Buyers and sellers beware… rumor has it that between November of 2009 and November of 2010 banks may be releasing up to 500,000 foreclosed properties. Some estimates show 250,000 of these properties are in Los Angeles.
The moratorium on foreclosures is set to expire and several large real-estate companies have signed exclusive deals to help move much of this foreclosed inventory.
My personal opinion is that this should create a feeding frenzy of activity and make it even more frustrating for buyers.
One way to ensure you are submitting the strongest offer possible is to be fully pre-approved with a lender prior to submitting an offer.
Several of my clients have asked about how they can help reduce the cost of obtaining a new home loan. Generally speaking, once you add in closing costs, bank fees, title & escrow fees, inspection fees, pre-paid interest, up front insurance, and pro-rated taxes… clients have to bring in $10,000 or more in total costs on top of their down payment.
One way to help mitigate these expenses is to ask for a closing cost credit from the seller. Sellers are usually a little more open to give closing cost credits if your offer price is closer to, or above their asking price. However, asking for $2,000, $5,000, or even $10,000 in closing cost credits is not out of the norm in todays market.
Loan programs and banks vary on what they will allow as seller paid credits; as always, check with your lender early and often about any credits you will be requesting.
Property values are still well below their highs… however, sales in the new home and existing home markets are on the rise.
Like anything else, as supply decreases, demand should increase, and presumably prices will rise. It’s very possible we are at, or near the trough of this housing bubble. Don’t miss the bottom by trying to time the absolute bottom.
If you can afford a place that you like… get pre-qualified, make an offer, become a home owner.
http://money.cnn.com/2009/07/27/real_estate/June_new_home_sales/index.htm?postversion=2009072712
Several of the agents I work with know that reading about politics, the markets, and finance is my hobbie. For the most comprehensive list of daily stories, I tend to go the “real-clear” portals. www.realclearpolitics.com and www.realclearmarkets.com are a couple of their sites I check out daily.
Here is a small sampling of great articles I found today:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14098372
http://www.nytimes.com/2009/07/24/business/economy/24norris.html?_r=2&ref=business
http://money.cnn.com/2009/07/24/news/economy/health_care_reform_obama.fortune/index.htm?postversion=2009072410
This morning I was on a conference call with the CFO, Strategic Planning Manager, and Sales Manager of a major bank.
Several items were discussed which lead me to believe that it is going to get exceedingly difficult over the next 6 months for houses in certain price ranges to sell. Read the rest of this entry »
Recently, as mortgage rates have risen slightly, I have had a lot of clients doing extensive “shopping” of rates.
The truth is, from bank to bank, rates are going to be virtually the same and are set by mortgage backed securities; with some price influenced by the 10 year treasury.
Generally speaking, the difference in rate from Bank ‘A’ versus Bank ‘B’ may be somewhere around0.125%. Trading in your trusted lender who you have a relationship with for someone who promises a rate of 0.125% lower is very dangerous.
First and foremost, the mortgage industry, and specifically loan brokers, are notorious for not delivering rates as promised; or these rates surprisingly come with higher fees.
On a $500,000 loan, the difference of 0.125% equates to about $500 a year. For the majority of my clients, doing business with someone they are not 100% comfortable with to handle the biggest financial decision of their life is not worth the potential savings. Additionally, since most Americans refinance or modify their loan once every 5 years, it’s important to have a trusted source you can return to for future transactions.
I could write thousands of pages of bad experiences my clients have encountered by trying to go with the cheapest deal available; but in the end, I can sum it up by letting everyone know they should continue to work with a lender they know and can trust.
Nothing could be further from the truth. Read the rest of this entry »
I subscribe to a service run by Barry Habib called Mortgage Market Guide.
As part of this service- I get daily emails, phone calls, and web-blasts the update me on changing market conditions affecting bond prices. These 10 year treasuries and the bond market dictate what mortgage rates will be set at.
