Homebuyers cautious despite strong economy

 Real Estate Market  Comments Off on Homebuyers cautious despite strong economy
May 232019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Homebuyers remain somewhat cautious about the housing market according the most recent Fannie Mae National Housing Survey. After last month’s blip higher, the share of respondents saying it’s a good time to buy a home resumed the downward trend that started over 5 years ago. Even so, a 14% majority of respondents still thinks it’s a good-time-to-buy.

That decline in buying sentiment largely was responsible for the 1.5 point decline in the overall survey index. It now stands almost 3 and a half points lower than at the same time last year.

The decline was a little surprising given the positive change to two of the other survey components. The net share of respondents who thinks home prices will continue rising fell 2 points, and while a 36% majority still thinks prices will rise, this share is 13 points lower than last year. A large majority, 40%, still thinks mortgage rates will rise in the next year, but that share has fallen 12 points in the last two months.

Among the other survey components, those related to personal finances remain bullish. Consumers overwhelming are unconcerned about job security and by a 22% margin say their income this year is significantly higher than it was 12 months ago.

In addition, a strong majority of respondents, 43%, still thinks it’s a good time to sell a home. That share hasn’t changed much since peaking a year ago.

Here is a link to the full report.

Housing index focused on home prices

 Real Estate Market, Residential Mortgage  Comments Off on Housing index focused on home prices
Mar 192019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index was down slightly last month, continuing a slow deterioration of the index that began last year. It’s down 1.5 points since last Feb. While consumers still express strong confidence about their personal finances, their confidence in the housing market is slipping.

The overwhelming majority of respondents still expect their personal financial situation to stay the same or improve in the next year, and a 14-point majority thinks the economy is on the right track. Those percentages have changed little over the last year.

What has changed is the share of respondents who think it’s a good time to buy or sell a home. The “good-time-to-sell” component is down 6 points from last year and down 17 points from its peak last Jun. This may be a reflection of consumer’s softening expectations about home price growth. While a net 33% still expect prices to rise in the next 12 months, that’s down 19 points from the peak last year.

The “good-time-buy” component is down 7 points from last Feb, and has been declining steadily since summer of 2013. Interestingly, this also may be due to rising home prices as it’s the most frequently cited concern of potential homebuyers.

The positive takeaway is that as declining expectations for higher home prices sink in, potential homebuyers may begin to view buying a home as an affordable option again. Consumers still expect rents to rise almost twice as fast as home prices over the coming year.

Link to the full report.

Homebuyer beware of authorized user accounts

 Credit Scoring, Loan Guidelines  Comments Off on Homebuyer beware of authorized user accounts
Mar 142019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The authorized-user account: It’s been a trick folks with weak credit histories have used for a long time to improve their credit scores. Mortgage lenders have grown wise to this trick, and they’re finally clamping down on its use.

An authorized-user account is an account on which a consumer has signing privileges, but the consumer’s credit history wasn’t used to open it. For example, a parent might allow a child to be an authorized-user on one of the parent’s credit cards to help the child establish credit.

A few years back, credit repair companies started promoting this as a way for folks with weak credit to quickly improve their credit scores. Someone with strong credit would allow the consumer with weak credit to sign on an account, even if the two individuals had no other relationship. Unfortunately for creditors, the score improvement didn’t reflect the consumer’s true credit risk.

Fannie Mae and Freddie Mac loan guidelines now instruct lenders to carefully review loan applications for which a borrower has an authorized-user account. The intent is to weed out potential borrowers who used an unrelated individual’s strong credit to try to improve their chances for loan approval.

According to the guidelines, it’s acceptable for a borrower to be an authorized-user on an account belonging to another borrower on the loan, with the borrower’s spouse, or an account on which the borrower makes the payments.

If these situations don’t apply, the guidelines instruct lenders to review the borrower’s credit to make sure an authorized-user account didn’t have a significant impact on the borrower’s credit scores. If the borrower otherwise has weak or little credit, it’s possible the borrower’s loan request will be denied.

Big rebound in housing sentiment

 Real Estate Market, Residential Mortgage  Comments Off on Big rebound in housing sentiment
Feb 252019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index rebounded in Jan after Dec’s big drop in sentiment. Most of the gain was the result of consumers’ confidence about their personal finances. Thirty-four percent of respondents reported their income is higher this year while only seven percent said their income has fallen. This is an 11 point improvement from the index a year ago.

