Hello and welcome to this week’s edition of Moorings, you source for everything related to the mortgage industry. First let’s check in on rates where we are still hovering at approximately 4.875% for a thirty year fixed conventional mortgage. This bodes well for the housing industry as home ownership remains affordable. After attending a local real estate companies awards banquet this past week, it’s clear that the local real estate market has gained strength. Many agents were commenting on how busy they have become in the past month or so with more and more buyers in the market and more listings coming on the market. This is obviously great news for anyone in the business and in fact great news for the economy in general.
In terms of Real Estate statistics, January had both some good and bad news. According to the National Association of Realtors existing-home sales were down by 7.2 percent. At the same time, it is up 11.5 percent from the same time last year, in the after-math of the economic recession. In conjunction with this up and down, I have to continue to harp about the $8,000 tax credit. This is truly a limited time offer so please do not wait until the last minute, especially with government loans like FHA and USDA. USDA loans are currently taking longer and longer to get approved and writing a contract a week before the tax credit expiration date will almost definitely mean you won’t be approved in time to benefit. April 30th is the date by which you have to be under contract to buy a home and then you have to close by June 30, giving you two months to work out all the details on the home purchase. Say though that the deal falls through midstream, there is no second chance…you’re out $8,000. Bottom line, get off the fence and don’t be the person kicking themselves because they waited till the last minute and missed out.
Last week I spoke at length about changes in the guidelines for FHA loans and there is one additional and important change that has also come to my attention. Allowable seller concessions on FHA purchased homes are going to be reduced from 6% to 3% as of April 5th, 2010. What does this mean you ask? A good example is a builder or home-owner who has a home listed and is offering to pay $4,000 in closing costs on a $100,000 starter home. If the buyer is purchasing the home with an FHA insured mortgage then that amount would be reduced to no more than 3% of the sale price of the home, or $3,000. This could definitely have some negative impact on homes on the lower end of the price range where the difference between 3% and what the seller was offering to concede could be vastly different. This could in fact, make or break a deal at the $150,000 and below segment of the market where buyers rarely have more than the minimum to put down and need the seller or builder to pay all of the closing costs.
In closing I would like to welcome another new loan officer, Stan Walston, who will be in the