What Lenders Are Looking For...

The Four C's

Low mortgage rates are helping to bring home ownership within reach for some borrowers. But qualifying for a mortgage remains a big challenge for many, as tight underwriting standards persist in the wake of the financial crisis.

family sales and relationship management for Freddie Mac, explains how your clients can be better prepared to qualify. Boyle writes at the mortgage giant’s website about the four C’s that lenders are evaluating when deciding whether to grant a borrower a loan. They are:

• Capacity: “Your current and future ability to pay back the loan,” Boyle explains. “Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on a mortgage comfortably.”
• Collateral: The value of the home that you intend to purchase.
• Capital: “The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash,” Boyle says. “Having these reserves proves that you can manage your money and have funds, in addition to your income, to help pay the debt.”
• Credit: How well you’ve done paying your bills and other debts on time.

The down payment is also an important piece that lenders consider, Boyle adds. In 2014, buyers put down an average of 14 percent on their home purchase, according to a report by RealtyTrac. Freddie Mac’s new Home Possible Advantages down an average of 14 percent on their home purchase, according to a report by RealtyTrac. Freddie Mac’s new Home Possible Advantages mortgage allows qualified borrowers to put down as little as 3 percent. But those who put down less than 20 percent should expect to pay a higher interest rate as well as pay mortgage insurance, Boyle says.

If You Wait A Year To Buy A Home...

Some Important Points To Consider:

• The latest Freddie Mac Primary Mortgage Market Survey reports the 30-year fixed rate at 3.7%.
• Freddie Mac's projection for Q2 2016 is that the rate will be 4.7% (a full percentage point higher)
• The Home Price Expectation Survey predicts that home prices will appreciate by 4.4% during this same time

The impact waiting a year to purchase your dream home can make on your monthly payment is significant. Contact a local real estate professional today to discuss your options before the experts' predictions become reality!

Desire For Vacation Homes Growing!

The National Association of Realtors just released their 2015 Investment and Vacation Home Buyers Survey which revealed that vacation home sales boomed in 2014 to above their most recent peak level in 2006. NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales:

“Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment. Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”

The report shows:

• Vacation-home sales catapulted to an estimated 1.13 million last year
• This was the highest amount since NAR began the survey in 2003
• Vacation sales were up 57.4% from 717,000 in 2013
• Vacation-home sales accounted for 21 percent of all transactions in 2014, their highest market share since the survey was first conducted

Bottom Line

If you have been considering that waterfront condo in Florida, that ranch in Wyoming or that special getaway you someday will retire to, maybe now is the time to act. Prices are good and mortgage rates are at historic lows. Contact a local real estate professional to help you put your dreams to a plan.

FHA Lowers Its Mortgage Costs

DID YOU KNOW?

FHA LOWERED IT'S ANNUAL PREMIUMS?

The Federal Housing Administration recently reduced the annual premiums borrowers will pay by half a percent.  This action is projected to help over 250,000 home buyers over the next three years! Could you be one of them?

The FHA's mortgage insurance premiums are reduced from 1.35 percent to .85 percent. The reduction on mortgages could save an average California borrower $1,500 per year on a $300,000 loan.  More on a higher loan!

IF you didn't buy due to higher premiums now is the time to get pre-qualified, call me today to get started! 661-702-4767
Or 
Click Here For A FREE List of Homes that my fit your home buying criteria

Five Spring Home Buying Strategies

The spring home-buying boom is underway, and this year buyers in some markets will face an increased amount of competition due to low housing inventory. In fact, the most recent existing-home sales report from the National Association of REALTORS® cautions that "Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices."

Real estate professionals around the country are echoing the concern about the lack of available housing options. "The [housing] recovery appears slow due to a lack of inventory and a low participation rate among first-time buyers, but it’s still a competitive seller’s market," says David Yocum, a Redfin agent from Chicago.

In order to be successful in competitive markets, buyers need to be strategic in how they approach finding their dream home. Here are five tips they can incorporate into their home buying process that will prepare them with all of the information they need.

