The Kallhoff Team: December 2013

Thursday, December 19, 2013

Many Borrowers Facing Higher Mortgage Costs Next Year

DAILY REAL ESTATE NEWS | THURSDAY, DECEMBER 19, 2013

Borrowers will likely see an increase in mortgage costs next spring, particularly those who lack a sizable down payment or have less-than-perfect credit scores. Mortgage giants Fannie Mae and Freddie Mac are raising the fees they charge lenders, which is expected to get passed on to borrowers.

According to Fannie Mae’s web site, here are some of the increases that borrowers can expect:

A borrower with a 30-year fixed-rate mortgage, a credit score of 735, and a 10 percent down payment will see fees rise from the current rate of 0.75 percent to 2 percent of the loan amount.
For those borrowers making a 10 percent down payment and who have a 750 credit score, fees are to increase from 0.5 percent to 1.5 percent of the loan amount.
Borrowers with credit scores of 775 and a 10 percent down payment will see fees rise from 0.5 percent to 1 percent.

Borrowers with higher down payments aren’t likely to escape some rises in mortgage costs either. For example, borrowers who have a down payment of 25 percent but a credit score of 690 will see fees rise from 1.5 percent to 2.25 percent.

Analysts predict that higher fees combined with rising interest rates and new mortgage rates could further tighten mortgage credit in the new year.

“It’s another headwind for housing on top of other headwinds that, individually, might have been manageable,” says Ivy Zelman, chief executive of Zelman & Associates, a housing research and advisory firm.

Source: “Why Mortgage Costs Could Rise in 2014,” The Wall Street Journal (Dec. 17, 2013) andFannie Mae

http://realtormag.realtor.org/daily-news/2013/12/19/many-borrowers-facing-higher-mortgage-costs-next-year

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Wednesday, December 18, 2013

Home Owners Stand to Recapture More Equity in 2014

DAILY REAL ESTATE NEWS | WEDNESDAY, DECEMBER 18, 2013

The number of underwater homes continues to slip, with 791,000 properties regaining equity during the third quarter, CoreLogic reports.

Currently, about 13 percent of all homes with a mortgage -- or 6.4 million -- remain in negative equity compared to 14.7 percent -- or 7.2 million -- at the end of the second quarter.

An estimated 42.6 million homes in the U.S. have positive equity. About 20 percent-- or 10 million -- of those homes, however, have less than 20 percent of equity or what is considered “under-equitied,” according to CoreLogic.

What’s more, about 1.5 million properties have less than 5 percent and are considered near-negative equity. They are the most at risk if prices happen to fall, CoreLogic reports.

The following states have the highest levels of negative equity and account for 36.4 percent of all the negative equity in the country:

Nevada: 32.2% of properties have negative equity
Florida: 28.8%
Arizona: 22.5%
Ohio: 18%
Georgia: 17.8%

The majority of the homes that have positive equity are in the high-end housing market. Ninety-two percent of homes valued at more than $200,000 have equity compared to 82 percent of homes values at less than $200,000, CoreLogic found.

"We should see a further rebound in consumer confidence and economic growth in 2014 as more homeowners escape the negative equity trap," says Anand Nallathambi, president and CEO of CoreLogic. "Home price appreciation has helped more than 3 million property owners regain equity since the first quarter of 2013."

Source: “Negative Equity Will Continue Declining in 2014: CoreLogic,” Mortgage News Daily (Dec. 17, 2013)

http://realtormag.realtor.org/daily-news/2013/12/18/home-owners-stand-recapture-more-equity-in-2014

http://www.rebeccasellsaz.com

Tuesday, December 17, 2013

Economists: Growth in Home Prices Will Slow by Half in 2014

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 17, 2013

Economists are predicting housing prices to continue to rise next year — but only at about half the rate that they did in 2013, Money Magazine reports.

However, “for a sustainable recovery, you want to see more balance between buyers and sellers,” says David Stiff, chief economist at CoreLogic Case-Shiller.

