December 2014
M T W T F S S
« Nov    
1234567
891011121314
15161718192021
22232425262728
293031  

Cashwoe Categories

Avoid reverse mortgage regrets

Lots of people don’t fully understand how reverse mortgages work, and the resulting confusion can leave them with a lot of regrets.

Reverse mortgages were largely created for seniors who are cash-poor but house-rich – they have a lot of equity in their homes. The idea was to allow seniors to remain in their homes by borrowing a portion of their equity to supplement their incomes.

To qualify for a reverse mortgage, you have to be 62 or older. But unlike traditional home loan products, there is no monthly payment. The loan isn’t due until the borrower moves, sells or dies.

The overwhelming majority of borrowers get a reverse mortgage through the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program.

I recently wrote about the loan product and many readers had questions and concerns.

One wrote: “It is recommended that the prospective borrower seek the guidance of a counselor. How independent are these counselors? My late cousin had obtained a reverse mortgage to supplement her limited pension. My impression was that the ‘counselor’ essentially presented my cousin with the different options of receiving the reverse mortgage (lump sum, monthly, etc.) rather than the associated costs, requirements and risks.”

Counseling is not recommended, it’s required by the Department of Housing and Urban Development. Borrowers have to use HUD-approved housing counselors, who must discuss not just how a reverse mortgage works and its eligibility requirements but the financial implications of getting this type of loan. They also are supposed to talk about alternatives. Their job is to help guide people to make their own decisions about whether the product is right for them.

Counselors are allowed to charge for counseling, but the agency must tell you about the fee before charging it. Fees are typically about $125, but some agencies charge less. Agencies are also required to waive the counseling fee if a borrower can’t afford it. You can pay the fee directly to the agency or out of your loan proceeds.

Another reader wrote: “A home equity line of credit can serve the same function as a reverse mortgage at much lower costs, and with the potential of being able to withdraw a larger percentage of equity than with a reverse mortgage. Am I missing something?”

The problem with a line of credit for cash-strapped seniors is that they may not qualify for the loan and they have to make monthly payments. The appeal of a reverse mortgage is that no monthly payment is required.

I also received a heart-wrenching note from one senior in Florida whose husband had taken out a reverse mortgage. She had signed over her rights to their home to her husband so that he could get a higher mortgage amount. She was 57 at the time. He was 62.

Some people, who married later in life, never add the spouse to the deed to a home that one spouse owned previously, said Jean Constantine-Davis, senior attorney with AARP Foundation Litigation. “More commonly, the younger spouses are talked into quit-claiming their interest in the home by mortgage brokers to generate higher draw on equity,” she said. “The couples virtually never understand that under the terms of the mortgage, when the borrowing spouse dies, the surviving spouse will be foreclosed on and evicted.”

That’s what happened to the reader.

“They assured me there would be no problem in adding my name back when I turned 62,” she wrote. “They failed to tell us that would require qualifying for a refinance.”

Now they can’t afford to [...]

Before you tap your home for cash…

Thumbnail

NEW YORK (CNNMoney)

During the housing bust, many homeowners were cut off from a popular source of funds: their homes.

But as home prices recover, more people have been able to tap their home’s equity to pay for renovations, consolidate debts or help pay for other big ticket items.

Home equity lines of credit were up 27% during the year ended June 30, according to financial services company Experian and consulting firm Oliver Wyman. And more people are expected to follow suit.

But does that mean a home equity loan (HEL) or home equity line of credit (HELOC) is right for you? Here are five things you need to consider.

1. Rates

In recent years, mortgage rates have hovered near historic lows — with nearly 9 million borrowers getting 30-year fixed mortgages at or below 4%, according to CoreLogic.

Now rates are expected to rise.

“We may be in for a more volatile period,” said Keith Gumbinger, of HSH.com, a mortgage information firm. Coming to an end next month are several of the Federal Reserve’s efforts to keep rates low under its quantitative easing monetary policy, he noted.

So if you are one of the borrowers who locked in an ultra-low rate in the past few years, a home equity loan or HELOC could save you more money than refinancing the entire mortgage through a cash-out refinance.

Related: Best cities for Millennial buyers

If you refinance your loan now, you’re likely to pay a rate that is as much as a percentage point higher than your original loan. And you will be paying that rate on the entire loan balance.

