Misc. Information...

The federal government announced big changes in the Refinance rules for borrowers with loans currently back by Fannie Mae and Freddie Mac. Current Refinance rules give higher rates/fees to borrowers that owe more than their home is worth and completely disqualify borrowers that are more than 25% upside down (a huge problem for Arizona homeowners).

The newly announced refi program claims that both of those issues will be eliminated when they roll out the full details of this program in mid November. The announcement claims that an appraisal will not be required in most cases. Borrowers must not have any late mortgage payments in the past 6 months and cannot have more than 1 late mortgage payment in the past 12 months. The most important requirement of this program is that it only applies to loans that are currently backed by Fannie Mae or Freddie Mac and only applies to loans that were closed prior to May 2009. Here are the websites to check to see if your loan is backed by Fannie Mae or Freddie Mac http://www.fanniemae.com/loanlookup/ and https://ww3.freddiemac.com/corporate/

Rules for Financing Condos

Lending rules have become stricter in the past few years when financing condos with FHA, VA and even Conventional loans. You can go on the FHA website to search for FHA approved condos in a particular zipcode.

https://entp.hud.gov/idapp/html/condlook.cfm

Even if the complex is FHA approved on the websits, lenders still need to verify that less than 50% of owners are investors and the tougher requirement is that no more than 15% of the HOA dues can be more than 30 days delinquent. The investor % and HOA delinquency % requirements apply to FHA, VA, and Conventional loans and can keep even highly qualified buyers from obtaining a loan on a condo

Self Employment Requirement Drops to 1 Year

Conventional loan rules with 20% down have gotten easier for borrowers with non-salary types of income. In the past, borrowers with self employment, tip, bonus, commission, overtime, part time or 2 job income were required to show a 2 year history to be able to use this type of income to qualify. Now, strong borrowers with 20% down can use these income types after only 1 year of history. FHA, VA and Conventional loans with less than 20% down still requires a 2 years history.

Flips Now Allowed on Conventional Loans with PMI

• Flips are now allowed on Conventional purchase loans that carry Private Mortgage Insurance. Due to Private Mortgage Insurance rules, Conventional loans used to require a 20% down payment if the seller had owned the property for less than 90 days. Now, a buyer is able to purchase a flip property immediately with a 97% Conventional loan. The best part of using a Conventional loan to purchase a flip is that only 1 appraisal is required (FHA requires 2 appraisals on their flips).

Foreclosure filings in U.S. plunge to lowest in four years...

• Bloomberg — August 11, 2011 - U.S. foreclosure filings dropped 35 percent last month to the lowest level in almost four years as lenders and state and federal agencies increased efforts to keep delinquent borrowers in their homes, RealtyTrac Inc. said.

Interest Rates to remain LOW...

• August 2011 - On the heels of the Federal Reserve’s announcement, interest rates will remain exceptionally low for at least two more years. Freddie Mac said a 30-year fixed rate mortgage fell to an average of 4.32 percent in the week ending Aug. 11, the lowest level of the year. A 15-year fixed rate fell to an average of 3.5 percent, the lowest since Freddie Mac has been keeping track.

Waiting Period for Cashout Refi is Waived

Featured Article

Rental Costs Are About to Takeoff
Reasons NOW Is a Great Time to Buy
By The KCM Crew

We are often asked whether it is better to rent or buy in the current housing market. The answer to that question is: "It all depends."

There are certain situations where renting short term probably makes sense. It may make sense if you are retiring to a different region of the country and are not yet sure where you want to set down roots for the next 25 years. It may make sense if you have a one-year employment contract that will probably require a move to another place upon termination.

However, in most other cases, renting right now makes little sense for several reasons.

• Even though prices may still soften, waiting to buy wouldn't make sense as the cost of owning a home may still increase.
• Mortgages may soon become much more expensive than they are right now.
• Owning a home is less expensive than renting a home in 72% of major U.S. cities.
• Rental costs are about to explode.

Let's take a closer look at the last reason. We have often said that the cost of anything is based on supply and demand. The number of widgets for sale and the number of widget buyers together create the price for widgets. That will also apply to rents. There is a much larger demand for rentals right now. The economy has forced many to leave their foreclosed homes and other buyers are afraid to plunge into homeownership.

At the same time, the supply of rentals is rapidly decreasing. Here is a graph from Calculated Risk showing the apartment vacancy rate in the United States:

Apartment vacancy has dropped significantly since the recession, which ultimately drives up

rental rates

When supply is rapidly decreasing and demand is quickly increasing, prices have only one place to go – and that is UP! That is exactly where rental prices are headed.

Bottom Line

Is now a good time to rent? We think not. You can buy a home today at a discounted price and get a 30-year mortgage at a historically low interest rate. You can set your housing expense for the next thirty years. On the other hand, rental costs are poised to increase for years to come.