Shadow Inventory: Part Three of Three

For the last three weeks on the Mortgage Guys blog, we’ve been discussing shadow inventory and how it effects the housing market. Shadow inventory refers to the amount of unlisted bank-owned homes that are not yet on the market as well as homes in preforeclosure that are likely headed to a trustee sale and will become bank-owned themselves.

This week, we’ll discuss how new construction helps the outlook of the current real estate market. According to part three of the Wall Street Journal article, new home building has been as its lowest levels since World War II in 2009, 2010 and 2011. This has helped to offset the potential damage from elevated levels of foreclosed properties, because there are fewer new homes available on the market.

Additionally, according to the article, Census data shows the share of vacant homes for rent is down to the lowest level in 10 years, which has a vacancy rate of 8.6 percent. The vacancy rate of homes for sale is down to 2.1 percent, the lowest in six years. However, most financial advisers argue that new construction is still just relatively small amount of the overall housing inventory.

Hopefully, these three posts will help homeowners gain more insight into the housing market. If you have more questions or concerns, don’t hesitate to contact The Mortgage Guys in Atlanta, GA. We’re happy to sit down with you to discuss a variety of financing options that will suit your family best.

Part One: Shadow Inventory: What is it and Should We Worry? 

Part Two: Shadow Inventory: Part Two of Three

Shadow Inventory: Part Two of Three

Last week on our blog, we introduced the first of three blog posts examining a Wall Street Journal article that takes a deeper look into shadow inventory, and how it effects the housing market. We introduced shadow inventory as the amount of unlisted bank-owned homes that are not yet on the market as well as homes in preforeclosure that are likely headed to a trustee sale and will become bank-owned themselves.

The Banks’ Involvement Bank bag full of dollar bills

How banks dispose of shadow inventory and whether there are enough buyers willing to purchase these homes is worrisome to many financial advisers. Bank-owned foreclosures began rising again 2010 after a drop in the volume of bank-owned properties throughout 2009. Since September 2010, banks have been slowing down the foreclosure process, particularly in judicial states where courts are overwhelmed by the number of cases and banks have struggled with documentation of the mortgages they own.

Additionally, non-judicial states have recently passed laws imposing new requirements on banks before they foreclose, which is likely to further slow the process.

Shadow Inventory in Concentrated Markets

As previously stated in the part one of the article, shadow inventory isn’t a national phenomenon. It is concentrated in particular markets, and even in submarkets of those markets. These markets are very specific, and only in certain areas.

Stay tuned for next week’s blog post where we analyze the last of these three posts from The Wall Street Journal. If you have any questions or concerns about shadow inventory and how it effects the surrounding housing market in Atlanta, don’t hesitate to contact The Mortgage Guys.

View the first blog post: Shadow Inventory: What is it and Should We Worry?

Photo courtesy of Flickr.

Shadow Inventory: What is it and Should We Worry?

In a recent article by The Wall Street Journal, called Shadow Inventory: It’s Not as Scary as It Looks, author Nick Timiraos stated that shadow inventory isn’t as scary as it sounds. What does this mean for the recovering housing industry, and home sales going forward?

Shadow inventory refers to the amount of unlisted bank-owned homes (REOs) that are not yet on the market as well as the homes in in preforeclosure that are likely headed to a trustee sale and will become real estate owned properties themselves.

Half million dollar house in Salinas, Californ...

According to the article, there are a few reasons why shadow inventory isn’t as scary as it sounds. Broken down, these are as follows:

  • It’s concentrated in a handful of markets, which means that it isn’t a national phenomenon
  • It is being offset by improved demand, particularly from investors.
  • The housing vacancy rate is low, a product of very little new home construction over the past few years that could counterbalance continued high inventories of foreclosed homes.

As far as actual numbers, there are a wide range of estimates of shadow inventory. A common measure are loans that are either in the foreclosure process or that are three months or more delinquent. These are mortgages that are among the most likely to ultimately become bank-owned properties.

Over the next two weeks, we will be looking at the additional posts linking to this article, further discussing the housing market and what this means for current homeowners and potential homeowners alike. Have more questions? Contact The Mortgage Guys in Atlanta, GA and we can sit down address your concerns about the current housing market and your situation.

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Mortgage Rates Are Down Even Further

According to an article via Mortgage News Daily posted yesterday, mortgage rates moved slightly lower yesterday, but the change was enough to officially hit new all-time lows. Now more than ever, first-time homebuyers have the opportunity to purchase a really great home in some of Atlanta’s best neighborhoods.

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The article from Mortgage News Daily states:

“Certain lenders’ rates are unchanged on the day, and some are even slightly higher, but the average moved lower. Even then, the actual INTEREST RATE would be the same as it was yesterday. The improvements from yesterday were seen in the form of lower borrowing costs for those same rates. Bottom line: Best-Execution remained at 3.625%, but just got a bit more affordable.”

Current homeowners can also benefit from the low mortgage rates, too. With opportunities like HARP 2.0 and the FHA Streamline Refinance Program, many households can take advantage of these great rates, while putting some money back in their pockets for summer.

