Archives for May 2014

Good News For First-Time Home Buyers

May 29, 2014 By Sean Zalmanoff

First-time home buyers have new opportunities for home ownership.

This May, the new regulator for Fannie Mae and Freddie Mac plus the secretary for HUD made announcements that they are going to make some policy changes so that first-time home buyers will find credit more attainable. This is in response to the recent housing recovery coming to a sudden and inexplicable halt after months of tremendous strides forward.

The Decrease in First-Time Home Buyers

Some professionals are blaming the halt on a tight and over-priced mortgage market while others point the finger at the decrease in first-time home buyers. Whatever is to blame, these government agencies are thankfully looking for ways to amend the problem. Mel Watt, the new director of the Federal Housing Finance Agency, has already announced that the maximum loan amounts for Fannie and Freddie will stand at the current $417,000 despite rumors that there were plans to lower it. Mr. Watt, who is in charge of overseeing the workings of the two major mortgage lenders, is attempting to ease the minds of banks who still feel leery when dealing with Fannie Mae and Freddie Mac products. This is in direct contrast with the purpose of the programs, which is to make funds for housing more accessible to consumers.

Reducing Mortgage Insurance Premiums

Meanwhile, HUD secretary Shaun Donovan is proposing changes aimed directly at the first-time home buyer market. This fall, the FHA will start a 4-year pilot program that allows first-time home buyers a reduction in the insurance premiums on their loans if they commit to credit counseling. The average FHA loan balance is roughly $180,000. With this trial program, a first-time home buyer could potentially save $10,000 over the course of the mortgage just by taking classes in money management skills.

As home prices continue to rise, being able to afford a home has become a concern for potential home buyers. With these reductions in mortgage prices, they can offset the increased price of the home with a better priced mortgage package. The best way for a new home buyer to take advantage of these changes is by utilizing a service like Sean Z’s TBD mortgage program. To be determined lending looks at the borrowers history as opposed to the value of the home they are interested in. A first-time home buyer can be approved through this TBD program first, find out how much house they can afford, and then start looking for one that falls into their criteria.

A Better Opportunity to Buy a Home

By easing the mortgage pricing, first-time home buyers are going to find that they can afford more house than they thought possible. With luck, this will spark a growth in home sales as this lagging portion of the housing market is given better opportunities to buy a house. The FHA is realizing that the loss of the first-time home buyer has a great deal to do with the sudden slowing down of the housing market. By targeting this group and encouraging new homeownership we should start to see more growth.

If you are considering buying your first home, now is the time and Sean Z is the one lender who can help you. With him, gain the confidence you may need to start your homeownership journey by finding out first what your spending limit is. Call SeanZMortgage at (314) 361-9979.

Photo credit: are you my rik? via Flickr

Why the St. Louis Housing Market May Be Stagnant

May 22, 2014 By Sean Zalmanoff

Home sales for St. Louis were up for 2013, but have since leveled off over the last few months.

There are many factors affecting the number of homes that are being sold, including a significant drop in the number of first time home buyers to the market.Professionals are predicting that 2014 will not see any drastic changes in the St. Louis housing market as there are major positives, like a growing job market taking place in the area, being thwarted by the fear of raising interest rates.

A Growing Job Market

The St. Louis job market is looking good for 2014 and beyond, partially thanks to the Swiss-based company, IKEA, choosing all local contractors to build their new superstore in downtown St. Louis. The highly popular retail store is expected to break ground in just a few months and plans on being ready to open by the fall of 2015. That opening will lead to hundreds of new jobs available to St. Louis residents.

A rising job market is great news for the real estate industry, which should see benefits as St. Louis residents gain more personal financial security. Unfortunately, they are still fearful of the rising interest rates which are expected to continue to go up into the new year. Now would be the right time to lock in at a rate before interest rates continue this upward trend.

A Decrease In New Housing Construction

Another factor being cited as the reason for a lagging home sales market is a decrease in new housing construction. Smaller construction companies are being held back by difficulties in securing loans, meaning contractors are not able to break ground on new homes. With any luck the credit will begin to flow again, adding new jobs to the St. Louis area as well as new homes. Once there is an increase in economic activity, there will naturally be an increase in home sales.

An Increase in Property Values

The rate of home sales is of special interest to those St. Louis home owners who are still strapped with a mortgage that is greater than the value of their home. Once St. Louis residents feel the financial security of steady jobs and begin to invade the home buyers market, those property values should increase, allowing home owners to take advantage of low interest rates now to refinance high interest loans before they hit their expected peak at the end of the year.

As of right now, the market remains stagnant as St. Louis residents wait for new jobs to arrive and mortgage interest rates to drop. Unfortunately, what they do not realize is that right now they are probably at the lowest they will be for the rest of this year.
If you are considering a new home purchase for 2014, now is the best time to lock in on an interest rate. Call SeanZMortgage at (314) 361-9979. With guaranteed financing given before you find a home, like the Sean Z TBA home mortgage program, you can get a good mortgage rate now, and take your time finding the right house to fit your budget.

Photo credit: Ron Reiring via Flickr

Paying For College: Refinance Your Home or Use Student Loans?

May 16, 2014 By Sean Zalmanoff

Graduation season is just around the corner, and if you are the parent of a senior, then you may already be worrying about the expense of college.

If you have managed to build up equity in your home over the years, then it might make sense for you to tap into it to help with the cost of college. This is not a decision to be made lightly, as you are using an investment that you have worked hard for to now invest in the future of your child.

Explore All Your Options

Before looking at refinancing your home or taking out a home equity loan against it, make sure all other options have been exhausted. Some students may qualify for financial aid or scholarship programs. With the high cost of a college education, even an added boost of $500 a month will be a big help. Ensure that your child has gone over all possibilities of student aid programs with their high school guidance counselor when it comes to paying for higher education.

Federal Student Loans

Federal student loans are also another path you and your family can pursue. Compared with a private student loan, a federally backed loan will usually come with a lower fixed interest rate. In addition, repayment is based on their income and they will have options to postpone payments if necessary without damaging their credit score. You can use this type of loan to cover a portion of the cost and make up the difference from a refinance loan on your house. In this way the debt is split between you and your child, hopefully giving them more incentive to do well in school. Private student loans are not nearly as forgiving and may leave your child with a debt they cannot afford after graduation.

Once you have secured as much funding from outside sources as you can, you can start to consider your homes’ equity to secure the difference. With interest rates still hovering around 4.5% and lower, now is a good time for a refinance loan. All indicators are pointing to that number rising about 4% before the end of 2014.

Refinance, Home Equity Loan, or Home Equity Line of Credit

A cash out first mortgage refinance is the better choice over a home equity loan or a home equity line of credit. The interest rate may be a bit higher than refinancing with no cash out, but it will be significantly lower than a home equity loan. Plus, remember the added benefit of being able to use the interest paid on a refinance as a tax write-off. A home equity line of credit may have an appealing low interest rate, plus the ability to draw from the money as needed, but this type of loan is adjustable. That means that if things go as predicted, your interest rate on that line of credit will jump substantially over the next few years.

This is not a decision to be made lightly, which is why you should be considering your options now before you even see the high school diploma. You can begin taking some steps to further improve on the value of your house, increasing your odds of securing a loan at a reasonable rate. Remember, if you are able to do it, there is no other investment opportunity that is nearly as rewarding as the one you can make in your own child’s future. Call SeanZMortgage at (314) 361-9979.

Photo credit: Chris Campbell via Flickr

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