Archive for the 'Buyer Resource' Category
What’s The Rate?
March 25th, 2011 categories: Buyer Resource, Mortgage Rates
I am asked many questions as a guy who’s been in lending for over 22 years, but none more often than, “What’s the rate?” I have learned to make peace with the question, but I used to absolutely hate it. Why? The answer is simple; there is no such thing as “the” rate.
I am not trying to 
be arguemenitive. Bill Clinton, when asked if he was having an affair with Monica Lewinsky said, “There is nothing improper going on between myself and Ms. Lewinsky.” Later when questioned by the Grand Jury he said he had not lied because it depends on what you mean by “is.”
“What’s the rate today” Well much Like Predisdent Clinton, it depends on the meaning of “is.” You see the rate is constantly changing minute by minute day by day, Monday through Friday. The mortgage interest rates are determined by the appetite investors have for treasury bills and bonds. Since the market is constantly moving/trading as investors put money in or take money out of these markets, the rates change constantly.
Boring Dave! What’s the rate! Ok, maybe it would help if you understood what a typical loan officer goes through each day. A typical day looks like this.
Lou Loanguy wakes up and runs to the TV and checks the market to see the direction of rates and then makes coffee. (Yes, in that order.) When he gets to the office he checks the first rate sheet that comes in to see where rates will start out. He gets a call from a client and is asked about the rates. As he is answering the question, the rates are changing in small degrees as those crazy investors put money in and take money out of the credit markets. Once there is a decisive move in a direction, we get an actual rate sheet update.
As soon as Lou gets settled into his day, there is an email bulletin, “Rates changing!” Over the next thirty minutes all the lenders re-price as the treasury market changes direction or moves further in the direction of the morning. This goes on all day until Lou is ready to scream. You see what he quoted the client just a few hours ago is now different and if that client calls and wants to lock in the rate, Lou will have to explain why he can’t offer that rate anymore.
This goes on each day until Mr. Loanguy gets a facial tick at the sound of any word that rhymes with rate. You see the reality is, until you lock your loan, it doesn’t matter what is being quoted. What you get and what is quoted may be totally different.
To even further exasperate the situation, some Loan Officers will quote low just to, (let’s be nice here), get the business. Since what a loan person quotes is going to change anyway, some Loan Officers will quote low to get the deal and then bring the borrower to the market when it’s time to lock.
So what’s the rate? The rate is what ends up on your documents. How can you find out what that will be? You have to ask more than, “What’s the rate.”
What is your lock policy?
What if rates go down after I lock?
When can I lock?
Hot tip! If a loan person quotes you a rate, but then says you can’t lock until your loan is approved, or they have the appraisal in, or some other excuse not to lock you, they are quoting a rate that they can’t deliver. What should you do in that case? Find a new loan officer.
I have explained all that to borrowers countless times. You know what they usually say back? “Ok, what is the rate?” Then my face twitches and I go have another cup of coffee.
This article was contributed by:
Dave Raffi
707.303.2933
MISSION HILLS MORTGAGE
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The Seven Deadly Sins of Home Buying
February 4th, 2011 categories: Buyer Resource
1) Pride – Accept help
Don’t be too proud to go get pre-approved. Some buyers feel they should not need to visit a lender before looking at homes. Realtors know that it makes more sense for a buyer to get pre-approved before they go look at homes. Some buyers take offense to this. Realtors know that the best thing for a buyer is to have their financial ducks in a row.
Start your home search by visiting a lender. If you don’t know who to talk to, trust your Realtor. They know who has the best service, the best prices and who will take good care of you.
2) Lust – Dangerous Desire
Have you ever wanted something so bad you made a bad decision about getting it? That probably was lust. Many mistakes are made when we let our emotions take over our good sense of needs and wants.
Buying a home is usually a process of elimination. We all have needs and wants. The trick is to not let wants take over, which can lead to bad decisions. There are a limited number of homes currently for sale in the area you have chosen. Often times you can’t get everything you want in one home, so you must trade-off and balance some of these “needs”, “wants”, and especially “don’t wants”.
3) Gluttony – Affordability
Make sure the home you buy is affordable. Over indulging by finding yourself in too much debt can give you financial “heart burn.” Desire for too much of a good thing can slip over into a gluttonous budget.
