Wednesday, March 15, 2006
40-year mortgage unveiled for first-time buyers
Here is a Press-Enterprise article about a new state-backed program for first-time buyers ...State move aims to aid first-time buyers as the region's prices reach new heights
Tuesday, March 14, 2006
By LESLIE BERKMANThe Press-EnterpriseEven as Southern California continues to set record-high home prices, the California Housing Finance Agency unveiled a program to make those homes more affordable, but over 40 years instead of 30.Housing prices rose last month at the slowest pace in four years, but still the region's median price hit a record of $480,000. San Bernardino County saw the biggest annual gain of almost 28 percent, with the median price reaching a new all-time high of $373,000.Riverside County homes sold in February at a median price of $410,000, which was more than 10 percent higher than the median price a year earlier, according to statistics released by DataQuick Information Systems Tuesday."Californians face an incredibly difficult market to purchase a first home," Theresa Parker, executive director of CalHFA, said in announcing the new program for first-time buyers.CalHFA's 40-year loan has a fixed interest rate of 5.75 percent, which is about a point below market-rate loans, and on average will lower mortgage payments by $150 a month compared to the agency's 30-year loans, said Evan Gerberding, the agency's assistant director of marketing.John Marcell, president of the California Association of Mortgage Brokers, said since 40-year mortgages became available on the private market about a year ago, they have gained popularity in high-cost housing areas like California, New York and Florida. Marcell estimated that 40-year mortgages now represent about 15 percent of the market in California.He said the association forecasts that if home prices continue to rise, this year 40-year mortgages will become a major part of its members' lending activity.But Bunker Rayner, vice president of Corona Mortgage, said, "I don't think the 40-year mortgage alone will make as big of a difference as people are hoping for." He said the market-rate interest for a 40-year fixed rate loan is 6.25 percent and to buy a $400,000 home with 20 percent down, the monthly principal and interest payment would be $1,816, compared to $1,918 with a conventional 30-year fixed rate loan.He said to make a bigger impact on reducing monthly payments, lenders also have to look to adjustable and interest-only loans. "You always combine as much of the programs as will allow you to have a lower payment," to meet a client's needs, Rayner said.Still, DataQuick analyst John Karevoll said as mortgage interest rates rise, lenders and buyers have started to shy away from adjustable rates.He said between November and February, the portion of home buyers financing their purchase with adjustable rate mortgages slipped from 71 percent to 53 percent in Riverside County and from nearly 70 percent to about 52 percent in San Bernardino County.While a number of factors may be contributing to the change, Karevoll said, "probably both buyer and financial institutions are being a bit more cautious."In the Inland Empire, Gerberding said, households of one or two people earning up to $66,840 a year and households of three or more with annual incomes of as much as $77,980 are eligible to apply for CalHFA's first-time home buyer loans. Under the program they may buy homes priced as high as $525,000.Gerberding said although families earning $66,840 could not qualify to buy a $525,000 house without a large down payment, they could purchase a condo for around $300,000.Currently there are 10 lenders who offer the 40-year, government financed loans, she said: American Home Mortgage, Bank of America, Clearinghouse, CU West Mortgage, Eagle Home Mortgage, First Mortgage Corporation, Guild Mortgage, Mountain West Financial, Pinnacle Financial and Visalia Community Bank.CalHFA also offers first-time home buyers 100 percent financing and down payment assistance. Moreover, she said if the new homeowner loses a job, the agency will make the mortgage payments for up to six months until the borrower finds new employment. Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula
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