I have posted a chart for Contra Costa County Real Estate Interest Rates from December 2001 through December 2007. This chart uses a 12-month moving average of data.
How to read this chart: when the market momentum reading falls from above the "0" line to below the "0" line, it signals that interest rates are trending down, which is a good sign for the real estate market. The Campbell Method uses trends in interest rates not as a key predictor of real estate trends, but as an indicator when the prevailing trend of the market is likely to get stronger or weaker.
This chart is one of five key real estate indicators called "Vital Signs" used to track local real estate market trends. Interest rates is Vital Sign #5.
"The Campbell Method" is a proven system for buying and selling real estate for maximum profits. Based on five key real estate indicators- called "Vital Signs" - The Campbell Method is a clearly defined approach to real estate investing that shows you how to anticipate the peaks and valleys of real estate cycles with incredible accuracy. These Vital Signs act as "leading indicators" and give you as much as 3 to 6 months advance notice to the direction real estate prices are likely to take, long before it becomes obvious to the general public.
I recommend that you purchase and read the book "Timing the Real Estate Market"- Robert Campbell. Log on to http://www.realestatetiming.com/ to learn about The Campbell Method, purchase the book and Market Momentum software.
Here is what Timing the Real Estate Market shows you...
How to identify the best time to buy a home- and the best time to sell
How to maximize real estate investment profits - and avoid losses
How to identify the sweet spot in real estate cycles - where the prices can go full throttle through the roof
How to identify the four stages of all real estate cycles - and position yourself to have an overwhelming advantage when you buy and sell
How to read the signals that tell you when the market is about to change
How to avoid real estate's single biggest mistake
Ten cardinal rules to follow - that guarantee optimal real estate success
Why economists and market forecasters are usually dead wrong.
Tuesday, February 12, 2008
Contra Costa County Real Estate: Market Momentum Chart: Mortgage Interest Rates December 2007
Contra Costa County Real Estate: Market Momentum Chart: Foreclosure Sales December 2007
I have posted a chart for Contra Costa County Real Estate Foreclosure Sales from December 2001 through December 2007. This chart uses a 12-month moving average of data sourced.
How to read this chart: when the market momentum reading falls from above the "0" line to below the "0" line, this signals that the trend in foreclosure sales changes from an uptrend to a downtrend. Fewer foreclosure sales are a positive sign for the market and the local economy.
When the marketing momentum reading climbs from below the "0" line to above the "0" line, this signals a trend in foreclosure sales has changed from a downtrend to an uptrend. A negative sign for a weakening local economy.This chart is one of five key real estate indicators called "vital signs" used to track local real estate market trends. Foreclosure sales (REO's) is Vital Sign #4.
.jpg)
"The Campbell Method" is a proven system for buying and selling real estate for maximum profits. Based on five key real estate indicators- called "Vital Signs" - The Campbell Method is a clearly defined approach to real estate investing that shows you how to anticipate the peaks and valleys of real estate cycles with incredible accuracy. These Vital Signs act as "leading indicators" and give you as much as 3 to 6 months advance notice to the direction real estate prices are likely to take, long before it becomes obvious to the general public.
I recommend that you purchase and read the book "Timing the Real Estate Market"- Robert Campbell. Log on to http://www.realestatetiming.com/ to learn about The Campbell Method, purchase the book and Market Momentum software.
Here is what Timing the Real Estate Market shows you...
How to identify the best time to buy a home- and the best time to sell
How to maximize real estate investment profits - and avoid losses
How to identify the sweet spot in real estate cycles - where the prices can go full throttle through the roof
How to identify the four stages of all real estate cycles - and position yourself to have an overwhelming advantage when you buy and sell
How to read the signals that tell you when the market is about to change
How to avoid real estate's single biggest mistake
Ten cardinal rules to follow - that guarantee optimal real estate success
Why economists and market forecasters are usually dead wrong.
Temporary Loan Limit Increase for FHA...Here are the facts
H.R.5140 is also known as the Economic Stimulus Act of 2008 (Enrolled as Agreed to or Passed by Both House and Senate). The high cost real estate markets like California and the San Fransico Bay Area will be the primary beneficiaries of the increase in FHA loan limits to stimulate the home purchase and refinance activity.
