The vast majority of homes selling today are priced under $300,000. Of the 208 homes sold in April, 191 were sold for $300,000 or less. The most active price bracket is the under $150,000 range which tallied 105 closed sales in April.

For homes in Redding, the average cost-per-square-foot has remained relatively steady at about $108/sq ft. The average home is defined as a home with between 1500-2000 sq ft.

Inventory has tightened significantly over the past year. 1034 homes were listed for sale in early May 2011 compared to 751 today. The number of bank-owned homes in the inventory has dropped more than half from 202 last year to 96 today. Short sales have increased their share of market activity with 69 active listings and 235 in escrow today. Last year there were 94 active listings and 153 short sale properties in escrow.

Of the 632 pending home sales, 63% are distress sales-bank-owned or short sale listings. This percentage is in line with what we have been seeing in the local markeplace these past two years.

Interest rates for home loans continue to push lower. Today, a 30-year fixed rate loan is available (for those with good credit and verifiable income) at 3.75%. A 15-year fixed is down to 3.09%.  This good news is dampened somewhat by a rise in mortgage insurance fees associated with FHA loans, one of the more popular types of loans in this area.

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN DOWNTOWN REDDING

NEARLY 30 YEARS OF LOCAL REAL ESTATE EXPERIENCE

530-224-6767 OR 530-941-7492

bradgreps@yahoo.com

www.thereddingrealestateguy.com

Mary Lake Sunset

Starting April 1, home buyers utilizing FHA financing will see a significant increase in the Mortgage Insurance Premium (MIP) paid upfront by buyers. The MIP premium will rise from the current 1% to 1.75%. Besides the one-time upfront fee, the monthly MIP will also rise 0.1% for loans under $625,000 and 0.35% for loans above $625,000 beginning June 1.

       MIP is charged to FHA buyers to cover the cost of foreclosing on loans and liquidating properties which go into default. FHA loans are originated by banks and mortgage bankers using their own capital, with the stipulation HUD will step in and take over the loan if the buyers default. Since the federal government backs these loans, borrowers can purchase a home with as little as 3.5 % down payment monies. In theory, the MIP pays the cost of administering the program so taxpayers do not have to subsidize this loan program. VA loans for veterans are structured similarly.

Other changes to the FHA loan program coming soon include reducing the amount a seller can credit the buyer for closing costs. Currently, sellers can offer up to 6% of the purchase price for the buyer to use for loan fees and other costs to secure a loan. Indications are this will be capped at 3% in the near future.

The reasons cited for the changes in a recent article in The Los Angeles Times include the fact demand for FHA loans has increased to 40% of all new home purchases. Despite the rapid growth in usage, capital reserves have declined far below levels mandated by Congress. Combined with increasing delinquencies, the program is under pressure to rebuild reserves and make the program self-sustaining once again. During the housing bubble, FHA loans were only utilized by a small number of home buyers because conventional loans offered no money down loans.

Borrowers looking now can avoid these fees by taking action before the fee hikes take effect by either buying now or asking your loan officer to secure a case number and buy a home within 60 days after the upfront MIP takes effect.

Feel free to contact me with any questions.

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN DOWNTOWN REDDING

NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENE

bradgreps@yahoo.com

www.movetoredding.com

530-941-7492

• 207 home sold in February 2012 compared to 129 a year ago
• 92% of homes sold in February had a list price under $300,000
• 732 homes were listed for sale as of March 5, down 37% compared to the previous year
• 541 homes were pending compared to 472 in early March 2011
• 141 bank-owned homes and 204 short sales equalling 64% of pending home sales are “distressed” properties
• 418 homes have closed escrow in 2012, up 69% for the same time period in 2011

Mortgage rates for fixed-rate loans are averaging 3.17% for a 15-year loan and 3.9% for a 30-year loan. Investors paying cash and first-time buyers using FHA loans dominate the market.

Wild cards which could impact home sales in 2012 include Adjustable Rate Mortgage interest rate resets and strategic defaults by homeowners underwater on their loans. Of the 47 million loans nationwide, 3.6 million are delinquent and 12,533,155 are underwater 125%  or more!  We still have a long way to go before the housing market recovers and returns to any sense of normalcy. At least we appear to be headed in the right direction!

BRAD GARBUTT

BROKER/REALTOR ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN DOWNTOWN REDDING

NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE

FREE CONSULTATIONS TO BUYERS AND SELLERS

530-941-7492

BRADGREPS@YAHOO.COM

WWW.MOVETOREDDING.COM

• Borrowers with credit scores of 500-579 must make a 10% downpayment and the downpayment cannot be a gift or provided by a downpayment assistance program such as those offered by Redding and Shasta County.
• Borrowers with credit scores between 580 and 599 must tender a 5% downpayment under the same conditions as above.
• Borrowers with credit scores of 600 or better can make a downpayment as low as 3.5% and gift funds are acceptable.