Step Away from the Computer

Despite the fact that 90 percent of home buyers start their search online, buyers should also consider getting outside and canvassing their desired neighborhoods. In a low inventory market, it's important to to be proactive and not waste time weighing options, because by that time, the property might be off the market. "In our market we hope for a burst of new inventory in the spring, but that doesn't always happen,"  "Even if that burst comes, demand will outstrip supply, so buyers have to be in a position to make a decision quickly."

Get to Know the Current Housing Market

Every housing market is different, so it's important to do research on the market and neighborhood trends. Finding a good real estate agent and keeping up with local real estate news is crucial for buyers to understand the nuances of their local housing market. "Buyers need to get up to speed quickly on market values so they know the right decision when it presents itself," says Yocum. "The more quickly buyers can educate themselves, the more successful the home search will be."

Grab Those Low Mortgage Rates—Before it's too Late!

While mortgage rates continue to hover below four percent, buyers might not be able to enjoy these low rates forever. "With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages," says NAR chief economist Lawrence Yun.

Create a Dynamic Team

The fast pace of the most competitive housing markets means buyers have to be in a position to make an offer at a moment's notice. Before making an offer, buyers need to ensure they've lined up a real estate professional, a lender, a lawyer, and a home inspector. They will also want to be pre-approved for a loan and ready to complete a mortgage application as soon as they find a property.

Be Prepared for Bidding Wars

Buyers should be strategic when maneuvering a bidding war. Some agents suggest that buyer clients include an escalation clause, while others suggest they examine the deal and identify areas where they could be more flexible, in terms of contingency clauses. However, Yocum warns that "all of these [contingency clauses] have various levels of risk that not all buyers are willing to accept, and you should consult with your team before [removing] any of them."

Don't Go To New Construction Without Agent Representation

If you are considering purchasing new construction, please contact your local real estate agent first.
Buying a new construction home may seam easy enough to do on your own; in fact, it can be even trickier than buying an existing home.

When buying a new construction property, the hurdles are large and plentiful.  Having someone who knows how to jump all of the hurdles and even jump some for you makes the process easier.  When it comes to buying a new construction property, it is definitely to your advantage to use a buyers agent and it 

costs you nothing!!

There is quite a bit of new construction available in the Santa Clarita Valley, contact me today for a list of available projects.

Loan Program Update

There are some pretty good loan programs out there that many buyers and agents are not aware of. 

FHA Sapphire. 

FHA Sapphire is a regular FHA loan with higher than usual FHA rates, but the buyer is only required to put down .50% instead of 3.5%. The program allows us to credit the buyer 3%-5% depending on the program they choose to help with closing costs, and the remainder of the down payment. It does have income limits and the maximum loan amount will be $417,000.00. The .50 down from the buyer can be a gift. The income limits are $78,315.00 in Los Angeles County, $97,635.00 in Orange County and $102,005 in Ventura County. Please also note that the buyer will have to pay 1.5 points on the loan and the rates are typically .50% higher for the 3% Grant and 1.0% higher for the 5% grant. This is a great product for first time home buyers that are struggling to save up a down payment. We can refinance the buyers in as little as 7 months to lower their rate back down. The Grant does not have to be repaid!

What do you have to lose?

How Much Money Do I Need To Buy A In Santa Clarita Valley, Ca?

 
In a recent survey, How America Views Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95%said they want to own a home if they don’t already. Franklin Codel, head of Wells Fargo home mortgageproduction, explains:

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about “qualifying for a mortgage or navigating the home buying process”. Though 74% said they “know and understand” the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

• 30% of respondents believe that only individuals with high incomes can obtain a mortgage
• 64% of respondents believe they must have a “very good” credit score to buy a home
• 44% believe that a 20% down payment is required

In actuality many of these beliefs are unfounded. Let’s look at the question of down payment: Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today's homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold.  So, not only are low down payment options real, they represent a significant portion of today's purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

• A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
• Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

Bottom Line

If you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. You CAN pay cash or you put as little as 3% down to purchase a home? ___________________________________________________________________

Did You Serve in The Armed Service? VA Loans Are Available To Purchase a Home in Santa Clarita, Ca!

If you have ever served in the armed services did you know you have the opportunity to receive a VA Loan to buy a home in Santa Clarita, Ca? Here are some facts about VA loans:

1.) VA loans are with zero down and very little out of your pocket!