Here are the facts:
SEC. 202. TEMPORARY LOAN LIMIT INCREASE FOR FHA.
(a) Increase of High-Cost Area Limit- For mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008, subparagraph (A) of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) shall be considered (except for purposes of section 255(g) of such Act (12 U.S.C. 1715z-20(g))) to require that a mortgage shall involve a principal obligation in an amount that does not exceed the lesser of--
(1) in the case of a 1-family residence, 125 percent of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation determined for 2008 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation determined for 2008 under such section for a 1-family residence; or
(2) 175 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitation with respect to properties located in Alaska, Guam, Hawaii, or the Virgin Islands);
(a) except that the dollar amount limitation in effect under this subsection for any size residence for any area shall not be less than the greater of: (A) the dollar amount limitation in effect under such section 203(b)(2) for the area on October 21, 1998; or (B) 65 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size. Any reference in this subsection to dollar amount limitations in effect under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act means such limitations as in effect without regard to any increase in such limitation pursuant to section 201 of this title.
(b) Discretionary Authority- If the Secretary of Housing and Urban Development determines that market conditions warrant such an increase, the Secretary may, for the period that begins upon the date of the enactment of this Act and ends at the end of the date specified in subsection (a), increase the maximum dollar amount limitation determined pursuant to subsection (a) with respect to any particular size or sizes of residences, or with respect to residences located in any particular area or areas, to an amount that does not exceed the maximum dollar amount then otherwise in effect pursuant to subsection (a) for such size residence, or for such area (if applicable), by not more than $100,000.
(c) Publication of Area Median Prices and Loan Limits- The Secretary of Housing and Urban Development shall publish the median house prices and mortgage principal obligation limits, as revised pursuant to this section, for all areas as soon as practicable, but in no case more than 30 days after the date of the enactment of this Act. With respect to existing areas for which the Secretary has not established area median prices before such date of enactment, the Secretary may rely on existing commercial data in determining area median prices and calculating such revised principal obligation limits.
Raising Conforming Loan Limits...It Ain't Over 'Till the Fat Lady Sings (Wall Street Investors)
I suggest cautious optimism for those of us in the real estate industry in high cost real estate markets like California and the San Fransico Bay Area. Here are two of the most common questions for the proposed conforming loan limit increases passed by Congress and expected to be approved by President Bush next week:
How will the new amounts be priced? The law impacts loans originated after July 1 of last year. So do you remember all those jumbo loans for $500 or $600 or $700k that were purchased by Citi, Chase, Wells, etc.? Per the proposed law, these loans can now fall under FNMA & FHLMC guidance. Owners (holders) of these mortgages are "testing the waters" in terms of pricing in the secondary market. If there is little investor acceptance, rates will stay high. If there is investor appetite, rates on these high-balance loans will improve. It is anyone's guess. Please note that the law "encourages" these loans to be securitized - it does not require it! So no one knows the answer yet. Time will tell if Wall Street investors are willing to purchase mortgage backed securities in high cost (high risk) real estate markets...
What is the schedule? President Bush needs to sign the legislation. That may happen this weekend, or sometime next week. I doubt any large investors will announce a policy until he actually signs the document. And even after that, pricing may be unknown due to questionable investor acceptance.
In the text of the proposed law, it mentions section 302(b)(2) of FNMA's charter. If you are curious, here it is: http://www.ofheo.gov/Media/Archive/docs/reports/fnma.pdf
Here is the exact text of the law:
SEC. 201. TEMPORARY CONFORMING LOAN LIMIT INCREASE FOR FANNIE MAE AND FREDDIE MAC.
(a) Increase of High Cost Areas Limits for Housing GSEs- For mortgages originated during the period beginning on July 1, 2007, and ending at the end of December 31, 2008:
(1) FANNIE MAE- With respect to the Federal National Mortgage Association, notwithstanding section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)), the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Association shall be the higher of--
(A) the limitation for 2008 determined under such section 302(b)(2) for a residence of the applicable size; or
(B) 125 percent of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation for 2008 determined under such section 302(b)(2) for a residence of the applicable size.
