Buying Is Now 37.7% Cheaper Than Renting In The US

The results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

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The updated numbers actually show that the range is an average of 17.4% less expensive in Honolulu (HI), all the way up to 53.2% less expensive in Miami & West Palm Beach (FL), and 37.7% nationwide!

Other interesting findings in the report include:

  • Interest rates have remained low, and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.
  • Home prices would have to appreciate by a range of over 23% in Honolulu (HI), up to over 45% in Ventura County (CA), to reach the tipping point of renting being less expensive than buying.
  • Nationally, rates would have to reach 9.1%, a 145% increase over today’s average of 3.7%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

TO GET STARTED, PLEASE CLICK ON THE APPLY NOW BUTTON AND TAKE A FEW MINUTES TO COMPLETE AN ONLINE APPLICATION.

STEP 1
YOU SUBMIT AN ELECTRONIC APPLICATION ONLINE

STEP 2
WE AIM TO MAKE A DECISION WITHIN 24 HOURS

STEP 3
YOUR PREQUALIFICATION FORM AND LETTER IS ISSUED

STEP 4
YOU ARE READY TO SHOP!

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U.S. Housing Inventory Hits a New Low = LIST YOUR HOUSE TODAY!

Every summer, families across the country decide if this will be the year they sell their current house and move into their dream home.

Mortgage rates have hovered in the mid to low 4’s for almost a year now, giving more and more buyers the opportunity to buy their dream home.   Combine this with that fact that inventory levels of homes for sale have dropped dramatically as compared to this time last year — and this results in extremely strong demand for homes RIGHT NOW!!

Trulia reported that “U.S. home inventory has tumbled 8.9% over the past year and has now fallen for nine consecutive quarters.”   There is now 20% less inventory than there was five years ago.

See the chart below, which shows the decrease in inventory levels broken down by category:

GRAPH

Bottom Line

The Demand for your home is extremely strong right now while your competition (other homes for sale) is at a historically low level.  If you’ve been thinking of selling, now may be the perfect time.

CONTACT US TODAY AND WE’LL CONNECT YOU WITH ONE OF THE TOP LISTING AGENTS IN OUR NETWORK.

1-800-464-1424

Phoenix Property Taxes to Increase This Year

Thanks to rising property values and the recent decision by the Phoenix Union High School District Governing Board, home owners can expect to see an increase in their property taxes this year.

On June 20, the governing board of the Phoenix Union High School District voted a $3 million dollar increase to their tax levy, a decision that, by law, can be made without voter approval and is required to be adopted by the city. Practically speaking, this levy, which is expected to fund local community services, increases the property tax of a $100,000 home from $124.27 to $130.70. This signifies a near 5% increase in the primary property tax rate for such homes.

On the surface level, such an increase may not be much of a reason to fret. However, as the economy improves and property values in Phoenix naturally increase, residents can expect to see the amount they are paying in property taxes creeping up as well. This trend, along with secondary property tax increases being voted on by the Maricopa County Board of Supervisors could coagulate into a cause of financial stress.

Property taxes on the rise are understandably a concern for many, especially in light of the fact that the levy of school district’s in Arizona can be raised without voter approval, but here’s a couple things to remember before fretting. First, while property taxes will rise, Maricopa County as a whole must stay below its maximum levy, and the county is currently well below that. Second, in the grand scheme of things these levies are calculated to provide necessary and beneficial services to the community.

The end result of these property taxes remain to be seen, and August will prove to be an interesting month as governing boards meet to discuss, vote, and approve tax proposals.

TO GET STARTED, PLEASE CLICK ON THE APPLY NOW BUTTON AND TAKE A FEW MINUTES TO COMPLETE AN ONLINE APPLICATION.

Oh Politics…Trump Reverses Obama’s Mortgage Fee Cuts on First Day

carson-ben-bl030416-365Soon after Donald Trump was sworn in as president, his administration undid one of Barack Obama’s last-minute economic-policy actions: a mortgage-fee cut under a government program that’s popular with first-time home buyers and low-income borrowers.

The new administration on Friday said it’s canceling a reduction in the Federal Housing Administration’s annual fee for most borrowers. The cut would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year.

The reversal comes after Trump’s team criticized the Obama administration for adopting new policies as it prepared to leave office. In the waning days of the administration, the White House announced new Russia sanctions, a ban on drilling in parts of the Arctic and many other regulations.

No Consultation

Last week, Obama’s Housing and Urban Development secretary, Julian Castro, said the FHA would cut its fees. The administration didn’t consult Trump’s team before the announcement.

Republicans have argued in the past that reductions put taxpayers at risk by lowering the funds the FHA has to deal with mortgage defaults.

Shares of private mortgage insurance companies, including MGIC Investment Corp. and Radian Group Inc., erased earlier losses, trading up about one percent as of mid-afternoon. They closed little changed from the day before. Private insurers, which back loans guaranteed by mortgage-finance companies Fannie Mae and Freddie Mac, compete with the FHA for market share and have been critics of fee cuts in the past.

