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  1. First-time Home Buyers Take Over Home Purchases

    By on November 8, 2010

    first-time home buyers, fixed-rate mortgages, home purchases, mortgage ratesHalf of all home purchases involved first-time home buyers this year, the largest portion since the National Association of Realtors started keep records in 1981.

    Last year 47 percent of home purchases were by first-time home buyers, according to NAR’s Profile of Home Buyers and Sellers. The previous largest share of first-time home buyers was 44 percent in 1991. Learn about tips for buying your first home.

    The first-time home buyers’ tax credit, which has now expired, was a major reason for their large share of home purchases. Almost all first-time home buyers, or 93 percent, used the tax credit.

    Almost all of first-time home buyers, or 95 percent, used fixed-rate home loans. Check mortgage rates for fixed-rate terms.

    Most, 74 percent, used savings for their down payment, while 27 percent used a gift from friends or relatives, slightly more than last year. That increases shows that more parents helped their children take advantage of the tax credit and extremely affordable housing, said Paul Bishop, NAR vice president of research.

    Also, 56 percent of first-time home buyers used FHA home loans to finance their home purchase. NAR also reported that 52 percent of the home buyers said obtaining a mortgage was more difficult than they had expected and 9 percent were rejected by a lender. Find tips for getting mortgage approval.

    The median down payment for home buyers was 8 percent, including 4 percent for first-time buyers to 14 percent for repeat buyers. First-time may have used FHA loans, which allow down payments as low as 3.5 percent. How to purchase a house with an FHA mortgage and current FHA mortgage rates.

    NAR’s survey shows that the median age of first-time buyers was 30 and their median income was $59,900. The typical first-time buyer bought a 1,540-square-foot house for $152,000. The typical home sold for 96 percent of the listing price, compared to 95 percent the group’s survey last year.

    Category: First Time Home Buyer, Fixed Rate Mortgages, Purchase

  2. Home Prices Rise in June Due to First Time Homebuyer Tax Credit

    By on August 31, 2010

    S&P Case Shiller released their Home Price Indices for the month of June today, and it showed an increase in U.S. home prices.  Prices rose 4.4 percent in the second quarter of 2010, following a 2.8 percent decrease in the first quarter.  It is important to note that this index is a three month average with a two month lag.  As a result, it measures conditions as they were several months ago.  All current indicators point to home prices falling, and the report itself states “housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue”.

    From the report

    “The monthly Composites cover June and the national index covers the second quarter, when the government’s program for first time home-buyers was winding down.  While the number are upbeat, other more recent data on home slaes and mortgages point to fewer gains ahead,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.  “Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year.  Further, California’s cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains”.

    Continue Reading…

    Category: Mortgage Rates

  3. Could First Time Homebuyer Tax Credit Return?

    18 By on August 30, 2010

    The last iteration of the repeat homebuyer tax credit and the first time home buyer tax credits expired on April 30, 2010.  After their expiration, demand for housing utterly collapsed despite record low mortgage rates.  Currently there is a huge overhang of homes on the market (over 12.5 months worth).  The excess supply and lack of demand are causing house values to drop.  Nobody knows where the market will settle, but many are predicting declines of 5-20 percent over the next year or two.

    One would think that this clearly demonstrates that the tax credits did nothing more than accelerate sales from the summer and fall into the spring, providing a temporary lift to the housing market, which resumed its decline as soon as the tax credit was withdrawn.  In short, we dumped billions in taxpayer money into the housing market for no real price stabilization.

    Surprisingly, the Obama Administration has not ruled out bringing back the tax credits. According to a New York Times article, on Sunday HUD Secretary Shaun Donovan was quoted as saying:

    “It’s too early to say whether the tax credit will be revived”.  Donovan said in an interview on CNN’s “State of the Union” program.  He said the administration would “do everything we can” to stabilize the shaky U.S. housing market”.

    Another tax credit may stabilize the market temporarily by goosing demand for homes, as it did before.  Our current experience suggests that the lift would be temporary, at which point housing prices would resume their decline to whatever level is naturally dictated by the market (unless other conditions, such as the labor market, were to improve in the meantime).

    It seems clear to me that the tax credits were bad public policy, and likely cost taxpayers billions of dollars that caused no long term benefit.  Despite this, I wouldn’t be surprised to see this country’s politicians enact another tax credit in order to curry favor with voters in November.  If there are any further developments in this story, I will be sure to update this space.

    Do you disagree with me on the tax credits?  Do you think they were good policy?  If so, let me know why in the comments section below.

    Category: Mortgage Rates

  4. California First Time Homebuyer Tax Credit Deadline Set For August 15th

    By on August 9, 2010

    Billy, Get to da tax credit! Now!

    As we have mentioned here in the past, after the end of the first time home buyer tax credit in April, California instituted its own first time home buyer tax credit and new home credit to stimulate the California housing market.  The state earmarked $100 million for each program in an effort to drive home sales in the golden state.

    The tax credit was worth the lesser of either 5 percent of the purchase price of the home, or $10,000.  The tax credits are to be applied in equal amounts in three successive years after the home was purchased.

