Low Texas Mortgage Rates Stick Around

Here’s the latest news on mortgage rates:

According to bankrate.com, the benchmark 30-year, fixed-rate mortgage rose 7 basis points, to 5.41 percent. Our rates at Home Loan Specialists continue to rank better than the national averages . One year ago, the mortgage index was 6.41 percent, so even though rates have inched up, we are still seeing extremely low rates due to the economic environment.

The benchmark 15-year, fixed-rate mortgage was unchanged at 4.93 percent. The benchmark 5/1 adjustable-rate mortgage rose 3 basis points, to 5.4 percent.

As I mentioned in a previous post, we have uncovered a great new lending source for jumbo loans; that is loans in excess of the FNMA & FHLMC maximums of $417k. These loans have been very tough to find as lenders have tightened credit becuase they cannot easily be packaged and purchased by the government. Previously, we were limited to only offering ARMs on these products or offering much higher than market fixed rates. If you are looking to refinance to reduce your rate or your term, give me a shout.

A Great New Tool!

Home Loan Specialists Launches New Refinancing Tool for Homeowners in Spring, Tomball, The Woodlands, and Houston

Jumbo Loans

We just found a great new source for jumbo mortgage loans, that is loans above the conventional mortgage loan limit of $417k. Give me a shout to find out more!!

Texas Programs Help First Time Homebuyers in Spring, Tomball, Conroe, The Woodlands, and Houston

Our country has always valued the principle of home ownership, and despite the recent fallout of the sub-prime mortgage market, generous incentives still exist for first time home buyers searching for a mortgage loan. Between Federal and State-funded programs, there are many options for residents of Spring, Tomball, Conroe, The Woodlands, and Houston.

In the State of Texas, there are three primary sources of assistance for first time home buyers.

1. The First Time Homebuyer Federal Tax Credit
2. The Mortgage Credit Certificate
3. The TDHCA Texas First Time Homebuyer Program

There are also three additional programs for targeted groups including the Professional Educators program, the Homes for Texas Heroes program, and the Home Sweet Texas Loan program. Unfortunately, these programs are current not funded.

The First Time Homebuyer Federal Tax Credit provides an extremely generous $8,000 (as amended in the American Recovery and Reinvestment Act of 2009) tax credit for qualified homeowners purchasing a home in calendar year 2009. Unlike a tax-deduction which reduces your taxable income, a tax credit like this reduces your tax liability dollar-for-dollar.

Previously, this tax credit was a loan that had to be repaid over 15 years, however under the new legislation, repayment is no longer required. This program is not available to everyone. Single taxpayers with incomes up to $75,000 and joint filers with incomes up to $150,000 qualify for the full credit. The credit is phased out at higher income levels. Under previous legislation, you were not eligible for this tax credit if your home was purchased through a mortgage revenue bond program, but this is no longer the case.

The Texas Department of Housing and Community Affairs created the Mortgage Credit Certificate (MCC) program, which is also a tax credit. With the MCC, the qualified homebuyer is eligible to take a portion of the annual interest paid on the mortgage as a tax credit up to $2,000 for each year that they occupy the home as their principal residence. The amount of the tax credit is equal to 30% of the annual interest paid. This credit offsets other taxes paid and effectively increases the homebuyer’s net earnings. Increased income also results in increased capacity to qualify for a mortgage loan, and a potentially larger loan amount. The MCC has the potential of saving the MCC holder thousands of dollars over the life of the loan.

The Texas First Time Homebuyer Program provides eligible homeowners with a grant equal to 5% of the mortgage amount. In order to qualify, your income must not exceed 60% of the Area Median Family Income (AMFI). In certain targeted areas like the Rita GO Zone, family incomes of up to 140% of AMFI can qualify. A “targeted area” is a census tract in which 70% or more of the families have incomes that are 80% or less of the statewide median income or an area of chronic economic distress. Homebuyers purchasing properties located in Targeted Areas do not have to be a first time homebuyer and purchase price and income limits are generally higher. The loans available under this program are 30-year fixed rate loans and lenders are limited in what they can charge for closing costs.