When you find homes you like, ask your lender for an estimate of closing costs. This should include all costs, including all fees, all points, Title Company fees, pre-paid expenses like taxes, insurance and pro-rated mortgage interest. Homeowners Association dues may also need to be taken into account. This should also give you a complete breakdown of all monthly costs.
This is the perfect time to rethink your budget. Examine the monthly costs closely and make sure you understand where each is coming from and whether it will be an ongoing cost after you own the home, or a one-time fee. Check the actual closing cost statement at settlement to make sure there are no surprises.
4) Greed – Penny Wise, Dollar Foolish
There are buyers who try to save a few bucks by not having a house inspection or by doing it themselves. Saving money this way could end up costing you thousands in the future. Greed is when money becomes the most important thing, even over safety.
Realtors are great at referring you to excellent and qualified Home Inspectors. A Home Inspector will go over the entire house, inside and out, basement and attic. His report will call out all deficiencies, suggest repairs and recommend further action.
This report is worth its weight in gold and is money well spent.
5) Envy – Keeping Up
Have you ever seen someone who looks at what others have to determine what they need? It used to be called “Keeping up with the Jones’.” Many people buy a home that will impress their friends and family.
Don’t fall into the trap. Our society seems to drive us to spend money we don’t have, to buy stuff we don’t’ need, to impress people we don’t know. Buying a home is a time to put all that stuff aside.
We just came out of a cycle where a lot of people bought homes just because someone they knew bought one. Many people just a few years ago over bought and had problems dealing with it because of life’s ups and downs.
If you’re going to buy a home to impress someone, buy a home that impresses your accountant.
6) Sloth – Get Involved
Don’t be lazy. This is a time to do your home work and discover all you can about the home, neighborhood and the area. Make a list of non-house related issues – Schools, crime rates, neighbors, traffic, power lines, new development in the area, environmental issues, etc.
Your Realtor will be an excellent resource for this information. Ask these questions before you make any offer on a home. By getting these answers now, you’ll have more confidence in your home purchase decision.
7) Anger – Frustration
Buying a home is a happy time. If you buy now, you are buying into a Real Estate market that offers you the best opportunity to have a successful experience as a home owner.
This is a great time to buy! Imagine; Home prices at their lowest in 15-20 years, mortgage rates are the lowest they have been since the Eisenhower years and the market is now stable and appears to be poised for recovery.
There are challenges in every market though. There may be times when things don’t go as quickly as you would like. Every market has its challenges. Just relax and trust your Realtor to be your guide through these times. Realtors will be able to explain the process and keep you moving forward.
Keep the process fun. You are about to do a great thing for yourself and your family. You aren’t just buying a house, you are buying a home!
Keep it real
If you can avoid the seven deadly sins of home buying and you’ll be miles ahead, and can have peace of mind that you are making a solid, well thought out decision about the purchase of your next home. What’s the old saying…..?”An ounce of prevention is worth a pound of cure”? Never has it been truer than when buying a home.
Click Here to search for homes for sale.
This article was contributed by: Dave Raffi, Mission Hills Mortgage, 707-303-2933, DRaffi@mhmb.com
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Does It Pay To Be A Landlord?
January 25th, 2011 categories: Buyer Resource
Here’s a note from your landlord you’ll NEVER receive…
Dear Renter,
Thank you so much for continuing to rent my house. I have to tell you, thanks to you and a few other families like you, I have been able to take some amazing vacations, raise a family and retire. I feel the least I can do is thank you.
You see, when I bought that house I wasn’t sure how I could ever pay for it. It seemed like such an expensive price, but the value has gone up so much that I now have hundreds of dollars in equity. You see, while you have made the rent payments to me, I have been able to pay off the bank. In effect, you’ve been buying it for me! It just struck me what an amazing thing you have done for me.
Remember when you complained about the broken toilet? I told you that I didn’t have the money to fix it, but I did. I told you that the lease made you responsible for it and I feel bad now that I made you fix it. Truth is I guess I was a little greedy. Thanks for fixing it, the leak in the sink and all the other work you’ve done on my house. You are so nice.
