Flood Insurance expired over the weekend leaving some homebuyers in limbo. Over 5 million homeowners and businesses have flood insurance policies but Congress has not extended the program. Last time Congress snoozed on this, it was a 2 month lapse! If it isn’t approved retroactively, current policy owners are affected too. Housing needs Congress to help, not a hiatus.
Temporary Loan Limits expired September 30th. Again, another housing gut punch from our legislators. To check the FHA loan limit page link, click here https://entp.hud.gov/idapp/html/hicostlook.cfm
There is chatter from DC that the limits could be increased later this year. While rates are near lows not seen since the 50s, we are now entering the holiday quarter, which isn’t known for huge home buying activity. Every hurdle or dropped pass by Congress simply excarcerbates home buying apathy and fear .
Effective October 1, USDA will lower the upfront guarantee fee but add a monthly insurance fee for the first time. This program offers 100% financing but has one of the best performance rates ( low delinquency) of all programs. I’m not in agreement with this new policy. In my opinion, it is HUD’s way of charging the low risk segment in order to subsidize their higher risk offerings.
The Veterans Administration (VA) program is lowering some of the fees starting this week. This too is a 100% financing program and interestingly, it also has a low delinquency rate. Two 100% financing programs and both are at the bottom of delinquency charts. I still contend that ” more money down” is not a panacea.
Paul from East Berlin writes in :” I owe just under $24,000 on my mortgage at a rate of 6 1/8% with 6 years left. With rates so low, should I consider refinancing?”. Rates are very low, but I don’t think it makes sense for you ,Paul. Refinancing to a 5 year term so as not to extend your payments , would not save you enough to justify. Smaller loans need a significant drop in rate, which is the case here. However, you only have a few years left. If you are able , simply pay additional money each month. Even $50 extra a month will accelerate your payoff in your situation.
Conversely, if money is tight and you have other debts, consult your tax and financial advisors along with your mortgage professional to see if refinancing plus consolidating is fiscally prudent.
Home sales are up for fourth month in a row. Loan Modifications just hit a new high, meaning people in distress are getting lower payments. In first quarter, we will see if they benefited or defaulted. According to one recent report, some economists are arguing to stop modifying loans and instead, rush the foreclosure process. The report cites that 2/3s of delinquent homeowners have not made a payment in over a year, with more than half not making a payment in over two years.
An experienced loan officer came to me the other day venting how disorganized and anti- customer the bank she works for is and how frustrated she is. She explained how loans are taking 2-3 months to settle; she is required to be in meetings constantly, preventing her from assisting clients; and, the majority of her loans collapse because the realtors and clients go elsewhere losing patience. I asked her why she stays, given what she said. ” We have really great rates!” was the reply. if your loans do not settle, does it matter how low the rates are?
A baseball team salivates over a young prospect that throws 100 mph fastball, getting their fan base excited in order to sell more tickets. Imagine the fans shock when they see the pitcher exceed 100 mph but never find the strike zone. Something to think about when interviewing lenders in this market. Instead of focusing on rate, ask about turn times, program options, the appraisal process and referrals. Focus on the skill, not the heat!
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