Refinancing? Current loan limits expire this week...

Current loan limits expire this week (today on Friday).

Current conforming loan limits are scheduled to expire Friday, Sept. 30. The maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.

The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

An estimated 30,000 people will be impacted in California by this new limit.
If you are thinking of refinancing, or a purchase, I can certainly help you choose a reliable, professional lender.

Francis Rolland
Silicon Valley real estate
Local real estate links.

►worthy to note: our next E-Waste collection and shredding event: 10/22/11
at: 161 S. San Antonio Rd, Los Altos, CA 94022.
It's easy, it's free, it's green!  Stop by for free shredding service and bring your electronic recyclables with you!  TV's, cell phones, batteries, computer stuff.... ;-)

Can you be an "accidental landlord" ?

Reading this article from Rismedia called: “sign of the times, accidental landlords”, it reminded me of several situations I have seen recently here in the Bay Area, with clients who became exactly that: an accidental landlord.

What do you do indeed when you need to move, but your property would not sell for what you bought it for?

One solution is to sell it at a loss, and recuperate this loss in the new purchase, which is going to be less expensive too; but you cannot do this as easily nowadays. It used to be that you could purchase a home and get a “bridge loan” from the house you were moving from. The bridge loan was predicated on the house being sold within 2 or 3 months. Banks did not have any problem doing this because they were pretty sure your old house would sell fairly quickly. You cannot get such a bridge loan today, and therefore you have to sell your previous house first, and then move to temporary housing and start looking for your new house. Not very convenient…

Another solution is to buy subject to the sale of your current home. This is harder to do than to say; often it means you’d have to pay more, to compensate for a weak bargaining position. It is almost impossible to do if you are looking for a desirable property, and other people want it too.

The remaining option is to rent out your previous house and purchase your new home. But there again the banks are a lot tighter with their money (hum.., your money…), and the rules are much stricter. The ideal is when you have enough income to qualify for 2 loans easily. If you are not in this ideal case, you need to show that your previous house has a tenant in place before they will lend you on your purchase. And there you go, you are an “accidental landlord”.

People do not intend to remain a landlord for long, just the time for the market to improve enough that it will make sense to sell. But actually, if you are going to have savings, it makes sense to spread them over several investment vehicles: the usual suspects are “real estate”, CD’s, bonds, stocks and cash. Over the long term, a real estate investment can be a good retirement account. But remember to check with your tax advisor: depending on your specific situation, the tax implications will not be the same.

If you think you may find yourself in such a situation, call me to discuss your options.
Thanks for reading!
Francis
http://www.frolland.com/
http://www.francisrolland.com/

Fix Ups for Property Resale

Are you a homeowner preparing your home for sale? If you are, you may want to consider these 6 real estate fix up tips. They will help you increase your chances of getting the most return at the time of sale, for a modest cost. We can often overlook the simplest things but these 6 tips will ensure that you optimize for the maximum payout.

"Money wisely spent is money wisely earned."

• Cleaning and de-cluttering - costs $290 but yields a $1,990 Return (put things in boxes, since they will end up in boxes anyway)
• Brightening - costs $375 but yields a $1,550 Return  (clean and clear windows, update light fixtures)...
• Smart staging - costs $550 but yields a $2,194 Return
• Landscaping enhancements - costs $540 but yields a $1,932 return (new flowers, nice colors, clean up...)
• Repairing electrical or plumbing - costs $535 but yields a $1,505 Return - time to repair these little things that have been left alone...

• Replacing or shampooing dirty carpets - costs $647 but yields a $1,739 Return

The yields are estimates of course, but a good indication of the results.

The ROI (return on investment) on performing these property fix ups is pretty good, so consider them closely. The time spent performing the tasks are plainly worth the effort.

The 6 home fix up tips were the result of a Home Sale Maximizer Survey released by HomeGain.com. - the result of a survey of nearly 600 real estate professionals to try to find out what pays the most. The survey was to aid home sellers in determining what to consider to prepare their homes for sale time.

