Want To Refi? Maybe You Can Now

Californian poppy
Image via Wikipedia

The program rolled out amidst much fanfare in March from the Obama administration, Home Affordable Refinance Program [HARP], was a major dud as far as California was concerned…The reason? As explained in this post at the time, instead of the typical 80% loan to value [LTV] for a refi, it offered government help for up to 105% LTV. Some places, even many places in the country, that’s a big help, but not here. We are too far underwater.

So, it was good to hear the other day that Obamanites have figured this out finally–the program has been pretty much a bust–and changed the rules so that now the government will help for up to 125% LTV. This means you can refinance if say your home is worth $300,000 right now, but you owe $375,000 and you’re paying 8% on an adjustable  If you’re eligible, you could get that refi at the new, lower rates, maybe in 5.5% on a 30-year fixed.

Who is eligible? First, your loan must be owned by Fannie Mae or Freddie Mac. To find out if your is, check the Fannie Loan Look-up or the Freddie Loan Look-Up.  Good so far? Well, now it comes to you and your house. You must have a job or at least income sufficient to take on such a loan. This is becoming more difficult when L.A. County’s unemployment rate is 12.6% as of May.  And, then, your home must be worth that $375,000 you think it is. Talk to a reputable lender and s/he can figure all this out for you in minutes over the phone.Call me at 626-641-0346 for a referral.

Don’t delay. Property values are still sinking. Next month might be too late.

Some will question whether this applies to rental property as well…I believe it does, as the previous loan limit of 105% LTV did. Small investors need help right now. Rents are not covering costs and the big initial down payment that many investors made to get their loans have disappeared as the value of the homes has sunk.

And, last, of course, you still owe $375,000 and you’re paying on $75,000 that isn’t there. If you have a financial turn of mind, you will see that doesn’t make a lot of sense.  So far, we haven’t seen too much relief for that problem.  Maybe down the road…

Reblog this post [with Zemanta]

Mortgage Rates Fall Again!

arrow-down

Freddie Mac  released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.78 percent with an average 0.7 point for the week ending April 2, 2009, down from last week when it averaged 4.85 percent. Last year at this time, the 30-year FRM averaged 5.88 percent. This is the lowest rate since1971 when Freddie first started the survey–that’s 38 years ago!!

The 15-year FRM this week averaged 4.52 percent with an average 0.7 point, down from last week when it averaged 4.58 percent. A year ago at this time, the 15-year FRM averaged 5.42 percent. This is the lowest rate since Freddie began keeping track of the 15-year rate in 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.92 percent this week, with an average 0.7 point, down from last week when it averaged 4.96 percent. A year ago, the 5-year ARM averaged 5.59 percent. The 5-year ARM has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 2005 for the 5-year ARM.

One-year Treasury-indexed ARMs averaged 4.75 percent this week with an average 0.6 point, down from last week when it averaged 4.85 percent. At this time last year, the 1-year ARM averaged 5.19 percent.

What does all this mean to you the homeowner or potential home buyer? That’s easy…Run, run to your nearest mortgage lender and grab these rates while you can…If you’ve thought of refinancing, now’s the time. If you’ve thought of home buying, now’s the time..

freddie-mac


Obama’s Plan: Help for Small Investors

Sign for Barney's Loans, corner of Second Ave ...
Image via Wikipedia

Yes you read that right. Obama’s plan will also help you refinance if you have rental properties. Last week Fannie Mae and Freddie Mac announced they would refinance rental and second homes as part of the Obama administration’s housing relief effort.  That is a relief! It seems that finally these lending giants have realized that helping small investors will also help renters and if nothing else provide homes for the foreclosed upon.

Here’s the skinny. First, the loans must be owned by Fannie or Freddie. If you don’t know, call your servicer to find out or go to Fannie and Freddie websites. If your loan is with another entity or a private lender, you will not be eligible.

