Real Estate Information Archive

For some clients, the following article will say things are getting worse… While there may be bad, there is definitely still many goods!
 
What’s good do you ask?
 
80% financing up to $2 million for a  loan amount is what’s good.  If you are purchasing from $1 million to $2.5 million in price, you can now put 20% down where as just 2 years ago, you would need 30 to 40% down.  For refinances without cash out, all you need is 20% equity to refinance. 

We really needed this and now have it!
 
Additionally, rates hit an all time low today in 12 months:
 
30 year fixed money for loans of $417,000 or less -  4.625% at 0 Points or 4.375% with 1 point.

Please note, rates and fees subject to change without notice or until locked in and approved by lender. Based on 60% loan to value or less on fully-documented owner-occupied property. 

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
650-465-8957 Cell
560 S Winchester Blvd, Suite 500
San Jose, CA  95128
A Dept.of Real Estate - License # 01165697

As stated over the last several weeks, we are very concerned about interest rates going higher for the following reasons:

• In just 2 months, interest rates have increased by .500% in rate across the board.
• The Federal Reserve has stopped buying mortgage back securities which has kept rates down in the past.
• The Federal Reserve now plans on selling mortgage backed secrurities which will force interest rates higher.
• There is talk on the street that the Federal Reserve may increase the federal fund rate by .25 in after hours trading one of these days not to upset the stock market but would devistate the bond market and push rates higher.
• We continue to see more economic reports being released weekly that are indicating the economy is recovering which pushes interest rate higher.

As result of the above, the window of opportunity for locking in a low interest rate on your mortgage or refinance may be numbered.  Please contact me for more information.

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
650-465-8957 Cell
560 S Winchester Blvd, Suite 500
San Jose, CA  95128
A Dept.of Real Estate - License # 01165697

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Homeowners can refinance into and homebuyers can qualify for a 'green mortgage'. There are mortgages that will offer a discount or qualify the buyer to make energy efficient improvements or buy a house that meets or exceeds current energy efficient standards. These mortgages are called EEMs for Energy Efficient Mortgages or EIMs for Energy Improvement Mortgages. A homebuyer/owner will see their current mortgage payment increase slightly, but this will be offset and even have buyers/owners come out ahead on saving money with reduced utility bills.

Now is a good time to talk to your Real Estate professional and Lender about obtaining a Green Mortgage.

© The Dawn Thomas Team

The Dawn Thomas Team
Intero Real Estate Services
496 First Street, Suite 200
Los Altos CA 94022
(877) 901-2121
CA DRE License: 01860743

____________________________________________________________________
The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Great Teacher Loan Program

We recently helped a teacher purchase their home with the CalSTRS loan program.  Initially the buyers wanted an FHA loan but did not like the fees and mortgage insurance associated with the loan.  The CalSTRS loan which allowed them to forgo mortgage insurance, pay fewer points and significantly lower their cost of financing.  Below are some benefits in the CalSTRS loan program.  

If you know of a public school teacher or public school employee, please pass on this information.  Below are some of the details on the program:

•    Max purchase price of $670,103
•    No Mortgage Insurance required (unlike FHA loans)
•    3% down payment (1% can be from the borrower with the remainder from a family gift)
•    Credit scores as low as 620 on conforming;  680 on high balance conforming
•    Deferred mortgage payments on 2nd loan for 1st five years
•    Only 2 month's reserves required by lender
•    Must be a member of CalSTRS.

Have your favorite teacher call us for more information!

Rob McCarthy
Owner and Senior Mortgage Planner - 101 Loan
www.101loan.com
Email Me
408-377-4123 Office
650-465-8957 Cell
560 S Winchester Blvd, Suite 500
San Jose, CA  95128
A Dept.of Real Estate - License # 01165697

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

We wanted you to be aware of the many changes that have once again challenged our industry beginning January 1, 2010.  The new Regulation X (as it is being called) dramatically affects the way disclosures are handled on the loan side of a purchase or refinance.  This has hit the whole industry nationally, whether the loan is done through a bank, broker or mortgage banker.

The “new GFE (Good Faith Estimate) 2010” may have ramifications on the time a transaction can be completed and any changes that may affect the deal along the way.  Any "change" to rate, fees, extensions, sales price, credits, etc... or anything that may affect the APR of the loan could impact the ability to close on time.  Due to these changes, it has never been more important to fight for a reputable escrow, title and lending institution that you know and trust to handle your transactions.  This is not a market for rookies!

There are many lenders pushing for changes to the purchase contract to now extend the loan contingency dates and to encourage longer escrow periods to allow for these changes.  Many rush situations will now be completely out of the control of the lender to accommodate, as any change to the transaction will set into effect a new process for re-disclosure, so please establish realistic time frames when negotiating your purchase contract.  We will be sharing a lot of information on a go forward to keep you informed, but wanted to make sure you were aware of some of the implications of the changes that went into effect.  This is said to be the biggest change to the mortgage lending industry in over 20 years and will have a vast impact on the ability to modify and change purchase transactions and any change that will impact the APR on the loan.

