Dear Clients:
I am seeing more of my clients actually put money into their homes, or "Cash In" to take advantage current lifetime low interest rates by either refinancing their current residence or buying up to their dream home, while home prices remain low. If they do not have the required 20% equity position needed to refinance, they are coming in with cash to reach the 20% level plus closing costs.
I am happy to review your situation and present a cost benefit analysis to determine if this financing strategy is right for you. Simply call, click or email me for a full mortgage review, or go to my website at www.HomeQuestMortgageCorp.com to apply.
Regards,
Tom
714-478-3153
Wall Street Journal
Record-Low Interest Rates and a Scary Stock Market Are Prompting Investors To Sink Even More Money Into Their Homes.
The housing crash has left at least 11 million people in the unenviable position of owing more on their homes than they are worth—and many more millions with properties worth far less than they paid for them.
But some might not be as trapped as they think.
Record-low mortgage rates and a new slump in home prices are presenting unusual opportunities in the housing market these days—even for so-called underwater borrowers.
Larry and Mary Schuck paid about $29,000 to refinance into a 15-year mortgage at a rate of just 4.5%. That's like an investment return of about 10% a year over five years. They also reduced their total interest payment by more than $95,000.
Some intrepid homeowners are intentionally taking a loss on their current house—and writing a big check to retire their old mortgage—in order to buy twice the home for not much more money. Others, eschewing conventional personal-finance advice, are even opting for "cash-in" refinancings, paying thousands of dollars out of pocket to settle old loans—and then taking out new mortgages with lower payments, shorter durations or both.
Katie Everett, a real-estate broker in Denver, says none of her clients kicked in cash when selling their homes last year. This year, "about half are willing to bring money to closing, anywhere from $5,000 to $45,000," she says.
Are these people crazy to be tying up even more of their cash in their homes, in effect doubling down on what has been a losing bet thus far? After all, any number of variables, from the employment picture to the credit markets, could weigh on housing for years to come.
Yet economists say trading up to new homes or refinancing existing ones can be smart—even if it means plunking down more cash to get out of old mortgages. People living in less-desirable neighborhoods might be able to find better homes in tonier ones that offer better appreciation potential. And with mortgage rates so low, such buyers can keep their monthly payments manageable, even though the new homes are more expensive.
."If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?" says Christopher J. Mayer, a Columbia Business School economist.
The refinancing equation is changing, too. Thanks to rock-bottom interest rates and liberal lending terms for Federal Housing Administration loans, a person who plunks down cash to retire a higher-rate mortgage might be able to reduce his monthly payments, even as he shortens his loan term to 20, 15 or 10 years.
In the past, financial planners typically recommended that homeowners devote as little cash to real estate as possible, and to invest it in the financial markets instead. But with stocks essentially where they were 11 years ago and market volatility seemingly on the rise, people are rethinking that wisdom. Devoting extra cash to repay a mortgage early is among the safest ways to produce an investment return.
"At this point," says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, "if they don't have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to."
During the fourth quarter of 2009, 33% of refinancings were of the cash-in variety, the highest percentage since Freddie Mac began tracking the characteristics of refinance transactions in 1985. Figures for the second quarter are due next week.
"Historically high percentages of borrowers are paying down their principal when they refinance their mortgages," says Brad German, a Freddie Mac spokesman.
It helps that interest rates are lower than they have been in decades. The average rate on a 30-year fixed-rate loan was about 4.74% on July 21, according to Bankrate.com. That is down from 5.26% in January. Rates on 15-year loans averaged about 4.18%.
The Mortgage Bankers Association said Wednesday that low interest rates sent the volume of mortgage applications 7.6% higher during the week ended July 16. Purchase applications increased for just the second time since the expiration of a temporary federal tax break in May. Refinance applications grew 8.6%, to the highest level since May 2009.
The attractive terms are spurring people like Scott Ayler, 35 years old, into action. He and his wife, Jaclyn, 33, recently decided to trade up to a larger home in their native Denver, despite taking a loss on their current house. In 2004, they paid $234,000 for a three-bedroom, 2½-bath house builtthat same year in Green Valley Ranch, a subdivision that has among the highest foreclosure rates in the city and lacks upscale amenities. They are in contract to sell the home for about $204,000.
Their new home, built this year, cost about $323,000, comes with four bedrooms and three baths, and sits on a corner lot overlooking a reservoir. The house, which was initially listed at $379,000, is in Denver's desirable Cherry Creek area, known for excellent schools, plentiful amenities and few foreclosures.
With $195,000 remaining on their original 6.625%, 30-year fixed-rate loan, the Aylers estimate their total paper loss will be around $45,000. They are putting down only $11,500 on the new house. But because the new FHA loan carries a 4.5% rate, their monthly payment will rise by only $290 a month.
