The recent government intervention in today's downtrodden real estate market is joyous news for Carlsbad.
First, a series of reductions in the federal funds rate has boosted business and led the way for lower mortgage rates. Conforming 30-year fixed rate mortgages have fallen back down to 2004-2005 lows of 5.5 percent. Second, Congress recently passed legislation to raise the conforming loan amount to give Carlsbad and California homebuyers more purchasing power, simultaneously making expensive homes more affordable.
Until recently, the current conforming loan limit was set at $417,000. Conforming loans are guaranteed by the United States government and carry less risk than loans of more than $417,000, often referred to as jumbo loans. To investors purchasing loans on the secondary market, that risk difference is worth about 1 percent. The average conforming rate loan is around 5.5 percent, while the jumbo loan amount is around 6.5 percent. The new legislation would raise the government guaranteed limit to $729,750 with certain limitations.
With a 10 percent down payment of $55,000, a buyer looking for an affordable home in Carlsbad would need a loan for roughly $500,000 to purchase a home for $550,000. Without the changes in loan limits, the buyer would pay 6.6 percent on $500,000 or $2,750 a month in interest. With the new legislation, the monthly loan payment is $2,292, which is an annual difference of almost $5,500. Not only will this encourage more sales, but the new conforming standards will aid troubled homeowners with refinancing, and stem future foreclosures.
As of last month, the conforming loan limit reset at $729,750 in high cost areas only applies to loans made between July 1, 2007 and Dec. 31, 2008. Recent homebuyers who purchased last year and hold a jumbo mortgage loan that is less than $729,750 should inquire with their lender about a rate reduction or available refinance options. The new limits and restrictions also apply to FHA loans.
Local market recap
Sales activity in the Carlsbad and surrounding market areas is expected to pick up through April, May and June. If rates stay low, average sales prices should hold steady through the summer. The combination of new low prices and 5.5 percent 30-year fixed rates will give strong encouragement to those on the fence about buying a home.
Select areas of Oceanside, Vista and San Marcos continue to draw attention from investors and homebuyers. Many homes within the Rancho Del Oro area of Oceanside (92056) are at excellent prices. Bank owned homes are driving down prices as banks push to get their homes sold and off of their books.
For example, a 2,000-square-foot, three-plus bedroom home with a remodeled kitchen that sold for more than $550,000 in the height of the market, recently sold for $385,000. There are many more homes in excellent condition for similar prices.
This is an opportune time to buy for those interested in owning a home who have at least a 5 percent down payment and a FICO score that is 700 or higher.
First, a series of reductions in the federal funds rate has boosted business and led the way for lower mortgage rates. Conforming 30-year fixed rate mortgages have fallen back down to 2004-2005 lows of 5.5 percent. Second, Congress recently passed legislation to raise the conforming loan amount to give Carlsbad and California homebuyers more purchasing power, simultaneously making expensive homes more affordable.
Until recently, the current conforming loan limit was set at $417,000. Conforming loans are guaranteed by the United States government and carry less risk than loans of more than $417,000, often referred to as jumbo loans. To investors purchasing loans on the secondary market, that risk difference is worth about 1 percent. The average conforming rate loan is around 5.5 percent, while the jumbo loan amount is around 6.5 percent. The new legislation would raise the government guaranteed limit to $729,750 with certain limitations.
With a 10 percent down payment of $55,000, a buyer looking for an affordable home in Carlsbad would need a loan for roughly $500,000 to purchase a home for $550,000. Without the changes in loan limits, the buyer would pay 6.6 percent on $500,000 or $2,750 a month in interest. With the new legislation, the monthly loan payment is $2,292, which is an annual difference of almost $5,500. Not only will this encourage more sales, but the new conforming standards will aid troubled homeowners with refinancing, and stem future foreclosures.
As of last month, the conforming loan limit reset at $729,750 in high cost areas only applies to loans made between July 1, 2007 and Dec. 31, 2008. Recent homebuyers who purchased last year and hold a jumbo mortgage loan that is less than $729,750 should inquire with their lender about a rate reduction or available refinance options. The new limits and restrictions also apply to FHA loans.
Local market recap
Sales activity in the Carlsbad and surrounding market areas is expected to pick up through April, May and June. If rates stay low, average sales prices should hold steady through the summer. The combination of new low prices and 5.5 percent 30-year fixed rates will give strong encouragement to those on the fence about buying a home.
Select areas of Oceanside, Vista and San Marcos continue to draw attention from investors and homebuyers. Many homes within the Rancho Del Oro area of Oceanside (92056) are at excellent prices. Bank owned homes are driving down prices as banks push to get their homes sold and off of their books.
For example, a 2,000-square-foot, three-plus bedroom home with a remodeled kitchen that sold for more than $550,000 in the height of the market, recently sold for $385,000. There are many more homes in excellent condition for similar prices.
This is an opportune time to buy for those interested in owning a home who have at least a 5 percent down payment and a FICO score that is 700 or higher.