Homeownership: A savings lifeline

Posted by at 12:30 pm

With home prices rising to all-time highs, many potential buyers may imagine drowning in a sea of monthly payments stretching across many years. Naysayers bob to the surface with harrowing tales of home-buying gone wrong. If the down payment doesn’t get you – well the property taxes, maintenance and insurance surely will! These so-called “savvy” investors say renters who dutifully put all money not spent on housing into stable investments – like mutual funds – may get a greater rate of return. Criticism of homeownership as an instrument of wealth-building has understandably become louder in the last decade, after a Housing Bust that put more than 10 million homeowners upside-down, and 4 million more into foreclosure. Though most underwater homeowners have swum back into positive equity, and many of those foreclosures are mortgage-eligible again, the math geeks remain in a...
Read more

Bay Equity joins Hispanic groups advocating housing sustainability

Posted by at 1:54 pm

Bay Equity Home Loans representatives joined the National Association of Hispanic Real Estate Professionals (NAHREP) on Capitol Hill recently, advocating for legislation supporting the sustainability of successful home-buying for the growing Latino community. According to the 2016 State of Hispanic Homeownership Report, the Hispanic population is steering and shaping new household formation and homeownership in the United States. Produced annually by NAHREP in collaboration with the Hispanic Wealth Project, the study found Hispanic homeownership increased by 209,000 since 2015, an astonishing 74.9 percent of the nation’s overall net growth. While overall homeownership rates hovered around a 50-year low of 63.4 percent in 2016, the rate among Latinos actually increased slightly– from 45.6 to 46 percent. With greater Latino labor force participation fueling increased purchasing power, steady growth is likely to continue unabated. “These are numbers you simply cannot look away from,”...
Read more

Buying Young

Posted by at 12:12 pm

  Buyers under the age of 35 are leading the way as consumer confidence in the housing market rises near all-time highs heading into the spring of 2017. In its February installment of the National Housing Survey, Fannie Mae saw surging Millennial confidence in the housing market, even with mortgage rates seemingly poised to rise, and home prices at near-record levels. Along with more job security and increasing income, Millennial home buyers are increasingly married with children – all three legs of the home demand stool. Nearly half (49 percent) of Millennial buyers reported at least one child – up from 45 percent last year and 43 percent two years ago. As with every aspect of the marketplace, young buyers with children are the key to shaping the future of real estate. With more kids in tow, more of these...
Read more
February 17th, 2017

Robot Mortgages Still Far in the Future

Posted by at 11:18 am

In another “sign of the times,” Bank of America recently began testing three mini-bank branches – two in Denver, one in Minneapolis – that have ATMs and video-conference capability, but no actual human beings working there. But much like self-checkout at the grocery store or self-serve gas, customers can still conduct banking business of almost any kind. This news comes at the same time the country’s first robotic barista – nicknamed Gordon – came on line, serving up to 120 coffee drinks an hour in a San Francisco shopping complex. Today’s home loan consumers insist on the ability to conduct financial transactions electronically, as well. They search online for the right home, then email the real estate agent. After choosing a home, a potential borrower can power through pre-qualifying in just a few minutes via texts and maybe a phone call...
Read more

Trump trumps FHA insurance premium cut

Posted by at 4:44 pm

The Donald Trump administration quickly reversed a planned cut in FHA annual premiums about an hour after the new president took the oath of office Jan. 20. Due to have taken effect Jan. 27, the planned reduction of 25 basis points was announced Jan. 9 by Julian Castro, the Secretary of Housing and Urban Development under former President Barack Obama. FHA loans are popular among young and modest-income home buyers because they allow down payments of as little as 3.5 percent. However, FHA borrowers must pay for mortgage insurance to guard against the possibility of default. The cut from .85 to .60 percent of the total loan would have saved the average borrower about $500 a year. Trump and his team said it was too soon to make the cuts without further investigating the effects. Some Congressional Republicans say taxpayers already face...
Read more
January 10th, 2017