.They say they expect better price appreciation in their new home. And with a young daughter and plans for another child, they need more space anyway.
"We don't want to wait for the market to come back," says Mr. Ayler, general counsel for an energy company. "We wanted a better quality of life now."
Of course, many homeowners in states like Arizona, Florida and Michigan are seriously underwater, having overpaid for houses now worth as little as half their value at the market's peak. Making up that yawning gap and scraping up additional cash for a new down payment is beyond their means.
Some of those people are going to extremes by engaging in "strategic defaults," a highly controversial strategy in which they stop paying their mortgages and go into foreclosure to get out of their obligations. But while cutting losses on a bad housing investment might seem liberating, it can stain a person's credit report for years.
The vast majority of homeowners remain reluctant to sell their primary residence at a loss, perhaps irrationally so. In a study of seller behavior in condominium transactions in downtown Boston from 1990 to 1997, economists David Genesove of Hebrew University in Jerusalem and Prof. Mayer of Columbia showed that sellers were so "averse to nominal losses" that it affected their behavior. Those who were selling their homes in down markets and faced the possibility of nominal losses kept their homes on the market for much longer than other sellers, in some cases to their detriment.
Saturday, July 24, 2010
Tuesday, July 20, 2010
Major Lenders Are Beginning to Loosen JUMBO Guidelines
One of my National lenders announced today they will be offering loan amounts of 80% Loan-to-Value up to $2,000,000.
This represents a very good sign, that lenders are beginning to loosen guidelines to low risk borrowers who qualify and want to take advantage of today's lifetime low interest rates.
This program applies to 15,20,30-year fixed rate and 5/1,7/1, and 10/1 LIBOR ARMS. Interest-Only loans do not apply.
Borrower requirements include: Maximum Debt-to-Income ratio of 45%; 720 Minimum FICO; Full Doc; subordinate financing not permitted; Purchase or Rate and term Refinance and program ALLOWS up to 6% seller closing cost contribution.
Call me today at 714-478-3143 to learn if you qualify!
This represents a very good sign, that lenders are beginning to loosen guidelines to low risk borrowers who qualify and want to take advantage of today's lifetime low interest rates.
This program applies to 15,20,30-year fixed rate and 5/1,7/1, and 10/1 LIBOR ARMS. Interest-Only loans do not apply.
Borrower requirements include: Maximum Debt-to-Income ratio of 45%; 720 Minimum FICO; Full Doc; subordinate financing not permitted; Purchase or Rate and term Refinance and program ALLOWS up to 6% seller closing cost contribution.
Call me today at 714-478-3143 to learn if you qualify!
Friday, July 16, 2010
June Housing Inventory Numbers RISE!
Housing Inventory Rises in Many Markets in June
The number of homes listed for sale grew in many U.S. cities in June, a month that typically brings a slowdown in listings. Inventory grew amid signs that demand plunged after the expiration of the home-buyer tax credit.
The supply of homes available for sale in 27 major metropolitan areas at the end of June was up 3.7% from one month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data includes all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates. (See all the inventory data.)
Inventories typically decline modestly in June, as the summer slowdown begins. Zelman & Associates, a research firm, says June listings nationally have fallen an average of 0.5% from May over the past 27 years.
Compared to one year ago, the June inventory in the 27 markets covered by ZipRealty was up 2.1%. Western markets saw the biggest month-over-month uptick in inventory, rising by 10.5% in Las Vegas, 9.4% in San Diego and 7% in Orange County, Calif.
Compared with the previous month, inventory fell in just one of the markets covered by Zip, declining by 1.5% in Jacksonville, Fla.
Inventory could continue to rise over the second half of 2010 as more banks take title to homes through foreclosure. More than seven million households are behind on their mortgage payments or in some stage of foreclosure.
Meanwhile, demand appears to have fallen sharply in the months following the expiration of the tax credit. New home sales fell to a record low in May, while pending sales were down 30% from April. Mortgage rates remain near 60-year lows, and yet demand for home-purchase loans fell to a 14 year low last week, according to the Mortgage Bankers Association.
The number of homes listed for sale grew in many U.S. cities in June, a month that typically brings a slowdown in listings. Inventory grew amid signs that demand plunged after the expiration of the home-buyer tax credit.
The supply of homes available for sale in 27 major metropolitan areas at the end of June was up 3.7% from one month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data includes all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates. (See all the inventory data.)
Inventories typically decline modestly in June, as the summer slowdown begins. Zelman & Associates, a research firm, says June listings nationally have fallen an average of 0.5% from May over the past 27 years.
