MORTGAGE LENDERS NOW REQUIRE SMALLER DOWNPAYMENTS FOR HOME LOANS!

 

I just wanted to get this out there for all of you who read my blog. Feel free to share it with your friends and family as this topic comes up on a regular basis with people I run into. It also lets us know the banking industry as well as the housing markets are improving. Lenders tightened up lending requirements following the 2007 housing crash because prices continued to slide and they didn’t want to have people walking away from new home purchases if the market continued it’s downward spiral. As home prices have increased and leveled off, lenders feel more confident that prices are stable and rising so they have relaxed requirements a bit. Underwriting, however hasn’t relaxed it’s rules, they are in fact more stringent than they use to be and ask for verification on EVERYTHING!           

 

More home loans require smaller downpayments

 

WASHINGTON – Oct. 24, 2013 – More people are getting home loans with lower credit scores and smaller downpayments.

Last month, the average FICO score for a closed home loan was 732, down from 750 a year ago, shows data from mortgage tracker Ellie Mae.

The average downpayment was 19 percent, vs. 22 percent a year ago. What’s more, almost one-third of closed loans had FICO scores under 700, vs. 17 percent a year ago. The top FICO score is 850.

“We continue to see things open up ever so slightly month by month,” says Jonathan Corr, Ellie Mae president.

The standards to get a home loan remain tight, mortgage experts say. But lenders are reducing some restrictions as housing prices recover and as higher interest rates curtail their refinance business.

“We’re starting to see some of the banks … get more creative … to drive more volume to the door,” says Jeff Taylor, managing partner at mortgage analytics firm Digital Risk.

Earlier this month, Bank of America dropped its minimum downpayment requirement for non-conforming loans under $1 million to 15 percent from 20 percent. Non-conforming loans, which can’t be sold to Fannie Mae or Freddie Mac, are over $417,000 in most parts of the country.

Wells Fargo also reduced non-conforming loan minimum downpayments to 15 percent from 20 percent in July.

JPMorgan Chase, meanwhile, reduced downpayment requirements in Arizona, Florida, Nevada and Michigan – states that were especially hard hit by foreclosures. The bank’s minimum downpayment is now 5 percent, down from 10 percent, for primary homes and 10 percent, instead of 20 percent for second homes in those states. The change brings downpayment requirements in those states in line with others, says JPMorgan spokeswoman Amy Bonitatibus.

“These markets have shown strong signs of improvement,” Bonitatibus says. Improving home values lessen risk for lenders.

JPMorgan and Wells made their changes in July after a sharp interest rate spike in May cut into the refinance business.

While banks are easing some loan requirements, home lending standards remain tight and will likely stay there, says Cameron Findlay, economist at Discover Home Loans.

New lending rules expected to take hold in January require lenders to make home loans that meet federal standards or face greater liability from borrower lawsuits should the loans go sour. Findlay doesn’t expect lenders to do many loans that fall outside of those standards.

“We’re seeing tweaking of the underwriting standards, but it’s not a wholesale loosening,” says Guy Cecala, publisher of Inside Mortgage Finance. “The pendulum is still too far toward restrictive.”

Copyright © 2013 USA TODAY, Julie Schmit

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FHA & USDA BUYERS…….EXPECT DELAYS DUE TO GOVERNMENT SHUTDOWN

If you were in the middle of purchasing a home when the government shut down took place EXPECT delays with your financing. This just doesn’t apply to FHA, but to USDA financing as well. I have a listing where the buyer is USDA and we have already been told expect delays. I love our government. It shut’s down for two weeks and it will take longer than that to get things moving again. And these people are going to be in charge of our health care now? WOW

FHA to real estate: Expect a few delays

WASHINGTON – Oct. 21, 2013 – While most mortgages backed by the Federal Housing Administration (FHA) continued to function during the recent government shutdown, a letter sent by Deputy Assistant Secretary for Single Family Housing Charles Coulter has asked for patience as the agency gets back up to speed.

“We are very pleased to be fully operational and wanted you to know that we will be working hard to bring business back to normal,” Coulter said.

