Monthly Newsletter From Duane Albro
Publicado el 2009-12-03 21:26:19 [0 comentarios]
Duane Albro
Duane Albro - Lending with Integrity
Rhode Island Licensed Lender/Loan Broker
MA(MC5074),CT(17276FM,17277SM),NH(11396)
Cranston, RI 02920
Phone: (401)764-0880
Fax: (401)942-1129
http://www.lendingwithintegrity.com
Top Mortgage Story:
Mortgage rates drop to record lows
By Jim Woodard
Mortgage interest rates dipped to an all-time low in late November, averaging 4.78 percent, with 0.7 points (fees), for a 30-year fixed-rate loan, according to Freddie Mac. Last year at this time the rate for the same loan was 5.97 percent. The 15-year fixed-rate loan is also at a record low - 4.29 percent.
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Other Mortgage Stories:
Home sales up substantially
Paperless transactions emerging
FHA mortgages becoming stronger and more popular
FHA provides diversified financing
Special homebuyer benefits in college towns
Positive outlook for home sales in 2010
Impact of extended and expanded tax credit
Mortgage rates drop to record lows
Mortgage interest rates dipped to an all-time low in late November, averaging 4.78 percent, with 0.7 points (fees), for a 30-year fixed-rate loan, according to Freddie Mac. Last year at this time the rate for the same loan was 5.97 percent. The 15-year fixed-rate loan is also at a record low - 4.29 percent.
"Long-term interest rates eased for the fourth consecutive week to record low levels," said Frank Nothaft, chief economist for Freddie Mac. "Also, home prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down by only 3 percent. That's the smallest decline since February, 2008."
Sales in October showed a strong uptrend, continuing a seven month series of monthly increases - up in by 10.1 percent over the previous month. Sales of newly constructed homes increased by 6.2 percent. At the same time, inventories of for-sale homes are declining, according to a report from the National Association of Realtors. The total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale. That represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.
Lawrence Yun, NAR's chief economist, was surprised at the size of the sales gain in October. "Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November," he said. "With such a sales spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer."
Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. "There is still a large pent-up demand that cann be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through. There likely are many more buyers who were attempting to purchase but simply ran out of time. Historically low interest rates also are boosting the market," Yun said.
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Paperless transactions emerging
The development of more sophisticated computer software programs is moving the paperless era closer to reality. This includes documents related to home sales and the transmission of those documents to participating parties, and including the legal use of e-signatures.
Recognizing the growing demand for this technology, the National Association of Realtors recently partnered with DocuSign, a provider of on-demand electronic signature capabilities. The firm provides software needed for complete electronic processing of documents, including the signing, tracking and storing of home sale documents, according to NAR. Most home buyers and seller, along with brokers, are delighted with this development. It's much more convenient and time-saving as opposed to the traditional paper-loaded processing of documents.
NAR is convinced that its affiliation with DocuSign will meet the demand for legally binding electronic signatures, and that will help Realtors close more deals at a faster rate and offer the convenience and flexibility buyers require, a NAR spokesman said.
The evolution of electronic signatures on documents started when Congress enacted the Electronic Signature in Global and National Commerce Act (the Esign Act) in year 2000. Its primary objective was to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legality of e-contracts.
One special benefit of use e-documents in home sale transactions is tied to the need for delivery of all signed documents to the parties involved, as stated in most state real estate practice statutes. It also deters people or companies from fraudulently changing the terms of contracts in cases where consumers electronically sign an agreement and consent to receive electronic disclosures.
FHA mortgages becoming stronger and more popular
FHA (Federal Housing Administration) continues to make changes in its mortgage programs to help provide needed financing for increasing numbers of home buyers, as well as owners who want to refinance their existing mortgage. That was the message communicated by FHA Housing Commissioner Dave Stevens at a recent Realtor convention.
"We must never let over-exuberance overtake the housing market again, and interrupt the housing market and the lives of untold millions of Americans," he told the Realtors. "Our goal must be nothing less than to craft a solid and sustainable housing market - a market with a secure foundation for the future."
Pointing to an example of recently implemented changes in FHA programs, Stevens said the FHA now no longer requires a second appraisal on high-balance loans for properties in declining markets. "We did not find our previous policy to be particularly helpful and were very concerned about the additional burden on lenders and consumers. The new policy change brings industry alignment, streamline loan processing and reduced costs to consumers," he said.
FHA has also taken actions related to condominium mortgages. "We enacted some temporary measures to meet challenges in the condo market," Stevens noted. "We have excluded vacant and bank-owned real estate units from the calculation of owner-occupancy ratios in condo projects, and reduced the presale requirement from 50 percent to 30 percent among others. These standards will take effect December 7, and spot loan approvals will extend until February 1 to provide time for transition," he said.
