Zillow: Post-Bubble Homebuyers Guilty of Overpricing Homes

Those who purchased their homes post-housing bubble are guilty of overpricing their homes, according to a new survey from Zillow.

The company noted that current home sellers who purchased their homes in 2007 or later are overpricing their properties by an average of 14.1 percent.
Conversely, those who purchased pre-bubble, from 2002-2006, have only priced their homes 9.3 percent above current market value.

Meanwhile, those who purchased before 2002 have listed their homes by an average of 11.6 percent above market value.

“Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today,” said Zillow Chief Economist Dr. Stan Humphries,” in a release.

“But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.”

Humphries added that listing homes above the current market value causes them to stagnate, leading to a more bloated inventory, which further drives homes prices down.

The takeaway is that home prices remain very fragile, and haven’t done much more than fall or move sideways since the crash.

Even those who didn’t see their home price drift lower probably don’t have the required home equity to sell, factoring in agent commissions.
I guess this all begs the question, when is it going to be the right time to buy?

NY Closing Cost Scary?

Mortgage rates may be at or near record lows, but closing costs aren’t.
Mortgage closing costs rose for a second straight year, according to a survey released today by Bankrate.
The company said the average loan origination and title insurance fees on a $200,000 mortgage total $4,070, up 8.8 percent from a year ago.
And the average bank/mortgage lender charges roughly $1,614 in loan origination fees, up 10.3 percent from last year.

Loan origination fees include services such as underwriting and loan processing fees, along with loan officer or mortgage broker compensation for closing the loan.
Keep in mind that the person closing your loan can also get paid on the back-end, via yield spread premium, or at least a new form of it now that it’s been outlawed.
(How does a mortgage broker get paid?)

New York Most Expensive for Closing Costs

New York topped the survey again for the second straight year, with average closing costs of $6,183, followed by Texas at $4,944 and Utah at $4,906.
Mortgage closing costs were cheapest in Arkansas, with an average of just $3,378.







The survey is based on good faith estimates for a $200,000 purchase-money mortgage on a single-family home with a 20 percent down payment (80% loan-to-value).
It excludes taxes, homeowners insurance, homeowners association fees, prepaid interest and other prepaid items.

Effort to refinance underwater GSE mortgages gains steam

A bill from Sen. Barbara Boxer (D-Calif.), which would allow borrowers who are current but underwater on their Fannie Mae or Freddie Mac mortgage to refinance into a lower-rate loan, gained more industry support but also stirred more concern from investors.

Currently, more than 8 million Fannie or Freddie loans carry an interest rate of more than 6%. Boxer introduced the Helping Responsible Homeowners Act of 2011, S. 170, earlier this year. It would eliminate the negative equity restrictions and the upfront fees Fannie and Freddie charge when evaluating current homeowners. The bill would target roughly 2 million borrowers for a refinance into today's lower interest rate loan.

"They have been so solid in their mortgage payments every month even though the value of their home is going down," Boxer said in a conference call Tuesday. "This bill would remove the barriers that kept them trapped."
But under current tax law, a loan with a loan-to-value ratio over 125% would not be allowed to be packaged into a mortgage-backed security.
An aide for Boxer said there are vehicles that could be created and that it was also possible for Fannie and Freddie to move these loans into their portfolio – portfolios that under current conservatorship agreements should be on the decline.

The bill carries the support of Sen. Johnny Isakson (R-Ga.) and several industry trade groups including the National Association of Realtors, Mark Zandi, chief economist for Moody's Analytics and Bill Gross, the founder of investment firm PIMCO.
"The policy efforts implemented throughout the financial crisis have fallen short," Zandi said. "There have been many efforts and they've been helpful and they've clearly not been adequate.

The cost from this bill should be very small. I think this is a very efficient and effective way to help address one of the biggest roadblocks to a recovery and do it very quickly when the economy needs it."

One of the biggest hindrances to one of those initiatives that have under whelmed so far, the Federal Housing Administration Short Refinance program, is that Fannie and Freddie do not participate under guidance from their regulator the Federal Housing Finance Agency.

Wall Street investors expressed nervousness on Tuesday about the proposal, claiming such a move could shake-up an already fragile MBS market. But Boxer claims the cost to Fannie and Freddie to refinance these loans would be offset by the millions of underwater borrowers who could walk away otherwise.
"We don't think this is going to disrupt anything. In fact, we think this will stabilize the markets," Boxer said. "What would roil the market is if these millions of borrowers walk away from their loan."

PMI to pay underwater borrowers to stay

Private mortgage insurer PMI Group (PMI: 1.415 -6.29%) will offer cash incentives to some homeowners in negative equity to help prevent mortgage defaults.

PMI subsidiary, Homeowner Reward is working with Loan Value Group, to administer the pilot program, called Responsible Homeowner Reward.

The program launched Monday and will start in select real estate markets where falling house prices left borrowers owing significantly more on their mortgage than what the property is worth.

Participation in RH Reward is voluntary and there is no cost to the homeowner, according to PMI. The cash will come after a lengthy period of keeping the mortgage current, generally from 36 to 60 months. According to PMI, the reward will be between 10 to 30% of the unpaid principal balance.

The Loan Value Group works "to positively influence consumer behavior on behalf of residential mortgage owners and servicers," according to its website.
LVG programs already delivered more than $100 million in cash incentives to distressed homeowners. However, those programs focus on turnkey solutions such as cash for keys, with an aim to avoid principal forgiveness. The Homeowner Reward program is taking a different path.

"We continue to seek creative and effective loss mitigation strategies," said Chris Hovey, PMI vice president of servicing operations and loss management. "PMI is especially supportive of homeownership retention efforts in states that are facing unprecedented housing challenges."

