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.

Fannie says consumers stoked about housing

 Real Estate Market  Comments Off on Fannie says consumers stoked about housing
Feb 242018
 

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

By G. Steven Bray

Fannie Mae says consumers are stoked about housing. Does this portend an active spring home season?

Fannie’s Home Purchase Sentiment Index rose to an all-time high in Jan with 5 of the 6 survey components improving. Interestingly, the only component that didn’t improve was the percentage of households saying their income rose significantly over the last year. That result may change as the tax cuts kick in.

Of the components that rose, the main driver was respondents’ belief that home prices will keep rising. 58% said prices will rise whereas only 6% believe they will fall.

Respondents also believe this is a good time to buy a home (by a 59% to 32% margin) and a good time to sell (by a 65% to 27% margin). The good time to sell reading was also an all-time survey high. It will be interesting to see if this translates into more housing inventory this spring.

Finally, I thought it was interesting given the recent rise in mortgage rates that the share of respondents thinking rates will rise remained fairly constant. I suspect that component also may change in the coming months.

Tax plan shouldn’t stop you from buying a home

 Owner-occupied, Residential Mortgage  Comments Off on Tax plan shouldn’t stop you from buying a home
Nov 272017
 

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

By G. Steven Bray

The tax reform plans currently being considered in Washington could change the mortgage interest deduction, and housing industry leaders are asserting that the change is going to decimate homebuying. Let’s see if the facts support their outrage.

Currently, only 21% of taxpayers use the mortgage interest deduction, and most reside in coastal states where home prices and/or property taxes are high.

If the House tax reform plan were to become law, the loan amount eligible for the mortgage interest deduction would drop from $1 million to $500k, and it would reduce the maximum deduction for property taxes to $10k.

Let’s consider the case of couple with a $300k mortgage. In the first year, they would pay roughly $13k in mortgage interest. If we assume their yearly property tax bill is $7k, they probably would be much better off under the House tax plan. Instead of a $20k deduction, they would get a $24k standard deduction. And remember that mortgage interest declines over the life of the loan, so the advantage of the new plan would increase each year.

Given that the median home price in TX is $269k, most TX homebuyers clearly would be better off under the new plan. Those who would be worse off will be folks who have mortgages greater than $500k and folks in areas with very high property taxes. Thus, any effects to the TX housing industry would be limited to high-end communities.

FHA makes it easier to get a condo loan

 Loan Guidelines, Owner-occupied, Residential Mortgage  Comments Off on FHA makes it easier to get a condo loan
Oct 032016
 

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

By G. Steven Bray

The FHA loan program once was a major source of financing for condo purchases, but due to regulatory changes, its volume dropped by almost 75%. The changes disqualified thousands of condo projects, and in turn limited the housing choices for first-time homebuyers and others with limited credit, a target market for the FHA program, and limited the pool of potential buyers for condo owners in those disqualified projects.

Well, it seems FHA may have seen the light. New rules FHA adopted this summer loosen up some of the more onerous restrictions. The two biggest changes affecting TX condos are:

– FHA agreed to include second homes that are not rentals in its calculation for owner-occupied units. A condo project qualifies for FHA financing only if at least 50% of the units are owner-occupied. This change could make a huge difference for projects in vacation areas.

– FHA also has simplified the recertification process that condos must go through every two years to remain approved. Some condo associations allowed their FHA approvals to lapse because the old process was so burdensome. Lenders often pursued the recertification process for the project because of a buyer’s interest in a condo, but imagine the number of potential buyers who didn’t apply because the project wasn’t already approved.

The new rules are only good for a year, but that gives FHA time to listen to feedback and enact permanent rules that don’t unfairly restrict lending for condos.

