Are credit standards loosening for mortgages and home loans?
What we are seeing in the industry is stringent documentation to meet lending standards that have not changed over the “tight” post-bubble real estate market…. MORE
Mortgage Process Explained
This straightforward, step-by-step guide breaks down the mortgage process using graphics, pictures and expert insight. Good for any level of understanding:
National Mortgage News
2 Million Few Underwater Mortgages in 2012
The fourth quarter saw the percentage of total mortgages that were underwater fall to 27.5%, down from 28.2%.
FHA fees to jump after April 1: make sure to plan ahead
The FHA recently announced that loans originated after April 1st, 2013 will have life of loan mortgage insurance.
The United States economy grew less than expected during the first quarter, as the Commerce Department revised Gross Domestic Product down from 2.5% to 2.4%. Government “austerity” hurt the reading.
— Yahoo! Finance (@YahooFinance) May 30, 2013
Wall Street Journal reporter Ben Casselman points out that the GDP news has good news for income, which could help with the jobs situation.
Economic output looks (a bit) better when you focus on income rather than spending. That’s a good sign for jobs. on.wsj.com/ZgFSu6
— Ben Casselman (@bencasselman) May 30, 2013
Real Estate News
More foreclosure news. Despite decrease in foreclosure activity, 1 in 5 sales continue to be of distressed homes.
— Diana Olick (@diana_olick) May 30, 2013
Meanwhile, pending home sales hit a three year high in April. Despite constrained supply, demand appears to be holding out. Will rising mortgage rates put a damper on the real estate frenzy?
Mortgage rates continue to rise as the economy improves and speculation that the Federal Reserve will wind down its stimulus activity continues. (For a more detailed explanation, read here).
— HousingWire (@HousingWire) May 30, 2013
Lastly, the Making Home Affordable program (HAMP) has been extended through the end of 2013. The loan modification program helps homeowners modify loans and reduce monthly payments. More information here.
— HousingWire (@HousingWire) May 30, 2013
Some good news for May’s economic data outlook; initial claims have taken yet another drop. There were 340,000 claims for unemployment benefits in the May 18 week, down 23,000 in the week and 15,000 from the April 13 week.
Continuing claims also show some positive news, which are down 112,000 in the May 11 week, putting them at a new recovery low of 2.912 million.
Can borrowers get a mortgage with a down payment under 5%? Are homebuyers able to shop around at different lenders after prequalification? By law, do all banks charge the same fee for credit reports and appraisals?
The answers are “yes”, “yes”, “no.” Did you get the them correct? Because many Americans are still a bit confused about such mortgage basics, finds a recent Zillow poll.
Zillow put together a “Mortgage IQ” test, which features 10 questions used to gauge familiarity with the mortgage process. Some questions (like if borrowers can get a mortgage with a low down payment – see FHA, USDA, and Conforming Financing), underscore beliefs that could keep potential buyers out of the marketplace, and harm borrowers that have qualified for a mortgage (not knowing they could shop around).
Of respondents, 34% didn’t know that programs exist for down payments under 5%. Over one-quarter (26%) believe that they must close their loan with the original lender that pre-approved them.
You can take the quiz here.
And just as a side note (and a bit of an indulgent pat on the back), this is why we have made it our company mission statement to educate potential borrowers as much as possible. (Check out Mortgage Matters Radio every Saturday from 10 a.m. to 12 noon for more!)
We encourage borrowers to shop around as much as they like; we are confident that our mortgage rates will be lower and our service superior. In other words, we don’t rely on cheap tricks or misinformation to make our business go.
Call us any time (805.543.Loan) or email us (info@centralcoastlending) with any of your mortgage or real estate questions.
In March, the number of mortgages that are delinquent or in foreclosure fell below 5 million for the first time since 2008. From Nick Timiraos at the Wall Street Journal Developments blog, writing on a Lender Processing Services report:
- 1.69 million mortgage in foreclosure process in March, down 20% yearly
- 3.4% of US mortgage in foreclosure in March, down 4.2% yearly
- 3.31 million loans behind on payments in March
- 1.47 million delinquent loans had missed at least three payments
- 6.6% of all borrowers in some stage of delinquency (excluding foreclosure) down 3% yearly
Three main factors have helped the decline in foreclosure activity. For one, the market worked through a large portion of distressed properties, and the borrowers that remain are more committed to keeping their homes.
For another, lenders are increasingly turning to short sales, principle reductions, and loan modifications to avoid the costly foreclosure process.
Lastly, increases in home prices are helping more borrowers come out from underwater, thus giving them incentive to stay in their home and continue mortgage payments.
First-time homebuyers are more likely to care about location, compromise luxury items, and finance with a mortgage, according to a recent survey by Doorstep, an online real estate service. As reported by Meg Handley of U.S. News, first-time buyers make up 39% of the buyer pool. Here are a few more demographic statistics: Read more
Remember those “choose your own adventure” books? Readers would open to first first page and read a prompt, “Walking down a dim forest path, you hear a rustle in the bushes.” Readers were given a choice, “If you run and hide, go to page 50; if you investigate the sound, go to page 100.” Read more
Mortgage applications inched up the April 19 week after a strong showing the week before. Both purchases and refinances rose 0.3%. According to Bloomberg, this is the most activity the index has registered since May 2010, a period of strength due to the stimulus efforts. Continued declines in mortgage rate pricing has helped increase applications activity.
Catching up on a bit of data from earlier in the week, weekly jobless claims rose a bit and mortgage application volume spiked for the week ending April 13. Jobless claims rose to 352,000, but this was just a 4,000 increase from the previous week. The four week average has moved to 361,250 as a result. Mortgage application jumped 4.8 percent, including 5.0 for refinances and 4.0 for purchases.
In our recent article “Low Mortgage Rates Help Housing Boom, but is a Bust on the Horizon?” we discuss the effect that low mortgage rates have had on the booming housing market. The following day, Jann Swanson at Mortgage News Daily posted an article called “Housing Market May be Experiencing a ‘Bubble within a Bust.”
Both articles look at the rising home prices and the roll that mortgage rates are playing to qualify more buyers, thus stoking demand and fueling the housing revival. This “bubble within a bust” has helped home prices spike, according to a note from Wells Fargo Bank’s Economics Group.
Swanson wrote, “As interest rates move up the risk-adjusted returns for investors who convert single-family homes to rentals will diminish as will investor purchases.” Once this happen, the “bubble” will deflate and home prices gains will slow.
Central Coast Lending owner Jason Grote has a different take.
“Investors have been paying cash and driving owner-occupied sales out of the market, so in their absence more owner occupants will be able to buy.” Read more