In addition to these programs, there are many other programs available at the Federal and State level, including the Texas Veterans Land Board Housing Assistance Program and programs available through the U.S. Department of Housing and Urban Development. A more complete list of programs and links is available at our web site .

While the current upheaval in the mortgage markets may cause you to think twice about buying a home, home affordability levels are very high, interest rates are at record lows, and programs like the ones we discussed here create attractive financial incentives that should not be overlooked.

First Time Homebuyers in Texas Benefit from New Legislation

First-time homebuyers in Texas may get a generous incentive to act under the Obama Administration’s new housing recovery proposal. This incentive, coupled with low mortgage rates, makes today an excellent time to purchase a new home as local rents in Spring, Tomball, Conroe, The Woodlands, and Houston may now exceed the monthly cost of buying.

 

The American Recovery and Reinvestment Act expanded several provisions in the First Time Homebuyer Tax Credit including:

 

·        Increasing the maximum credit amount from $7,500 to $8,000

·        Eliminating the prohibition on use of the credit when state or local bond funding is utilized for mortgage financing.

·        Eliminating the repayment requirement for purchases after January 1, 2009. Previously, the credit had to be repaid over 15 years

·        For homes purchased in 2009, if the home is sold within three years, the entire amount of the credit is recaptured.

 

This is truly outstanding news for home buyers as it essentially provides them with up to $8,000 in free money to buy a home! There are income limitations to this credit. The full credit is available to individuals with an adjusted gross income of $75,000 or less; $150,000 or less on a joint return, and it full phased out at $95,000 and $170,000 respectively. For a free consultation on how this new legislation may affect your mortgage purchase plans, send us an e-mail at MikeL@hlstx.com

Home Values in Texas Hold Up – Good News for Refinancing!

Zillow.com just released their Zillow Real Estate Market Report for the 4th Quarter of 2008 and there’s goo news for homeowners looking to refinance their mortgage in Houston, Spring, Tomball, Conroe and Houston. Overall, year over year home values declined 11.6%, reflecting eight consecutive negative quarters for the housing market. Since the market peak in 2006, values are down 17.5%. Furthermore, one in five homes sold last year was a foreclosure and one in six has negative equity.

The good news is that Texas is holding up quite well. Because most homes in Texas were not overleveraged, and did not experience the significant appreciation we saw in other parts of the country, the declines have been much smaller. Check out the map at this site below to see how Texas is doing relative to other mtro areas. You’ll see alot of “blue” on the coasts!

What does this mean to you as a resident of the Houston metro area? It means that it is more likely that you will be able to refinance at today’s low mortgage rates than many of your friends and relatives in other states, especially California and Florida. Your equity is more liekly to be intact. While Texas limits “cash out” refinances to 80% of a home’s value, straight rate/term refinances can be done at higher loan-to-values. Mortgage rates today are running at 5% or less, so I wouldn’t suggest waiting too long to take advantage of this opportunity; just be sure not to brag to your friends out of state!!

FHA, VA, USDA Mortgages Meet Needs of Many Homeowners in Houston, Spring, Tomball, Conroe and The Woodlands, Texas

In today’s post-mortgage meltdown environment, many prospective homebuyers in our local markets of Houston, Spring, Tomball, Conroe and The Woodlands are being denied approval by traditional lenders. Most sub-prime mortgage lenders have shuttered their doors and left investors with billions of dollars in losses from non-performing loans. Fortunately, the Federal government is offering programs that are making funds available for marginal credit borrowers, for both purchase and refinance. Unlike yesterday’s sub-prime lenders, the Feds are demanding that borrowers show a willingness to meet their obligations for at least the past 12 months. These programs are sponsored by the FHA, VA and USDA. We will briefly describe each here.

One common element of each of these programs is the generous acceptance of borrowers whose credit score exceeds only 620. Since January 1, 2009 that floor was raised from 580 reflecting the continued contraction of credit availability. However, the cash at closing minimum for these programs remains very liberal. FHA now requires only a modest (3.5%) down payment and 100% financing can be arranged through VA and USDA backed programs.

