Low mortgage rates gone already for Bay Area?

And why you should rush to buy Low mortgage rates are Going..Going...Gone for Bay Area!! FNMA-30 4.5% coupon went down again today - by a whopping 100 bips. Over last couple of weeks mortgage backed securities have been in a free fall, pushing the mortgage rates up - substantially. According to Freddie Mac 30-year fixed-rate mortgage (FRM) averaged 5.29 percent with an average 0.7 point for the week ending June 4, 2009, up from last week when it averaged 4.91 percent. 15 year fixed rate mortgages and 5 year adjustable rate mortgages moved up too. Note that these averages are for conforming loans under $417,000. The rates for conforming jumbos (loan amounts upto $729,750) and jumbos are higher than these averages. Yields on long-term Treasury bonds have been rising despite the Fed's efforts to push them down by purchasing Treasury securities. The Fed wants Treasury yields lower because they are a benchmark for many other private-sector interest rates -- including rates on mortgages. Concerns about large federal deficits, are one cause of the unwanted rise in yields. The wider the deficits, the more the Treasury borrows and the higher rates go. Wider deficits also stir inflation fears, which also push Treasury yields up. (more…)

FHA allows $8000 tax credit for down payment in San Jose

But can you really use it? Not so fast.... Federal Housing Administration (FHA) announced today that the first time home buyer credit of $8000 can be used as down payment in San Jose & rest of the Bay Area. If you are a first time buyer with limited down payment and you are the type who doesn't read fine prints, it certainly is a great news. But I have my reservations - some serious ones. I see some very basic issues with the announcement which would either delay the implementation or may have…continue reading →

Potent combination of FHA Financing, Steep Home Price Declines & Low Mortgage Rates

According to DataQuick Bay Area home sales posted a year-over-year gain for the eighth consecutive month in April. Santa Clara county had 1606 sales in April 09 compared to 1440 in April 08 up 11.5%. Alameda county had 1457 sales in April 09 compared to 1240 in April 08, up 17.5%. The question is what is causing this robust sales. I guess, I gave away the answer in the post header. Lets discuss the top 3 reasons one at a time. FHA Financing - In April FHA mortgages represented a record 26% of…continue reading →

Housing approaching a trough

In the summary of Fed's late-April meeting released yesterday, there were some important pointers to the economy: Fed officials saw the economy contracting between 1.3% and 2% this year and the GDP was only expected to advance 2%-3% next year. The Unemployment rate is expected to end 2009 between 9.2% and 9.6%, higher than what officials expected in January. Note that for Santa Clara County the unemployment rate at the end of March 2009 was at 10.8% and for Alameda county was at 10.5%. (more…)

Buying a foreclosed home in San Jose with an FHA Loan?

So are you planning to buy a foreclosed home in San Jose with an FHA Loan? Foreclosed properties can be sold by 2 entities: Directly by the Mortgagee (The bank that held the mortgage), or By entities that purchase foreclosed properties either singly or in bulk for resale FHA has a property flipping rule that says that the new owner has to own the property for 90 days before he/she can sell again. FHA on Friday 5/15/2009 extended it's Property Flipping Waiver to 5/10/2010. Meaning, a bank can foreclose on a property today…continue reading →

4 Cs of Home Loans in Bay Area

If you are planning to get a Home Loan in Bay Area, you should be aware of the 4Cs of Lending. Capacity Lenders usually look for a minimum of 2 years of work history in the same line of work. Any employment gaps or extended time off must to be explained. If you had a recent job change or if your income is derived from seasonal work, your income may be considered for qualifying purposes in certain situations. However, less than 2 years of work history may be acceptable if you have been…continue reading →

Are Foreclosure Properties a Good Deal in Santa Clara?

DataQuick said 43 percent of all homes sold in Santa Clara County was in foreclosure upon sometime in the previous 12 months. The number for Alameda county is 46.2 percent. Evidently, most of the current sale is being driven by foreclosed properties; that also explains the falling median prices in these counties. But before jumping on the bandwagon be cautioned that not all foreclosed houses are good deal. Most foreclosures sell at a discount, but the benefit of a lower sales price is often negated by the cost of repairs required to restore…continue reading →

$10,000 California State HomeBuyer Credit

A recently passed law established a personal income tax credit for purchasers of a qualifying principal residence. The tax credit is capped at the lesser of $10,000 or 5 percent of the purchase price for the purchase of a principal residence that has never been occupied made between March 1, 2009 and March 1, 2010. The credit will be provided in equal amounts ($3,333 for the $10,000 credit) over the three successive taxable years beginning with the year in which the purchase is made. Qualifying residences must never have been occupied and must be eligible after purchase, for the Homeowner's Property Tax Exemption. The taxpayer must live in the home as their principal residence for at least two years or be subject to payback for any tax credits received. (more…)

Five Factors That Impact Your Credit Score

What are the factors that impact your credit score? 1. Payment History 35% Impact Paying debt on time and in full has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Missing a high payment will have a more severe impact than missing a low payment, and delinquencies that have occurred in the last two years carry more weight than older items. 2. Outstanding Credit Balances 30% Impact This factor marks the ratio between the outstanding balance and available credit. Ideally, you should make…continue reading →

$8000 First Time Home Buyer Tax Credit for San Jose Purchase

First Time Home Buyer Tax Credit for San Jose and rest of the Bay Area Who is Eligible? The $8,000 tax credit is available for first-time home buyers only. The law defines first-time home buyer as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens and residents (as defined by IRS) who file taxes are eligible to participate in the program. Payback Provisions The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is…continue reading →