Santa Clarita Jazz and Blues Concert Tonight

Don't miss the free concert tonight! Hope to see you there, more information at http://www.valenciajazzandblues.com/

Interest Rates and Lock Extensions

Good Morning and Happy Thursday to you! It has been a pretty exciting and busy week and I want to thank those of you who have entrusted in me to take care of your clients financing needs.

As of this moment interest rates are still where they were yesterday and looking FLAT! So read what I wrote yesterday if you want rates for today.

I am really liking the normal market we are in right now. I will call it normal because it is as close to normal as any market I can remember in the past eight years. So in a normal market there are the challenges of contingent offers and with contingent offers sometimes we have delays. Delays could be caused by the seller, the buyer, the agents (No I did not say that!), escrow, or even the lender. So what happens when a rate lock expires?

• Who is responsible to pay for the rate lock extension? Nobody is truly responsible for a rate lock extension, but somebody has to pay for it.
• Who can legally pay for the extension? Anybody that is a party to the transaction can pay for a rate lock extension.
• What happens to the rate and what is the cost of a rate lock extension? Rate lock extensions vary depending on who the investor is. We have some that will extend for free if the market improves and they will charge .250% if the market is slightly worse or .375% if the market is dramatically worse. We have others that charge .125% for every 7 days and there are many other ways that banks price extensions as well.
• Can the rate go up? Absolutely, but if the lender is using the right investors, then it should not go up.
• Can the rate go down? It could, but only if there is a dramatic move down in the interest rates. Usually we LOCK a loan which means a rate is locked in and changing investors to get a lower rate is going to slow down the process even further. So the answer is a soft yes on a case by case basis.
• What should I watch out for?
• There are so many things to watch out for. There are some lenders that like to profit off of the hardship of others and charge through the nose if a rate lock expires.
• There are some Lenders that have a no extension policy.
• I have seen Lenders that forget to lock and then when the client gets to the close he has a higher rate.
• Lenders can be like contractors. "Well you are making changes so we need to charge you this much instead of what we said originally!”
• One last thing of note about rate lock extensions: I am too big of a wimp to charge them to my client! I will try to get money from the seller if it is their fault, but I almost always pay for the first 15 days of extensions and when I do that I explain to the client that the next one will cost X and that one is on them if we go that long.

Just remember that a lender you refer is a reflection of you and a lender you don't refer can also reflect badly on you. Be strong, be sincere and let your clients know why it is important to use a professional that you refer. Remember that when you align yourself with the best in the business you will make your business the best!

Home Owners Still Holding Out For Equity

Several reports are showing home equity on the rise. In fact, home owners’ equity holdings at the end of the first quarter amounted to $10.8 trillion – the highest amount since late 2007, according to Federal Reserve reports. That number is below the $13.4 trillion reached in early 2006 during the housing bubble. However, if home prices rise about 5 percent in the next year – which many predict they will – researchers from CoreLogic estimate an additional 1.2 million home owners will regain equity.

While the home equity picture is looking brighter, many owners remain underwater, owing more on their mortgage than their home is currently worth. About 6.3 million home owners nationwide are underwater. On average, they owe 33 percent more than their house would sell for today. For households with one mortgage, the average negative equity balance is about $52,000. The average negative equity for two mortgages is about $75,000, according to CoreLogic.

Being underwater is preventing many from selling. For example, at the end of March, 1.6 million home owners had less than 5 percent of equity in their homes. Many home owners in that position would have to bring money to the settlement table or pay off the debt on their house before they could sell, housing analysts say.

The homes most likely to be in a negative equity position are lower-cost homes, according to research by CoreLogic. About 17 percent of homes costing less than $200,000 are in negative equity positions compared to 3 percent of homes costing more than $500,000.

Not surprisingly, areas that saw some of the biggest drops in home prices during the housing crisis tend to be the areas with the highest concentrated numbers of underwater home owners. For example, 29 percent of homes in Nevada are in a negative equity position; 27 percent in Florida; and 20 percent in Arizona. However, California has fared much better. In some of the state’s counties, home values sank by 50 percent or more during the housing crisis. But the state’s strong housing rebound has put its negative equity picture to just slightly above 11 percent.

Boomerang Buyers Get Second Chance!

About 7.2 million homes have been lost to foreclosure or short sale since the housing crash began, according to housing data from Black Knight Financial Services. That has forced millions of former home owners into renting, as they work to rebuild their credit.

But a government program launched last summer by the Federal Housing Administration is helping these former home owners step back into home ownership in as little as a year after a foreclosure or short sale. The FHA’s Back to Work program allows them to qualify for low interest rates with a minimum of a 3.5 percent down payment. Applicants must show that the main culprit behind losing their home was that they lost at least 20 percent of their household income for at least six months. They also must show they have worked to repair their credit for at least a year.

Lenders are reporting an uptick in boomerang buyers coming in to explore financing opportunities for a home purchase.

"We see a lot of boomerang buyers,” says Matt Weaver, a lender with PMAC Lending Services in Florida. “I'd say about 20 percent of my current clientele has either suffered a short sale or a foreclosure in the past and are now re-buying back into the marketplace."

But while opportunities to apply for a home loan are increasing, some are hesitant to step back in, housing analysts say.

"Based on the fact that the home ownership rate isn't rising again and demand for single-family rentals is historically high, the comeback buyer is not a significant phenomenon in the market," says Mark Fleming, chief economist at CoreLogic. "Given the duration of the recovery, it's likely that many of the initially foreclosed borrowers have repaired their credit and are now creditworthy, but the scale at which they will enter the market is not sufficient to significantly influence demand."