During the shutdown, FHA continued to endorse loans and handle most REO and servicing/loss mitigation activities. Coulter said FHA had “minimal interruptions” with FHA-insured mortgage loan originations and REO and servicing loss mitigation activities.

“However, since we had a very limited number of staff working during the shutdown, we have a considerable backlog of work,” Coulter adds. He notes delays specifically with:

  • Processing HECM endorsements and other cases that must be manually endorsed
  • Condominium project approvals
  • Incoming questions from lenders or borrowers
  • Some other FHA service functions

“We are prioritizing the backlog and will be working to address more critical items within 30 days, and then to clear our backlog within 60 days,” Coulter said. “Please allow us time to respond to inquiries already submitted through the FHA Resource Center and the National Servicing Center.”

Coulter said it will “only slow the process” if documents or questions are resubmitted because it seems to be taking FHA too long to respond.

© 2013 Florida Realtors®

MORE NEWS ON NATIONAL AND FLORIDA SEPTEMBER 2013 HOME SALE

Great news all around the country……the complete article was a great read and made me feel positive about our Tampa area real estate market.

 

Florida’s housing market shows positive gains in Sept. 2013

NAR: Existing-home sales down, but prices rise in Sept.

WASHINGTON – Oct. 21, 2013 – After hitting the highest level in nearly four years, existing-home sales declined in September, but limited inventory conditions continued to pressure home prices in much of the country, according to the National Association of Realtors® (NAR). Read More

ORLANDO, Fla. – Oct. 21, 2013 – More closed sales, higher median prices, increased pending sales and the continued stabilization of the homes-for-sale inventory resulted into a sunny outlook for Florida’s housing market in September, according to the latest housing data released by Florida Realtors®.

“Throughout the year, we’ve seen Florida’s housing market strengthen, and that positive momentum continued in September,” says 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “Home values are rising, and many homeowners across the state see improving home equity. Those trends are helping to ease tight inventory levels in many areas as people who had been waiting on the sidelines decided to list their homes for sale.

“September marks 22 months in a row that the statewide median sales prices rose year-over-year for both single-family homes and for townhome-condo properties.”

Statewide closed sales of existing single-family homes totaled 18,490 in September, up 18.8 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – signed contracts not yet completed or closed – for existing single-family homes last month rose 10.5 percent over the previous September. The statewide median sales price for single-family existing homes last month was $170,000, up 17.2 percent from the previous year. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in August 2013 was $212,200, up 14.4 percent from the previous year. In California, the statewide median sales price for single-family existing homes in August was $441,330; in Massachusetts, it was $345,000; in Maryland, it was $272,895; and in New York, it was $242,000.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 8,279 units sold statewide last month, up 11.4 percent from September 2012. Meanwhile, pending sales for townhouse-condos last month increased 4.6 percent compared to the year-ago figure. The statewide median price for townhouse-condo properties was $130,000, up 23.5 percent over the previous year. NAR reported that the national median existing condo price in August 2013 was $211,700.

Inventory was at a 5.3-months’ supply in September for both single-family homes and for townhouse-condo properties, according to Florida Realtors.

“Not too long ago, the focus was on the strength and longevity of Florida’s housing market recovery, but we’ve moved into a slightly different stage of growth,” says Florida Realtors Chief Economist Dr. John Tuccillo. “Now, the focus turns to growth in different segments of the real estate market. For example, it is very difficult to find homes for sale priced under $200,000. Investors have taken whatever has come on the market in this range. However, despite this, inventory has definitely stabilized and appears to be on the verge of rising.

“More sellers are coming into the market — new listings are up — and investor demand appears to be cooling off a bit, as shown by the fact that cash sales as a percentage of all sales are falling.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.49 percent in September 2013, up from the 3.47 percent average recorded during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors Media Center athttp://media.floridarealtors.org/ and look under Latest Releases, or download the September 2013 data report PDFs under Market Data at: http://media.floridarealtors.org/market-data

HAVE YOU EVER THOUGHT OF FLIPPING HOUSES? HERE IS SOMETHING YOU SHOULD KNOW!

