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Congress reinstates FHA loan limit

November 24, 2011 By Leave a Comment

C.A.R. applauds reinstatement of FHA loan limits; urges longer extension of flood insurance

LOS ANGELES (Nov. 18) – The U.S. Congress late yesterday passed a “minibus” appropriations measure that will continue to fund the government and includes a provision to reinstate the Federal Housing Administration (FHA) loan limit in high-cost areas for two years. President Obama signed the measure into law today.

The higher Fannie Mae, Freddie Mac, and FHA conforming loan limits of $729,750 expired Oct. 1, when it was reduced to $625,500. The passage of H.R. 2112 provides for an extension of FHA-insured mortgages at the higher level through December 2013. It also provides for a short-term extension of the National Flood Insurance Program (NFIP) through Dec. 16, 2011. C.A.R. and NAR strongly urge Congress to work on a five-year NFIP reauthorization bill to provide certainty and avoid further disruption to real estate markets.

“C.A.R. is pleased the Senate and House were able to come to a reasonable compromise on extending the FHA loan limit to ensure affordable home financing for middle-class buyers,” said 2012 C.A.R. President LeFrancis Arnold. “However, we are disappointed that the Senate and House could not agree on increasing the loan limits for Fannie Mae- and Freddie Mac-insured loans, especially since the Senate bill included a premium on high-cost loans that protected U.S. taxpayers from footing the costs.”

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® (NAR) have long advocated making permanent higher loan limits.

A continued government role in housing financing will ensure stability in mortgage markets and that home buyers in high-cost areas will be able to refinance and obtain FHA financing for new home purchases more easily. However, it will cost these home buyers more to finance their homes either through jumbo mortgages or with FHA than it would have through Fannie Mae or Freddie Mac.

The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
C.A.R. November 18, 2011

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REALTOR.com Goes Global

November 8, 2011 By Leave a Comment

The National Association of REALTORS® and Move Inc. have announced the launch of the REALTOR.com International Web site. Available at www.REALTOR.com/International, the new site delivers 4.4 million for-sale property listings to buyers across the globe, as well as residential properties fed to the site by foreign content providers.

At launch, Realtor.com International will feature residential real estate listings from Brazil, Bulgaria, Croatia, France, Italy, Portugal, Romania, Serbia, Slovakia, and Spain. The site can also be accessed from the REALTOR.com home page. In the past three months, nearly 2.6 million international visitors searched for U.S. real estate on REALTOR.com. The top five countries where searches originated from are Canada, the United Kingdom, Germany, Australia, and India.  Daily Real Estate News

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How will Fed decision affect home loan rates?

September 22, 2011 By Leave a Comment

The Federal Reserve announced it’s changing its investment strategy, which means we could have lower mortgage rates in the future. The Fed has deccided to shift $400B in holdings to boost the lagging economy.

Operation Twist? The committee’s words: To help support conditions in the mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.

The Director of SDSU’s real estate center, Mr. Lea (former past chief economist of mortgage giant Freddie Mac), said officials are basically selling off shorter-term Treasury holdings for longer-term ones and mortgage-backed securities.

“They’re changing the composition of their balance sheet,” said Lea.. “This isn’t a new round of quantitative easing. They’re reinvesting, not injecting more money into the economy.”
This could mean pushing down long-term interest rates, and in turn, mortgage rates.

Read the full story  Lily Leung at lily.leung@uniontrib.com

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Mortgage rates hit 60-year low, but few qualify

September 9, 2011 By Leave a Comment

Mortgage rates have reached their lowest levels in six decades, making this the best time in most Americans’ lives to buy or refinance a home. For people who qualify, today’s rates could save thousands of dollars a year. Read article  MercuryNews.com

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Getting a fair appraisal in a tough market

September 9, 2011 By Leave a Comment

Since the real estate market took a downturn, some people have complained they couldn’t buy, sell, or refinance a home because an appraiser used bank-owned (REO) or short-sold homes as comparables in the valuation process, which dragged down the value of their home. While using REO and short-sold properties can lower the value of a home, some homeowners are upset that their county assessor will not use these properties as comps for their property taxes.

Making sense of the story

In California, some assessors will consider distressed sales when looking at comps, but it varies widely by county, neighborhood, and house. In general, assessors will always look at non-distressed sales first and if there are enough, disregard REO and short sales. However, if there are not enough standard sales, or the home is in an area dominated by distressed sales, the assessor likely will take these properties into account.

Under Proposition 13, property is assessed upon a change in ownership at its fair market value. That is usually the same as the sale price. However, with distressed property, the sale price may not equal fair market value.
Between changes of ownership, assessors can raise values only by an inflation rate, not to exceed 2 percent per year, plus the value of major improvements or additions.

Under Prop. 8, owners who think the market value of their property has fallen below its assessed value can ask for a temporary reduction to the fair market value.