Over the years I have raised the rent to where I now make money every month. That’s right not only do you make my house payment for me, I even get to buy my wife gifts with the extra. The last time I raised the rent I thought I‘d lose you. But you hung in there and just stayed. You’re a trooper!
You have been a great renter all these years. I am amazed that you haven’t bought your own home. I know that payments for homes today are lower than paying rent, but you just keep paying! I heard the other day that there are programs today where you can buy a home with 1% for the down! The 30 year fixed rates on the program are at 4.25%. Oh, and you don’t even need perfect credit to be approved. You just keep paying and paying for my mortgage. You are terrific and I hope you never change!
The point is I wish I had a hundred people like you. Keep the payments coming and take good care of my house.
Oh and by the way, attached you’ll find a copy of the new lease. I’m not going to make some lame excuse for why I raised the rent this time. You deserve better than that. I had to raise the rent because I plan to sell it soon and want to fix up some things before I do. Don’t worry though; I’ll give you thirty days notice to get out before anything happens. Thanks again…you’re the best!
Your very appreciative landlord,
Mr. Wealthy Real Estate Owner
So… Does it pay to be a landlord?… YES!!!
Is it time for you to stop paying your landlords house payment and start making that payment on your own home? Stop being so nice to your landlord! Call Yasmeen Hillyard and find out how to buy a home for yourself and your family…today!
This article was contributed by: By Dave Raffi, MISSION HILLS MORTGAGE 707.303.2933
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Lose weight or buy a home!
January 21st, 2011 categories: Buyer Resource
Did you make any New Year’s resolutions? Do you still remember what they were? The top three New Year’s resolutions in the United States are:
1. To lose weight
2. Pay off debt
3. Quit smoking
I was surprised that quit smoking is still in the top three. But not everyone lives in California and smoking is still a cherished delight in much of the country. Problem is most people who make resolutions for the New Year will have broken or forgotten them by the time the ball drops!
Why do so many people fail at their resolutions? Counselors will tell you that the biggest problem is a lack of coaching or to a person stay on track. People very quickly go back to their old habits. If you like junk food and you’re a little hungry, there is no one to say, “Hey, what are you doing chubby? You said you were going to lose some weight!” Maybe you could avoid the backsliding if there was a coach to say, “When you look at the golden arches think gold buttage!”
What didn’t make the top 3 resolutions list was buying a home. The fact is many people will set as a goal, or resolution, buying their first home in 2011. For them it will be the best thing they ever did. Why? Home prices are at rock bottom prices. This means that over time, as home prices rise, buyers today will see their net worth increase substantially.
There is even better news! While many will not see any loss of weight, debt or smoke in their immediate future, they will see their first home. The difference is the coaching. Realtors are like home buying coaches who will see you through to the completion of your goal. A Realtor is trained in how to determine the market value of a home, how to facilitate the buying process and how to keep a buyer from any pitfalls.
Home sales are predicted to increase in 2011 over 2010 levels. Do you want to keep your resolution to buy that home? Contact Yasmeen Hillyard today and she will coach you through the process. While you might not decrease your bottom, with a little help, you will see an increase your bottom line!
This article was contributed by: Dave Raffi, Mission Hills Mortgage, 707.303.2933
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Veteran’s Reward: The no- no!
December 27th, 2010 categories: Buyer Resource
Did you know that part of a Veterans’ benefit is a thing called the VA Mortgage Loan Program? It used to be called the GI Bill in the “olden” days. The loan Program is another way the US government thanks Vets for their service. Only a Veteran or the spouse of a Veteran can obtain a VA loan.
VA zero-down home loans
All mortgage programs, other than the VA loan, follow a similar theme. All other loans require you to have a down payment. Lenders want you to have a little skin in the game, as they say. Also, if you’re putting down less than 20% (And most are by the way!) then you’re required to pay mortgage insurance too.
The VA loan breaks all that down all those standard rules. Veterans can buy a home with 0 down! That’s right zero! The US government guarantees the first 25% to the lender so that there is no need for mortgage insurance too. Who needs that extra monthly expense?
So zero down payment, no mortgage insurance and there’s more. If you act right now, you also get a set of Ginzo knives! Ok, no knives, but a Veteran also gets reduced fees and costs too. With all that good news a Veteran can get those knives with all the money that saved them.
