wendy silver-hale fha fees reduced in bid to assist loan … · 2012-03-13 · loans to near zero,...
TRANSCRIPT
More Families Can Afford to Buy a HomeMore families than ever before can afford to buy a home due to today’s low interest rates on home loans and lower home prices, a report released last week concluded.The nationwide pattern, confirmed by the National Association of Realtors Wednes-day, followed on the heels of recent reports from the California Association of Realtors that affordability throughout the Golden State rose to its highest level during the fourth quarter 2011.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose to 55 percent in the fourth quarter of 2011, up from 52 percent in third-quarter 2011 and from 50 percent in the fourth quarter of 2010. The index was the highest since C.A.R. began tracking this statistic in 1988, and equaled a high set in first-quarter 2009.
Homebuyers statewide needed a mini-mum annual income of $57,750 to qualify for the purchase of a $282,350 statewide median-priced, existing single-family home in the fourth quarter of 2011. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,440, as-suming a 20 percent down payment and an effective composite interest rate of 4.31 per-cent. The nationwide housing affordability index — which tracks median home price, median family income, and the average mortgage rate — in January reached 206.1, the highest level since N.A.R. began track-ing it in 1970. It also was the first time the index broke the 200 mark, meaning the typ-ical family had roughly double the income needed to purchase a median-priced home.
“For buyers who can qualify for a mort-gage,” said Moe Veissi, N.A.R. president, “now is a very good time to become a home owner.”
N.A.R. projects that affordability will remain high for the remainder of the year, even though dwindling inventories in many markets, including the San Fernando Valley, have declined to a point where conditions are more balanced.
“If access to credit improves,” Veissi said, “we could see a more meaningful increase in sales and broader stabilization in prices, es-pecially in regions with stronger job growth.”
FHA Fees Reduced in Bid to Assist Loan Refinancings
By Wendy Silver-Hale, President, and David Walker, Southland Regional Association of Realtors®While not a cure for all that ails housing, an initiative unveiled Tuesday offered hope that between 2 and 3 million homeowners could refinance to today’s low interest rates, thus reducing monthly payments on average by about $250 per month, or $3,000 per year, while avoiding typical refinancing fees that would result in an additional $1,000 savings.
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‘If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices … ’
Homeowners who have Federal Housing Administration mortgages may be able to refinance their loans at a lower interest
rate as well as not have to bear the high refinance fees to do so, President Barack Obama announced at a news conference Tuesday.
“It’s like another tax cut in people’s pockets,’’ the President said.
To qualify, borrowers must be current on their existing FHA-insured mortgages which were written on or before May 31, 2009. An estimated 3.4 million households with loans endorsed prior to that date pay more than a 5 percent annual interest rate on their FHA-insured mortgages.
By refinancing through this streamlined process, it’s estimated that the average qualified FHA-insured borrower will save approximately $3,000 a year, or $250 per month. The discounted prices assume no greater risk to the Mutual Mortgage Insur-
ance Fund and will allow many borrowers to refinance into a lower cost FHA-insured mortgage without requiring additional
underwriting. Homeowners
with FHA-insured loans should contact their existing lender to deter-mine eligibility.
The Federal Housing Admin-istration will cut its upfront fees for refinancing loans to near zero, reducing it to 0.01 percent, or $10 for every $100,000.
The reduced fee plan is expected to save up to 3 million average FHA borrowers about $1,000, the
administration announced.Many borrowers who took out FHA-
backed loans several years ago haven’t been able to refinance because FHA insurance premiums increased sharply over the last two years. Consequently, while interest rates have dropped to a level where they typically generate a wave of refinancing, the higher FHA premiums offset savings, thus discouraging borrowers from even trying to refinance. The changes unveiled by Obama Tuesday seek to address that problem.
Lowering refinancing fees also should be broadly positive for housing and the economy by reducing foreclosures and free-ing up income for consumers to spend on other goods and services.
Additionally, President Obama an-nounced aid to U.S. service members
who lost their homes due to wrongful foreclosures. In a process to be overseen by the Justice Department, Obama said that lenders and mortgage servicers will be required to review the cases of all service members who were foreclosed upon since 2006. Any service member found to have been wrongfully foreclosed upon will be compensated — repaid the lost equity in the home plus interest, as well as a flat fee of $116,785.
Loan servicers also agreed to provide awards to members of the military who, contrary to law, were charged more than a 6 percent interest rate after requesting a lower rate. The award would be four times the amount overcharged, plus interest.The Southland Regional Association of Realtors® is one of the largest local trade associations in the nation with more than 9,000 members serving the San Fernando and Santa Clarita Valleys.