Friday, December 11, 2015

Good News, Bad News on Fannie Mae Loan Limits

Human beings running the world.  Sometimes you just have to be satisfied with the idea that we're all trying anyway.

We're all cheering in the real estate world because Fannie Mae and Freddie Mac announced increased loan limits for conventional loans.  It means in part that the US government and the financial markets have more trust in us now than they did last year, because they perceive the risk of giving someone hundreds of thousands of dollars is acceptable in larger amounts now.  That's good.  It really is.

But look at the rates.  Today, if you walked into a mortgage brokerage firm and applied for a conforming conventional 30-year fixed rate loan, your mortgage broker would calculate out what your interest rate would be.  It would depend on your credit score, whether or not you'd been through a bankruptcy in the past two years, etc.  But the rate would be the rate.

If you asked instead for a jumbo loan (more money than the conforming conventional loan limits allow), your interest rate would be about a 1/4 percentage point lower.

Historically, rates for jumbo loans are a bit higher than conforming loans.  Think about it.  There's inherently more risk in giving someone more money than less.  But today, the perceived risk is low enough on those larger loans, that the banks don't need as much return on that additional risk.  That's the great strength of this real estate market in Colorado.

So if you want $350,000, you can't get a jumbo loan.  They're only for amounts greater than the new higher loan limits ($474,950 in Boulder County for year 2016).  So the new higher loan limits mean that some people will pay a higher interest rate in 2016 than they would have in 2015, simply because the loan limits increased.

I'm very happy that the government perceives us as less risky this year than last, but until the market corrects itself to a more historically average situation, some people will pay a little more for it.

Human beings running the world.  We'll keep trying.

Call me as you need.  I'm always here for you.

Enjoy the day,
Mike Moger
Wright Kingdom Real Estate
303.541.1920 office
303.859.4467 mobile

Thursday, December 10, 2015

FHA Loan Limits increased in Colorado

It happened again.  We have another indicator that the value of real estate in Colorado has increased.

The US Government periodically changes the loan limits for its FHA insured loans.  Mind you, it doesn't happen because time has passed or Congress chooses to throw a bone to the public before an election cycle.  It happens because the risk factors for the loans has changed.  When average home values increase in a given geography, the risk of giving someone a higher loan amount diminishes.

Loan limits for FHA loans have now increased for some communities in Colorado, as follow:

What you're looking at is not only the governement's increased level of trust in home values in Colorado, it's flat out good news for people buying homes in the above counties.  Fannie Mae and Freddie Mac did the same thing a short time ago.  

You simply cannot deny when every indicator coming at you is positive that real estate is a good bet in most of Colorado.  Yay for us.

Call me as you need.  I'm always here for you.

303.541.1920 office
303.859.4467 mobile

Friday, December 4, 2015

HARP Program is no longer needed in Colorado

We all remember that the wheels kind of fell off the economic wagon in 2008.  Times were hard, home values were declining, and many, many people were suddenly upside down on their mortgages.  Walking away became a viable option, which would have made things even worse for the country.

As a result, in 2009 the US government initiated a wonderful program for those homeowners called HARP (Home Affordable Refinancing Program).  It encouraged people to refinance at very low interest rates and lower their monthly mortgage payments.  The government saw this as a tool to stem the number of people who might choose to abandon those mortgages and homes.

The structure was great.  You couldn't have been late with a payment in the past six months, and only once in the six months prior to that.  The balance on the loan had to be more than 80% of the current value of the home, and your original interest rate had to be 1.5 percentage points above the current rates.  A whole lot of people were immediately eligible for that opportunity.

Time for an update.  The HARP loans are still available for anyone qualifying, but here in Colorado we'll see almost no takers.  Simply put, our economy and home values are much too strong.

FHFA (Federal Home Finance Administration) just came out with the updated estimates of the numbers of homeowners that are now eligible for the program.  Following is a chart that breaks down the numbers by community.

That's right.  Eleven homeowners in the greater Denver area look to qualify at this time.  Pueblo has a bit more than 100, and there are a very few areas that all total a few hundred.  

Fact is, our home values and economy for the most part don't need the program anymore.  Some states do, and it's a wonderful program.  We've just outgrown it.  Yay for Colorado. 

Call me as you need.  I'm always here for you.

303.541.1920 office
303.859.4467 mobile

Thursday, December 3, 2015

Mortgage Rate update for 2015 12 3

Thursday every week is the time when Freddie Mac reports to the world what mortgage interest rates looked like over the past seven days.  The results for this week are now in, as follows:

What that means for your monthly mortgage payment is that, for every $100,000 you borrow on a standard 30-year loan, the payment will be $473.39.  A 15-year mortgage for the same $100,000 will be $736.18.

Not bad.  When I started selling real estate in the early 1980's, interest rates were 17-18%.  Throw that into a calculator and be amazed.

Call me as you need.  I'm always here for you.

Mike Moger
Wright Kingdom Real Estate
Boulder, Colorado
303-541-1920 office
303-859-4467 mobile