Mortgage California Blog

Mortgage News Roundup

June 13th, 2013

Approved Mortgage loanMortgage News Roundup

The big news of the day is RealtyTrac releasing their report that foreclosures increased 2% in May. Foreclosures had been on a downward trend for 75 months, so it was a bit surprising. The numbers are still down 28% from May of 2012.  Additionally, the report stated that 1 in every 885 housing units in the U.S. has a foreclosure filing during the month of May.

So what happened?

  1. The increase was caused primarily by an 11% month-over-month increase in bank repossessions. Bank repos increased in 33 states from April to May with North Carolina leading the pack.
  2. Last year, there was a large mortgage settlement among the five major lenders which slowed down foreclosures. All but Citi posted monthly increases in repossessions in May, so the temporary halt to foreclosures is at the end.
  3. There was also an increase of 4% in foreclosure starts with Maryland leading the pack.

Rising Home Prices Rescue Underwater Homeowners

The number of underwater homeowners dropped below 10 million for the first time in three years. As prices continue to rise, people will put their homes on the market increasing inventory. As we’ve mentioned previously, there is a lack of inventory for home buyers, and that increases the price of homes due to bidding wars. If an underwater home is sold for a good price, it increases the value of the other homes in the area.

Also, as homeowners regain equity, it’s easier to refinance taking advantage of the lower interest rates. Lending institutions believe that borrowers with equity are less likely to default on their loans.

Refinancing When HARP Can’t Help

Five years ago, the Federal Government created the Home Affordable Refinance Program (HARP) which has helped many homeowners refinance out of high risk, sub-prime and adjustable rate loans into low fixed-rate mortgages. Recently, HARP was extended through 2015. They’ve also expanded eligibility guidelines.

The possible problem for homeowners is that while you may be eligible for HARP, certain lenders are reluctant to offer the program. So you may get approved for HARP but declined by the bank.

So what can you do?

  1. Find a reputable mortgage broker who will help you find other lenders, and the best options for interest rates and fees.
  2. Protect your credit report. Narrow down the choices to three lenders before your report gets pulled. As we’ve mentioned prior, you get dinged down a bit for each pull.
  3. Pay attention to your loan-to-value. If it’s more than 80%, you will need the additional insurance PMI.

Is It Time To Buy Your First House?

The Ask Carrie column at Charles Schwab recently answered this question.

With mortgage rates enticingly low, and prices generally below their previous highs, a lot of first-time homebuyers may be tempted to jump in before the housing market completely rebounds. But, as we learned from the recent housing crisis, buying a home and taking on a mortgage should be done with considerable care. So you’re wise to be asking this question.

She then went on to discuss how buying a home is not just a financial decision but also an emotional one. So step one is to take your emotional temperature.

Even if you find the house of your dreams, before you consider buying, you should look honestly at where you are—and where you want to be. For instance:

  • Do you plan to stay at your current job? Is there a chance you might be relocated?
  • Would the type of house you can afford today still work if your family grows?
  • Are you willing to take on the commitment of time, money and energy necessary to maintain a house?

Then

  1. Weigh the costs
  2. Consider the ongoing costs
  3. Evaluate your overall debt
  4. Evaluate the tax advantages
  5. Compare your costs/benefits with renting

Talk to a reputable loan officer early to find out what you could afford and what you should afford. The loan officer will have solid advice and help you have a better understanding of the financial obligation of owning a home.

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