DreamTeam-Jo Cel Perez & Hector Gamez

On Friday Fannie Mae announced it will require borrowers using interest-only mortgages to place at least 30% down. This requirement will ensure that buyers can qualify for their mortgage payments should the interest rate rise to the CAP rate, which wasn’t the way the mortgages had been underwritten in the past.

Fannie Mae also said that in order for them to purchase ARM’s that borrowers must qualify using either:

1. The loan’s initial interest rate plus two percentage points.
2. The cap, the maximum the interest rate can rise.

“Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long-term, while helping our lender partners offer a range of mortgage products for qualified borrowers,” says Marianne Sullivan, senior vice president of Single Family Credit Policy and Risk Management at Fannie Mae, in a prepared release.

In light of defaults from the last 2 years, this makes sense to make sure the borrowers can sustain their mortgages payment should the interest rate rise and just in case the borrowers for some reason are unable to refinance their homes. Perhaps they should think about raising the credit score for those borrowers as well.

• Initial Job claims more than expected at $456,000 this week from $450,000. However, it was still better than last week’s figure at $480,000.
• Exisiting Home Sales rose 6.8 percent nationwide in March to a 5.35 million annual rate, according to the NATIONAL ASSOCIATION OF REALTORS®.
• Existing, single-family home sales increased 2.5 percent in March.The statewide median price of an existing single-family home increased 20.8 percent in March to
  $301,790.
• According to the Mortgage Bankers Association on Wednesday, demand for mortgages rose 13.6 percent as mortgage rates stablized during the week ending April 16.

Mortgage rates fell for the third straight week on 30-year fixed home loans, according to Freddie Mac. This week average interest on 30-year mortgages was 4.99 percent, compared to 5.06 percent last week and 5.16 percent a year ago.

Rates on 15-year fixed loans were also lower, averaging 4.40 percent, compared to 4.45 percent last week. Adjustable-rate mortgages also fell this week, the 5/1 ARM being at 4.27% and the 1 year at 4.32. .

“Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th.

Source: Freddie Mac

· Existing, single-family home sales increased 1 percent in October to a seasonally adjusted rate of 562,400 units on an annualized basis.

· The statewide median price of an existing single-family home increased 0.3 percent in October to $297,500, compared with September 2009.

· C.A.R.’s Unsold Inventory Index fell to 4 months in October, compared with 6.1 months in October 2008.

. The median number of days it took to sell a single-family home was 34.1 days in October 2009, compared with 45.5 days (revised) for the same period a year ago.

. Statewide, the 10 cities with the highest median home prices in California during October 2009 were: Palo Alto, $1,639,550; Los Altos, $1,592,550; Manhattan Beach, $1,037,500; Cupertino, $1,030,000; Newport Beach, $935,000; Los Gatos, $920,000; Rancho Palos Verdes, $900,000; Santa Barbara, $897,500; Lafayette, $867,500; and Santa Monica, $786,000.

October 2009 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted

Median Prices By Region – Current Month vs. Year Ago

 Source: CALIFORNIA ASSOCIATION OF REALTORS^®

. Thirty-year fixed-mortgage interest rates averaged 4.95 percent during October 2009, compared with 6.20 percent in October 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.55 percent in October 2009, compared with 5.21 percent in October 2008.

Calif. median home price – August 09: $292,960 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region August 09: Santa Barbara So. Coast $828,750 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region August 09: High Desert $111,770 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index – Second Quarter 2009: 67 percent (Source: C.A.R.)
Mortgage rates – week ending 10/15/09 30-yr. fixed: 4.92% Fees/points: 0.7% 15-yr. fixed: 4.37% Fees/points: 0.7% 1-yr. adjustable: 4.60% Fees/points: 0.5% (Source: Freddie Mac)

Local Median Home Prices….

  County/City/Area                August 2009               August 2008             % Change

Source:CAR

According to a Goldman Sachs economists this week, the Federal Reserve will probably keep interest rates low to assist with keeping debt low and getting rid of debt. While some think the Fed will probably raise rates, the economists believe rates will be close to zero until the end of 2010 or perhaps even longer. One more year of low interest rates will probably be in the best interest of the economy and help continue to stimulate the housing market, which is still in need of more stimulation.

Since there are so many tips out there about how to improve one’s credit score, I though I would put my two cents out there. Fico scores are very important and often times determines the rate of interest you will pay on a mortgage loan, what type of financing you are able to get, and even if you can qualify for a mortgage. You can try these tips out and see what happens, or your Loan Officer can run a credit analyzer through the credit agency which will give you more specifics about what you can do regarding your specific credit situation..

First and foremost, have your Loan Officer give you a copy of your credit report…..

1. To improve your credit score by 8-15 points try paying off any credit card balances that are less than $1000 and remember to leave the accounts open.
2. Review your credit and look for any duplicate accounts. Have the credit agency remove any duplicates.
3. Review your credit and look for multiple social security numbers. Advise your Loan Officer of any social security numbers that aren’t yours or your spouses. Have the credit agency remove them.
4. Payoff any collection accounts that are less than 6 months old. This can potentially increase your credit score by 8-14 points.
5. Of course during the loan process continue to make your payments on-time. Late payments can affect your credit score from 40-100 points.
6. Review your credit report for any errors. Errors can be corrected with documentation and a updated credit report can be ran.
7. Make sure you have at least 3 trade lines (accounts) that have been opened for at least 2 years and leave the accounts open (you can loose 7-12 points)
8. Collection and charge-off accounts, even if sold to other companies, will remain on your credit until they are paid. Once paid, you may be able to have the accounts deleted. A lender may delete a late payment depending on the circumstances.
9. Shopping around for another lender can cost you to loose 5+ points for each inquiry.
10. Over time it can take 3 months to 1 year for on time late payments to improve your score after recent late payments, Bankruptcy, or Foreclosure.

Keep in mind these may not increase your credit score by these exact numbers, but this can give you a pretty good idea on how much of an impact a few changes can make. Again your Loan Officer can do this for you through a credit analyzer, but the cost of that will most likely be passed on to you…..