Patch’s Homeowner Weekly Update | May 1, 2017
Every week, we curate news articles on topics such as home finance, mortgage rates, trends in consumer lending along with the latest developments across the real estate industry. Here is a brief summary of the top stories from last week that impact you the most as a homeowner.
1. Fannie Mae considers program to roll student loans into a mortgage
44 million Americans saddled with $1.4 trillion in student loans may soon have a new option to reduce their debt burden — Fannie Mae has created a new standard that will allow borrowers with sufficient home equity to fold their student loan balances into their home mortgages. This could help homeowners as mortgages tend to have lower rates and their interest is tax-deductible. On the other side, some student loans allow payments to be capped based on income or paused during job losses — something that mortgages don’t have. Either way, more options are always a good thing for consumers. If you’re thinking of using home equity to pay off student loans, see how our 0% home equity financing can work for you.
2. Homeowners impacted by the latest tax plan
National Association of Realtors® President William E. Brown, has called the President’s tax proposal released today as a non-starter for homeowners and real estate professionals. The President’s plan calls for doubling the standard deduction to $12,400 for single individuals and $25,200 for married couples filing jointly, which consequently would raise the bar in terms of the amount homeowners need to pay in mortgage interest to qualify. The plan would effectively nullify the current tax benefits of owning a home for the vast majority of tax filers. Nearly 50% of all tax returns claiming the mortgage-interest deduction come from tax filers with $100,000 or more in income. Read more details here
3. Refinancing activity picks up as mortgage rates fall
The refinance market shows signs of coming back to life last week, as mortgage rates fell a little bit. Total mortgage application volume rose 2.7%, seasonally adjusted, for the week, according to the Mortgage Bankers Association. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less decreased to 4.20% from 4.22%. At the same time, the size of the average refinance loan also increased, as large-balance borrowers are more rate sensitive. Overall, refinances are still 34 % below where they were a year ago as homeowners continue to be concerned with rates and credit is limited via traditional bank lenders.
4. Rising Home Prices Raise Concerns of Overheating
The U.S. housing market’s red-hot recovery from the depths of the crash five years ago is fueling concerns among economists and real-estate brokers that home prices are overheating. Dearth of new construction and strong demand from buyers are pushing up prices twice as fast as the rate of income growth, the latest data show, a level economists said is unsustainable. The S&P/Case-Shiller 20-city index rose 5.9% in the three-month period ending in February compared to the same period a year ago — this is the highest rate since July 2014. Among the 20 cities, Seattle prices grew the fastest at 12.2% while New York came in at the lower end with only a 3.2% growth.
5. Home equity lending suffers as lenders tighten standards
As home prices rise, accessing home equity becomes an attractive source of income for many homeowners. But not everyone meets the high bar of requirements set by banks and credit unions. Homeowners must have a trifecta of enough equity, a high credit score and a healthy relationship between their debt and income to take money out of their house. “With a lower volume of refis being done, you have more people looking at every file,” says Paul Anastos, president of Mortgage Master Inc. “There’s more scrutiny from banks and the agencies.” Obscure rules at banks means lower amounts based on credit scores, DTI ratio, type of property etc. At Patch Homes, we realize the tough spot for many homeowners are are transparent about our eligibility guidelines and saving you money compared to HELOCs.
We’d love to hear from you. Email us at firstname.lastname@example.org or ask questions about our 0% home equity financing solution. Learn more at www.patchhomes.com