Category Archives: finance

Mortgage Rates….Staying Low or Rising???

I wanted to ask people out there whether they feel interest rates are going to stay around 5% or rise?  I have had so many of my buyers get great interest rates with FHA loans.  It just amazes me how long they have stayed low.  If you listen to all the lenders ho are advertising they are saying to take adavantage of these “All Time Low Rates”, because they will not be here long.  When I heard this again today on the radio, I thought to myself, who knows?  I think you have to listen to the economists to understand. 

I think for the rates to rise the Obama adminstration needs to be worried about inflation.  However some economist, “moringstar analyist” are saying we are looking at a Double Dip.  This means that we are going to see home prices fall again, because the current adminstration has not been able to create enough jobs to prevent the double dip.  There is not enough income to support any price increases.

Anybody have any comments on what you think the interest rates will do?  Just a real estate agent trying to better prepare my clients for the future.

New Guidelines for FHA Loans

The FHA (Federal Housing Association), who currently does about 30% of the current loans in today’s market, is changing a few of their rules and fees.  Three years ago, FHA loans made  up about 2% of the loan market.  One of the reasons that the FHA makes most of the loans now is that they only require the buyer to put 3.5% down to purchase a home.  With only 3.5% down, the FHA can also ask the seller to pay up to 3% in closing costs.  The catch to these loans is that they are not cheap and they require the buyer to carry PMI (property mortgage insurance) to protect the risk of such a low down payment.

The changes are as follows:

  • Increase FHA insurance premiums
  • Increase upfront cash by the borrower
  • Focus on enforcement and lender accoutability
  • Reduce the maximum seller concessions from 6% to 3%
  • Raise the minimum FICO score to qualify

I think these could be good changes — the FHA is trying to make sure that the buyer is more strongly qualified so that we don’t end up with people buying homes that they can’t afford.  If a buyer only puts 3% down and gets 6% back in closing costs, they are basically coming up with no cash.  Buying a home takes more than just a down payment; you also need to maintain the home which, overall, is more expensive monthly than renting.

We need to take accoutablility for our expdentures…

Short Sales or Modifications

I was a little stumped on what to write about today, however, something has been bothering me so I though I would share…  I meet with my tax accountant the other day and we got into the discussion of real estate, which happens a lot to me.  He mentioned that we are going to see more foreclosures and short sales in the next two years than we’ve seen over the past two years.  This was not the first time I’ve heard this!  Why would that be? The problem is that there are a large number of adjustable loans coming in to their adjusment period over the next two years. A lot of these homeowners have already lost a lot of their home’s value, and now have less incentive to modify their loans. The prediction is that a lot of these homeowners will face foreclosure or short sale their properties.

As I sit in my office, I wonder what will happen to the real estate market…  Will we see that “W” that everybody has been talking about?  Or will the market stay flat?

Let me know if you have any thoughts on the next two years in the real estate market.

FDIC and OneWest Bank Loan Modifications

I saw this clip the other day on the internet on how the FDIC is handling the losses on one bank…  According to this clip, the FDIC bailed out IndyMac and shut its doors back in July of 2008.  In March of 2009, the FDIC sold all the bad loans to OneWest Bank for 70% of their value and HELOC’s (helocs are lines of credit) at 50% of their value.

When watching this video, my blood begin to boil! This is the same public rip-off that we have been watching for years.  Whether we have a republican/democrat in office, it’s all the same old story! OneWest Bank is owned by private investors with ties to the US treasury department.  This means they did not have to sign up for the loan modification program that Obama passed a few months back — that program helps consumers in danger of foreclosure by modifying the terms of their loan.  OneWest Bank has no incentive to help homeowners, and in fact, it has a lot of incentive to foreclose on the homeowners. 

Here is a link to the article I am referencing:  http://www.thinkbigworksmall.com/mypage/archive/1/32274.  Please watch the video, read the blogs, and tell me what you think.  I just don’t understand how we can get the housing market back on track if we don’t get the government out of the housing market.