Camarillo Real Estate Market Trends – California

Here are some recent real estate related articles that may interest you:

A hidden fee is set to rise

The guarantee fee - a hidden fee inside the interest rate quoted on a home mortgage - has been mandated by Congress to increase this spring, and other increases are likely later to take place later this year and next.

Making sense of the story

• •.The guarantee fee has been charged by government sponsored entities like Fannie Mae and Freddie Mac for more than three decades.  The fee does not show up in borrowers' mortgage documents or good-faith estimates, and it is little known outside the industry.  According to a Fannie Mae spokesman, the fee "gets incorporated into the underlying rate the borrower pays." 

• •.An interest rate is usually made of up three parts: The largest goes to the bank or the investors who buy the loan; the smaller portion is for the mortgage servicer that collects monthly payments; and then there's the guarantee fee.  Fannie and Freddie charge guarantee fees as a form of insurance against default for the loans they acquire and resell to investors. 

• •.The guarantee fee will rise 10 basis points on April 1; the increase was included in the two-month extension of the payroll tax reduction last December.  A basis point is equal to one one-hundredth of 1 percent, or 0.01 percent. 

• •.One way to avoid the guarantee fee is to use a lender that does not sell off its loans - for instance, a community bank or a credit union. 

• •.In addition to offsetting risks, the fees provide a primary source of revenue for Fannie Mae and Freddie Mac.  Both organizations started raising fee rates in 2008 during the housing crisis, as foreclosure costs rose. 

• •.Read the full story 

Feds roll out new mortgage refinance program

On Tuesday, the Federal Housing Administration announced it will slash mortgage insurance premiums for certain homeowners who refinance an FHA loan into a new one under its streamlined program.

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New housing scam emerges in California

State officials have noticed an emerging scam: Callers say they will help homeowners apply for Keep Your Home California benefits for fees of up to $900.  The calls are happening statewide.  Applying for the program is free.

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Are more new foreclosures a good thing?

Foreclosures starts jumped 28 percent in January compared with December, although starts were down 11.5 percent from the same month in 2011, according to data firm Lender Processing Services.

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"Forced" home insurance policies face new scrutiny

Officials at the state and federal level are concerned that insurers have been charging too much for something known as "force-placed insurance," which takes the place of a lapsed policy.

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Consumer confidence up in February

The Conference Board's Consumer Confidence Index currently stands at 70.8, up from a revised 61.5 in January, helped by consumers' improving assessment of the job market.

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Number of "underwater" borrowers rises

CoreLogic said Thursday that 11.1 million of American households with a mortgage were "underwater" at the end of last year.  That was up from 10.7 million of properties in the third quarter of 2011.

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What you should know

• •.The greatest hindrance to the sale of a home can be a seller who is seized by emotion.  Home sellers who allow emotions and sentimental attachments to overtake them during the sales process run the risk of making hasty, sometimes poor decisions. 

• •.One is to overprice the property.  Getting top dollar is the dream of every home seller, but getting a buy to pay a premium for features that are valuable only to the seller is closer to a fantasy. 

• •.The truth is, prices have nothing to do with the seller's emotional affinity for the property.  It's important sellers understand that as early as possible. 

• •.Sellers who bought at the top of the market likely won't see that same price from today's buyers. 

Here are some recent real estate related articles that may interest you:

Points lose favor

With interest rates at or near record lows, many borrowers are seeing little reason to pay points when buying or refinancing a home.  Some are even opting for what's known as "negative points," agreeing to a slightly higher rate to help pay closing costs.

Making sense of the story

• •.Paying points enables a borrower to "buy down" the interest rate on a mortgage in exchange for an upfront fee.  The trend away from points partly reflects borrower sentiment that rates are already low enough, according to industry experts. 

• •.A point equals 1 percent of the loan amount, so paying one point on a $250,000 refinancing costs an extra $2,500 at closing, in addition to other mortgage fees, taxes, and escrow amounts.  Paying a point usually reduces the interest rate by 0.25 points over its term, so for instance, instead of 4 percent, the rate is 3.75 percent. 

• •.The average number of points paid in 2011, according to a Freddie Mac survey, was 0.7 percentage points, less than half the levels people paid in the 1990s.  The average has been 0.7 percent for three years, after it hit a low of 0.4 percent in 2007; in 1995 it averaged 1.8 percent, according to Freddie Mac data. 

• •.The primary advantages of paying points are a lower rate and monthly payment.  To decide if paying points is worthwhile, borrowers should consider two key decisions: How long they plan to live in the home, and how much they can afford in close costs. 

• •.Many mortgage professionals suggest following this rule: If the borrower plans to live in the home for at least five years, paying points will help the homeowner to reap savings.   

• •.Some borrowers are even going for negative points, which is also called a lender rebate or points in reverse.  In exchange for accepting a higher interest rate, the lender agrees to give the borrower a credit, which is usually used for closing costs. 

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Foreclosures made up one in four home sales

During the three months that ended Dec. 31, homes that were either bank-owned or going through the foreclosure process accounted for 24 percent of all home sales, up from 20 percent in the previous quarter and down only slightly from a year earlier when foreclosures accounted for 26 percent of sales, RealtyTrac said.

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Principal reduction isn't ideal fix for foreclosures, official says

Edward J. DeMarco, acting director of the Federal Housing Finance Agency told U.S. senators Tuesday that reducing the principal on mortgages owned or guaranteed by Fannie and Freddie would not protect taxpayers.

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Bills aim to curb unfair foreclosure practices

A package of six bills designed to curb unfair foreclosure practices was unveiled this week.

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Where are all the home sellers?

Inventories of homes listed for sale in January dropped by 6.6 percent from December to 1.77 million, the eighth straight month that listings have declined, according to data from Realtor.com.

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Home prices hit new lows

The Standard & Poor's/Case Shiller index of 20 American cities fell 1.1 percent from November to December and 4 percent from December 2010.

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Sales contracts for U.S. homes up 2 percent in January

The NATIONAL ASSOCIATION OF REALTORS® said Monday that its index of sales agreements rose 2 percent last month to a reading of 97.  That's the highest reading since April 2010.

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What You Should Know

• •.Homeowners should be aware of these tax breaks that they may be eligible to receive. 

• •.Mortgage interest: Homeowners are generally entitled to reduce their taxable income by the amount of mortgage interest they pay, as long as they itemize deductions on their tax returns.  

• •.Private mortgage insurance: Homeowners who are paying PMI likely will be able to fully deduct the amount, as long as their adjusted gross income is $100,000 or less ($50,000 for married taxpayers filing separately).  Borrowers with incomes above $100,000 may qualify for a partial deduction. 

• •.Energy-efficient home improvements: If windows, doors, or skylights that meet the requirements of the federal Energy Star program were installed in 2011, homeowners can get a tax credit equal to 10 percent of the product's costs. 

• •.Points: The charges a borrower paid in points to get a mortgage are generally deductible if it was a first mortgage on the property.  In the case of a refinance loan, all or some of the point charges might be deductible, but it gets complicated. 

• •.Property taxes: The amount paid in property taxes is deductible as long as it is based on the assessed value of the property.  If the mortgage company collects money for property taxes, the amount actually paid should be on the 1098 form lenders send out each January.