A letter Friday from HUD to lenders and others in the real-estate industry said, “more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”

Senate Democratic leader Chuck Schumer of New York took to the chamber’s floor to denounce the reversal.

“It took only an hour after his positive words on the inaugural platform for his actions to ring hollow,” Schumer said. “One hour after talking about helping working people and ending the cabal in Washington that hurts people, he signs a regulation that makes it more expensive for new homeowners to buy mortgages.”

Mark Calabria, director of financial regulation studies for the libertarian Cato Institute, said it was appropriate for the administration to examine last-minute decisions by its predecessor, “especially when those decisions appear to be purely motivated by politics.”

Ben Carson, Trump’s nominee to lead HUD, FHA’s parent agency, said at his confirmation hearing last week that he was disappointed the cut was announced in Obama’s final days in office.

FHA Role

The FHA sells insurance to protect against defaults and doesn’t issue mortgages. It is a popular program among first-time home buyers because it allows borrowers to make a down payment of as low as 3.5 percent with a credit score of 580, on a scale of 300 to 850.

The Obama administration announced last week it would cut the insurance premium by a quarter of a percentage point to 0.60 percent, effective on Jan. 27.

Some housing industry groups lauded the change, saying it could increase home buying by offsetting recent rises in mortgage rates. Supporters of the reduction were disappointed that the Trump administration reversed course.

‘Average People’

“This action is completely out of alignment with President Trump’s words about having the government work for the people,” said John Taylor, president of the National Community Reinvestment Coalition, through a spokesman. “Exactly how does raising the cost of buying a home help average people?”

Sarah Edelman, director of housing policy for the left-leaning Center for American Progress, in an e-mail wrote, “On Day 1, the president has turned his back on middle-class families — this decision effectively takes $500 out of the pocketbooks of families that were planning to buy a home in 2017. This is not the way to build a strong economy.”

The FHA came under severe stress after the financial crisis. In 2013, it needed $1.7 billion from the U.S. Treasury, its first bailout in 79 years, due to a wave of defaults. To replenish the FHA’s coffers, the Obama administration several times increased the fees the agency charges. The law requires the FHA’s capital reserve ratio to stay above 2 percent, and the agency hit that level in 2015 for the first time since the bailout.

“It is important to ensure that the FHA fund remains strong to support homeownership in the future while minimizing taxpayer risk,” Teresa Bryce Bazemore, president of Radian Group, said in a statement.

FHA to cut Mortgage Insurance Premium

The Federal Housing Administration will reduce the annual premium borrowers pay, in order to expand credit access to more Americans, the government announced Monday.

Borrowers who close on an FHA mortgage after January 27 will pay 25 basis points less for the mortgage insurance premium, the Department of Housing and Urban Development said.

Like Fannie Mae FNMA and Freddie Mac , FHA doesn’t make loans but provides a backstop for lenders. The annual premium fees fund the FHA’s Mutual Mortgage Insurance Fund, which helps the agency protect against losses incurred if borrowers run into trouble.

Congress requires that FHA have enough reserves to cover projected losses over 30 years. In 2013, it fell short on that threshold and had to receive a cash bailout of $1.7 billion. Separately, the agency must maintain the fund’s net worth of at least 2% of its loan portfolio.

In a statement, FHA noted that the reserve ratio stood at 2.32% last year, the second year in a row to exceed the 2% threshold.

“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” HUD Secretary Julian Castro wrote.

But many analysts think it’s much more than the insurance premium that’s holding back lending.

“I’m not quite sure how much it actually does,” Laurie Goodman, codirector of the Urban Institute’s Housing Finance Policy Center, told MarketWatch.

“When you look at opening the credit box, there are other actions like figuring out how to break down the False Claims Act so lenders aren’t running scared of more risky loans. That seems to me would have been more effective in terms of access to credit.”

Many big banks have left the FHA program after being slapped with heavy fines for what they perceive as minor infractions of the rules of FHA’s program. One large lender, Quicken Loans, sued the government after being fined.

In the wake of the financial crisis, as mortgage lending became more stringent, FHA lending has boomed, in part because it allows borrowers to take out mortgages with down payments as small as 3.5%.

This is the second such cut in insurance premiums. FHA implemented a 50 basis point reduction in Jan. 2015. The agency estimates this cut will save borrowers an average of $500 per year, and projects approximately 1 million people will take out an FHA mortgage in 2017.

FHA noted that the premium decrease might help offset some of the impact of higher rates for mortgages. Rates have jumped about 66 basis points since the November election.

Rising Rates Will Lead Buyers to Cheaper Homes

Many real estate agents expected rising interest rates to affect the type of home prospective purchasers were shopping for, according to the results of a survey by Redfin.

Nearly 50% of those surveyed said that a rate increase to 5% in the next year would cause buyers to look for a lower priced property, Redfin reported Wednesday. A similar question posed earlier in December to homebuyers found that 2.6% of them would cancel their search altogether if rates went above 4%.

