Housing Showing Signs of Life
  
Since the recession hit, there has been a lot of bad news about the real estate industry. Homes were foreclosing, lenders and banks were closing their doors, and no one seemed to be buying any new property. However, in the past few months, we have seen extraordinary progress. It looks like the industry is finally getting back on its feet and bottoming out.
 
More and more weeks go buy where the term "record low mortgage rates" can be seen in industry publications. It’s true that rates have never been lower and that they continue to drop. The continuing Euro Zone crisis has kept interest rates low here in the States, and they are expected to remain that way for quite some time.
 
Sales for new and existing homes are on the rise. The number of home sales in April 2012 is the highest since the federal home buyer tax credit in 2010 (except for February 2012). Existing home sales for the 1st quarter in 2012 was the highest since 2007. Currently, our national home supply inventory could be sold in 5.1 months. When the national inventory can be sold in 6 months, the market is said to be in balance. If the current inventory can sustain this level, it may trigger a ‘bull-market’, which is good news for homeowners looking to sell their property. We are already seeing bidding wars for certain properties.
 
Finally, foreclosures are at the lowest level since 2007. There a few reasons for this improvement, but borrowers being able to refinance or to do a loan modification are some of the main reasons. There is plenty of excitement surrounding the HARP 2.0 and FHA Streamline Refinance programs. With these relatively new and definitely improved programs, it has never been easier for those homeowners who pay on time but are still underwater to refinance their homes at lower rates or for shorter terms. These programs have been a blessing to homeowners with government-backed loans (those owned by Fannie Mae, Freddie Mac, and FHA). President Obama is currently in talks to expand refinancing programs to those homeowners who cannot yet benefit from these programs. The hope is that refinancing homes will put more money into the pockets of our nation’s homeowners: money that they will put back into the economy, or into their homes’ equity, thus improving the real estate industry further.
 
We are at a new stage in our recovery, but the economy is still fragile. Worries about other parts of the globe and especially Europe make one cautiously optimistic.

A New and Improved HARP Refinance Program May be on Its Way
  
Following President Obama’s State of the Union address, the mortgage world has been buzzing about the possibility of a HARP 3.0 program. The rumors have been flying ever since the President stated that “every responsible homeowner” should be able to refinance. While no plan for another HARP program has been announced, the idea is enticing enough to warrant speculation on the parts of mortgage professionals all over the country.
 
The current HARP 2.0 program has been extremely successful, allowing homeowners with mortgages owned by Fannie Mae and Freddie Mac to refinance at today’s low rates. The upcoming new FHA Streamline program is anticipated to have a similar effect on those homeowners with FHA mortgages. But for those struggling homeowners who have privately-owned (not owned by Freddie or Fannie Mae), Jumbo, Alt-A, or sub-prime mortgages, no relief has been offered in these tough economic times.
 
If a HARP 3.0 program was made available, it would target those borrowers with non-GSE mortgages. Non-GSE mortgages were much more popular from 2001 to 2007 when they offered lower rates and more program options than GSE (Freddie Mac or Fannie Mae) mortgages. With a HARP 3.0 program, these borrowers would finally be able to refinance their property, thus helping the real estate and mortgage industry.
 
It is hard to say when, if ever, HARP 3.0 would be released. In the meantime, relief is still available for those homeowners with Fannie Mae and Freddie Mac owned mortgages through HARP 2.0, and the upcoming FHA Streamline program is sure to help those FHA borrowers hoping to lower their rates, too.

Inventory is Low Now, but Why?
  
Inventory in the real estate industry is as low as it has been in over three years, but what has caused this decrease? One of the contributing factors is that banks aren’t foreclosing properties as quickly as they were. According to Mortgage News Daily, foreclosure filings in the first quarter of 2012 were at the lowest they have been in four years. While on the surface this certainly sounds like a good sign that our housing industry is recovering, the decrease is likely due to the fact that banks are being careful to do their due diligence prior to foreclosing a property. A decrease now very well may mean an increase in foreclosed homes in the future. Therefore, it may mean that housing inventory is scarce now only to increase later.
 
If you’re currently thinking about buying a new home, you may be frustrated by a lack of available homes. By getting pre-approved now, however, you’ll be prepared to start looking once inventory is back up. If you’re currently facing foreclosure on an existing property, you may still have a chance of keeping your home. Contact your bank and ask about a home modification option. Even if you applied earlier, the modification process has improved over the last couple of months. By checking on refinancing or a modification now while banks are still catching up on foreclosures, you can keep your property and secure a lower monthly rate or an affordable payment.

