Preparing for your purchase

Buying a home could be one of the most complicated financial transactions of your life. If a home purchase is anywhere in your future, it's never too early to check your credit and do what you can to strengthen it. Experts say that credit scores above 750 get the best rates and anything below 640 to 660 may not even qualify for a loan.

Before falling in love with a house, determine your budget. FHA loans dictate that home payments can't exceed 31 percent of your income. Don't forget taxes and insurance as well.

Take the time to get pre-approved before you begin looking at homes. In fact, many real estate agents won't work with you until you have received pre-approval for a mortgage. You might find the perfect home, and then find out the bank denied your loan application. This heartbreaking scenario wastes your time and your agent's time, too.
Going through the mortgage-approval process can be a frustrating experience, so be prepared. In addition to all of the paperwork, you have to answer a lot of very pointed questions about your income, net worth, and credit worthiness. If you have a 20 percent down payment, a high credit score, and a steady job, then you have a better chance of being pre-approved for a loan.
Having the largest down payment possible will work in your favor. You may need to start saving months, or even years, in advance to get a significant chunk of money saved. Create a budget that will keep you on track to pay down debt and save for a down payment.
It’s an obvious no-no, even if you aren’t applying for a loan. But overdraft charges are red flags to underwriters, so make sure you walk the line from here on out.

If you're not planning on staying in your home more than seven to ten years, think about renting. You may still decide to buy, but you need to understand the cost of purchasing and maintaining a home. Investigate the economic difference between buying and renting.

Don't wait until after you have found an acceptable property to begin determining what your choices and options are. Having your mortgage picture clear prior to looking for houses can only strengthen your bargaining position when it comes time to negotiate for the home you want. If two different buyers are interested in the same house, one who has been pre-qualified for a mortgage and the other who plans to do it in the future, you can guess which buyer will have the stronger bargaining power.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.   

Which one is best for you HARP or HAMP

Essentially, the federal government created the HAMP program in order to aid homeowners who are at risk of foreclosure.  HAMP does this by subsidizing lender modifications to borrower home mortgages. In order to qualify for a HAMP modification, you must satisfy the following requirements:

• The home must be your primary residence.
• The mortgage must be less than or equal to $729,750.
• The mortgage must have been closed prior to January 1, 2009.
• The housing payment, including principal, interest property taxes, HOA fees, and insurance, mustn't exceed 31% of your gross monthly income, before taxes.
• You must have a documentable hardship, typically consisting of either a substantial decrease of income or a significant increase in expenses that were beyond your control.
• You must have a steady source of income that is sufficient to afford the modified mortgage payments.

Borrowers that satisfy these criteria should contact their lenders and begin gathering documents for the modification application. Lenders will typically require documentation regarding income, outstanding debts, assets, and evidence of financial hardship before granting borrowers a preliminary and permanent loan modification. On average, you can save approximately $500 monthly through a HAMP modification, so if you are eligible, you should contact your lender as soon as possible.
Who Should Consider Obtaining a HAMP Loan Modification:

• Eligible borrowers who have experienced a financial hardship as a result of the U.S. housing market collapse
• Borrowers who are cannot feasibly afford monthly mortgage payments but would be able to afford an adjusted mortgage rate

HARP Overview

The Home Affordability Refinance Program, abbreviated as HARP, was designed to provide financial relief for underwater homeowners, who owe more than their home’s value as a result of the burst of the housing market bubble. Through this program, these formerly ineligible borrowers can secure refinance loans to capitalize on the exceptionally low mortgage rates that are currently available. Unlike the HAMP program, HARP does not require you to be at risk of foreclosure or experiencing financial hardship; rather, to qualify for HARP, you must satisfy the following HARP requirements
:

• You must own less than 20% of their home’s equity.
• You must have made all mortgage payments on time, or less than 30 days late, within the past 6 months prior to application
• The mortgage must have been acquired and securitized prior to June 1, 2009.
• You must have a mortgage that is backed by Fannie Mae or Freddie Mac.

