WASHINGTON, D.C. (December 2, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 27, 2009, which was a shortened week due to the Thanksgiving holiday. The Market Composite Index, a measure of mortgage loan application volume, increased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 29.3 percent compared with the previous week. The Refinance Index increased 1.7 percent from the previous week and the seasonally adjusted Purchase Index increased 4.1 percent from one week earlier. These results include an adjustment to account for the Thanksgiving holiday. The unadjusted Purchase Index decreased 30.4 percent compared with the previous week and was 34.9 percent lower than the same week one year ago.
The four week moving average for the seasonally adjusted Market Index is up 0.2 percent. The four week moving average is down 2.0 percent for the seasonally adjusted Purchase Index, while this average is up 1.5 percent for the Refinance Index.
The refinance share of mortgage activity increased to 72.1 percent of total applications from 71.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.8 percent from 5.3 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.79 percent from 4.82 percent, with points decreasing to 1.00 from 1.19 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed-rate observed in the survey since the week ending May 15, 2009.
Whew, my rates just beat the average! To see my posted rates or apply online for financing Click Here
Showing posts with label First Time Home Buyer. Show all posts
Showing posts with label First Time Home Buyer. Show all posts
Thursday, December 3, 2009
Wednesday, December 2, 2009
Looking Back at Local Stats
The volume of real estate sold as reported by the Greater Louisville Board of Realtors over the last four years is very interesting. Comparing year-to-date dollar volume on sales reported until 11/30 of each year says a lot. The first thing I noticed is the total volume for the period was highest in 2006. Then the number decreases slightly in 2007, only a 1% decrease.
The following year, 2008, the figures dropped a whopping 23.5% compared to the same period in 2007!!! I personally felt the difference. This year versus last year is off almost exactly 6% which isn’t anything to celebrate but at least it isn’t double digit.
We compiled the report gathering monthly sales figures for the first 11 months of each year and looking at the spreadsheet it is clear that this year the direction changed in July. Prior to that the last positive month was August 2007 – two years of straight decline!
There is nothing scientific about my method and of course there are many other factors that could be considered such as a percentage of listing verses properties sold, average sale price, median sale price, etc. Or you can do what I did and look at simple monthly totals of sales figures. Last month the number was a whopping 45% increase over November 2008 and this October was 30% above last. Well now, it appears the first time homebuyer tax credit dumped about $82,000,000 (or $122M adding the average monthly loss for the rest of the year) extra into our local economy in October and November this year. Prior to October we were down $182,000,000 for the year, an average of slightly $20,000,000 per month. The last two months cut the loss almost in half.
Many thanks to Debbie Rood with RE/MAX Properties East for supplying the figures.
The following year, 2008, the figures dropped a whopping 23.5% compared to the same period in 2007!!! I personally felt the difference. This year versus last year is off almost exactly 6% which isn’t anything to celebrate but at least it isn’t double digit.
We compiled the report gathering monthly sales figures for the first 11 months of each year and looking at the spreadsheet it is clear that this year the direction changed in July. Prior to that the last positive month was August 2007 – two years of straight decline!
There is nothing scientific about my method and of course there are many other factors that could be considered such as a percentage of listing verses properties sold, average sale price, median sale price, etc. Or you can do what I did and look at simple monthly totals of sales figures. Last month the number was a whopping 45% increase over November 2008 and this October was 30% above last. Well now, it appears the first time homebuyer tax credit dumped about $82,000,000 (or $122M adding the average monthly loss for the rest of the year) extra into our local economy in October and November this year. Prior to October we were down $182,000,000 for the year, an average of slightly $20,000,000 per month. The last two months cut the loss almost in half.
Many thanks to Debbie Rood with RE/MAX Properties East for supplying the figures.
Tuesday, November 24, 2009
Rates Continue to Improve
It is a very strange market. A few days ago I commented that interest rates are nearing the bottom and that is still my position. But here we are two days before a four day weekend and rates are still improving. The markets are going to be closed Thursday and Friday and normally that alone would push rate higher.
My primary goal is to help buyers and sellers close transactions as quickly and smoothly as possible. Doing that is good for our local economy. Rates as low as they are today are creating all types of opportunities for both buyers and sellers.
