Living In Tucson Blog

Many people are wary about getting back into the housing market. They are concerned about declining values and challenging mortgage requirements. Despite these negatives, it may be a great time to get back into residential real estate. In the past few months, we have seen an increase in the median price of homes in Tucson, however, a third of the homes sold here in 2011 were under $100,000. The affordability index has never been better! Interest rates have hit record lows according to a recent Freddie Mac’s weekly survey and it’s not quite as arduous to obtain a mortgage as you may have thought.
 
Will 2012 be The Road to Recovery?
 
Predictions are that there will be new foreclosures hitting the market in 2012.  The good news is delinquency rates are declining quite a bit. The bad news is these foreclosures continue to slow down the housing recovery. Interest rates should remain historically low for the first half of 2012 while housing prices will find their bottom. You can expect to see modest increase in prices of homes in the second half of 2012. Pent up demand for housing is increasing.  Rental properties and foreign investors are ready to soak up deals and refinance programs such as HARP (Home Affordable Refinance Program) will also help the housing market recover its equilibrium.
 
Wild cards:
 
Eurozone, Employment, Election Year!
 
Call me, David Wolsky, for any mortgage related questions. I can be reached at (520) 275-2536 or david@davidwolsky.com. 

On November 15th, Fannie Mae and Freddie Mac will release the updated guidelines for the Home Affordable Refinance Program (HARP) to help more homeowners refinance. So far, 900,000 borrowers have been able to take advantage of the program. Those homeowners will not be able to refinance with another HARP loan a second time. The program is open to borrowers for mortgages originated prior to June of 2009. As of now, you are able to finance up to 125% of the property’s value. We can expect the loan-to-value ratio to increase above 125% also known as “being underwater”.                            

54% of the homes in and around Phoenix are underwater. It’s the second worse market in the country behind Las Vegas where 64% is underwater! About a third of the homes in Tucson are underwater.

The Fed is determined to keep rates low so borrowers can take advantage of the savings and Fannie Mae and Freddie Mac are removing restrictions to the program helping more homeowners stave off foreclosure.

HARP stands for Home Affordable Refinance Program. Eligible borrowers obtained their original mortgages prior to July of 2009. You can borrow up to 125% of the current value. Some loans will require an appraisal and others do not. It was designed to help millions of borrowers get relief though, unfortunately, the program has only helped a few hundred thousand homeowners. I have had mixed success with my customers with this program. The first thing to do is determine if Fannie Mae or Freddie Mac owns your loan. They have search engines on their websites, www.fanniemae.com or www.freddiemac.com. Remember, you don’t make your payments to Fannie or Freddie. They are investors, not loan servicers (collecting the payments). That means they buy the loans and pay a premium to lenders to service the loans. The best bet is going back to the lender who is servicing your loan and find out if they can refinance your home.

Currently, there is no relief for underwater homeowners with mortgages not owned by Fannie or Freddie. Proposals are being considered to help. President Obama was selling refinancing in his recent jobs speech. I have noticed a bigger effort from my company, PHH Home Loans and Coldwell Banker Home Loans to originate HARP refinances. If you had bought your house prior to July 2009 with a mortgage from PHH or CBHL, get in touch with me to see if we can save you some money! Those borrowers I have helped have saved an average of more than $125 per month! I’m David Wolsky and can be reached at (520) 275-2536 or david@davidwolsky.com.

Finally some good news for borrowers buying a home with VA loans. Effective October 1st, the VA funding fees are going down! With a down payment of less than 5% for a first time user of VA benefits, the fee is 1.4% down from 2.15%. (Reservist/Nation Guard borrowers pay 1.65% – currently it’s 2.4%). Second or subsequent users of VA loans will have a funding fee of 2.8% (currently 3.3%) until October 1, 2012. From October 2011 to October 2012, the fee will be 2.15% and after October 1, 2013, it will be 1.25%.

The funding fee  for refinances will continue to be .5%.

VA loans are a great deal for those that qualify! Active military or qualifying veterans can buy a house with a zero down payment and no mortgage insurance. If you already have a VA loan with a rate of 5% or higher, you might consider a refinance. Remember, in most cases, a VA refinance does not require an appraisal.