You also can negotiate the seller to pay all closing costs too! While this may not be available on very deal, with the right Realtor, you can structure your offer with a seller “concession” whereby they pay all costs. That means the Veteran moves in with zero money out of pocket, with the exception of inspections which are optional.
Summary:
The VA loan allows for a No-No! No down payment and no closing costs. This makes it a “Yes-Yes” and the greatest loan program available. Yes you have to be a Veteran or Spouse of a Veteran, but if you are you deserve this great deal. Heck, maybe you can even get the seller to kick in the knives too!
This article was contributed by:
Dave Raffi
MISSION HILLS MORTGAGE
707.303.2933
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Sonoma County Mortgage & Housing
May 20th, 2010 categories: Buyer Resource, Mortgage Rates
Market Dynamics and Consumer Opportunities
As a lender I read various market reports. These reports break the real estate market into various segments and basically come down to units of homes sold over a given time period. These segments include “new” versus “existing” homes sold, basically the number of homes sold by home builders versus the number of homes sold by their current owner. Across the nation “new” versus “old” is broken down into regional data and then into state data.
The aggregate national housing data can be broken into ever discrete data points. In addition to new and old units sold, it is possible to break out the number of single family homes sold versus the number of condos, or the number of rental units built versus the number of for sale homes built, this can go on and on. This data is always compared to past results. This month’s data is compared to last month’s data. This year’s data is compared to last year’s data.
What just struck me were a few recent reports that have looked at today’s housing performance and compared it to the number of homes sold during “the housing boom.” This period between 2003 and the middle of 2006 has been called “the go-go years” and “housing’s heyday” in addition to “the housing boom,” which begs the following question to be asked.
If we continue to breakdown the housing data into ever more discrete units until we finally get to the transaction level, would any of the consumers who bought their home during “the boom years” say the got a good deal on their homes?
“The Boom Years” is characterized by the aggregation of transactions. Most of those who handled multiple transactions did very well. At the top of the heap would be homebuilders, then Realtors and mortgage lenders. The experience of the individual buyer is not accurately reflected in a descriptive title for any given market.
This divergence between a descriptive title being applied to market conditions and the experience of the individual applies to today’s housing market. The housing market is generally described as depressed, moribund, or even as a crisis. These are apt descriptions if you happen to be a homebuilder, a supplier of building products, or a land broker. However; for consumers it is possible to say that today’s housing market represents a remarkable opportunity.
Home prices are starting to stabilized after falling as much as 50% over the last few years. If you combine these low home prices with interest rates that are very close to historic lows, the cost of home ownership is lower today than in any time in recent memory.
One of the causalities of “the boom years” was the concept of what our homes should be. Throughout much of this decade our homes became financial instruments that we manipulated for short term financial gain. If you are looking for a house to be a place that can be the long term anchor for a family, to be that old school idea of a home, then today represents a remarkable opportunity to get a good deal. Those who end up buying their home in the next two years will mostly likely look back at that purchase in several years and very happy with the results.
If you have any questions on this entry, or have any questions regarding mortgages, please feel free to contact me.
This article was contributed by: Bob Jones
Mission Hills Mortgage Bankers
(707) 292-0337
rtjones@mhmb.com
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Sonoma County Mortgage Rate Update: 02/12/10
February 12th, 2010 categories: Buyer Resource
First Time Buyer Tax Credit!
Will you miss out on an $8,000 giveaway?
You have about 2.5 months to get in contract to buy a home. The Federal Government extended the $8,000 but you must be in contract by April 30th to be eligible. This is an amazing opportunity to buy a home and get money for doing it!
Can you imagine what you could do with the $8,000? You could set aside for emergencies, remodel the kitchen or bathrooms, take a vacation, etc. This is a great opportunity, but in order to get the $8,000, you need to get moving…literally!
Getting a Mortgage in 2010:
10 Things to Know
More than three years into a painful housing crash, the real estate market has seen recent signs of stabilization. Home sales have increased, inventory levels are down, and price declines have become less precipitous. Along with more affordable home prices and a tax perk from Uncle Sam, attractive mortgage rates—which remained below 5 percent as of late November—have been a driving force behind this development. The availability of low mortgage rates will play a decisive role in the performance of the 2010 housing market as well. To help consumers better understand the requirements and costs they will face as they shop for a home loan next year, U.S. News spoke with a handful of housing market experts and compiled a list of 10 things to know about getting a mortgage in 2010.
