Rate Drop Spurs Home Refinancing .

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By NICK TIMIRAOS
The 30-year fixed-rate mortgage dipped below 4%, possibly triggering a refinancing boom for many of the same borrowers who already have taken advantage of rock-bottom interest rates.

According to a survey by Credit Suisse on Thursday, lenders were offering an average rate of 3.91% on 30-year fixed-rate mortgages to borrowers who paid “points,” or fees, worth 1% of the loan balance.

Wells Fargo & Co. advertised on its website Friday afternoon a 3.875% rate on a 30-year fixed-rate mortgage, with fees of 1% on the loan.

.Lou Barnes, a mortgage banker in Boulder, Colo., refinanced four borrowers on Thursday into 30-year fixed-rate mortgages at 3.875%. “At this point, the only people being helped are those who need it the least,” he said.

For the home-sales market, low rates will help make homes more affordable, but may not boost home buying if consumers are worried about the economy.

“Today, the buyers’ concern is the falling value of homes,” said Mr. Barnes. “I’ve had potential buyers say: ‘I don’t care if rates are zero if prices are going to fall again.’ ”

Mortgages rates fell this past week after the Federal Reserve announced Wednesday that it would begin plowing payments from its portfolio of $885 billion in government-backed mortgage bonds back into mortgages. That caused a rally in the mortgage market because the Fed’s move eliminates the risk that the central bank would be forced to sell its mortgage holdings as refinancing increases.

Mortgages rarely have been this cheap. A 1961 study by the National Bureau of Economic Research shows that loans made to World War II veterans in the late 1940s were available with 4% rates.

More than 60% of borrowers with a 30-year fixed-rate mortgage could reduce their mortgage rate by one percentage point, up from 42% at the beginning of August, according to Credit Suisse.

.But some borrowers haven’t been able to refinance rates because they can’t qualify under loan standards that are much tighter than at the time of their first loan. Other borrowers don’t have enough equity in their home to refinance.

Before the housing crisis, refinancing tended to jump when borrowers were able to lower their rate by 0.5 percentage point. Since 2009, mortgage applications have taken longer to process, while riskier borrowers have faced higher refinancing costs. As a result, borrowers typically now refinance when rates are 1.5 percentage points below their current rate, according to Bank of America mortgage analysts.

Donald Fraser, a 56-year old pathology assistant who shaved a full percentage point off the 4.875% mortgage he got last year, said he plans to stash most of the $2,700 a year in savings into retirement. “I don’t think we’ll ever see these rates in my lifetime or yours,” he said.

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.It isn’t clear how much these lower rates will help the economy, in part because a weakening economy is fueling the decline.

“We felt lucky. At the same time, we’re lucky at the expense of a suffering market,” said Richard Klompus, who refinanced his Glastonbury, Conn., home with a 4%, 30-year fixed-rate mortgage.

Mr. Klompus, 49, had a hybrid adjustable-rate mortgage that carries a 4.5% rate for the first five years before moving to a variable rate. He paid tens of thousands of dollars to pay down his loan balance to $417,000, the maximum size for loans eligible for purchase by mortgage companies Fannie Mae and Freddie Mac.

To encourage refinancing, Obama administration officials and U.S. regulators are in talks with lenders about ways to revamp an existing White House refinancing initiative designed to help borrowers with little or no equity. The program is open to borrowers whose loans are backed by Fannie and Freddie, which guarantee about half of all outstanding home loans.

The Federal Housing Finance Agency, which oversees Fannie and Freddie, is weighing a series of changes to the program, which has been snarled by a series of technical hurdles. Just 838,000 borrowers have refinanced, short of the hoped-for four million to five million. Just 63,000 of those borrowers have loans worth more than 105% of their home value.

“It hasn’t worked, to be honest,” said James Parrott, a top White House housing adviser, in a speech to industry executives this week. He said the housing market is at a “critical juncture” and policy decisions over the next six months could determine whether the economic headwinds are “going to be a blip or a broader struggle.”

A separate question is whether banks will be able to handle the volume of mortgage applications.

Banks recently have laid off mortgage employees in anticipation of lower loan volumes, while shifting others to the backlog of delinquent loans. The reduced ability to handle loan volumes means that banks have charged higher rates relative to their borrowing costs, muting the decline in rates.

Houston Home Sales Show Dramatic Growth in August

7:45 am, Thu Sep 22, 2011.

