Mortgage amounts are rising more quickly than Columbia SC home prices, an unusual phenomenon that seems to confirm continued weakness at the lower end of the housing market, according to the Mortgage Bankers Association.
When Mortgages Began to Exceed Columbia SC Home Prices
The average size of mortgage loans began to outpace the recovery in Columbia SC home prices in September 2011. By December 2014, according to the trade association's weekly mortgage application survey, the average mortgage loan amount had risen by nearly 32 percent. The average for the week ending March 6, for example, was $294,900, a record high. In other words, the average mortgage now exceeds levels reached before the recession when Columbia SC home prices climbed to unsustainable heights.
There is a lot more activity at the higher end in general. Jumbo loans (which exceed conventional conforming loan limits) account for about 25 percent of mortgages. The brisker activity among jumbo borrowers — those who take out loans greater than $417,000 — is partly because, while there has lately been some loosening of credit for borrowers at the lower end, for the most part, the easing of guidelines has been a bit more on the jumbo end.
Buyers on the lower end — looking for Columbia SC home prices at $250,000 and below — are generally of moderate credit and are having trouble or being intimidated from applying for mortgages.
Borrowers are still being rejected at a historically high rate. According to the Federal Reserve, consumer attitudes towards the availability of applying for, and getting, a mortgage is not changing. Fully 40% of those who might want a mortgage think they’ll be rejected if they apply.
Just in the last year, the mortgage rejection rate jumped 10%, from around 15% of mortgage applications being rejected to nearly 25% being rejected. Even though word may be getting out that there are more types of mortgages available, such as the recent low-down-payment options from the government-sponsored enterprises, the sad reality is that of those people who think they can get a mortgage, too many aren't even applying.
We will continue to monitor Columbia SC home prices and the mortgage market as it relates to prospective buyers and their desire to get their own home in 2015.
Remember, we also post daily on our Facebook Page, and over at Twitter. We'd love you to find us there too.
Many Columbia SC properties were still underwater at the end of 2014. According to CoreLogic, about 5.4 million homes, or 11 percent of all U.S. residential properties with a mortgage, were still in "negative equity" at the end of the fourth quarter of 2014, meaning that a borrower owes more on a Columbia SC home than it is worth. These Columbia SC properties are referred to as "underwater" or "upside down."
Negative Equity of Columbia SC Properties Expected to Improve
Negative equity continued to be a serious issue for the Columbia SC housing market and the U.S. economy at the end of 2014 with 5.4 million homeowners nationwide still "underwater". The situation is expected to improve over the course of 2015. CoreLogic projects their Home Price Index will rise 5 percent in 2015, which will lift about 1 million homeowners out of negative equity.
More and more mortgage borrowers are gaining equity as home prices continue their steady rise. Nearly 1.2 million U.S. borrowers regained equity in 2014.
Fewer Columbia SC properties are underwater since the peak of the foreclosure and financial crisis, but the national aggregate value of negative equity was $348.8 billion for the fourth quarter of 2014, compared to $341.8 billion for third quarter 2014, an increase of $7 billion.
The share of homeowners that had negative equity increased slightly in the fourth quarter of 2014, reflecting the typical weakness in home values during the final quarter of the year. The CoreLogic HPI dipped 0.7 percent from September to December, and the percent of owners "underwater" increased to 10.8 percent. However, from December-to-December, the CoreLogic index was up 4.8 percent, and the negative equity share fell by 2.6 percentage points.
As we move through calendar year 2015, we will continue to monitor Columbia SC properties and their rise from underwater status. We'll post an update to the problem of Columbia SC properties being underwater later in the year to see how they compare to 2014.
Remember, we also post daily on our Facebook Page, and over at Twitter. We'd love you to find us there too.
One of the questions we're asked quite often of people buying a Columbia SC home is, "How much salary do I need to make in order to qualify for a mortgage?"
On a national scale, a buyer who puts 20 percent down would need to earn a salary of $48,604 to afford the median-priced home in America. But that total varies a lot from city to city, and that holds true for anyone buying a Columbia SC home.
HSH.com estimates that you can buy the median home while making less in some areas than others, but some salaries require nearly $90,000 or more. But the most expensive city by far is San Francisco, where the site estimates you would need to make $142,448 to buy the median home in the area.
Qualifying Guidelines When Buying a Columbia SC Home
The site's calculations assume that a buyer spends 28 percent of gross monthly income on housing, including principal, interest, taxes and insurance, (in line with industry guidelines for standard "front-end" debt ratios) and makes a 20 percent down payment on a house.
To calculate the cost of buying the median-priced Columbia SC home, HSH.com combines its own average interest rate for 30-year, fixed-rate mortgages in the fourth quarter; the National Association of Realtors' data on median-home prices in the fourth quarter; average metropolitan property tax data from the Tax Foundation, a Washington-based think tank; and statewide average homeowner insurance premium costs from the Insurance Information Institute, an industry organization.
