2015: The Year of the First-Time Homebuyer

For the past several years the first-time homebuyer has been all but absent from the housing market.  With high unemployment for younger workers and restrictive and ambiguous mortgage credit policies, many millennials have stayed out of the housing market.  But, that could all change in 2015.  It appears the landscape is perfect for the return of the first-time homebuyer.   Here are the key factors that will help the first-time homebuyers in 2015:

Low Interest Rates
Mortgage rates have fallen over the last several weeks to near-historic lows – helped by the plummeting price of oil.  While interest rates are still projected to rise through the end of 2015, for now they are extremely low, making housing affordable.

Improving Employment
More jobs were created in 2014 than in any other year since 2000.  And, employment for younger households had an even better year – the economy created the most civilian jobs for the 25-34 age range (an important group for first-time homebuyers) since 1987!  Now that more millennials are working, they can afford to get out of mom & dad’s basement.

New Fannie Mae/Freddie Mac Programs
Both Fannie Mae & Freddie Mac have introduced mortgage programs geared toward the first-time homebuyer that requires only a 3% down payment.  Down payments are often a barrier for would-be first-time homebuyers and this program will help out with that.  Fannie Mae’s program is already available with Freddie Mac’s program set to begin in March 2015.

FHA Lowers Mortgage Insurance Premium
FHA announced that effective January 26, 2015, the mortgage insurance premium on a 30 year fixed rate mortgage will be reduced by 0.50% - from 1.35% - 0.85%.  According to the National Association of Realtors, this will save the average homebuyer almost $1,000/year.

Down Payment Assistance Programs
Many states offer down payment assistance programs.  In Illinois, the Illinois Housing Development Agency offers several down payment assistance program for first-time homebuyers.
 
2015 will be a great year for all homebuyers, but especially the first-time homebuyer.  Give me a call today to make sure you are mortgage-ready.  I can pre-qualify you for your mortgage and even refer you to a great Realtor to find your dream home!  Contact me at BarkerLoans@gmail.com or 708.473.7688.
 
It’s also a great time to refinance – low rates, increasing property values and lower FHA mortgage insurance premiums make now an excellent time to save some money on your current mortgage!

FHA to Lower Annual Mortgage Insurance Premium from 1.35% to 0.85%

President Obama issued a Fact Sheet today outlining the changes to the FHA Annual Mortgage Insurance Premium (MIP) - from 1.35% to 0.85%.

This 1/2% reduction will make homeownership more affordable for many people.  A home buyer with a base mortgage of $150,000 would save $62.50/month on their monthly mortgage payment.

It is estimated that about 800,000 homeowners will take advantage of these lower MIP rates in the first year alone.  And, this decrease will create an opportunity for an additional 250,000 homeowners to purchase a home over the next three years.

These new rates are not yet in effect but will be soon.  As soon as they are I will update this blog.

Please contact me with any questions at 708.473.7688 or BarkerLoans@gmail.com.

IHDA's Welcome Home Illinois Program Closing November 30th

IHDA's Welcome Home Illinois Program Closing November 30th

Since its inception, more than 10,000 first time home buyers in Illinois have taken advantage of the Illinois Housing Development Authority's (IHDA) Welcome Home Illinois Program's generous $7,500 down payment assistance and 5 year forgiveness period.  But, the funds for the program are nearly exhausted.

IHDA is confident they will be able to honor all funds reserved through November 30, 2014 but reserves the right to close the program earlier if fund reservations increase and exceed the funds available.  Act now to reserve your funds!

IHDA's other down payment assistance programs will continue to be available after November 30th.  Most programs are available only to 1st time homebuyers.  But, qualified veterans need not be 1st time homebuyers and there are programs in specific areas without this requirement.

Contact me for more information on IHDA or any other mortgage programs at barkerloans@gmail.com or 708.473.7688.
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FHA to Stop Collecting Post-Payoff Interest

When you make a mortgage payment, you are paying interest that accrued during the previous month.  So, your September 1st mortgage payment paid the interest that accrues from August 1 - 31.

When you payoff a mortgage, whether through refinancing or sale of the property, the lender will calculate and charge you interest from the first of the month through the day they receive the funds to pay your mortgage in full.  So, if the funds arrive on September 9th, you will have to pay 9 days on interest.

However, for FHA loans, the borrower may be charged interest through the end of the month regardless of when the payoff funds actually get to the lender.  So, even if your funds get to the lender at the 9th, you may still be required to pay interest for the remaining 21 days in September.

FHA says that they have allowed lenders to collect the full month of interest because holders of mortgage-backed securities expect a full month of interest regardless of when the loan is satisfied.

The Consumer Financial Protection Bureau (CFPB) has asked the FHA to review this policy because it can end up costing consumers hundreds of dollars in extra interest.  FHA has agreed to change it's policy effective January 21, 2015.

For any housing or mortgage-related questions please contact me at BarkerLoans@gmail.com.

Warmer Weather Brings In The Buyers, Is There Inventory?

After three consecutive months of decline, the S&P Case-Shiller 20-City Composite Index

remained nearly unchanged in February. Year-over-year home prices rose by 12.90 percent in February as compared to 13.20 percent in January.