Renting Your Home, Selling Your Home, Or Just To Wow Your Neighbors

Curb appeal and first impressions are important, here are 7 ways to boost your curb appeal.

1. Mulch heavily

You know that flower or shrub bed sitting in the front of your home? You might not be able to force it to bloom (more on that later), but you can still amplify its aesthetics by heavily mulching it at the start of each growing season.

Organic mulches that are colored with vegetable dyes, like red cedar bark, are a double-edged sword. They create the biggest ‘wow' factor, but the color can also fade quickly, especially if you live in an area with plenty of sunlight and rain. Once this mulch fades in color, it loses its charm, causing you to add more.

The solution? It depends on your budget. If you can re-mulch twice per year, feel free to indulge in the nicer varieties. If you're really on a shoestring, opt for something more durable, like pine straw or wood chips, or even entertain the notion of landscaping with small gravel.

2. Create a rock garden

Nothing screams "modern" and "chic" like a contained rock garden. One of the easiest ways to create this is by:

• Setting a border that visually defines an area of your front yard.
• Clearing that defined space of all weeds, leaves and plantings.
• Laying down landscape fabric and securing it into place with pegs.
• Covering the area with a nice-looking gravel, like decomposed granite or Russian river cobbles.
• Placing an odd number of vertical, eye-catching decorations in the center, such as a planter with blooming annuals.

Why an odd number? It's a design hack. Odd increments look more visually appealing. Try either one, three or five planters, depending on the size of your rock garden.

This will instantly upgrade your curb appeal without costing too much money or time. One warning, however: Don't place your rock garden close to any deciduous trees. When trees shed their leaves in the fall, you'll find that they get stuck in the gravel and are nearly-impossible to remove. No amount of leaf-blowing seems to solve the problem. Eventually, these leaves decompose into soil, which then creates a weed problem within your rock garden.

The solution? Be cautious about the placement of your garden, especially if you live in a humid or heavily forested area.

3. Add trim

Beyond landscaping, you can also boost curb appeal by adding an extra layer of trim and molding to the windows and doors.

If you don't want to remove your existing molding, simply add a layer of crown to the top of your current trim. There are hundreds of designs that you can select from, ranging from simple Craftsman styles to more ornate Victorian and Queen Anne motifs.

If you're willing to remove your existing trim, your options really explode. If you want to create an elaborate look, add fluted trim (rather than plain planks), top it with rosettes, and sandwich these between heavy layers of both crown and base molding.

Trim is like adding accessories to an outfit – it can elevate a basic ensemble into something that looks far more expensive than it actually is.

4. Add shutters

Depending on the architectural style of your home, shutters might be precisely the missing component. Historically, shutters were used to protect dwellings from storms (and in some areas, like along the Gulf Coast, they still are), but more homeowners are now using shutters as decorative elements that add texture and dimension to their home's facade.

You can choose from a variety of styles, ranging from more traditional louvered rectangular shutters to the far more decorative arch-top board-and-batten style.

5. Paint your brick

Do you own a brick home? Some homeowners have the good fortune of owning houses that are built from gorgeous bricks, such as old clay-fired red brick from the early 1900s. But if your house is constructed from an unremarkable brick style, try spraying-on a layer of paint.

If you're opting for a modern-yet-classic feel, try painting your bricks white. If you're more daring, consider a shimmery grey texture.

6. Paint your front door

Is your home clad in vinyl siding, rather than brick? Don't worry. You might not be able to paint your vinyl (and replacing it is pricey), but you can still add an eye-catching layer of paint to your front door.

Recently, the "red front door" trend has become popular. If your home bears a neutral color, such as beige or brown, painting your front door lipstick-red can add some contrast and really make your entrance pop.

If that's not your style, try a more muted shade like sea-blue, sage-green or even black.

7. Replace your house numbers

Finally, here's a tip that will improve the look of your home exterior for $50 or less: Replace your house numbers with something that's more stylish or aesthetically pleasing. If your house announces that it's "123 Main Street" with humdrum text, try replacing that numbering with a typeface that's art deco, cursive or a modern sans-serif made from metal.

5 Reasons To Sell Now

Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? Can buyers qualify for a mortgage?  These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are five of those reasons.

1. Demand is Strong

There is currently a pent-up demand of purchasers as many home buyers pushed off their search this past winter because of extreme weather. According to the National Association of Realtors (NAR), the number of buyers in the market, which feel off dramatically in December, January and February, has begun to increase again over the last few months. These buyers are ready, willing and able to buy…and are in the market right now! Weather may not have affected our area, however the lack of inventory did! Buyers are still out there!

2. There Is Less Competition Now

Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future. Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen.  Selling now will make the process quicker and simpler.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate in the low 4’s right now. Rates are projected to be over 5% by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market and pricing it so it sells. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Should I Rent My Home Vs Selling My Home

There has been a lot written about how buying a home is less expensive than renting one in most parts of the country, especially Santa Clarita. Rents are skyrocketing and homes are still at great prices. These two situations are also causing some sellers to consider renting their home instead of selling it. After all, a homeowner can get great rental income now and perhaps wait until house values increase even further before selling.

This logic makes sense in some cases. There is a strong belief that residential real estate is a great investment right now. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for.

Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to ask BEFORE renting your home

1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
3. Have you interviewed experienced eviction attorneys in case a challenge does arise?
4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
5. Will you allow pets? Cats? Dogs? How big a dog?
6. How will you actually collect the rent? By mail? In person?
7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up? Most importantly, how will you pay for these repairs?
8. Do you have a list of craftspeople readily available to handle these repairs?
9. How often will you do a physical inspection of the property?
10. Will you alert your current neighbors that you are renting the house?

Bottom Line

Again, renting out residential real estate is historically a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.