San Diego Foreclosure news

A new study from the UC Irvine Paul Merage School of Business Center for Real Estate suggests that the private mortgage industry, not subprime borrowers who took out risky adjustable rate loans, led to the current lending crisis that resulted in the dramatic rise and fall of home prices across the country and mounting foreclosures.

According to the study, had loan limits for Fannie Mae and Freddie Mac, the nation's two largest mortgage lenders, been lifted ahead of the current housing crisis, the two agencies would have been able to provide more loan products for borrowers, and the private mortgage sector would not have pushed as many subprime loan products– loans that, for many homeowners, became unaffordable as their initial adjustable interest rates reset at higher amounts.

"We were quite surprised to find the intensity of subprime lending was insignificant after controlling for all the other factors influencing the market, but we were really blown away when Fannie's and Freddie's continuing presence in the market was shown to be so important," said Kerry Vandell, UCI finance professor and Center for Real Estate director.

If you are thinking of buying a home, you might be confused about the many issues in the news from mortgage rates to mortgage bills in Congress.

   But the fundamentals of buying a home really haven’t changed and, in fact, there are new incentives on the horizon that should make home buying more attractive than ever.

   There are plenty of homes on the market in every price range and if you want one of them, you need only do what generations of people have done. You just have to pay attention to these basics:

   First, cultivate good credit by prudent living. Pay your bills and pay them on time. Use credit sparingly.

   If you do this, you’ll earn a good credit score, which is crucial to getting a good interest rate. Research shows that many consumers believe that they have to have a high income to have a high credit score, but that’s not true. In fact, income is irrelevant to your credit score. Your credit score is a rating based on how well you live up to your obligations, pay your bills and use your credit.

   Second, save money for a down payment. In the current climate, most lenders will ask you to bring some cash to the table in a mortgage deal.

   Third, find a house you love but can also afford.  One path to financial freedom is to buy a modest house and build equity. When you decide to move up, you can sell your house and take a large chunk of the money from the sale and apply it to your new home.  Your payment is lower while you live better. It’s the good, always-in-fashion way to live.

   Congress is also planning some incentives for new home buyers.  It appears first-time home buyers will get a tax credit of 10 percent of the purchase price of a home up to $8,000. That means in the year you purchase a new home, your tax bill could be reduced up to $8,000. However, the credit is not a pure gift.  Homeowners apparently will be asked to pay back the credit during a 15 year period.  Each year, they will be required to repay a little more than 6.5 percent of the tax credit. That’s just over $530 per year for an $8,000 credit.  Homeowners will not qualify for the credit if they sell the home in the first year.

   To be classified as a first-time homeowner, you must not have owned a home in the last three years.

QI see headlines that say mortgage rates are falling. I see headlines that say mortgage rates are rising. When shall I buy and lock-in my rate?

 A  You really can’t go by your daily newspaper to find out what mortgage rates are doing.  One reason is that by the time they report the rate, it has changed. 

The key, if you want the best rate is to speak with a mortgage banker, develop a relationship with him or her, and when they think the time is right (and you agree) then lock in your rate.

A lock is a guarantee by a lender that your mortgage will come with a specific interest rate, points and other costs.  Lock agreements will cost money and you should inquire as to the terms.

Locks are also limited in time, to protect the lender if you decide not to buy immediately. Be sure to discuss the time needed to process your application so whatever lock period you choose is long enough.

Before going for a lock, be sure you gather all your paperwork: credit report, income documentation, asset and debt documentation and whatever else you need to support your mortgage application. You will want to quickly submit your application as soon as you lock in your rate.

 You can read more about locks in a document by the Federal Reserve Board.

We are on standby for you when your ready to get started, if you are ready, go to my website at County Properties.

The Federal Reserve cut interest rates today for the seventh straight time since September of last year. Many experts believe that the Fed is done cutting interest rates and will begin a new watch-and-wait policy. This new policy is due – in part – to the fact that the first Stimulus Act rebate checks are hitting millions of mailboxes this week. The Fed hopes this money gives a boost in the arm to the economy.

If you’ve been taking a watch-and-wait approach with your own finances, now is the time to call and review your options.

Consider this: the Federal Reserve Board meets 11 times this year to review the health of the US economy and make adjustments if needed. Don’t you think you owe it to yourself to take just a few minutes and do the same with your own financial goals?

