It’s About to Become Easier to Qualify for a Mortgage – Here’s Why

| Jun 20, 2017
 

We’re living in expensive times—when a bottle of fresh juice can run you $5, rents and home prices are soaring, and the bills never seem to stop piling up. But aspiring homeowners might soon get a break as it becomes a little easier for those with student, credit card, and car loan debt to qualify for a mortgage.

Fannie Mae plans to increase its allowable debt-to-income ratio from 45% to 50% on July 29. This means that more borrowers on the cusp of getting a loan (e.g., millennial, first-time, and lower- to moderate-income borrowers carrying more debt) could potentially qualify for a mortgage backed by Fannie.

The debt-to-income ratio is calculated by taking a potential borrower’s monthly gross income and dividing it by the borrower’s recurring debts such as monthly car payments. Lenders use this ratio to figure out if borrowers can afford to make their mortgage payments each month.

“They’re trying to make more loans available,” says mortgage loan originator Don Frommeyer of Marine Bank, in Indianapolis. “When interest rates go up, the debt ratios go up. And that limits the number of people who can buy a house.”

Fannie, which purchases and guarantees mortgages, was already granting ratios of up to 50% with certain conditions—such as if the borrowers had deeper cash reserves, underwent financial counseling, or had higher incomes. The change opens the door to borrowers with more debt who can’t meet those conditions.

Your bank might have its own debt-to-income ratios

However, not everyone will be benefit from the change. Fannie Mae insures mortgages, but it’s still banks, credit unions, and other financial entities that make the loans—and those lenders have their own criteria.

But the increased debt allowance could encourage more lenders to make changes to their debt-to-income ratios. And that could help more buyers on the brink.

“The best thing the consumer can do is ask the lender if they underwrite to Fannie Mae guidelines,” says longtime mortgage broker Jeff Lazerson, based in Laguna Niguel, CA. If they don’t, “you [might] just have to find another lender. Or maybe you push back on that lender” to see if it’ll raise the limits.

Lower debt-to-income ratios won’t help everyone

A higher debt ratio isn’t a silver bullet for loan seekers, though.

“Mortgage borrowers need to keep in mind, it’s the person’s whole application that will determine whether or not they get approved,” says Eric Tyson, co-author of “Mortgages for Dummies.”

“If you don’t have a good credit score, if you don’t have a sufficiently large down payment, it won’t change the outcome of your application.”

Buyers who can’t qualify, even with the higher ratios, should consider other alternatives.

“Most people are looking to buy at the high end of their budget. They want to qualify for as much house as they can get, partly because homes are so expensive to begin with,” says Lazerson, who is also a mortgage columnist.

“They could look for a smaller-sized property [with a] lower sales price. They could find a co-signer, someone who they trust, usually a family member or a close friend,” Lazerson says. “Or [they could] come up with more down payment money.”

Posted on July 17, 2017 at 8:11 pm
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Home Prices Are Soaring – Here are the 20 Places Where Owners are Reaping the Biggest Profits in 2017

If you’re looking to buy or sell a home this year, you probably know the housing market is booming in virtually every corner of the country.

In fact, homeowners who sold in the first quarter of the year realized an average price gain of $44,000 since purchasing their home, a new ATTOM Data Solutions report shows. That equals an average 24% return on purchase price across the country — the highest average price gain for home sellers in nearly 10 years.

“The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are continuing to stay put in their homes longer before selling,” said Daren Blomquist, senior vice president with ATTOM Data Solutions.

The report showed homeowners are staying in their homes just shy of eight years on average. “This counter-intuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers,” Blomquist added.

Of course, there are still some laggards. Baton Rouge, Louisiana, for example, saw average home prices decline by $15,000 from their previous purchase price. The same is true for Huntsville, Alabama, where average home prices declined by $8,100.

Of the 20 metro areas with the highest percent return on the previous purchase price, 10 were located in California and three were in Colorado. Competition among homebuyers, especially in these areas, is fierce, so it’s particularly important to have your finances locked and loaded before you start your search.

Regardless of where you’re looking, getting pre-approved for a mortgage is key. You’ll also want to be sure your credit is in good shape so you’ll get the best mortgage terms available. You can check your credit scores for free on Credit.com.

These are the top 20 metro areas where home sellers are making the most money when selling their homes.