“Somebody who has a 3.5% first mortgage is not going to do a cash-out refinance at 5.5% unless they absolutely have to,” said Greg McBride, senior financial analyst for BankRate.com.

While rates on home equity loans tend to be a couple of percentage points higher, you will only be paying that higher rate on a fraction of your total loan balance.

HELOCs tend to offer competitive rates, but they are often adjustable, meaning there is a risk they will rise. Again, you will only pay the higher rate on the amount of credit you’ve taken out.

2. Costs

The price you’ll pay upfront to get a home equity loan or HELOC is far cheaper than refinancing.

That’s because many lenders make you go through the full underwriting process when you refinance — and they charge all the fees that go along with that process, too.

How much do you know about mortgages?

You can expect to pay inspection and attorney review fees, for example, and you will have to get a new title search and insurance, which can typically cost $1,000 or more, depending on the size of your mortgage. In total, all of those upfront costs of refinancing can put you back two to three grand depending on the size of your loan.

Meanwhile, some lenders issue home equity loans or lines of credit with no upfront costs; borrowers pay for their application, appraisal and other fees by paying a higher interest rate.

3. Time

When you take out a home equity loan or HELOC, you keep making your payments on the same payment schedule.

When you refinance a loan, however, the clock resets.

Quiz: Are you a homebuying genius?

So even if you’ve paid 30 months on a 30-year loan and then refinance, when you make your first payment on the new loan it will be like starting at day one of the 30-year term.

However, if you opt to roll the 30-year loan into a 15-year one, that would then reduce the number of payments you make but increase the amount of your payments each month.

4. What the loan or line of credit is for

The best reason to take out a home equity loan is when it has some positive impact on your finances. Using it to pay for a renovation that adds value to your property, for example, or to pay for an advanced degree that can increase your earning power.

Of course, there are times when borrowing against your home doesn’t make sense.

It can be foolish to tap your home’s equity for nonessential spending, for example. Using home equity to buy a Mercedes, pay for a luxury vacation or make some other discretionary purchase can be a foolish move. The money will be gone and you will be paying off the debt for years to come.

Draining your home of equity can also put you on the road to foreclosure. Run into unexpected expenses and there’s one less source of funds to tap.

5.Tax benefits

Just like first mortgages, certain home equity loans and HELOCs are eligible for the home mortgage interest deduction. Borrowers can deduct up to $100,000 of interest paid on a mortgage’s principal.

That’s not always the case when you pursue a cash-out refinance.

First Published: October 7, 2014: 7:42 PM ET [...]

5 things to consider before tapping your home for cash

Thumbnail

NEW YORK (CNNMoney)

During the housing bust, many homeowners were cut off from a popular source of funds: their homes.

But as home prices recover, more people have been able to tap their home’s equity to pay for renovations, consolidate debts or help pay for other big ticket items.

Home equity lines of credit were up 27% during the year ended June 30, according to financial services company Experian and consulting firm Oliver Wyman. And more people are expected to follow suit.

But does that mean a home equity loan (HEL) or home equity line of credit (HELOC) is right for you? Here are five things you need to consider.

1. Rates

In recent years, mortgage rates have hovered near historic lows — with nearly 9 million borrowers getting 30-year fixed mortgages at or below 4%, according to CoreLogic.

Now rates are expected to rise.

“We may be in for a more volatile period,” said Keith Gumbinger, of HSH.com, a mortgage information firm. Coming to an end next month are several of the Federal Reserve’s efforts to keep rates low under its quantitative easing monetary policy, he noted.

So if you are one of the borrowers who locked in an ultra-low rate in the past few years, a home equity loan or HELOC could save you more money than refinancing the entire mortgage through a cash-out refinance.

Related: Best cities for Millennial buyers

If you refinance your loan now, you’re likely to pay a rate that is as much as a percentage point higher than your original loan. And you will be paying that rate on the entire loan balance.

“Somebody who has a 3.5% first mortgage is not going to do a cash-out refinance at 5.5% unless they absolutely have to,” said Greg McBride, senior financial analyst for BankRate.com.

While rates on home equity loans tend to be a couple of percentage points higher, you will only be paying that higher rate on a fraction of your total loan balance.

HELOCs tend to offer competitive rates, but they are often adjustable, meaning there is a risk they will rise. Again, you will only pay the higher rate on the amount of credit you’ve taken out.

2. Costs

The price you’ll pay upfront to get a home equity loan or HELOC is far cheaper than refinancing.

