Robbyn Battles September Housing Newsletter

<br /> Robbyn Battles September News<br />

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Robbyn Battles

Robbyn Battles
The House Agent
(818) 249-7492

Battles Real Estate
2606 Foothill Blvd.
La Crescenta, CA 91214

Estimate Your Home’s Value with NAHB Tool

The National Association of Home Builders (NAHB) recently released an updated version of its House Price Estimator tool on, calibrated with data from the latest (2013) installment of the U.S. Census Bureau’s American Housing Survey. The tool establishes standard estimates of home prices in 14 broad geographic areas, then takes into account variables such as physical features in the home and neighborhood characteristics to illustrate how property values are affected.

For example, the standard price of a house in a Southern city is about $173,000. By using the Estimator, you find that if the same house is located within ½ block of a park, its price rises $7,500, while being located within a mile of a subway/commuter rail increases the value by $71,000.

Homeowners can use the tool to see how their home’s price could be affected by adding physical features. Adding a bedroom to the same Southern home increases the estimated price by about $9,700, while adding a full bathroom increases the price by $37,000. This could be particularly useful if you’re contemplating remodeling or getting ready to fix up your house to sell.

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Also in this issue…
Loan Originations on the Rise
6 Tips for Buying in a Seller’s Market
Getting Rid of PMI (Private Mortgage Insurance)
Appraised Value vs. Homeowner Perception

Loan Originations on the Rise

RealtyTrac recently released its second-quarter U.S. Residential Loan Origination Report for the second quarter of 2015, and the results are encouraging. More than 1.9 million loans on single-family residences were originated, up 23% from a year ago.

Here are some of the report’s key findings.

  • The 1,950,267 loans were worth nearly $540 billion — up 29% from a year ago.
  • 56.7% of total loan origination dollar volume was from refinance loans, rather than purchase loans.
  • 1,203,722 conventional and jumbo loan originations — up 17% from a year ago.
  • 326,143 Federal Housing Administration (FHA) loan originations (typically low down-payment loans for first-time home buyers) — up 46% from a year ago.

“The rise in loan originations, particularly the sharp rise in FHA purchase originations, indicates the FHA premium reduction at the end of January really is having a big impact, pushing people off the fence to purchase,” said Daren Blomquist, vice president at RealtyTrac. “The average loan amount for FHA purchase loans increased from $187,718 in the first quarter of 2011 to $197,315 in the second quarter of 2015 (a 16-quarter high), as the lower FHA premium gave those buyers more buying power.”

Metro areas with a population of at least 500,000 that saw the biggest increase in loan originations from a year ago include:

  • Birmingham, AL — 197%
  • Oxnard, CA — 58%
  • Minneapolis, MN — 51%
  • San Jose, CA — 50%
  • Richmond, VA — 48%
  • Denver, CO — 46%
  • Seattle, WA — 39%

6 Tips for Buying in a Seller’s Market

In many regions across the U.S., it’s a tight market — inventory is low and demand is high. While this is great for sellers, it can be tough for buyers. But there are some steps you can take to increase your chance of getting the house you want without paying more than you should.

1. Get pre-approved. Make sure your financial ducks are in a row and get a pre-qualification or pre-approval letter from a reputable lender. This will allow you to move fast when the right house comes along and show the seller that you’re a viable buyer who should be able to close quickly.

2. Expand your search methods. Work with a real estate professional who will know about houses coming onto the market. See if family, friends or coworkers know of any houses coming up for sale and tell your REALTOR®.

3. Separate needs from wants. In a competitive market, you’re going to have to compromise on something — location, amenities, home condition, etc. Know ahead of time what you must have and what you can let slide, so you don’t waste time deciding.

4. Be flexible. Show that you are willing to move as quickly, or as slowly, as the seller wants. Some houses are being sold the week (or even the day) they are listed, so you need to be easy to work with.

5. Sweeten the pot. Find something you can offer that will make the seller want to do business with you — offer more cash upfront, waive mortgage or inspection contingencies, or forego the seller-provided warranty. Make it a good deal from the seller’s perspective.

6. Know your limits. Keep in mind that lenders often approve you for more than you can actually afford. So figure out your realistic limits, and don’t let a bidding war push you out of your price range.

Getting Rid of PMI (Private Mortgage Insurance)

If you made a small down payment on your house (less than 20 percent), your lender most likely required you to pay private mortgage insurance (PMI) to protect itself in case you default on your loan. But once your loan balance has reached 80 percent or less of the home’s value (known as your loan-to-value ratio), you can cancel this expensive insurance and lower your monthly payments.

According to the Consumer Financial Protection Bureau, you have to meet certain requirements to remove PMI:

  • Your loan-to-value ratio must be 80 percent or less.
  • You must request PMI cancellation in writing.
  • You have to be current on your payments and have a good payment history.
  • You might have to prove that you don’t have any other liens on the property, such as a home equity loan.
  • You might have to show evidence (such as an appraisal) that your property value hasn’t declined below its value when you bought it.

In most cases, if you meet these requirements, your loan servicer must cancel your PMI if you request it.

If you’re not quite down to 80 percent yet and you want to speed up the process, suggests the following steps to improve your negotiating position.

Get a new appraisal. If home values in your area have been rising, you could pay $300-$500 for a new appraisal to see if your house is worth more than when you bought it. Some lenders will consider this new appraisal value instead of the original sales price when calculating your loan-to-value ratio.

Prepay on your loan. Even $50 a month can mean a dramatic drop in your loan balance over time and get you to the 80 percent mark sooner.

Remodel. Add a room or a bath to increase your home’s market value. Then ask the lender to recalculate your loan-to-value ratio using the new value figure.

Appraised Value vs. Homeowner Perception

How much do you think your house is worth? Quicken Loans says you might want to think again. According to its national Home Price Perception Index, homeowners are increasingly overvaluing their homes, with estimates of more than 2 percent above the opinions of appraisers.

“Many homeowners are seeing the national headlines about home value increases and they are optimistic about their equity increasing,” said Quicken Loans Chief Economist Bob Walters. But variations in home appreciation levels in different areas of the country can lead to confusion.

“Appraisers are viewing the housing industry every day; they know when home values growth may be slowing,” Walters added. “Homeowners may think values are still skyrocketing, when they have instead returned to more healthy appreciation in their area.”