Fannie Mae announces 3% closing cost aid program

WASHINGTON – April 15, 2015 – Fannie Mae announced yesterday the rollout of its HomePath Ready Buyer program for qualified first-time homebuyers, defined for the program as someone who hasn’t owned property in the past three years.

Under the program, buyers can receive up to three percent of a home’s purchase price in closing cost assistance when they buy a home through Fannie Mae’s HomePath program, providing they also complete a homebuyer education course.

On a $150,000 home, Fannie Mae says the program could save buyers up to $4,500. In addition, Fannie Mae will reimburse buyers for the $75 cost of the education course at closing.

“We developed the HomePath Ready Buyer program to provide first-time homebuyers with the knowledge to make informed decisions as they navigate the complexities of the home buying process,” says Jay Ryan, vice president of REO sales with Fannie Mae. “Closing cost assistance provides a cushion many first-time buyers need to more confidently face the financial responsibilities of homeownership.”

For the buyer education course, Fannie Mae partnered with Framework, a nonprofit created by the Housing Partnership Network and the Minnesota Homeownership Center. The course covers the complexities of home buying and responsibilities of owning a home. The course contains nine 30-minute sessions and is entirely online.

To be eligible for the program:

  • Buyers must complete the full online HomePath Ready Buyer training course on https://www.homepath.com and receive the Certificate of Completion.
  • An applicant must be a first-time homebuyer with plans to make the home their primary residence. Auction, pool and investor sales aren’t eligible.
  • The request for closing cost assistance must be made at the initial offer, and submitted on or after April 14, 2015.
  • Buyers interested in becoming a homeowner are encouraged to take the course as soon as possible. The course must be completed before submitting an offer to qualify.

© 2015 Florida Realtors®

Why rents will rise again this year

LOS ANGELES (AP) – April 15, 2015 – Living in an apartment? Expect your rent to go up again.

Renting has gotten increasingly expensive over the last five years. The average U.S. rent has climbed 14 percent to $1,124 since 2010, according to commercial property tracker Reis Inc. That’s four percentage points faster than inflation, and more than double the rise in U.S. home prices over the same period.

Now, even with a surge in apartment construction, rents are projected to rise yet another 3.3 percent this year, to an average $1,161, according to Reis. While that’s slower than last year’s 3.6 percent increase, the broader upward trend isn’t going away.

“The only relief in sight is rents in the hottest markets are going to go up at a slower pace, but they’re still going to go up,” says Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm.

The main reason: More people than ever are apartment hunting.

Young people who have been living with their parents are increasingly finding jobs and moving out. Rising home prices are leading many long-time renters to stay put.

In addition, most of the new apartments coming on the market are aimed at affluent tenants and carry higher-than-average rents. That’s especially true in cities where new buildings are going up in urban core areas, which means builders need to recoup higher land and development costs.

Consider Denver, where rents have increased more than 5 percent a year since 2010 — 9.2 percent in 2014 — according to Marcus & Millichap. Of the 9,400 new apartment units added last year, 23 percent were in urban core areas.

Competition for apartments means renters are less likely to be able to negotiate with landlords, or win concessions such as a free month’s rent.

Here’s a closer look at why apartment dwellers will probably see rents go up for a sixth straight year.

More jobs, more competition

During the last recession many workers who lost their jobs moved in with relatives or took on roommates. About 32 percent of U.S. adults were living with roommates or adult family members in 2012, up from 27.4 percent in 2006, according to Zillow, an online real estate firm.

Stepped-up hiring has begun to reverse that trend. About 2.8 million more Americans have jobs than 12 months ago.

“The share of young adults with jobs has climbed in the past year, and that will help many of them move out of their parents’ homes,” says Jed Kolko, chief economist at online real estate firm Trulia. “Most of them will be renters first.”

More people vying for apartments helps drive rents higher. And metropolitan areas with faster job growth are generally seeing higher-than-average rent hikes as well.

