The Housing Scene by Lew Sichelman

Odd Parcels: VA, Women, Affordability

To protect borrowers with VA-guaranteed mortgages against churning by less-than-scrupulous lenders, the Department of Veterans Affairs has taken steps to make it more difficult to refinance loans that are all but brand new.

Under an interim rule that takes effect today (Feb. 15), loans used to remove equity from the underlying property cannot exceed 100 percent of the reasonable value of the underlying property. Also, while funding fees can be rolled into the amount being financed, any part of the charge that causes the loan amount to exceed 100 percent of value must be paid in cash.

These two new requirements will go a long way toward stopping lenders who try to convince veterans and current servicemen and women to turn in their VA loans shortly after they take them out in favor of higher-balance mortgages that are loaded with extra fees and charges.

The poachers offer a lower interest rate, but borrowers have to pay closing costs all over again, so there is little or no savings. And in some cases, the new loan is more costly than the old one, even at the lower rate.

Now, the VA says the new loan must provide a “net tangible benefit” to the borrower which can be satisfied in one of several ways. For example, it can have a shorter term, lower rate or lower payment. Or it can have a balance of 90 percent or less of value, eliminate mortgage insurance, or exchange an adjustable rate mortgage for one that has a fixed rate.

For some loans, all fees and charges to the borrower must be recouped within 36 months. Also, the rate on a fixed-to-fixed refi must be at least a half a percentage point lower; on an fixed-to-ARM refi, it must be at least 2 points lower.

A sign of the times: A Manhattan construction company is believed to be the first to post a “Men and Women at Work” sign at a building site.

As part of Plaza Construction’s effort to encourage women to enter the field, it is posting the gender-neutral sign at the entrance to all of its jobs in and around New York as well as Washington, D.C., Tampa and Miami.

Women account for 9 percent of the construction workforce nationally, but they account for a fourth of Plaza’s crews.

Most wannabe buyers are scared off by higher interest rates. But the more important factor in deciding whether to buy now or wait is what your monthly mortgage payment will be.

The typical house payment stands as good proxy for affordability because it shows how much a borrower would have to qualify for to obtain financing to buy the median priced home. It’s not exact because it only covers principal and interest. It does not include annual property tax and homeowners insurance payments, a portion of which lenders collect each month and pay out when those bills become due. But it is close enough.

Unfortunately, according to analysts at CoreLogic, the typical P&I payment rose 16.4 percent over the 12-month period that ended last September, whereas mortgage rates were up by less than 6 percent. The reason, of course, is that the median house price is up -- by 5.6 percent to $221,697 over the same period.

And it could get worse. CoreLogic research analyst Andrew LePage says the consensus forecast is for mortgage rates to bump up by 0.5 percent by this coming September. Couple that with a 2.7 percent increase in the median house price, and the typical house payment will rise from $912 in September 2018 to $994 in the same month this year.

That’s an 8.9 percent year-over-year jump on top of the 16 percent leap recorded in the previous 12-month period.

There’s no doubt that households with children have different needs from those sans kids when it comes to purchasing houses.

For example, kidless buyers could hardly give a hoot about schools. But for half of all those with children under the age of 18, the quality of the school district is a paramount consideration, according to the latest research from the National Association of Realtors. Forty-five percent say convenience to schools is an important factor.

Buyers with kids also purchase larger houses -- 2,100 square feet on average vs. 1,750 -- with four bedrooms as opposed to three for those without kidlets.

Buyers with and without children are on the same page when it comes to finding the right property. In both situations, 54 percent said it was the most difficult step in the process. But 27 percent of those with kids said child care expenses forced them to delay their purchase. And many made compromises when they did buy because of child care costs.

They compromised on the size of the house, distance from their workplaces and the condition and style of the house they bought. But only 10 percent caved on school quality and just 5 percent bought farther away from school than they originally wanted to be.