Can I Still Get a Home Loan Right Now?

 

YES!! The home mortgage market has been effectively federalized—at least for the time being. More than 90% of new loans now are being made through the federal Housing Administration insurance program, plus Fannie Mae and Freddie Mac. This means that there is more money available for home mortgages. Ginnie Mae which is the FHA’s pipeline to the bond market recorded an all-time high of $29 billion in new mortgage-backed securities issued in August!

 

If you are interested in buying a home then you need to know the following:

 

1)      Loan terms and credit underwriting standards have toughened up, but you can still put down only 3% on a FHA-insured mortgage and 5% on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. This will go up to 3.5% after January 1^st. You do not need “spotless credit” to qualify for these loans.

2)      Maximum loan amounts through GHA, Fannie and Freddie in high cost local markets on the West and East Coasts continue to be $729,750 through December. It is projected that after January 1^st, this amount will go down to $625,500. If you need a loan above this amount the interest rate will be higher after January 1^st.

3)      Home prices have rolled back to 2003 and 2004 levels or lower in many of the foreclosure and boom markets.

When is the Best Time to Buy?

We are approaching our favorite time of the year! Not only because we are heading into Turkey dinner, family get together’s and gift giving but because this is when we see the BEST deals! This is when the bargain shopping begins. We love taking our clients out right now to see these sale prices.

 

We and our clients pick up fantastic homes and investment properties for the lowest prices all year. The California Median Home price is DOWN 31% from last year! The Detached Median Home prices are DOWN 41% from last year! Affortability for 1^st time home buyers is up 24%. And California is leading the way compared to the rest of the country – Sales are up 85%. Properties under contract as of September 2008 are up 190.4% from prior year. That means that volume is dramatically up and prices will be soon follow as the sale inventory gets bought up. This could be the lowest bargain shopping season we see!

 

Call us today if you are interested in setting up a buying consulation.  

 

 

 

What is the Foreclosure Process?

Here is a very clear explanation of the Foreclosure process written by North American Title Company. If you have specific questions, please give us a call. We are here to advise and represent you in the purchase of a foreclosed home to make sure that the home you are buying has a clear title and will qualify for title insurance. If you need to sell your house to avoid foreclosure, please let us know. We have an extensive network of partners and lender relationships to close your property quickly to avoid a foreclosure on your credit record.

 

Understanding Foreclosure It Is An Unfortunate Commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements also are contributing factors. "...as a general rule, a lender would rather receive payments than receive a home due to a foreclosure." When prices are rapidly accelerating during a real estate "bonanza," many people go to any lengths available to get into the market through investments in vacation homes, rental housing, and "trading up" to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third, and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. Neither may occur, and borrowers may be faced with large "balloon" payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon. In The Foreclosure Process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling homes and will often try to accommodate homeowners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner's financial situation improves. Let's say, however, that a homeowner has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under some circumstances, the lender, whether a bank, savings and loan, or private party, will request that a trustee, often a title company, file a notice of default with the county recorder's office. A copy of the notice is mailed to the homeowner. Once the notice of default has been recorded, the homeowner has 3 months to bring the loan current. If during the 3 month period the owner cures the default by making up the payments, the deed of trust or mortgage will be reinstated and regular monthly payments will continue as before. If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may then direct the trustee to sell the property at a public sale. In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. During this time, it may still be possible for the homeowner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes "on the block." At the sale, buyers must pay the amount of their bid in cash, cashier's check, or other instrument acceptable to the trustee. A lender may "credit bid" up to the amount of the obligation being foreclosed upon. With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, the buyer should beware, foreclosed properties are likely to be burdened with overdue taxes, liens, and clouded title. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale or various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property. .

 

What are homes selling for in the Bay Area?

Here are the final sales numbers and median home prices for each county in the Bay Area. The chart compares September 2008 to September 2007. If you qualify financially, it is a GREAT time to leverage the low prices and buy now. Some of the best deals are in the 4th quarter of the year.

Click the image below to enlarge!

Financial Market, Real Estate & You

We certainly live in interesting times!  We have experienced the good, the bad and the ugly recently in the real estate market. Who would have thought that large banks such as WaMu, Wachovia and IndyMac could fail or get bought out so quickly?!  Or large financial brokerages like Lehman Bros or Bear Stearns would be liquidated or file for bankruptcy?  Not to mention the government stepping in to shore up Fannie Mae and Freddie Mac as loan guarantors.  Whatever your view politically, it is a huge mess that requires government intervention on some level to prevent a catastrophic collapse of the credit markets.

 

With the level of foreclosures increasing, it has created somewhat of a dichotomy in our California real estate market. On the one side, there is an increasing inventory of bank owned homes on the market at greatly discounted prices which has taken a toll on most homeowners’ equity position.  Some areas are affected more than others in the Bay Area, but generally speaking, we have seen price declines resulting in homes selling at 2003 values.

 

The positive side of the same coin is that buying a home is now more affordable than it has been in years.  Some of our clients are taking advantage of the new FHA loan limits (Currently at $729,700) with a down payment of 3% to 10%, on a 30 year fixed rate period.  In many cases the Seller (the Bank, when it is bank owned) is willing to pay up to 3% of the Buyers’ closing costs in an effort to get these homes off of their books.  This has resulted in many properties receiving multiple offers and in some cases the purchase price gets driven up!  A down payment assistance program that enabled the Seller to help the Buyer with the down payment via a non profit entity has just been eliminated, although there is now talk of it being re-established in the near future.  There had been a fear that down payment assistant programs would serve to artificially drive up prices, but that has been somewhat unfounded in the current market. We will update you on that important change as soon as it becomes clearer.  When we were able to utilize the down payment assistance program in the past, it worked very well for first time buyers.  As with all FHA loans, the buyer must qualify for the loan, resulting in a much safer and more predictable loan

 

Where does that leave the rest of us?  Well, if you do not have to move anytime soon, and your mortgage is not about to adjust to astronomical levels, then it might be time to sit tight and wait it out.  Having said that, if you are contemplating moving soon, you will not realize such a windfall as we once had, but if you are considering buying as well, then you should make out quite well on your new home.  You could also consider keeping your current home and renting it out until the market stabilizes.  Interestingly enough, the rental market has become very strong, with well kept homes commanding premium rents. There are some loan restrictions going forward when employing this method, please call us for clarification on your individual situation.

