November 7th, 2013
This week, we’ll talk about projects that lower your home’s value, the impact of FHFA reducing the maximum amount of their loans, and how banks are now offering 5% down payment loans.
Plus, we’ll talk about something we already know: California has the highest priced real estate in the nation.
Believe it or not, there are some home improvement projects that will count against you, and we’re not talking about painting walls black.
The Federal Housing Finance Agency plans to reduce the maximum size of mortgages backed by Fannie Mae and Freddie Mac this January. Currently, the limits are $417,000 in most parts of the nation and up to $625,500 in more expensive markets like San Francisco and Seattle. The agency hasn’t announced how much it will lower loan caps, but data compiled for MarketWatch by Lender Processing Services, a mortgage-data tracking firm, shows that a decline of just $25,000 from the current caps would impact hundreds of thousands of home buyers in middle-priced and upper-middle-priced housing markets.
However, will it really impact a lot of people? These loans account for less than 3% of all Fannie Mae and Freddie Mac mortgages. But, reducing the caps could have a domino effect on home sales. Many borrowers who use the maximum dollar amount of Fannie Mae and Freddie Mac loans tend to live in high-cost areas and rely on these mortgages to buy homes. If they’re unable to obtain financing, sales could stall and prices as a result may drop, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.
California holds 13 of the top 25 spots for the most expensive housing markets in the U.S., Coldwell Banker data shows.
Malibu was ranked the most expensive place to live, with the average list price for a four-bedroom, two-bathroom home there at $2.15 million. This was followed by Newport Beach at almost $1.8 million.
I don’t think this is news to any of us who live here.
Good news for future homeowners who don’t have a lot of cash on hand: Banks are offering loans with down payments of just 5%.
After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan. To stay competitive, banks like Wells Fargo, BofA and TD Bank have increased their offerings.
While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home.
Contact your mortgage loan officer to find a loan that will be best for your situation. They stay up to date on all offerings so you have numerous loans to choose from.