Just as with owner-occupied properties, the loan to value ratio cannot exceed 105% and that is up to $729,750 loan amount.  Let’s say you bought a duplex or a fourplex a few years back for $500,000 with a first mortgage of $400,000 at 7.5% and that loan has now been acquired by Fannie Mae. You may well be able to refinance into todays 5% and 6% rates, thereby greatly increasing your cash flow. Even if the value of your property has dropped in the intervening few years, as long as the current market value is at least $420,000, you can do it.

Of course, you do have to be a good prospect for a refi. Your payment history on the loan should be close to perfect–no 30 day lates in the past 12 months. Even if you’ve had other financial woes which may have tanked your credit score, it’s still possible because Fannie and Freddie have agreed to waive their usual minimum score requirement and you won’t have to pay for new mortgage insurance [pmi].

You will have to show income to qualify–often investment income from the building is enough–and there will be the usual closing costs which will increase your loan balance.

All in all, though, this is a great deal!

Reblog this post [with Zemanta]

November 2008: L.A. County Home Prices

los-angeles

Well, as we’ve all been hearing, it’s been another bad month for the nation and for L.A. County. Prices are heading–you guessed it!–DOWN, DOWN, DOWN.  In fact, year over year, prices have fallen 35.7% countywide. The median home value is now $340,000.

Of course, the drops are greater in some areas than in others. In general, working class areas are most likely to show the greatest declines and more affluent areas the least. Statisticians are telling us that until now lower-priced areas have lost 44% of value while upper-income areas have lost 22%. That is a reflection of the ability of the rich to cushion the blow. They have more resources to call upon when times get tough. Lower-income folks are more likely to live paycheck to paycheck with no real savings in case of a downturn.

Thus, we note that in our San Gabriel Valley Azusa is down 30.9% to a median of $280,000; Altadena is down 28% to a median $420,000. Baldwin Park dropped 31.9% to $274,000, Covina is down over 30% to $330,000, Duarte has dipped a whopping 42% to a median of $280,000, and La Puente is down over 32% to a median of about $275,000. Pomona is still Heartbreak City for our area, though, with drops of 49%  and 40%  to a median of $230,000 in 91766 and 91767,  and to  44.6% in 91768 to a median of  $210,000. This is truly horrible and is producing a sea of human misery.

Still and all, other areas of L. A. County are doing far worse. In one ZIP in Palmdale prices are down 64.9% to a median of an unbelieveable $80,000. Other Palmdale areas clock in a medians of $253,000 and $129,000. With prices like these, you know that remaining home owners are going to bail either letting their homes go to short sale or into foreclosure.

The lower-priced homes are now in many areas priced below replacement value. So, in other words, prices cannot fall too much further.  So the previous situation of lower-priced homes taking the greater hit in home values  we are told, is about to change. This downturn is so severe and so intense that now the wealthy are also starting to lose their homes in greater numbers.

Some of that is due to true economic hardship. After all, the wealthy are the business and shop owners whose sales are down the drain and the executives who are being downsized. Eventually, with businesses failing, they run out of money as well.  And, as homes in more affluent areas begin to lose value, many owners question themselves: why am I sitting here paying on a $600,000 mortgage when my home is now worth $350,000? Sometimes it’s a business decision to let the home go…It is cheaper to rent the same house, perhaps as much as half as cheap, especially in good areas which have many foreclosures, such as Corona or Rancho Cucamonga. Fear not, though, these massive foreclosures are coming to L.A. County as well.

Areas in L.A. County which until now have maintained are starting onto that downward spiral. In our area,  affluent Arcadia has declined 22.5 % in 91006 to $420,000 while 91007 is down 26.2 to $830,000. These are significant drops.  San Marino with only a few sales is also down 25.5% to a median $1,250,000.  Sierra Madre is down 24.6% to a median of $660,000. Glendora 91741 is down 31.8% to a median of $505,000 while 91740, only partly in Glendora school district, is down 18.7% to $386,000 median.