Let me know, as always, how I can help!

Francis,

Silicon Valley Specialist

Local Real Estate resources

Silicon Valley Market Trends

Buyer beware! lenders need to know everything!

Buyers beware...  When applying for a loan: lenders need to know everything!

1- All funds used for the down payment and closing costs are going to be very carefully scrutinized by the lender:

• you must provide detailed and accurate information to show which accounts the funds are in and where the funds are coming from,
• you must document the source of any funds that have been in your accounts for less than 2 months,
• any changes that occur to your financial condition will need to be explained to the lender,
• changes to your assets, employment, income or credit scores during the escrow could jeopardize your ability to qualify,
• provide complete documents, - all pages!
• provide documents with names, addresses and account numbers.

2- The lender is going to require a letter of explanation and/or support documentation for:

• recent inquiries or derogatory items on your credit report,
• recent deposits, transfers of money etc... in your accounts,
• evidence earnest money deposit has cleared your account.  ... hum, they don't trust much...

3- If you are receiving Gift Funds the lender will require:

• a gift letter signed by you and the gift donor,
• evidence of the donors ability to gift the funds (bank statement),
• evidence of the receipt of the gift funds, in your account.

4- Things not to do during an escrow:

• do not transfer funds between accounts, nor make large deposits into your bank accounts,
• do not buy a car!... or spend large amounts of money on stuff..
• do not change jobs,
• do not close or open credit card accounts.

Yes, it is a real experience, to get a loan nowadays!  ;-)

For lenders referrals, do not hesitate to contact me.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Why it is a good time to buy real estate...

Real estate is positioned well for the future...

From our Coldwell Banker blog...
* "Baby boomers are in their prime real estate buying years and are 78 million strong.

* The Pew Research Center reports minority homeownership levels still have room for improvement. The gaps between white and minority households remain significant with homeownership rates for Asians (59.1 percent), African-Americans (47.5 percent) and Latinos (48.9 percent) well below the 74.9 percent among whites.

* Immigrants are moving to the U.S. by the tune of 1.1-1.5 million a year depending on the source. These are legal immigrants who add value to our country and society. They need housing.

* Echo boomers will likely have similar economic impact in coming years that their baby boomers parents have had through their lives. Echo boomers are born between 1977 and 1994 and are 73 million strong and according to the Joint Center for Housing Studies at Harvard University, 4 million turn 21 each year.

* Household formation is also an important statistic. The Joint Center for Housing Studies at Harvard University projects at least 1.25 million households will be created annually from 2010-2020 and will be led by the echo boomers.

* Between 2010 and 2020, the Census Bureau projects U.S. household growth to be in the range of 1.25 to 1.5 million per year, which will create an additional demand for housing. This should equate to a demand for 12.5 -15 million total new households during this decade.

* People move for lifestyle. There have been 4 million marriages and a record more than 8 million babies born in the last two years indicating there is demand for housing. Many of these growing families have not bought a home and are either renting or living with family as they save for a down payment. We know there is pent up demand." ....


Why is now a smart time to buy?

"I.I.I.P. Inventory, interest rates, incentives and price. In most markets around the nation, home inventory has increased giving buyers a greater choice. At the same time, mortgage rates remain at near historic lows and home prices have seemingly stabilized. 2010 saw median prices increase slightly by 0.2% to $172,900. This has made home affordability the best since at least 1973 and maybe ever."

Thanks for reading, and let me know how I can help, always!
Francis
Silicon Valley Real Estate
Los Altos Specialist

Rates:
Mortgage rates: Week ending 8/4/2011 30-yr. fixed: 4.39 fees/points: 0.8% 15-yr. fixed: 3.54 fees/points: 0.7% 1-yr. adjustable: 3.02% Fees/points: 0.5% (Source: Freddie Mac)

Valuable Appliance Longevity Report Every Home Owner Must Have

Have you ever thought about the life expectancy of your household appliances? How about the materials used to build your home? Well, if you are like many home owners today, you probably haven't given it much thought at all. I mean, who really needs to know how long the shingles on the roof are going to last, anyway, right? But, that is just the point; there are some things, you, the home owner, need to know.