The data is, of course, an estimate — for one, property taxes and insurance costs will vary depending on the property — but it gives you a good idea of how housing costs varied around the country in the fourth quarter.
Another varying factor based on buying a Columbia SC home is the lower mortgage rates today compared to when rates climb higher. As interest rates rise, so must the salary of the average buyer of a Columbia SC home.
Find more news articles as they relate to buying a Columbia SC home under our Columbia SC Home Buying Tips section of articles, as well as Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories. Also find us on Facebook and follow us on Twitter for daily updates as well.
Buying Columbia SC real estate used to require 20 percent down in most cases to get the best deal and avoid Private Mortgage Insurance. In recent months, the Obama administration has taken several steps to expand the credit box and make it easier for borrowers, especially first-time homebuyers, to buy Columbia SC real estate. To that end, in October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.
For some borrowers, saving up 3% for a down payment is still a hurdle they can't quite clear. However, a new program announced recently will allow some borrowers in select locations to put down even less for a down payment. It seems the "no money down" loans may be attempting a comeback. Yep, the same no money down type of loans that got us into this whole real estate and mortgage crash problem in the first place.
BBVA Compass announced the launch of a new program called Home Ownership Made Easier, or HOME for short, designed to help low and moderate-income borrowers become homeowners by helping to overcome one of the "most significant barriers" to homeownership, the down payment.
In the HOME program, qualifying borrowers may be eligible to finance 100% of the home's value. In addition to offering 100% LTV loans, BBVA will also contribute up to $4,500 toward "certain closing costs" associated with obtaining a home loan.
But not every potential borrower is eligible for the HOME program. The subject property must either be located in a low-to-moderate income census tract (as determined by the Federal Financial Institutions Examination Council) or the loan applicants cannot have an income greater than 80% of the median income for the area, per the guidelines from the U.S. Department of Housing and Urban Development.
In some cases, clients participating in the bank's HOME program may pay a monthly mortgage payment that is less than what they currently pay as renters for buying Columbia SC real estate. We'll keep you posted on how this one goes. Meanwhile…
Mortgage Apps Show More People Buying Columbia SC Real Estate
Despite recent data showing weak home sales for January, a new report shows home buyers may be edging back into the market now.
Mortgage applications for buying Columbia SC real estate rose 5 percent on a seasonally adjusted basis for the week ending February 27th from the previous week, according to the Mortgage Bankers Association (MBA). They are still 2 percent lower than the same week a year ago.
Lower rates could reinvigorate refinances, but mortgage rates do not seem to be the primary driver for those buying Columbia SC real estate. Rising home prices and very tight inventory of homes for sale have been major barriers to entry for first-time and move-up buyers alike. A recent report showed price gains accelerating again after a year of easing. Spring generally brings more sellers to the market, but so far Realtors are not seeing enough new listings at affordable prices to meet the demand.
In the meantime, you can get more information about news that may affect buying Columbia SC real estate in our section of articles on Columbia SC Real Estate News to your right under Columbia SC Real Estate Categories.
Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
A study to make Columbia SC homebuyers realize they could qualify for a free down payment without hitting the jackpot and winning the lottery found that 87 percent of all U.S. homes qualify for down payment help.
Columbia SC Homebuyers Need to Investigate Options
Many Columbia SC homebuyers, especially Millennials, have not fully investigated their home financing options because they are pessimistic about qualifying for a mortgage. The Homeownership Program Index highlights the wide range and availability of down payment programs available to today's Columbia SC homebuyers. 91 percent of the 2,290 programs in the registry have funds available to lend to eligible homebuyers. Income limits vary depending on the market and programs extend beyond just first-time Columbia SC homebuyers. It's important for buyers to research down payment programs as part of their loan shopping process.
Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is, the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country.
RealtyTrac looked at 2,290 down payment programs from Down Payment Resource's Homeownership Program Index and found that out of more than 78 million U.S. single family homes and condos in 1,792 counties with sufficient home value data, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.
Columbia SC Homebuyers May Be Missing the Boat
You could be REALLY missing the boat if you don't at least look into one of the free down payment plans available across the country.
We have seen a dramatic increase in financing options available and loosening of credit scores with conventional 3 percent down payments readily available for qualified Columbia SC homebuyers. This is great news for the millennials and Columbia SC homebuyers re-entering the market.
Get more information about how first time Columbia SC homebuyers, whether Millennials or not, can get started in the home buying process in our section on Columbia SC Home Buyer Tips to your right under Columbia SC Real Estate Categories.
We post daily to Twitter, and also on our Facebook Page. We'd love you to find us there too.