Compared to one year ago, the June inventory in the 27 markets covered by ZipRealty was up 2.1%. Western markets saw the biggest month-over-month uptick in inventory, rising by 10.5% in Las Vegas, 9.4% in San Diego and 7% in Orange County, Calif.
Compared with the previous month, inventory fell in just one of the markets covered by Zip, declining by 1.5% in Jacksonville, Fla.
Inventory could continue to rise over the second half of 2010 as more banks take title to homes through foreclosure. More than seven million households are behind on their mortgage payments or in some stage of foreclosure.
Meanwhile, demand appears to have fallen sharply in the months following the expiration of the tax credit. New home sales fell to a record low in May, while pending sales were down 30% from April. Mortgage rates remain near 60-year lows, and yet demand for home-purchase loans fell to a 14 year low last week, according to the Mortgage Bankers Association.
Wednesday, July 14, 2010
Jumbo Loan Rates Plunge
Attention Jumbo Home Loan Borrowers:
Nearly two years after the credit crunch virtually froze mortgage markets, high-end borrowers are seeing some relief: Rates for "jumbo" mortgages on pricier homes are at their lowest since 2003.
Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.
"In just the past couple of months, jumbo loans have really started to be competitively priced," says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.
Cheaper mortgages could provide a spark to the market for high-end homes. The lower rates signal relief for homeowners looking to shed an onerous mortgage—and for the high-end housing market itself. More-affordable jumbo loans will likely whet appetites for new home purchases, helping to stabilize prices at the upper end of the market. For consumers, the lower rates will make home purchases more affordable and enable existing homeowners to trim their monthly bills by refinancing.
Applications Are Up
More lenders are expected to make jumbo loans a "top priority" as they view it as a safe and profitable business to get into because jumbo loans are only going to borrowers with pristine credit.
Competitive pricing has spurred an uptick in activity among borrowers around the country, say mortgage brokers. "In the last couple of months alone, I've seen almost a 50% rise in sales of homes that need jumbo mortgages," says Frederick Wohlfarth, president of Manhattan real-estate broker Wohlfarth & Associates.
After the financial crisis struck, the market for jumbo loans ground to a halt. Instead of selling loans into the secondary market, lenders had to hold them on their balance sheets. With housing prices on a dizzying dive, most lenders weren't willing to take the risk of keeping potentially risky new loans on their books, which crippled the market for higher-end homes. Investors headed for the safety of government-backed home loans and steered clear of the private-lender variety.
"Now banks have more capital and are beginning to lend," HSH's Mr. Gumbinger says. "My ultimate question is: How long will these rates really last?"
Big Savings for Borrowers
A single percentage drop spells big savings for borrowers—and that is good news for the housing market. For example, a homeowner with a 30-year fixed-rate $800,000 mortgage at 6.86% pays $5,247 a month. If he were to refinance at 5%, his monthly payments would be reduced by $952.
While financial experts advise caution, prudent borrowers also can use lower rates to refinance existing mortgages and cash out some of their equity, while still ending up with an affordable mortgage.
Along with favorable rates, well-heeled borrowers are finding it easier to qualify for new jumbo loans and refinance existing loans at attractive terms. Underwriting standards are still strict, with most major lenders requiring a credit score in the 700s and down payments of up to 40%, but those with good credit can find good deals.
A borrower in Laguna Beach, Calif., is trading in his 30-year interest-only mortgage for a cheaper one. Four years ago, the 50-year old real-estate developer took out the mortgage, which had a fixed rate for 10 years, to buy his dream home, which has 180-degree views of the Pacific. The $1.5 million loan, which was issued by Countrywide Financial, required him to pay $7,500 a month—causing him more distress than he expected.
With the help of his mortgage broker, the borrower is now in the process of refinancing into a new 30-year loan with a fixed rate of 4.875% for seven years. "I am working to save some money, and this enables me to do that," he says. "I am thrilled."
Nearly two years after the credit crunch virtually froze mortgage markets, high-end borrowers are seeing some relief: Rates for "jumbo" mortgages on pricier homes are at their lowest since 2003.
Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.
"In just the past couple of months, jumbo loans have really started to be competitively priced," says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.
Cheaper mortgages could provide a spark to the market for high-end homes. The lower rates signal relief for homeowners looking to shed an onerous mortgage—and for the high-end housing market itself. More-affordable jumbo loans will likely whet appetites for new home purchases, helping to stabilize prices at the upper end of the market. For consumers, the lower rates will make home purchases more affordable and enable existing homeowners to trim their monthly bills by refinancing.