Borrowers that meet these criteria should contact their loan servicer to determine whether or not they are eligible.
Who Should Obtain a HARP Refinance Loan:

• Borrowers who lost a significant amount of equity due to the burst of the housing market bubble
• Eligible borrowers who are underwater and cannot refinance with traditional loan programs

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.   

15 > than 30?

The 15-year fixed rate mortgage is popular.
Last quarter, a growing number of U.S. households refinanced out of 30-year fixed rate mortgages, and into 15-year and 20-year ones. More refinancing households moved to shorter loan terms than during any quarter since 2011.
Low mortgage rates are part of the reason. The HARP refinance program is the other.

35% Of Refinancing Households Left The 30-Year Fixed

According to Freddie Mac's quarterly Product Transition report, between April - June 2013, 35 percent of refinancing U.S. households with an existing 30-year fixed rate mortgage elected to refinance into a new 15-year fixed rate mortgage or 20-year fixed rate mortgage.
The reading marks a 4 percentage point increase over the quarter prior, and the largest transition rate in more than a year.
The rush among homeowners to ditch their 30-year mortgages is noteworthy. Average 15-year mortgages are historically cheap as compared to their 30-year mortgage counterpart.

• Between 2000-2012, 15-year rates were 0.52 percentage points below 30-year rates
• Last quarter, 15-year rates were 0.84 percentage points below 30-year rates

Today's 15-year fixed rate mortgage is "on sale" and a savvy rate shoppers know a great deal when they see one. At today's rates, the total interest paid over the life of a 15-year loan is 66 percent lower as compared to a similar 30-year product.
Never in history could homeowners save this much. The spread is bigger than it's ever been before.

HARP 2.0 Below 105% LTV Dominated By 15-Year Fixed

Last quarter, the 15-year mortgage was especially popular among users of the Home Affordable Refinance Program (HARP). HARP is the government's mortgage program for underwater homeowners.
Via HARP, homeowners whose homes have lost equity are eligible to refinance without new, or additional, private mortgage insurance (PMI) coverage. This means that homeowners who put 10% down at the time of purchase can refinance into a loan with "10% down PMI", regardless of their home's current equity levels.
Similarly, homeowners who put 20% down at the time of purchase -- but who are now underwater -- can refinance via HARP without having being required to pay any amount of PMI at all.
HARP was initially launched as part of the American Reinvestment and Recovery Act of 2009. The program was expected to reach 7 million U.S. households.
By late-2011, though, HARP had little traction. Fewer than 1 million homes had been HARP-refinanced. The government took control.
Renaming the product "HARP 2.0", the Home Affordable Refinance Program was revamped and re-released. The number of eligible HARP households increased dramatically and so did the number of HARP closing.
More than 1,000,000 HARP 2.0 loans closed in 2012. Another one million are expected to close in 2013. The program is a hit.
Also, among HARP refinances, a pattern has emerged. The more equity that a HARP-refinance candidate has in its home, the more likely the homeowner will choose a "short" loan term.

• LTV of 80 - 105 percent : 29% refinanced into a 15-year or 20-year mortgage 
• LTV of 105 - 125 percent : 21% refinanced into a 15-year or 20-year mortgage
• LTV of 125 percent or more : 18% refinanced into a 15-year or 20-year mortgage 

As HARP 2.0 expands to reach more homeowners -- possibly in the form of HARP 3.0, which may launch next quarter -- the share of U.S. households which refinancing into 15-year fixed rate mortgages may increase as compared to other loan terms.

See All Of Today's HARP Mortgage Rates

The interest rate spread between 15-year and 30-year mortgages is at an historical high. For HARP households, the savings can be huge. Take a look at today's rates and see how they fit your budget. Zero-closing cost mortgages are available.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.   
 