Homeowners who think their homes are worth less than the assessed value can usually ask their assessor for an informal review. If they are still not satisfied, they can file a formal appeal with their county’s assessment appeals board by Sept. 15 or Nov. 30, depending on the county.

San Francisco Chronicle

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U.S. considers refinance plan for mortgages

September 2, 2011 By Leave a Comment

The Obama administration is considering further actions to strengthen the
housing market, but the bar is high.  One proposal would allow millions of
homeowners with government-backed mortgages to refinance them at today’s lower
interest rates, about 4 percent, according to people briefed on the
administration’s disucssions.

Read the full story   The Mercury News

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When income is freelance

September 2, 2011 By Leave a Comment

After the financial market downturn in 2008, getting approved for a mortgage loan became even more difficult. Combine that with the fledgling economy, which left many people turning to freelance work, and the challenges involved in qualifying for a home mortgage increase exponentially. However, with a little extra work, home buyers using freelance work as proof of income still can qualify for a new loan.

Making sense of the story

Borrowers who earn most of their income on 1099s should be prepared for extra preparation, paperwork, and discussion of their financial standing when applying for a mortgage.

It’s important that independent contractors show that their income is stable and increasing. For some, that may mean declaring all their income on their tax returns, and not, say, carrying anything over to the next year, even if it means paying more taxes.

Consistency in income is key, so those applying for a mortgage this fall or winter should be prepared to provide proof for year-to-date income.

To increase the chances of getting a mortgage approval, borrowers should pay off other debts, including balances on credit cards.

Pinpointing the source of the down payment also is helpful. If the down payment will be a gift from a relative, borrowers are advised to submit an account statement showing the funds are available and awaiting the home purchase. Same goes for borrowing from a 401(k).

Freelancers also should be prepared for a more in-depth analysis of their ability to repay the debt. Submitting tax returns from the last three years and explaining any significant differences in income is advised.
Read the full story  The New York Times

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Homeownership hits lowest level since 1965

August 31, 2011 By Leave a Comment

Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9 percent during the second quarter – its lowest level since the first quarter of 1998 and far from the high of 69.2 percent in late 2004.

Read the full story  CNN Money

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How to lower your property taxes

August 26, 2011 By Leave a Comment

Despite home prices in major urban centers decreasing 31 percent between 2005 and 2009, property taxes across the U.S. increased by nearly 20 percent. There is good news, however; homeowners can fight back.

Making sense of the story

Homeowners should keep in mind that property taxes do not always correspond with home values, because local governments typically don’t measure values every year and some have limits on annual property-tax increases.

As a result, current property taxes might reflect the home’s value when the market was healthier. According to the Congressional Budget Office, property-tax adjustments lag behind changes in home prices by an average of three years.

Although homeowners cannot change their property-tax rate, which is set by the local government, homeowners can get their assessment lowered if they appeal to their local assessor.

One key to a successful appeal is fact checking the assessor’s work. About half of all successful appeals come from homeowners pointing out an error in the assessor’s description of the home, according to one property tax expert.

During the appeal process, which is similar to a less-formal court hearing, homeowners may present their case to several local officials or representatives. The simplest way to convince officials that a property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to the property being discussed. This should include square footage, amenities, and neighborhood characteristics. Sale documents and photos of the property in question, as well as the comparable properties also should be brought in.

Homeowners who have made improvements or substantial changes to the property should be cautious about appealing an assessment though, as it could have negative effects and actually increase theThe Wall Street Journal property’s value and, in turn, the property taxes.  Read the full story  The Wall Street Journal

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Cosigning on the dotted line

August 11, 2011 By Leave a Comment

Tighter lender standards and an unstable job market have made it tougher for some people, especially those just starting out, to qualify for a home mortgage on their own. So, some home buyers are turning to family members or close friends with good credit to co-sign a home loan.

Making sense of the story

While becoming a cosigner may seem like a good solution, money manager and lenders caution against those who are asked to be the cosigner.

A cosigner, even if not living in the house, is really a coborrower, meaning he or she still is responsible for payments if the occupant is unable to meet his or her obligations. In other words, if the principal party defaults on the loan, the cosigner is on the hook.

One financial planner suggests potential cosigners take a less risky alternative, such as providing a cash gift for the down payment. Under current tax laws, a person can give as much as $13,000 to a person, free of gift taxes, or $26,000 per person, if a married couple filing jointly is giving the money.

Those considering cosigning a mortgage must conduct due diligence. First, the cosigner must understand why the family member or friend is asking for help. Potential cosigners shouldn’t be afraid to look into the requestor’s personal finances to help determine whether he or she will be able to repay the loan. Perusing credit reports also will show the track record he or she has for paying off debts.

A discussion about worst-case scenarios also should take place before signing on the dotted line. Working out a written contract containing an agreement about what would happen in the event of a default, also is recommended.

Cosigners also should keep in mind that the mortgage will show up on their credit report, and could affect their own ability to borrow money or buy a second home. If the principal borrower makes a late payment, that also will show up on the cosigner’s report.
Read the full story New York Times

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