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It’s Time to Think About Refinancing Your Mortgage

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From the NYTimes.com — The bond market is a complicated thing, and it is understandable if most people don’t spend a lot of time thinking about it. But even for Americans who don’t want to spend any mental energy on yield curves, convexity and term premia, there is one simple thing to know about the current tumult in the multitrillion dollar market: It’s time to think about refinancing your mortgage.

The average rate on a 30-year fixed-rate mortgage was 3.8 percent at the end of last week. That is down from 4.5 percent as recently as last spring, the lowest since May 2013 and far below the 5 percent-plus rates that prevailed as recently as early 2011.

Please feel free  to contact the Silva+Villa Team, Wendy at 818/522-6644 or Leslie at 626/975-4010 to review your refinance options and the potential savings available to you. We look forward to helping you.

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FHA Mortgage Insurance Premiums Cut

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From Businessweek.com — The annual fees the Federal Housing Administration charges to guarantee mortgages will be cut by 0.5 percentage point, to 0.85 percent of the loan balance, Julian Castro, secretary of the Department of Housing and Urban Development, said today during a conference call with reporters. Under the new premium structure, FHA estimates that 2 million borrowers will be able to save an average of $900 annually over the next three years if they purchase or refinance homes.

The FHA has been increasing premiums since 2011 to offset losses caused by defaults on mortgages it backed after the housing bubble burst. Housing industry participants say the increases in annual fees, which are now at 1.35 percent of the loan balance, are squeezing buyers with modest incomes out of the market. Continue reading

Five Key Take-Aways on America’s Housing Market

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Fannie Mae’s chief economist, Douglas G. Duncan met with the L.A. Times editors and reporters to share his views on where the housing market is headed. Here are five key takeaways:

Housing isn’t really going gangbusters. Despite those eye-popping price jumps, housing is not in a bubble or even a boom. Real estate is also not likely to be the same economic driver it once was, Duncan said. “We are of the view that housing is continuing to grow, but we are not of the view that it is robust,” he told The Times. While home prices have posted double-digit increases this year, those gains are just bounce-backs from very low bottoms. Meanwhile home builders have been slow to acquire land and hire adequate help, and that has made housing’s overall contribution to the economy smaller than it would be otherwise. When construction finally does get humming along at full tilt again, the industry will probably contribute a million fewer jobs than it did during the boom, Duncan said. Those jobs will simply have to come from other parts of the economy.

The rise in mortgage interest rates will not choke off the recovery. Economists at Fannie Mae recently studied the relationship between a sharp increase in mortgage-interest rates and home prices. They found there is little correlation between the two. Sales may decline but prices are still likely to increase. Duncan also doesn’t expect mortgage-interest rates to surge again. Expect a more gradual increase, he said. “I don’t think that the rate rises will be as sudden as the first piece we saw,” Duncan said.

Homeownership is the goal but renting has lost its stigma. The homeownership rate has fallen drastically since the boom years, raising questions about whether America will become a rental society. But much of the growth in the rental market has come from the single-family housing market, as investors have snapped up homes and turned those properties into rentals, meaning that former homeowners have tried to re-create their experiences. While the homeownership rate is not likely to rise anytime soon, even those people who lose their homes are likely to become homeowners again. The aspiration to be a homeowner remains unchanged by the crisis, and most renters would still like to own a home, Duncan said.

It is indeed a good time to buy. Home prices are still down considerably, even though they are up from their bottoms. Mortgage-interest rates are still very low despite the recent spike this year. But you should only buy a house if you can afford it, Duncan said.

Investors pose a possible risk. Big investors have become a significant factor in the housing market’s recovery. The question is, will new home construction increase supply, just as big investors decide it’s time to sell their holdings? If they were to do so, that could usher in another decline, though not one of the same magnitude as the last housing downturn, Duncan said. Investors should be watching the home builders closely. “If I were them, I would have a close eye on what’s actually happening in construction, because that is going to be one form of competition,” Duncan said. Another form of competition for both investors and builders will be homeowners who are freed up to sell their house after spending years “underwater.”

Source: http://articles.latimes.com/2013/sep/11/business/la-fi-mo-housing-fannie-mae-20130910

Mortgage Rates Hit Six-Month Low; Not Likely to Rebound

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From the Wall Street Journal.  Mortgage-interest rates have fallen to their lowest level in six months, and may struggle to surpass last fall’s peak by the end of the year.  Such a development could be a boon for the housing market slowed by a rise interest-rates that began a year ago.

Interest rates on 30-year fixed-rate mortgage averaged 4.21% in the past week, Freddie Mac said Thursday. That’s down from 4.29% in the prior week and the lowest level since the week of November 7.  And Freddie Mac Chief Economist Frank Nothaft isn’t expecting a quick rebound.

Mortgage rates will “just gradually rise, very slowly” this year, he said Wednesday during an economic forecast event at the U.S. Chamber of Commerce. Mr. Nothaft expects rates to rise to between 4.6% and 4.7% by the end of the year. For the full article click here.

Cash-Out Refinances Up as Home Equity Rises

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According to the LA Times,  equity holdings in homes are surging again, cash-out refinancings are coming back into vogue — this time under much tighter controls by lenders and used for saner purposes by borrowers than they were last decade.

Giant mortgage lender Quicken Loans estimates that about one-quarter of new refinancings are cash-outs. Federally chartered investor Freddie Mac reports that cash-outs grew to 17% of all refinancings in the first quarter of this year compared with 14% the same period in 2013. Continue reading

Increasingly Optimistic Attitudes on Housing Market

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From Mortgage News Daily.  A new Gallup survey seems to indicate that Americans are falling in love with real estate again.  The poll, conducted among over a thousand respondents this month, shows that 56 percent of Americans think the average price of a home in their local area will increase compared to only one-third who thought so two years ago and 21 percent, a survey low, in January 2011.  Another 34 percent expect prices to remain at about the same level, leaving only 10 percent who believe prices will fall again. The current euphoria is not up to pre-crash standards, but is closing in on the peak 60 percent who expected appreciation in late 2006

For the full story, please click here.

Home Prices on the Rise in California

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Home prices continue to increase by double digit percentages

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on a year-over-year basis CoreLogic said today. California is among the top 5 states that has seen the highest home price appreciation. “As the spring home-buying season kicks off, house price appreciation continues to be strong,” said Dr. Mark Fleming, chief economist for CoreLogic. To learn more about what is expected for home prices, click here.

Source: Mortgage News Daily.