1. Still tight: The steep run-up in home prices during the first half of the decade was fueled in large part by breezy lending standards. Some bankers handed out loans without down payments or documentation requirements. But when the housing bubble popped and those loans became massive losses, banks began raising lending standards for borrowers of all stripes. And with the labor market continuing to erode—the unemployment rate hit 10.2 percent in October—and mortgage delinquency rates setting new records, there is no reason to expect credit requirements to loosen in 2010. “Lending standards have tightened dramatically between 2007 and 2009,” says Scott Stern, CEO of Lenders One, a cooperative of independent mortgage bankers. “I think there will be a little more belt-tightening in 2010.”
2. Down payments: This tight credit environment affects consumers in several ways. First, down payment requirements will be higher than they were just a few years ago. Loans backed by the Federal Housing Administration are at the low end of the spectrum and come with minimum down payments of 3.5 percent. (More on FHA loans below.) Down payments on loans outside of the FHA will vary depending on the market, the borrower, and the property type. “Generally, to get the best rate around, you need at least 20 percent for a down payment,” says Guy Cecala, publisher of Inside Mortgage Finance. “That doesn’t mean you can’t get a mortgage if you have less of a down payment. . . it just means that you are not going to get the best interest rates.” Could lenders ease up on down payment requirements in 2010? Possibly. If lenders become convinced that home prices are improving, they may allow borrowers to put slightly less down. But don’t expect that to occur until the end of the year—if at all.
3. Credit scores: Cecala says that borrowers will need a FICO score of at least 730 to get the best mortgage rates. They also will need to fully document their income and assets. To ensure that your credit score is as strong as possible, borrowers should access their credit reports. The Fair and Accurate Credit Transactions Act entitles consumers to one free credit report from all three major credit reporting bureaus—TransUnion, Equifax, and Experian—each year. (The free reports can be obtained at annualcreditreport.com.) Consumers should examine each report to make sure it doesn’t include any errors. “[Consumers] ought to know what their credit score is; they ought to know what’s on their credit report; they ought to make sure that what’s on their credit report is in fact theirs,” says Rick Allen, director of strategic initiatives for Mortgage Marvel, an online mortgage shopping website. “That’s a must do for everybody.”
4. FHA: Borrowers who can’t meet these tighter lending requirements can turn to the FHA, a federal agency that insures mortgage loans against default. Standards for FHA loans are typically less onerous than those for private lenders. The average credit score for FHA borrowers is about 690, and the minimum down payment is 3.5 percent, Cecala says. “If you can’t make the 730 [credit score] or you can’t make the 20 percent down [payment], the next best thing is FHA,” Cecala says. The downside is that FHA loans come with additional costs. Borrowers must pay an insurance premium as well as a slightly higher interest rate, Cecala says.
5. FHA increase? With so many borrowers unable to meet today’s stricter lending requirements, FHA-backed loans have become increasingly popular. Today, the FHA guarantees nearly 3 of every 10 new home mortgages. That’s a stunning increase from 2006, when the agency backed roughly 3 percent of new home loans. Meanwhile, the agency’s finances have deteriorated considerably. The seasonally adjusted delinquency rate for FHA loans increased from about 13 percent in the third quarter of last year to 14.36 percent in this year’s third quarter. At the same time, the agency’s capital reserve ratio dipped below the level that Congress mandates. In the face of mounting political pressure, the Obama administration has announced new steps that may make it more difficult for some borrowers to obtain mortgages backed by the agency. The steps include raising the minimum FICO score, increasing up-front cash requirements, and possibly charging higher insurance premiums. “We want to ensure that we are able to continue to support the housing market in the short term and provide access to homeownership over the long-term, while minimizing the risk to the American taxpayer,” Housing and Urban Development Secretary Shaun Donovan told a congressional committee in written testimony.