Rising Mortgage Rates Affect Home Affordability

Rising Mortgage Rates Affect Home Affordability

Tuesday, the National Association of Home Builders released its Housing Opportunity Index (HOI) for 2013's second quarter.
The HOI is a home affordability gauge. In each of 225 tracked metropolitan areas, the Home Opportunity Index takes the median home sale price and the average 30-year fixed rate mortgage rate, then projects what a typical housing payment for this "median home" may look like.
An "affordable" home is one for which the monthly mortgage payment would be 28% or less of that area's median household monthly income. The index assumes a 10% downpayment on the home.
According the National Association of Homebuilders, just 69.4 percent of U.S. homes were affordable for households earning the national median income of $64,400 last quarter.

The reading is a 4.4 percentage point drop from the quarter prior, which marks the largest quarter-over-quarter drop in home affordability since the NAHB began tracking such data in 2005.
The last three quarters have been on steady decline :

• 3 quarters ago : 74.9 percent
• 2 quarters ago : 73.7 percent
• Last quarter : 69.4 percent

Throughout this time frame, the median U.S. home sales price climbed 7% to $202,000, the average mortgage rate used by the NAHB index rose 0.16 percentage points; and, the median U.S. household income sank $600 annually.
Home affordability will likely be reported lower for Q3 2013, too. Home prices continue to rise in many U.S. markets and mortgage rates are elevated as compared to last quarter's average.

Small Markets Dominate Home Affordability Study

Like all things in real estate, home affordability is a local phenomenon. Home prices, mortgage rates and household incomes vary by region, and so does the Home Opportunity Index.
"Small" markets dominated second quarter index results. "Large" markets fared poorly.
The Utica-Rome, New York area was ranked as last quarter's most affordable housing market. 97.1% of all homes sold were affordable to families earning the area's median income of $63,800. Roughly one hundred thousand people live in the Utica-Rome area.
Other small market cities with high affordability rankings include Kokomo, Indiana (95.7); Cumberland, Maryland (94.7); Vineland, New Jersey (94.7); and, Bay City, Michigan (94.6).
The top major market was the Ogden-Clearfield, Utah area. The Salt Lake City satellite region posted an affordability ranking of 92.8.
Meanwhile, at the low-end of the affordability spectrum, for the 3rd consecutive quarter, the San Francisco-San Mateo-San Jose, California area ranked at the top. Just 19.3% of families earning the area's median income of $101,200 can afford to buy homes in California's Bay Area.
The median sales price was $781,000 last quarter.

For "Great Deals" In Housing, The Door May Be Closing

From 2008-2012, falling home prices plus falling rates dropped home affordability to all-time record levels. In 2013, that trend has reversed. It's getting tougher to find "great deals" in housing. Affordability falls month by month by month.
Today's home buyers would do well to take note of the market. Low- and no-downpayment programs still exist
but, because of rising mortgage rates, monthly payments are moving higher. Maybe write that offer sooner rather than later? By 2014, affordability may be even lower.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.   

FHA Info you should know

The FHA mortgage is one of the misunderstood products in the market. For years, the FHA advertised its products as loans for people "on the margins". For the last 10 years, however, that has not been the case.
FHA loans are among the most flexible and rewarding products available to today's U.S. home buyers.
There are 6 common misconceptions about the FHA mortgage, and these falsehoods could be standing between you and a bona fide loan approval. Read more below.

Myth 1 : The FHA Is A Mortgage Lender

Fact : The FHA is not a mortgage lender. It's a mortgage insurer.
The acronym "FHA" stands for Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. The FHA doesn't make mortgage loans to home buyers or refinancing households. Rather, the FHA provide mortgage insurance to banks, credit unions, and other lenders which make loans meeting FHA insurance standards.
The FHA reimburses lenders for a portion of incurred losses in the event that their FHA-insured loans default, or go to short sale or foreclosure.

Myth 2 : FHA Loans Are For First-Time Buyers Only

Fact : FHA loans are not for first-time buyers only. FHA loans can be used by first-time buyers and repeat buyers alike.
The FHA loan is often marketed as a product for "first-time buyers" because of its low downpayment requirements. However, last decade, many U.S. homeowners have lost home equity in the housing market downturn. These repeat buyers may have little money for downpayment -- even after the sale of their former home.
The FHA will insure mortgages for any primary residence. You don't need to be a first-time buyer.