Consider this, if you check out the rates on my application site you will find and FHA 30 year fixed under 5% without points. Click Here
FHA allows the seller to contribute funds for the buyer’s closing cost (payable at closing from the sale proceeds). This is a huge marketing tool that could give a seller a distinct advantage over other properties listed for sale. Consider a home selling for $200,000, a buyer could purchase with only 3.5% down or $7,000, roll the up front mortgage insurance premium into the loan amount making the loan $196,377. Based on today’s rate of 4.875% it is possible for the seller to provide a start rate of only 2.875% fixed for the first year, 3.875% for the second year and then 4.875% for the remaining 28 years!!! Cost to the seller for this example would be two points or $4,084. That is much better than a 5% reduction in the sale price, the seller would net almost $6,000 more and the buyer receives awesome payments.
STOP!! He said something other than "fixed rate" - no I didn’t. The example is a fixed rate of 4.875% for 30 years, it is temporally bought down for 2 years. And it works very well if the buyer is qualified for the payment based on the highest rate. I have closed about a kazillion of these loans over the years.
In our example above the APR is 5.843% assuming a note and payment rate of 4.875%, fixed for 30 years.
My primary goal is to help buyers and sellers close transactions as quickly and smoothly as possible. Doing that is good for our local economy. Rates as low as they are today are creating all types of opportunities for both buyers and sellers.
Consider this, if you check out the rates on my application site you will find and FHA 30 year fixed under 5% without points. Click Here
FHA allows the seller to contribute funds for the buyer’s closing cost (payable at closing from the sale proceeds). This is a huge marketing tool that could give a seller a distinct advantage over other properties listed for sale. Consider a home selling for $200,000, a buyer could purchase with only 3.5% down or $7,000, roll the up front mortgage insurance premium into the loan amount making the loan $196,377. Based on today’s rate of 4.875% it is possible for the seller to provide a start rate of only 2.875% fixed for the first year, 3.875% for the second year and then 4.875% for the remaining 28 years!!! Cost to the seller for this example would be two points or $4,084. That is much better than a 5% reduction in the sale price, the seller would net almost $6,000 more and the buyer receives awesome payments.
STOP!! He said something other than "fixed rate" - no I didn’t. The example is a fixed rate of 4.875% for 30 years, it is temporally bought down for 2 years. And it works very well if the buyer is qualified for the payment based on the highest rate. I have closed about a kazillion of these loans over the years.
In our example above the APR is 5.843% assuming a note and payment rate of 4.875%, fixed for 30 years.
Monday, November 23, 2009
FHA Financing For Condos
The recent Mortgagee Letter from HUD is going to impact the availability of purchase money for condos. In theory the new guidelines are supposed to make the process easier. At first glance I thought it would be (see post July 30), until I read the entire publication.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
The item that alarmed me the most is the Recertification Process. All of the condos on the existing approved list will be moved a new list that requires recertification every two years. This is a big change.
Consider the unlucky buyer that purchases a condo under this system and finances it using an FHA loan. Three years later they try to sell it and the project is no longer approved unless someone has recertified the entire project. This could have a huge impact on values. It is possible a homebuyer could close on a loan today and the same loan would not be available for a new buyer tomorrow. A loan on the exact same condo may require only 3.5% down payment one day and then require 10% down the next. That difference would eliminate many buyers and that impacts value.
Here is something to consider, there are 322 projects in Kentucky on the existing approved list. This means someone will need to recertify 13+ projects per month, or roughly 3 per week - and do it for FREE??? Good luck with that.
Friday, November 20, 2009
Time For A Budget
Many credit issues are caused by overextending credit or another way of stating that - not adhering to a budget. Underwriters frequently face the problem of increased housing expense while reviewing loan applications. Stated simply, if the homebuyer is asking for a loan that will have a payment higher than their current housing expense, is it possible for them to make the higher payment? If the applicant has been saving an amount each month that covers the difference, it is a strong indication they can afford a higher payment.
This issue came up recently in a class I taught for first time homebuyers. One of the participants asked, "What if you aren’t saving by choice?"
My answer, "What are you proposing to give up after you buy a home? Nice shoes by-the-way, are they new?" Even she had to laugh with the rest of the class, exactly the point.
The loan officer that originates the loan application must include any documents provided by the applicant that supports the loan request. Fight fire with fire!!! This is the slickest trick I have ever thought up for using the system to trump the system. Freddie Mac publishes a sample budget on their web site under some obscure section (and I think it gets moved around). I saved a copy long ago. What is the underwriter going to think when he or she discovers a budget in the file that documents the ability to afford a higher housing expense AND it is on a form provided by Freddie Mac and contains the Freddie logo? I promise you it will be like finding a candy bar in the file. Well, lookie what I found!
