There is nothing more awesome than taking ownership of your new dream home. But before you do that, you better loosen up your writing hand. Did someone say paperwork?
Here you are, ready to make an offer on your first home! And since you’re about to part with an insane amount of money, it’s time to get close to your REALTOR®.
You’re really doing it! You know what you can afford and you’ve got your pre-approval letter. But before you buy the home of your dreams, you’ve gotta find it first.
Unless you have a boatload of cash under your mattress, buying a home usually costs more money than you currently have. First, you’ll need a competitively-priced loan.
Buying a home is so grown-up and impressive, but there are a few things you should think about before you start telling everyone how grown up and impressive you are.
Maybe the days of rock-bottom mortgage interest rates aren’t numbered, after all.
Rates dropped 0.09 percentage point this week to 4.23% for a 30-year, fixed -rate home loan, according to the latest weekly report from Freddie Mac.
Mortgage rates started the year at 4.53%, and have sunk each week in 2014, falling a total of 0.3 percentage point.
Borrowers with a 4.23% mortgage would pay $982 a month on a $200,000 balance, compared with $1,017 on a 4.53% loan.
Frank Nothaft, Freddie Mac’s chief economist, attributed the move to cooling home sales.
“Mortgage rates fell further this week following the release of weaker housing data,” he said. “The pending home sales index fell 8.7% in December to its lowest level since October 2011.”
The drop in mortgage bond purchases by the Federal Reserve, the so-called taper, that started last month, was expected to push rates gradually higher.
But worrisome economic news and a plunge in stocks has counter balanced the Fed action, according to Keith Gumbinger of HSH.com, a mortgage information company. Anxious investors have scurried to safe havens like treasury bonds and mortgage backed securities.
“Much to the benefit of mortgage shoppers, this move [to bonds] is dragging down yields and mortgage rates,” said Gumbinger. “This is a nice surprise” for people looking to purchase or refinance their homes in a rising rates environment, he said.
Rates may keep dropping, according to Gumbinger.
“The reduction in Fed support, slowing manufacturing activity here and in China, some less-than-stellar figures on consumer spending, housing, and more are causing some concern that the economy has decelerated over the last couple of months,” he said. “The economy doesn’t need to slow very much to put us back into the kind of funk we’ve been hoping to escape since the recovery began several years ago.”
SOURCE: CNN Money
Take advantage of a great fare on one of Alaska Airlines newest routes, or other destinations.
Explore More. Spend Less.
Private jumbo-mortgage originations are on pace to reach the highest level since 2007, as lenders are offering low down-payment requirements to lure more borrowers, The Wall Street Journal reports.
Many small lenders, such as community banks and credit unions, say they are willing to cover jumbo loans with 5 percent to 10 percent down payments now, according to the Journal.
As home values rise, banks are experimenting with loosening up lending standards by targeting private jumbo loans as a way to increase their business share. In most parts of the country, jumbo loans are those that are $417,000 and higher; in some of the most expensive markets, jumbo loans are $625,500 or more.
But with low down-payment requirements for jumbo loans entering the arena, that means a comeback for the private mortgage insurance industry. The insurance, which protects lenders in case a borrower defaults, is charged to borrowers who usually make less than a 20 percent down payment. Private mortgage insurers are reportedly lowering their costs and increasing the size of mortgages they’ll cover to accommodate jumbo borrowers.
Mortgage Guaranty Insurance Corp. raised the maximum mortgage it will insure from $750,000 to $850,000 last month; Genworth Mortgage Insurance raised its maximum level from $625,500 to $850,000; United Guaranty recently started offering a limited program for loans up to $1 million.
The move by private lenders to increase low-down-payment jumbo loans comes as the Federal Housing Administration started reducing the amount of high-cost mortgages that it will insure in about 650 counties. As of Jan. 1, FHA loans in high-cost areas have been capped at $625,500, reduced from $729,750.
SOURCE: Realtor Magazine
Fannie Mae (FNMA) and Freddie Mac, the U.S.-owned mortgage-finance companies, will raise the fees they charge lenders to guarantee loans as part of an effort to shrink their presence in the mortgage market, the Federal Housing Finance Agency said.
For the first time, the companies also will start charging higher fees in New York, New Jersey,Connecticut and Florida, where long foreclosure timelines make it more expensive for Fannie Mae and Freddie Mac to dispose of properties they take over after borrowers default, the FHFA said yesterday. The agency is also shifting its fee structure so borrowers with poor credit will pay more.
The fee increases, typically passed on to borrowers in the form of higher interest rates, will go into effect in March and April, the agency said in a statement. Fees will rise an average of 14 basis points on typical 30-year fixed-rate mortgages, the FHFA said.
“Today’s price changes improve the relationship between g-fees and risk,” FHFA Acting Director Edward J. DeMarco said in a statement, referring to fees for the guarantees. “The new pricing continues the gradual progression toward more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital.”
Fannie Mae and Freddie Mac (FMCC) purchase loans and package them into securities, guaranteeing payments of principal and interest. They currently back about 60 percent of U.S. home mortgages.
The move to shrink the companies’ footprint by raising prices comes as DeMarco is in his last days heading the agency after spending four years pursuing a program of gradually reducing the companies’ operations and maximizing their returns to taxpayers.
The U.S. Senate plans to vote tomorrow to confirm DeMarco’s successor, Mel Watt, a Democratic congressman from North Carolina. Watt, who has declined to discuss his views on housing policy while his nomination is pending, would have the power to reverse the increases if he disagrees with them.
The FHFA is eliminating a 25 basis-point up-front fee Fannie Mae and Freddie Mac began charging in 2008 to deal with the costs of the adverse housing market, recognizing that the market has improved. The fee will remain in the four high-cost states.
FHFA’s last guarantee-fee increase, of 10 basis points, came in November of 2012. An increase of 10 basis points would cost a borrower with a $200,000 mortgage about $4,000 over a 30-year loan term. The average guarantee fee charged by the two companies rose to 38 basis points in 2012 from 28 basis points in 2011, according to a report FHFA also released yesterday.
Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac have taken almost $187.5 billion in U.S. aid since they were placed under conservatorship in September 2008 after losses on investments in risky loans pushed them to the brink of insolvency. With the rebound in the housing market, the companies have become profitable and will have returned $185.2 billion to taxpayers by the end of 2013.
The Federal Housing Administration will be reducing the amount it’ll insure on high-cost mortgages starting in the new year.
Beginning on Jan. 1, all FHA loans will be capped in high-cost areas at $625,500, reduced from the current cap of $729,750. FHA will keep its current loan limits in place in areas where housing costs are lower than $271,050. The new loan limit for the highest cost areas will affect about 650 counties, according to the Department of Housing and Urban Development. Blaine County will be at the $625,500 limit.
FHA insures loans for buyers with down payments as low as 3.5 percent. The agency raised its limits during the financial crisis to help more home buyers, and the program quadrupled as a result. However, it faced mounting defaults and losses.
“As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play,” says FHA Commissioner Carol Galante. “Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.”
SOURCE: Realtor News