    The state of California has announced that Californians have until August 15th, 2010 to submit applications for the tax credits.  It is important to bear in mind that not everyone who submits an application will receive the credit, even if they meet all the conditions. California allocated $100 million for each credit, and when the money is gone, the credit is over, so it is kind of a first-come, first-serve deal.

    The state is accepting more applications than it will be able to fill in an effort to make sure that all of the earmarked money is allocated.  The program promised to accept 28,000 applications.  Many of the first batch of accepted applications were found to be invalid or duplicates, which is why the deadline was extended to August 15th.

    For complete details on the California tax credits, and to see the complete conditions for acceptance, you can check the State of California’s Tax Credit website here.

    Have you taken advantage of the tax credit?  If so, let us know in the comments section below.

    Category: Mortgage Rates

  5. Did the First Time Home Buyer Tax Credit Work?

    1 By on July 28, 2010

    Did the first time home buyer tax credit work?  This is the question that occurred to me today when I read this piece in the New York Times by Casey Mulligan, a University of Chicago economics professor.  While I am certainly not an economics professor, I find the logic behind this piece to be somewhat questionable, and I must respectfully suggest the conclusion is incorrect.  You should probably click through to read the whole thing, but here is an outtake:

    “But the wider market is quite a bit wider: the stock of owner-occupied houses in the United States is worth about $14 trillion, with an additional $3 trillion of rental housing. From this perspective, the $19 billion in first-time home buyer tax credits amounts to about one-tenth of 1 percent.

    For the same reason, the possible expiration of credit is not an important event for the housing market. The credit was not designed to last more than year or two, whereas houses last decades or even centuries. Most of the value of a house accrues in the decades after the first year or two of its existence.

    Certainly some housing construction projects and housing purchase deals were accelerated to conclude before the credit expired. But accelerating a deal is far different than creating a deal out of thin air.  That’s why I expect little, if any, housing price reduction after the credit expires.”

    Now, it is unlikely that we will really know the total effects of the first time home buyer tax credit for some time, but the initial evidence does not seem to agree with Mr. Mulligan’s analysis.  The most recent Case-Shiller House Price Index showed prices increasing – in May.  Now the tax credit expired at the end of April 30th, but people have until September 30th to close on the deal signed prior to the expiration.  As a result, some of the effects of the credit are seen after the expiration.

    Two days ago, Calculated Risk posted an article that suggests that housing prices are falling now.  Now it is possible that the drop in prices is not attributable to diminishing demand, but rather that demand is staying constant and supply is increasing due to the large numbers of distressed properties and REO on the market.  However, mortgage purchase applications have pretty much collapsed since the expiration of the credit.  My thinking is that the drop in prices is probably attributable to both a fall in demand (because of the expired credit) and an increase in supply.

    It is my belief that the tax credit accelerated sales from the summer and fall into the spring, and now we are seeing the after-effects of this acceleration.  We spent $19 billion (so far) and I’m not sure that it actually prompted many people to make purchases they would not have made eventually anyway, and now we are dealing with prices that are falling again.  I also believe that the tax credit artificially propped up the housing market, and simply dragged out the amount of time it will take for the market to bottom out and eventually recover.

    With tremendous numbers of foreclosures, problems at Fannie Mae and Freddie Mac, a serious problem with oversupply of homes, and housing prices that appear to be falling, I am not sure what was accomplished with the first time home buyer tax credit other than to goose demand in the short term.  I am left to conclude that this was not good policy.

    Possibly there are other beneficial effects that I am overlooking, but I am not sure what they are.  What are your thoughts on the effectiveness of the first time home buyer tax credit?  Am I wrong?  Let me know in the comments section below.

    Category: Mortgage Rates

  6. Home Sales Nose-Dive in May

    1 By on July 1, 2010

    The first time home buyer tax credit was very successful in increasing demand for homes in the spring of 2010, but the surge in demand proved to be fleeting, as home sales have collapsed since the withdrawal of the government stimulus.  Despite mortgage rates that are at all-time lows, mortgage applications have been down for the last several weeks.

    According to a report from the National Association of Realtors (NAR) today, the Pending Home Sales Index dropped 30 percent from April to May, and is 16 percent below May 2009.

    Lawrence Yun, chief economist for the NAR said, “Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June.  Existing-home sales that close in June will remain elevated, but we’ll then see a notable decline for July and August”.

    The housing recovery still faces many headwinds, namely unemployment and an oversupply of housing.  Unemployment is running close to 10 percent, and home foreclosures are at all-time highs, and neither of these trends look to be turning around in the near future.

    Many analysts are predicting there will be continued downward pressure on home values for the remainder of the year.  Depending upon who you believe, home prices are predicted to fall somewhere between 5 and 10 percent in the coming year.

    Category: General

  7. National Flood Insurance Program Extended to September 30th

    By on July 1, 2010

    Amidst all the talk about the first time home buyer tax credit closing date extension, a less talked about but equally important extension was passed by the Senate yesterday.  The National Flood Insurance Program (NFIP),  which had lapsed for a month, was extended to September 30th by the Senate yesterday.