That’s because many lenders make you go through the full underwriting process when you refinance — and they charge all the fees that go along with that process, too.

How much do you know about mortgages?

You can expect to pay inspection and attorney review fees, for example, and you will have to get a new title search and insurance, which can typically cost $1,000 or more, depending on the size of your mortgage. In total, all of those upfront costs of refinancing can put you back two to three grand depending on the size of your loan.

Meanwhile, some lenders issue home equity loans or lines of credit with no upfront costs; borrowers pay for their application, appraisal and other fees by paying a higher interest rate.

3. Time

When you take out a home equity loan or HELOC, you keep making your payments on the same payment schedule.

When you refinance a loan, however, the clock resets.

Quiz: Are you a homebuying genius?

So even if you’ve paid 30 months on a 30-year loan and then refinance, when you make your first payment on the new loan it will be like starting at day one of the 30-year term.

However, if you opt to roll the 30-year loan into a 15-year one, that would then reduce the number of payments you make but increase the amount of your payments each month.

4. What the loan or line of credit is for

The best reason to take out a home equity loan is when it has some positive impact on your finances. Using it to pay for a renovation that adds value to your property, for example, or to pay for an advanced degree that can increase your earning power.

Of course, there are times when borrowing against your home doesn’t make sense.

It can be foolish to tap your home’s equity for nonessential spending, for example. Using home equity to buy a Mercedes, pay for a luxury vacation or make some other discretionary purchase can be a foolish move. The money will be gone and you will be paying off the debt for years to come.

Draining your home of equity can also put you on the road to foreclosure. Run into unexpected expenses and there’s one less source of funds to tap.

5.Tax benefits

Just like first mortgages, certain home equity loans and HELOCs are eligible for the home mortgage interest deduction. Borrowers can deduct up to $100,000 of interest paid on a mortgage’s principal.

That’s not always the case when you pursue a cash-out refinance.

First Published: October 7, 2014: 7:42 PM ET [...]

Cash-strapped Latino biz booms

Biz2Credit announced last week the average annual revenue for Latino-owned businesses was $69,518.56, while for non-Latino-owned businesses, the figure was $86,501.47, a nearly $17,000 difference. Meanwhile, the average credit score for Latino-owned businesses was 611.7, compared to 622.3 for all others.

Interestingly, the average operating expenses for Latino-owned companies were lower ($20,981.19) than for non-Latino businesses ($29,455.54). On the surface, this seems like good news. However, many of these companies are operating out of homes rather than offices, which add to overhead. This may be fine for a landscaping company or catering business, for instance. But if an entrepreneur realistically plans to take his or her business to the next level, it is important to have an infrastructure in place and accurate accounting records. This can be a struggle for many business owners.

Because of their lower credit scores and revenue, Latino entrepreneurs face greater scrutiny from banks. The impact of these financial realities is that Latinos often must turn to high-interest, non-bank lenders. These so-called alternative lenders include firms that provide payday loans and cash-advance companies. In some cases, these lenders charge interest rates as high as 30 percent to 40 percent.

Read MoreSBA administrator kicks off Hispanic Heritage [...]

Fitch: US Single-Family Rental Deals Face Higher Refinance Risk

NEW YORK–(BUSINESS WIRE)–

Elevated cash flow leverage, refinance risk and dependence on property liquidation for debt repayment remain key reasons for our ‘A’ cap on single-borrower, single-family rental (SFR) transactions. Presale reports for recent SFR transactions justify elevated leverage with current property values and the likelihood of repayment through the foreclosure and sale of the properties, particularly to owner occupants. In our view, this line of thinking may persuade market participants to materially underestimate maturity default risk and the issuers’ ability to refinance.

Unlike traditional RMBS loans, SFR transactions do not fully amortize, exposing issuers to term as well as maturity risk. Term default risk is mitigated by the currently low interest rates and interest rate caps. However, loans with balloon payments will default at maturity if not refinanced. To refinance, secured lenders expect property cash flow to cover expected principal and interest payments.

A common measure of leverage and refinance capacity for income producing real estate is debt yield (property cash flow divided by debt). For three recent SFR transactions, Silver Bay Realty 2014-1, American Residential Properties 2014-SFR-1 and Invitation Homes 2014-SFR2, other rating agencies calculate debt yields in the 5% range. In contrast, debt yields for Freddie Mac K Series transactions are approximately 9%.