FHA makes it easier to qualify with student loans

 Loan Guidelines, Residential Mortgage  Comments Off on FHA makes it easier to qualify with student loans
Apr 292016
 

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

By G. Steven Bray

Last fall, FHA changed its loan guidelines to require lenders to include a homebuyer’s deferred student loans in the buyer’s debt calculation. The change made FHA consistent with other loan programs. If a creditor didn’t report a payment for a student loan, FHA instructed lenders to use 2% of the loan’s balance. Unfortunately, this was twice the percentage other loan programs required and made it more difficult for many first-time homebuyers to qualify.

Well, apparently FHA heard our complaints. For FHA loans registered on or after 6/30, FHA has changed the guideline to 1%, consistent with other programs. (I can’t explain why they didn’t make the change effective immediately.)

So, how does this change affect one’s ability to qualify? Consider a homebuyer who earns $4000/m. She has a $500/m car payment and $20k in student debt. She wants to buy a $200k home, which requires an estimated FHA mortgage payment of $1432.

Under the existing 2% guideline, the ratio of her debt to income would be 58%, and she would not qualify. However, under the new guideline, the ratio drops to 53%, and she could qualify.

Can you buy a home before you sell your existing home?

 Loan Guidelines, Residential Mortgage  Comments Off on Can you buy a home before you sell your existing home?
Nov 062015
 

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

By G. Steven Bray

In today’s housing market, you need to act quickly when you find a home you want. This can put you in a bind if you need to sell your existing home so you can afford a new one because if your existing home doesn’t sell first, your income would have to be sufficient to support both housing payments.

But a recent change in loan guidelines could help. If you have an executed contract for the sale of your existing home, we can exclude your current housing payment no matter when the sale will close. If the contract includes a financing contingency, we will need a loan approval from the other lender to satisfy the guideline, or the buyer can waive the contingency.

The same change applies if your employer is relocating you and has a relocation plan that covers your existing mortgages.

Tapping your retirement to buy a home

 Homebuyer Tips  Comments Off on Tapping your retirement to buy a home
Aug 272015
 

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

By G. Steven Bray

While current mortgage guidelines require only a 3% to 3.5% down payment to purchase a home, even that’s a hurdle for some folks. If this sounds familiar, I may have a solution if you have retirement savings. The approach depends on the type of retirement plan you have.

If you have a 401k, you may be able to borrow against the account balance, if your plan permits it. Typically, the loan is limited to the lesser of $50k or 50% of the balance. Note that if you’re not using the loan to purchase your primary residence, the loan typically must be repaid within 5 years.

For those folks who have an IRA, you cannot technically borrow from the account. However, if you’re buying or building your first home, you can take out up to $10k without the distribution being subject to the standard 10% penalty. Note that if your IRA contributions are with pre-tax income, you’ll owe income tax on the money you take out.

Before you exercise either of these options, I suggest you talk to your financial advisor about how tapping your retirement account will affect your retirement plans.

Fewer bargain homes but still opportunity for home buyers

 Real Estate Market  Comments Off on Fewer bargain homes but still opportunity for home buyers
Aug 222014
 

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

By G. Steven Bray

Corelogic, a real estate analytics company, reported this week that distressed home sales, short sales and foreclosed homes, fell again last month to 11.4% of all sales, their lowest level since 12/07. The diminishing share and the competition for those homes have contributed to home price increases, as distressed sales typically sell at a discount.

The improvement in this measure of home industry health is susbtantial. At the height of the housing bust, distressed sales accounted for almost 1/3 of the total. However, a more sobering view is to compare it to the share before the bust. At that time only 2% of the market was distressed sales.

But let’s take the glass half full view. Other data also points to an improving market. Existing home sales rose for the 4th straight month in Jul, the inventory of homes for sales is increasing, and home prices are moderating. With still very low mortgage rates, this fall could be great opportunity for homebuyers.

National Housing Survey shows cooling attitudes towards homebuying

 Owner-occupied, Real Estate Market, Residential Mortgage  Comments Off on National Housing Survey shows cooling attitudes towards homebuying
Dec 102013
 

Click here for a link to the Fannie Mae National Housing Survey.

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