Mortgage

ORLANDO REAL ESTATE NEWS

housing-report-03.2016Orlando’s homebuying season kicks off with a decline in inventory and an increase in median price

The traditional start to Orlando’s homebuying season — April 1 — finds buyers continuing to grapple with a dwindling inventory that in March pushed home prices up 10 percent.
“Like much of the country, Orlando home sales are being impacted by a lack of inventory rather than a lack of buyers,” says ORRA President John Lazenby. “For example, there is only 2.16 months’ worth of non-distressed single-family homes (not short sales or foreclosures) in the critical first-time homebuyer price categories. That’s even below the area’s overall 3.5 months-of-supply, which is far below the six months that economists consider balanced between supply and demand.”

Median Price
The overall median price for the month of March 2016 was $195,000, a jump of 5.41 percent compared to the February 2016 median price of $185,000.

Completed Sales
Homes of all types spent an average of 70 days on the market before coming under contract in March 2016, and the average home sold for 97.14 percent of its listing price. In March 2015 those numbers were 80 days and 96.87 percent, respectively.

The average interest rate paid by Orlando homebuyers in March was 3.70 percent. Last month, the average interest rate was 3.75 while this month last year homebuyers paid an average interest rate of 3.78.

Affordability
Buyers who earn the reported median income of $57,038 can qualify to purchase one of 4,391 homes in Orange and Seminole counties currently listed in the local multiple listing service for $322,548 or less.

First-time buyers earning the reported median income of $38,786 can qualify to purchase one of the 2,207 homes in Orange and Seminole counties currently listed in the local multiple listing service for $191,963 or less.

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Florida Home Search New On Market

Real Estate Home Buyers News

OD_BloggerWhile the prevailing conclusion is that the economy has not fully recovered from the recession of almost ten years ago, there are certainly some aspects of the economy that have shown signs recovery.

This unfinished recovery is also true in the real estate industry. Home prices are definitely showing signs of recovery, with the average price of homes in many areas of the country now back at levels reached during the peak of the real estate boom. On the other hand, unfinished recovery on the supply side is affecting the numbers of homes available for sale and adding additional upwards pressure to home prices.

Factors of the unfinished recovery directly related to the availability of homes for sale would include; Baby boomers due to losses sustained during the downturn or lack of confidence in the recovery are delaying retirement and scaling down to the condo on the beach and are holding on to their single family home much longer.

Builders are not building new homes at the same pace as before the crash; actuality they are reporting a shortage of skilled labor.

Based on population growth during the past decade the underlying demand for housing may be higher than available supply for several years, providing additional upwards pressure to home prices. To avoid repeating the past, it is essential to address this shortage and the pressing issue that America will need a greater supply of homes to house our growing population in the future.

The Markets

  • Rates on home loans inched higher again in the past week.
  • Freddie Mac announced that, for the week ending March 17, 30-year fixed rates rose to 3.73% from 3.68% the week before.
  • The average for 15-year loans was also moderately higher at 2.99%.
  • The average for five-year adjustable rate loan increased slightly to 2.93%.
  • A year ago, 30-year fixed rates were at 3.78% very close to today’s levels.

Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

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Florida Home Search

Tax Times Favors Homeowners

OD_BloggerCongress has consistently enacted tax legislation which favors homeowners. Indeed, much has been written that our tax laws discriminate against renters, by giving unfair and unequal tax benefits to those who own homes. For those of us who own homes, here is a list of the itemized tax deductions available to the average homeowner. Every year, you are permitted to deduct the following expenses:

Real estate property taxes, both state and local, can be deducted. However, it should be noted that real estate taxes are only deductible in the year they are actually paid to the government.

Interest on home loans on a first or second home is fully deductible, subject to the following limitations: acquisition loans up to $1 million, and home equity loans up to $100,000. If you are married, but file separately, these limits are split in half.

Points paid to lower your interest rate are deductible. Points paid to a lender when you refinance your current home loan are not fully deductible in the year they are paid; you have to allocate the amount over the life of the loan.

 

Source: Realty Times

Be sure to consult your tax advisor regarding taking advantage of all of your house-related deductions.

Housing Tax Benefits Extended

OD_BloggerHomeowners are among those who will benefit from a $760 billion tax deal that was signed into law in December. The deal includes two very important tax breaks for those who own homes. The law contains a retroactive extension of The Mortgage Debt Forgiveness Act through 2016. This law expired at the end of 2014 and, without the extension; any loan forgiveness achieved in a short sale would have been counted as income for homeowners who sold their homes for less than the amount of their home loan during 2015.

Also extended retroactively until 2016, was the deduction for mortgage insurance payments which expired at the end of 2014. Borrowers with adjusted gross incomes up to $100,000 can deduct 100% of their payments. Deductions are reduced by 10% for each additional $1,000 of adjusted gross income above $100,000. The threshold for married borrowers filing separately is $50,000 of adjusted gross income per person. Deductions are reduced by 5% for each additional $500 of adjusted gross income above $50,000. If you have questions regarding your eligibility for these tax breaks, it is suggested you contact your accountant. 

 

Low Mortgage Rates In 2016?

OD_BloggerReceived the following important information about interest rates in my newsletter this morning, had to share.

The Fed Meeting Finally Arrives

The Federal Reserve Board’s Federal Open Market Committee meets today and tomorrow. This is the most anticipated meeting of the Fed in almost a decade. It has been exactly seven years since the Fed moved short-term interest rates to close to zero and it has been over nine years since the Fed actually raised short term rates. Now the markets are expecting the Fed to raise rates from these historically low levels once again.