In all cases, Wells Fargo is limiting closing cost credits to the borrower from the property seller to 3%. In the past, seller contributions up to 6% were allowed.

An FHA loan is a government insured loan. The loans are processed and funded by FHA approved lenders. If the borrower defaults on the loan, the government steps in, makes the lender whole, then resells the property after foreclosure.

Historically, this program has not cost taxpayers a dime. However, the decline in home prices, the struggling economy and the marked increase usage of the FHA loan program has resulted in red ink. HUD, which oversees this loan program, recently modified the mortgage insurance requirements to increase revenues to cover losses. Today, borrowers can expect to pay more in upfront fees and monthly payments of mortgage insurance premiums to keep FHA solvent.

For additional details, contact Mike Whitman at Wells Fargo in Redding at 226-2646.

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESIONALS

CORNER OF COURT AND PLACER IN REDDING

NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE

The two primary changes involve the upfront fee collected from the borrower (being reduced) and the mortgage insurance premium (MIP) tacked on to the payment (being increased).  The MIP is going up from 0.5-0.55% to 0.85-0.9% depending on the size of the downpayment. The upfront insurance premium is dropping from 2.25% to 1%. This fee is either paid in one lump sum at closing or rolled into the loan and paid over the life of the loan.

On the surface this does not sound too bad but in the real world this will cost the borrower dearly over the long run. Here’s an example provided by FHA and detailed in a recent article in THE NEW YORK TIMES. A borrower puts 3.5% downpayment on a purchase price of $154,000 (the median home price today) and finances the upfront mortgage insurance fee into the loan. The mortgage payment, including principal, interest, taxes, homeowner’s insurance and both mortgage insurance premiums goes up from $1,205/month to $1,238/month. The increase includes the drop of the upfront MIP from $3,344 to $1,486 but the monthly increase in the MIP from $68 to $111.

All FHA loans require mortgage insurance while conventional loans have a sliding scale for insurance rates if the borrower tenders less than 20% downpayment. The FHA MIP can be eliminated after 5 years if the loan-to-value ratio drops below 78%. This can be accomplished by paying down the principal, appreciation of the property value, or a combination of the two.

FHA has for the first time set a minimum credit score threshold of 500. Those with credit scores between 500 and 580 must tender a 10% downpayment. However, practically speaking, most lenders will require higher credit scores to assure they can get the loans insured by FHA. The financial meltdown has created a vast new realm of buyers that heretofore would have never considered an FHA loan due to the hefty mortgage insurance premiums. Company executives, teachers, and people with six-figure incomes are now applying for FHA loans!

The desire to leverage real estate purchases with a minimal  downpayment is alive and well, despite the added cost for the opportunity to do so.

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN REDDING

MORE THAN 25 YEARS LOCAL REAL ESTATE EXPERIENCE

 Here are some important details:

• Must have a  660 credit score or better
• Existing loan must be at least 6 months old
• No thirty-day late payments in past 12 months
• Lender will call wage earner’s employer for verbal verification of employment
• Self employed borrowers must provide copy of business license or prove existence of business
• All “other” income must be documented
• Borrower must have appropriate debt-to-income ratios

In some cases no appraisal is required- the original appraised value is used. Currently, interest rates are below 4.5% for borrowers with good credit. If you are paying 6% or more on your existing FHA loan, taking advantage of today’s rate could result in 25% of interest savings. A $200,000 loan at 6% interest is roughly $1,200/ month for principal and interest, not including taxes, insurance or mortgage insurance. At 4.5%, the payment would be $1,013. If the loan refinance fees were about $2,500, you would break even in about 14 months, then save about $183/month thereafter. 

For more particulars regarding an FHA refinance, contact Wayne Barni of Choice Funding at 530-224-6707.

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN REDDING

MORE THAN 25 YEARS LOCAL REAL ESTATE EXPERIENCE

• The loan to be refinanced can not be an FHA loan
• The homeowner must be current on their mortgage payments
• Must have a credit score of 500 or higher
• Must be the borrowers primary residence
• Existing lender must agree to write off at least 10% of the loan balance  bringing the total loan-to-value ratio to no greater than 115% of fair market value

The first step for borrowers wishing to take advantage of this program would be to contact their existing lender(s) and see if they are willing to write off at least 10% of the unpaid principal balance. If so, contact a local FHA lender for more information.