But the impact of higher rates may not just be on the buyer side of the equation. Among the agents that responded, 16% said that potential sellers with locked-in low rates would hold on to their current home to keep their cheaper mortgage. Additionally, 45% of agents surveyed said that sellers will still move, but will rent their previous home rather than sell it.

That latter group of homeowners though is contributing to supply issues that have been keeping many, particularly millennials, out of the purchase market.

“For some homeowners looking to move, it can be a wise decision to take advantage of the combination of rising rents and low mortgage rates by renting their current homes,” Redfin chief economist Nela Richardson said in a news release. “For this reason, we have a group of move-up buyers that are not making their starter homes available to the next generation of homebuyers, which is historically how more affordable inventory is added to the market. This is a double-whammy for the inventory crunch since not only are there fewer homes for sale but the ones that do get listed are mostly in a higher price range.”

Still, there were signs of optimism: 44% of agents said now is a good time to buy, which is the highest level reported all year and just one percentage point down from a year ago.

by Jacob Passy

FHFA increases conforming loan limits for the first time in a decade

For the first time since the housing crisis, the Federal Housing Finance Agency is increasing the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2017.

For much of the country, the Fannie Mae and Freddie Mac loan limit remained at $417,000 for one-unit properties (or single-family homes) in 2016, just as it had for the previous 10 years.

The FHFA announced last week that for 2017, it is increasing the loan limit from $417,000 to $424,100 for single-family homes.  Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit.

Maximum Original Principal Balance for 2017

Units Contiguous States, District of Columbia, and Puerto Rico Alaska, Guam, Hawaii, and the U.S. Virgin Islands
1 $424,100 $636,150
2 $543,000 $814,500
3 $656,350 $984,525
4 $815,650 $1,223,475

Maximum Loan Limits for High-Cost Areas for Mortgages Acquired in Calendar Year 2017

All but 87 counties (or county equivalents) will see a loan limit increase.

Units Contiguous States, District of Columbia+ Alaska, Guam, Hawaii, and the U.S. Virgin Islands
1 $636,150 $954,225
2 $814,500 $1,221,750
3 $984,525 $1,476,775
4 $1,223,475 $1,835,200

+A number of other states and Puerto Rico do not have any high-cost areas in 2017.

For a full list of the conforming loan limits by county, click here.

HARP Loan Extended Through September 2017

U.S. homeowners who are struggling to make their monthly mortgage payments now have more time to take advantage of a government refinance program. The Federal Housing Finance Agency (FHFA) has extended the Home Affordable Refinance Program, or HARP loan, through Sept. 30, 2017.

The FHFA estimates that over 300,000 U.S. homeowners whose mortgages are underwater — they owe more than their home is worth — could still refinance through HARP to lower their monthly payments and avoid foreclosure.

Fannie Mae and Freddie Mac will offer a new refinance program for borrowers with high loan-to-value ratios beginning October 2017, according to the FHFA. Meanwhile, the HARP loan, which was set to expire at the end of 2016, will “create a bridge” to the new refinance program, the agency said in a news release.

The FHFA says that “the new refinance offering will provide much-needed liquidity for borrowers who are current on their mortgage, but are unable to refinance through traditional programs.”

Over 3.4 million homeowners have used HARP to refinance their mortgages since 2009, when the program was launched in response to the housing crisis, according to the FHFA.

To start the process of owning your own home and applying online, simply click HERE and take a few minutes to complete an online application.  Often times, you can be Pre-Approved in minutes!  

Or TEXT the word ‘LOAN’ to 38470

Upfront Guarantee Fee and Annual Fee Reduction

April 28, 2016

Upfront Guarantee Fee and Annual Fee Reduction for Fiscal Year (FY) 2017

This message provides advance notice of the upfront guarantee fee and annual fee structure that will be effective for Single Family Housing Guaranteed Loan Program (SFHGLP) loans in fiscal year (FY) 2017, which begins October 1, 2016 and ends at the close of business on September 30, 2017.  The upfront guarantee fee will change from 2.75% to 1.0% of the loan amount.  The annual fee will change from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.

Please refer to the unnumbered letter (UL), Upfront Guarantee Fee and Annual Fee for Fiscal Year 2017, for additional details.

The “Guarantee Fee & Annual Fee Calculator” is available online at the USDA LINC Training and Resource Library in the “Loan Origination” and “Guarantee Annual Fee (GAF) Billing and Payment” sections of the page.

Thank you for your support of the Single Family Housing Guaranteed Loan Program!

To start the process of owning your own home and applying online, simply click HERE and take a few minutes to complete an online application.  Often times, you can be Pre-Approved in minutes!  

Or TEXT the word ‘LOAN’ to 38470

To see if you qualify for  Free Government Down Payment Assistance, click Down Payment Assistance !  There is no first time home buyer requirement.