Buy now with 3.5% down payment...

If you have a stable income and if you are paying too much for rent, it can definitely make sense to buy with an FHA loan. 
Many people believe that to even think of becoming a homeowner you must secure a 20% down payment.  This is difficult to do for a lot of aspiring-to-be-homeowners.  But there is another way:

think: " FHA loans ".

FHA facts to keep in mind:

- 3.5% down.  Low down payment - less money out of pocket and 96.5% loan-to-value.

- 100% Gift allowed for down payment and closing costs,

- Any buyer can buy like this, not just first-time home buyers,

- minimum FICO 640,

- Long term financing:  30 year fixed, or adjustable,

- Loan limits up to $625,500, depending on the County,

- Non occupant co-borrowers are ok

- Purchase and "refis" are allowed,

Prior bankruptcies?: yes very possibly.  See the specific rules, but on-time payments allow FHA borrowing fairly quickly afterwards.



  There are some very nice homes that one can buy for less than $500,000 in Santa Clara for instance, and you'd only need ... about $20k.  With an FHA loan you do pay what is called mortgage insurance, a way for the lender to be insured against potential future defaults.  But even with this mortgage insurance, these loans can be pretty attractive when everything is said and done, because banks do not mind doing such loans: they have ... mortgage insurance.  Hence the very attractive rates.

If this gives you food for thoughts, let me know: I can help!  ...or for someone you know, pass it along!.. 

Francis

Silicon Valley Real Estate

Local market trends

useful links

PS:  Mortgage rates: Week ending 11/3/2011

- 30-yr. fixed: 4.0 fees/points: 0.7%

- 15-yr. fixed: 3.31 fees/points: 0.7%

- 1-yr. adjustable: 2.88% Fees/points: 0.6%
(Source: Freddie Mac)

Who does not cringe at rejection?..

Triggers for rejection. - Loan rejection that is.

Last year, more than two million people were turned down for homes, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more rigorous in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection.

• Insufficient income: well, this is straightforward… But also, lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.

• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.

• Poor credit: Lenders typically reject applicants with FICO scores below 620.

• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low. If this is the case, the bank will often loan less, which can create a problem for the cash-tight buyers.

• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.

• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

The full story can be accessed here.

If you need any lender referrals, don't hesitate to contact me. When you buy a home or refinance, you rely a lot on your loan agent.
Thanks for reading!...
Francis

Silicon Valley Real Estate

Local market trends

frolland.com

PS:  Mortgage rates: Week ending 10/27/2011
- 30-yr. fixed: 4.11 fees/points: 0.8%
- 15-yr. fixed: 3.38 fees/points: 0.8%-
- 1-yr. adjustable: 2.94% Fees/points: 0.6%
(Source: Freddie Mac)

Refinancing & the Economy .. A Missing Link ...

There is a lot of noise right now about the “occupy wall street” movement. And the economy is giving ulcers to everyone. The world is full of catch 22’s in many important areas. Consider the following situation if you have a second with me, and tell me if this is not illogical:

Someone wants to refinance their property but the value has gone down so much that it is under the value of the loan. The rules of the banks, the way they are right now, are such that the bank will not allow the borrower to refinance the same amount of loan as before (because of the “loan-to-value ratios” rules). How does that make sense? The lender is taking a much bigger risk in most cases by leaving someone obligated to pay a high interest rate that will sink them, when they could pay a lower rate and have a better chance of affording their loan.

The borrower, in front of such an illogical catch 22, decides to stop paying and to go to foreclosure. If you look at my previous blog, it is clear to many analysts that a lot of these borrowers are not inherently a “bad risk”, just because they decided to default on a loan that they cannot change. When these borrowers have only one default on their record, and it is this kind of default, they are often ready to buy something else, at today’s value, with today’s interest rate. It is often cheaper than to rent. But they cannot do it because of their credit history (since they just defaulted on a loan).

The system is blocked. It is thought that many people, if they were allowed to buy a new property, would prefer that option to renting.

  - 1/ the market would be a lot less depressed, as many properties would sell instead of sitting forever,

  - 2/ because more properties would sell, the market values would be more sustained and in many cases would slightly go up. This in turn would help the banks, since the total market value of their distressed properties would be higher.

This blog does not go into judging anyone, or deciding if it would be fair to do this or that. But the difficulty to refinance falls under rules that are counter-intuitive in my opinion.

As I write this I learn that the HARP program (see one of my previous blogs on refinancing) has just been expanded to the end of 2013, and removed the 125% ceiling on “loan-to-value” cap for fixed rate mortgages backed by Fannie Mae and Freddie Mac. More on this PDF from the Federal Housing Finance Agency.  However, I need to underline that it is for mortgages backed by FNMA and Freddie Mac only...

Still, it is estimated that between 1.5 and 2 million people may take advantage of these new rules.  (just heard on NPR).

Couldn't all the banks think in the same manner, for their own ultimate good? And couldn't they waive some qualifying rules on a case-by-case basis? - It would make a lot of "cents" to them in the end.