Debt yield represents a loan’s maximum interest rate based on a property’s cash flow. Using the Invitation Homes transaction as an example, the break-even interest rate on the loan is 4.0%. If a takeout lender required a minimum debt service coverage ratio of 1.2x, the break-even rate refinance rate drops to 3.34%. If the takeout lender also required the loan to amortize on a 30-year schedule, the break-even interest rate drops to approximately 2 bps (0.002%). This is also illustrated by simply comparing the annual debt service on the loan at 3.34% ($24,049,378) to the balloon balance simply divided by 30 equal annual installments ($24,000,733).

Given the leverage on SFR transactions, it is unlikely a secured lender would refinance the current debt, absent significant improvement in property cash flow. Fitch also believes that debt repayment predicated on foreclosure and liquidation is contrary to sponsor plans to build SFR portfolios, and is inconsistent with high investment-grade ratings.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

FinanceDebtSFR
Contact:

Fitch Ratings

Daniel Chambers, +1 212-908-0782

Managing Director

U.S. Commercial Mortgage-Backed Securities

33 Whitehall Street

New York, NY

or

Rob Rowan, +1 212-908-9159

Senior Director

Fitch Wire

or

Media Relations:

Sandro Scenga, +1 212-908-0278

All-Cash Share of U.S. Home Sales Pulls Back From 3-Year High, Institutional Investor Share Drops to 3-Year Low

IRVINE, CA–(Marketwired – Aug 19, 2014) – RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its Q2 2014 U.S. Institutional Investor & Cash Sales Report, which shows all-cash sales accounted for 37.9 percent of all sales of single family homes and condos nationwide in the second quarter, down from a three-year high of 42.0 percent in the previous quarter but still up from 35.7 percent a year ago.

The report also shows that sales to institutional investors — entities that purchase at least 10 properties in a calendar year — accounted for 4.7 percent of all sales of single family homes and condos in the second quarter, down from 5.3 percent in the previous quarter and down from 5.8 percent a year ago to the lowest level since the first quarter of 2012.

“The flurry of purchases by institutional investors and other cash buyers that kicked off two years ago when U.S. home prices hit bottom is finally showing signs of subsiding,” said Daren Blomquist, RealtyTrac vice president, noting that the U.S. median home prices bottomed out in March 2012. “Over the past 10 quarters cash sales have accounted for 39 percent of all home sales on average, and institutional investor purchases have accounted for 5.3 percent of all home sales on average. Prior to that, from 2001 to 2011, the average quarterly cash share was 30 percent, and the average quarterly institutional investor share was 2.6 percent.”

“This is a classic good news/bad news scenario for the housing market,” Blomquist continued. “The good news is that fewer cash buyers should help loosen up inventory of homes for sale and reduce competitive bidding, giving first time homebuyers and other non-cash buyers more opportunities. The bad news is that some of those first time homebuyers and other non-cash buyers may already be priced out of the market thanks to the rapid run-up in home prices over the past two years in many areas.”

Cash sales account for larger share of very high-end, low-end and distressed sales
The report shows that U.S. cash sales hit a recent peak of 45.8 percent of all home sales in the first quarter of 2012, when home prices bottomed out, but were down to as low as 34.0 percent of all sales in the third quarter of 2013 before jumping to 36.6 percent in the fourth quarter on the heels of the rise in interest rates and jumping again to 42.0 percent of all sales in the first quarter of 2014, when new qualified mortgage rules from the Consumer Financial Protection Bureau took effect.

Cash sales in the second quarter were skewed higher on both ends of the home price spectrum. Cash sales accounted for 67 percent of purchases of homes selling for $100,000 or less, and cash sales accounted for 45 percent of purchases of homes selling for more than $2 million.

Cash sales represented a larger share of distressed sales, with 49 percent of bank-owned sales, 61 percent of sales of properties in the foreclosure process, and 96 percent of sales at the foreclosure auction. By comparison, non-distressed home sales were 36 percent all-cash.

Cash sales more than half of all sales in Miami, New York, Detroit, Atlanta, Las Vegas
Among metropolitan statistical areas with a population of at least 500,000, those with the top six highest percentages of cash sales were all in Florida: Miami-Fort Lauderdale-Pompano Beach (64.1 percent), Cape Coral-Fort Myers (62.1 percent), Sarasota-Bradenton-Venice (61.5 percent), Tampa-St. Petersburg-Clearwater (54.6 percent), Lakeland (53.0 percent), and Orlando-Kissimmee (52.2 percent). All six metros posted a lower all-cash share of sales than the previous quarter and a year ago.