Another attractive feature of all three of these programs is that they allow the seller to contribute at least 3% toward the buyer’s closing costs. In the vast majority of today’s housing markets, sales are consummated at or below appraised value. The disparity between the appraisal and the contracted price can be applied to the buyer’s closing costs as long as it doesn’t exceed the 3% to 6% that the program guidelines allow. The buyer simply agrees to finance the higher value and the seller agrees to return that incremental value to cover the buyer’s closing costs. This is a mixed blessing for the buyer as it requires a higher loan amount which potentially adds thousands to the interest expense over the life of the loan but does allow him to bring far less to closing. Furthermore, these government approved loans also allow gifts from immediate family members, down payment assistance programs, and tax credits to further lessen the buyer’s commitment at closing. In the case of USDA and VA loans, it is common for buyers to walk away from closing with virtually nothing out of pocket even in today’s tight credit environment.

FHA loans are available to all US citizens provided that they are purchasing their primary residence only, have typical allowable debt to income ratios, have had no credit problems in the past 12 months and are purchasing a home below the maximum price as dictated for their respective county (normally $267,000 for the vast majority of US counties). FHA loans are at a fixed rate for terms of 15 or 30 years. These rates compare very favorably to the best conventional loan rates. Additionally, they carry a reduced monthly mortgage insurance premium which equates to approximately ½ the premium demanded for an identical conventional loan scenario. An up-front-premium equaling from 1.5% to 3.3% must be paid by the buyer. However, this cost can be negotiated as a seller paid concession. In other words, borrowers with marginal credit and little down payment can enjoy a very affordable rate with an FHA loan.

The USDA program offers even greater economies to the borrower. Again the qualifying credit score is around 620 and the debt to income ratios are virtually the same as FHA. However, the USDA program offers the incredible opportunity to purchase with no money down! The USDA program is designed to assist in the development of rural communities. The program is limited to families with low to moderate income levels as compared to the average statistical incomes for the respective area. The maximum allowable population for the community can be no more than 25,000. However, the vast majority of non-urban America qualifies. In the Greater Houston Metro area, significant portions of Montgomery, Fort Bend, San Jacinto, Liberty, Chambers, Brazoria, Waller and Galveston counties qualify. Here again, interest rates are very competitive with conventional programs. Finally, no monthly mortgage insurance premium is required. As is the case with FHA, an up-front closing fee is charged which can either be financed or paid for through seller concessions if available.

Veterans can also obtain 100% financing for their home purchase (or refinance) through the VA program. The veteran must only have served a minimum of 90 consecutive days in time of war or 180 days consecutively in peace time. Once again, rates for veterans are virtually identical to those of top conventional loan programs. In fact, if the veteran has suffered any disability during his or her service, further rate adjustments are deducted making monthly payments extremely attractive to honor the service of these returning soldiers, sailors and airmen. Once again, no monthly mortgage insurance premium is due and a modest up-front charge is due at closing equaling 2% of the loan amount.

Some negative characteristics of government loans are that they normally take approximately 50% longer to underwrite, are not available through all mortgage lenders, and are limited to owner-occupied residences only. If you have a good job but have had past credit challenges and haven’t been able to save for the down payment, ask your mortgage professional if he can provide a government program.

We have found that government mortgage loan programs now fill an important gap in the mortgage markets and represent an attractive option for homeowners in Houston, Spring, Tomball and The Woodlands looking to purchase a home, or refinance their existing mortgage.

Mortgage Rates Increase, Then Drop Again for Houston Homeowners

Mortgage refinancing activity dropped last week due to an increase in mortgage rates, but it appears happy days are here again, as low rates returned yesterday and decided to stick around!