The overall index, which measures how consumers feel about the housing market, rose 1.2 points in Jan. However, the index is down almost 5 points from the same time last year, a negative trend that started last summer.

Three other components of the index stood out. The net share of respondents who thinks home prices will rise fell one percent, declining for the fourth consecutive month. This component is down 22 points from the same time last year.

The net share of respondents saying mortgage rates will fall increased three points. However, this component hasn’t changed much in the last year, and the overwhelming majority of consumers still think rates will rise.

Finally, the net share who thinks now is a good time to buy a home rose four points last month to 15%. It was this component that caused the Dec index to sink.

Taken together, the positive improvements in the index may signal that consumers are sensing improving home affordability, and that could portend an active spring homebuying season.

Higher loan limits for 2019

 Loan Guidelines, Residential Mortgage  Comments Off on Higher loan limits for 2019
Dec 032018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Rising home prices have prompted federal regulators to raise the loan limits for conventional loans starting in Jan. The maximum loan amount for a conforming loan on a single-family home, one eligible for acquisition by Fannie Mae or Freddie Mac, will rise to $484,350.

The Federal Housing Finance Agency (FHFA) reviews the loan limits each year as established by the Housing and Economic Recovery Act (HERA) and adjusts them as necessary to reflect changes in home prices. FHFA reported its housing price index rose 6.9% since the third quarter of last year, so it adjusted the loan limit higher by the same amount.

Higher limits apply in certain “high cost” areas where 115% of the local median home price exceeds the new limit; however, FHFA hasn’t indentified any of those “high cost” areas in TX. Higher limits also apply to two, three, and four unit properties.

For some historical perspective, conforming loan limits go back to the early 1970’s, when the single-family loan limit was $33,000. Congress set the limit to $417,000 in 2008, where it remained for several years until average home prices rebounded from the great recession.

FHA and VA set their loan limits independently of the conforming loan limit, and I’ll report those as soon as they’re available.

Fannie housing index says it’s a good time to buy

 Real Estate Market  Comments Off on Fannie housing index says it’s a good time to buy
Oct 312018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index fell slightly last month, but it remains on trend, suggesting the housing market continues to strengthen slowly. The good-time-to-buy component of the index rebounded strongly last month, gaining 5 points. Apparently, the strong economy has buoyed homebuyer sentiment enough to overcome rising interest rates. However, the component still is significantly lower than earlier in the year and is down year-over-year.

The good-time-to-sell component remained flat last month; however, it’s still trending higher and is well within reach of its recent all-time high.

Surprisingly, the components that measure personal finances both fell last month. The net share of respondents who said their income is significantly higher than last year fell by 4 points, and the net share who feel confident about job security fell 1 point. However, this last component is strongly positive (+79%), so the decrease probably isn’t meaningful. The right track/wrong track component widened to 21 points in favor of the economy being on the right track, and that could explain the strength of the good-time-to-buy component.

Neither the home price nor mortgage rate component of the index showed any surprises. Respondents still overwhelming expect home prices and mortgage rates to rise in the next year, and the net share expecting a rise increased for both components last month.

More low down payment options

 Loan Programs, Residential Mortgage  Comments Off on More low down payment options
Aug 222018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae and Freddie Mac have 3% down conventional loan programs that target low-to-moderate income folks. We used to call these community lending programs because they’re designed to fulfill Fannie and Freddie’s mandate to provide assistance for mortgages to low and moderate income families and underserved areas. The programs go by the monikers HomeReady and HomePossible.

Unlike the programs we discussed yesterday, you don’t have to be a first-time homebuyer to qualify. However, if the buyers are first-timers, one of them must complete a homebuyer education course for the HomePossible program. For HomeReady, one must complete homebuyer education regardless of first-timer status.

The programs are income-limited. By that I mean your total income cannot exceed a limit, which can differ even within a given county. For both programs, the limit typically is set to an area’s median income. However, the programs waive the limit in disaster areas and in certain areas Fannie and Freddie consider to be underserved. Call me if you want some help determining the income limit for your area.

