Mortgage News Roundup

This week’s FOMC meeting has adjourned with an announcement that the Fed trimmed their current bond buying program by another $10 billion per month. This met the analysts predictions.

Following the release of the statement at 2:00 PM ET, the bond market initially worsened but has since improved to near its best levels on Wednesday. The stock markets have extended their earlier losses with the Dow down 172 points and the Nasdaq down 47 points. The bond market is currently up 18/32, which should be enough of a move to cause many lenders to improve rates by approximately .125 of a discount point over this morning’s pricing.

Sales Climb as U.S. Housing Market Adjusts to Rates: Economy

December showed an increase in the number of previously owned home sales for the first time in five months, and capped the highest rate since 2006.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.0 percent to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November, but are 0.6 percent below the 4.90 million-unit level in December 2012.

For all of 2013, there were 5.09 million sales, which is 9.1 percent higher than 2012. It was the strongest performance since 2006 when sales reached an unusual high of 6.48 million at the close of the housing boom.

Self-Employed? The Mortgage Rule You Need to Know

When applying for a mortgage, lenders will classify you as a wage earner employee or self-employed. Furthermore, if you also own a business, or a percentage of a business, you might be considered self-employed even though you are a W-2 wage earner.

Here is how lenders classify you:

• Employee: Individuals are W-2 wage earners and receive a paycheck. From the paycheck, taxes are withheld.
• Self-employed: Everything else including any business entity where income is derived or lost.

Where it gets tricky is when you have an employee who has a stake in the business. They could be considered self-employed. What most loan officers look at is if you own 24% or less of a business. If so, then you’re generally considered an employee. If you own 25% or more, you’re generally considered self-employed.

Talk with a reputable loan officer about your particular situation before you buy a home to ensure that you’ve met all the requirements. These issues will be discussed if you pre-qualify for a mortgage.

Buyers flocked to foreclosures last year — and many paid all cash

Sales of foreclosed and distressed homes made up 16.2% of all home sales last year, up from 14.5% in 2012, according to RealtyTrac. This was unusual and not what was expected because the number of foreclosures dropped to a seven year low in 2013.

There are about 1.2 million properties that are bank owned or in the foreclosure process right now providing a sizable inventory. The median home price of a foreclosed or bank-owned property was $108,500 in December compared with $174,400 for non-distressed properties.

This makes the homes more attractive to those who have a smaller budget.

However, major investors who purchase homes, fix them up and rent them out are buying the greatest share of these properties.

Have you looked into investing in foreclosed homes?