In all the years originating loans I have never had a homebuyer offer a copy of their budget as part of the support documents. What a killer tool this would be especially if it documents a turn around contained in the credit report.
Send me an email if you want a copy of this form and I will send it ASAP: jsimms@cmcloans.com
This issue came up recently in a class I taught for first time homebuyers. One of the participants asked, "What if you aren’t saving by choice?"
My answer, "What are you proposing to give up after you buy a home? Nice shoes by-the-way, are they new?" Even she had to laugh with the rest of the class, exactly the point.
The loan officer that originates the loan application must include any documents provided by the applicant that supports the loan request. Fight fire with fire!!! This is the slickest trick I have ever thought up for using the system to trump the system. Freddie Mac publishes a sample budget on their web site under some obscure section (and I think it gets moved around). I saved a copy long ago. What is the underwriter going to think when he or she discovers a budget in the file that documents the ability to afford a higher housing expense AND it is on a form provided by Freddie Mac and contains the Freddie logo? I promise you it will be like finding a candy bar in the file. Well, lookie what I found!
In all the years originating loans I have never had a homebuyer offer a copy of their budget as part of the support documents. What a killer tool this would be especially if it documents a turn around contained in the credit report.
Send me an email if you want a copy of this form and I will send it ASAP: jsimms@cmcloans.com
Thursday, July 16, 2009
Deadline Fast Approaching - $8,000 First-Time Home Buyer Tax Credit
I realize all of the counters posted on the web show 137 days left until the deadline. While that is true it does not take in to consideration the amount of time necessary to find a property, make all of the arrangements and actually “buy” a home. I have helped hundreds of people purchase their first home, and usually they move very slowly compared to those that have been through the process a couple of times.
The entire procedure can take from 30 to 45 days for well informed and experienced home buyers. Add a couple weeks to that for buyers that are new to the process and the deadline to get started is about 60 days from now!!!
The First-Time Home Buyer needs to have a home selected, under contract and financing in the works by November 1st to be safe. It simply takes time for inspections, repairs if necessary, appraisal and title work.
There are many things you can do to stream line the process. Save all of your pay stubs and bank statements from this point forward. Keep all of the pages for every bank statement, one page missing and the underwriters are not allowed to accept that statement for documentation. A simple mistake like a missing page can add a couple of days to the processing period. There is no grace period for the Tax Credit (yet). November 30 falls on a Monday this year and if you have not closed by the end of the day then on Tuesday your name is Trout and you are out!!!
Another tip, any deposit on the bank statements you provide that exceeds your pay check will be questioned. Keep copies of everything if you sell a big ticket item like a car, make a copy of the transfer, the check, your deposit slip, etc.
If you are using an FHA loan to finance the purchase you will need a copy of the FHA Amendatory Clause signed and dated on or before the date the sale contracted is accepted. The tricky part is it must be signed by everyone, buyers, sellers and Realtors. I posted a blank copy of this form on my Application Web Site in the resource section under forms. Apply for a loan while you are there, would love to help. http://JamesSimms.com
The entire procedure can take from 30 to 45 days for well informed and experienced home buyers. Add a couple weeks to that for buyers that are new to the process and the deadline to get started is about 60 days from now!!!
The First-Time Home Buyer needs to have a home selected, under contract and financing in the works by November 1st to be safe. It simply takes time for inspections, repairs if necessary, appraisal and title work.
There are many things you can do to stream line the process. Save all of your pay stubs and bank statements from this point forward. Keep all of the pages for every bank statement, one page missing and the underwriters are not allowed to accept that statement for documentation. A simple mistake like a missing page can add a couple of days to the processing period. There is no grace period for the Tax Credit (yet). November 30 falls on a Monday this year and if you have not closed by the end of the day then on Tuesday your name is Trout and you are out!!!
Another tip, any deposit on the bank statements you provide that exceeds your pay check will be questioned. Keep copies of everything if you sell a big ticket item like a car, make a copy of the transfer, the check, your deposit slip, etc.
If you are using an FHA loan to finance the purchase you will need a copy of the FHA Amendatory Clause signed and dated on or before the date the sale contracted is accepted. The tricky part is it must be signed by everyone, buyers, sellers and Realtors. I posted a blank copy of this form on my Application Web Site in the resource section under forms. Apply for a loan while you are there, would love to help. http://JamesSimms.com
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