(2) FREDDIE MAC- With respect to the Federal Home Loan Mortgage Corporation, notwithstanding section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), the limitation on the maximum original principal obligation of a mortgage that may be purchased by the Corporation shall be the higher of--
(A) the limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size; or
(B) 125 percent of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size.
(b) Determination of Limits- The areas and area median prices used for purposes of the determinations under subsection (a) shall be the areas and area median prices used by the Secretary of Housing and Urban Development in determining the applicable limits under section 202 of this title.
(c) Rule of Construction- A mortgage originated during the period referred to in subsection (a) that is eligible for purchase by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation pursuant to this section shall be eligible for such purchase for the duration of the term of the mortgage, notwithstanding that such purchase occurs after the expiration of such period.
(d) Effect on Housing Goals- Notwithstanding any other provision of law, mortgages purchased in accordance with the increased maximum original principal obligation limitations determined pursuant to this section shall not be considered in determining performance with respect to any of the housing goals established under section 1332, 1333, or 1334 of the Housing and Community Development Act of 1992 (12 U.S.C. 4562-4), and shall not be considered in determining compliance with such goals pursuant to section 1336 of such Act (12 U.S.C. 4566) and regulations, orders, or guidelines issued thereunder.
(e) Sense of Congress- It is the sense of the Congress that the securitization of mortgages by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation plays an important role in providing liquidity to the United States housing markets. Therefore, the Congress encourages the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to securitize mortgages acquired under the increased conforming loan limits established in this section, to the extent that such securitizations can be effected in a timely and efficient manner that does not impose additional costs for mortgages originated, purchased, or securitized under the existing limits or interfere with the goal of adding liquidity to the market.
Contra Costa County Real Estate: Market Momentum Chart: Mortgage Loan Defaults December 2007
I have posted a chart for Contra Costa County Real Estate Mortgage Loan Defaults from December 2001 through December 2007. This chart uses a 12-month moving average of data.
How to read this chart: when the market momentum reading falls from above the "0" line to below the "0" line, this signals that the trend in mortgage loan defaults changes from an uptrend to a downtrend. When fewer people have difficulty making their mortgage payments, this is a positive sign for the local economy.
When the marketing momentum reading climbs from below the "0" line to above the "0" line, this signals that the trend in foreclosure sales has changed from a downtrend to an uptrend. More and more people are having difficulty making their mortgage payments. This is a negative sign for the local economy and its real estate market.
This chart is one of five key real estate indicators called "vital signs" used to track local real estate market trends. Mortgage Loan Defaults (NOD's) is Vital Sign #3.
NOTE: when you see that Vital Sign #1, #2, and #3 all give signals to buy, you can now be 80%-90% confident that a major real estate upcycle is underway..jpg)
"The Campbell Method" is a proven system for buying and selling real estate for maximum profits. Based on five key real estate indicators- called "Vital Signs" - The Campbell Method is a clearly defined approach to real estate investing that shows you how to anticipate the peaks and valleys of real estate cycles with incredible accuracy. These Vital Signs act as "leading indicators" and give you as much as 3 to 6 months advance notice to the direction real estate prices are likely to take, long before it becomes obvious to the general public.
I recommend that you purchase and read the book "Timing the Real Estate Market"- Robert Campbell. Log on to http://www.realestatetiming.com/ to learn about The Campbell Method, purchase the book and Market Momentum software.
Here is what Timing the Real Estate Market shows you...
How to identify the best time to buy a home- and the best time to sell
How to maximize real estate investment profits - and avoid losses
How to identify the sweet spot in real estate cycles - where the prices can go full throttle through the roof
How to identify the four stages of all real estate cycles - and position yourself to have an overwhelming advantage when you buy and sell
How to read the signals that tell you when the market is about to change
How to avoid real estate's single biggest mistake
Ten cardinal rules to follow - that guarantee optimal real estate success
Why economists and market forecasters are usually dead wrong.
Breaking News...Congress Sends Economic Plan to President Bush...
Congress passed an emergency plan Thursday to stimulate the weak economy by providing rebates to most taxpayers, disabled veterans, the elderly and low-income people. Rebate checks could begin arriving in May based on 2007 tax returns.