The three metro areas with the biggest annual increase in rent in January, according to Trulia: Denver (14.2 percent), Oakland, California (12.1 percent), and San Francisco (11.6 percent).

Job growth in each of those cities also eclipsed the national growth rate of 2.3 percent over the 12 months ended in January. Employment grew 3.7 percent in Denver, 2.7 percent in Oakland and 4.5 percent in San Francisco.

Home buying delayed

Traditionally, renting has been a stepping stone toward homeownership. When rents rise, tenants are motivated to buy sooner, especially when interest rates are near historic lows, as they are now.

But these days, renters are taking longer to buy. The U.S. homeownership rate ended last year at a 19-year low of 64.4 percent.

Between higher rents taking a bigger bite out of the bank account and sharply higher home prices, potential buyers are having more trouble saving for a downpayment and qualifying for a mortgage.

And many millennials, or 18- to 34-year-olds, simply prefer renting.

That’s true for Alyssa Hankins, a marketing and social media strategist in Los Angeles. She moved in February to a newly opened complex where rents range from $2,325 for a studio to $5,920 for a two-bedroom unit. She wants to be able to move quickly if a job opportunity comes up.

“It’s less about affordability and more about flexibility,” says Hankins, 29.

When renters stay put, fewer apartments are available for new tenants, which in turn drives up rents.

New apartments are pricey

Developers added 238,000 apartments nationwide last year, a 14-year high, with another 210,000 expected this year, according to Marcus & Millichap.

In theory, more apartment construction should help bring down rents because landlords would compete for tenants. But 80 percent of new complexes, Nadji estimates, are high-end projects aimed at renters willing to pay a premium for amenities like gourmet kitchens and concierge service.

How much of a premium? The average rent for apartments completed last year was $1,721. That’s 46 percent higher than the average apartment rent for older units, according to Marcus & Millichap and data provider MPF Research.

“There’s very little new supply being added anywhere else,” says Nadji, “so that’s why there’s so much pressure on rents and very little choice for the average renter.”

AP Logo Copyright © 2015 The Associated Press, Alex Veiga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Education marketing helps buyers hungry for info

NEW YORK – March 20, 2015 – While some banks have eased their lending standards and made credit available to more homebuyers, they’re still falling short on supplying enough homeownership education, consumers say.

That lack of education may be a void real estate professionals could fill by offering more homebuying information on their websites or hosting more buyer workshops and classes.

Though 86 percent of buyers say they had sufficient resources to educate themselves about the homebuying process during their search, according to TD Bank’s latest Mortgage Service Index, 51 percent indicate that banks could offer more relevant and helpful information online. Forty-nine percent also say banks should better train their employees to more clearly explain buyers’ options.

The Mortgage Service Index is based on a survey of more than 1,450 consumers who bought homes within the last 10 years.

First-time homebuyers show the most interest in added educational resources, with 52 percent saying banks could offer more home financing seminars and workshops, according to the Index. Only 40 percent of all respondents say the same. And 58 percent of first-timers say they want additional information online compared to 51 percent of all respondents.

Additionally, the Index finds, 44 percent of all consumers are unfamiliar with home affordability programs.

“In our current housing market, a critical first step for buyers is to educate themselves on the financing process by speaking with multiple lenders and learning about the loan options available to them,” says Malcolm Hollensteiner, director of retail lending, sales, and production at TD Bank. “Lenders today should be working with borrowers on a case-by-case basis in order to find the loan option that best meets their needs and budget.”

Realtors® have often made education their mission, not just for their own clients but also for communities as a whole. Some associations set up programs to teach kids as young as third grade about housing issues or reach out to minorities to educate them about homeownership. Others host their own homebuyer seminars and classes.

However Realtors do it, it’s clear that the opportunity is there for real estate professionals to work with buyers on getting better educated and come up with ways to supplement information that banks are disseminating.

