Review of Real Estate & Mortgage News for Orange County

Review of Real Estate and Mortgage News

According to UCLA economists,here is a forecast of the Orange County, CA housing market:

* From 2011 to 2015, O.C. home prices will increase by 2.5% to 8.7% a year. The median home price, at $406,481 this year, is projected to top $500,000 by 2011 and to be above $600,000 in 2015.

* Foreclosures are expected to rise again early this year, but won’t derail the recovery.

* Home building this year will fall to 1,912 units, the lowest number in records dating back to 1946.

* Home building will pick up by 2012, rising above 11,000 units a year — levels not seen since 2002. In 2013, UCLA projects that housing starts will total 12,537.

* Mortgage interest rates will remain low. Southern California rates likely will be below 6% through 2015, the forecast said.

* Commercial real estate will be hampered by high unemployment through 2010, with recovery not expected until around 2011.

* Office vacancies — currently at 18% to 20% — will start to drop in 2010, but lease rates won’t resume going up until 2011.

* Retail sales are expected to start picking up in late 2010, aided by the recovery in the housing market.

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FHA Mortgage Fees May Increase

News about FHA says they are in the process of asking congress to raise the annual insurance fee on FHA mortgage loans.

If granted, mortgage insurance rates for an FHA loan would increase from the current limit of .55% to a new limit of .85%.

The rate change would raise monthly mortgage payments by about $25 for each $100,000 loan increment.

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Why are Mortgage Payments Made to Other Lenders?

Home mortgages are often sold to a loan servicing lender, who collects and processes payments because the original mortgage lender is only in the business of selling mortgages.

A mortgage may be originated by a broker or lender who then sells it to the loan servicer, who then combines it with other mortgages and sends them to Fannie Mae or Freddie Mac, who then securitizes and sells them on the secondary market.

In a normal real estate market, mortgage investors could be mutual funds, school endowments, pensions, foreign governments, etc. Currently, the primary investor is the Federal Reserve, who has been maintaining low mortgage rates by purchasing those securities.

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Note Rate is Lower than APR When you Compare Mortgage Rates

In order to help standardize the process of comparing mortgage rates and fees, lenders are required to quote the APR in addition to the mortgage note rate.

The annual percentage rate will almost always be higher than the note rate of a mortgage because certain fees are included in the calculation.

Mortgage fees usually included in the APR:

• Loan processing fee
• Document preparation fee
• Underwriting fee
• Private mortgage insurance cost, if applicable
• Discount points
• Origination points
• Pre-paid interest amount

There are other closing costs in a mortgage which are not included in the APR, such as, credit reports, appraisals, notary, recording fee, title insurance, and escrow fees.

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