Housing Outlook Charleston SCHere locally our market is probably like most, on fire; well that’s getting a little carried away. Nothing will be like the yesteryear of 05 – 06′ when things were just out of control with housing. With that said there is no mistaken that in my local area of Charleston South Carolina the housing market is booming and dare I say it definitely a seller’s market. With such a lack of inventory (good inventory that is) seller’s are winning the battle of price wars between buyers, and buyers are paying. Agents like myself are seeing bidding wars, homes sell over list price, and multiple offer situations on a regular basis which does not bode well for prospective buyers. Although not like it was in the ‘boom’ if you’re considering selling this is without question the time to be doing it. Rates are hovering just above 4% and that is still CHEAP money, having spent 13+ years as a mortgage expert I know the trend, and these low rates can not and will not last forever. Trust me.Last week CNBC reported that although mortgage applications were on the decline this is primarily because of refinancing. Purchases aren’t slowing down in the foreseeable future, although buyers aren’t as willing to “put their necks out” like they once were before the housing bubble burst. Despite future expectations, though, mortgage applications to purchase a home also fell, down 3 percent from the previous week but were still 14 percent higher than the same week one year ago. Home sales have not been as strong as some predicted this spring, but that may have more to do with tight supply than higher interest rates.CNBC’s Diana Olick Explains
Lower Mortgage Insurance Rates Coming | Easier To Buy First Home in Charleston SCBuying your first home, or any home with less than 20% down just got a whole lot easier. Government-backed home loans like FHA will soon be less costly for first-time buyers to come up with a down payment or to afford private mortgage insurance if the Obama administration has their way. Early last week Washington D.C. announced that the premium that borrowers with an FHA-backed home loan must pay for mortgage insurance will be dropped to 0.85% from 1.35% by the end of January.By doing so it is estimated to save the average home buyer $900 a year, as well as help save money for homeowners looking to refinance their mortgage the home have less than 20% equity.Coupled with the big news last month that Fannie Mae and Freddie Mac would be adopting new guidelines on down payments down from a minimum of 5% to 3% this bodes well for the real estate market. “These two changes between the FHA, Freddie Mac and Fannie Mae are a huge signal to the market that it’s OK to lend to first-time home buyers again,” said Chris Brand, broker-in-charge Brand Name Real Estate.According to NAR, first-time buyers accounted for 31% of all previously occupied homes bought in November. That’s well below the 40% that has been historically common.For most, affordability still remains the largest hurdle because they have insufficient savings or poor credit — hurdles that could keep them from benefiting from the recent loan policy changes.Here are three things to keep in mind if you’re considering applying for a home loan backed by Fannie Mae, Freddie Mac or guaranteed by the FHA:THE SKINNYAnd the rate cut will do nothing to change the underwriting requirements for FHA-backed loans.Not all borrowers will qualify for the 3% down payment on a home loan guaranteed by Fannie Mae and Freddie Mac. Very high credit scores will be what is expected to even be considered.Under the terms announced last month, borrowers must have enough income to afford the monthly payments. And the rate is only good on homes that will be used as the borrowers’ primary residence.Freddie Mac’s version of the loan program also requires that borrowers earn less than the median income.– FHA, Fannie Mae and Freddie Mac have their own definition of a qualified borrower, but banks often go beyond these standards, raising the threshold for what it takes to qualify for a home loan. Primarily, because they don’t want to risk not being able to sell the loan later on the secondary market. Banks do this to shield themselves from the possibility that they might have to buy back loans they sell to the government should the loan go unpaid. That can happen if the government determines that the lender failed to vet borrowers’ creditworthiness properly.Typically, it’s less costly to go conventional because FHA charges higher mortgage insurance premiums (MIP), even after the recent reduction. In addition, the interest rates are lower for conventional loans.Bottom line – Save Save Save. The more money you put down the better off you’ll be.
Second Home Mortgage Financing Charleston, South CarolinaSECOND HOME LOANS & VACATION HOME MORTGAGES CHARLESTON SOUTH CAROLINACharleston SC, Isle of Palms, Sullivan’s Island, Kiawah Island, Folly Beach, Wild Dunes Resort , Myrtle Beach, Pawley’s Island, Hilton Head, and Edisto Island are riddled with second homes (vacation homes), and getting the right mortgage financing is of the utmost importance for such a large investment. As an ex-mortgage expert for over 13 years I have an understanding of what it takes to get approved, and the important factors involved in obtaining the right loan and insuring mortgage approval for buying a vacation second home. Buying a second home can be like planning the vacation of a lifetime. Because it’s a significant investment, there are many things a future homeowner should know about the purchase process, and this article will cover the most important parts. Owning a second home is a great option, but it is important to do one’s research before committing to such a big responsibility. There are two main types of second homes: vacation homes, and investment homes. The definition of a true “second home” varies from lender to lender, but typically, to be defined as a vacation home the house must be at least 50 miles away from your primary home. Usually, the property must be capable of year-round occupancy, and it must be occupied for a portion of the year. Investment homes are usually defined as property that the owner does not intend to occupy, or they can be vacation home that is too close to your first home. Here in Charleston South Carolina, one can gather that there are a lot of second homes because of us being a coastal beach town, and a historic luxury vacation destination as well. In many instances there are 3rd and 4th homes that people own here, however, these wouldn’t qualify for standard mortgages. As far as mortgage rates go, second homes will always have a higher rate than your first home. Properties not considered a primary residence are assigned much higher rates because the bank is taking a greater risk, and therefore, the risk is represented in the rate. The risk for the bank is; if you were to go into financial distress (such as 2008) the first property you were to relinquish would be the vacation home. Banks also consider what’s called the “loan to value” of the requested mortgage loan. This is the amount borrowed as a percentage of the appraised value of the property. Keep in mind that a higher loan to value of the house means a higher rate. It is harder and more expensive to obtain a loan for your second home, and you should expect to put down at least 10 percent, likely more, and to pay a higher interest rate that is a quarter (.25%) to half (.50%) of a percentage higher or possibly more if the property you want to purchase is an attached home such as: condo, or villa. There are many factors that one should consider when thinking about buying a second “vacation” home, but once you’ve made the decision that a second home is right for you. Be sure to get the right real estate agent and lending professional before you begin your search for the perfect getaway.Article Written By: Meg Robb Guild Mortgage