19. TIE: Port St. Lucie, Florida

19. TIE: Port St. Lucie, Florida

Average return on investment: 39%

Average price gain: $53,000

19. TIE: Austin-Round Rock, Texas

19. TIE: Austin-Round Rock, Texas

Average return on investment: 39%

Average price gain: $81,795

16. TIE: San Diego-Carlsbad, California

16. TIE: San Diego-Carlsbad, California

Average return on investment: 41%

Average price gain: $144,000

16. TIE: Riverside-San Bernardino-Ontario, California

16. TIE: Riverside-San Bernardino-Ontario, California

Average return on investment: 41%

Average price gain: $90,000

16. TIE: Boston-Cambridge-Newton, Massachusetts-New Hampshire

16. TIE: Boston-Cambridge-Newton, Massachusetts-New Hampshire

Average return on investment: 41%

Average price gain: $111,100

13. TIE: Oxnard-Thousand Oaks-Ventura, California

13. TIE: Oxnard-Thousand Oaks-Ventura, California

Average return on investment: 43%

Average price gain: $160,000

13. TIE: Sacramento-Roseville-Arden-Arcade, California

13. TIE: Sacramento-Roseville-Arden-Arcade, California

Average return on investment: 43%

Average price gain: $99,000

13. TIE: Fort Collins, Colorado

13. TIE: Fort Collins, Colorado

Average return on investment: 43%

Average price gain: $97,500

12. Greeley, Colorado

12. Greeley, Colorado

Average return on investment: 44%

Average price gain: $85,050

10. TIE: Urban Honolulu, Hawaii

10. TIE: Urban Honolulu, Hawaii

Average return on investment: 46%

Average price gain: $161,110

10. TIE: Salem, Oregon

10. TIE: Salem, Oregon

Average return on investment: 46%

Average price gain: $70,800

9. Vallejo-Fairfield, California

9. Vallejo-Fairfield, California

Average return on investment: 47%

Average price gain: $115,000

7. TIE: Denver-Aurora-Lakewood, Colorado

7. TIE: Denver-Aurora-Lakewood, Colorado

Average return on investment: 50%

Average price gain: $110,000

7. TIE: Los Angeles-Long Beach-Anaheim, California

7. TIE: Los Angeles-Long Beach-Anaheim, California

Average return on investment: 50%

Average price gain: $187,000

5. TIE: Stockton-Lodi, California

5. TIE: Stockton-Lodi, California

Average return on investment: 51%

Average price gain: $101,000

5. TIE: Modesto, California

5. TIE: Modesto, California


Average return on investment: 51%

Average price gain: $87,500

4. Portland-Vancouver-Hillsboro, Oregon-Washington

4. Portland-Vancouver-Hillsboro, Oregon-Washington

Average return on investment: 52%

Average price gain: $110,799

3. Seattle-Tacoma-Bellevue, Washington

3. Seattle-Tacoma-Bellevue, Washington

Average return on investment: 56%

Average price gain: $139,325

2. San Francisco-Oakland-Hayward, California

2. San Francisco-Oakland-Hayward, California

Average return on investment: 65%

Average price gain: $276,750

1. San Jose-Sunnyvale-Santa Clara, California

1. San Jose-Sunnyvale-Santa Clara, California

Average return on investment: 71%

Average price gain: $356,000

Posted on May 1, 2017 at 11:55 pm
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Portland-area home prices push higher

By Elliot Njus | The Oregonian/OregonLive
on March 28, 2017 at 8:31 AM, updated March 28, 2017 at 11:48 AM

Home prices in the Portland area, already at record levels, pushed higher in January.

Prices climbed 0.1 percent during what is usually a seasonally slow month, according to the S&P CoreLogic Case-Shiller home price index, reaching a level 9.7 percent higher than a year earlier.

That’s second only to Seattle’s 11.3 percent increase, year over year, in the 20-city index.

The median home price in Portland was $350,000 in January, according to the Regional Multiple Listing Service. It climbed to $353,400 in February.

The limited supply of homes on the market has helped push prices higher. In Portland, the end of February saw just 3,109 homes on the market, according to RMLS.

Prices are rising fastest among the lowest-priced homes, where first-time homebuyers and investors are competing for deals, but middle- and high-priced homes are seeing similar increases.

Climbing prices continue to take a toll on affordability. Mortgage rates have stayed relatively low, helping would-be homeowners maintain their buying power.

Future increases, however, could put a damper on homebuying, said David M. Blitzer, chairman of the index committee.

“At some point, this process will force prices to level off and decline,” he said in a statement. “However, we don’t appear to be there yet.”

Despite the eye-popping annual increases, there are signs that Portland-area home prices are losing steam.

For six months, monthly home-price growth on a percentage basis has hovered near the national average.

Portland area puts brakes on rapidly rising home prices

Rapid increases in Portland metro home prices may have run out of steam in the second half of 2016.

