Reduced Mortgage Insurance Premiums Allow More Buyers to Qualify

CF Funding is happy to share that the Department of Housing and Urban Development recently announced a 50 basis point reduction in MIP rates. In the HUD’s Mortgagee Letter 2015-01 , they shared that the new MIP rates will take effect January 26^th. The executive order announced January 8^th that the annual premiums on FHA backed loans with terms greater than 15 years will be reduced from about 1.35% of the loan balance to .85% of the loan balance.*

Since the change is only in effect for borrowers with case numbers issued on or after January 26^th, FHA is allowing cancellation requests for borrowers currently in process. Ask your CF Funding loan officer to see if you could be eligible for this cancellation!

According to Jann Swanson of Mortgage News Daily, “For borrowers who have recently closed an FHA loan which has been funded there will be no immediate recourse.  They will have to wait the mandatory 210 day period  and have made six payments on their existing FHA loan before refinancing through a streamline loan in order to secure the lower MIP.”

*for most FHA loans. 

Take 2 Tylenol, Reduce the Asking Price?

Yesterday, Wall Street Journal published an article titled "Can Tylenol Ease the Pain of a Home Sale?" in response to a study at the Univeristy of Kentucky. The study "Can Acetaminophen Reduce the Pain of Decision Making?",  based on the principle that physical and emotional pain can overlap, has now been connected to the real estate industry. Psychologists, journalists, and real estate professionals are asking the question, could painkillers cause homeowners to reduce their asking price? 

According to www.scientificdirect.com, "experiments showed that acetaminophen reduced the pain of decision-making, as indicated by lower attitude change that accompanies cognitive dissonance and lower selling prices when selling personal possessions." The study of 95 undergraduate students compared asking prices when the students were asked to sell a mug. The students were asked to study the mug for 30 seconds "to create a sense of attachment," before making an offer, according to WSJ. Students who took acetaminophen asked for about $4.15 to $5.92, while students who took a placebo asked for about $5.55 to $6.27. 

Stefanos Chen of WSJ explained that "the results illustrate 'loss aversion'... the thought of losing the mug caused pain, and the acetaminophen helped students who were attached to the mug decide to sell at a lower price." Professor Nathan DeWall of Univeristy of Kentucky stated, "It's the same principle at play when a sentimental homeowner balks at an agent's comparable sales figures and demands a higher price for his home."

It is hard to say without further research whether or not the same results would apply to an item with much higher sense of attachment - such as a home. 

What do you think?  Leave your comments below! 

California's Short Sales at Lowest Since 2008

CF Funding is happy to share that California’s pending home sales increased significantly in March, while short sales dropped to a six-year low. According to the California Association of Realtors (CAR), “pending home sales increased more than usual [in March] and rose to the highest level in eight months… meanwhile, the share of short sales has fallen to levels last observed in 2008.”

Pending home sales increased 17.8 percent, and the PHSI (Pending Home Sales Index) rose from 97.1 in February to 114.4 in March. This is the highest index since July 2013. Although March of 2013 had about 9.9 percent more pending sales, the CAR says this decline “has been tapering over the past few months.” Equity sales, defined as non-distressed property sales, have increased over the past year and saw a 2.6 percent increase in March, reaching 87.6 percent. CF Funding expects that equity sales will continue to rise as the Spring season brings out more homebuyers and the economy continues to improve. In March 2013, equity sales made up only 71.8 percent of sales.

30 out of 38 counties in California saw a decrease in distressed sales month-to-month. Counties with the least amount of distressed sales included Alameda, Marin, San Diego, and Santa Clara. Alameda, Marin, and San Mateo also experienced the best year-over-year improvement (in reduced distressed sales), as well as Madera and Monterey counties. Declines in short sales and REO sales were significant across the state of California in March, falling from 15 to 12.4 percent. The C.A.R. says one year ago distressed sales were more than twice as high, reaching 28.2 percent.

As seen in the chart, equity sales have increased significantly since January 2012. Short sales and REO sales in California have drastically decreased, with REO sales declining 64 percent.

The inventory of properties declined in March (especially non-distressed), with the Unsold Inventory Index dropping from 4.8 months to 4 months, and the supply of REOs dropping from 3 months to 2.8 months. The short-sale inventory fell from 5 months in February to 4.7 months in March.

CF Funding is licensed in California, as well as Illinois, Colorado, Tennessee, Florida, and soon Texas and Virginia. Homebuyers in these states who are in need of a mortgage should contact CF Funding Corporation for a free consultation, as the lender compares rates and programs from multiple lenders. Call 888-344-4080 or visit www.cffunding.com for more information.

Americans are Buying Second Homes As Market Recovers

According to Fannie Mae’s report released Monday, titled “Second Homes: Recovery Post Financial Crisis,” the second home mortgage market is recovering after the housing market crash, and is expected to continue to grow. CF Funding is happy to share this sign of economic recovery. The Housing Insights report shared that second home mortgage origination has averaged about 4.6 percent of the total purchase market since 1998, and it has grown in the past few years. Fannie Mae and Freddie Mac have acquired about 64 percent of these second home purchase mortgages.

The National Association of Realtors’ survey of second home buyers, which was released last week, is used in the report to share general characteristics of second home buyers vs. those of primary residence buyers (those who have only one home). The typical second home buyer was profiled as about 47 years old, as opposed to a primary home buyer’s average age of 38. A second home buyer usually comes from a two-earner household and has a median household income of $90,660, whereas the primary homebuyer has a median household income of $74,580. The average second home buyer finances the purchase of their home about 61 percent of the time and usually puts down a larger down payment on their home than a primary homebuyer.

