Fall Housing Trends

Good news for both home sellers and buyers when it comes to opportunity at the end-of-the-year.

While it is still a sellers market, homebuyers are can take advantage of low mortgage rates while lenders are showing forgiveness for those who foreclosed in previous years.

If you are in the market to buy or sell a home, consider these current housing trends:

Home prices cool off. The summer sizzled, and so did the housing market. It's likely we will see it cool down just a bit over the upcoming months. The upside is that potential homebuyers can take their time and not be rushed or pressured into a sale due to the fear of climbing prices.

Banks are loosening up the reins. With rising mortgage rates, homeowners aren't rushing out to refinance like they once had. Homebuyers are now the lender's target audience and they are doing whatever it takes to get their business. Underwriting standards are expected to loosen in coming months as lenders turn their attention towards buyers

Distressed buyers are making a comeback. The Federal Housing Authority is now making it possible for people who were troubled by foreclosures or short sales to make another go at trying to buy a home. The three-year waiting period to apply for a loan has been shortened to one year if the buyers can demonstrate that a reduction in income or a job loss was the reason they lost their previous home.

Potential borrowers must have all their documentation showing they lost at least 20 percent of their income for six months, but that they've been able to pay their bills on time for at least one year.

Mortgage rates stabilize. Mortgage rates spiked this past summer, but it is likely that they will level out as the Federal Reserve will keep rates low and keep pumping the economy with cheap money.

Hurry! 3% Down-Payment Deadline Coming Soon!!

Homeowners who wish to put 3% down on their home take note: Fannie Mae has announced that beginning on November 16th, they will increase the minimum down-payment requirement on conventional loans from 3 to 5%. Homebuyers who wish to purchase a house with 3% down still have time to obtain a Fannie Mae-backed loan but need to act fast; they need to be pre-approved by November 15th, and the loan must close by March 31st of next year.

On November 16, Fannie Mae will implement scheduled changes to its automated underwriting system (DU or "Desktop Underwriter"). DU is used by lenders to approve loans, and several of the changes will make it harder for some borrowers to qualify. These include tougher debt ratio calculations, removal of interest-only options; and stricter requirements for down payments, increasing the minimum amount from 3% to 5% of the loan balance.

While increased down payments could deter some buyers, there are still significant Fannie Mae advantages over FHA: they have no upfront mortgage insurance costs, and 5% down Fannie loans also have lower PMI costs than either FHA or current 3% down loans.

Helpful Answers Regarding FHA “Back to Work” Program!

What is the FHA Back To Work - Extenuating Circumstances program?
The FHA Back To Work - Extenuating Circumstances program is the FHA's "second chance" for mortgage applicants who have experienced financial hardship as a result of unemployment or severe reduction in income.

Can I use the Back to Work as a first-time home buyer?
Yes, you can use the program as a first-time buyer.

Can I use the Back To Work program as a repeat home buyer?
Yes, you can use the program as a repeat home buyer.


Can I use the Back To Work program for an FHA 203k construction loan?
Yes, you can use the program for an FHA 203k construction loan.


Does the FHA Back To Work program waive the traditional 3-year waiting period after a foreclosure, short sale, or deed-in-lieu?
Yes, the program waives the agency's three-year waiting period. You no longer need to wait three years to apply for an FHA loan after experiencing a foreclosure, short sale or deed-in-lieu.


Does the Back To Work program waive the traditional 2-year waiting period after bankruptcy?
Yes, the program waives the agency's two-year waiting period. You no longer need to wait two years to apply for an FHA loan after experiencing a Chapter 7 or Chapter 13 bankruptcy.

Which types of "events" are covered by the FHA Back To Work - Extenuating Circumstances program?
The program can be used by anyone who's experienced a pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification; or who has entered into a forbearance agreement.


How do I apply for the program?
You can apply for an FHA Back to Work - Extenuating Circumstances mortgage with any FHA-approved lender. The mortgage approval process is the same for any other FHA-insured mortgage.

Learn About The New FHA "Back To Work" Program!

The FHA's primary role is as an insurer of mortgage loans made by FHA-approved lenders. The FHA insures loans in all 50 states, all U.S. territories, and in the District of Columbia. Since its inception, the group has insured more than 34 million loans which makes the FHA the world's largest insurer of mortgages.

FHA mortgage insurance is available for any loan which meets the following two conditions

Must be made by an approved FHA lender

Must meet the minimum standards of the "FHA Mortgage Guidelines".

The minimum standards of the FHA mortgage guidelines are generally very straight-forward. The more well-known rules require mortgage applicants to show a minimum credit score of 500; to make a down payment of at least 3.5% on a purchase; and to verify income via W-2 or federal tax returns.

Loans failing to meet FHA mortgage guidelines do not get insured and the Federal Housing Administration has been steadily tightening its requirements since last decade's housing downturn.

On August 15, 2013, though, the Federal Housing Administration moved to relax its guidelines for borrowers who "experienced periods of financial difficulty due to extenuating circumstances".

Dubbed the "Back To Work - Extenuating Circumstances Program", the FHA removed the familiar waiting periods that typically followed a derogatory credit event.

If you've experienced any of the following financial difficulties, you may be program-eligible

Pre-foreclosure sales

Short sales

Deed-in-lieu

Foreclosure

Chapter 7 bankruptcy

Chapter 13 bankruptcy

Loan modification

Forbearance agreements


Contact us today to find out if you qualify, www.katzmortgageteam.com