    The National Flood Insurance Program is the primary flood insurer in the United States because very few private insurers offer flood insurance.  The program expired on May 31st because of a lack of funding, and since that time nearly 6 million homeowners in flood plains lacked flood insurance, which is especially problematic as hurricane season approaches.

    Thousands of home sales in flood prone areas were held up because lenders will typically not fund mortgage loans for homes that are in a flood plain that do not have flood insurance.  Because of the lack of private flood insurance, the closings for these homes were held up.  A significant number of these borrowers were also attempting to close in time to claim the first time home buyer tax credit, so for them the absence of flood insurance was particularly troubling.

    The extension is retroactive to whenever a homeowner applied for flood insurance during the suspension of the program.  This is the fifth short term extension of the NFIP over the past year.  Hopefully Congress will permanently fund the program at some point soon, but in the meantime, home sales in flood areas can start moving forward again.

    Have you been affected by the suspension of the NFIP?  Let us know in the comments section below.

    Category: General

  8. First Time Home Buyer Tax Credit Closing Date Extended By Senate

    11 By on July 1, 2010

    They waited until the very last minute, but last night the Senate passed the stand alone bill from the House of Representatives that would extend the closing date to claim the first time home buyer tax credit from June 30th until September 30th.  The measure passed the Senate unanimously and President Obama is expected to sign the bill into law today.

    Many people that had signed purchase agreements prior to April 30th were having trouble closing by June 30th due to backlogged lenders and servicers who were having difficulty dealing with the increased volume of home sales before the expiration of the tax credit.  Many others who were purchasing distressed homes or short sales were having issues with the closing date because of the extended transaction time for those types of sales.

    If the closing date was not extended, it was estimated that nearly 180,000 home sales would fall apart as borrowers backed out of deals. Whether or not you agree with the original tax credit policy (and I think the jury is still out as to whether this was good policy or not, although I am initially inclined to believe it was not a good idea), it made a lot of sense to extend the closing date.  The additional cost is relatively minimal, and it does not make sense to unfairly punish those who entered into deals with the expectation of receiving a credit who could not close due to any fault of their own.

    Category: General

  9. Current Mortgage Rates at Total Mortgage Services

    By on June 30, 2010

    Mortgage Rates across the nation are still incredibly low. According to HSH Associates Financial Publisher the national average rate for a 30-Year Fixed Rate Mortgage is 5.00% and a 15-Year Fixed Rate Mortgage has a rate of 4.42%. Total Mortgage is currently offering similar mortgage products with lower rates.

    A 30-Year Fixed Rate Mortgage is currently available with a rate of 4.375% and a 4.581% APR. 15-Year Fixed Rate Mortgages are being offered with a 3.875% rate and an APR of 4.233%. Both of these come in well below the national average.

    Total Mortgage has extremely low rates for jumbo loans as well. In most parts of the country a jumbo mortgage is one that exceeds the limits setup by Fannie Mae and Freddie Mac, which is $417,000. Current rates for  15-Year Fixed Jumbo mortgages are 4.000% with a 4.349% APR. We also offer a 30-Year Fixed FHA Mortgage with a rate of 4.250% and a 5.244% APR.

    Yesterday the U.S. House of Representatives passed an extension of the First Time Home Buyer Tax Credit. The bill is being moved to the senate where it will be voted on again. The outcome of this vote should have an effect on the housing market for the next couple of months.

    Loan Type Rate APR
    30-Year Fixed Conventional Mortgage 4.375% 4.581%
    15-Year Fixed Conventional Mortgage 3.875% 4.233%
    15-Year Fixed Jumbo Mortgage 4.000% 4.349%
    30-Year Fixed FHA Mortgages 4.250% 5.244%

    * For additional mortgage rates and a complete list of our mortgage products check us out online or call 877-868-2503 to speak to one of our licensed mortgage professionals.

    * All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

  10. Today’s Mortgage Rates Afternoon Update: June 29, 2010

    By on June 29, 2010

    Total Mortgage Services continues to offer some of the lowest current mortgage rates available in the industry. Near record low mortgage rates are presenting  a great opportunity for both homeowners looking to refinance and potential home buyers.

    30-Year Fixed Conventional Mortgages are currently available with a 4.375% rate and a 4.581% APR. A 15-Year Fixed Jumbo Mortgage is being listed with a rate of 4.000% and with an APR of 4.349%.

    In addition to these fixed mortgages Total Mortgage is also offering incredibly low rates on FHA mortgages. A 30-Year Fixed FHA Mortgage is currently being offered with a rate of 4.250% and a 5.244% APR.

    The pending vote on the First Time Home Buyer Tax Credit should affect both sales and interest rates in the foreseeable future.

    Today’s Mortgage Rates Afternoon Update: June 29, 2010

    Loan Type Rate APR
    30-Year Fixed Conventional Mortgage 4.375% 4.581%
    15-Year Fixed Jumbo Mortgage 4.000% 4.349%
    30-Year Fixed FHA Mortgage 4.250% 5.244%
    5/1 ARM Conforming Mortgage 3.000% 3.480%

    Check us out for a complete list of mortgage products and additional mortgage rates. To speak to one of our licensed mortgage professionals call 877-868-2503 right now!

    * All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 2 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

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