opportunities Abound for Buyers/Investors. Housing prices have dropped slightly and will likely continue to do so, due in part to the large distressed property inventory that will continue to grow for at least a year or two. Mortgage rates are still low and buyers can get a LOT more for their money right now, so it is a great time to take advantage before mortgage rates do rise.
Mortgage Delinquencies Increasing/Foreclosures Down. Although the number of new foreclosures went down in the last quarter, the number of homeowners who are delinquent in paying their mortgages increased slightly. This is an indicator that there will be a new wave of foreclosures and short sales to come, and that prices will continue to decrease until that inventory is cleared out. Great news for buyers, not such great news for sellers (unless they have equity in their homes). Foreclosures comprised 45% of home sales in California in the first quarter.
California is Expanding Foreclosure Investigations. The state of California has been expanding probes into loan servicers and applying pressure. The Attorney General is looking into robo-signing claims in an attempt to enforce restitution and prevent bad lending practices from happening in the future. A mortgage fraud task force has been comprised of 25 individuals will be targeting 3 specific areas: corporate fraud, fraudulent lending practices, and scams aimed at troubled homeowners facing foreclosures. Other states, such as Illinois and New York, are also expanding investigatory procedures.
Thursday, February 11th, 2010
Fannie Mae and Freddie Mac are instituting two new programs to help struggling homeowners with their quest to get modifications. Freddie Mac claims to have helped 250,000 homeowners with loan modifications to date, so the time is better than ever to try and work out your mortgage issues. Here are the new available opportunities:
1. Borrower Help Centers: Help centers are and will be opening up in numerous areas to assist delinquent Freddie Mac borrowers with loan modifications. Homeowners will be able to visit these centers and get one-on-one counseling and questions answered for free. As of now these centers are located in Chicago, Phoenix, San Bernardino (Southern California) and Washington, DC. Counselors are specially trained in helping with modification and other financial issues. Following are the borrower help centers:
Latin United Community Housing Association (LUCHA)
1152 N Christiana Avenue
Chicago, IL 60651
Chicago Neighborhood Housing Services
1279 N. Milwaukee Ave., 5th Floor
Chicago, IL 60642
California â€š Inland Empire
Neighborhood Partnership Housing Services (NPHS)
320 W. G Street, Suite 103
Ontario, CA 91762
1405 East McDowell Road, Suite 100
Phoenix, AZ 85006
Chicanos por la Causa
1242 E. Washington Street, Suite 102
Phoenix, AZ 85034-4043
3401A East West Highway
Hyattsville, MD 20782
2. Borrower Help Network Phone Assistance: The phone network will be similar to the help centers and will provide counseling and information to delinquent Freddie Mac borrowers.
The counseling provided is labeled “holistic counseling,” which includes an assessment of the borrower’s debt and credit issues. Many community organizations are participating in helping borrowers with these programs, including the National Urban League, National Council of La Raza (NCLR), HomeFree-USA, local Neighborhood Housing Services in Chicago, Phoenix, and Ontario, California, and other local community organizations. Following are the phone assistance location centers. To find out more and get contact number please visit http://freddiemac.com/avoidforeclosure/.
To get more information on modifications and refinancing options under the Making Home Affordable Program you can also visit http://makinghomeaffordable.gov/. You can also contact HopeNow, a free homeowner help hotline, at 888-995-HOPE.