Wednesday, March 19, 2008
On a side note, mortgage application fees may go up due to a new push for independent appraisers.
|City||State||Median price/% undervalued|
|College Station||TX||$104.1 -25.8%|
|Fort Worth||TX||$111.7 -24.9%|
|Lake Charles||LA||$99.9 -23.8%|
Monday, March 17, 2008
|Trends at a Glance|
|Feb 08||Jan 08||Feb 07|
|Sale/List Price Ratio:||98.2%||97.6%||99.8%|
|Days on Market:||81||87||71|
|Days of Inventory:||359||406||132|
Sales of single-family, re-sale homes bounced back from the record low set in January. There were 424 homes sold last month, a rise of 25.8% from the month before, down 36.2% from last February. Condo sales rose 2.2%, but were off 56.9% year-over-year.
Inventory continues to increase as we enter the spring selling season. The number of homes on the market rose 11.1% compared to January, and up 72.9% year-over-year. Condo inventory rose 8.7% month-over-month, and was up 61.7% compared to last February.
Saturday, March 8, 2008
According to IR-2008-17, borrowers who had some portion of their mortgage debt forgiven in 2007 should receive a Form 1099C from the lender identifying the amount of forgiven debt. Borrowers will have to file Form 982 (specifically lines 1e, 2 and 10b).
The debt must have been used to buy, build or substantially improve the taxpayer's principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. The new law grants relief for principal residences sold by their owners or to borrowers who arrange a “workout” with a lender that reduces the outstanding balance of the mortgage.
The new rule also modifies the application of the exclusion when an individual converts a rental or vacation property to his/her principal residence. Under the new rule, effective Jan. 1, 2008, the owner will still have the option of receiving the benefit of the exclusion, but will be required to pay capital gains taxes on the appreciation attributable to the time that the property was used as an investment property. The amount excluded will be a fraction, determined at the time the vacation/rental property is sold. Assuming that the owner has satisfied the two-year residence requirement, the amount of gain that can be excluded will be determined by a fraction. The numerator of the fraction will be the number of years the property was used as a principal residence. The denominator will be the number of years the individual actually owned the property, measured from Jan. 1, 2008.
In addition, the new rule also extends the tax deductibility of Mortgage Insurance through December 31, 2010.
Besides CalHFA, California Housing Finance Agency at www.calhfa.ca.gov, Neighborhood Housing Services at www.nhssv.org or South County Housing at www.scounty.com also have programs that can also help first time home buyers.
With the passing of HR5140, Congress and President Bush recently raised the conforming mortgage loan limit to $729,750 from the existing $417,000 (but only for certain areas and only till the end of this year--12/31/2008). However, this may not help rates as much as people have anticipated: the reason being the lenders will need to take on more risks. Some example areas in CA that are affected by the new limit are listed below (a factor of 1.25 x existing market value is used to set the new limit: with $729,750 being the upper limit):
(Reported by Stanford Group Company 1/25/08 - Markets where Fannie and Freddie Would be Allowed to Securitize Larger Loans Based on National Association of Realtors Median Sales Price Data)
|Metro Area||State||Q3 2007||Median x 1.25||New Limit|
|Los Angeles-Long Beach-Santa Ana||CA||588,400||735,500||729,750|
|San Jose-Sunnyvale-Santa Clara||CA||852,500||1,065,625||729,750|
- Jumbo-conforming mortgages have rather strict loan-to-value limits. If you're getting a loan to buy your principal home, you can't borrow more than 90 percent of the home's value if you get a fixed-rate loan, and you can't borrow more than 80 percent of the home's value if you get an adjustable-rate loan.
If you're refinancing, you can't get a first-lien mortgage of more than 75 percent of the home's appraised value. The combined amount of all mortgages, including home-equity debt, can't exceed 95 percent of the appraised value. These loan-to-value ratios for refinances apply to both fixed-rate and adjustable-rate loans.
- You can do only a "limited cash-out refinance," which means that you can borrow a little bit more than your current balance, but only to pay closing costs or borrow a round number (i.e., borrow $530,000 instead of $528,838). You can't do a cash-out refi to pay off a home-equity loan or home-equity line of credit, or to walk away from the closing table with a check for more than $2,000.
- You have to have a credit score of 660 or higher. If you're getting the loan to buy a house, and you're borrowing more than 80 percent of the home's price, the minimum credit score is 700.
- For second homes and investment properties, the maximum loan-to-value is 60 percent, and the minimum credit score is 660.
- It has to be a one-unit property. That includes a single-family house, of course, and it also includes condominium units. It excludes duplexes and triplexes where the owner rents out the other units.
- Because you can't get a cash-out refi to pay off home-equity debt, the second-lien holder has to sign off on the refinance and agree to remain in the second lien position.
Some home-equity lenders, most prominently National City Mortgage, are refusing to agree to remain in the second-lien position, forcing borrowers to either pay off their home-equity debt or forgo refinancing.
- You can't have had any late mortgage payments in the last 12 months. A late payment is defined as 30 days or more late.
- The debt-to-income ratio is capped at 45 percent. That means if you have a gross income of $200,000 a year, the total debt payments can't exceed 45 percent of that, or $90,000. All ARMs are qualified based on the fully indexed rate.
- Your life has to be an open book. You have to permit an appraisal with interior and exterior inspections, and fully document your income and assets.
- If the loan-to-value exceeds 80 percent, you have to buy mortgage insurance.
- You can't get a construction-to-permanent loan under the jumbo-conforming amount.