2.) Veterans can qualify to purchase a home 2 years after a short sale or foreclosure and very favorable time frames after a BK.  

3.) VA programs can include co-borrowers who are not Veterans

4.) No minimum credit score for Veterans to qualify VA

I am here to help someone who has helped us! Please let me know how I can serve your real estate needs!

New Construction Homes-Competition?

For the last several years, home sellers had to compete with huge inventories of distressed properties (foreclosures and short sales). The great news is that the supply of these properties is falling like a rock in the vast majority of housing markets. Many homeowners are now thinking of selling as the impact of this substantially discounted competition has disappeared.

However, every seller of an existing residential property must realize that there is a new form of competition about to hit the market: newly constructed homes.

As the economy improves, builders will again be bringing their housing developments to the market. Trulia recently reported that the purchaser, given a choice, actually prefers new construction. Here are two charts showing the results of the Trulia survey:

Bottom Line

If you are thinking of selling, perhaps you should do it now to avoid the additional competition that will come to the market later this year.

School or Pool?

A Great Reason To Sell Now

The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.  

According to the National Association of Realtors (NAR), the supply of homes for sale is still below the normal 6 month level of inventory. That means less competition.

However, a recent study revealed that 71% of current homeowners are considering selling their home this year. Putting your home on the market now instead of waiting for this increased competition to come to the market might make a lot of sense.

Buyers currently in the market are motivated purchasers. They want to buy now. With limited inventory available in most markets, a seller will be in a great position to negotiate their best possible price.

Interest Rates Compared to Home Prices

Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates are below 4% with 20% down and a 740 FICO score.

Don't get priced out of your 'Dream Home'... pay attention to interest rates, they have a direct impact on your purchasing power.  See the diagram below.  When interest rates are higher, you can have about the same house payment as a home that is $40,000 more with a point less in interest rates.

Remember as interest rates go lower, home prices usually will increase and as rates rise home values will normally diminish. 

Don't hesitate to contact me directly if you have any questions, 661-702-4767.

Most buyers are overwhelmed!

There was an interesting survey I read about that home buyers revealed how prepared they actually are for the mortgage process. The survey reported that 94% of prospective buyers believe they are making a good investment decision if they buy a home. The survey also explained that 66% of buyers reach out to real estate agents to help determine whether buying a certain home would be a good investment. However, there is less certainty regarding the mortgage process.

Most buyers overwhelmed

The majority of potential buyers are actually overwhelmed with the plethora of information available about the home financing process.  Here are some interesting highlights from the report:

• Nearly 66% feel overwhelmed with the amount of information available
• 76% of those under the age of 30 feel overwhelmed
• 76% of first time buyers feel the same way
• 54% of those buyers who have previously owned also were overwhelmed
• 59% of buyers turn to mortgage bankers to help evaluate mortgage terms and comparing offers
• 49% of buyers turn to real estate agents to help evaluate mortgage terms and comparing offers

There is help available…use it!

Cameron Findlay, chief economist at Discover Home Loans, gives great advice:

“The industry is becoming more transparent in an effort to help homebuyers become informed about changes that may affect their process. The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances.”

Bottom Line

When you are ready to purchase a home, don't go it alone!  As your real estate agent, I am here to advise you on finding you the best lender out there.  Use me for all the advice you can get!

What Does A Real Estate Agent Do For You?

IF YOU HAVE STARTED YOU HOME SEARCH AND ARE FEELING A LITTLE OVERWHELMED HERE IS THE BEST WAY TO FIND AN AGENT FOR YOU.

HOW DO I FIND THE BEST AGENT FOR ME?

To find the best agent you should think of the selection process as an interview to find someone that is the right fit. You are interviewing potential agents to determine which one will get you into a new home, in the shortest amount of time possible, and for the least amount of money. With that in mind, you should attempt to find an agent through a referral (more than 50% of buyers find an agent through referral or from previous home buying experience), or by contacting your State’s Association of Realtors.

Your evaluation should focus on the following criteria:

EXPERIENCE

Does your agent have recent and in-depth experience helping buyers locate homes that fit your criteria, and in your preferred location?