Houston home sales show dramatic growth in August By MICHAEL REED
Regional News Bureau Houston Community Newspapers | 1 comment

Houston-area single-family home sales spiked in August, however, as in recent months, much of what otherwise would be a rosy picture was dulled by the lackluster numbers from last year used as a point of comparison.

“The Houston real estate market’s vital signs appear to be quite healthy as we move from the summer buying season into the fall,” said Carlos P. Bujosa, Houston Association of Realtors chairman. “But we must remain mindful that we are still comparing 2011 home sales to that period last year when transactions slowed dramatically after the tax credit expired.”

Total sales in the Greater Houston Area jumped from 4,257 to 5,542 homes — 30.2 percent — over last year at this time, HAR data showed. The increase followed sales gains in January, June and July with all segments of market, from the sub-$80,000 to the $500,000 and above, posting strong sales numbers for the month.

A positive comparison to August of 2009, even though less dramatic, may bode well even better news for those looking to sell homes, though. In a year that felt no unusual market influences such as Hurricane Ike in 2008 and the 2010 tax credit, single-family home sales were up 10.4 percent.

Bujosa said he was encouraged to see how the monthly numbers “stack up” in comparisons to August 2009, “the last normal year for our housing market.”

August sales of homes priced under $80,000 showed the biggest gains in month-to-month comparisons, a whopping 45.4 percent. The smallest increase by market segment came in the luxury market — $500,000 or more — but those sales still climbed 22.4 percent.

Even as the number of sales appeared strong, prices remained near the same level as a year ago, HAR data showed. Average prices in month-to-month comparisons rose only 0.7 percent, from $215,506 to $217,047. The highest August level ever was $222,638, occurring in 2008. Median prices creeped up even less, 0.3 percent, from $158,500 to $159,000.

The number of townhouses and condominiums that sold in August climbed significantly as well, 19.5 percent, compared to last August. It marked the third sales increase of the year. In the Houston area, 460 units were sold last month vs. 385 units in August 2010.

Average prices for townhouse and condominiums increases in month-to-month comparisons to $156,522, or 3 percent. Median prices, however, were down slightly, 0.8 percent, to $120,000.

Meanwhile, lease-properties remained in high demand with single-family rentals up 21.8 percent vs. August 2010. HAR said local employment numbers have driven the market for several months.

mreed@hcnonline.com

Buying a Resale home vs Building a New Construction

 

September 23, 2011

Building a New Home vs. Buying a Resale

 

It doesn’t get any better than this….

 

It can be a difficult decision whether to purchase a resale home or a new home from a builder.  In this economy, the cost to construct a new home has increased tremendously.  Many times, there is a home already constructed quite similar to your ideas, haves and wants.

 Advantages of an existing home
Established neighborhoods with lived-in homes have much to offer. It is hard to beat the charm of an established neighborhood that is already lined with well-loved family homes. Another advantage of a resale home is that you can move in relatively quickly. With a new construction home, you often have to wait for construction to be completed. It could be six months or more, depending on delays from the weather or supply shortages. A resale home is ready at closing, often just 30 to 45 days after making an offer. There is also convenience involved with buying an existing home. You won’t have to put up with construction traffic through your neighborhood as other homes are completed and you already know what surrounds your home. Also, a resale home can usually be purchased at a better value per square footage than new construction. You often get more house for the money with a resale home.

 

P.S. Are you tired of waiting to build on your waterfront lot? I have enclosed a brochure of one of our Luxury Homes in Bentwater. Based on the price per square foot, this home is priced well below market value.  If you are concerned with the current lake levels, you should buy before the rain returns.  The price of this waterfront beauty will rise with the level of water.  The rains will come, buyers will rush back to the lake and prices will rise even faster than the level of the lake.  Now’s your chance to make the buy of the year! The water level may be low, but so are interest rates. This flawlessly constructed waterfront retreat sits on Bentwater’s private island. It is over 1/3 of an acre with over 90ft on the water. This beautiful masterpiece faces southeast with 180 degree view across main lake. This luxury home comes with a Grand Pine membership. Let it rain, let it rain, let it rain!!!

Please call me to schedule your exclusive preview of this home at 936-525-3259.

 

Sincerely,

Glenda Johnson

Glenda Johnson                                                                                

Luxury Home Consultant