Myth 3 : FHA Loans Require 20 Percent Downpayment

Fact : FHA loans do not require a 20 percent downpayment.
For home buyers, FHA mortgages require a 3.5 percent downpayment with the fewest "strings" attached. This makes the FHA mortgage one of the most lenient mortgage types available nationwide.
There are very few credit restrictions with the FHA loan and the agency allows your 3.5% downpayment to comes as a gift from a family member, employer, charitable organization or government home-buyer program.
Other low-downpayment mortgage programs have eligibility requirements. The VA loan, for example, allows for 100% financing but you must be an eligible military borrower to use it.
The USDA Rural Development loan also allows 100% financing but the USDA program requires that your home be in a less-developed census tract; and that your household income is within certain limits.
Fannie Mae's 3% downpayment program -- the Conventional 97 -- require higher credit scores than an FHA loan, and loan sizes are limited to $417,000. FHA loans are available up to $729,750.

Myth 4 : FHA Loans Require High Credit Scores

Fact : FHA loans do not require a high credit score to qualify.
FHA loans feature some of the flexible and forgiving credit standards of any available loan type. With an FHA-backed loan, perfect credit is not required, and mortgage lenders are expressly instructed to consider a borrower's complete credit history --  not just isolated instances of late payments here and there.
You can get an FHA loan if you've recently experienced a short sale, foreclosure or bankruptcy. Sometimes, a waiting period is required, but not always. Depending on your personal circumstances, you may be eligible to purchase another home using FHA financing right away.
Since 2011, FHA mortgage rates have been lower than comparable conventional products.
Note that not everyone will qualify for an FHA home loan. Borrowers with a "banged-up" history, though, have a much better chance of getting loan approval via the FHA than other government agencies.
Even if you've been turned down for other types of credit, such as an auto loan, credit card or other home loan programs, an FHA-backed loan may open the door to homeownership for you.

Myth 5 : FHA Loans Are Expensive

Fact : FHA loans can be more expensive, or less expensive, than other loan types. The long-term cost of an FHA loan depends on your loan size, your downpayment, and your location.
The biggest cost of an FHA home loan is usually not its mortgage rate -- FHA mortgage rates are often less than comparable conventional mortgage rates via Fannie Mae and Freddie Mac. The biggest cost is FHA mortgage insurance.
FHA mortgage insurance premiums (MIP) are payments made to the FHA to insure your loan against default. MIP is how the FHA collects "dues" to keep its program available to U.S homeowners at no cost to taxpayers.
MIP is paid in two parts. The first part is paid at closing and is known as Upfront MIP. Upfront MIP is automatically added to your loan balance by the FHA so no payment is required at settlement. Upfront MIP ranges from 0.35% of your loan size to 1.5% of your loan size. Your loan traits determine your MIP cost.
The same is true for annual mortgage insurance premiums, which are paid in monthly installments along with your mortgage payment.
Annual MIP can range as high as 1.55% in high-cost areas such as Orange County, California; Potomac, Maryland; and, New York City, New York. For most borrowers, MIP is between 0.45% and 1.35% annually.
As compared to conventional loans with less than 20% downpayment, FHA MIP is sometimes more costly and sometimes less so. Your loan officer can help you compare choices.

Myth 6 : All FHA Loans Are The Same

Fact : All FHA loans are not the same. There are many "types" of FHA loans, and mortgage rates vary by lender.
As an agency, the FHA publishes and maintains minimum eligibility requirements all of the loans it insures. However, FHA lenders enforce additional requirements on FHA loans, known as "investor overlays."
A sample of investor overlays includes raising the minimum FHA mortgage score requirement; or, requiring additional time since a bankruptcy, short sale, or foreclosure; or requiring employment verification for an FHA Streamline Refinance transaction.
Because of overlays, when you've been turned down for an FHA mortgage by Lender A, you should always try to apply with Lender B which may approve your FHA loan request. Plus, mortgage rates can be very different from bank-to-bank.
In addition, the FHA offers special refinance loans, home construction loans, and various benefits to eligible applicants.