Other major metro areas with an all-cash share among the top 20 highest nationwide were Las Vegas (50.7 percent), New York (48.2 percent), Detroit (47.7 percent), Kansas City (46.8 percent), Philadelphia (45.1 percent), and Cleveland (45.1 percent).

Analysis of percentage of cash sales with subsequent financing
RealtyTrac analyzed more than 7,500 all-cash transactions for single family homes in Orange County, Calif., between January 2013 and July 2014 to determine what percentage of the properties purchases were subsequently financed by the buyer.

The analysis found that 10 percent of those all-cash purchases had some sort of subsequent mortgage taken out by the owner who purchased with cash. The subsequent financing was recorded on average 136 days after the sale of the property was recorded.

Institutional investor share increases in Las Vegas, Jacksonville, Columbus, Miami
Among metropolitan statistical areas with a population of at least 500,000, those with the highest share of institutional investor purchases in the second quarter were Atlanta-Sandy Springs-Marietta (15.6 percent), Las Vegas-Paradise (14.4 percent), Jacksonville, Fla., (12. 5 percent), Memphis, Tenn. (12.0 percent), and Charlotte-Gastonia-Concord (11.3 percent).

Although Atlanta documented the highest share of institutional investor sales in the second quarter, its 15.6 percent share was down from a 20.6 percent share in the first quarter and a 16.5 percent share in the second quarter of 2013 — following nine consecutive quarters with year-over-year increases in Atlanta’s institutional investor share.

The institutional investor share of home purchases were also down from a year ago in Memphis and Charlotte, but increased from a year ago in Las Vegas and Jacksonville, bucking the national trend.

Other metro areas among the top 10 for institutional investor share with increases from a year ago were Knoxville, Tenn., (10.0 percent compared to 6.9 percent a year ago); Columbus, Ohio (9.2 percent compared to 6.9 percent a year ago); and Miami (8.2 percent compared to 6.7 percent a year ago).

Institutional investor breakdown: price, foreclosure status, financing and bulk sales
The report shows that the second quarter share of institutional investor purchases was the lowest since the first quarter of 2012, when they represented 4.6 percent of all U.S. home sales. The peak in institutional investor share of all sales was 6.0 percent in the first quarter of 2013.

In the second quarter institutional investors purchased homes at an average sale price of $147,017, while the average estimated full market value of the homes purchased was $164,553 at the time of the sale.

The majority of purchases made by institutional investors in the second quarter were all-cash (79 percent) and not in any stage of foreclosure or bank-owned (80 percent). Of the remaining 20 percent, 7 percent were bank-owned, 11 percent were scheduled for a foreclosure auction, and 2 percent were in default with no foreclosure auction date set.

Analysis of institutional investor bulk transactions on single family homes
Among the 29,444 single family homes purchased by institutional investors in the second quarter, 8,856 (29 percent) were bulk transactions involving multiple properties sold on the same date from the same seller and to the same buyer. The 29 percent bulk transactions was down from 31 percent in the previous quarter but still up from 19 percent a year ago.

An analysis of the buyers and sellers involved with the bulk transactions indicated that most of the bulk transactions involve an institutional investor with multiple corporations purchasing properties that are consolidating all of those properties under a single ownership name. A detailed breakdown of buyers and sellers involved in these bulk transactions is available upon request.

Report methodology
The RealtyTrac U.S. Institutional Investor & Cash Sales Report provides percentages of all sales that are sold to institutional investors and cash buyers, by state and metropolitan statistical area. Data is also available at the county and zip code level upon request. The data is derived from recorded sales deeds and loan data. Statistics for previous quarters are revised when each new quarterly report is issued as more deed data becomes available for those previous months.

Special note on methodology change in second quarter of 2014: RealtyTrac adjusted its methodology for calculating cash sales, changing how loan coverage was determined and eliminating data from one of the data providers used in the past.

Definitions
All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in the last 12 months.

Report License 
The RealtyTrac U.S. Residential & Foreclosure Sales report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com.

About RealtyTrac
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by many federal government agencies, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

FinanceReal EstateRealtyTracInstitutional [...]

