Monthly Archives: May 2012
Even though we are seeing signs of improvement in our economy, there are still areas that are severely struggling with underwater mortgages.
According to the published article, 1 in 3 L.A. County homes are underwater. That is a significant amount of borrowers who owe far more than what their home is worth due to the housing crash.
Further more, it states that roughly 10% of Southern California cities are experiencing 1 out of 5 homeowners being underwater with their mortgage.
The article states that underwater mortgages in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego have a negative equity totaled to $138.9 billion this last quarter. The Inland Empire is one of the areas that is being severely affected by the housing market.
Now what does this mean to the underwater homeowners?
There are programs available to help lower your payments and reduce your interest rate in order to give some ease in this situation.
One program is HARP. This program is for Fannie Mae and Freddie Mac owned loans. This program is specifically for homeowners that have no equity, and allows them to refinance and reduce their interest rate as well as their monthly payment. This program began in December of 2011, and will continue through 2013. For more information regarding HARP visit Harp2Lender.info.
The second program that is going to be released in June of 2012 is the FHA Streamline. This, in a way, is FHA’s version of HARP. For homeowners who have a loan owned by FHA, you can refinance with no equity in your home. The great benefit of this program is it is No Cost. It will not cost you anything to refinance your home if done correctly with an experienced mortgage broker. This program will allow you to refinance to the low-interest rates and save you a minimum of 5% on your monthly payment. From our experience with the FHA Streamline, the savings is typically much greater than 5 percent. For more information on the FHA Streamline visit FHAStreamlineLender.com
Although the housing market has really negatively affected Southern California, there are programs available to help. Take advantage of these programs that have become available to help homeowners in need.
If you are wondering whether you should do a fixed rate or an ARM, a 30 year or 15 year loan, let us tell you what the statistics are.
Freddie Mac published that borrowers who refinanced during this first quarter of 2012, 31 percent reduced their loan term by paying of their loan sooner and replacing their 30-year loan with a 20-year, 15-year or even shorter term.
Freddie Mac also stated that 66 percent of borrowers have kept their same term as the loan they had paid off.
Now what about an ARM (Adjustable Rate Mortgage) versus a fixed rate mortgage? Well according to Freddie Mac, during the first quarter of 2012, 68 percent of borrowers who had an ARM refinanced to a fixed rate. Only 32 percent of borrowers chose to refinance and keep an ARM.
When choosing between an adjustable rate mortgage and a fixed rate, you need to consider where interest rates will be in the coming years. Initially and ARM is a risk in hopes that interest rates will decrease or be the same when you need to refinance and choose another rate. However, right now, interest rates are so incredibly low, it may make more sense to do a fixed rate mortgage and keep these low rates for the entire term of your loan. We have never seen rates this low, so it would be a big risk to hope in three or five years rates will remain this low.
The first quarter of 2012, the fixed rate mortgages averaged 3.92 percent for 30-year loans, and 3.19 percent for 15-year loans; both extremely low averages!
If you are a borrower that is looking to lower your interest rate, keep in mind you can lower it further by lowering your term. Speak to a mortgage planning specialist to determine what is in your best financial interest.
Regarding HARP (Home Affordable Refinance Program), we have noticed that most people are refinancing to lower terms. From our experience with the desktop underwriter, a 30 year loan has yet to be approved. Most borrowers are saving money and paying of their loan earlier with a 20-year or 25-year mortgage. It’s beneficial from all sides – lowering the interest rate, lowering the monthly payment, and paying the loan off sooner.
If you are interested in refinancing to a fixed rate mortgage, lowering your term, or any other refinancing reason, you should speak with a mortgage professional at Stateline Funding Corp.
When comparing April 2011 sales results to this April’s sales, our market performed much better. This is all good news and signs that we are heading in a direction of recovery.
According to Los Angeles Times news, “A total of 38,241 newly built and previously owned houses, town homes, and condominiums sold state wide in April. That was up 2% from March and up 8.6% from April 2011.”
The article also gives statistics of the sales percentage of foreclosed homes in California. In April last month, foreclosed homes made up 30.3% of the resale of homes. This was a decrease of 2.5 points from March 2012 which was 32.8%, and a decrease of 6.1 points from April of 2011 which was 36.4%.