TD’s Mortgage Service Index also finds that consumers are feeling better about the homebuying process as a whole, with 68 percent saying their last experience was excellent or very good. That’s up from 62 percent a year ago. Consumers rated the following aspects of the homebuying process the highest:

  • Finding a good real estate practitioner (59 percent say their experience was excellent or very good)
  • Finding the right lender (57 percent)
  • Getting approved for a mortgage (65 percent)
  • Length of the entire process (52 percent)

Source: Realtor® Magazine

© 2015 Florida Realtors®

Buyers may find mortgages easier to get

NEW YORK – Feb. 25, 2015 – Good news for potential home shoppers: A Mortgage Bankers Association (MBA) index shows lender requirements for credit scores, downpayments, and other key mortgage terms are finally loosening up.

Some lenders even expanded the types of mortgages they offer. These moves come after years of tightening loan requirements in the aftermath of the housing crisis.

The newly released MBA index shows that recent improvements in lending are mostly tied to the government’s efforts to ease regulations and improve affordability in the housing market. For example, mortgage financing giant Fannie Mae is now allowing purchases of conventional mortgages that have downpayments as low as 3 percent; Freddie Mac is planning to do the same for mortgages closed on or after March 23.

Also, the Federal Housing Administration, which insures loans with downpayments as low as 3.5 percent, reduced its upfront mortgage insurance premiums last month, which is expanding eligibility for home purchases to thousands of potential home shoppers.

“Things are looking better for home buyers and refinancers,” not just in the loosening of underwriting requirements but also in the cost of credit, says Brad Blackwell, executive vice president of Wells Fargo Home Mortgage.

Blackwell says that Wells Fargo has gradually opened its credit box as the government took steps to clarify its lending policies and penalties against lenders for defaulting loans. That rule clarity has, in turn, helped lenders gain the confidence to expand lending to a broader range of borrowers, including those who may not have high credit scores or a sizable downpayment for a home purchase.

Wells Fargo says it also relaxed its policy on downpayment gifts to borrowers from relatives and friends. It previously required borrowers to contribute at least 5 percent of the total costs on a home purchase from their own finances in order to qualify for a conventional loan with a 5 percent or lower downpayment; however, the bank recently reduced that requirement to 3 percent and greater gift assistance.

Source: “Lenders Begin Easing Requirements to get a Mortgage,” The Los Angeles Times (Feb. 22, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Average rate on 30-year mortgage rises to 3.80%

Mortgage Rate Trend Index

Most mortgage experts (67%) think rates are done rising and will tick a bit lower over the short term; 25% foresee little change, and the remaining 8% predict another increase.

WASHINGTON (AP) – Feb. 27, 2015 – Average long-term U.S. mortgage rates have edged up for a third straight week while remaining near their historically low levels reached in May 2013.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage rose to 3.80 percent from 3.76 percent last week.

The rate for the 15-year loan, a popular choice for people who are refinancing, ticked up to 3.07 percent from 3.05 percent last week.

A year ago, the average 30-year mortgage stood at 4.37 percent and the 15-year mortgage at 3.39 percent. Mortgage rates have remained low even though the Federal Reserve in October ended its monthly bond purchases, which were meant to hold down long-term rates.

In testimony before Congress this week, Fed Chair Janet Yellen made clear that the central bank isn’t ready yet to raise rates from record lows. The job market is still healing, and inflation is too low, she said. At the same time, Yellen signaled that the Fed is moving closer to a rate hike by sketching the steps it would take when it deemed the time was right.

A government report issued Wednesday showed that sales of new homes were basically flat in January, evidence that the relatively low mortgage rates and recent job gains have yet to spur the real estate market. Despite the increasingly favorable economy, home sales have been sluggish at the start of the year. Still, many analysts expect that the housing market will gather momentum with the start of the spring buying season.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.6 point, unchanged from last week. The fee for a 15-year mortgage also remained at 0.6 point.

The average rate on a five-year adjustable-rate mortgage rose to 2.99 percent from 2.97 percent. The fee was stable at 0.5 point.

For a one-year ARM, the average rate slipped to 2.44 percent from 2.45 percent. The fee remained at 0.4 point.