Most Orlando luxury estate buyers come with cash in hand

Thumbnail

The buyer who purchased Dwight Howard‘s estate in Seminole County last month wasn’t the Orlando market’s only luxury seeker to come with cash in hand.

The NBA star had three cash offers on his lakefront mansion, which sold last month for $3.4 million — $1.5 million less than the asking price.

Of the 20 Metro Orlando homes that sold for $2 million or more during the second quarter, 12 of them, or 60 percent, went for cash, according to a new study by the real estate research firm RealtyTrac. Nationally, 45 percent of buyers in that price range paid cash during the period.

Related

Dwight Howard unloads Chateau D’Usse for $3.4 million

Get text alerts on your phone!

Pictures: Orlando power brokers

Photos

Pictures: Orlando powerhouse businesses

Pictures: Closed for business: Orlando-area retail and restaurant closings

Pictures: Notable chains make their way to Orlando

See more photos »

Topics


Orlando Real Estate


Homes


Real Estate Buyers

See more topics »

Regardless of how they are funded, the number of high-end deals has increased in the Orlando market. Reports from the Orlando Regional Realtor Association show that the core Orlando market, which mostly includes Orange and Seminole counties, had 156 sales of $1 million or more from January through July — more than double the rate five years ago during the real-estate downturn.

“The vast percentage of my high-end sales have been cash” for at least the past year, said Nancy Bagby, an associate for Fannie Hillman and Associates of Winter Park. “There are a couple of reasons for this. For one, we’re getting cash offers from people who know they can get a better deal if they don’t have a 30-day contingency on getting financing.”



Pictures: Orlando attractions that have closed


In addition, she said, cash buyers can avoid going through the appraisal process. Appraisers have come under fire from real-estate agents for various reasons — including being too conservative and being unfamiliar with neighborhood values, according to a 2013 survey of agents by the National Association of Realtors.

Anecdotally, real-estate agents say those buyers also “crowd-fund” by getting friends and family to loan them cash so they have a better chance of getting a contract in multiple-offer situations, said Daren Blomquist, vice president of RealtyTrac. After the sale closes, they secure more traditional financing to repay their original lenders.

In markets such as Orlando and Miami, the high proportion of cash sales is also being driven by foreign buyers who are looking for a place to park some of their savings.

“The thing we hear the most from brokers and agents working with foreign investors is that the U.S. real estate market is considered a safe haven and, now that it’s coming off from a downward cycle, they also consider it a value proposition,” Blomquist added.

Wayne Weger, the listing agent on Howard’s house, said prospective buyers for the home on Markham Woods Road were all of Middle Eastern descent. But they weren’t looking for a safe haven for their money as much as they were seeking a place to enjoy their success, he said. Software entrepreneur Nisim Heletz purchased the 11,000-square-foot house.

Just as Orlando had a disproportionately high rate of cash deals in the upper end of the residential market, it also attracted plenty of cash for more affordable housing. For houses and condominiums selling for $100,000 or less, more than 80 percent of the buyers paid cash in Metro Orlando. The rates were 78 percent statewide and 67 percent nationally.

The number of cash deals is declining in Florida, however. In the four-county Orlando region, 52 percent of residential sales during the second quarter were cash — down from 56 percent a year earlier. The rate of cash buying declined similarly throughout the state but increased slightly across the nation.

mshanklin@tribune.com or [...]

Freddie Mac 2014 Second Quarter Refinance Report

MCLEAN, VA–(Marketwired – Jul 29, 2014) – Freddie Mac (OTCQB: FMCC) today released the results of its second quarter 2014 quarterly refinance analysis, showing that borrowers will save in aggregate more than $1 billion in interest payments over the coming year, as borrowers continued to shorten their payment terms and build equity in their homes.