So, given the programs we discussed yesterday, who cares that we have another 3% down program? Three reasons:

– Conventional low down-payment programs require mortgage insurance, which can bump up your housing payment quite a bit. HomeReady and HomePossible have lower mortgage insurance rates than the other low down payment programs.

– Second, the programs’ easier guidelines may make it easier for you to qualify.

– Finally, you don’t have to be a first-time homebuyer. For HomePossible, you can’t currently own other real estate, but Freddie carves out some exceptions to that in cases of divorce or inheritance.

The programs have other features and restrictions that may make one more appropriate for you than the other. Give me a call to see what’s the best fit for your situation.

Freddie adds another low down payment option

 Loan Programs, Residential Mortgage  Comments Off on Freddie adds another low down payment option
Aug 202018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Freddie Mac recently joined Fannie Mae in offering a 3% down conventional loan program with no income limitations. Freddie calls its program HomeOne, and like Fannie’s program, it targets first-time homebuyers.

A lot of folks hear that, first-time homebuyers, and tune out, but you may be a first-time homebuyer and not realize it. Fannie and Freddie define a first-time homebuyer as someone who hasn’t owned real estate in the last 3 years. Freddie expands that definition to allow folks who owned a home with their ex-spouse to qualify.

If you’re buying a home with another person, only one of you has to be a first-time homebuyer. And if all of you are first-time homebuyers, one must complete a homebuyer education course prior to closing. The cost is minimal, and most folks complete the course online.

The programs are limited to single-family homes and condos and have a min credit score of 620. The 3% down payment may come from your own funds or from an acceptable gift source, such as a family member. It can’t come from the seller, but the seller can contribute up to 3% of the price towards your closing costs.

With this offering, Freddie and Fannie finally have comparable low down payment programs. The two have nuanced differences, so give me a call to see if one program is more appropriate for you than the other.

Next time, we’ll look at conventional low down payment options that specifically target low-to-moderate income folks.

Fannie housing index shows market still strong

 Real Estate Market, Residential Mortgage  Comments Off on Fannie housing index shows market still strong
Jun 302018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index rose to another record high last month despite the continued divergence of attitudes about buying and selling a home. The good-time-to-sell indicator rose 1 point last month and now stands at +46 while the good-time-to-buy indicator fell by 1 point and stands at +28. A positive reading means more consumers think it’s a good time to buy or sell than not, so both indicators still suggest strength in the housing market.

The good-time-to-sell indicator has been rising steadily over the past year and is 14 points higher year-over-year. The good-time-to-buy indicator has been relatively flat over the past year, which is good news given the increase in mortgage rates and home prices over the same period.

One possible contributor to the still positive good-time-to-buy indicator is consumers’ attitudes about renting. An overwhelming majority still say they would buy rather buy than rent if they were going to move. In addition, consumers expect rents to rise faster than home prices over the coming year, meaning waiting to buy a home could be an expensive choice.

Respondents continue to report strong personal financial conditions. Again this month they expressed an increased sense of job security, and more reported that their incomes had increased significantly in the last year. Both indicators also are higher year-over-year.

Record number say good time to sell a home

 Real Estate Market, Residential Mortgage  Comments Off on Record number say good time to sell a home
May 182018
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

Fannie Mae’s housing index soared to a record high last month despite a negative reading from one of the index’s key components. The net share of respondents who said now is a good time to sell a home increased 6 points from last month to 45%. This good-time-to-sell sentiment has been on a steady rise for the last couple years, but unfortunately it doesn’t seem to have resulted in additional home inventory for sale, which remains very low.

Respondents also reported stronger personal financial conditions. They expressed an increased sense of job security, and more reported that their incomes had increased significantly in the last year.

The net share of respondents who think home prices will continue to rise jumped 7 points this month, and the average expected increase was 3.9%. While that might seem a negative for homebuyers, respondents said they expect rents to rise an average 5.7% over the same period.

The one black mark in the survey was the net share of respondents who think now is a good time to buy. That component fell 3 points last month. It’s likely the combination of higher prices, higher mortgage rates, and fewer homes for sale contributed to the fall. However, these same factors may increase buyers’ sense of urgency even if they don’t think it’s a good time to buy.