U.S. home prices increased in May when compared to last year’s figures, but the gains have slowed to a more normal pace. National data provider CoreLogic said Tuesday that prices increased 8.8 percent in May compared with 12 months earlier. The pace of gains has slowed as more houses have come onto the market. On a month-to-month basis, prices rose 1.2 percent from April to May.
Prices increased the most in Western states, including Hawaii, California and Nevada. Home sales began to stall in the middle of 2013 after double-digit price increases and higher mortgage rates made real estate less affordable for many people. But sales rose last month as price gains have moderated and mortgage rates have dipped.
Sales of existing homes climbed 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million homes, according to the National Association of Realtors. However, sales are down 5 percent year-over-year. Sluggish sales, in turn, will slow annual price gains this year to a more normal rate of appreciation, roughly 5 percent or 6 percent, economists predict.
Prices rose in the last 12 months in every state, CoreLogic said. The states with the biggest price gains were Hawaii, 13.2 percent; California, 13.1 percent; Nevada, 12.6 percent; Michigan, 11.8 percent; New York, 11 percent; Georgia, 10.3 percent; and Oregon, 10.1 percent. Average prices have risen nationwide for the past 27 months, but homes nationwide are still 13.5 percent below their peak values in April 2006. Ten states have exceeded their previous peaks, including Alaska, Louisiana, Oklahoma, Nebraska, Iowa, South Dakota, North Dakota, Colorado, Texas and New York.
Whether you are interested in buying a home or getting a lower interest rate on your current mortgage, the following items will be required by all lenders for a new mortgage loan. With underwriting guidelines being more conservative than ever it is essential to provide all documentation upon the initial loan submission if you wish to acquire a new mortgage as easily and efficiently as possible.
Here is the Checklist:
Provide clear, legible copies of the following for each borrower:
- driver’s license
- social security card
- most recent paystubs spanning complete 30-day pay period
- all 2012 & 2013 W2s
- 2012 & 2013 Federal Tax Returns (all pages, all schedules, CA Returns not needed)
- a recent statement (all pages) for your 401K, IRA, Stocks, Funds, etc.
- 2 months’ most recent Checking Account statements (all pages, not internet summary, primary account)
(these additional items are required for refinance transactions)
- recent homeowner’s insurance bill
- property tax statement
- recent HOA bill (if applicable)
- most recent payment coupon for your 1st mortgage
- most recent payment coupon for your 2nd mortgage/heloc (if applicable)
- if subordinating a 2nd mortgage/heloc we need the NOTE for that loan
- recent statement for any account you wish to payoff through this transaction
Mortgage rates moved lower today, reaching their best levels of the week. Slumping stocks and geopolitical concerns contributed to positivity in the bond market, and when bond markets improve (specifically “mortgage-backed-securities,” or MBS), rates generally move lower. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains at 4.375% in most cases. While this is the same rate as yesterday, the cost to obtain it is lower. If we express that cost improvement in terms of rates, it comes out to a drop of roughly 0.03%.
All that having been said, geopolitical instability has clearly kept downward pressure on rates. It’s impossible to say exactly how much, but we do know that the longer term trend is just now shifting from “sideways to slightly higher in rate” to “sideways to slightly lower.” It’s close enough to “flat” to confidently say we’d still be trending higher if not for Ukraine events. That’s not the sort of market-mover we want to be hoping for on an ongoing basis, or at all for that matter. It’s here though, and thus represents an opportunity while rates are as low as they’ve been in over a week.
The Mortgage Bankers Association sent a letter to the Federal Housing Finance Agency, outlining its objections to a proposal that would reduce the maximum size of loans that Fannie Mae and Freddie Mac could purchase. The letter to FHFA Director Mel Watt said the agency’s proposal to reduce the maximum conforming and high-cost loan purchase limits for Fannie Mae/Freddie Mac purchases from $417,000 to $400,000 (and from $625,500 to $600,000 for high-cost areas) as early as Oct. 1 could have a “deleterious” effect on government housing finance and should only be considered as part of a more comprehensive housing finance reform effort. “Housing markets remain fragile and moving forward with this option risks further constricting access to credit and reversing progress made in the housing recovery without achieving a meaningful return of private capital,” MBA said. “Many potential homeowners remain on the sidelines unable to purchase a home or refinance their home loan due to rising rates, tight housing inventory and restrictive credit standards. In key housing markets, the proposed loan limit changes could exacerbate the problem.” MBA President and CEO David Stevens said MBA believes better options are currently available to FHFA to increase private capital participation without harmful effects. These options include expanding the GSEs’ successful use of risk sharing, which began during 2013, as well as offering lenders the option to arrange for deeper private mortgage insurance coverage in exchange for a reduced guarantee fee from the GSEs. “MBA believes these alternatives will not only increase private capital’s role in housing finance, but also produce tangible savings that can be passed on directly to borrowers,” Stevens wrote.