— Elliot Njus

 

Posted on April 10, 2017 at 7:31 pm
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Rates Likely to Be Left Alone in Uncertain Times

By MARTIN CRUTSINGER The Associated Press
WASHINGTON (AP) — The Federal Reserve is all but sure to leave interest rates alone when it ends a policy meeting Wednesday at a time of steady gains for the U.S. economy but also heightened uncertainty surrounding the new Trump administration.

The Fed will likely signal that it wants further time to monitor the progress of the economy and that it still envisions a gradual pace of rate increases ahead.
“I don’t look for the Fed to do anything this week,” said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. “They are starting to get their ducks in a row for further rate hikes, but it will be too soon to pull the trigger.”

The Fed’s two-day meeting will end with a policy statement that will be studied for any signals of its outlook or intentions. At the moment, most economists foresee no rate increase even at the Fed’s next meeting in March, especially given the unknowns about how President Donald Trump’s ambitious agenda will fare or whether his drive to cancel or rewrite trade deals will slow the economy or unsettle investors.

The statement will not be accompanied by updates to the Fed’s economic forecasts or by a news conference with Chair Janet Yellen, both of which occur four times a year .

Last month, the Fed modestly raised its benchmark short-term rate for the first time since December 2015, when it had raised it after keeping the rate at a record low near zero for seven years. The Fed had driven down its key rate to help rescue the banking system and energize the economy after the 2008 financial crisis and the Great Recession.

When it raised rates last month, the Fed indicated that it expected to do so three more times in 2017. Yet confusion and a lack of details over what exactly Trump’s stimulus program will look like, whether he will succeed in getting it through Congress and what impact it might have on the economy have muddied the outlook.

And while Trump’s tax and spending plans are raising hopes for faster growth, his proposals to impose tariffs on such countries as China and Mexico to correct trade imbalances could slow the economy if U.S. trading partners retaliate and collectively impede the flow of imports and exports.

“The Fed is unlikely to signal intentions to raise rates as early as March given the heightened uncertainty about the timing and scope of fiscal and protectionist policies,” said Sal Guatieri, senior economist at BMO Capital Markets.

Nariman Behravesh, chief economist at IHS Markit, predicts that the economy will grow a modest 2 percent to 2.5 percent this year, before accelerating next year to 2.6 percent to 2.7 percent on the assumption that Trump’s policy proposals will have begun to take full effect by then.

The outlook for both years would mark an improvement over the economy’s lackluster growth of 1.6 percent in 2016, its weakest performance since 2011.

Even though economic growth, as measured by the gross domestic product, was underwhelming last year, the job market appears close to full health. Hiring was consistently solid in 2016, and the unemployment rate ended the year at 4.7 percent, just below the 4.8 percent level the Fed has identified as representing full employment.

And inflation, by the Fed’s preferred measure, rose 1.6 percent in the 12 months that ended in December, moving closer to the Fed’s 2 percent goal.

Posted on February 15, 2017 at 12:57 am
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145 NW Pittock

Pittock

Posted on September 21, 2016 at 8:50 pm
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4933 SW Lodi Lane | SW Portland close-in location

Lodi copy 3

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Posted on September 6, 2016 at 9:15 pm
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Market Update- Home Sales Drop, but Prices Still Climbing

By Elliot Njus, the Oregonian / OregonLive

The Portland-area housing market cooled off in July, thought would-be buyers likely won't feel much relief. More homes went on the market while the number of sales slowed. Even so, the supply of homes for sale remained slim overall, and prices moved higher. The median home price rose to $391,000, up 11.4 percent from a year earlier. The 2,776 homes sold in July represent a drop of nearly 20 percent from a year earlier, in part reflecting the slim supply of homes for sale. Pending sales were also down 5.5 percent from July 2015, suggesting the sales slump will continue into at least late summer. But homes listed on the market sold in an average of 30 days in July, two weeks faster than a year earlier. If sales continued at the same clip, every home on the market would sell in 1.9 months, well short of the six-month supply that indicates a market balanced between willing buyers and sellers. Current conditions indicate a strong seller's market, which is driving prices higher. Sales activity jumped in the North of 26 area of Washington County and the Tigard-Wilsonville area. But supply-constrained areas in North Portland, Hillsboro-Forest Grove, Gresham-Troutdale and Lake Oswego-West Linn all saw above-average price increases. 

Posted on August 20, 2016 at 6:27 pm
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4933 SW Lodi Lane

Lodi

Posted on August 8, 2016 at 7:38 pm
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5054 SW Hilltop Lane

Hilltop

Posted on August 4, 2016 at 8:17 pm
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145 NW Pittock | NEW PRICE!!

Pittock

Posted on August 4, 2016 at 8:15 pm
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