Check Your FHA Eligibility Today

The FHA insures home loans in all 50 states, in the District of Columbia, and in many U.S. territories including Puerto Rico, Guam and the U.S. Virgin Islands. Whether you're a first-time buyer or an experienced one, an FHA-insured mortgage may be your best home financing option.
See today's FHA mortgage rates to see how FHA loans can help you. Getting rates online is fast and free and no social security number is required.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.  

Harp continues to play a beautiful melody...

The HARP refinance program continues to aid to U.S. homeowners.
According to the Federal Housing Finance Agency (FHFA), nearly one hundred-thousand mortgages were closed under the Home Affordable Refinance Program (HARP) in May, raising the all-time tally to 2.65 million.
HARP is available to U.S. homeowners through December 2015.

HARP : Refinancing Underwater Homeowners Since 2009

The Home Affordable Refinance Program was first launched in February 2009. It was introduced as a way to help struggling U.S. homeowners lower their mortgage payments, and to help boost the national economy.
The recession was underway and home values were dropping. So were mortgage rates. Unfortunately, only specific groups of homeowners could capitalize.
FHA-backed homeowners, for example, had access to the FHA Streamline Refinance, an appraisal-less refinance program. Losing home equity didn't affect FHA-backed homeowners.
The same was true for military borrowers carrying a VA loan. Via the streamline IRRRL program, eligible VA homeowners could simply ask their bank for a refinance and, in most cases, it was awarded.
These two programs were models for HARP.
Via HARP, the government waived most home appraisal requirements, giving U.S. homeowners whose homes had lost equity access to the same mortgage rates as everyone else. There were just three criteria in order to be HARP-eligible.

1. The homeowner's loan must be securitized by Fannie Mae or Freddie Mac
2. The homeowner's loan must have a securitization date no later than May 31, 2009
3. The homeowner must show a recent history of on-time payments

For people who met these conditions, the HARP program proved valuable and nearly one million Home Affordable Refinance Program loans closed before the government elected to update and relaunch to its popular refinance program.
Dubbed "HARP 2.0", the revamped Home Affordable Refinance Program included simpler approval standards and relaxed loan-to-value requirements. The changes  made HARP instantly available to millions of additional U.S. households.
In the year-plus since HARP 2.0 launched, there have been 150% more closings than during all of HARP 1.0's tenure.

HARP 2.0 : Tops In California, Florida, Michigan

When HARP was first announced in early-2009, it was a program expected to help 7,000,000 U.S. households lower their respective monthly mortgage payments. Four years later, however, HARP is well short of its target.
Through April 2013, there have been just 2.57 million HARP closings nationwide -- an average of 52,450 per month. It would take until May 2020 for HARP closings to reach 7 million at this pace. Unfortunately, the HARP program has just 17 months until its expiration.
This is one reason why talk of HARP 3.0 gets louder in Washington. Like HARP 2.0, such a program would break down barriers to entry and make the "Obama Refi" available more easily.
For now, though, HARP usage has been concentrated by state, with the Pareto Principle in effect. More than 80% of HARP closings have occurred in just 20 percent of the states.

1. California (21% of program refinances nationwide)
2. Florida (13% of program refinances nationwide)
3. Michigan (10% of program refinances nationwide)
4. Illinois (10% of program refinances nationwide)
5. Arizona (7% of program refinances nationwide)
6. Georgia (7% of program refinances nationwide)
7. Washington (6% of program refinances nationwide)
8. Minnesota (5% of program refinances nationwide)
9. Ohio (5% of program refinances nationwide)
10. New Jersey (4% of program refinances nationwide)

By contrast, there have been relatively few Home Affordable Refinance Program closings in Wyoming, Vermont, Alaska, South Dakota and North Dakota. The activity in these 5 states accounts for less than one-half of one percent of HARP refinance activity nationwide.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options. 

Condo values rising faster than housing...

