Loan Rates & Programs
Rumors that The Federal Reserve may raise interest rates have not affected the market…yet.
The market is in pretty good shape at the moment, with the recent jobs numbers from the Bureau of Labor Statistics bolstering confidence along many financial lines. Of course, this confidence may eventually lead an increase in inflation; something the Federal Reserve would like to avoid.
So how do we curb inflation as the nation’s economy improves? Many signs point to raising the base rate at which banks borrow money. In essence, this move trips a proverbial “breaker switch” with businesses and financial institutions, causing them to rethink their decisions on raising prices on goods and services. That being said, even a slight push upward in Federal rates will have an impact on the real estate market, even if it’s only temporary. Federal Reserve Chair Janet Yellen has hinted that rates may rise as early as September. Continue reading
Buying a home with little (or no) down payment comes with other obligations, but is it still worth it?
We just can’t stop talking about what a great time it is for home buyers. Low rates, relaxed lending practices (to a degree) may make it easier for you to qualify for a loan, and of course, property values are increasing, which gives you a great opportunity for a return on your investment.
Of course, it’s easy to WANT to buy a home, but not always easy to afford the 20% down payment, right? However, lenders will only finance a home up to 80% of its appraised value, so what do you do? There are options to get around facing the seemingly impossible task of saving tens of thousands (or more) of dollars in order to get into the home of your dreams. Continue reading
2015 off to a great start for home buyer in many ways.
It appears that the news continues to be positive for the Santa Clarita real estate market as we already near the middle of the first month of 2015. First up, interest rates have dropped…again, hitting a 20 month low by hovering in the low 3.70 percent range.
We’ll reiterate how incredible this news is for qualified home buyers looking to maximize their purchasing power. Homeowners considering selling their home soon should also take heed, as there is even more good news that will affect buyers in a positive way.
So, we once again have nearly historically low interest rates. In other home buyer news, Fannie Mae and Freddie Mac have made changes to their guidelines for lenders by backing loans with as little as 3% down.
But wait…there’s more!
As you probably know, purchasing a home using a zero down payment loan requires Private Mortgage Insurance (PMI). Typically, the cost of PMI was 1.35% of the value of the loan at or above 80% of the loan-to-value ratio of the property. The Federal Housing Administration (FHA) recently announced that they will cut the cost of PMI from 1.35% to .85%, which will typically save the homeowner with a zero down mortgage up to $900 per year. Continue reading
New report shows that what potential home buyers don’t know about mortgages unwittingly keep them on the sidelines.
So you’re sitting on the fence, still renting because you think you can’t qualify for a loan. Your credit score isn’t high enough, and you have a few bills to pay every month. Also, who has enough cash on hand to make a 20 percent down payment?
A recent survey from OmniTel showed that 55 percent of potential home buyers do not believe they are capable of qualifying for a home loan. Out of that number, 74 percent have never even attempted to find out if they can qualify for a mortgage, or what it takes to get one. So let’s tackle some of these sidelining factors, and see if we can’t enlighten the non-believers.
My Credit Score Is Too Low To Qualify For a Loan
A FICO (Which stands for Fair, Isaac and Company) score tops out at 850, and tt’s true that to qualify for certain lines of credit, having a score of 720 or higher. However, it turns out that 33 percent of home buyers nationwide had FICO scores at or below 700, and FHA borrowers on average had a score of 684. So yes, there may be a home loan program out there for you if your credit is less than perfect. Continue reading
Loan approval these days is a must BEFORE buyers begin their home search, but don’t jump in until you read this article.
It’s Springtime! Historically, this is when the real estate market begins to jump into action. As Summer nears, many buyers want to have their home choice secure so that it’s easier to move the family in between school sessions. Tax season is also a big motivator for some: Either because they received a sizable refund that will help with home purchase and moving expenses, or because the lack of a refund has motivated you to consider the tax benefits of home ownership.
That being said, it’s important to understand the basic tenet of today’s real estate market: Without loan prequalification (or better yet, preapproval), you’ll be hard pressed to present an offer for your dream home to the seller, or even get in the front door. Continue reading
Once blamed for helping to ignite the Great Recession, subprime mortgages have made their way back into the mortgage market.
Subprime mortgage: A term synonymous in many minds with the word “destruction.” Back in the early 2000’s, these loans were seemingly given out like Halloween candy to home buyers, qualified or not, as a way of ushering them into property ownership by lenders without regard to the outcome. Ultimately, subprime mortgages were mostly to blame for what had become the collapse of the real estate industry in 2008.
So what exactly is a “subprime mortgage?”