• Location: What areas do you work in the most?
• Price-Range: What was the price range of homes for which you acted as buyer agent last year? Average / median home price?
• First-Time Buyers: What percentage of your work is with first-time home buyers?
• Experience Closing: How many buyers have you represented? How many transactions did you complete in the last year?
• Buyers vs. Sellers: What percentage of your business is with home buyers (as opposed to sellers)?
• Types of Home: What type of homes do you specialize in? Single-family / condo / townhouse?

PERSONALITY

Trust is important in real estate transactions; does your agent have a personality that you’re comfortable with and do they seem trustworthy?

• Timing/Organization: How many clients do you work with? Can you work around my schedule?
• Communication Style: What is your preferred method of communication? (phone / email / text / in-person)? How often do you stay in touch?

KEY INTERVIEW CONSIDERATIONS

• Does the agent intimidate you? Do you feel they would pressure you into making a decision before you are ready?
• Would the agent work around your time schedule? Do they seem like they have time for you?
• Do you have confidence in their experience and abilities?
• Are they a member of the National Association of Realtors?

WHAT TO WATCH OUT FOR WITH AN AGENT

• An agent who is reluctant to show houses being sold directly by the owner – commission is usually only paid to agent for transactions in which a seller’s agent is representing the owner (you may need to discuss directly compensating your agent for this type of transaction).
• An agent who may be financially motivated to pressure you into completing a transaction – could pressure you or suggest that you pay a higher price so that you are more likely to secure the home, especially in the event of a bidding war.
• The potential exists for a “dual agency” situation, where an agent represents both the buyer and seller (and stands to collect the full commission). In these cases, the agent is purely interested in making sure the transaction closes, instead of protecting the buyer’s best interests, to receive a double commission.
• Service providers recommended by an agent may be less motivated to discover potential problems with the house in order to maintain business with the agent.

Reason #5 A Buyer May Dislike A Home

Some home buyers have a love-hate relationships with the properties they see. They either fall madly in love with a place, finding no faults, or are totally disgusted, even outraged that I would dare show them something so terrible. 

Sometimes, underlying a buyer’s rejection reaction are their own irrational expectations or other psychological quirks. But other times, there are hidden issues that can cause a gut reaction of hate toward a particular home.

Here is reason #5

5. Furniture foibles.

Is it irrational to make a decision about buying (or not buying) a particular property around your furniture? Probably so. Do people do it every single day?

Absolutely.

Buyers who have a house full of furnishings of a particular style or scale might recall the time and money they invested obtaining it and decide to hold out for a property that has a harmonious look, feel or scale. As well, many a buyer has hemmed and hawed about a house because their great-aunt’s/Grandma’s/Mom’s inherited dining room table would never fit.

Crazy, right?

Identity Theft and Data Breach Update

Target’s data breach last fall compromised not only the credit/debit card information of 40 million
customers, but more importantly the personally identifying data of 70 million people. Similar
breaches recently occurred at Michael’s Crafts, Neiman Marcus, eBay, PF Chang’s, universities,
and even at the federal government. A new report from the National Consumers League indicates
that breaches are now more likely to result in actual fraud: nearly 1-in-3 breaches in 2013, up from
1-in-9 in 2010.

California created one of the first data-breach notification laws, and requires consumer notification
if email or internet passwords have been breached, and if that data breach affects more than 500
people. There were 167 breaches reported in California last year, up 20% from 2011.
Initial protection begins with requesting a free credit report each year from the three credit bureaus,
viaannualcreditreport.com. However, credit fraud makes up less than 20% of all identity fraud.
True identity theft 1.) may involve your name, address, SSN, driver’s license, medical identity, character
or criminal issues, 2.) is costly and time-consuming to resolve, (on average 55-130 hours, and
$1000-$5000 per incident), and 3.) may even require help of an attorney in another state.

Be sure to check your credit a few times a year!

Who Needs A Real Estate Agent? YOU DO!

Whether you are buying or selling a home, it can be quite an adventurous journey. You need an experienced Real Estate Professional to lead you to your ultimate goal. In this world of instant gratification and internet searches, many sellers think that they can For Sale by Owner or FSBO. The 5 Reasons You NEED a Real Estate Professional in your corner haven’t changed, but have rather been strengthened in recent months due to the projections of higher mortgage interest rates & home prices as the market continues to recover.