My company, PHH Home Loans (and our sister company, Coldwell Banker Home Loans) offers a discount for active military borrowers for purchase loans or refinances. To find out more details, call me, David Wolsky at (520) 275-2536 or email me at david@davidwolsky.com.

My dad always advised me to buy low and sell high! You would be hard pressed to find a better market for mortgage rates and real estate pricing. Have you heard that the affordability index has measured that home buying is at it’s most affordable level in since the 60′s?  Tucson is a great market for buying real estate and it’s no secret that housing values have plummeted in Arizona. There are lots of foreclosures and short sales offering  very low home prices. Check out www.homepath.com for Fannie Mae owned properties. My company, PHH Mortgage offers special financing terms for a Home Path Mortgage (we are not currently offering the Home Path Renovation Mortgage at this time). Home Path Mortgages can be obtained with a 3% down payment (or more), there is no mortgage insurance and they do not require an appraisal. Fannie Mae often pays for the buyers closing costs too.

If you already own your house, have you thought about a refi? Here’s an article from yesterday’s USA today: Mortgage Rates Reach Record Lows, Sparking Refinancings.

The article indicates 63% of residential mortgages have rates above 5% and 46% of homeowners have 20% or less equity in their home. It is harder to refinance your home without sufficient equity. It can be hard to refinance your home with equity too as underwriting guidelines continue to get tighter. However if you qualify, now is the time. 5/1 ARMs are currently below 3% APR. According to this week’s Freddie Mac survey, 15 year fixed rates are at 3.5% and 30 year fixed rates are at 4.32% which is very near the record low. Freddie Mac has been tracking rates for over 40 years.

What if you don’t have equity and you still want to refinance?  You might qualify for the HASP (Home Affordability and Stability Plan) program that can enable you to refinance your loan even if the current mortgage is up to 125% of the home’s value. You had to have purchased your home before June of 2009 and the existing mortgage is with Fannie Mae (www.fanniemae.com) or Freddie Mac (www.freddiemac.com). Go to the Look Up tool to see if Fannie Mae or Freddie Mac owns your mortgage. They do not service the loans, but they are the investors.

Call me to review your options. David wolsky at 520-275-2536 or david@davidwolsky.com.

Throughout the month of February, PHH Home Loans and Coldwell Banker Home Loans is offering a $350 discount for registering a new purchase or refinance mortgage. This applies to all loan programs. There is also an additional discount for active military and returning vets. Remember the first time homebuyer credit last year? Well, it’s still in effect if you are a returning veteran after being deployed overseas. You must be under contract through April 30th, 2011 and close by June 30th, 2011 to be eligible.

David Wolsky can be reached at 520-275-2536 or email at david@davidwolsky.com.

I got a call the other day from a potential client interested in refinancing his home. He was trying to modify his loan and the lender suggested that he stopped making payments because the banks will not even talk to you about modifying a loan that is getting paid on a timely basis. Of course, their credit is shot now and they cannot qualify for a refinance despite the record low interest rates. I get calls like these every week. Why can’t everyone refinance their homes with record low interest rates?

1. Many homeowners have lost all of their equity or are underwater (owing more than the current value of their homes). Nationally, about 25% of homeowners fall into this category. In Tucson, over 30% of homeowners are underwater and in Phoenix, sources estimate over 50% fall into this category.

2. I am finding that some potential clients will pay for an appraisal, only to find out the appraiser has given the property a low value. Although there might be equity, it may not be enough to refinance.

3. Underwriting guidelines are very stringent. Many borrowers obtained their home loans with alternative document loans such as stated income loans, no document mortgages or no ratio mortgages. These products do not exist in the current mortgage marketplace. As a result, these same borrowers cannot refinance their loans because they cannot verify their income or assets.

4. Your credit is shot! About 25% of Americans have badly damaged credit. They have walked away from home loans and credit card debt. Bankruptcies are on the rise. Thousands of homes are foreclosed every day!!!

5. Another road block to refinancing is home equity lines in second position behind your current first mortgage. The combined loan-to-value ratio (CLTV) is very high in many cases. Lending guidelines cap CLTV especially in declining markets such as Arizona. Even if you have sufficient equity in your home, the second mortgage lenders are inundated with requests to subordinate their equity lines behind new first mortgages.