The bill also provides tax relief for businesses to make new investments. The measure also temporarily raises the loan limit on Federal Housing Administration (FHA) insured loans and the Fannie Mae and Freddie Mac conforming loan limit up to $729,750 in high cost real estate markets like California and the San Francisco Bay Area.
The Senate acted after a week of political maneuvering with an 81-16 vote. The White House said Bush would sign the bill sometime next week. The package was the result of a rare bi-partisan cooperative effort.
There are concerns that by raising the conforming loan limits for Fannie Mae and Freddie Mac that the larger loans will place an additional burden on these Government Sponsored Entities (GSE's) which may hinder their ability to cover larger loan losses.
This additional potential burden may have a negative effect on loan and appraisal underwriting requirements in declining real estate market like California which could increase the cost of home loan financing and down payment requirements.
The conforming loan limit increases will apply to loans originated from July 31, 2007 and will expire on December 31, 2008. The limited time frame for the temporary loan limit increase should create a sense of urgency in slow real estate markets to encourage home buyers to take action and for homeowners to take advantage of refinancing into a more affordable loan.
Stay tuned to see what happens next after Bush signs the bill.
Contra Costa County Real Estate: Market Momemtum Chart: New Home Building Permits December 2007
I have posted a chart for Contra Costa County Real Estate New Home Building Permits from December 2001 through December 2007. This chart uses a 12-month moving average of data.
How to read this chart: when the market momentum reading climbs from below the "0" line - indicates a trend change has occurred from a downtrend to an uptrend. Increased demand for newly built homes. When the marketing momentum reading falls from above the "0" line to below the "0" line, this indicates a trend change in new home buildings has occurred-changing from an uptrend to a downtrend. Negative sign indicates decreasing demand for newly built homes.
This chart is one of five key real estate indicators called "vital signs" used to track local real estate market trends. New home building is Vital Sign #2.
"The Campbell Method" is a proven system for buying and selling real estate for maximum profits. Based on five key real estate indicators- called "Vital Signs" - The Campbell Method is a clearly defined approach to real estate investing that shows you how to anticipate the peaks and valleys of real estate cycles with incredible accuracy. These Vital Signs act as "leading indicators" and give you as much as 3 to 6 months advance notice to the direction real estate prices are likely to take, long before it becomes obvious to the general public.
I recommend that you purchase and read the book "Timing the Real Estate Market"- Robert Campbell. Log on to http://www.realestatetiming.com/ to learn about The Campbell Method, purchase the book and Market Momentum software.
Here is what Timing the Real Estate Market shows you...
How to identify the best time to buy a home- and the best time to sell
How to maximize real estate investment profits - and avoid losses
How to identify the sweet spot in real estate cycles - where the prices can go full throttle through the roof
How to identify the four stages of all real estate cycles - and position yourself to have an overwhelming advantage when you buy and sell
How to read the signals that tell you when the market is about to change
How to avoid real estate's single biggest mistake
Ten cardinal rules to follow - that guarantee optimal real estate success
Why economists and market forecasters are usually dead wrong.
Contra Costa County Real Estate: Market Momentum Chart: Existing Home Sales December 2007
I have posted a chart for Contra Costa County Real Estate existing home sales from December 2001 through December 2007. This chart uses a 12-month moving average of data sourced directly from the Contra Costa Association of Realtors MLS.
How to read this chart: when the market momentum reading climbs from below the "0" line - indicates a trend change has occurred from a downtrend to an uptrend. Increasing demand usually indicates increasing property values. When the marketing momentum reading falls from above the "0" line to below the "0" line signals the trend in existing home sales has changed from an uptrend to a down trend which is a negative sign indicating decreasing home buying demand.
This chart is one of five key real estate indicators called "vital signs" used to track local real estate market trends. Existing Home Sales is Vital Sign #1.
"The Campbell Method" is a proven system for buying and selling real estate for maximum profits. Based on five key real estate indicators- called "Vital Signs" - The Campbell Method is a clearly defined approach to real estate investing that shows you how to anticipate the peaks and valleys of real estate cycles with incredible accuracy. These Vital Signs act as "leading indicators" and give you as much as 3 to 6 months advance notice to the direction real estate prices are likely to take, long before it becomes obvious to the general public.
