Tuesday, June 10, 2008
Wednesday, April 9, 2008
Alas, I have been slow to blog in the past few weeks, and will be for a while yet. I opened my own real estate office this spring, and I am doing my normal (vaguely manic) spring business, and I have been re-writing the MABA websites (there are two; a .org and a .com), and retooling my own web site to reflect my own business.
Needless to say, blogging takes a back seat. I am not willing to be another victim of possible “death by blogging.” If you have specific real estate questions, write me. I will take the time to answer them here.
Thank you all for your patience during the transition!
Friday, March 14, 2008
You read it here, first!
On March 11, The Boston Globe reported on something I told you about in February. The changes in the loan environment are big news for buyers. Count on me to keep my ear to the grapevine for things that really matter, in dollars and cents, for home buyers.
What is happening, in general, is that it is getting harder for entry-level buyers and only a little easier for those who have more money. The small down-payment loans are mostly not available, neither are loans structured to avoid PMI (mortgage insurance which pays the investor if you sell short or foreclose), and PMI standards are getting stricter. Meanwhile, it is cheaper to borrow larger amounts of money, since the limit for a “conventional” loans was raised, temporarily, by about $80,000. However, these new jumbos are not a free pass; the restrictions many. They are not designed to bail out those who are on the brink of selling short:
1. You need high credit scores, 700+
2. These loans are only for purchases, or to replace a purchase mortgage; you cannot refinance to get cash back, or to pay off home equity/second mortgages that you took out after your initial purchase. Owners can borrow 75% of their value, no more.
3. Second home refinances to get the new jumbo rates lends up to 60% of the value of the property, so you need to have 40% equity.
4. 2- and 3-family home limits are unchanged. 2-family limit is $533,850 and 3-family is $645,300.
What is happening, in general, is that it is getting harder for entry-level buyers and only a little easier for those who have more money. The small down-payment loans are mostly not available, neither are loans structured to avoid PMI (mortgage insurance which pays the investor if you sell short or foreclose), and PMI standards are getting stricter. Meanwhile, it is cheaper to borrow larger amounts of money, since the limit for a “conventional” loans was raised, temporarily, by about $80,000. However, these new jumbos are not a free pass; the restrictions many. They are not designed to bail out those who are on the brink of selling short:
1. You need high credit scores, 700+
2. These loans are only for purchases, or to replace a purchase mortgage; you cannot refinance to get cash back, or to pay off home equity/second mortgages that you took out after your initial purchase. Owners can borrow 75% of their value, no more.
3. Second home refinances to get the new jumbo rates lends up to 60% of the value of the property, so you need to have 40% equity.
4. 2- and 3-family home limits are unchanged. 2-family limit is $533,850 and 3-family is $645,300.
Tuesday, March 11, 2008
Loan rates improve for buyers above $460,000
At the end of February, it became harder to buy with a small down payment. Now, it just became easier to buy a property between about $460,000 to about $575,000. The rise in lending limits before higher “jumbo” rates kick in is a financial help to those buying in that price range. The old loan limit was $417,000. The new one is $523,750.
Here’s how the math works.
Suppose you were buying a home for $550,000 and your loan is $500,000:
Regular rate is 6.25 percent. The Jumbo rate is 7.125 percent.
Last week, you would have needed a jumbo loan at the higher rate. You’d pay $3369, plus tax and insurance. This week, you would get the lower, regular rate. That’s $3079, plus tax and insurance. That’s $90 a month less.
A typical “sales ploy” that brokers use is to tell you that $90 is not much in the scope of the purchase. However, I remind my clients that every penny counts when it comes to mortgages. An extra $10 a month for 30 years is $3,600. That $90 a month is $32,400 if you stayed in your house for the term of the loan.
If you have 10 percent down, you probably will pay mortgage insurance (PMI), which you pay for to protect the lender (some deal, huh?) Recently, the options for second mortgages for 10 percent to meet the 20 percent threshold to avoid PMI, have dried up. Check with you lender.
I am seeing a lot of buyers in the price range affected by this change. They are pleased. So am I.
Here’s how the math works.
Suppose you were buying a home for $550,000 and your loan is $500,000:
Regular rate is 6.25 percent. The Jumbo rate is 7.125 percent.
Last week, you would have needed a jumbo loan at the higher rate. You’d pay $3369, plus tax and insurance. This week, you would get the lower, regular rate. That’s $3079, plus tax and insurance. That’s $90 a month less.
A typical “sales ploy” that brokers use is to tell you that $90 is not much in the scope of the purchase. However, I remind my clients that every penny counts when it comes to mortgages. An extra $10 a month for 30 years is $3,600. That $90 a month is $32,400 if you stayed in your house for the term of the loan.
If you have 10 percent down, you probably will pay mortgage insurance (PMI), which you pay for to protect the lender (some deal, huh?) Recently, the options for second mortgages for 10 percent to meet the 20 percent threshold to avoid PMI, have dried up. Check with you lender.
I am seeing a lot of buyers in the price range affected by this change. They are pleased. So am I.
Wednesday, February 27, 2008
Because of fear of descending prices, buyers with less than 10% down may find themselves unable to buy. A lender friend of mine told me yesterday that the secondary mortgage market (the folks who buy your loans so that your lender has more money to give out) is no longer financing more than 90% of homes in the most of the Greater Boston area.
Check with your lender for more information.
This could have a very serious effect on the demand for housing. Many people have not saved enough for a 10% down payment for our high-priced market.
The positive: lower demand is better for buyers who are able to buy.
The negative: more people will be shut out of the market because of these changes.
If you are affected by this, or have an opinion, please jump in!
Check with your lender for more information.
This could have a very serious effect on the demand for housing. Many people have not saved enough for a 10% down payment for our high-priced market.
The positive: lower demand is better for buyers who are able to buy.
The negative: more people will be shut out of the market because of these changes.
If you are affected by this, or have an opinion, please jump in!
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