Despite these challenges, many borrowers are able to refinance their homes because they have the right combination of Good to excellent credit, income and asset qualifications and equity in their homes. Others may qualify for a program to help folks without enough equity if their home loans are owned by Fannie Mae or Freddie Mac.

If you are endeavoring to refinance, please be patient during the process as the system is at its capacity. I have heard that the three biggest banks in the country are taking over 90 days to process refinances. The residential mortgage industry has significantly consolidated over the past three and a half years as the economy was melting down. Of the top 25 lenders in 2008, only eight still exist! Also, lenders prioritize purchase transactions, so a refinance may have to go on the back burner. The best scenario for refinancing is to have your income and asset documentation available at the time of application. You will be required to submit your  two most recent income tax returns with all schedules, your two most recent W2s, if applicable and your two most recent bank and investment statements. If you own more than one home, be prepared to provide the complete housing expense documentation of house payments, taxes, insurance and home owners association fees, if any. Appraisals can take a week or two to complete. They are ordered through the lender’s appraisal management service. Be truthful on your application and hang in there! Be extra patient if you have a second mortgage or equity line and you want to keep it subordinated to your new first mortgage because you will add several weeks onto the transaction. Work with professionals! I’m David Wolsky, fully licensed in Arizona with over sixteen years of experience. I can be reached at david@davidwolsky.com or by calling 520-275-2536.

Here’s my brief commentary on the mortgage industry in Tucson for the month of April, 2009. Refinancings are going strong with record interest rates. Applications have really picked up! As I write this, most of my borrowers have come to the realization that you have to pay an origination fee or 1% of the loan amount as well as closing costs to get a rate under 5% for 30 year fixed rates. I am also in the process of helping a couple of borrowers with their Fannie Mae loans that fall under the new “Marking Home Affordable Program” for folks who owe more than 80% of the value of their homes, but less than 105%. To see if you qualify, go to www.fanniemae.com and enter your address into the form. If Fannie Mae owns your loan, I can help you! The rate will depend on your credit score and loan-to-value ratio (LTV). Your credit score and LTV will also determine your rate for traditional refinances.

For purchases, the lowest down payments are available for FHA loans and USDA loans. FHA loans have a maximum limit for a single family residence in Pima County of $316,250. The minimum down payment is 3.5% of the sales price. The USDA Rural Housing has increased their income limits to $73,600 for a household with 1 to 4 persons and $97,150 for a household of 5 to 8 persons. The loan program features a ZERO down payment with NO MORTGAGE INSURANCE! The properties must be within geographic boundaries that are considered rural, but that would include Marana, Vail and Sahuarita.

Hey, we have the leader of the free world advocating refinancing! “The main message we want to send today is there are 7 to 9 million people across the county who right now could be taking advantage of lower mortgage rates.”

Check out this video:

 http://cosmos.bcst.yahoo.com/up/player/popup/index.php?cl=12894847.

We are getting several calls a week from folks requesting refinances. We can help many of these borrowers especially now that the government has rolled out the Making Home Affordable Program.

We can offer you a refinance with record low interest rates if you fit into any of these categories:

• You have a conventional loan up to $417,000
• Your new mortgage will be 80% or less than the current value as determined by an appraisal
• You can verify your income & assets
• Your mortgage payments are current
• Your credit score is 620 or above

If you do not have at least 20% equity, you may still qualify for a refinance.

• Your first mortgage loan-to-value ratio is between 80% and 105%
• Your existing mortgage is owned by Fannie Mae or Freddie Mac.(These agencies do not collect the payments, but they buy loans for banks that collect payments. In other words, you might be making your payments to Wells Fargo, but Fannie Mae owns the loan).
• To determine if Fannie Mae owns your loan, go to www.fanniemae.com. If not, check with www.freddiemac.com. These agencies own more than 40% of all home loans in the United States.

Be patient, the system is taking longer primarily due to capacity. We are inundated with new files, but as an industry, we have not hired back loan processors, underwriters and funders to approve and fund the new loans. Purchase loans will take priority. However, if you hang in there you will be rewarded with a record low interest rate!