Timing is important in seeing what the housing market will ultimately look like for the rest of the year. What do you think the  housing market will look like at the end of this year? Leave us a comment below! And don’t hesitate to contact the Mortgage Guys Atlanta for all your mortgage-related questions and concerns!
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New FHA Loan Streamlined Program

This spring, the government announced plans to streamline the FHA program in order to create options for many current homeowners. This initiative was intended to make refinancing easier and more affordable for the millions of homeowners with FHA mortgages. The reduction in refinancing fees applies to borrowers who are current on payments.
Previously, based on a home loan for $200,000, for a regular refinance and regular purchase, a homeowner will pay $3,500 for the upfront premium and $211 for the monthly mortgage payments. With the new streamlined FHA program that will be effective June 11th, 2012, instead of paying $3,500 upfront, homeowners will now pay $20 with the monthly mortgage insurance at $91. With this new streamlined FHA option, the homeowner will save $136 a month, just on the upfront fees and monthly mortgage payments.

For those interested in purchasing a home in Atlanta, GA, rates are still historically low and FHA allows a down payment of as little as 3.5 percent of the purchase price. The housing boom is starting to rise again, and interested homebuyers still have some time to take advantage of these current rates.

Not sure if an FHA mortgage will benefit you?  Give the Mortgage Guys in Atlanta, GA a call in order to take advantage of purchasing or refinancing your home in  metro Atlanta to get these great rate reductions with FHA. For those with an FHA loan, there’s never been a better time to refinance for an FHA loan, especially if their current mortgage rate is about 5 percent.

Photo courtesy of Flickr.

HARP 2.0 Loan Updates

In the past few weeks, there have been some updates to the HARP Loan program, also known as the Home Affordable Refinance Program, which was instated in 2009 to help homeowners maintain their current mortgages. In order to be eligible for the initial HARP refinance program, homeowners needed to have their loan backed by Fannie Mae or Freddie Mac and must have had a secured date prior to June 1,2009.

We posted about the HARP Loan 2.0 updates in mid-March after the government’s new Refinance Program became available and offered new options that the initial HARP loan didn’t offer.

With the changes to the HARP Loan 2.0, homeowners who have mortgage insurance are now allowed to refinance, which means that current homeowners can potentially lower their current mortgage even with mortgage insurance. If you want to take advantage of the HARP program’s great opportunities, give The Mortgage Guys Atlanta a call so we can help refinance your home loan.

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Spring 2012 Could Be Best Time for Home Buying in Years

This spring could potentially be the best season for home buyers, according to this Forbes article published earlier this week on March 27th, 2012. According to the article, “The spring home buying season looks bright because of an elevated level of contract offers so far this year,” Lawrence Yun, chief economist of NAR, said in a statement earlier this week. February home sales, despite a slight dip from January to February, remain well above 2011 numbers. The Pending Home Sales Index, which reflects signed contracts that have yet to close, from the National Association of Realtors(NAR) was 9.2% higher than February of 2011 and existing-homes sales, or closed contracts, were 8.8% higher than last year.

The five factors that will ultimately determine the spring housing market, according to the article, are:

  • Weather – The mild weather has kept the market from slowing down, even in snowy places like the midwest
  • Tight Lending – Tight lending has led many buyers to pay with cash.
  • Foreclosure sales – Rise of foreclosure sales could affect the market this year.
  • Location – Folks are looking at real estate on a much more local level, according to the author.
  • Jobs – whether or not the job market improves
Timing is key in seeing what the housing market will ultimately look like in 2012. What do you think the 2012 housing market will look like? Leave us a comment below! And don’t hesitate to give the Mortgage Guys Atlanta a call for all your mortgage-related questions or concerns!
Photo courtesy of Flickr.

New HARP Loan Updates

In a recent post, we discussed the HARP Loan program and explained how those with a loan from Fannie Mae or Freddie Mac could qualify for the the program. New information has been issued on the HARP Loan program since then, and the new HARP Loan 2.0 underwriting program is due out in mid-March.

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It has been rumored that Fannie Mae will be updating their underwriting system the weekend of March 17, 2012.  So, as of Monday, March 19th, mortgage lenders should be able to run new loan requests through where the total debt to property value exceeds the 125% ratio. This is their automated (computerized) system that determines borrower qualifications.

Pricing for the Fannie Mae loanshas improved as of now.  Pricing is improved on owner-occupied primary residences for all loan terms (15, 20, 25 and 30 year fixed loans).

Also, the appraisal waiver component should be enhanced the weekend of March 17th.  Mortgage lenders can still receive appraisal waivers before the 19th of March but they will not be as extensive as what will see after March 19th. So, if you are waiting for the enhanced loan-to-value component or the appraisal waiver, hold off until March 19th if you can.

If you’re unsure about whether you qualify for the HARP Loan or have other mortgage questions, don’t hesitate to contact the  Mortgage Guys in Atlanta, GA.

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Mortgage Matters with the Mortgage Guys

We are very excited about our new radios show that airs on Saturday and Sunday mornings at 10:00 am.  The show is driven by our listeners who want their mortgage questions answered.  We interview industry veterans on all sorts of industry related topics.  In order to make the show better, we need  you questions and feedback.  Make it a great day! George