Last week, the 30 year fixed rate benmark mortgage stood at 5.7% with .35 discount points and the 15-year at 5.31%. This marks the 11th consecutive week that rates remained below 6% according to bankrate.com. You’d think at these rates, mortgage requests would continue to skyrocket, but mortgage applications were down last week. My view is that some homeowners are getting a little greedy in expecting 4% mortgage rates based on recent news reports of what some members of Congress would like to see. I have always avoiding staring the proverbial “gift horse” in the mouth and don’t believe we will see a 4% long-term rate anytime soon. Quite simply, all the downward pressure created by the stimulus package will be offset by increased long-term inflation fears. Ultimately, expectations for inflation will guide where mortgage rates will be.

This week we saw rates come down and now are quoting fixed rates below 5% once again, which quite frankly is amazing to anyone who has been in this business for any length of time. We have relaxed our concerns over 30-day rate locks and are once again comfortable locking clients in for 25 or 30 days as the underwriting log jam seems to have subsided.

Keep an eye out on our blog for a posting we will do on choosing a mortgage lender. I should have it finished by the weekend.

Holding Off On Your Home Puchase and Mortgage? Don’t Wait Too Long!

If you’re waiting until the economy recovers to get a mortgage and buy a new home in The Woodlands, Spring, Tomball or Houston, don’t wait too long, or you might miss the train!

I know you’re seeing all of the articles in the newspaper talking about the thousands of layoffs that are being announced each day. You have probably already convinced yourself that now is NOT the time to be buying a new home. After all, you’ll be much better off when all of this bad news has gone the way of the Betamax video recorder, right?

Well, not so fast. The National Association of Realtors’ home affordability index has hit its highest level since 1973, the Case Shuller 20 home city index has dropped 20 percent AND we are at historic lows in mortgage interest rates. This all points to a cyclical low in housing. Many experts believe that the pending government stimulus package, in whatever form it takes, will mean a slowdown in foreclosures in the 2nd half of the year and the early stages of an economic recovery by year-end. If you live in Houston, Spring, Tomball or The Woodlands, then you know our local economy is still very dependent upon the energy sector. Well, demand may have taken a pause due to the slowing economy, but its getting tougher and more expensive to find oil and natural gas, and the exisiting fields worldwide are depleting.  Solar, wind and additional nuclear power capacity are still years away, so it is highly unlikely we will see a sustained housing slump in the Texas Gulf Coast.

The final point here if you haven’t figured it out yet is that if you wait too long to get qualified for your new home mortgage, you might be faced with higher house prices, higher mortgage rates and increased difficulty in getting qualified. Provided you are currently employed and feel ”reasonably confident” that you are good at your profession, there is no need to wait.  Warren Buffet became one of wealthiest people on the planet by investing in companies when no one else would.

There is no better time than now to proceed with a home purchase. You will likely never get a house for this kind of price again and get a mortgage rate (and payment) quite this low again.

New Credit Scoring System to Assist Mortgage Borrowers

Fair Isaac, the developer of the FICO credit scoring model used by virtually all lenders, unveiled a new scoring system aimed at helping “sub prime” borrowers. The new system is called FICO Score Classic 08 and will differ from the current system in a couple of ways.

First, the system will minimize the effect of multiple small medical collections. It will also minimze the impact of isolated delinquencies. The program will also have some additional safegaurds to protect against unauthorized use of a credit file.

So, if your a homeowner in one of our market areas like, Spring, Tomball, The Woodlands, or Houston, “what does this mean to me?” you may ask. Well, nothing – right now. Only one of the three major national credit bureaus, Trans Union, has agreed to carry the new system, and won’t begin doing so until April. Our best guess is that the others will follow Trans Union’s lead once they are comfortable with its integration and they see improved predictability in the risk scores. This will probably be six months down the road. Our belief is that this system, coupled with federal fiscal stimulis towards the housing sector will loosen up credit restrictions in the third quarter. In the meantime, if your credit has some “dings”, get a copy of your credit score and work with a credit counseling service to identify the steps than you can take immediately to positively affect your score. The current system weighs your most recent credit activity the heaviest, so pay your bills on time right now and don’t open up new credit accounts. You will likely begin to see some improvemnt within just a few months. Check out http://www.knowthecreditscore.com if you need some additional resources.