1. What do you do with all this paperwork?

Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.

2. Ok, so you found your dream house, now what?

According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, who knows what these actions are to make sure that you acquire your dream?

3. Are you a good negotiator?

So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process.

4. What is the home you’re buying/selling really worth?

It is important for your home to be priced correctly from the start to attract the right buyers and shorten the time that it’s on the market. You need someone who is not emotionally connected to your home to give you the truth as to your home’s value. According to the National Association of REALTORS, “the typical FSBO home sold for $184,000 compared to $230,000 among agent-assisted home sales.” Get the most out of your transaction by hiring a professional.

5. Do you know what’s really going on in the market?

There is so much information out there on the news and the internet about home sales, prices, mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively price your home correctly at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a low-ball offer?

Dave Ramsey, the financial guru advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring an agent who has their finger on the pulse of the market will make your buying/selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line:

You wouldn't hike up Mt. Everest without a Sherpa, or replace the engine in your car without a trusted mechanic. Why would you make one of your most important financial decisions of your life without hiring a Real Estate Professional? 

Approved To Buy A House...Avoid the Following!

You have done the hard part in the home buying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.

Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!

Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of “do’s and don’ts” to follow.

Let’s start with the “do’s” …

1. Do keep the process moving by responding to your loan officers’ requests for documentation as soon as possible.
2. Do make decisions as soon as is reasonably possible.
3. Do convey questions or concerns you have as they develop.
4. Do continue to make all of your rent or mortgage payments on time.
5. Do stay current on all other existing accounts.
6. Do continue to work your normal work schedule with no unplanned time off.
7. Do continue to use your credit as normal.
8. Do be prepared to explain any large deposits in your bank accounts.
9. Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.

After you have been pre-approved for your mortgage you will want to refrain from the following …

1. Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
2. Do not apply for any new credit (even if it says you are pre-approved or “xxx days same as cash”).
3. Do not pay off charges or collections (unless directed by your loan officer to do so).
4. Do not make any changes to your credit profile.
5. Do not change bank accounts.
6. Do not make unusual deposits into your bank accounts or move money around from one account to another.

Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck!

Receiving Gift Money To Buy Real Estate?

       

If you are receiving gift money to purchase real estate it is very important that you consult with your loan officer how to deposit that money, every penny is tracked during the loan process.

 "Show me the Gift Money!"

Underwriters track gift money as well as bank deposits and/or money transfers in bank accounts during the loan approval process. The origin of the gift money and the transfer-ability of the funds from the donor's account to the buyer's account is reviewed by an Underwriter in great detail. It is imperative that you contact your lender when depositing monies into your account during the home buying process.  Why you may ask?...well, any money that appears in a buyer's bank account that is not from an employee's pay check or pension; social security; foster care, etc., raises questions as to where the money came from. The buyer needs instructions from the Loan Officer before receiving any gift money from anyone as a specific procedure must be followed.

                             "Transferring Money!"

Sometimes a buyer transfers money numerous times creating a time-consuming cross-referencing of bank accounts showing the money leaving one account and being transferred into another. This often leaves a buyer frustrated as to the detailed involvement of what they consider non-problematic. When the buyer is asked for an on-line bank printout there can be no gap from the date on the last print-out or last bank statement. The amount of money transferred from the donor's account to the buyer's account must exactly match the amount that was transferred. Sometimes when trying to track the transferring from one bank account to another its revealed that a bank account is missing on the application - creating a revision to the application.

       "Cash Deposits!"

Occasionally buyers don't have auto-depositing of their payroll check. When a buyer deposits their payroll check "Less Cash" the amount will be less than the amount shown on their check stub - which raises a red flag. Since the amounts don't match, a letter of explanation may be required from the buyer. The best way to remedy this is to deposit the entire check and then withdraw the cash they need. Of course a buyer who receives a check shouldn't cash it and then try to deposit the cash in their bank account. A cash deposit in any bank account is not able to be documented and will not be considered as sufficient funds to close escrow. So if you have a garage sale use the cash to buy groceries etc.