I recommend that you purchase and read the book "Timing the Real Estate Market"- Robert Campbell. Log on to http://www.realestatetiming.com/ to learn about The Campbell Method, purchase the book and Market Momentum software.
Here is what Timing the Real Estate Market shows you...
How to identify the best time to buy a home- and the best time to sell
How to maximize real estate investment profits - and avoid losses
How to identify the sweet spot in real estate cycles - where the prices can go full throttle through the roof
How to identify the four stages of all real estate cycles - and position yourself to have an overwhelming advantage when you buy and sell
How to read the signals that tell you when the market is about to change
How to avoid real estate's single biggest mistake
Ten cardinal rules to follow - that guarantee optimal real estate success
Why economists and market forecasters are usually dead wrong.
Contra Costa County, California: Real Estate Supply and Demand Comparison - December 2007
Monthly MLS Statistics for Central Contra Costa County Real Estate including the cities of Alamo, Danville, Concord, Clayton, Clyde, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill, San Ramon, Walnut Creek for both attached and detached properties.
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
Contra Costa County, California: Real Estate Supply and Demand Comparison - December 2007
Monthly MLS Statistics for Central Contra Costa County Real Estate including the cities of Alamo, Danville, Concord, Clayton, Clyde, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill, San Ramon, Walnut Creek for both attached and detached properties.
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
Contra Costa County Real Estate: Supply and Demand Comparison for Walnut Creek, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Walnut Creek, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Buying Down the Interest Rate Can Make You a Hero...
In most real estate markets throughout the country, sellers are trying to cope with a slower moving market burdened with an over supply of competing homes for sale and weak buyer demand.
Buyers are struggling with rising mortgage interest rates, tougher loan underwriting qualifying standards, high prices and low affordability.
Real estate investors want positive monthly rental income cash flow and a hedge against a softening rental market in the future.
Solution:
• A mortgage interest rate "buy-down" allows the seller to expand the pool of qualified buyers and real estate investors.
• The mortgage interest rate buy-down is a seller strategy with multiple options to maintain the seller's price position
• The property is offered for sale at the full asking price with a seller credit to discount the mortgage interest rate or a discounted price without a seller credit to discount the mortgage interest rate
• It's a "win-win" for both the buyer and seller
• The seller can deduct the buy down credit as a selling cost expense
• The buyer receives a 1098 form from the lender and a tax deduction for the buy down credit - "points" paid for the new loan to purchase the property
• Higher sales price maintains neighborhood property values
• The discounted mortgage interest rate helps to ensure the buyer will qualify for the loan
• The buy-down empowers the seller to compete with new home builders offering substantial buyer incentives
• The lower monthly loan payment increases the potential for positive rental cash flow for real estate investors
Why Buyers and Sellers are stuck:
In a slow real estate market, sellers usually experience long protracted marketing time-lines to find a qualified buyer.
An over supply of competing homes for sale leaves the seller with few options except to make consistent and substantial downward asking price adjustments until the property sells.
Investors are reluctant to buy income properties with negative monthly rental cash flow.
Buyers cannot qualify for financing to move up into a larger home or move to a more desirable location.
Buyers relocating from a lower cost area into a higher priced market must make a major lifestyle set back to buy a smaller home in a lesser location.
The process to solve the problem:
Sellers can align themselves with a reputable lender to find the best mortgage interest rate buy down program and integrate the buy-down with their marketing and pricing strategies
Buyers can obtain a loan pre-approval with a reputable lender using a mortgage interest rate buy down program to increase their purchasing power.
How does mortgage interest rate buy-down program work?
The seller uses a credit from the proceeds of the property sale to pay additional loan points on the buyer's loan. The additional loan points will "buy-down" the mortgage interest rate. The discounted mortgage interest rate applied against the same loan amount will reduce the monthly loan payment.
So, there is no "out-of-pocket" cost to the seller. The credit paid to the buyer's lender is a paper transfer at the close of escrow. The buy-down fee is a debit from the seller's proceeds of the property sale.
Review the Example and the type of loan used - The five-year interest-only loan.