We have hit the ground running with significant training and education to keep us at the front of the pack.  We will keep you informed as to how the change is impacting the lending world and to keep you up to date on what you can expect for the future.  We appreciate your support and will guarantee that we will do everything in our power to educate you and your clients and to insure a smooth lending process for your clients.  We are committed to your success and know that 2010 will be solid year for Real Estate.

Best regards,
Rob McCarthy
Owner and Senior Mortgage Planner
Email me
408-377-4123 Direct
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070
www.thehontegroup.com

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Very often clients who have not used the services of a mortgage broker ask the question…”Why use a Mortgage Broker over a Direct Lender?”  My answers include:

1)    With a direct lender, you only have access to one lending source.  With a mortgage broker, you have access to over 40 lending sources.  In these times where direct lenders are denying clients of loan approvals due to declined values,  too high debt to income ratios or not enough reserves in their savings accounts, many of our lenders approve these.  Just recently, a client of mine was declined by Chase after they took 90 days to respond to him that his debt to income ratios were too high. And thus they could not approve his refinance.  He called us and we not only provided a lower rate but closed his re-finance in 30 days!

2)   Rates from mortgage brokers tend to be lower.  Direct lenders have lots of overhead, brokers don’t.  As a result, brokers don’t need to make as much to stay in business and as a result tend to offer lower rates and fees.

3)    Mortgage brokers tend to have more experience in lending.  This year I hit 20 years in the business and in that time have closed over 3500 loans in excess of $1.2 billion in loan volume.  Most loan officers in retail branches have less than 3 years in the business.

Best regards,
Rob McCarthy
Owner and Senior Mortgage Planner
Email me
408-377-4123 Direct
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070
www.thehontegroup.com

____________________________________________________________________
Author and Business are endorsed by The Dawn Thomas Team, Inc.
Silicon Valley and Beyond - our website
Silicon Valley Home Search  - find Silicon Valley properties for sale
What’s Your Silicon Valley Home Worth? - get current market information for your Silicon Valley home

Interesting…

CNN’s top economic advisor made an interesting comment on Tuesday about housing.  He felt that if rates increased from 5% to 7% next year, housing prices will increase by 10%.  He stated, “this is the reason home buyers should buy now, at the lowest point in home prices and interest rates. He also said, “there may never be another time like this!” 
 
While I agree with the concept, I believe his assumptions are a little aggressive, but none the less, interest rates and values are expected to increase.  As a result, if you know a 1st time buyer, trade up buyer or investor looking for passive income on 1 to 4 unit property, now is the time to act. 

Remember, inflation erodes the value of the fixed return that a Bond provides - therefore, inflation is harmful to Bonds and home loan rates. Just the hint of inflation can cause home loan rates to worsen, which is what we saw last week.

Also adding pressure to Bonds and home loan rates is the Fed's plan to ration out their remaining purchases of Mortgage Backed Securities. The Fed has purchased around $950B year-to-date out of the $1.25T allotted for the program, which is now set to expire March 31, 2010. This means the Fed will be averaging about $14B a week in purchases, a lot less than $25B or so they had been doing up until recently. And anytime demand for an item slows down...including Mortgage Backed Securities...the price goes down. And in this case, it means that home loan rates will move higher.

The bottom line is that the heat is on...and home loan rates are starting to rise already. While home loan rates are still incredibly low, it is clear this won't last much longer - and we may not see rates at these levels again in our lifetimes.

Best regards,
Rob McCarthy
Owner and Senior Mortgage Planner
Email me
408-377-4123 Direct
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070
www.thehontegroup.com

It's the classic American Dream - owning your own home.   Given today's economic climate - does home ownership still make sense? 

There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment - even (or especially) today. In addition to exceptional home affordability and near historic interest rates, here are some important financial benefits of owning a home:

• Increased Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

• A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings - effectively reducing the amount of a homeowner's monthly loan payment.

• Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs, real estate historically appreciates around 6% per year. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 should grow in value to $364,000 over 30 years.

• $8,000 Tax Credit: Don't forget, the government is offering an $8,000 tax credit for first-time homebuyers - or for folks that haven't owned a home during the past three years. However, the program is scheduled to end soon. In fact, the Internal Revenue Service recently reminded potential buyers that they must complete their first-time home purchases before December 1, 2009 to qualify for the special credit, which means the last day to close on a home and qualify for the credit is November 30, 2009.
  
  The U.S. Senate has introduced a Senate Bill 1678 to extend the first-time tax credit for home buyers for 6 months - but don't count on when, where, or how this will happen!  If you're considering purchasing a home or refinancing, now is an ideal time.

