December 2013 Monthly Mortgage Update

Welcome to my monthly mortgage update. I wanted to tell you a little bit about what you can expect from real estate in the next couple of months. While I don't have a crystal ball, I can look at the information and take an educated guess.

Interest rates have been phenomenally low. Are they going to stay that way? The job report numbers came in very good this month, which is bad news for interest rates.

Another big effect on interest rates is the upcoming Federal Reserve meeting on Dec. 18th. During this meeting they will decide whether to continue backing mortgage loans which has artificially lowered interest rates. If they decide to back off, you can expect interest rates to increase.

What does this mean for you? You may not qualify for the amount you would have before or your payment may be higher. Look to buy now. If you have any questions, please give me a call. Thanks for watching.

#1 Mistake Buyers Make When Looking for a Home

Welcome back to my video blog! I wanted to send all buyers a quick reminder: the main mistake buyers make when looking for a new home is not getting preapproved beforehand.

Before you even look at a home, get preapproved. You need to know what you are approved for, what your required down payment is, etc.

Sellers won’t accept your offer either without preapproval. They need to know that you can close the transaction before they take their home off the market.

Give me a call at 619.209.7123 and we’ll have a free consultation and go over your credit, your income and which loan is right for you.

Thanks for watching!

Government Shutdown Risks Hurting The Housing Recovery

From: http://www.forbes.com/sites/morganbrennan/2013/10/01/heres-how-the-government-shutdown-will-affect-housing/

By:  Morgan Brennan, Forbes Staff

The government shutdown is here. Whether it’s not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there’s one bright spot of the economy that stands to be affected as well: housing.

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers’ access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae and Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.

That prospect would be somewhat worrisome – if it were actually true. The FHA’s Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the report now states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development’s contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.

The FHA’s single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government’s standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency’s Multifamily Housing Office, which is funded through yearly appropriations.

“Because we are able to endorse loans, we don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” continues the HUD report. “If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause “a setback in construction start-up,” and if the shutdown lasts for an extended period, “a substantial reduction in housing available in rural areas relative to population.”

“The government doesn’t generally approve loans, they basically just insure them,” says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. “For the most part you aren’t going to see much of a hit in the mortgage market unless it goes for a long period of time.”

If it does stretch on, he adds, the worry will be what mortgage rates do in a market shrouded in fiscal uncertainty and how that will affect the home buying, especially in light of recent rate spikes.

Home lending aside, many economists and real estate experts are keeping a close watch on how Americans will react to this shutdown. “Administratively everything should keep moving along, but it’s more about the confidence of consumers and whether they perceive that the government shutdown could lead to a recession,” says Lawrence Yun, chief economist at the National Association of Realtors.

Moody’s Analytics chief economist Mark Zandi recently told the Senate Budget Committee that a partial shutdown could shave as much as 1.4 percentage points off of fourth quarter economic growth if it drags on for several weeks.

Americans’ confidence in their ability to buy and sell homes hit a record high in May, according to a Fannie Mae survey. Since then, as mortgage rates jumped more than a percentage point, that confidence level has plateaued.  If prospective homebuyers fear that the country’s economic recovery will stall, or worse slip back into recession, they will pull back on purchases, worries Yun.

“Home sales is always the first housing variable that changes so one would see sales declining and that would naturally lead to more inventory on the market and eventually put pressure on prices,” he says. But that would be a worst-case scenario based on a long-term shutdown.

Jed Kolko, chief economist at Trulia TRLA +6.43%, notes that if the shutdown lasts longer than a few days, the first places to feel the impact will be local economies with large concentrations of federal government workers. Metro areas like Washington, D.C. and Bethesda, Md., where 19% and 13% respectively of total local wages go to federal employees, would be the feel the negative effects of unpaid furloughs and with them, tightened consumer spending and weakening local economic growth. Though not all will be equally affected, other metro areas like Virginia Beach, Va., Honolulu, Hawaii, and Dayton, Ohio are areas that Kolko is keeping an eye on: “Whether there is a big effect depends on how long the shutdown lasts, how long people think the shutdown lasts, and whether people get back-pay. All those things matter for the impact.”

Still others are worrying even more about the next fiscal standoff, in  mid-October, surrounding the debt ceiling debate and its accompanying threat of debt default by the U.S.  ”With the threat of an impending partial government shutdown and yet another battle over the nation’s debt ceiling, in particular, we are really messing with fire right now—even if it doesn’t seem to bother some legislators,” says Stan Humphries, chief economist at Zillow.

“But the effects of a government default associated with the impending debt-ceiling deadline would be more pronounced because of its greater impact on domestic and international markets. This will rattle consumers and investors alike, slow down the overall economic recovery and further slow the housing recovery, which is already undergoing a moderation in the pace of home value gains due to rising mortgage rates,” he warns.

What’s going on with interest rates?

Hey, everyone! Welcome back to our video blog.

I wanted to talk a little bit more about interest rates and how the increase affects you.

Many of you got preapproved a few months ago when rates were around 3.5 percent. Since then, rates have increased to 4.5 percent.

Does that affect your buying power? Absolutely.

If you were preapproved for homes in the $400,000 range when rates were lower, you may be surprised to find now those homes may be too expensive. That $400,000 is now around $365,000 because of the rate increase.

So give me a call and we can find out exactly how the increase has affected your buying power. I can be reached at 619.209.7123. Let’s figure out away to get you the home you want!

The Power of Pre-approval

Hi, this is Sergio Haros with Gateway Funding. Welcome to my video blog; we’ll be sending you videos twice a month with good education content to help you as you are on your way to becoming a homeowner.

Today, I wanted to talk about the power of preapproval, and not only getting preapproved by a lender, but how your lender can really be a great asset to help you get your offer accepted.

Some of you may have been looking at homes for a year; the San Diego market can be very frustrating. There are multiple offer situations; so, what’s going to help get your offer accepted?

We at Gateway Funding aren’t only going to examine your financials and credit to grant you a preapproval initially, but we are also going to be contacting the listing agents of the homes your realtor is putting offers into.

It’s important that your lender goes to bat for you. If you end up in a stack of 8-10 offers, what’s going to make your offer look a little different? How about guaranteeing that your finances look good and that you will close on time. That’s what a seller wants to know: am I going to get my money on time?

Because of our proven track record and our close-on-time guaranteed, we are a trusted lender.  We wanted to leave you with this pointer; we ask that you contact us now to find out how you can benefit from Gateway Funding.

Thanks for watching! See you in two weeks!