Mortgages: What the lenders look for

Here are the 14 factors, according to Bankrate.com, that the Desktop Underwriter, a Fannie Mae program, that are looked at in judging the borrower's loan qualification. Equity, credit history, your reserves, your debt-to-income ratio, down payment source, or whether you're buying a condo or a house: These are several of the factors. Remember, this is for an automated underwriting approach, it doesn't mean that there aren't other approaches to loan qualification, but the automated approach is one lenders like to use if you qualify because of the ease of finding you the actual loan source on which to close escrow. Click here for the full article.

Homeownership and Consumer Knowledge

How do consumers keep abreast of what is offered to them with the vast array of types of loans and loan sources? That is a question the federal agencies have grappled with for some time, as the model for loan underwriting has changed in the loan industry to one of automated underwriting driven largely by FICO scores of the consumers. The stretching of underwriting criteria by Fannie Mae and Freddie Mac led to an explosion of providers, funders and approaches in the early 1990's. The huge diversity of loan programs and providers cut into the homeownership education counseling programs.

"--the homeownership counseling industry is at a crossroads. The mortgage market has radically changed and originations are dominated by risk-based pricing driven by automated underwriting. Servicing also is increasingly driven by technology. And while predatory lending practices have consumed an enormous amount of attention and effort, the legitimate subprime market is maturing and offering fair options to many borrowers previously shut out of the prime market. Consumers are presented with a dazzling array of product options, and the rise of the Internet has brought the application process into the digital age. In this context, we explore what insights modern research literature has to offer about homeownership counseling." If you want to view the entire Harvard University study, take a look here. (© 2004 President and Fellows of Harvard College.)

Long Beach in 2004

How much did appreciation did we get in 2004? According to DataQuick, which tracks real estate data, the number of single family residences and condos sold in LONG BEACH in 2004 was 5,286 at a median price of $370,000--compare that to $285,000 in 2003, an increase in appreciation of 29.82%.

For the entire state, California Association of Realtors reported on January 25, 2004, that the median price of an existing, single-family detached home in California during December 2004 was $474,480, an 18.1 percent increase over the revised $401,720 median for December 2003. The December 2004 median price increased 0.5 percent compared with a revised $471,980 median price in November.

Interest Rates Lower--Still Under 6%

According to Bankrate.Com, rates in Boston, Houston, Los Angeles and San Francisco and Dallas are all similar (depending on the points paid), around 5.7 to 5.8 percent. Rates have dropped for the third consecutive week, so we're not seeing that upward climb yet, as rates generally continue at a 40-year low. Read more.

Home Builders Expect Strong Housing Market

Positive trends in the national economy are expected to buoy the demand for housing this year, according to a builders survey done in the last two weeks. They are most confident in the West, even though interest rates and high housing prices may offset affordability after a record year in 2004 for sales and single-family start ups. Click here for more.

Remodel Projects a New Force

Households with incomes of $120,000 and up are part of the home improvement market which has grown significantly since 1995. Major kitchen and bath remodels and room additions are the most popular types of projects, with costs of $25,000 accounting for over a third of the remodeling expenditures. A more diverse population of younger homeowners are increasing the demand for remodels, and rival the baby boomer in per-household spending.

Interest Rates Still Down at Second Lowest Average in 32 Years

According to the American Land Title Association, "mortgage rates in 2004 averaged around 5.84 percent, the second lowest annual rate ever recorded in the history of Freddie Mac’s Primary Mortgage Market Survey", according to Amy Cutts, their deputy chief economist. Mortgage rates are expected to rise in 2005, but not enough to slow the housing industry, although sales may drop off slightly from this 2004's pace.

There have been several projections about 2005 will bring, and there is definitely an increase in adjustable rate mortgages, but fixed rates continue under 6%. The national 30-year rate is just a shade lower than this time last year. This economist's projection is that the housing industry will continue to be healthy into the foreseeable future. Read ALTA - Industry News for more.

California Market Continued Its 2004 Increase

We thought it couldn't get any higher, but it has. Will 2005 bring us the same in pricing? Hard to say, but see this for more: "The median price of an existing, single-family detached home in California during November 2004 was $473,260, a 23.1 percent increase over the revised $384,470 median for November 2003, C.A.R. reported."

Increase Your Policy Coverage

A Harris Interactive Survey conducted last June reveals that the participants believed their homeowner's policy was adequate. But with the rising home values, your policy may not be giving you full coverage. The recent fires in California are an example of policy coverages coming up short for those owners. Is your coverage what it should be? Click here to review.

Your Free Credit Report as of December 1, 2004

A recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months. Starting December 1, 2004, consumers in 13 Western states including California will be able to begin making requests by visiting www.annualcreditreport.com, or by calling 877-322-8228, or by mailing a standardized form, to obtain their once-a-year free report. Other states are phased in at later dates throughout 2005.

To inform consumers about their state’s eligibility and help answer questions they may have about the consumer reporting companies’ new service, the Federal Trade Commission has published a new Facts for Consumers brochure, “Your Access to Free Credit Reports.” The alert explains why it is important for consumers to monitor their credit history, how to request a report and how to dispute any errors.

The FTC’s alert is available at http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm. For more information,visit www.ftc.gov/credit.