News Facts

Of borrowers who refinanced during the second quarter of 2014, 40 percent shortened their loan term, approximately the same as the previous quarter and the highest since 1992. In the second quarter, an estimated $7.8 billion in net home equity was cashed out during a refinance of conventional prime-credit home mortgages, up from the revised $5 billion last quarter. Adjusted for inflation, annual cash-out volumes during 2010 through 2013 have been the smallest since 1997. In aggregate, U.S. home equity grew by an estimated $4.1 trillion during the two-year period through March 31, 2014. Much of this gain was attributable to home value gains. The average mortgage interest rate reduction in the second quarter was about 1.4 percentage points — or a savings of about 24 percent. On a $200,000 loan, that translates into interest savings of about $2,800 during the next 12 months. Homeowners who refinanced through HARP during the second quarter of 2014 benefited from an average mortgage interest rate reduction of 1.6 percentage points and will save an average of $3,200 in interest payments during the first 12 months, or about $260 every month. About 79 percent of those who refinanced their first-lien home mortgage maintained approximately the same loan amount or lowered their principal balance by paying in additional money at the closing table, down 4 percent from the previous quarter. The peak was 88 percent during the second quarter of 2012. The median age of the original loan outstanding before refinance increased to 7.3 years during the first quarter, the most since the analysis began in 1985 and unchanged from the previous quarter.

Quotes
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist:

“The housing market realized a significant shift in the second quarter of this year as refinance activity fell below 50 percent marking the onset of the first purchase-dominated market the industry has seen since 2000 and an end to the refinance boom that started in late 2008. In this time we saw fixed mortgage rates hit all-time lows, with the 30-year fixed-rate mortgage falling well below 4 percent. We also estimate over 25 million American borrowers refinanced their loans to the tune of over $70 billion in total interest payment savings. However, since 2008 homeowners cashed-out approximately $215 billion in home equity, adjusted for inflation. The low level of cash-out refinance volume in the second quarter, despite the estimated $2.8 billion increase over last quarter, reflects how much home equity was lost during the Great Recession. Even with recent home price gains and rock-bottom interest rates, American households are not cashing out equity at rates we’ve seen historically. Regardless of the minimal level of cash-out refinance activity, when we couple it with lower mortgage rates and shorter terms homeowners have taken out through refinance over the past couple years, they have accelerated principal pay down and contributed to the rebound in home-equity accumulation.”

About the Quarterly Refinance Report
These estimates come from a sample of properties on which Freddie Mac has funded two successive conventional, first-mortgage loans, and the latest loan is for refinance rather than for purchase. The analysis does not track the use of funds made available from these refinances. The analysis also does not track loans paid off in entirety, with no new loan placed. Some loan products, such as 1-year ARMs and balloons, are based on a small number of transactions.

With the report for the first quarter of 2013, the calculation of the principal balance at payoff of the previous loan has been modified. Previously, the payoff balance was calculated as the amount due based on the loan’s amortization schedule, and “cash-in” was defined as a new loan amount that was less than the scheduled amortization amount. Data for 1994 to current have been recalculated using the actual payoff amount of the old loan, with an allowance for rounding down the principal at refinance; thus, from 1994 to present, “cash-in” is defined as a new loan amount that is at least $1,000 less than the payoff principal balance of the old loan. Data are presented under both methods for 1994 for comparison purposes.

Second Quarter 2014 Refinance Statistics

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

LoansInvesting EducationFreddie [...]

Jason M. Ruedy, The Home Loan Arranger, Analyzes the Baby Boomer Generation's Impact on the Housing Market

Thumbnail

Jason. M Ruedy

Denver, Colorado (PRWEB) June 24, 2014

Mortgage lender,Jason M. Ruedy, also known as The Home Loan Arranger, is keenly aware that many members of the “Baby Boomer” generation (individuals born between 1946 and 1964) are presently selling their existing homes – which have significant equity – and purchasing replacement homes with cash.

Many Baby Boomers purchased real estate for the first time in the early 1980s, when the median price for homes was significantly lower than it is in 2014. Now that a large percentage of these individuals have paid their original mortgages in full, and home values have gone up significantly over the course of 30 years, they are selling their existing homes for huge profits and purchasing retirement homes with the cash earned from selling.

An article published on Bloomberg.com on June 2, 2014 entitled, “Cash Deals for Homes Reach Record with Boomers Retiring” prompted Mr. Jason Ruedy to start a discussion on the same matter. Although The Home Loan Arranger understands that the Baby Boomer generation does not want the responsibility of making monthly mortgage payments, he also believes that Baby Boomers are vying for different types of real estate than individuals in younger generations.

“Home sellers often prefer to sell their homes to individuals offering to buy the properties in cash instead of with mortgages. So in a bidding war, the cash buyer is often the one who wins. I’m hoping that prospective home buyers will not read the article published on Bloomberg.com and get discouraged. I believe that Baby Boomers are looking to purchase very different types of properties than younger people – especially people in their 20s and 30s, and new families with young children.”