As the U.S. housing market gains, it's taking the condominium market with it.
Home price growth in condos and co-ops is outpacing growth in single-family residences. This is a major shift for the housing market -- condos were among the most distressed sectors of last decade's housing market downturn.
Home sellers are getting higher prices for their condos.

Los Angeles Condos Jump 23%; Chicago Rises 12%

According to the most recent Case-Shiller Index, home values climbed 12.2 percent nationwide for the 12 months ending May 2013. This jump marks the biggest one-year increase in home valuation since the Case-Shiller Index launched 26 years ago.

Each of the Case-Shiller Index's 20 tracked cities posted annual gains, led by the San Francisco Bay Area; Las Vegas, Nevada; and Phoenix, Arizona. Home valuations in the Las Vegas are up 23% since from 12 months ago, which claws back against the heavy losses sustained last decade.

The "last place" finisher in the May 2013 Case-Shiller Index? New York City.

As compared to one year ago, home values in the city's five boroughs -- Manhattan, Brooklyn, Queens, the Bronx, and Staten Island -- rose just 3.3 percent, which is well below the U.S. national average.
However, the Case-Shiller headline figure tells just part of the story.

In New York City, the market is thick with condominiums and co-ops and it just so happens that the Case-Shiller Index ignores homes of these types. If we were to add back condos and co-ops to the Case-Shiller Index data, we'd actually see that New York City is performing quite well.

In New York, condo values are up nearly 10% since last year -- well above the broader index's reading of 3.3 percent.
The same is true in other Case-Shiller Index markets, too. Condos in the 4 other cities tracked by the Case-Shiller Condominium Index showed strong annual gains, and each outpaced its home city.
•    Los Angeles, California : Condos +23.1% annually (versus +19.2% for single-family homes)
•    San Francisco, California : Condos + 27.6% annually (versus +24.5% for single-family homes)
•    Chicago, Illinois : Condos + 11.9% annually (versus +8.5% for single-family homes)
•    Boston, Massachusetts : Condos +8.7% annually (versus +7.5% for single-family homes)
•    New York City, New York : Condos + 9.8% annually (versus +3.3% for single-family homes)

With tight supply and limited construction, buyers of condos and co-ops should expect higher home prices through the end of 2013 and into early-2014, at least.

Mortgages For Condominiums

Getting a mortgage for a condo can sometimes be a challenge. Last decade, lenders were burned on condos for a variety of reasons and so they've bounced back on condo loans a bit more cautious and a bit more wise.
Today's buyers of condos have fewer financing choices as compared to buyers of single-family detached homes.
As one example, buyers using conventional mortgage financing via Fannie Mae or Freddie Mac pay a premium for all loans with less than 25% equity. For this reason, buyers of condos and co-ops are encouraged to cap loans at 75% loan-to-value (LTV).

Condo loans above 75% LTV remain acceptable, however, the accompanying mortgage rate and/or closing costs will likely be higher.

VA loans for condos are available, too. VA loans allow 100% financing with no mortgage insurance required. Mortgage rates tend to be relatively low with a VA loan because all VA loans are guaranteed by the government.
In nearly all cases, though, buyers of condominiums will want to verify a building's warrant ability.
"Warrant-ability" is a mortgage term whether mortgages in a given condo building are eligible for purchase by Fannie Mae or Freddie Mac. Non-warrant-able condos are sometimes denied for funding, but not always.

A building's warrant ability is based on a host of traits, some of which include :
1.    No person owns more than 10% of the building units
2.    No more than 50% of the building's units are active rental units
3.    No more than 20% of the building is dedicated to commercial/retail space
To determine whether a building is warrant-able or non-warrant-able, mortgage lenders will often use a "condominium questionnaire", which addresses the lend-ability of a building.
Non-warrant able condos can still be financed, it should be mentioned. Product availability, however, is limited and mortgage rates are sometimes higher.

The Case-Shiller Index reports rising values for today's condos and co-ops. In many cases, condo prices have climbed more than for comparable single-family residences. Buyers of condos should expect rising prices.
If you're considering buying a condo or co-op, see how today's mortgage rates fit your budget and check the warrant-ability of your expected purchase property.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.