I have flipped a few homes over the years, but you really have to know what you are doing and know your costs before you pull the trigger. I thought the below information is worth passing on…..the flippers have moved more towards high end flips because that is where they have better chances of making money. If you are an investor in the Tampa area and would like to partner up with me to flip some homes give me a call at 813-777-5332.

 

Home flipping down 13%, but high-end flipping up 34%

IRVINE, Calif. – Oct. 17, 2013 – RealtyTrac released its Q3 2013 Home Flipping Report, which shows 32,993 single family home flips – where a home is purchased and subsequently sold again within six months – in the third quarter of 2013. That number is down 35 percent from the second quarter and 13 percent year-to-year.

Overall, Florida’s 4,706 home flips in the third quarter came in second after California, which had 8,592 flips. And only one city in the state made RealtyTrac’s “Top 15 Markets for Profitable Home Flipping”: No. 13 Deltona-Daytona Beach-Ormond Beach.

In some cities, the number of home flips decreased significantly since the second quarter, including two Florida cities, Tampa (47 percent decrease) and Orlando (28 percent decrease).

According to RealtyTrac, real estate investors made an average gross profit of $54,927 on single-family home flips in the third quarter – a 12 percent higher average gross return compared to the third quarter of 2012.

The higher gross profit on fewer total home flips was driven, in part, by an increase in the number of high-end homes sold by flippers for $750,000 or more. A total of 968 high-end homes nationwide were flipped in the third quarter, down 13 percent from the previous quarter but up 34 percent from a year ago.

More than three-fourths of all high-end flips were in five markets: the New York metro area and four coastal California markets – Los Angeles, San Francisco, San Jose and San Diego. Flips on homes priced between $1 million and $2 million increased 42 percent year over year, while flips on homes priced between $2 million and $5 million increased 350 percent year over year.

“Increasing home prices over the past 18 months combined with decreasing foreclosures have created a market less favorable to the high quantity of middle- to low-end bread-and-butter flips that we saw late last year and early this year,” says Daren Blomquist, vice president at RealtyTrac.

“But the sharp rise in high-end flipping indicates there is still good money to be made for flippers willing and able to take on the additional risk of buying and rehabbing more expensive homes,” he adds.

The number of single family homes flipped in the third quarter decreased from the previous quarter and a year ago nationally, but flipping numbers were still up from a year ago in some markets such as Los Angeles (11 percent increase), New York (14 percent), Detroit (13 percent), Atlanta (32 percent), Las Vegas (9 percent) Chicago (28 percent) and Seattle (23 percent).

© 2013 Florida Realtors®

SEPTEMBER 2013 FLORIDA HOMES SALES UP! HAVE YOU CONSIDERED BUYING A NEW HOME?

ImageIt looks like Florida is slowly recovering, but I have noticed a drop off of buyer traffic since the government shut down has been going on. I would say the FishHawk neighborhood that I live in may be above the stats below with the finishing touches being put of Starling Water and a new section opening up with multiple builders. As always, if you need help selling or buying a home in the Tampa please give Rich Kemper a call at 813-777-5332.   

Fla. applications for new homes rose in Sept.

 

WASHINGTON – Oct. 14, 2013 – The Mortgage Bankers Association’ (MBA) Builder Application Survey (BAS) for September 2013 found that mortgage applications for new home purchases in the U.S. decreased by 1 percent relative to the previous month, though the numbers aren’t adjusted to compensate for seasonal variations.

In Florida, however, new home applications rose both month-to-month and year-to-year. Compared to August 2013, applications rose 1.6 percent. Compared to September 2012, applications rose 10.7 percent.

By product type, conventional loans composed 68.4 percent of U.S. loan applications, FHA loans made up 16.6 percent, RHS/USDA loans composed 1.1 percent and VA loans made up 13.9 percent.

The average loan size of new homes increased from $284,392 in August to $289,650 in September.