The Federal Reserve has indicated all along that the markets would get plenty of notice before they raise rates. This notice is designed to prevent market shocks. One must remember that the Fed is only raising short-term rates. For example, the Federal Funds Rate is the rate banks charge each other overnight as they balance their holdings. The other rate controlled by the Fed is the Discount Rate, which is also a short term rate charged to banks for borrowing money. The question is–how can these rates affect long-term rates that consumers pay for loans on cars, homes, credit cards and even student loans?

Some rates such as credit cards which are pegged to the prime rates charged by banks may go up instantly. Other loans which are based upon longer term rates such as home loans are not as easy to predict. That is where the markets come in. The markets react to what the Fed may do before they take action. For example, rates on home loans have risen in anticipation of the Fed’s move. Now the markets will listen to what the Fed will say about potential future interest moves. So let’s see what the Fed has to say in addition to whether they raise rates.

 

 

 

The Cost Of Waiting

Failing to refinance a home loan when interest rates fall can be a very costly mistake—tens of thousands of dollars in savings can be lost over the life of the loan. Yet about 20% of U.S. homeowners had fallen into this trap, according to a paper published this summer by the National Bureau of Economic Research.

The median total of lost savings for those who didn’t refinance was about $11,500 in present-value terms, the paper said (meaning actual losses over the life of the loan would amount to more than that). The Wall Street Journal spoke with Devin G. Pope, an associate professor at the University of Chicago Booth School of Business, one of the study’s three authors, about how to get more people to refinance their homes when interest rates fall.

Here is what Pope indicated — There can be real value in transferring money to homeowners as a way to stop the spiraling effect of foreclosures. Also, having people refinance their homes is a great way to put money in their pockets and stimulate the economy.

Yet if people are not refinancing, then it’s not completely working as a stimulus.” Pope continued: “We find some evidence that people with lower education and incomes are more likely to be in the group that is failing to refinance, which could indicate that financial savvy comes into play. There was also some evidence of procrastination.”

Source: The Wall Street Journal 

Florida Home Search

Controversial Rate Checker Tool Tweaked

OD_BloggerUnder strong criticism from the Mortgage Bankers Association and other industry trade groups, the Consumer Financial Protection Bureau made tweaks to its controversial Rate Checker consumer tool.

But MBA President and CEO David Stevens said the tweaks do nothing to resolve “fundamental flaws” with the tool and continue to provide “misleading” information to consumers. 

On January 13, the CFPB unveiled this new borrower education tool on its website (Click Here for Rate Checker) ostensibly to help consumers be better informed of rates and other costs when shopping for a home loan. CFPB said this Rate Checker tool will allow consumers to “see what interest rates people with similar financial situations have been offered.”

The tool uses a credit score, state; property location and a down payment percentage to generate an estimate for a borrower of rates available.

The website which indicates rate information for the rate checker is provided by a private firm who collect data from “actual lenders and is updated every business day.” “When the imprimatur of the government is associated with particular data, the public assumes the data are complete and accurate. However, the lenders’ rates incorporated in the tool include only a mix of large banks, regional banks and credit unions. Notably, rates from independent mortgage banks do not appear to be included in the data. Similarly, discount points, origination fees and mortgage insurance are not included, yet are a significant part of the cost of residential finance–and are critical for any website that purports to be a comprehensive borrower decision tool.” 

Source: Mortgage Bankers Association

 

Previous Owners Buy–Back Repossessed Homes at Present Market Value

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Fannie Mae and Freddie Mac directed to change policies relating to the sale of real estate owned (REO) properties in their current inventory by the Federal Housing Finance Agency (FHFA). The change requires real estate owned properties (REOs) to be sold to any qualified purchasers at the property’s fair market value.

Under the new policy foreclosed homeowners or a third-party purchasing on their behalf may do so at the value that applies to other purchasers. Prior to this change foreclosed homeowners or a third-party buying on owners behalf had to pay the entire amount owed on the mortgage.

This policy change is limited to Fannie Mae and Freddie Mac existing single family REO inventory of approximately 121,000 properties. Property exclusion may apply on a case by case basis. The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence.

For more information on purchasing REOs contact: iRealtyServices

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Their mission is to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Bank System are operating in a safe and sound manner so that they can serve as a reliable source of liquidity and funding for housing finance and community investment.

Source FHFA Media Release

Delayed Home Loans For Cash Buyers

icon_sellersGood news for cash homebuyers wanting to get home loans quickly after purchasing a home. You can get a cash-out refinance almost immediately, thanks to a little known Fannie Mae program. The delayed financing program allows all-cash homebuyers to refinance and take equity out as soon as they close on the home purchase.

That’s good news for homebuyers in all-cash purchases, many of which are investors or baby boomers trading down to more manageable homes. The delayed financing program gives them the option to take home even more cash while enjoying historically low interest rates on a conventional home loan.

The program comes with rules such as the sale must have been “arm’s length” (no parents selling to children), the owner can’t have more than 10 financed properties and there can’t be any other liens against the property. Why would a homeowner use the delayed financing program instead of waiting the six months to tap equity?

  • A property may be in such disrepair that a lender won’t underwrite it. With this program, a homebuyer can buy the property, make quick repairs and take money out of it before six months elapse.
  • The chain of buyers and sellers might have irreconcilable timing issues.
  • It can be used as a tactical advantage in a hot market. Many sellers would rather accept cash offers over those with a financing contingency, sometimes even when the cash offer is lower. The program allows homebuyers to present a cash offer, then replenish their liquidity once the deal is done.

Source: Mortgage Daily

The Markets

orra_housing-marketRates rebounded in the past week but stayed near their lows for the year. Freddie Mac announced that for the last week in October, 30-year fixed rates rose to 3.98% from 3.92% the week before. The average for 15-year loans increased to 3.13%. Adjustable rates were also higher, with the average for one-year adjustables moving to 2.43% and five-year adjustables increasing to 2.94%.