AP Logo Copyright © 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

CFPB: More than 50M have access to free credit score

WASHINGTON – Feb. 23, 2015 – According to the U.S. Consumer Financial Protection Bureau (CFPB), more than 50 million consumers now have free and regular access to their credit scores through their monthly credit card statements or online.

The CFPB also released a new consumer focus group study indicating that while consumers are accessing their credit scores and credit reports in a variety of ways, confusion about both persists.

“Consumers’ credit information is the foundation of their financial lives,” says CFPB Director Richard Cordray. “Once consumers see their credit scores, they can be motivated to learn more about their credit history, check their full credit report and take action to improve their financial lives.”

Consumer reporting companies collect information and create reports on consumers. Businesses, such as banks, use those reports’ credit scores to decide everything from consumer eligibility for a loan, to the interest rate that consumer will pay if approved.

One year after the CFPB launched a credit score initiative, more than a dozen major issuers are providing credit scores directly to consumers for free. Now, at least 50 million consumers have the opportunity to see their credit scores, and tens of millions more are expected to be added as more credit companies offer credit score info later this year.

While credit reports don’t usually list an actual score, U.S. residents already have access to a free report once per year. It can be requested online at annualcreditreport.com.

To better understand consumers’ perspectives on credit reports and scores, the CFPB recently conducted focus groups with consumers from diverse backgrounds across the country. The CFPB asked whether consumers checked their credit scores and reports, how they did it, and what motivated them to check it. Key takeaways from the research include:

  • Consumers access reports and scores multiple ways: Some consumers read their score on their credit card statement, or were able to review it through their credit card company. Others reported receiving their credit reports in other ways, such as a paid credit monitoring service, a free online service, as a result of a security breach or after being denied credit.
  • Consumer confusion around credit reports and scores persists: Some consumers were confused about how to check credit reports and scores, what information they include and how to improve them.
  • Consumers don’t understand how to improve credit histories: Consumers said they often don’t feel empowered to take action to improve their credit histories, and they rarely apply credit information in their daily lives, such as using their credit reports and scores to negotiate better credit terms.
  • Consumers engaged in the financial system check their credit reports regularly: Consumers who reported feeling financially savvy and knowledgeable about their credit files, credit terms and interest rates were more likely to say they check their reports regularly

More details about this research is on CFPB’s website.

The CFPB has also published a document for consumers called “Check Your Credit Report.”

© 2015 Florida Realtors®

Average 30-year mortgage rate rises to 3.76%

Mortgage Rate Trend Index

Almost half (46%) of the mortgage experts polled by Bankrate.com this week predict that rates will go higher over the short term. Only 23% expect a decline, while the remaining 31% expect little change.

WASHINGTON (AP) – Feb. 20, 2015 – Average long-term U.S. mortgage rates have risen for a second straight week yet remained near historically low levels.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year mortgage jumped to 3.76 percent from 3.69 percent last week. The average rate is still at its lowest level since May 2013.

The rate for the 15-year loan, a popular choice for people who are refinancing, increased to 3.05 percent from 2.99 percent last week.

A year ago, the average 30-year mortgage stood at 4.33 percent and the 15-year mortgage at 3.35 percent. Mortgage rates have remained low even though the Federal Reserve in October ended its monthly bond purchases, which were meant to hold down long-term rates.

The recent rise in mortgage rates has come as bond yields have jumped from record low levels. Mortgage rates often follow the yield on the 10-year Treasury note, which has climbed back over 2 percent. Bond yields rise as prices fall.

The 10-year note traded at 2.08 percent Wednesday, up from 1.99 percent a week earlier. It traded at 2.09 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.6 point, unchanged from last week. The fee for a 15-year mortgage also remained at 0.6 point.

The average rate on a five-year adjustable-rate mortgage was unchanged at 2.97 percent. The fee was stable at 0.5 point.

For a one-year ARM, the average rate increased to 2.45 percent from 2.42 percent. The fee remained at 0.4 point.

AP Logo Copyright © 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.