As far as short sales, those are decreasing as well. In April 2012, short sales accounted for 18.3% of home sales, which was down in comparison to March 2012 which was 19.1%. However, these statistics reflect an increase in relation to April 2011, which short sales only accounted for 16.9% of home sales.
Lastly, reports state that foreclosure activity decreased last month to the lowest levels we have seen since the credit crisis began in 2007.
Now these are all signs that our market is recovering slowly and showing more improvement each month. As always, time will tell if the trend continues.
Are you trying to sell your home this summer? If you are struggling to grab buyers’ interest, maybe you should consider staging your home. These are little things you can do to make your home more appealing to those buying. If you want to get ahead of the game, we have some home staging tips to get you started.
Clutter can make spaces look much smaller. Instead, try removing pieces to make the space look more open and clean, but not empty. You don’t want to crowd a small room with large furniture, but you don’t want to leave a space looking bare either.
White is boring. Try painting your walls with a neutral beige color. It creates a warm feeling, but neutral enough to allow versatility in decorating styles. Simply updating paint throughout the house can really grab the attention of the buyer. Avoid drastic colors though because not all buyers will love a dark blue room or bright red wall.
When a home needs to be painted, buyers may try to reduce the price in order to make up for the money they are going to spend fixing it up. Skip this obstacle, by doing it yourself for less. Include painting your doors as well if you notice the paint is chipping. It can really transform the look of the house.
Are your appliances really outdated? Try upgrading the appliances to build a better appeal and first impression. Stainless steel is a great look, and can transform your kitchen. Don’t worry about losing money because studies show sellers make back every penny spent in appliances.
Create Curb Appeal
How does your home look on the outside? The outside of your home is the first impression that determines if a prospective buyer will consider entering your home. Is your lawn kept? Are your plants trimmed? Is the paint on your house up to date? These are things you need to evaluate and fix to make sure you are delivering the best representation of your home, starting with the curb appeal.
Upgrade Eco-Friendly Materials
Buyers will spend more for a home if they know it is eco-friendly. Don’t go crazy, but if there are small changes you can make to present an eco-friendly home, then try to implement those changes. Small changes such as conserving energy with different light bulbs, to updating floors and walls; these are just other creative ideas to help you attract more buyers.
Clear Counter Space
Don’t crowd your kitchen counters with appliances such as a blender, toaster oven, coffee pot, etc. Remove these appliances and place them in the cupboard. This shows more counter space and allows the buyer to create their own vision of how they would organize your kitchen.
Keep toiletries tucked away when staging your home. Try to keep your shower clean, with limited shampoo and soap bottles. If you have a nice shower with nice tile, you may want to consider leaving the door or curtain open to display this. If you don’t want to show it off, dress up the shower with a nice curtain to decorate the bathroom.
One big turn off to a prospective buyer is smelling things like animal odor, cigarette smoke, and other turn off scents when entering a home. A problem is people may become used to the scents of their own home and pay no attention to it. If you have these things in your home, you need to make sure you eliminate all odors and create a fresh smell. Carpets can soak up odors so you may need to shampoo the carpets, air out the house by opening windows, and move the pets outside until you sell your home.
Let Light In
Make your home look open and inviting by keeping your blinds open so buyers can have light entering each room. It brightens up your home, and makes it more friendly and inviting.
Keep It Clean
Obviously to stage your home you want to make sure you are keeping it clean. Keep your floors clean, carpet vacuumed, furniture dusted, toilets cleaned and no stains. You don’t want cobwebs appearing as you are trying to sell your home. All these things need to be done when showing your home.
Hopefully with these few staging tips you will be able to make improvements to your home and be on your way to selling it faster. Good luck!
Certified Mortgage Planning Specialist
A good mortgage lender should be able to discuss your mortgage payment in detail with you to help it fit your financial situation. They should also be able to offer advice in ways to help improve your credit if your score is too low, or other issues occur on your credit report.
More importantly, a great mortgage lender would get you a pre-approval, not a pre-qualification before letting you look for a home. There is a big difference. A pre-qualification is based on their opinion and brief financial information gathered from you that you qualify. A pre-approval, specifically with Stateline Funding Corp., guarantees you are approved to purchase a home.
Interest rates are important. However, what many consumers don’t realize is interest rates change daily. For example, you may get a quote from one mortgage lender on a Monday, and the next Tuesday you get a quote that is higher. This is typically not the lender’s doing, but due to the fact that the interest rate changed within those 24 hours.