Whether you are buying a home or thinking of selling your home, it is important to understand the estimated life expectancy of all your appliances and other home materials. Buying or selling a house without factoring in the cost to fix aging materials can cost you in the long run.


There are many factors involved that can age a household appliance like a refrigerator or building material such as siding.

• Weather
• Maintenance
• How an item is used.

Here are some examples depending on above factors:
• A refrigerator may last up to 13 years.
• Cooks, - your kitchen cabinets have a life expectancy of 50 years.
• Outdoor lovers, your outside deck has only a life span of 20 years.
• Vinyl Siding will last for the lifetime of the house, and
• Your wood floor will endure for 100 years. Of course, all under ideal circumstances.

The NAHB, National Association of Home Builders released a report in 2007 entitled, "Study of Life Expectancy of Home Components." They list appliances, building materials, as well as other components you may never have thought about. The comprehensive report is only 19 pages long yet boasts as a worthy read of any home owner or potential buyer.

Let me know, as always, how I can help!

Francis

Silicon Valley Specialist
Local Real Estate resources
Silicon Valley Market Trends

Do you rent out one of your properties?

Reporting is now easier for mom-and-pop landlords.

I had send earlier in the year an email to all my clients who rented out a property, to alert them about a new IRS reporting requirement.

Good news: this has changed, for the better. Here is how:

Households that find renters for a second property but are not in the business of real estate don’t have to send an IRS Form 1099 to vendors if the vendors do more than $600 worth of work in a year. Landlords have faced the 1099 reporting requirement for a while, and that requirement continues to apply to them, but last year the requirement was extended to households and entities that rent out property as a sideline but are not in the rental housing trade.

The National Association of Realtors and others strongly opposed that expansion and succeeded in persuading lawmakers to repeal it, which Congress did.

President Obama signed the repeal into law in late April, so, now the requirement applies as it always has: just to those in the business of real estate.

Francis Rolland

Silicon Valley real estate

Study: Homeowners Who Default on Mortgage Alone Not a Credit Risk

Today, many homeowners who defaulted on their mortgage payments have asked the question, "Will my mortgage delinquencies make me a higher credit risk to lenders?"

Good question.

On the surface, it is obvious that falling behind and becoming consistently delinquent on any bill is not a financially sound thing to do. However, your credit rating may not be as tarnished as some would leave you to believe.

A homeowner needs to consider what establishes poor credit and good credit in the eyes of the lender. Surprisingly enough, if you have other debt that you are in good standing with, such as credit cards or an auto loan, you will be less likely deemed as a credit risk. Those who have defaulted on their mortgage payment as well as other accounts are higher risks to a lending institution. The study below reveals why.

Mortgage-Only Defaulters

Transunion. , a global leader in credit and information management, released a study which stated, "...consumers who only defaulted on their mortgage during the economic recession were far better risks than those consumers who went delinquent on multiple credit accounts." This particular study explained that consumers, who were only default with their mortgage payment, displayed stronger ability to stay current with other loans.
"There appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession," said Steve Chaouki, group vice president in TransUnion's financial services business unit. "This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers."

Breaking it down…
• The lack of cash flow that resulted in defaulted mortgage payments does not by itself make the consumer “high risk” to a lender.
• You are a risk if you have multiple delinquencies on other accounts including the mortgage.
• You are not a risk if you have mortgage-only defaults but are current with other debt, such as a car loan or credit card.

In conclusion, if you are a mortgage-only defaulter you have more hope than those who are not and should not consider yourself a high risk. For more information, here is the link again to the Transunion study Mortgage-only Defaulters.

Let me know, as always, how I can help!
Francis

Silicon Valley Specialist
Local _Real Estate resources
Silicon Valley Market Trends