I want to ensure that you’re taking advantage of this unique market and not letting it pass you by. Here are just a few things to consider:

• Today’s tougher housing market means there are some great buys to be had if you’re looking to purchase. This is an especially friendly market for first-time home buyers.
• The government has temporarily increased FHA loan limits in many areas across the US. These government-insured loans are not FICO-score driven and require little to no down payment. Here’s the catch: these new limits expire at the end of the year, so you must act now.
• You really don’t want to play the waiting game if you are holding an adjustable rate mortgage (ARM). That’s because there is nowhere for the rates to go but up from here, if we are truly at the end of the Fed’s cutting cycle.

We are on standby for you when your ready to get started, if you are ready, go to my website at County Properties.

A bill passed by the House on Wednesday will assist up to 2 million borrowers in danger of foreclosure by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also allocates funding to assist Fannie Mae and Freddie Mac. Most borrowers will receive substantial savings on FHA-backed loans, which carry reasonable interest rates that are fixed for the life of the loan. It also would give the FHA new authority to guarantee repayment of up to $300 billion in mortgages if a lender agrees to write down the loan principal below a home’s current appraised value. First-time home buyers would receive a tax credit. Additionally, states would be authorized to issue an additional $11 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time home buyers and fund the construction of low-income rental housing. Finally, it would permanently raise the limit to $625,000 for mortgages that Fannie Mae and Freddie Mac could purchase. The bill now goes to the Senate for approval and then to President Bush, who is expected to sign the bill into law.

· To qualify for the housing assistance program, homeowners must live in their home and have loans that were issued between January 2005 and June 2007. They also must be spending at least 40 percent of their gross monthly income on all household debt. Borrowers do not have to be in default, but they must show proof that they will not be able to continue making their existing mortgage payments.

· Prior to receiving an FHA-backed mortgage, homeowners must first pay off any other debt on the home, such as a home equity loan or line of credit. Borrowers also are not permitted to take out another home equity loan for at least five years, unless it’s used to pay for the necessary upkeep of a home and is approved by the FHA. Total debt cannot exceed 95 percent of the home’s appraised value at the time of appraisal.

· The program is voluntary, so the original lender(s) must agree to rework the loan before a homeowner starts the application process. Each loan must be underwritten by an FHA-approved lender and will be evaluated on a case-by-case basis. Homes will be re-appraised and banks will verify income statements, bank accounts, job histories and credit scores.

· Although there are little up-front costs for borrowers, consumers receiving a refinanced loan must agree to certain terms, including paying an insurance premium of 1.5 percent of the principal annually to the FHA.

2008 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) 
 

On July 14, the Federal Reserve is expected to present a revised set of rules governing mortgage lending. Proposed rules issued in December drew significant criticism from lenders, who fear that tougher standards at a time when credit already is tight could make many mortgages more costly by increasing paperwork and creating additional legal issues. At the same time, consumer groups argue that the proposed rules already are too weak and that efforts to alter the proposal could make it ineffective.

Starting in March 2008 during the near-collapse of Bear Stearns, the Fed initiated what was expected to be a six-month program to avert further bank defaults among the 20 top investment banks that regularly trade Treasury securities. Under federal law, the program may continue beyond September 2008 only if “unusual and exigent circumstances” exist in the financial markets. Under the program, the government may hold a wide variety of investments, including hard-to-sell mortgage-backed securities, as collateral for the overnight loans.

Speaking Tuesday, Fed Chairman Ben Bernanke reiterated his support for the proposed overhaul of Fannie Mae and Freddie Mac. “If these firms are strong, well-regulated, well-capitalized and focused on their mission, they will be better able to serve their function of increasing access to mortgage credit, without posing undue risks to the financial system or the taxpayer,” Bernanke said.

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Based on these future changes, could mean tougher guidelines, and possibly higher rates when new buyers go to buy a home. If your thinking on purchasing a home, I strongly recommend you to getting your loan process started and starting your home search, before these future changes in financing causes higher payments and or more difficulty in getting a loan to buy your home. Know your price range & payments by being pre-approved with a reputable lender.  As your agent I will help advise you to simply the process buying your future home. We are on standby for you when your ready to get started, if you are ready go to my website at County Properties.