MBA estimates that sales of new single-family homes were running at a seasonally adjusted annual rate of 459,000 in September 2013. On an unadjusted basis, the MBA estimates that there were 36,000 new home sales in September 2013. Even though the mortgage rate declined nationally, the percentage of all-cash home sales led to the increased estimate.

© 2013 Florida Realtors®

5 TIPS TO GETTING THE BEST MORTGAGE

English: Mortgage rates historical trends

English: Mortgage rates historical trends (Photo credit: Wikipedia)

I forget sometimes that as a Realtor I am familiar with all of these topics regarding getting the best possible mortgage, but not everyone else is so here they are for you to read. As always, if you know anyone who is looking to buy or sell a home in the Tampa area please give them my name and phone number. Richard Kemper 813-777-5332                 Image

 

5 ways borrowers can land the best mortgage

 Given the changing mortgage landscape, here are five things borrowers can do to get the best deal:

Do your homework: The first step is to check your credit report with the three credit reporting agencies.

You can do it for free at AnnualCreditReport.com. If there are any errors, correct them. Then do what you can to improve your credit rating by paying down your debt.

Avoid borrowing to buy a car or other big-ticket item in the months before you apply for a mortgage – and, for that matter, up to the date you finally close on your new home.

You can check your credit score at MyFico.com for $19.95. Anyone with scores below 620 will find it very difficult to qualify for a mortgage; borrowers with scores over 740 qualify for the best rates. It’s a good idea to try to improve your score in the months before you apply for a mortgage, because even a 20-point improvement can make a difference in the rate you can get, according to David Stein, chief operating officer of Residential Home Funding in Parsippany, N.J.

Be ready to offer up a lot of paperwork to document your income, debts and assets. Regulators have cracked down since the housing boom free-for-all, when unqualified buyers and borrowers got or refinanced mortgages they couldn’t actually afford.

Now, borrowers need to show one month’s worth of pay stubs, two months of bank statements and two years of tax returns, according to Stein. During the housing boom, Stein said, lenders “weren’t looking at anything – now they’re looking at everything.”

Then shop around among several lenders for the best rate.

Get preapproved: Even before you start looking for a house, you should get preapproved for a mortgage. This will make you a stronger buyer, because sellers will know you have the financing in place to move forward.

In addition, getting preapproved for a mortgage amount “sets boundaries around what you can afford. Those boundaries dictate what your price range is,” said McBride.

Choose between rates: The standard loan offers a fixed interest rate for 30 years. Adjustable-rate mortgages (ARMs) offer a fixed rate for, typically, the first five or seven years; after that, the rates can rise every year. In exchange for accepting the risk that interest rates will rise, borrowers get a lower initial rate on ARMs. According to the Mortgage Bankers Association, ARMs make up about 7 percent of the current market.
But ARMs make sense only for people who know for sure that they’re going to be in the house for a limited time.

“Forget about adjustable rates altogether unless you have sufficient financial stability that you could absorb a higher monthly payment if your timetable doesn’t pan out,” McBride said.

Decide length of loan: Fifteen-year loans are more popular with refinancing homeowners than they are with first-time homebuyers because many buyers can’t afford the higher monthly payments. The reward for those higher payments is that over time, you’ll pay much less in interest by shortening the life of the loan. And 15-year mortgages come with lower rates.

Sammy Thomas, a consultant living in Ridgewood, N.J., wasn’t looking for a 15-year mortgage when he decided to refinance as rates dipped last year. But with rates on 15-year mortgages then hovering around 3 percent, he decided that was the best deal. The shorter loan also meant that he and his wife, Demi, a teacher, could live mortgage-free sooner. That was especially appealing as they plan for their retirement, said Thomas, 58. In fact, they hope to put extra money on the loan each month and have it paid off in 11 or 12 years.

Lock in your rate: Once you’ve found a good rate, consider locking it in, which you can usually do for no cost, or for a fee that is refunded at closing. It’s not worth betting that rates will fall before you close on the house.

“I rarely tell folks to try to time the bottom of the market,” Gumbinger said. “Mortgage rates almost always rise much more quickly than they fall.”