20 Percent Below Their 2006 Pre-recession Peak
Analysts note that in spite of recent slowdowns in home prices, the year-over-year rates of home price growth remain close to peak price growth attained in 2006. National home prices remain approximately 20 percent below their 2006 pre-recession peak. 13 cities posted lower rates of price gains in February. The Case-Shiller 10 and 20 city indices showed year-over-year price gains of 13.10 and 12.90 percent respectively. Only five cities posted year-over-year gains in price appreciation. Las Vegas, Nevada continues to lead home price growth but its year-over-year rate of home price growth slowed from January’s reading of 24.9 percent to February’s reading of 23.10 percent. Washington, D.C. posted its eighth consecutive month of home price gains with a year-over-year reading of 9.10 percent, its highest rate of price increases since May 2006. Dallas, Texas posted a year-over-year rate of 10.10 percent and a month-to-month increase of 0.20 percent, which continues the city’s record home price growth.

Home Price Gains Expected To Slow In Coming Months
Analysts said that more homes are expected to come on the market and also noted that the rapid increase in home prices for some areas likely sidelined some buyers. As inventories of homes increase, home prices are expected to rise at more modest rates. Job markets continue to experience ups and downs and incomes are relatively flat. These factors can cause would-be homeowners to take a “wait-and-see” stance. Price increases in other sectors can also impact home prices, as buyers adjust their home purchase plans to what they can afford to spend.

Pending Home Sales Rise In March
The NAR reported that its pending home sales index rose by 3.40 percent in March as compared to a decrease of -0.80 percent for February. The March reading showed the first increase in pending home sales in nine months, and was the highest reading since November. Warmer weather allowed more buyers shop for homes, but remains 7.90 percent lower than in March 2013. Higher home prices and low inventories of available homes were cited as reasons for the lower reading. Pending home sales by region showed mixed results, and suggested the impact of severe winter weather on potential home buyers.
Northeast: +1.40 percent
Midwest:    -0.80 percent
South:       +5.60 percent
West:        +5.70 percent
Based on a slow start during the first quarter of 2014, the NAR forecasts 2014 sales of existing homes at 4.9 million as compared to 5.1 million existing homes sold in 2013.

If you are thinking of buying or selling a home, please contact me at BarkerLoans@gmail.com or 708.473.7688.

2014 FHA Loan Limits

HUD announced the FHA Loan Limits for all FHA Case Numbers assigned between January 1, 2014 and December 31, 2014.  The new limits will be lower for 650 counties across the country, including all counties in the Chicago area.

For the Chicago Metropolitan Area, the FHA limits are as follows:
               1-Unit  $365,700
               2-Unit  $468,150
               3-Unit  $565,900
               4-Unit  $703,250

Loan limits for FHA Home Equity Conversions Mortgages (reverse mortgages) remains at $625,500.  However, the maximum loan amounts are determined by the value of the property and the home owner's age.

To find out the FHA loan limits in other areas, go to: https://entp.hud.gov/idapp/html/hicostlook.cfm

Please contact me with any questions or when you are ready to purchase or refinance a home at BarkerLoans@gmail.com.

Is the FHA Streamlined 203(k) Loan right for you?

With the increase in the amount of foreclosures, short-sales, and fixer-uppers on the market, many people are looking for ways to purchase a home that needs some work without paying for all of the costs out-of-pocket. FHA offers a streamlined version of the traditional 203(k) rehab loan that can help you do just that.

The Streamlined 203(k) loan offers that homebuyer the ability to finance up to $35,000 of improvements to the property directly into the mortgage.

A few things to consider are that the Streamlined 203(k)is designed for non-structural repairs to the property, so you can't move load-bearing walls or add an addition to the property. But there are a lot of repairs that can be covered:

• Repair/ replace/upgrade roofs, gutters/downspouts, HVAC systems, plumbing systems, electrical systems, flooring.
• Remodel kitchens, baths, etc.
• Painting – interior and exterior
• Weatherization of property – doors, windows, insulation, etc.
• Finish/re-finish basements or attics
• Handicap-accessible improvements
• New appliances
• New siding
• Basement/crawlspace waterproofing
• Lead-based paint stabilization or abatement
• Repair/replace/add exterior decks, porches and patios

Following are the limits to the extent of work that can be performed with a Streamlined 203(k) loan:

• Major rehab/remodeling that may require the addition or relocation of a load-bearing wall.
• Any new construction including adding an addition to the property
• Repairing any structural damage to the property
• Any work that cannot be started within 30 days of closing or completed within 6 months of closing
• Any work that requires detailed plans, drawings or architectural exhibits
• Any work that would require the homeowner to vacate the property for more than 30 days.

Projects that involve any of these items may still be eligible to be done with the traditional FHA 203(k) loan

In addition to the above, the Streamlined 203(k) loan also doesn't require the use of a consultant, nor the use of a general contractor to complete the work. And, if the amount of work to be performed on the property is less than $15,000, the mortgagee (lender) may not require an inspection of the completed work.

The Streamlined 203(k) can also be used on a refinance to remodel/rehab a property you are currently living in. However, it can only be used on owner-occupied properties.

If you are thinking of purchasing a property that will need some work after closing, please give me a call so we can go over the details of this loan and see if it might be right for you! You can call me at 708-473-7688 or email BarkerLoans@gmail.com