Why can't I get the rate I saw on the Banner?

Mortgage rate Q&A: “Why are mortgage rates different?”

Why is the sky blue? Why are clouds white? Why won’t your neighbor trim their tree branches?

These are all good questions, and ones that often puzzle even the savviest human beings.

First things first, take a look at how mortgage rates are determined to better understand how banks and mortgage lenders come up with interest rates to begin with.
From there, you’ll need to consider why mortgage rates are different for consumer A vs. consumer B.

No One Size Fits All for Mortgage Rates
Mortgages are complicated business, and there certainly isn’t a one-size-fits-all approach.

Every loan scenario is different, and must be priced accordingly to factor in mortgage default risk (risk-based pricing).

Mortgage Rates Vary Based on the Loan Criteria

Mortgage rates don’t exist in a bubble – the parts affect the whole.

Banks and lenders start with a base interest rate (par rate) and then either raise it or lower it (rarely) based on the loan criteria.

There are loan pricing adjustments for all types of stuff, including:
• Loan amount
• Documentation (full, limited, or stated)
• Credit score
• Occupancy
• Loan Purpose (purchase or refinance)
• Debt-to-Income Ratio
• Property Type
• Loan-to-value / Combined loan-to-value

The more you’ve “got going on,” the higher your mortgage rate will be. And vice versa.

I’ve already covered a few related topics, including why mortgage rates rates are higher for condos and investment properties.Mortgage rates are also higher on jumbo loans and refinance transactions, especially those involving cash-out.

Advertised Mortgage Rates Are Best Case Scenario

You know those mortgage rates you see on TV? Those assume you’ve got an owner-occupied single family home, a perfect credit score, a huge down payment, and a conforming loan amount. Not to mention a newborn golden retriever.

Most people don’t have all those things, and as a result, they’ll see different mortgage rates. And by “different,” I mean higher.
How much higher depends on all the factors listed above. So take the advertised rates you see with a huge grain of salt.
Shop Around!

All the more reason to shop around. Compare mortgage rates online and speak with a mortgage broker.

Housing Inventory Issues?

If you thought housing inventory was under control, you might want to read this.
The latest LPS Mortgage Monitor Report released today revealed that mortgages 90+ days delinquent and loans in foreclosure outnumbered foreclosure sales by a staggering 50 to 1 in May.
In other words, there’s an endless housing supply and not nearly enough demand to keep up with it, even with all the measures being taken to slow it all down.
Severely delinquent loans and foreclosure inventory totaled 4,084,557 at the end of May, while foreclosure sales were just 78,676 at month end.
It gets worse.
Foreclosure sales have been slowing – declines of 96 percent in DC, 80 percent in Maryland, 79 percent in New York, and 75 percent were seen in May.
And inventories of foreclosures in judicial states have increased twice as much as those in non-judicial states over the past year.
33% of Borrowers in Foreclosure Haven’t Paid in Two Years
This is good news for those facing foreclosure, as 33 percent of homeowners haven’t made a mortgage payment in over two years.
That’s a lot of free rent.
Oh, and negative equity continues to be a major concern, with nearly 30 percent of current loans underwater (hello short sale).
LPS noted that significantly underwater mortgages are defaulting up to 10 times more than loans with some home equity.
The only sliver of good news is new problem loans, defined as loans that were current six months ago and now 60 or more days delinquent, are now more than 50 percent below peak levels seen in 2009.

“Why use a mortgage broker?”

“Why use a mortgage broker?”

If you’re in the market for a new mortgage, whether it be a purchase money mortgage or a refinance, you may be wondering how to go about it all.

Assuming you’ve heard the phrase “mortgage broker” thrown around, you may also be curious why anyone would use a mortgage broker.

Lower Rates

Mortgage brokers have access to wholesale mortgage rates, which are priced below those offered by retail banks.

They’re able to offer lower mortgage rates because they don’t need to pay a sales team to sell those rates, as mortgage brokers run their own businesses and earn money off commission (yield spread premium).

That said, you may be able to get a better deal if you work with a mortgage broker as opposed to walking into your local bank branch.

Rate Shopping

Not only that, but mortgage brokers have the ability to “shop your rate” with multiple mortgage lenders simultaneously, meaning more options for you and less legwork.



Customer Service

Finally, a mortgage broker may be able to provide better customer service than a giant, faceless corporation.

Many mortgage brokers are mom-and-pop shops, so it’s easy to get someone on the phone or speak in person.

They also tend to hustle a bit more with their commission on the line.


Concerns about Refinancing
Just as with the creation of any other new loan there are fees associated with refinancing your home mortgage. Depending upon how long you have been paying on your current loan, the interest vs. principle pay down will be a consideration. With a refinance, which means taking on a new loan, the bulk of your payment will once again go towards interest.

You also have to consider how much longer you will remain in your home. If you are going to save $1,400 a year by refinancing, but you have to spend $4,200 to get it done, then you will have to own that home for more than three years to realize any savings on that level.

Regardless of any of these concerns, if your situation is correct, you can save a ton of money by refinancing your current home mortgage loan. Do the research and do in now by comparing mortgage rates with us, time is of the essence and it may not be in your favor, but why?

If you want to see if Refinancing makes financial sense please reply via email with the following information

1. Current Interest Rate

2. Current Loan Balance

3. Idea of Home Value from Assessment or Recent Appraisal

4. Current Monthly Payment

5. Yearly Taxes

6. Yearly Homeowners Insurance

7. Idea of Credit Score or Rating Fair-550-620 Good 620-680 Excellent 680 and above.

By sending an email back with the above information, I can then forward you an accurate idea of what your new payment would be if you decided to refinance. Not 1 phone call unless you prefer to discuss further.