A “subprime” mortgage basically refers to a loan that is made to a borrower with less than perfect credit. In fact, typically they were made to borrowers with a credit score of 640 or less. Usually, a credit score of less than 700 eliminates many home buyers from obtaining a mortgage loan. A subprime mortgage makes allowances for such items as limited credit experience, excessive debt, a history of late payments, etc. In some cases, borrowers weren’t even required to provide proof of income. They came at a heftier interest rate and larger origination fees hidden in cheap, temporary “teaser” rates that would rise exponentially after the teaser period expired. Continue reading
New mortgage rules help to protect the real estate market, but do they limit buyers in their home purchases?
A lot of changes have taken place in the real estate industry over the past few years. Many of the practices that helped trigger the so-called “Great Recession” more than a half decade ago have been analyzed and done away with; either by law, or by the lenders themselves.
New laws protecting homeowners went into effect at the beginning of 2013. These laws included The California Homeowner Bill of Rights, which granted protection for homeowners from unscrupulous lending practices such as dual tracking and verification of loan documents (AKA: No more “robosigning”).
This year, new rules have been put into place to insure lenders will grant mortgage loans only to buyers who are truly qualified to obtain them. Known as “QM” (Qualified Mortgages), these rules set in motion by the Consumer Finance Protection Bureau were put in place to protect consumers from obtaining loans they cannot afford. Continue reading
If you’re looking for a reason to buy a home before the end of the year, here it is!
Mortgage rates took another sizable dip to the low 4 percent range, due in part inadvertently to the recent government shutdown. After months of slow increases beginning late last spring, when interest rates were at a historic low of around three and a half percent, the bond market was actually bolstered by post shutdown activity that seemed to satisfy investors that Quantitative Easing would not be affected any time soon.
This news comes just in time as buyers are seeing a slight rise in the inventory of available homes for sale, which gives the possibility of having less competition when making a purchase offer as well as more amenable sellers who may be more willing to negotiate.
Another great reason to buy a home before the end of the year.
First time home buyers may be entitled to tax credits as part of the California Housing Finance Agency’s Mortgage Credit Certificate Tax Credit program. This program allows eligible first time home buyers to convert a portion of their annual mortgage interest rate into a direct dollar for dollar credit on their individual tax returns. Continue reading
In many cases, those who think they want to buy a home hold off because they don’t understand the options available to them when it comes to home loans. Understandably, not everyone can save up for a 20 percent down payment, which is why most lenders will offer choices to home buyers. For those of you thinking it’s time to venture into home ownership, what follows is an overview of the most common home loan types. Note that home loan availability is subject to credit approval, and that within each loan type, there may be several options that your lender can provide for you. We can help answer those questions and provide resources to help you make your final choice. Contact us to find out more.
Common Home Mortgage Loan Types
Conventional Fixed-Rate Mortgage
This one is relatively self-explanatory with no surprises. Home buyer receives a home loan at an interest rate that is guaranteed for the life of the loan. Continue reading
Despite an increase in Santa Clarita Valley property values, nominal interest rates give home buyers more bang for their buck.
It’s true; housing prices are on the rise in the Santa Clarita Valley. The real estate industry is bouncing back after experiencing serious setbacks during and after the so-called “Great Recession” that reared its ugly head around 2008. The rise in property values in the last 12 months have reached the double digit percentage-wise in most markets, with areas such as Phoenix, Arizona experiencing a rebound of 23%. That being said, where does that leave home buyers who are still looking for a deal?
Buying a home isn’t just about price, it’s about affordability.
As we mentioned above, while housing prices are on the rise, interest rates are still at historic lows. Most lenders are still offering 30 year fixed mortgages with interest rates at less than 4%, with even lower rates available for 15 year or 5 year ARM (Adjustable Rate Mortgage) loans. When considering a home purchase, lenders take into account the amount you can actually afford in a monthly mortgage payment (The “principal”) along with interest, taxes and insurance. The entire amount is referred to as “PITI” (Principal, Interest, Taxes and Insurance). While qualifications and approvals vary from lender to lender, in most cases buyers with good credit may qualify for a home loan at these historically low rates. So let’s say you’ve done your proper diligence beforehand and are preapproved for a loan at 3.9%, this means that your monthly principal and interest payment would be under $1700 on a home loan valued at $350,000. This payment does not include taxes, insurance, or mortgage insurance (Mortgage insurance is required for borrowers who are acquiring a home loan at 100% of its value with no money down). The same home’s principal and interest payment is reduced to just over $1300 per month with a 20% down payment. Continue reading