 

(Another thought if you move: You may also want to think about utilizing the Prop 60 approach on maintaining your current property tax base when moving on, check with your local Tax Assessors office in the county of residence for details.)

 

In case you were not aware, we are members of many MLS boards including Contra Costa, San Francisco, Peninsula, Central Valley and San Diego.  So we can list and sell homes in any of these areas.  Please check out our web site for all of your Real Estate needs at www.dugganteam.com.

 

Let’s hope that Congress is able to stabilize the economy and prevent a severe downturn and get the housing market back on track soon!

 

By: Mike Duggan

Mike has been in Real Estate and Finance since 1979. He has experienced 2 previous financial downturns. This hands on expertise is especially important in helping our clients make the right buying or selling decision.

 

California Housing Market at the Bottom?!

GREAT article on the affordability of housing right now. Lower prices are making owning the same cost as renting…

California housing market hints at bottom to slump

By Jim ChristieFri Aug 1, 4:32 PM ET

A bottom in the battered U.S. housing market may emerge first in California, one of the states hardest hit by foreclosures and where home prices are dropping to a point where the cost of a mortgage and taxes equals rent.

"The key is to try is to get some stability in the price of homes, which appears to be happening in California," veteran banking analyst Charles Peabody of Portales Partners told Reuters by phone on Friday.

And as goes California, the most populous state, so goes the rest of the United States, according to Peabody.

He sees the tumble in California home prices nearing its end and suspects home prices elsewhere likewise will stabilize.

"Since California constitutes 25 percent of the housing stock in the U.S., any stabilization can have a profound impact on national averages," Peabody said in a recent report.

The fall in home prices in California, fueled dramatically this year by the firesale of foreclosed homes, combined with reasonably low mortgage interest rates is making homeownership more affordable again.

As a result, home sales are picking up and are foreshadowing a stabilization in home prices in California before the end of this year, Peabody said.

"By extension, a stabilization in home prices is required before any sustainable rally in financials can be expected," he added. "It is our belief that we are moving in that direction."

Reasons to believe in California home prices will firm may be found in the California Association of Realtors data, Peabody said.

Notably, buyers are responding to sharply lower home prices. The realtors' group reports the state's June home sales rose 17.5 percent from a year earlier while its median home price plunged 37.7 percent. June also marked the third consecutive month of increases of home sales from year-earlier levels in the state.

Additionally, the backlog of homes for sale in California has steadily decreased this year, falling to 7.7 months of supply in June from 16.8 months in January, and the days a home for sale stayed on the market fell to 49.1 in June from 71.6 in January.

In many parts of California, buying a house, especially at auction, makes more financial sense than paying rent.

Peabody noted that in Lompoc, California, home prices are "depressed," with the local median price was down 39.7 percent in June from a year earlier, and a buyer may be able to get a house that would have cost $500,000 during the hey-dey of the housing boom earlier in the decade at auction now for $250,000.

The annual "carrying costs," or monthly mortgage payments and property taxes, for a home in Lompoc, now equates to about 25 percent of the $80,000 gross income of a two-income earning blue-collar household.

More important, that $20,000 in annual carrying costs now are in line with rents in Lompoc, where monthly rents run $1,500 to $2,000, Peabody said.

"At last, the carrying cost of purchasing a home equals rental rates, a condition that should lead to more stable home pricing going forward," he said.

But Peabody said he is uncertain whether stable home prices will stick. For now he sees "a bottom, but not the bottom" for housing and financials, adding that, "We think a temporary bottom in housing is at hand."

(Reporting by Jim Christie;)

 

 

 

Housing and Economic Recovery Act of 2008...How can you benefit from it in Real Estate?

This new law was signed by President Bush on July 30^th. It contains critical factors that affect current home owners and those that plan to purchase a new home soon. I’ve highlighted a couple of these factors below.

 

1) Starting January 1, 2009, the new conforming loan limit in high cost areas will be $625,500 vs. the current limit of $729,750.

 

Refinance or Buy today! If you have or will need a loan amount > $625,500 after January 1, 2009 you could be in for a interest rate shock north of 10%.  Jumbo (> $729,750) 30-year fixed loans are at 9% today. Waiting could cost you about $450 per month more per $100,000 of loan amount compared to what you can refinance or buy into today (about 6.5%).

 

2) First-time home buyers, who have not owned a home within 3 years, can receive a tax credit of the purchase price not to exceed $7,500.

 

3) Down payment assistance programs like Nehemiah programs which credit the buyer 3% in closing costs and up to 3% of the down payment expire September 30^th.

If you don’t have enough money for the down payment and the closing costs, you need to into escrow on a home in the next 2 weeks or less.

 

4) The Minimum down payment for FHA loans will increase from 3% to 3.5% after December 31, 2008

If you won’t have a down payment of more than 3.5% after December 31, 2008, then prepare to buy a home before the new change goes into effect.

 

 

Please call or email us if you have any questions or want to discuss your options.