Entries Tagged 'Home Loans' ↓

After being in freefall for several years, there are signs that the housing market may have finally reached a point where prices will be flat for some time to come. The recently released Standard & Poor’s/Case-Shiller Home Price index showed that while housing prices continued to decline nationally in the fourth quarter of last year, the declines may be soon coming to an end.

The widely respected Case-Shiller index reported a price fall of 2.5% in Q4 2009, as compared with the same period for 2008. Moreover, prices fell only 1.1% from the third to the fourth quarters last year. While still a decline, the number was a marked improvement from previous quarters. The Case-Shiller index tracks housing prices in 20 cities and nine census divisions across the United States.
Continue reading →

A new study soon to be released by the National Resources Defense Council has found that homeowners with long commute times tend to default on their mortgages at a higher rate than those who work closer to home. The draft report studied 40,000 mortgages in Chicago, Jacksonville, Fl, and San Francisco.

The research looked at homeowner’s income and expenses, their credit record, as well as the loan-to-value ratio of the mortgage. Using a complex formula, the NRDC study found that mortgage foreclosures increased with the number of cars owned by a household. In others words, the neighborhood where more households owned cars were also the same locations that had the highest default rates.

Continue reading →

If you think we’re through with the sub-prime and foreclosure crises in the housing market – prepare yourself. There could be another shoe dropping and that shoe is the looming Option ARM crisis.

Option ARMs are typically 30-year adjustable rate mortgages that initially offer the borrower four monthly payment options: a specified minimum payment, an interest-only payment, a 15-year fully amortizing payment, and a 30-year fully amortizing payment. Option ARMs are also known as “pick-a-payment” or “pay-option” ARMs. Option ARMs are often offered with a very low teaser rate (often as low as 1%) which translates into very low minimum payments for the first year of the ARM.

Continue reading →

There’s an interesting article in today’s Business Insider that argues the housing bubble, or some form of it, has returned. Is it possible that after so many months of falling prices and glum out look that the market has fully turned around so quickly? There is – surprisingly – some evidence to suggest this might be the case, at least in certain housing markets.

While home prices have not yet reached overinflated levels, the enthusiasm (some would call it mania) and the speculation of the earlier housing boom have returned. Markets like Las Vegas which were once the epicenter of the foreclosure crisis are now bustling once again.

While home prices in Vegas are down a whopping 50% off their peak reached in 2006, the inventory of houses on the market is now down to a 3-month supply. Compare this to the national average of 8.5 months of supply on the market and it becomes clear that something is going on in Las Vegas and other foreclosure centers. In addition, 40% of all transactions in Vegas are all cash, indicating that deep pocketed speculators are entering the market.

All cash deals? Speculators? Dwindling supply and transactions completed in the blink of an eye? Sounds like mania has returned to Vegas. The only question is when and if this craziness moves on to other hard-hit housing markets.

For the first time in four months rates on 30-year mortgages dipped below 5 percent. According to mortgage company Freddie Mac, the average for 30-year fixed rate loans was 4.94%, down from 5.05% last week.

These low home loan rates, combined with the federal tax credit for first time homebuyers drove up the number of signed home sales contracts for the seventh straight month, the National Association of Realtors reported. The association said that its index of sales agreements rose 6.4 percent from July to 103.8, beating forecasts. The index was 12 percent higher than a year ago, matching similar reporting on home sales from the Case-Shiller home sales index.

The decline in mortgage rates is significant in that the economy appears to be picking up steam, leading many analysts to predict interest rates would start to rise. This clearly hasn’t happened yet, as last week’s rates were the lowest since May when it was 4.91 percent. Mortgage rates hit their record lowest point of 4.78 percent in the spring.