“Don’t try to guess the way rates are moving,” McBride agreed. “I’m not a fan of people rolling the dice for something as significant as what their mortgage payment is.”

Copyright © 2013 The Record (Hackensack, N.J.) Distributed by MCT Information Services.

EXPECT DELAYS IF YOU ARE USING VA, FHA, OR USDA TO GET A LOAN!

If you are applying for a VA, FHA, or USDA loan or already in the process and just waiting for your closing date expect delays. I think we all know this, but just wanted to drive message home as I received this bit of news today which you can read. Let’s hope the government shut down does not have an adverse affect on the Tampa housing market, a market that is still soft in many ways. As always, if you need help selling or purchasing a home in the Tampa area give Richard Kemper with RE/MAX a call at 813-777-5332

 

FHA answers questions about shutdown’s impact

WASHINGTON – Oct. 7, 2013 – The Federal Housing Administration (FHA) says it has received a number of questions about the government shutdown and its impact on FHA loans. As a result, it issued a list of questions and answers:

Can I get an FHA case number?
Yes. Lenders will be able to obtain an FHA case number from the FHA Connection.

Will FHA endorse single-family loans during a shutdown?

FHA will be able to endorse single-family loans, with the exception of Home Equity Conversion Mortgages (HECM) and Title I loans, during the shutdown. A limited number of FHA staff will be available to endorse new loans. Due to limited staff, the time to endorse the cases may be extended.

Will FHA still be able to endorse my loan if I am not able to obtain tax returns verified by the IRS during the shutdown?
Some lenders obtain tax transcripts directly from the IRS when underwriting their FHA-insured loans. But these lenders may be unable to obtain returns directly from the IRS for the duration of the government shutdown.

Lenders may continue originating loans using FHA’s existing underwriting requirements, which have not changed. Lenders must obtain tax returns from certain borrowers in order to originate FHA-insured loans, and the borrower’s signed authorization (i.e., Forms IRS 4506, IRS 8821, or whatever form or electronic retrieval service is appropriate) for any loan for which the borrower’s tax returns are required.

Why didn’t the borrower’s name and Social Security Number pass validation with the Social Security Administration?
When the lender requests a FHA case number, the borrower’s name, date of birth, Social Security Number (SSN) and property address are entered into FHA Connection (FHAC). If the matching process with Social Security Administrations (SSA) fails, a “Case Warning for SSN Validation” will be placed on the case number.

The failure could occur because the data doesn’t match or because the SSA system went offline due to the government shutdown. SSA has limited tolerance for minor mistakes in names, birth dates and social security numbers.

Can the Social Security Number validation be run again?
Lenders can make necessary corrections and try a second time to validate with SSA. Any changes made to the borrower’s name, birth date and SSN at any time prior to insurance endorsement will trigger a validation request with SSA. If the revised data passes validation, the Case Warning for SSN Validation is removed.

However, if the failure was caused by the government shutdown, the Case Warning for SSN Validation will not be able to be removed until the government reopens. FHA will ensure that the validation process takes place and lenders will be advised of the results in FHAC as soon as possible after that happens.

Can I continue to process the loan without the Social Security Number validation?
Lenders may continue processing loans without receiving validation of the borrower’s name and SSN, but FHA will not endorse loans without this validation.

What happens if I cannot validate the borrower’s SSN?
The lender may submit a request for insurance endorsement if confident that the Case Warning was received in error as a result of a system shutdown. The lender must provide conclusive documentation to verify the Social Security number, such as a valid SSN card issued by the SSA; or an original document issued by a federal or state government agency that contains the name of the individual and the SSN of the individual, along with other identifying information to support the validity of the borrower’s name and SSN to the applicable Homeownership Center (HOC).

Lenders may not endorse any loans with Case Warnings for SSN Validation, and FHA will require the lender to submit the case binder for endorsement along with conclusive documentation to verify the SSN.

After viewing the documentation, FHA will endorse the mortgage for insurance if it believes the documentation provided complies with HUD’s regulations and the loan meets all other FHA requirements.

© 2013 Florida Realtors®