Conventional Loans are the Way to Go
  
For potential buyers with limited funds, FHA loans have long been known to provide help by allowing for smaller down payments and buyers with marginal credit. However, recent government regulations are increasing the fees associated with FHA mortgages and turning this once great deal into an expensive proposition for borrowers.
 
Part of the reason why lenders are willing take on a bit more risk is because FHA loans are insured by the Government or HUD. So in the event of a mortgage default, lenders are reimbursed by the Government. To ensure that tax payers are not responsible for these losses, FHA borrowers pay two types of insurance fees to FHA (HUD). FHA borrowers pay both an Up-front Mortgage Insurance Premium (Up-front MIP) fee when they begin the loan or at closing, and monthly MI fees while paying off the loan.
 
In the past, these fees have been relatively small: the Up-front MIP was approximately 1% of the overall loan amount. However, government legislation has increased the Up-front MIP fee to 1.75% of the loan amount as of April 9th, 2012. Monthly MI fees are also due to increase starting June 1st. Furthermore, congress recently approved a bill which is likely to increase the Up-front MIP fees to as high as 2.05%. This would almost double the current fees paid by FHA borrowers.
 
For those borrowers looking to purchase a new home, Network Mortgage has conventional loans – those owned by Fannie Mae and Freddie Mac – that now allow down payments as low as 3%. This is even smaller than the current minimum down payment for FHA loans (3.5%). There are monthly MI fees associated with small down payments on conventional loans, but they, too, are lower than the fees for FHA loans.

If you have not refinanced within the last year and taken advantage of the historical low mortgage rates, this may be your chance.
  
On Tuesday, March 06, 2012, the Obama Administration announced a new plan to further help homeowners struggling to pay their mortgage. The new FHA Streamline refinance program will allow homeowners to refinance their FHA-owned properties at today’s low rates. It is estimated that borrowers taking advantage of this new program could save $1000 a year.
 
Homeowners whose current loan closed on or before June 1, 2009 will be able to receive lowered monthly mortgage insurance (MI) fees, with their current fees being cut in half. Up-Front MI fees will also drop from 1% to 0.01%.
 
The new FHA Streamline also hopes to combat many of the hurdles of refinancing, including credit checks and home appraisals.
 
If you are looking to refinance your FHA-owned home, contact me today to find out more about the new FHA Streamline program.

Now is the Time to Buy
   
In an interview with CNBC’s Squawk Box, business magnate and investor Warren Buffett stated that if you’re thinking about buying a single family home, now is the time to do it.
 
“If I had a way of buying a couple hundred thousand single family homes,” Buffett said, “…I would load up on them. And I would take out mortgages at very, very low rates.”
 

 
As one of the most successful investors in the world, Buffett is an excellent source for advice on the real estate industry. If you’ve been on the fence about buying a home, this is a very strong sign that now is the time to purchase.

There Could Possibly be More Refinance Options for Homeowners
  
The mortgage world is buzzing with ideas surrounding potential new housing legislation. In an effort to further improve the housing crisis, President Barack Obama is working to more clearly define his housing-related proposals.
 
The Obama Administration is looking to expand several programs that intend to streamline refinancing for homeowners who are currently paying for conventional loans at a higher interest rate through HUD and FHA. These programs would not require the borrower to submit a new appraisal or tax return, but to simply verify their current employment. In order to qualify, borrowers would need to meet a few criteria:

• Borrowers must be current on their loan for the past 6 months.
• Borrowers must have a FICO credit score of 580 or higher to be eligible.
• The loan that is being refinanced must be for a single family, primary residence.

While it is uncertain how much of this new proposal will become regulation, it’s good to know that the government has a plan to improve the housing industry and help struggling buyers.

Interest Rates are About to Go Up, but Not Because of Market Changes



Last month, Congress and the Obama Administration passed a bill to extend unemployment benefits for those individuals whose unemployment benefits have run out. In order to pay for this new cost, the government is planning to increase the fees mortgage lenders pay to sell loans to Fannie Mae and Freddie Mac.
 
An unfortunate side effect of these higher fees for lenders is that it will lead to higher mortgage rates. Interest rates on conventional loans are likely to increase 0.375% to 0.5% very soon. FHA interest rates are also due to increase in the spring. This is counterintuitive to what the Federal Reserve has been working on for the last few years. One of the Federal Reserve’s objectives has been to keep mortgage rates low so that existing home owners can refinance their mortgages and lower their monthly payments. These savings can have a ripple effect on our economy. The combination of low property prices and low mortgage rates have helped the battled Real Estate market hit bottom, and is now getting ready to rebound.
 
It’s hard to say how much of an impact this new legislation will have on the Mortgage and Real Estate industries in general. Rest assured that Network Mortgage will keep you abreast of any changes and developments that arise.