This is why you need to work with a certified mortgage planning specialist who understands what causes the interest rates to fluctuate. When selecting a mortgage lender, you want to have a mortgage planning specialist who knows how to monitor interest rates in real time and watches them daily to guarantee the best rate possible.
Reputation & Reviews
Seek advice and recommendations from family and friends. Referrals are a great way to find a mortgage lender that you can trust. You can also read reviews online. At Stateline Funding Corp., we encourage our clients to leave a review after each transaction so others can learn from their experience with our company. A company should be transparent and have real reviews from clients who have experienced doing business with the company.
According to their website, this past week averaged a 30-year fixed-rate mortgage at 3.83 percent which was lower than the previous week at 3.84 percent. Last year this time, the average 30-year fixed-rate mortgage was 4.63 percent.
The 15-year fixed-rate mortgage averaged at 3.05 percent which was lower than last week’s rate at 3.07 percent. This time last year the average 15-year fixed-rate mortgage was 3.82 percent.
Keep in mind these rates do not include additional fees that may get added on, known as points. According to Freddie Mac, the average fee for a 30-year mortgage was 0.7 of a point.
Overall, these are historically low interest rates for the mortgage industry. A 30-year fixed-rate mortgage at this rate is a great deal especially with the low home prices, or simply even refinancing to obtain a much lower rate.
For those who don’t know, Fannie Mae buys and insures mortgages for the housing market. Its sister company is Freddie Mac. Together these two companies own or back 60% of the United States mortgages.
In 2008, the government had to bail out the companies due to the housing crisis that occurred.
However, this first quarter is the first time that Fannie Mae didn’t need taxpayers’ money in order to stay afloat. The last quarter in 2011, Fannie Mae lost $2.4 billion and needed $4.6 billion in government aid.
The reason this profit is a big deal for our housing industry, is the possibility of it being a turning point, showing we have finally hit the lowest point in the market. Hoping this trend continues and that we can have a steady improvement in the housing market.
However, Fannie Mae is not getting too excited just yet. They understand that they need to have consecutive quarters that profit in order to really tell if this trend is showing an improvement. Until then, we can hope for the best and that Fannie Mae will continue to profit and pay back the money owed to the government.
Why did Fannie Mae’s finances improve this quarter? According to an article in the LA Times, the reason for the improvement was from several factors such as: slower decline in home values, fewer homeowners behind on their mortgage payments, and fewer foreclosed homes on the company’s books.
The last time that Fannie Mae recorded a profit was back in 2010 with $73 million, and still needed $2.6 billion from the government to stay afloat. The positive thing with this year’s profit is they don’t need any government aid.
Altogether, Fannie Mae has received $116.2 billion in taxpayer moneys to stay afloat since 2008. The company has paid back $22.6 billion.
As the company stays on trend, it will continue to pay back the money borrowed from government.
If you are looking for a better deal to come along with a home purchase, you probably won’t find a better deal than now. Home prices are at their lowest and are combined with extremely low interest rates.
According to an article on CNN, home prices have dropped 34% nationally since 2006. This is mind blowing how drastically the market changed. Combining that with historic low interest rates, you cannot create a better deal.
A chief economist for PNC Financial Services, Stuart Hoffman, said he expects home prices to flatten out by the third quarter and start climbing by next year. Hoffman also listed a few things that will help improve the housing market, and increase home prices.
Two factors are the decline of the number of foreclosures as well as a continued job growth. In addition, people are getting their finances in order, improving their credit score and gaining more access to mortgages as they improve their financial situation.
All of these factors will help contribute to improving the housing market and leading to increased prices.
So for all the home buyers on the fence of waiting to purchase in hopes of receiving a better deal, you most likely won’t find one. The market is the most affordable right now!
However, for those unable to purchase until 2013, don’t fret. Economists are predicting a 2% increase in home prices, which still leaves home prices at an affordable amount. The only thing we can’t predict is the interest rates since they are fluctuating on a daily, even hourly basis.
With summer approaching, it’s the best time to house shop. It’s warm outside so you don’t mind going out to look at homes. It also gives you a better idea of what the neighborhood is like with people outside being active on the weekends. Hopefully lawns will be looking much better after the winter and cold seasons are done. Spring and summer are the busiest times to house shop.
So as of today, now is the best time to purchase a home because you are combining low interest rates, low home prices and summer time to shop and purchase!