The number of homeowners who owe more on their mortgage than their home is worth has fallen 47.5 percent since the beginning of 2012. According to the federal government’s most recent Housing Scorecard, released by the U.S. Department of Housing and Urban Development and the U.S. Department of the Treasury, nearly 6 million underwater homeowners have been lifted above water as home prices increased from post-crash lows over the past two years. The improvement has pushed homeowner equity up 55 percent since the end of 2011. In fact, by the third quarter of 2013, homeowner equity was slightly higher than it was at the end of 2003. Despite the progress, officials caution that there is more work to do. Edward J. Szymanoski, HUD’s associate deputy assistant secretary for economic affairs, said there are encouraging signs that the housing market recovery is providing millions of American homeowners with more economic security but there remains work to do in order to address the remaining underwater borrowers. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages was unchanged last week from the week before. Mortgage rates held steady for loans with both conforming and jumbo balances, while 15-year rates increased. Demand for loan applications, on the other hand, was up – rising 2.6 percent from the previous week. The Refinance Index spiked 5 percent – after falling 9 percent a week earlier – and the seasonally adjusted Purchase Index fell 1 percent. The results were adjusted to account for the New Year’s Day holiday. Also in the report, the refinance share of total mortgage activity remained at 63 percent from the week before. The Mortgage Bankers Association’s Weekly Applications Survey covers more than 75 percent of all U.S. retail residential mortgage applications and has been conducted since 1990. More here.
No credit or a bad credit score can be an obstacle to home buying, but you can offer advice to help clients improve their finances.
Al Goldstein, CEO of Pangea Properties in Chicago, has these five tips to pass on to your clients, which will help them take control of their credit.
1. Get a credit card…really! A credit card is a credit-building tool when used correctly. Goldstein suggests charging a few affordable purchases each month, and then pay the bill in full (before the due date), which will build up credit. However, it is important to not miss or make any late payments to avoid the interest backlash.
2. Keep an eye on credit card balances. On the other side of the coin, it is important to only use credit cards for purchases that could easily be paid out of pocket. Racking up big balances can hurt your clients’ score, regardless if the balance is paid in full. Let them know they should stick to 10 percent of the credit limit.
3. Review credit report and fix errors. Make sure your clients know they’re entitled to a free credit report each year, and they should get into an annual habit of requesting and reviewing their report. If they spot incorrect credit limits, closed accounts, or other errors on their credit reports, they should dispute them right away.
4. Leave paid debts on credit report. Not all old debts are bad, says Goldstein. Documentation of past debts, such as a car loan, provide a track record of how your clients have handled and paid debts, which can be good for their credit. The longer the history of good debt, the better it is for the score.
5. It doesn’t hurt to ask. If your clients have debt and are looking to pay it off quickly, simply asking the lender if they will lower the interest rate may work in their favor. If there are one or two late payments on their statements, suggest that they ask for a goodwill deletion, which can payoff in the long run.
Source: Pangea Properties, www.pangeare.com
The Mortgage Bankers Association’s Weekly Applications Survey covers more than 75 percent of all U.S. residential mortgage applications and is a measure of both refinancing and home purchase demand. According to the most recent release, total mortgage loan application volume fell by 5.5 percent last week from one week earlier. Both the Refinance Index and the Purchase Index fell 6 percent from the previous week. Mike Fratantoni, MBA’s vice president of research and economics, said the market index fell to its lowest level in more than a dozen years. According to Fratantoni, purchase and refinance demand dropped due to increasing interest rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances edged up last week, reaching its highest level since September. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage loan activity rose following a slow week that included the Thanksgiving holiday. The MBA’s Market Composite Index – which measures both purchase and refinance activity – found the number of people requesting applications for mortgage loans increased 1 percent from the previous week on a seasonally adjusted basis. Refinance demand rose 2 percent, bringing the refinance share of total mortgage activity to 65 percent. Purchase demand was up 1 percent. Also, the average contract interest rate for a 30-year fixed-rate mortgage increased last week. The average interest rate is now the highest it’s been since September. More here.