Mortgage rates in 2010 were the lowest in six decades, but a recent and sustained increase may indicate that consumers can expect to pay more in the new year to buy or refinance a home.
Waiver of the 90 day flip rule helps buyers and sellers
The 90 day flip rule waiver reduces the time an investor has to wait to sell their recently purchased property.
Most first time buyer use FHA financing to make their purchase because of the low down payment requirements. FHA guideline mandated that borrowers can not purchase a home that has been “flipped” within 90 days regardless of the value of the property. This has dicourage investors from buying and re-habing properties because so many of the potential buyers could not qualifiy to buy the property due to the 90 day flip rule.
Buyers that need financing have found themselves unable to compete with cash buyers- especially with distressed properties which have imperfection that lenders would rather stay away from.
Summary
Investors will buy, fix and resale more properties which will create more inventory for buyers that need financing for their purchase.
The waiver of the 90 day flip rule is set to last until 2/1/2011.
One quarter of home owners are underwater
One out of four people indebted to a lender for the purchase of a home owe more money on the loan than the home is worth.
Many prime loans are included in loans that are being foreclosed on. About 33 percent of the loans that are in default are prime loans. Only 21 percent of loans in default were prime loans last year. The rising unemployment is one of the main explanations for the increase in defaults of prime loans.
Sub-prime loans with balloon payments after the first five years or rates that adjust account for only 16 percent of loans while last year the sub-prime loans made up 35 percent of loans in default.