Home sales will likely see modest growth next year, says Lawrence Yun, chief economist at the National Association of REALTORS® . Strict underwriting practices by lenders, rising interest rates, and tight inventories in many markets will moderate sales growth. NAR has predicted home sales of about 5.12 million for 2014, which is close to the same level forecasted for 2013.

Meanwhile, inventory levels are expected to see some improvement in 2014. In September, they rose 1.8 percent compared to a year earlier, according to NAR data. That marked the first increase in inventory levels since late 2011.

Still, expect 2014 to continue to be a seller’s market while inventory levels remain tight, analysts say.

Fewer distressed homes on the market also will likely mean investors will take a step back, leaving more room for home buyers to step in. Investors’ share of residential home purchases dropped from 23 percent earlier this year to 17 percent in September, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking survey.

But buyers will likely be greeted by higher mortgage rates. The 30-year fixed-rate mortgage is expected to increase from a 4.5 percent average to more than 5 percent in the new year.

Also, buyers will still face tight underwriting standards. While real estate professionals are reporting that qualifying for a loan is getting easier, the speed of processing the loan has not improved. Virginia real estate professional Rob Wittman told Money Magazine that buyers might want to consider using local lenders with ties to nearby appraisers for faster closings.

And sellers shouldn’t underestimate buyers in the new year, either.

"Buyers are smart these days — they know where the market is and know that rates are higher. They aren't going to bite on a list price above recent comparables," says Sara Fischer, an agent with San Diego-based Redfin.

Source: “Real estate: Look for value in 2014,” Money Magazine (December 2013) and “NAR: Price Gains, Not Sales, to Drive Housing Growth,” REALTOR® Magazine Daily News (November 2013)

http://realtormag.realtor.org/daily-news/2013/12/17/economists-growth-in-home-prices-will-slow-half-in-2014

http://www.rebeccasellsaz.com

Monday, December 16, 2013

FHA Closing Gap on Capital Shortfall

DAILY REAL ESTATE NEWS | MONDAY, DECEMBER 16, 2013

A year ago, the Federal Housing Administration was projected to face a $16.3 billion shortfall, but the shortfall now has fallen to $1.3 billion, a new independent audit shows.

FHA received $1.7 billion in funds from the U.S. Treasury in September to help cover projected losses. The agency also raised the amount it charges borrowers to insure mortgages against default six times, and has tightened its underwriting standards in an attempt to prevent future defaults on mortgages.

The FHA insures more than $1 trillion in mortgages. The number of mortgages it insures increased during the housing crisis, and it now insures more than one-third of all U.S. mortgages—that’s an increase from about 5 percent in 2006, Reuters reports. Many loans it insured from 2007 to 2009 had gone bad and had chipped away at its cash reserves. Loans made since 2010 are expected to remain profitable, according to the audit.

The FHA is required by law to maintain a 2 percent capital ratio. It has failed to meet that ratio since 2009. The audit found FHA will likely meet it in the 2015 fiscal year.

The National Association of REALTORS® is a strong supporter of FHA and what it calls the agency's “vital role in the mortgage marketplace.”

“These promising gains are the result of strong leadership and a commitment to policies that balance risk with FHA’s mission of making mortgage insurance available to qualified home buyers,” NAR said in a statement. “In light of this report, NAR believes that Congress should not dramatically change the FHA or redefine its purpose. We will continue our work with FHA to help make the dream of home ownership a reality for millions more Americans.”

Source: “U.S. FHA Faces $1.3 Billion Capital Shortfall,” Reuters (Dec. 13, 2013)

http://realtormag.realtor.org/daily-news/2013/12/16/fha-closing-gap-capital-shortfall

http://www.rebeccasellsaz.com

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The Kallhoff Team

Thursday, December 19, 2013

Many Borrowers Facing Higher Mortgage Costs Next Year

Wednesday, December 18, 2013

Home Owners Stand to Recapture More Equity in 2014

Tuesday, December 17, 2013

Economists: Growth in Home Prices Will Slow by Half in 2014

Monday, December 16, 2013

FHA Closing Gap on Capital Shortfall

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