Example:
$644,000 sales price with the Buyer purchasing with 20%down:
Down payment 20% $128,800
Loan amount 80% $515,200
Rate/payment 6.375% $2,737 per month
Option I
$644,000 sales price with Seller credit of $10,000 applied to interest rate buy down:
Down payment 20% $128,800
Loan amount 80% $515,200
Rate/Payment 5.5% $2,361 per month
**This results in a monthly payment reduction of $376.
Option II
Reduce sales price by $10,000 to $634,000 with the Buyer purchasing with 20% down:
Down payment 20% $126,800
Loan amount 80% $507,200
Rate/Payment 6.375% $2,694 per month
*** Your buyer saved only $43 per month
In order to achieve the same payment of $2,361 per month by using a price reduction you would have to reduce the sales price by $88,750!
(see example below)
Reduce sales price by $88,750 to $555,250:
Down payment 20% $111,050
Loan amount 80% $444,200
Rate/ Payment 6.375% $2,361 per month
While a $10,000 sales price reduction is reasonable, an $88,750 sales price reduction is not. The loan interest rate buy down credit is a win/win for the buyer and seller.
Review Option I -
Compare the difference in the interest rate and monthly payment between the Example and Option 1
How much will the buyer save each month using the buy-down loan?
$376 per month...multiply this monthly savings by 60 months and the buyer saves over $22,560 in five years.
If the buyer decides to pay a lower price instead of taking advantage of the buy-down interest rate loan- how much does the buyer save each month if the seller lowers the purchase price by a sum equivalent to the 3% credit, in this case, $10,000?
Review Option II -
The buyer saves $43 per month or $2,580 over five years.
The buyer can pocket an additional $19,980 if the buyer chooses to pay the full asking price with the mortgage rate buy-down loan.
How much would the seller have to lower the asking price to achieve the same discounted monthly loan payment and the borrower financing 80% of the purchase price?
The seller would have to lower the asking price by $88,750 to achieve the same payment using an 80% loan to value ratio.
(Review the "sales price reduction" example)
The seller is more than likely to be unable or willing to make such a large price concession.
Why does the buyer receive a tax credit for the buy-down fees paid by the seller?
The lender is required to issue a 1098 form to the borrower for points paid on the purchase loan. The seller is not the lender's customer. Therefore, the buyer receives a significant tax deduction of which could make the property purchase even more attractive.
How do lenders benefit from these buy-down loans?
1. It is easier for a buyer to qualify under a discounted loan interest rate and the bank receives upfront "pre-paid" profit from the additional points paid on the loan.
2. The discounted interest rate can make it easier to put a second loan behind the discounted first loan and therefore, the buyer can use a smaller down payment to purchase the property - like an 80-10-10 loan.
3. The discounted monthly payment can offset additional monthly association fees for buyers purchasing a condominium.
Is it possible to buy down an adjustable rate loan?
The interest rate index and margin are added together to create the "note rate". The buy-down of the margin will lower the note rate and, therefore, the related monthly mortgage payment. The benefits of a margin buy-down in a rising interest rate environment include lower monthly payment increases.
Is it possible to buy-down the interest rate in a loan refinance?
The buy-down fee (points) in a refinance is built-in by obtaining a larger loan amount above the existing loan amount. You can reduce the monthly mortgage payment through a buy-down refinance loan.
Buying down the interest rate on a new first loan may enable the buyer to qualify for "piggyback" second loan financing to minimize the buyer's down payment requirement.
A lower monthly loan payment on the discounted first loan leaves qualifying room for the buyer's debt-to-income ratio for the monthly payment on a second loan.
Also, a lower monthly loan payment leaves qualifying room for a buyer's debt-to-income ratio to pay monthly condo association fees
Here is a strategy to enable buyers to find sellers willing to pay the buy-down loan fees....