Barry and his team have built a very successful business around keeping mortgage providers up to date with new information that may affect mortgage rates. I particullarly enjoy getting a phone call from his ‘800′ number that advises me rates may be going up. It generally gives me about 30 minutes to lock in loans and review rates with my clients prior to the banks increasing rates.
For the average consumer, this service would be a waste of time and money… for lending professionals, this service is a must.
As always, if you need information on starting a new loan for the purchase or refinance of your home, contact me at TrustYourLender@gmail.com
Have several files in underwriting and slightly out of my control for at least the next 48 hours.
Agents and clients are working away at funding conditions.
Mid month is always the calm before the storm. Business in general, rush requests, and last minute conditions always seem to come at the end of the month.
Maybe I’ll actually leave by 5pm today and hit the gym.
I hear this frequently from clients of mine who are high wage earners.
My clients know they have excellent credit, a solid down payment, and make plenty of money to cover a mortgage payment. However, many people who feel they should be able to get a loan cannot seem to find financing in our current market… why? Read the rest of this entry »
Paying points is a way to accomplish one of two things… buy down your interest rate and save yourself money on your monthly payment, or pad the pockets of the bank, mortgage broker, or loan originator you are working with.
Obviously you only want to pay points if it reduces your interest rate, and you want to avoid the latter at all costs.
Normally speaking, the cost of ‘buying’ points, versus your monthly savings on the reduced rate, takes about 3 years to recover.
Recently I did a loan for a young couple who had just had their first child. They bought a large house in Los Angeles that they knew they would be in for years. The house was big enough for the family to grow, and they were 100% comfortable with staying in this house and California for the long haul. Due to their time horizon, they paid 1.50% points up front to get a lower rate. This was a fee of approximately $9,000 up front.
Guess what? Life happens. A family member of theirs recently got sick and they have to move back east as soon as possible. They are frantically working to sell their house after only enjoying the lower payment for 6 month. In the end, a majority of that $9,000 up front fee will be wasted.
This is just one of the hundreds of reasons not to pay points. Stuff happens, refinance opportunities come along, loans get paid off, houses get sold way before the original expectations.
For all these reasons, I always recommend my clients pay as little as possible in up front fees in order to obtain a mortgage.
I once saw a bumper sticker that said… “To err is human, to really screw something up, you need a computer”.
In today’s super faced paced, ridiculously “plugged-in-world”, information travels from one source to the next at lightning fast speed. Although certain areas of the mortgage and real-estate industry generally lag slightly behind the cutting edge of technology, the speed at which information is processed is a little scary. Read the rest of this entry »
Today two local Realtors / influential bloggers interviewed me for their most recent Pod-Cast on real-estate market trends and mortgage information.
Listen to the whole interview here:
www.silverlakeopenhouse.com/mortgagefraud.m4a
Many of my clients utilize a fairly well known tax deduction know as 2106 Non-reimbursable business expenses. Basically, if you encounter business expenses required for your job or profession, and are not reimbursed by your employer, you can deduct these from your overall income.
Examples include un-reimbursed training, supplies, equipment, and professional licensing fees.
These are a great tool for reducing your overall tax liability; however, these deductions are also taken into consideration by loan underwriters as a deduction to your income.
If for example you show $12,000 per year in un-reimbursed business expenses, the underwriter will reduce your verified income by $1,000 per month. The rationale is that these business expenses are your on-going costs of staying employed and will continue to decrease your total earned income.
As always, if you are planning to buy or refinance a home, it’s important to have a conversation with your lender as soon as possible about your tax returns. Unfortunately, saving a few thousand dollars on your taxes could reduce your income to the point of not being able to qualify for a loan.
For those of you who know me personally, you know I tend to get on my soap-box from time-to-time regarding politics and the government. I try very hard to keep my personal opinions and political rants out of the work environment. However, many of the agents I work with have been asking questions regarding the current and upcoming housing laws and how they may affect delays in mortgage transactions. Below is a list of recently passed or upcoming laws that are going to make it harder than ever to close a deal. Read the rest of this entry »
