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Experts Weigh in on When to Refinance

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With interest rates falling to record lows in recent months, more homeowners have been refinancing their mortgages than ever before.

Still, there are plenty who didn’t jump on the bandwagon, and that’s ok.

The Wall Street Journal asked John Schleck, centralized and online sales executive at Bank of America Home Loans, how to know when the time is right to pull the trigger on refinancing, and he had some helpful tips.

“A general rule of thumb for mortgage borrowers is to refinance when rates decrease by half of a percentage point,” the newspaper gathered from Schleck’s points. “But because of their larger loan size, jumbo borrowers may save substantially even with one-eighth of a percentage-point drop.”

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U.S. New-Home Sizes Set Record in 2014

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Houses in the United States continue to get bigger and bigger, as new-home sizes reached a record high in 2014.

According to the Commerce Department, the median size of new homes completed in 2014 was 2,415 square feet, up slightly from the year before.

“The American dream is still to chase the big beautiful home with the lavish master suite and the spectacular gourmet kitchen and the finished basement that has the wine room and the media room,” said Douglas Yearley, chief executive of luxury home builder Toll Brothers Inc.

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Low Inventory Could Lead to Slow Spring Sales

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According to a new report by CNBC, home prices are beginning to soar once again, as the number of houses for sale continues to remain low.

And, as one expert points out, that could mean bad news for springtime home sales, as high prices were the main factor in last year’s weakened market.

In all, there were nearly 9 percent fewer homes for sale in January 2015 than there were the year before.

“January’s inventory data suggest a continuation of the tightening trend we identified last month in the December data, and with a shortage of inventory typically comes increased home prices,” said Jonathan Smoke, chief economist at Realtor.com. “Half of the 200 markets Realtor.com tracks experienced year-over-year price increases of at least 6 percent in January.”

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Report: Goldman Sachs Could Face Mortgage-Bond Lawsuit

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The Wall Street Journal’s MarketWatch reported on Monday that Goldman Sachs Group Inc. could soon be hit with a mortgage-bonds lawsuit stemming from the 2008 financial crisis.

According to the news site, the financial giant was informed by federal prosecutors in December of the potential civil lawsuit.

Prosecutors in the U.S. attorney’s office in the Eastern District of California have reportedly “primarily concluded” that Goldman Sachs had “violated federal law in connection with underwriting, securitizing and selling mortgage bonds,” according to MortgageWatch.

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Report: HUD Gives $37M in Subsidies to Wrong People

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CNBC reported on Friday that more than $37 million in monthly housing subsidies for people in need landed in the wrong hands last year, and it’s all because the Department of Housing and Urban Development has not yet figured out how to accurately verify who is eligible for its program.

“If HUD does not strengthen its controls, it will pay at least $448 million over the next year in subsidies for public-housing units occupied by noncompliant tenants that otherwise could house compliant households,” a report by HUD’s Inspector General reads.

The program is intended to provide housing subsidies for low-income people who are trying to get back into the job market and meet the “community service and self-sufficiency requirement,” which is defined as being between the ages of 18 and 62 and logging a minimum of eight hours of community service or job training each month.

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Mortgage Rates on the Rise for Second Consecutive Week

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Although fixed-rate mortgage rates remain at historic lows, Freddie Mac revealed on Thursday that they have risen for the second consecutive week.

According to the organization’s Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.76 percent this week, up an average of 0.6 points from last week.

“Mortgage rates rose for the second consecutive week as 10-year Treasury yields surged,” said Len Kiefer, deputy chief economist for Freddie Mac. “Housing starts declined 2 percent to a seasonally adjusted pace of 1.065 million units and housing permits dipped 0.7 percent in January. However, homebuilders remain confident about new home sales although slightly tempered from last month as the NAHB Housing Market Index slipped 2 points to 55 in February.”

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Dallas Home Prices on the Rise

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Home prices in Dallas, Texas, have surged over the last year, with experts pointing to the “severe shortage of inventory” as the cause.

According to the MetroTex Association of Realtors, the media price of a home in Dallas was 12.3 percent higher in December 2014 than it was at the same time the year before.

“Buyers are seeing sticker shock, but they’re buying anyway,” said Laura Barnett of RE/MAX DFW Associates.

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Outlook Is Bright as Zillow and Trulia Merge

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The two most popular real estate search engines now reside under one roof, as Zillow has completed its acquisition of Trulia.

According to CNBC, shares of Zillow rose more than 10 percent on Wednesday, as a result of the news of potential cost-cutting.

“The synergy potential here is significant,” Zillow CEO Spencer Rascoff told the news outlet. “There will be significant cost savings as a result of that.”

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U.S. Moving Toward Mortgage Crisis Investigation on Individuals

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United States Attorney General Eric Holder announced on Tuesday that he has given his fellow U.S. attorneys 90 days to determine whether they may be able to bring cases against any individuals for their roles in the 2008 financial crisis.

Federal prosecutors have already brought charges against several institutions and will now investigate individual employees for potential criminal or civil charges, Reuters explains.

Holder is set to leave office soon, so the decision whether the prosecute will ultimately be left up to Loretta Lynch, who is set to replace him.

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All About Insurance

Refinancing Today Could Be Beneficial for One in Three FHA Borrowers

refinance

The Urban Institute reported on Monday that nearly one in three FHA borrowers could save a significant amount of money over the course of their home loans if they were to refinance today.

With President Barack Obama’s proposed 0.5 percentage point cut in the Federal Housing Administration’s annual Mortgage Insurance Premium, combined with today’s historically low mortgage interest rates, current borrowers could stand to save nearly 1 percent if they refinance now.

“In general, borrowers stand to save money by refinancing if the new mortgage rate and the new FHA premiums, combined, result in a 0.75 percent reduction or more in annual mortgage costs,” Metro Trends bloggers Karan Kaul and Laurie Goodman wrote. “Some borrowers are more conservative, of course, and might wait until their annual mortgage cost savings hits 1 percent to refinance, resulting in less refinance activity. Other borrowers are aggressive and might jump in when they stand to gain only 0.5 percent, which would result in more refinance activity.”

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