San Dimas is down only by 9.8% to a median of $508,000. LaVerne is down only 13.9% to a $439,000 median.  Claremont is down 9.6% to $520,000. These postings show these cities are holding their value well in comparison to the rest of the county. For this, east Valley residents can be grateful despite losing whopping amounts of equity in their homes.

What does the near future hold for our county? I’m afraid it’s more drops in value, especially among the more affluent areas.  Until January 9th, Freddie and Fannie have declared a moratorium on foreclosures both to get everyone through Christmas as well as to allow banks to catch up. Once the moratorium period is over, we will see a tsunami of foreclosures right here where we live. Even a new President will be powerless to stop it.

Mortgage Rates To Go To Record Lows!

The Federal Reserve has began purchasing Mortgage-backed Securities from Fannie Mae and Freddie Mac. This has driven mortgage rates to record lows.  The 30-year fixed rate is projected to reach 4.5% by the beginning of 2009.

This could be your chance to take advantage of this unprecedented opportunity.

The U.S. Treasury Dept. is considering a plan proposed by the Financial Services Roundtable, an industry trade group, to purchase mortgage-backed securities from Fannie Mae and Freddie Mac in an attempt to restore confidence in mortgage-backed securities and encourage banks to make additional loans.
Under the plan, the Treasury Dept. would purchase 30-year, fixed-rate mortgages, which should restore confidence in mortgage-backed securities and encourage banks to make more loans.  As a result, banks could lower the rates on mortgage-backed securities, which could lower mortgage rates for consumers.The idea is to restore confidence in mortgage-backed securities, encouraging banks to make more loans, knowing that they will be able to sell them to the federal government. That should lower the rates on mortgage-backed securities and in turn mortgage rates.

Who will benefit from this plan?

The prime beneficiaries and the prime targets are home buyers. The whole idea is to provide low rates to more potential home buyers can qualify for loans.

Of course, California still has some of the highest-priced real estate in the country.  Many loans here go over the limit at which the government entities, Fannie and Freddie,  will purchase loans. Such jumbo loans are those over $729,750 until December 31st and then to $625,500 for 2009. These lower rates will not apply to such non-conforming loans.

Other beneficiaries are those who would like to refinance. Here in California, though, only those who do not owe more than their homes are worth or who, indeed, have significant equity in their homes will be able to take advantage of this boon.

Fannie and Freddie Holiday Halt to Foreclosures

foreclosure-house

Fannie Mae and Freddie Mac recently announced they will postpone foreclosure sales and evictions on occupied single-family residences scheduled to occur between November 26, 2008 and January  9, 2009.

During this time, the companies will streamline their mortgage modification programs, scheduled to launch December  15. Foreclosure attorneys and loan servicers will continue to contact borrowers who have defaulted on their mortgage loans owned or guaranteed by Fannie Mae or Freddie Mac, and continue to pursue workout options.
Note: this is a holiday halt only. Companies are attempting to contact homeowners and trying to arrange loan modifications for those who qualify.

The companies said they would enact a program to restructure mortgages for borrowers who are falling behind in their payments. That effort would seek to help homeowners who haven’t paid their loans for three months but whose homes had not been foreclosed upon yet. In a foreclosure, Fannie Mae or Freddie Mac seizes control of a home and, usually, tries to sell it.

This program extends aid to those who are in immediate danger of foreclosure. The companies estimate that means about 16,000 homes.

Under the mortgage modifications program unveiled last week, Fannie and Freddie will seek to modify loan terms to ensure borrowers aren’t paying more than 38 percent of their monthly pretax salary on their mortgage. The companies will do this by extending the total term of loans to up to 40 years, reducing the interest rate, and, in some cases, delaying payment on part of the loan.

Notice, though, that lenders do not want to reduce loan balances even for borrowers who are seriously upside down on their home’s value as is the case for almost anyone in California who bought or refinanced between 2003 and 2007.