• Team up with a Realtor to search for properties listed on the MLS for at least 30 to 45 days
• Look for properties that are vacant and are still listed at the original asking price
• Occupied properties are OK, too
• Ask your lender to prepare a loan interest rate "buy-down" outline like the handout for this conference call
• Draft a full price purchase offer with your Realtor
• Ask your Realtor to contact the seller's agent and make it a requirement that your Realtor meet with the seller and the seller's Realtor in person or on a 3-way conference call including the seller's agent to present your offer
• Ask your lender to be on "stand-by" to answer any questions that may come up during the presentation of your offer
Contra Costa County Real Estate: Supply and Demand Comparison for San Ramon, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for San Ramon, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Here is Your Chance to Make a Difference...
There are several high-cost real estate markets throughout the country with challenging conditions to provide affordable loans above the current conforming loan limit of $417,000.
NAR issued a Call-for-Action today asking REALTORS(r) to contact their U.S. Senators to urge them to include an increase to the FHA and conforming loan limits in the economic stimulus package that may be voted on as soon as Thursday.
The U.S. House of Representatives yesterday passed a stimulus package that raises the FHA and conforming loan limits to as high as $729,750 in high-cost areas.
There is speculation that the Senate version of the stimulus package DOES NOT include these increases.
Both NAR and C.A.R. haved waged a long campaign to raise these loan limits. It is critical that the final stimulus package include the increases.
ACTION ITEM
If you are a Realtor, lender, in the real estate industry or a concerned citizen:
Please contact Senator Barbara Boxer and Senator Diane Feinstein or your state Senator by responding to NAR's Call-for-Action. Look for an e-mail from the "National Association of REALTORS" and click on the "Take Action" button included in the body of that e-mail.
FOR MORE INFORMATION
Please visit NAR's web site at http://www.realtor.org/.
Contra Costa County Real Estate: Supply and Demand Comparison for Pleasant Hill, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Pleasant Hill, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
How to Avoid the Most Deadly Lending Landmines...
Here are some tips I learned from a seasoned California mortgage banker who successfully funded over 100 loans during the tough transitional 2007 real estate market. These tales from the trenches can prevent your deal from the shrapnel of a loan decline or last minute tighter "prior to document or funding" conditions:
Most conventional (up to $417k) and non-conforming (Jumbo) loans above $417k require Desktop Underwriting approval
Conventional secondary financing is very difficult to obtain. A maximum of 90% loan-to-value (LTV) ratio should be relied upon from the buyer
Jumbo interest rates are currently at least 1.375% higher than conforming loan interest rates
Secondary "seller carry-back" financing is a great sales tool strategy. In some cases 100% total loan-to-value will be allowed with the first loan at 80% LTV or less
Beware of "declining market" underwriting guidelines -
A 5% reduction on the guideline is required by most lenders, so if the buyer is applying for an 80/10/10 loan, the underwriting guideline would have to meet or exceed 85/15/5 underwriting guidelines
Be sure to work out these important details in advance during the loan "pre-approval" stage instead of in the middle of a transaction!
All of California is now considered to be in a "declining market"- check with your lender to see how your local market is rated
Credit scores of less than 620 will not pass
Appraisal reports are submitted to underwriting
Underwriting runs an Automated Value (AVM) which almost always comes in low
Desk/Field appraisal review is then ordered
Make sure the appraisal is always signed off by the underwriter within a reasonable amount of time
One more thing...don't forget to wear your flack jacket in this ever changing lending environment.
Contra Costa County Real Estate: Supply and Demand Comparison for Orinda, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Orinda, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Protect Your Transaction From the Number One Deal Killer...
In today's challenging and uncertain lending environment, qualifying standards for home loans and refinancing are becoming increasingly more stringent. Many potential borrowers who were "pre-approved" under yesterday's loan underwriting guidelines may discover that their loan program qualifying standards have changed or the loan program is no longer available.
Unfortunately, some unwary prospective homebuyers discover they cannot meet the revised underwriting criteria when they are in escrow waiting for the lender to fund the loan to complete their purchase transaction. The loan documents sometimes will arrive just a few days prior to the scheduled closing date with different loan terms and/or "prior-to-funding" conditions of which the borrower cannot comply.