Applications Are Up
More lenders are expected to make jumbo loans a "top priority" as they view it as a safe and profitable business to get into because jumbo loans are only going to borrowers with pristine credit.
Competitive pricing has spurred an uptick in activity among borrowers around the country, say mortgage brokers. "In the last couple of months alone, I've seen almost a 50% rise in sales of homes that need jumbo mortgages," says Frederick Wohlfarth, president of Manhattan real-estate broker Wohlfarth & Associates.
After the financial crisis struck, the market for jumbo loans ground to a halt. Instead of selling loans into the secondary market, lenders had to hold them on their balance sheets. With housing prices on a dizzying dive, most lenders weren't willing to take the risk of keeping potentially risky new loans on their books, which crippled the market for higher-end homes. Investors headed for the safety of government-backed home loans and steered clear of the private-lender variety.
"Now banks have more capital and are beginning to lend," HSH's Mr. Gumbinger says. "My ultimate question is: How long will these rates really last?"
Big Savings for Borrowers
A single percentage drop spells big savings for borrowers—and that is good news for the housing market. For example, a homeowner with a 30-year fixed-rate $800,000 mortgage at 6.86% pays $5,247 a month. If he were to refinance at 5%, his monthly payments would be reduced by $952.
While financial experts advise caution, prudent borrowers also can use lower rates to refinance existing mortgages and cash out some of their equity, while still ending up with an affordable mortgage.
Along with favorable rates, well-heeled borrowers are finding it easier to qualify for new jumbo loans and refinance existing loans at attractive terms. Underwriting standards are still strict, with most major lenders requiring a credit score in the 700s and down payments of up to 40%, but those with good credit can find good deals.
A borrower in Laguna Beach, Calif., is trading in his 30-year interest-only mortgage for a cheaper one. Four years ago, the 50-year old real-estate developer took out the mortgage, which had a fixed rate for 10 years, to buy his dream home, which has 180-degree views of the Pacific. The $1.5 million loan, which was issued by Countrywide Financial, required him to pay $7,500 a month—causing him more distress than he expected.
With the help of his mortgage broker, the borrower is now in the process of refinancing into a new 30-year loan with a fixed rate of 4.875% for seven years. "I am working to save some money, and this enables me to do that," he says. "I am thrilled."
Friday, July 2, 2010
Mortgage Rates Hit Lifetime Lows
Mortgage rates have sunk to the lowest level in decades. If your current mortgage interest rate is above 5% on either investment, 2nd home, or primary residence, now is the time to find out if you qualify.
The reason rates are dropping is that investors are seeking out mortgage bonds backed by the U.S. government as a safe haven from the tumult of the global economy, a reversal of fortune that has helped drive mortgage rates for consumers to record lows.
Thursday saw a slew of downbeat data, with the Institute for Supply Management saying its index of manufacturing activity fell unexpectedly to its lowest level of the year; auto makers reporting lower U.S. sales in June; and the Labor Department announcing a rise in weekly claims for jobless benefits.
The average rate for a 30-year fixed-rate mortgage tumbled this week to 4.58%, government-sponsored mortgage agency Freddie Mac said Thursday, from 4.69% last week. That is the lowest rate since Freddie Mac started keeping track in 1971.
A refinancing wave would be welcome now, with the economy appearing to lose momentum. The housing market has been a particular source of worry. A report Thursday from the National Association of Realtors showed that pending home sales sank 30% in May from the month before, far worse than economists expected.
If you or anyone you know who wants to take advantage of these rates and secure a lower payment or shorten their term to a 15yr fixed, without seeing a payment increase, please call me today at 714-478-3153.
Tom
The reason rates are dropping is that investors are seeking out mortgage bonds backed by the U.S. government as a safe haven from the tumult of the global economy, a reversal of fortune that has helped drive mortgage rates for consumers to record lows.
Thursday saw a slew of downbeat data, with the Institute for Supply Management saying its index of manufacturing activity fell unexpectedly to its lowest level of the year; auto makers reporting lower U.S. sales in June; and the Labor Department announcing a rise in weekly claims for jobless benefits.
The average rate for a 30-year fixed-rate mortgage tumbled this week to 4.58%, government-sponsored mortgage agency Freddie Mac said Thursday, from 4.69% last week. That is the lowest rate since Freddie Mac started keeping track in 1971.
A refinancing wave would be welcome now, with the economy appearing to lose momentum. The housing market has been a particular source of worry. A report Thursday from the National Association of Realtors showed that pending home sales sank 30% in May from the month before, far worse than economists expected.
If you or anyone you know who wants to take advantage of these rates and secure a lower payment or shorten their term to a 15yr fixed, without seeing a payment increase, please call me today at 714-478-3153.
Tom
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