6. Asset purchase program: Mortgage rates in 2010 are expected to climb from 2009’s extremely low levels. After the Federal Reserve announced plans to purchase debt and mortgage-backed securities from Fannie Mae and Freddie Mac last year, rates on 30-year fixed conforming mortgages fell to historic lows, plunging to 4.97 percent in late November from 6.19 a year earlier. But the Fed’s asset purchase program is scheduled to expire at the end of the first quarter of 2010, and a lack of private demand for mortgage-backed securities could lead to higher rates. Keep in mind that the Fed has already extended this program once. And if it appears that the market needs additional government support to keep rates low, the Fed could always decide to remain in the market. Keith Gumbinger of HSH.com expects rates to increase from current levels to between 5 and 5.25 percent by the end of March 2010.
7. Jumbo mortgages: Rates on more expensive home loans—or jumbo mortgages—have dropped to extremely attractive levels, hitting 5.88 percent in the week that ended November 27. “That ranks with all-time bests,” Gumbinger says. But while he expects rates on jumbo mortgages to remain historically attractive throughout 2010, many borrowers won’t be able to obtain them. That’s because most banks have to keep jumbo mortgages on their books and therefore apply much stricter lending standards to them. (Smaller conforming loans can be sold off to Fannie and Freddie.) “Your down payment requirements [for jumbo mortgages] are anywhere between 40 percent down to 20 percent down, depending upon what is happening in your marketplace,” Gumbinger says. “You may have to show superhuman strength in terms of credit, [and] you may have to show extraordinary income size.”
8. Fed rate hike: In attempting to jump-start the economy, the Fed has slashed its benchmark federal funds rate to as low as zero percent. And even as some express concerns about future inflation, the central bank in early November said that economic conditions were “likely to warrant exceptionally low levels of the federal funds rate for an extended period.” As such, economists don’t expect the Fed to raise rates anytime soon. “The statement does not lead us to change our view that the Fed will keep rates unchanged until the September 2010 meeting, when we expect the first rate hike,” Dean Maki of Barclays Capital Research said in a report. But while an increased federal funds rate could push rates on certain products—such as adjustable rate mortgages or home equity lines of credit—higher, it has little direct influence on fixed mortgage rates.
9. Recovery: A recovery in the U.S. economy may also lead to increased mortgage costs. That’s because economic improvement could create more demand for credit, which pushes rates higher. At the same time, a recovery could embolden investors to move money out of ultra safe assets like 10-year treasuries and into more risky investments. And since 30-year fixed mortgage rates tend to track the yield on the 10-year Treasury note, such a development would put upward pressure on mortgage rates. Gumbinger says that economic improvement and other factors could push rates on 30-year fixed mortgages as high as 5.75 percent by midsummer. “After that, you are going to be at the whims of the economy,” he says.
10. Fannie and Freddie’s future: A wild card in the outlook for mortgage rates is the administration’s plans for Fannie and Freddie. The two mortgage finance giants—which buy home loans from banks—are a key source of liquidity for the market. The government-chartered companies have long been controversial, and speculation about their future has been mounting since their shaky finances forced Uncle Sam to take over last year. The administration’s plans for their future—which could include liquidation or converting them to public utilities—could become clearer in early 2010. This decision could have profound implications for mortgage rates, Gumbinger says. “We could have some dislocations in the supply chains with mortgages depending upon how immediate or how gradual the changes to the structures of those companies are,” he says.
Mortgage Rate Update…
Rates moved up and then down and remain unchanged from last week! Rates moved around as they always do, and were again motivated by disappointing economic information!
Bottom line…rates are great!!! But for how long?
Rates for the week ending 2/12/2010
FHA Loan with a minimum of 3.5% down, for a person buying a personal residence with a FICO score of 620 or better who would be locking for 30 days.
30 Year Fixed Rate 5% w/5.26 APR
Conventional Loan with a minimum of 10% down, for a person buying a personal residence with a FICO score of 740 or better who is locking for 30 days.
30 Year Fixed Rate 4.875% w/5.21% APR
Call team “WineCountryMoves.com” today!
Happy buying!
This article was contributed by Dave Raffi, 707-303-2933, Regional Manager- Mission Hills Mortgage
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FHA To Help Troubled Borrowers BEFORE They Become Delinquent
January 26th, 2010 categories: Buyer Resource
If you are having trouble making payments on your FHA mortgage, there is a new program that may help. The Federal Housing Administration announced on Friday, January 22, 2010, that you no longer have to be delinquent on payments in order to get help.