Stevens also cited policy changes in FHA management of risk, including elimination of the streamline refinancing program as of January 1 and requiring FHA-approved lenders to hold more capital to ensure responsible lending and risk management. He also noted that FHA recently hired, for the first time in FHA's history, a chief risk officer. FHA's share of the mortgage market rose from 3 percent three years ago to more than 25 percent today, Stevens noted. About 80 percent of recent FHA mortgages have financed homes for first-time buyers.
FHA provides diversified financing
FHA mortgages are not only being enhanced to make them more accessible and affordable to home buyers, they are also structured to serve the real estate needs of other groups. For example, the Federal Housing Administration (FHA), working through the Department of Housing and Urban Development, has a special program for providing insured mortgage financing for hospitals and critical care facilities. Applicants for these mortgages can now obtain financing for projects for which they qualify. Many have been cut off from the credit markets due to the collapse of the bond insurance business and other factors, according to a report carried in National Mortgage News.
"The FHA's Section 242 mortgage insurance program is designed to support hospital projects by helping to reduce their cost of capital," said Steven Hunt, a senior account executive for HUD. The program focuses on hospital construction but can be used for other purposes. It's used mostly at urban hospitals, and is now available in 43 states.
The program has been ignored by many hospitals in the past because the HUD standards have been perceived to be too onerous. And municipal bond deals associated with the program have been few in number and relatively small in size. But now the program is gaining more attention and considered to be more viable in today's market.
Under the program, a qualifying hospital can get an FHA-insured mortgage that can be securitized as a Ginnie Mae loan that is guaranteed by the federal government and purchased by an investor. Most current participants in the program are critical care facilities in urban and rural areas, it was reported.
Special homebuyer benefits in college towns
College towns have unique characteristics and benefits for home buyers. This is a fact of real estate life that is seldom recognized by consumers. A recent study revealed that homes in these communities offer generally undiscovered benefits. They are affordable and those markets are exceptionally stable. The cultural and economic stability associated with higher education institutions make them exceptionally desirable for the purchase of homes and other real properties.
The study was conducted by Coldwell Banker Real Estate while compiling data for their annual Home Price Comparison Index. They found that the average four-bedroom home costs less than $250,000 in 62 percent of college markets surveyed. The study centered on an apples-to-apples comparison of 2,200-square-foot, four-bedroom, two-and-a-half bathroom homes in college markets. The most affordable market was Akron, Ohio where a typical home costs $121,885. Next was Muncie, Indiana where the typical price was $144,996, followed by Ann Arbor, Michigan where the price was $148,000.
"Further research indicates that the charm and affordability of college towns is appealing to more than just students. College markets have long been one of the real estate industry's best kept secrets," said Jim Gillespie, Coldwell Banker's president. "People have been investing in college towns for years, often purchasing homes for their children who attend college in the area. However, these vibrant cities are not only for students. Many empty nesters and families are attracted to the health care systems, culture, and overall quality of life that college towns offer," he said.
Positive outlook for home sales in 2010
The outlook appears to be very healthy for residential sales in the coming year. Home sales will increase by 15 percent to about 5.7 million units, it was predicted by Lawrence Yun, chief economist for the National Association of Realtors.
One key factor in spurring sales projections is the extended and expanded homebuyer tax credit. This will have a particularly strong impact in the lower-end of the housing market, bringing up to 400,000 first-time buyers into the market who wouldn't have bought a home otherwise, Yon noted. This will tighten inventories of starter homes and will shore up prices, thus reducing homeowners' fears of further price drops, he added.
Impact of extended and expanded tax credit
Now that the extended and expanded the tax credit bill for home buyers has been passed by Congress and signed by the president, more people are seriously considering buying a home or selling their residence. This trend will be particularly strong in the early months of 2010. Here's a quick review of the new tax credit law:
Instead of terminating on November 30, the $8000 credit for first-time home buyers was extended to April 30, 2010. It is effective for home sale contracts entered into by April 30 and closed by June 30. Also, the new law expands the tax credit incentive to include up to $6,500 credit for owners of existing homes who are purchasing another principal residence. To qualify, they must have lived in their previous home for five consecutive years out of the last eight years. The annual income eligibility limits to claim the full credit amount for both groups of home buyers has been raised to $125,000 for individuals and $225,000 for married couples.
"The tax credit has proven to be a powerful economic incentive," said Joe Robson, chairman of the National Association of Home Builders. "The action by Congress to extend and expand the credit will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."
NAHB estimates that the extended and expanded tax credit will create 211,000 jobs and generate 180,000 additional homes sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.
Jim Woodard writes a nationally syndicated newspaper column on real estate news and trends, carried in about 240 U.S. newspapers - along with freelance features. Reproduction of this report, in part or entirety, is prohibited without the express permission of the author. E-mail: storyjim@aol.com. Web site: www.jimwoodard.net
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Categorias: NEWS - Noticias, ECONOMY - Economía