I was out showing homes in the Wash Park area this weekend and could not believe how many buyers were out looking too! The showing activity on my listings has also increased over the past week. I think this is great news for the Denver market!
Real Estate Information
Denver, CO Real Estate Blog
Roberts Johnson and Rachel Diedrich, Real Estate Broker/Owners
Displaying blog entries 271-277 of 277
Wow! I knew it all along, but now it is official! Denver was voted the best place to live. Please check the story out at:
Those jumbo loans that came with lower interest rates and smaller down payments may disappear any day now.
The Federal Housing Administration, Fannie Mae and Freddie Mac earlier this year announced eased underwriting standards for so-called "conforming jumbo loans" of up to $729,750 through December 31, 2008, thanks to a mandate by the Economic Stimulus Act of 2008.
Recently, however, all three agencies said they would roll back that temporary limit to $625,500 in 2009.
Many lenders won't wait for 2009 to roll back the limit, but will soon start, if they haven't already, to apply eased underwriting standards only to the new, lower loan level. Eased underwriting standards included lower interest rates and smaller down payments than those typically associated with so called "jumbo loans" before the stimulus act.
Beginning in January, the FHA will insure single-family home mortgages up to $271,050 in low cost areas and up to a maximum of $625,500 in high cost areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
The new $625,500 maximum, however, represents a significant increase over the $362,790 limit that was in effect prior to the stimulus package, according to the U.S. Department of Housing and Urban Affairs (HUD) .
According to the Federal Housing Finance Agency (formerly the Office of Federal Housing Enterprise Oversight -- OFHEO), Fannie Mae and Freddie Mac will retain their $417,000 conforming loan limit for conventional loans, lower the temporary conforming jumbo limit of $729,750 to $625,500 for certain higher cost cities and counties and a set the maximum loan limit to $721,050, but only for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
On the endangered species list in the mortgage world, $729,750 "conforming jumbo loans" experienced mixed reviews from risk averse lenders who never fully embraced the loans. Lenders buried under foreclosures, barely opened the doors to offer the loans until months after they were available. The larger the loan the greater the risk. The riskier the loan, the tougher it is for a home buyer to get the mortgage approved.
It wasn't until months after they were allowed, Fannie Mae and Freddie Mac announced they would purchase the larger conforming loans with the same requirements they use to purchase loans at the old conforming loan level.
Fannie Mae and Freddie Mac had also reduced down payment requirements on some loans to as little as 3 percent down. And new FHA loan plans with higher limits also helped put more big loan mortgage money on the market.
But as the economy sank into recession, the jumbo conforming loan at the $729,750 level never really managed a strong toehold.
"In today's environment where access to credit is being restricted, we need to make mortgage loans readily available to households throughout the country, and especially in high-cost areas," said HUD spokesman Steve Preston.
"These new loan limits will ensure FHA can to continue help struggling homeowners refinance into safe, affordable government-insured loans, and allow many first-time buyers take advantage of today's buyers market," he added.
Published: January 8, 2009
Merry Christmas to everyone!
What the Government Takeover of Fannie Mae and Freddie Mac Means to Housing Industry
In short-term, home sales should improve as mortgage rates fall
Washington, D.C. (September 8, 2008)—The federal government’s takeover of secondary mortgage giants Fannie Mae and Freddie Mac should cause a drop in mortgage rates in the short term that benefits home buyers, but the long-term outlook is too early to call. NAR fully supports the action of the U.S. Treasury and the Federal Housing Finance Agency.
The federal government had no choice. The capital situation of the two companies was not enough to handle the fallout from rising mortgage defaults in the near future. In addition, investors who purchase Fannie Mae and Freddie Mac debt have lost confidence in the two.
In a statement, NAR commended the Treasury’s action, announced yesterday, to bring stability and continued liquidity to the mortgage market. “The plan will help restore confidence in the secondary mortgage market,” said NAR President Richard F. Gaylord. “We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. We look forward to working with the administration and Congress to ensure the continued vibrancy of the secondary mortgage market.”
Summary of what the Treasury actually did and what it means
In the takeover, Treasury placed the GSEs into a conservatorship—similar to a Chapter 11 bankruptcy— which fully protects taxpayers from conflicts of interest between taxpayers and shareholders or current management.
The federal government is authorized to take up to an 80 percent stake in the companies, will review their financial condition quarterly, and inject money into the operations as needed. That means the market for GSE securities will be treated more like Treasury obligations, which should push mortgage interest rates down. That in turn, is expected to speed up home sales and help stabilize home prices.
The GSEs will be allowed to increase their mortgage funding over the next year and a half to help stabilize markets. Starting in 2010, the plan calls for them to reduce their portfolios.
The heads of Fannie Mae and Freddie Mac have been relieved of their duties. Treasury selected Herbert Allison, former Merrill Lynch vice chairman, to lead Fannie Mae, and David Moffett, former U.S. Bancorp CFO, to guide Freddie Mac.
I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!
Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!
While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.
Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.
The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers. Call everyone you know who wants to buy their first home (or who hasn't owned one in three years), this is too good to miss - it's a $7,500 tax CREDIT (not deduction but a credit).
If you have not owned a home in three years, you qualify as a first time home buyer. If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit. Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify. It has to be your principal residence, so rentals do not count.
The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit. In other words, you take $7,500 off your tax bill. But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.
The loan has no interest, and will be paid back over 15 years. You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment. You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year. If you stay put for 15 years, you pay it off with no interest.
What happens if you sell the house? You pay the balance back at the closing. So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house. What happens if you do not make enough money when you sell your house? They forgive the rest of the debt.
Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.
If you'd like to learn more about this program, please call me!