Is this a sign that the FHA is now being PROactive instead of REactive? This is not just a sign that the FHA is being proactive, it is definitive proof!
The Federal Housing Administration announced that in some instances, the FHA will assist troubled borrowers BEFORE they become delinquent or miss payments. All that would need to be proved is that any mortgage payment problems were related to a reduction in income from:
- Job Loss
- Fewer Paid Hours
- Slashed Wages
- Decline In Self Employed Business Earnings.
FHA Commissioner David Sterns gave a little more insight into the situation with the following statement: “The FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options. Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home.”
You can see from the above quote that the overriding goal for the FHA is to keep borrowers in their home, no matter their circumstances. The FHA has been helping delinquent borrowers modify their loans, now they are planning to help those who will likely become delinquent.
So what are the remedies that may be available to those who qualify? There are currently only two options that were listed…but these are two very good options.
- Forbearance – Lenders agree to postpone or reduce payments for a specified period of time. Please note that forbearance does not forgive payments, the payments are simply added to the balance of the loan.
- Permanent Payment Reductions – The permanent payment reductions are utilized in more severe cases. This may be done by increasing the length of the loan, reducing the interest rates, forgiving principal owed, or any combination of the three.
As we stated before, it is clear that the Federal Housing Administration ultimately wants to keep borrowers in their homes, and is giving good options to do just that. The new programs are helping to reduce the chance of future problems.
Helping people stay in their homes helps keep families intact, and also helps keep Real Estate values higher than they would be otherwise.
If you have any questions regarding FHA Loans, or anything related to Sonoma County Real Estate, please do not hesitate to contact us
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What Will The 2010 Real Estate Market Look Like?
January 13th, 2010 categories: Buyer Resource
With the start of 2010, we have heard a recurring question; What will the 2010 Real Estate market look like?
I have done a lot of reading and research, both good and bad. There are a lot of bulls who expect great things from 2010, and there are also a lot of bears who are predicting some not so good news for 2010. I wanted to share some of the factors that will shape our year.
Sonoma County Real Estate 2010
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New Home Construction Rebounds
December 20th, 2009 categories: Buyer Resource
Custom Built Home In Petaluma California
New home construction rebounded in November 2009, from a 6 month low that was recorded in October 2009. The actual numbers came in at an annualized rate of 574,000 units, as compared to Octobers’ woeful 527,000 units. We see any increase as good news, and the November increase was listed as an 8.9% improvement in monthly annualized numbers, a large increase.
The improvement in new home construction starts was regionalized however. The Northeastern U.S. saw a remarkable 16.4% rise, the Southern U.S. saw a 12.3% rise, the Midwestern U.S. saw a 3.0% rise, and we recorded a 1.9% increase here in the western U.S. Again, we will take any improvement, and are happy to see positive numbers.
We, as a nation, are still behind last years numbers. November 2008 recorded 655,000 new construction starts…we are 12.4% short of that number. Again, I will reiterate, we are happy with any signs of improvement, especially an 8.9% monthly increase in what is traditionally a slow time of the year for construction.
Is it too soon to start new construction? In many parts of the country you can still purchase a home for less than it costs to build a comparable home; Sonoma County is no exception to this trend. Many of these new home starts are for people who want a specific property that is not on the market, retirees and “moveups” who are looking for their dream home, and even those who cannot seem to find the perfect home listed for sale. We have written about a shortfall of homes on the market in some price ranges, and the new construction may be an outcome of that situation.
Another reason for the new construction numbers was the extension of the $8,000 tax credit for first time home buyers. Many builders noted that this alone was the reason for many buyers to enter into a contract to build a home, and we are excited that the government had the foresight to extend this important stimulus plan.
It is fair to note that this new home construction “recovery” is a month to month numbers comparison, and the new home construction numbers are trailing off towards the end of the year, which is typical in the new home construction industry. What happens in 2010 remains to be seen. We will surely post an article with our 2010 Real Estate predictions before the end of the year.
If you have any questions regarding new home construction, or Sonoma County Real Estate in general, please do not hesitate to contact us. We look forward to hearing from you and answering your questions.
This article was contributed by Chris Ingram.
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