FHA lowers rates for first-time buyers

Posted by at 2:28 pm

The FHA has announced lower insurance premiums for first-time homebuyers – lowering rates by about a quarter-point to 0.60 percent of the loan balance for most borrowers. Effective Jan. 27, the cuts would bring an average annual savings of about $500, and serve as a virtual parting gift from President Barack Obama’s administration. Incoming president Donald Trump will have a narrow window after his inauguration Jan. 20 to consider whether to play Scrooge – weighing objections to lower fees against the benefits. Some Congressional Republicans argue that taxpayers already face too much risk if borrowers default. They point to 2013, when the FHA’s Mutual Mortgage Insurance Fund (MMIF) fell below its mandated reserve of 2 percent in the wake of the Housing Crisis, and had to dip into the U.S. Treasury for a cash infusion of $1.7 billion. But outgoing...
Read more

Young homebuyers crunched

Posted by at 12:07 pm

  When existing homeowners don’t sell, and non-homeowners want to buy in, the laws of supply and demand dictate prices must rise. The backup can reverberate throughout the rest of the market. Many potential buyers – whether first-timers or move-ups – can get caught in an inventory crunch. The real problem behind market imbalance is fewer existing homeowners selling: Some are underwater and can’t afford to. Others simply don’t want to. Cut to the chase “Market chasers” are in the latter group. Whether consciously or not, they wait to see how high prices will go. Research finds the most powerful emotional drive at work in a sale is the perception you might lose out on getting the highest possible return. The thought process is they’ll wait until the market “tops out” before they list. Usually, it’s not going to work,...
Read more

Does Dodd-Frank hurt housing?

Posted by at 4:05 pm

  After the Great Recession, the 2010 Dodd-Frank Act was passed in an attempt to rein in many abusive aspects of the financial industry. Along with thousands of pages of regulations, Dodd-Frank created the watchdog Consumer Financial Protection Bureau, which celebrates its fourth anniversary this month. Along with enforcing laws that ban discrimination and other unfair consumer treatment, the CFPB aims to weed out predatory and abusive lending, false advertisement and fraud. The CFPB works with regulators to stop transactions that hurt consumers, including risky lending. It offers a wide variety of assistance programs and informational websites for consumers, has created a complaint-filing mechanism, and investigates and fines violators. The CFPB says 38 percent of its complaints are about mortgages. Not all lenders agree the CFPB is beneficial to consumers. And many believe its “plain English” online tutorials for consumers...
Read more

May new home sales surge

Posted by at 7:29 pm

  Outpacing modest predictions, new U.S. single-family home sales surged 2.2 percent to a 7-year high in May, further brightening the outlook for the housing market and the broader economy. The Commerce Department says new home sales rose a seasonally adjusted annual rate of 546,000 units, the highest level since February 2008. April’s sales pace was revised to 534,000 units from the previously reported 517,000 units. Economists had forecast a mild increase to a 525,000-unit pace in May. The new home sales report added to strong retail sales, consumer sentiment and employment data in the second quarter of 2015, after output slumped at the start of the year. New homes sales surged 87.5 percent in the Northeast, the largest increase since July 2012. Sales increased 13.1 percent in the West, the biggest gain in nine months. In contrast, sales fell...
Read more

First timers make May sales shine

Posted by at 10:24 pm

  April’s gloomy sales bloomed into exciting May numbers released by the National Association of Realtors this week, raising hopes that the housing market is poised for a big second half of 2015. Sales of existing single-family homes, condos, townhouses, and co-ops were up 5.1 percent above April’s numbers to a seasonally adjusted annual rate of 5.35 million units. The previous rate for April was revised up a bit as well, from 5.04 million to 5.09 million units. First-time homebuyers led the way, making 32 percent of recorded purchases, their highest share since September 2012 and 5 percent higher than May 2014. With strong job gains among young adults and the prospect of rising mortgage rates in the near future, more first-timers are deciding to enter the market, and take advantage of low down payment programs. Sales are now at their highest...
Read more