Thanks for reading,

Francis

Silicon Valley Real Estate

Local market trends

useful links

The luxury market in the Silicon Valley….

A total of 207 homes sold for more than $1 million in Santa Clara County in August, essentially flat from the previous month’s 208 transactions but down from the 221 sales recorded in August 2010.
However, the median sale price of a million-dollar home in the South Bay climbed to $1,387,000, up 2.7 percent from the $1.35 million median sale price recorded in July and August of last year.

Other metrics also showed the high-end market continues to recover: There were 41 multi-million-dollar sales last month, up from 34 in July and 36 in August 2010. And sellers received 100 percent of their asking price on average, up from 98 percent a year ago and 99 percent the previous month.

The figures were derived from Multiple Listing Service data of all homes sold in Santa Clara County for more than $1 million in August.

“The luxury segment of the Silicon Valley housing market continues to strengthen, along with the high-end markets in other parts of the Bay Area,” said Rick Turley, president of Coldwell Banker Residential Brokerage. “Both sales and prices are firming up in the South Bay, San Francisco, the Peninsula and Marin County. That could be a leading indicator of how the overall market will fare in the months ahead.”

Turley noted that the high-end market often recovers first following a downturn. Last month, DataQuick, the La Jolla-based real estate research firm, reported that overall sales in the Bay Area last month rose 12.2 percent, although the median price dipped 3.9 percent.

Some key findings from this month’s Coldwell Banker Residential Brokerage luxury report:

• The most expensive sale in Santa Clara County last month was a five-bedroom, nine-bath 6,400-square foot home in Los Gatos that sold for $5.2 million;

• Los Altos boasted the most million-dollar sales last month with 43, followed by Palo Alto with 33, San Jose with 32, Saratoga with 29, and Cupertino with 17;

• Homes closing last month stayed on the market an average of 38 days, the same as the previous month and up from 36 days a year ago.

The Silicon Valley Luxury Housing Market Report is a monthly report by Coldwell Banker Residential Brokerage, a specialist in high-end real estate sales.

Thanks for reading!
Francis Rolland

Silicon Valley Real Estate

Local market trends

useful links

Palo Alto, Mountain View, Los Altos …

We know that the market is very localized, and that even within a City the market is markedly different from low-end to high-end, from an area to an other, and of course whether it is a house or a condominium.
How does it look all combined??

This is the way the market looks for these 3 Cities combined, houses and condominiums and townhouses, all together, over the past 2 and a half years.

Some will describe it as “definitely hesitant”,

Some will say it is “getting better”,

Others will say that the worse was in mid 09.

It is difficult to interpret such graphs because a low average price per square foot can just mean that more properties of a larger size sold that month, and the median and average price mean something different, - although the curves are fairly parallel. This is a summary of many individual stories.


But one thing is certain, the market is alive and kicking here, and in most of the Silicon Valley.

Also, let’s remember that about 35% of houses sell for over asking price in the County, and a good 30 to 35% of sales are cash sales, with no loan involved … We are fortunate.

Curious about your City, or your zip code? Let me know, I can help ;-)

Francis

Silicon Valley Real Estate

Local market trends

useful links

Remember: our Free E-Waste Collection and Shredding Event,
on: 10/22/11, Sat.  9 am to 4 pm for E-Waste Collection
10 am to 2 pm for Shredding.
address:  161 S. San Antonio Rd, Los Altos, CA 94022

KnowYourOptions.com ...

Homeowners in difficulty: KnowYourOptions.com

For homeowners who are in difficulty to make their mortgage payments or cannot refinance, there are several options other than Short Sales or letting the property be sold through the foreclosure process.

Fannie Mae has set up a website: www.knowyouroptions.com/  . That site lists the five possible options that sellers should explore with their legal and financial advisors before deciding to list their property as a Short Sale or letting it go through a foreclosure action, if the loan is owned by Fannie Mae.

This web site is all about getting informed, knowing all the possibilities available to be able to stay in your home, the options if you do have to leave your home, and how to contact a help center – if the loan is owned by Fannie Mae.

In-person and telephone support for homeowners is available in the “Mortgage Help Centers”.

These Centers have been established to help homeowners with loans owned by Fannie Mae.  At a Mortgage Help Center, one can meet directly with dedicated on-site staff and experienced housing advisors to discuss one’s mortgage situation. English and Spanish advisors are available, and all services offered by the Fannie Mae Mortgage Help Center are FREE.

Of course, hopefully this is not something that is needed...

Francis Rolland

Silicon Valley Real Estate

Local market trends

useful links

PS:  Mortgage rates: Week ending 10/06/2011:
- 30-yr. fixed: 3.94 fees/points: 0.8%
- 15-yr. fixed: 3.26 fees/points: 0.8%
- 1-yr. adjustable: 2.95% Fees/points: 0.5%
(Source: Freddie Mac)

Worth noting: our Free E-Waste Collection and Shredding Event,
on: 10/22/11, Sat.  9 am to 4 pm for E-Waste Collection
10 am to 2 pm for Shredding.
address:  161 S. San Antonio Rd, Los Altos, CA 94022

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/