Tag Archives: fannie mae

Home Equity: You May Have More Than You Think

Home Equity: You May Have More Than You Think | Keeping Current Matters

CoreLogic recently released their 2015 2nd Quarter Equity Report which revealed that 759,000 properties had regained equity in the last quarter. That means that 91% of allmortgaged properties (approximately 45.9 million) are now in a positive equity position. Anand Nallathambi, president and CEO of CoreLogic, reported:

“For much of the country, the negative equity epidemic is lifting. The biggest reason for this improvement has been the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets.”

Obviously, this is great news for the financial situation of many homeowners.

But, do they realize their equity position has changed?

A recent study by Fannie Mae suggests that many homeowners are unaware that their equity position has changed…in some cases dramatically. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, only 9% of homes are in that position.

The study also revealed that, though 69% of homes had “significant equity” (greater than 20%), only 37% of Americans realize it.

Significant Equity | Keeping Current Matters

This means that 32% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizeable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing).

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

Every homeowner should be aware of the true equity in their house and also realize the opportunities that go along with it. If you are unsure of the savings you currently have built up in your home, contact a real estate professional to help ascertain that number. You may be surprised.

Over 23% Thinking of Selling. Why the Hesitation?

Over 23% Thinking of Selling. Why the Hesitation? | Keeping Current Matters

Last month, the National Association of Realtors (NAR) reported that housing inventory was down 4.7% from the same time last year and that the month’s inventory of homes for sale stood at 4.8 – far below the six months necessary for a normal housing market. Why is there such a shortage of inventory?

The recently released Homeowner Sentiment Survey suggests that the American homeowner may not be fully aware of the opportunities that exist in the current real estate market. The survey, conducted by Edelman Berland for HSF Affiliates, also reports that many homeowners would be placing their home up for sale if they were better informed about today’s market.

Since the housing industry is facing a shortage of housing inventory, the survey’s findings are crucially important.

The survey reported that 23% of current homeowners questioned are considering selling their home, but haven’t yet put it up for sale. That’s almost one out of every four houses. This is the inventory necessary to normalize the balance between “supply & demand” in the current market.

Why are potential sellers hesitating?

The survey shows that 55% of the 23% contemplating selling “would be more likely to put their homes on the market if given more information about the process”. What information do they need?

Here are a few of the challenges that potential sellers perceive to exist according to the survey along with what is actually happening in today’s market:

1. More than half (53%) don’t realize that “the number of homes for sale on the market is lower, giving buyers fewer choices”. As a matter of fact, only 6% of potential sellers believe that listing inventory has recently decreased.

In reality, as we mentioned before, inventory is down from last year.

2. 80% think credit scores make it difficult to get a loan.

In reality, though other studies have shown that many Americans believe that you need a credit score of at least 780 to get a loan when the actual median scores on closed loans are demonstratively lower than that.

3. 76% believe stricter lending requirements make it more difficult to get a mortgage.

In reality, the Mortgage Credit Availability Index shows lending standards have been consistently easing over the last year.

4. 68% think that current homeowners are trapped into their mortgages and are unable to sell their current homes.

In reality, a recent Fannie Mae study revealed that 32% of Americans are dramatically underestimating the current equity in their homes. Many more can afford to make the move they desire.

What’s the answer?

Every family should feel confident when they are buying or selling a home. In order to feel confident they need to truly understand their options and opportunities. HSF Affiliates CEO Gino Blefari put it best when he addressed the findings of the survey:

“Education is essential in today’s market. The stage is set for real estate professionals to connect with consumers, learn their needs and concerns and determine the best way for sellers and buyers to capitalize on the opportunities that exist today.”

Mortgage Lending is NOT Out of Control!!

Mortgage Lending is NOT Out of Control! | Keeping Current Matters

This year, both Freddie Mac & Fannie Mae have introduced new programs that only require a 3% down payment on a mortgage in order to purchase a home. Earlier this month, the Mortgage Bankers’ Association reported that adjustable-rate mortgages (ARMs) may be making a slow comeback as the share of ARMs increased to 7.4 percent of total mortgage applications. Some see this loosening of lending standards as a point of concern.

We know that the ridiculously low lending standards of the early 2000’s were part of the reason a housing bubble formed and burst last decade. Some are worried that we are headed down the same road that caused that housing crisis.

However, a recent survey of a distinguished panel of over 100 economists, investment strategists, and housing market analysts conducted by Pulsenomics showed the vast majority disagree. The survey revealed that only 4% of the experts felt that over the next twelve months lending standards would “ease too much, become too lax”.

Here are the results of that survey:

Mortgage Access Survey | Keeping Current Matters

Bottom Line

There is no question that lending standards are easing; thereby giving more families the opportunity of accomplishing the American Dream of homeownership. However, we are not going back to the ridiculousness of the last decade.

Should I Rent My House Instead of Selling It?

Should I Rent My House Instead of Selling It?  | Keeping Current Matters

The results of Fannie Mae’s June 2015 National Housing Survey, were just released showing that more and more homeowners are warming up to the idea that now may be a great time to sell their home.

The amount of respondents that stated that now is a good time to sell rose three percentage points to a survey high of 52%; which may translate to a healthier market as more homes are listed in the coming months.

At the same time “the percentage of respondents who expect home rental prices to go up rose to 59% – a new survey high.” Doug Duncan, senior vice president and chief economist at Fannie Mae, gave this insight: “The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates.”

There is a chance that those who believe rental prices will rise may consider renting their house rather than selling it at this time.

However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for. Are you ready to be a landlord?

Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to ask BEFORE renting your home

  1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
  2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
  3. Have you interviewed experienced eviction attorneys in case a challenge does arise?
  4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
  5. Will you allow pets? Cats? Dogs? How big a dog?
  6. How will you actually collect the rent? By mail? In person?
  7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?
  8. Do you have a list of craftspeople readily available to handle these repairs?
  9. How often will you do a physical inspection of the property?
  10. Will you alert your current neighbors that you are renting the house?

Bottom Line

Renting out residential real estate historically is a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.