The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up and distressed sales (foreclosures and short sales) have fallen to their lowest point in years. The market will continue to strengthen in 2019.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory! Buyer demand naturally increases during the summer months, but supply has not kept up.

Here are the thoughts of a few industry experts on the subject:

Lawrence Yun, Chief Economist at National Association of Realtors

“Further increases in inventory are highly desirable to keep home prices in check, the sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”

Jessica Lautz, Vice President of NAR

“There’s a supply-demand mismatch… More inventory is needed at the lower end and a price reduction may be needed at the upper end.”

Danielle Hale, Chief Economist of Realtor.com

“Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions… A buyer’s experience will vary notably depending on the market and price point they’re targeting.”

Bottom Line

If you are thinking of selling, now may be the time! Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price!

1. Up-front MIP Mortgage Insurance Premium will increase to 2.25%, this will go into effect April 5 2010

How this affects you: Currently up-front MIP is at 1.75% of the base loan amount.
Example: on a $100,000 base loan amount, the amount that is currently added to that amount is $1750.00. This makes the total loan amount that is financed as $101,750.00.  The monthly payment (assuming a 5.50% rate) would be $577.73.
Under the new change the new loan amount would be $102,250.00 ($500.00 more added to the loan balance) and the new monthly payment would increase to $580.56 ($2.83 per month more).
The benefit is significant to HUD as it allows them to re-capitalize their insurance fund (which is low due to loan losses over the past several years) and continue to insure home loans will minimal down payments which are a good thing.

2. Borrowers with credit scores less than 580 will be required to put down at least 10%; effective early summer.  Current down payment is 3.5% and will stay for credit scores above 580.

How this affects you: Although HUD/FHA has never required a minimum credit score before, most investors have required minimum credit scores for quite some time.  Most have a minimum of 620 with a few down to 600 and even 580.
This change might cause some investors/lenders to look at this market segment more seriously because of the significant down payment of 10% possibly opening more opportunities for more borrowers with lower scores and a down payment.

3. Seller contributions to be lowered from 6% to 3%.

How this affects you: This is VERY significant especially lower priced homes.   Currently on a $100,000 the seller is allowed to pay up to $6,000.00 (6.0%) in closing costs and pre-paid items (taxes/insurance).

This change will reduce this amount to only $3000.00 (3.0%) in this example. 
If your closing costs and pre-paid items happen to be $4,000.00, then you the borrower would have to pay that difference yourself out of pocket ($1,000.00) due to maximum being now 3.0 percent.
This means that your “funds to close” would be $1,000.00 higher than under the prior guidelines. Not a good thing on a cash strapped buyer.

4. The waiver on anti-flipping requirements is effective February 1, 2010.

How this affects you: This is very good news and means that there will be a better inventory of renovated property properties to chose from for buyers.  Let’s face it, there are allot of properties out there for sale but many of them are in very rough condition or in short sale situations where it is difficult for a first time buyer to either have to deal with renovations or wait for banks to approve the short sale.
This new rule removes the “90 Day hold requirement” by sellers so that properties can be resold more quickly after a purchase.  This will help “fix and flip” investors by reducing their hold times on properties and provide more inventory to prospective buyers.
One word of caution to buyers; “Beware of properties that were purchased and marked up with little or no renovation being done.” There are specific rules that must be followed in order for these properties to be financed through FHA/HUD. 

As always, feel free to call me as a resource for your real estate needs.

]]> https://gloribee.com/changes-to-fha-loans-and-how-it-affects-the-buyer/feed/ 0 https://gloribee.com/realtor-goes-to-court-on-behalf-of-seller-foreclosure/ https://gloribee.com/realtor-goes-to-court-on-behalf-of-seller-foreclosure/#respond Sat, 07 Feb 2009 15:36:59 +0000 https://ocean2river.wordpress.com/2009/02/07/realtor-goes-to-court-on-behalf-of-seller-foreclosure/ […]]]> I came accros this article and thought the essense of it should be spread to all homeowners and sellers.

Recently I went to court not because I am in trouble…but someone important to me…our real estate seller!  See they live about 6 hours away..and yes the process of foreclosure has started.  Laid off..injured car (needs repairs) and could not make the trip. So what was this seller to do?

They Asked Me To Appear in Court!

Rather than no one appearing…I told them to type a letter..and if the judge will even acknowledge me..and read the seller's letter…there might be some hope to get the offer they received ..to the closing table…all we need is time..time to get the short sale processed..I know it's going to be hard work…I read the wonderful Missy Caulk..and have had REALTORS throughout the state asking me for help to get through to this lender.

for the full story   Realtor goes to Court – Foreclosure

The moral of the story is if you are in the process of foreclosure…DO NOT IGNORE  the documents…that means respond to the lender…so you will know your options…respond to court documents and to court appearances..and if you can't get to the court room and its a legitimate reason…call someone who can stand in for you.