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The Lowdown on Low-down-payments Loans

Posted on August 31, 2013 | Leave a comment

WASHINGTON — Mortgage down payments as low as 3 percent — and even 100 percent loans — are returning. That may be good news for buyers who haven’t accumulated a lot of savings.

But there are trade-offs: Mortgage payments will be higher because more money is being borrowed and because private mortgage insurance is required for down payments less than 20 percent.

With that in mind, buyers may want to consider renting for a longer time and saving more for a larger down payment to make sure they can truly afford a home.

If after careful consideration, buyers settle on a low down payment, it’s best to go in with eyes wide open. It’s important to know the details of the loan program and their possible ramifications on finances. The interest rate on a loan with 5 percent down will typically be slightly higher (one-eighth to one-quarter of a percent) than one with 10 or 20 percent down because the loan-to-value ratio is higher.

Before the housing bubble burst, many lenders offered borrowers 100 percent financing. Some lenders even allowed buyers to finance 105 percent of the home value.

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San Diego – Housing Recovery Uneven Across County

Posted on August 29, 2013 | Leave a comment

North coastal and higher-density parts of San Diego County are going through a quicker housing turnaround than outlying areas that suffered most from foreclosures and overbuilding, a U-T analysis shows.

Limited supply, pent-up demand and near rock-bottom mortgage rates have fueled feverish home-price gains in the past year. Those market factors have lifted more homeowners out of negative equity and pulled more would-be buyers off the fence and into the field.

Are values in your neighborhood going up? Contact the appraisers at www.scappraisals.com for your appraisal questions.

Those gains, as meteoric as they may seem, have yet to return countywide values back to their peak, suggesting “we still have a ways to go,” said Michael Lea, real estate professor at San Diego State University.

Countywide, the median home price remains 21 percent below the peak of $517,000 set in late 2005, according to quarterly numbers from real estate tracker DataQuick.

Roughly 38 percent of 70-plus ZIP codes surveyed by the U-T are faring better than the countywide number. (ZIP codes with fewer than 50 sales in the second quarter were not included in the analysis.)

“The ramp-up was too high and the crash too low,” Lea added.

But following the mantra that all real estate is local, the housing recovery has been more vibrant in certain parts of the county.

Beating all others in the recovery race is Carmel Valley, a subdivision-heavy area close to major employers such as Qualcomm and desirable schools. It’s 3 percent below its peak median price of $850,000 in 2006. The biggest laggard is foreclosure-plagued Logan Heights, which is about 50 percent off its peak.

Those findings follow simple logic: Harder falls naturally require harder efforts to pick back up.

“It’s interesting,” said Lea of those findings. “But not surprising.”

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Post-Meltdown Mortgage Rules for Bank to Ease

Posted on August 29, 2013 | Leave a comment

Regulators want to ease a rule that would require banks to share some risk in the complicated mortgage investments that helped cause the financial crisis.

Under the 505-page draft proposal advanced Wednesday by the Federal Deposit Insurance Corp. and the Federal Reserve, banks could exempt relatively safe mortgages from the value of those securities. The broader requirements would still have banks hold at least 5 percent of the securities on their books. It drops a requirement that lenders retain a stake in mortgages with down payments of less than 20 percent. But banks complained that would exclude too many buyers with solid finances.

The proposal would require banks to retain a stake of mortgages when borrowers are spending more than 43 percent of their monthly income to repay their debt, versus when the spending would be more than 36 percent of income on all loan payments. The new measure also would prohibit loans with risky features such as balloon payments or repayment terms of longer than 30 years.

The broadening of the exemption is the latest sign of banks’ influence over the rule-making process after a financial overhaul law passed in July 2010. In the years before the crisis, banks packaged and sold bundles of risky mortgages with low teaser rates that climbed after only a few years. Many borrowers ended up defaulting on the loans when interest rates spiked. As a result, the value of the mortgage securities plummeted. Experts say banks had very little of their own money invested in those securities. That led them to take greater risks that helped stoke the crisis.

Disclaimer: for information and entertainment purposes only

The Lowdown on Low-down-payments Loans

San Diego – Housing Recovery Uneven Across County

Post-Meltdown Mortgage Rules for Bank to Ease

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