“The Bloomberg.com article discusses the fact that a large percentage of Baby Boomers are looking for real estate in rural communities or areas that cater to older adults. So, younger individuals or families looking to purchase homes with mortgages are not necessarily going to be competing with cash-in-hand Baby Boomers.” – Jason M. Ruedy, The Home Loan Arranger

In Mr. Ruedy’s opinion, the Baby Boomer generation wants the peace of mind that goes along with owning a home outright. However, those that need a mortgage in order to purchase a home should work with a reputable mortgage lender to make the home buying process as quick and easy as possible.

About The Home Loan Arranger:

Mr. Jason M. Ruedy, also known as The Home Loan Arranger, has 20+ years of experience in the mortgage business. His company was built around the crucial principles of hard work, discipline, and determination. The Home Loan Arranger evaluates client applications quickly and efficiently and structures loans with the best possible terms. Mr. Ruedy is successful in achieving loan closings for clients while meeting their highest expectations. Jason M. Ruedy is ranked #2 in the state of Colorado by Scotsman Guide, which is the top leading resource for mortgage originators.

For media inquiries, please contact Mr. Jason M. Ruedy, “The Home Loan Arranger”:

The Home Loan Arranger

512 Cook St #100

Denver, CO USA

Phone: (303) 862-4742

Toll Free: (877) 938-7501

http://www.thehomeloanarranger.com/


Smartland Suggests Unique Financing Options for Current and Potential Real Estate Investors

Thumbnail

Smartland Suggests Unique Financing Options for Current and Potential Real Estate Investors

Although the number of cash purchases have been at an all-time high, the number of investors who are opting to finance real estate investments across the nation have been on the uprise. Investors can take advantage of consolidation programs with low interest rates and impressive loan-to-value ratios on any Smartland property.

The benefits associated with today’s financing options are certainly worth considering.

Highland Heights, OH (PRWEB) June 04, 2014

As home prices across the nation continue to rise, the number of investors looking to finance residential real estate investments are increasing concurrently. In response to this growing trend, Smartland has explored the best possible financing options to facilitate the needs of its current and potential real estate investors. All-cash offers will continue to take the cake in a competitive housing market, however, the benefits associated with today’s financing options are certainly worth considering.

LLC Blanket Loan

Up to 75% LTV for Properties Owned at Least 12 Months (50% for Foreign Nationals)
Less than 12 Months Calculated at 90% Cost
Single Family Rentals
Non-Recourse
Minimum Credit Score 680 FICO
Emphasizes Cash Flow Not Tax Return
Refinance With or Without Cash

Best Investment Loan Program

Up to 75% LTV
30 Year Loan Amortization at 8-9%
Loans From $100,000
Non-Recourse
Loan Amount Based on Sales Price or Appraised Value
Minimum Credit Score 650 FICO
Single Family Rentals and Multi-Family Homes

A blanket loan is a unique financing alternative that is available to Smartland’s real estate investors, designed to consolidate the mortgages of multiple residential properties into one lump sum loan to be held under an LLC. Blanket loans may also be used to take the equity out of investment properties that were originally cash purchases. Smartland investors who own single family homes, duplexes, and small (1-4 unit) apartment buildings may take advantage of this non-recourse loan to obtain a lower interest rate and gain eligibility for Fannie Mae and Freddie Mac loans. These loans may then be used in future real estate investment purchases. Qualifying terms will vary by lending institution but generally require a combined loan amount of $500,000 and 5 doors, excluding any commercial properties.

Investors shouldn’t shy away from residential real estate purchases just because an all-cash offer is out of reach. Although the number of all-cash home purchases have been at an all-time high, the number of investors who are opting to finance real estate investments across the nation have been on the uprise. With a sizeable down payment, investors can take advantage of consolidation programs with low interest rates and impressive loan-to-value ratios on any Smartland property.

Another attractive financing option that is available to investors is a best investment loan program that is available for single family rentals and multi-family homes. This program offers qualifying Smartland investors a 30 year loan amortization with up to 75% loan-to-value (LTV). Office spaces and mixed-use buildings are also eligible for this loan with a 5% reduction in LTV. This is a non-recourse loan that will protect the borrower’s other assets and only requires the repayment from profits made on the investment property for which the loan was acquired. Individual loan amounts are based on the lower of the sales price or appraised value of the home to be purchased, starting at $100,000 at a rate of 8-9%.