Best regards,
Rob McCarthy

Owner and Senior Mortgage Planner, The Honte Group
408-377-4123 Direct
408-558-1422 (Renee Steff) Sr. Loan Coordinator
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070

Many of my new clients find themselves in a quandary when it comes to whether they should pay points or not.  The following is the most common way to determine which option is best for you.  Any questions or for the latest interest rates, please contact me.

First of all…What Are Points?
Points are up-front mortgage interest fees paid on a loan to reduce the initial interest rate. For example, a one point loan will always have a lower interest rate than a zero point loan. Therefore, paying points is a trade-off between paying money now versus paying money later.

When Should I Pay Points?
Generally speaking, you should only pay points if you plan on keeping the loan for at least 4+ years. Because points are prepaid interest, you need to be sure you will keep the loan long enough to recoup these costs through lower monthly mortgage payments.

If there is a chance you may move within a four year period or if the general interest rate market is declining, you should consider a no point loan.  If you plan on keeping the property for an extended period and the interest rate market is increasing, you should consider paying a point.  Of course each case is different.  It is recommended to seek the assistance
of a mortgage planner to make the right decision.

What Are The Tax Issues to Consider?
The tax treatment of points depends on what the loan is being used for. If you are purchasing a home, points are generally entirely deductible in the year you buy. This is true even if the seller is paying for your points in the form of a NRCC (non-recurring closing cost) credit.

In a refinance transaction, points must be amortized over the life of the loan. For example, on a 30 year loan, you can deduct 1/30th of the points paid each year. If you refinance for a second time, however, you can deduct the remaining unamortized points in the year you refinance the loan. Consult your CPA, tax planner or attorney for more info on this subject.

Example:

Loan Amount:  $400,000

Note:  Above rates provided only for educational purposes.  Rates and fees subject to change without notice.  If you want to run real numbers for your situation - give me a call!

Best regards,
Rob McCarthy

Owner and Senior Mortgage Planner, The Honte Group
408-377-4123 Direct
408-558-1422 (Renee Steff) Sr. Loan Coordinator
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070

4 reasons why refinance and purchase borrowers are being negatively impacted  AMC’s (Appraisal Management Companies) as required by Fannie and Freddie Mac:

1.    Increased Cost of Appraisals ($200 to $300 more per appraisal)
2.    Delays of 4 days or more (Not good when you have time constraints)
3.    Inability of an appraiser to convey estimated value before appraisal is ordered (What if the appraised value needed does not come in?)
4.    Inaccurate appraisals (Resulting in lower than fair market value)

We now have a lender that does not require the use of an AMC on the following loans:

3 Year ARM

$650,000 max in loan amount @ 70% LTV or less -

• 5.125% @ 0.750 Point  (APR 5.399%)
• 5.625% @ 0.000 Point  (APR 5.864%)

$1,000,000 max in loan amount @ 70% LTV or less -

• 5.125% @ 0.500 Point  (APR 5.372%) 
• 5.625% @ 0.000 Point  (APR 5.864%)

$1,500,000 max in loan amount @ 65% LTV or less -

• 5.500% @ 0.500 Point  (APR 5.747%)
• 5.875% @ 0.000 Point  (APR 6.114%)

5 Year ARM

$650,000 max in loan amount @ 70% LTV or less -

• 5.500% @ 0.750 Point  (APR 5.774%)
• 6.000% @ 0.000 Point  (APR 6.239%)

$1,000,000 max in loan amount @ 70% LTV or less -

• 5.500% @ 0.500 Point  (APR 5.747%)
• 6.000% @ 0.000 Point  (APR 6.239%)

$1,500,000 max in loan amount @ 65% LTV or less -

• 5.875% @ 0.500 Point  (APR 5.747%)
• 6.125% @ 0.000 Point  (APR 6.364%)

7 Year ARM

$650,000 max in loan amount @ 70% LTV or less -

• 5.750% @ 0.750 Point  (APR 6.024%)
• 6.125% @ 0.000 Point  (APR  6.364%)

$1,000,000 max in loan amount @ 70% LTV or less -

• 5.750% @ 0.500 Point  (APR 5.997%)
• 6.000% @ 0.000 Point  (APR 6.239%)

$1,500,000 max in loan amount @ 65% LTV or less -

• 5.875% @ 0.500 Point  (APR 6.122%)
• 6.125% @ 0.000 Point  (APR  6.364%)

Note: Above interest rates based on an owner occupied property with a borrower with a mid FICO score of 740 or higher with full income verification.  Rates and fees are subject to change without notice or until locked and fully approved by lender.

For more information on the above, please contact me.

Best regards,
Rob McCarthy

Owner and Senior Mortgage Planner, The Honte Group
408-377-4123 Direct
408-558-1422 (Renee Steff) Sr. Loan Coordinator
408-608-1921 Fax
CA Dept.of Real Estate - License # 01763070