Here are some tips to protect your transaction from the dreaded last minute failure due to unfulfilled financing to complete the purchase:
25 day maximum close of escrow deadline falls within the premium (least expensive) loan interest rate lock period and will avoid changing loan underwriting guidelines
Seller to insert a contingency clause into the purchase agreement "Buyer shall lock in loan interest rate within 24 hours of acceptance"
Buyers- demand that your Financing and Appraisal Contingencies remain in place until funding of the loan (usually the day before or day of close of escrow) to protect your good-faith earnest money deposit from forfeiture to the Seller
Sellers- instead of requiring the entire Financing Contingency removal in advance of the loan funding- insert a contingency clause that requires the Buyer to provide written evidence directly from the bank underwriter of full loan approval with all conditions met (within reason), verification of employment, down payment monies and a complete sign off of the appraisal report. The only item remaining to complete the financing are delivery of the loan documents and loan funds to the title company escrow account
For occupied properties, ALWAYS include a rent-back option in favor of the tenant or seller in the event there is a delay or worse, a cancellation of the sale due to financing problems. There is nothing worse than contacting the Seller that the deal is dead after they have moved out or all of their possessions are packed.
Many Sellers of occupied properties are buying and moving into another home and these suggested precautions can mitigate the pitfalls of these uncertain times in the lending arena.
BEWARE of using a Mortgage Broker to obtain financing. Direct lenders (banks) are closing their wholesale lending departments or eliminating the majority of Mortgage Brokers who fall outside of their performance requirements.
Additionally, Congress is likely to eliminate the Yield Spread Premiums (YSP) that Mortgage Brokers need to be competitive in loan costs to the borrower. Loan programs are being eliminated or modified on a consistent basis and many Mortgage Brokers are not in the direct line of communication when banks issue these memos to their in-house lending divisions.
Therefore, Mortgage Brokers are at a disadvantage in this tough lending environment. Don't take unnecessary chances with your transaction. Use a direct lender such as a major bank, credit union or mortgage banker.
Sellers- if the Buyer insists on using a Mortgage Broker, insert a contingency clause into the purchase agreement "Within 3 days after acceptance, Buyer shall provide Seller a letter from a direct lender (Bank or Mortgage Banker) stating that upon review of Buyer's written application and credit report, Buyer is pre-approved for the new loan stated and Buyer hereby agrees to accept the best available loan from either Direct Lender or Mortgage Broker at close of escrow".
VA Loans Offer Attractive Financing Terms...
The Veteran's Administration has modernized the current VA loan programs available to qualified veteran borrowers. These loans are very competitive and can offer an affordable financing alternative to prospective home buyers and people who want to refinance their existing mortgage.
Additionally, the current maximum VA loan limit is $1,000,000 which can be a great alternative to an expensive non-conforming jumbo loan (above $417,000) in high cost real estate markets like California and the San Francisco Bay Area.
Here are some of the terms and conditions for current VA loan programs:
100% loan to value (LTV) up to $417,000
Over $417,000 - down payment is 25% of the difference between $417,000 to $1,000,000
580 minimum required credit score
Veteran borrowers need a DD214 (Notice of Discharge)
Seller allowed to pay up to 4% of the purchase price toward the Buyer's closing costs plus 1% loan origination fee
2/1 loan interest rate buy-downs available
All recommended section 1 structural pest control repairs, all recommended further inspections of inaccessible areas and all recommended section 2 repairs which may lead to infestation must be completed by the Seller
A structural pest control certification must be obtained prior to close of escrow
45 day close of escrow
Other significant benefits include loans over $417,000 will be priced at interest rates as good as conforming loan interest rates; down payment on a $1,000,000 loan will be only $145,750 or 14.57% of the purchase price; no private mortgage insurance required (PMI).
Contra Costa County Real Estate: Supply and Demand Comparison for Moraga, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Moraga, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Martinez, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Martinez, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Lafayette, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Lafayette, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Danville, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Danville, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Concord, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Concord, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Clayton, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Clayton, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Blackhawk, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Blackhawk, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
Contra Costa County Real Estate: Supply and Demand Comparison for Alamo, California (detached and attached properties December 2007
I have posted the monthly MLS Statistics for Alamo, California real estate (attached and detached properties).
Easy to read charts and graphs to provide you with accurate up-to-the-minute information for the local Contra Costa County real estate market.
To learn how to interpret this information or further discuss, please feel free to contact me directly or post a comment to the blog.