The increase in second home buying correlates with CF Funding’s April 2 article titled “Vacation Sales Rise Strongly in NAR Survey,” as the lender observed that more high-net-worth households gained enough confidence in the housing market to buy a recreational property last year. Fannie Mae also mentioned that “34 percent of all second home mortgages have been originated on properties located in Florida, California, and Arizona,” which makes sense as these states are located in warmer climates where many purchase vacation homes. Read the full CF Funding article here.

Fannie Mae also shared a history of the second home mortgage market, as the second home share of PMM has more than tripled from the late 90’s through about 2006, then declined through 2009. This is relatively consistent with the cycle of the real estate market. Since 2009, the second home mortgages share of all purchases has increased, as “private lenders are increasingly more willing to lend to second home borrowers.” During the housing peak (around March 2006), the share of second home mortgages peaked at more than 15 times its share compared to 1998 volumes, while other purchase mortgages were at less than 4 times their 1998 mortgages.

Although the population aged 45-64, who are most likely to buy a second home, is expected to grow more slowly than the rest of the adult population through 2060, it is still predicted that second homes will occupy a large part of real estate and mortgage business in the years to come. CF Funding looks forward to assisting second home buyers in financing their new home purchase. 

For more updates on daily mortgage news, follow CF Funding on Twitter at www.twitter.com/CF_Funding or visit our daily news feed at www.cffunding.com/index.php/news/ .

CF Funding Opens New Location, Ribbon Cutting Ceremony in Plainfield

CF Funding is happy to announce the grand opening of a new location in Plainfield, IL. This family-owned mortgage lending company has been in business since March of 2000, and is proud of their A+ rating with the BBB for the past 5 years.

The firm offers both purchase and refinance mortgages, including
 conventional, FHA, VA and Home Affordable Refinance Programs (HARP). CF Funding works closely with each client to find the best solution for their needs. Clients of CF Funding have described the company’s loan officers as “extremely professional, helpful in overcoming barriers, creative in developing solutions to secure affordable financing, and very responsive to my questions and concerns.” The lender now has two locations in Illinois, but also provides services to clients in Colorado, Tennessee, and California.

Amanda Meath, branch manager at the new Plainfield location, is excited about the new opportunities that area residents will have to refinance, purchase a home, or consolidate debt. “We are extremely happy to be located in the heart of beautiful downtown Plainfield and I’m excited to put my 16 years of experience towards helping clients obtain the ultimate American dream of purchasing their own home!  I’m also excited to work with existing homeowners to refinance their current mortgage.  As a mortgage banker with the ability to also broker mortgages, CF Funding offers a vast majority of loan programs and I’m looking forward to sharing my knowledge of the lending world to help homeowners manage their mortgage.”

According to John Kocher, President of CF Funding Corporation, “We have always looked out for the customer’s best interest and strive to get them the best mortgage rate possible. Expanding our business will allow more homeowners to save money and to achieve the goal of purchasing or refinancing a home.” The lender looks forward to the growth of the housing industry in 2014 and will continue to provide quality service in the years to come.

To contact CF Funding at their new location, visit 24113 Lockport St. Suite B East, Plainfield IL 60544, call (815)317-0589 to set up a consultation, or visit the lender online at www.cffunding.com.

Follow CF Funding on facebook at www.facebook.com/cffundingcorp or on twitter at www.twitter.com/CF_Funding ! 

UPDATE: Our PACC Ribbon cutting ceremony will be held at the new location on Thursday April 10 at 4pm. Please join us to see what your new CF Funding location has to offer the Plainfield Community!

Vacation Sales Rise Strongly in NAR Survey

According to the National Association of Realtors’ 2014 Investment and Vacation Home Buyers Survey, vacation-home sales rose 29.7 percent last year to reach 717,000. This is quite a large jump in comparison to the previous year’s 553,000. At the same time, investment-home sales decreased by 8.5 percent in 2013, at 1.1 million in comparison to 2012’s 1.21 million investment home sales.

Vacation home sales represented 13 percent of all transactions in 2013. The improvement in vacation home sales was expected by NAR Chief Economist Lawrence Yun, who said “growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property.” CF Funding is happy to see an improvement in this market, although vacation home sales are still not at their peak levels seen in 2006 (about 1/3 less). The average vacation homebuyer was 43 years old with a median household income of $85,600. Most properties purchased were within 180 miles from the purchaser’s primary residence, and 46 percent were within 100 miles.

CF Funding expected a decrease in investment activity as prices rose in 2013, as confirmed by Lawrence Yun. Yun addressed the decrease in investment purchases by explaining that “prices were rising quickly [in 2013] along with a declining availability of discounted foreclosures over the course of the year… In 2011 and 2012, investment property was a no-brainer because home prices had sharply overcorrected during the downturn in many areas, creating great bargains that could be quickly turned into profitable rentals. With a return to more normal market conditions, investors now have to evaluate their purchases more carefully and do their homework.” About 47 percent of investment home purchases in 2013 were distressed sales, and the median investment-home price was $130,000.

According to the NAR, the 2014 survey includes answers from about 2,203 homes purchased during 2013, and is controlled for age and income to limit biases in the characteristics of respondents.

Homebuyers looking to purchase a vacation home should contact CF Funding Corporation today for a free preapproval. Now is a great time to buy, but rates are rising! Call (630)328-8900 or visit www.cffunding.com.