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN REDDING

MORE THAN 25 YEARS LOCAL SALES EXPERIENCE

FHA sees this new program as a win-win for borrowers who get to keep their home and FHA protects their insurance fund from unnecessary losses. Here are some additional details:

• A borrower considered “facing imminent default” is one that is current on payments or less than 30 days late but has experienced a significant reduction in income or some other hardship that will prevent making future payments in a timely fashion
• Allows for a forbearance agreement to be created that allows the loan servicer to postpone, reduce or suspend payments due on a loan for a specific amount of time
• Allows qualified borrowers to reduce their payments permanently through an interest rate reduction or loan reamortization to an affordable level by using a portion of their insurance with a loan modification. Principal deferred becomes an interest free subordinate loan which is repaid once the first loan is paid off

The hardship must be documented by the borrower to the loan servicers satisfaction. The cause of hardship may include one or more of the following:

• Unemployment, reduced job hours, reduced pay, or a decline in business for self-employed would all be considered as reasons for loan modification. A scheduled temporary shutdown of the employer would not be reason enough to qualify for a loan modification
• Death in the family, permanent or short term disability or serious illness qualify as hardships

The loan servicer makes the final decision. If you know someone struggling to make house payments, ask them if they have an FHA loan. If so, direct them to HUD’s website or contact me for further information.

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL LIVING REAL ESTATE PROFESSIONALS

CORNER OF COURT AND PLACER IN REDDING

MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE

First-time buyers and investors have been snapping up these properties soon after they hit the market. In some cases, bidding wars pushed the final selling price above the asking price! Buyers are attracted to these properties like flies to you know what believing they are capitalizing on someone’s loss. Low down or no down payment loans such as FHA and USDA have been used to leverage buyer’s limited cash resources to facilitate a purchase. Out-of-area buyers that largely fueled the run-up in real estate prices during the boom are all but gone. Today’s market is dominated by local Shasta County residents taking advantage of low prices and interest rates.

I wonder though if we have hit a saturation point looking at this significant uptick in available REO inventory. Speculation that banks are sitting on more than a million foreclosed homes could explain this increase. Perhaps banks are lowering the flood gates allowing more foreclosed inventory to hit the market. Banks must closely monitor the impact of listing REO’s for sale as a flood of distressed priced homes in one geographic area will only undermine values of other homes which these same banks hold loans on in these neighborhoods.

Shasta County’s higher than average unemployment rate only exacerbates the problem. Lenders aren’t approving loans for all but the most creditworthy borrowers. Additionally, prospective buyers must have stable and verifiable income to be granted loan approval. There’s talk of upping down payment requirements for the very popular FHA loan program from 3.5% to 5%. Credit score thresholds have been raised a couple of times this year by Fannie Mae to the point those with credit scores below 650 may not qualify for any loan.  A local mortgage broker told me this will have a major impact locally where, according to him, the avearge credit scores of borrowers he sees is just over 600.

Indications are 2010 will be another challenging year for all who work in the housing sector. Real estate agents, lenders, appraisers, escrow officers, home inspectors and contractors need to plan for another rough year as our nation nurses the hangover caused by lax oversight of the lending industry.

Many parts of California and the nation are reporting increases in home prices. Don’t expect that to happen here in the Redding/ Shasta County area until foreclosure activity subsides and REO listing inventory decreases to double-digit levels. I predict this will not happen here until 2011-at the earliest!

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

RELTOR/BROKER ASSOCIATE

REAL ESTATE PROFESSIONALS REAL LIVING

CORNER OF COURT AND PLACER IN REDDING

QUARTER CENTURY LOCAL SALES EXPERIENCE

• Downpayment can be a gift from a family member
• 2nd mortgage has a 15 year term at 8.25%
• Seller may contribute up to 6% of purchase price for closing costs
• Both first and second are fixed-rate loans
• No prepayment penalty on either loan
• Maximum loan amount is $417,000
• Maximum income for Shasta County residents is $66,840
• Loan for primary residence only
• Loan can be used for FHA approved condos, manufactured housing and single family homes
• Not limited to first-time buyers
• Buyers OK 2 years after bankruptcy or 3 years after foreclosure
• Buyers must take online homebuyer education course

Credit scores play a role so not everyone will qualify. Buyers should have credit scores at or above 620. Some lenders will raise the bar further to 640. Borrowers may be able to make some adjustments to their credit score by following the advice of a good loan officer.

For more details, give me a call or drop me an email. Wayne can be reached at 530-224-6707.

bradgreps@yahoo.com

530-224-6767 or 530-941-7492

BRAD GARBUTT

REALTOR/BROKER ASSOCIATE

REAL ESTATE PROFESSIONALS GMAC

CORNER OF COURT AND PLACER IN REDDING

QUARTER CENTURY LOCAL SALES EXPERIENCE