Thursday, September 9, 2010

New FHA Short Refinance Option

As of September 7, the FHA has a new program to help people who are underwater (owe the bank more than their home is worth). Check out the details here. Basically, the program allows you to refinance your primary residence under certain conditions: The lender must agree to forgive 10% of your unpaid principal, you must obtain the cooperation of all lien holders, the lender must agree to forgive at least 10% of the unpaid principal on the original note to bring the combined loan to value ratio to a maximum of 115%, the new FHA loan must not have a loan to value ratio of more than 97.75%, you must be current on your payments, you must have a credit score better than 500 and meet other normal FHA requirements.


The federal government has tried desperately to stabilize the housing market through tax credits (see my last blog post), by purchasing mortgage backed securities, and implementing loan modification programs. None of these things have done the trick, and I don't expect that this new program will turn things around either. However, for homeowners that are just squeaking by, and that meet the criteria above, this may be an excellent way to refinance and save some money each month.   

Monday, August 30, 2010

Are more tax credits needed to revive housing?

We are starting to see suggestions for another round of federal tax credits in order to try and jump start the housing market again. Is this really a good idea? Thanks to Bryan Murphy for the link to this article. While it would certainly provide some short term relief and as the article suggests, provide a reduction in the current inventory of homes, experience suggests that the last round of tax credits did not do much to solve the underlying problem. I would suggest that further tax credits are not the answer. The tax credits earlier in 2010 worked well to stimulate activity, but the market is paying the price with a slow down now. The housing market will recover on it's own, and the faster it corrects naturally, the better for everyone in the long term. Housing would benefit much more if the federal government would use their "laser beam" to focus on job creation . There are hoards of people out there who are on the fence about buying their first home, or upgrading their current home. I speak with them every weekend. They are not moving forward because of the wobbly economy, the reckless spending of the feds, or a general unease about our country. They fear for their own long term stability. What we need to stimulate the housing market is a boost in consumer confidence. Once people are confident, they will be out in force buying homes. Builders will start building new homes again, and the economy will start to take off.

With low home prices, and record low interest rates already present in the market, the only missing piece is some confidence in our economy. Please call or write your congressman and ask them to keep their eye on the ball. Elect representatives that will focus job creation and spending cuts.

Thursday, August 12, 2010

Mortgage rates at all time lows! What a great time to buy a home or rental property!

These are amazing times we live in. There are tremendous wealth building opportunities in real estate right now. As of today, I am hearing of interest rates at 4.375% for 30 yr. fixed and 3.875% for 15 yr fixed loans with no points! The housing market in Tucson (and most places nationally) continues to be soft, so there are tremendous deals out there on homes to go along with these historic low rates. If you have any inclination to upgrade, downsize, or re-finance, now is the time to do it! For those of you waiting for the value of your home to climb again before making a move, my question is why? Yes, you will sell low. But, you will also buy low, so your net result will not change. What will likely change is interest rates. While most experts in the industry are not expecting rates to climb in the short term, we know they will rise. We also know that historically when rates do rise, they do it quickly. In addition, HUD has plans to increase the monthly cost to those who will need mortgage insurance on an FHA loan.

It is times like these where great wealth is created. Cyclical lows in home prices and interest rates make for tremendous opportunity for those willing to act. Real estate has served as the primary wealth building tool in our country since it's beginnings. It is about buying low and selling high, or buying low, holding, and paying off the loan. Either way, buying at the low point in a cycle is the key.

If you need any help figuring out your options for a home purchase or sale, I will be happy to help. Contact me personally via my webpage. While you are there, take a moment to check out the many resources available to you. Even if you live out of state I can help point you in the right direction, or refer you to a good Realtor.