Posts Tagged ‘home purchase’
Wednesday, January 11th, 2017
By Elvin J. Wesley, President and Broker of Ranch and Coast Mortgage Group
What a great way to start the week and 2017!!!
Monday morning HUD announced that it had achieved the balance of its statutory operational goals and as a result of that it requires a reduction of the Annual MIP charged. This exciting announcement from HUD yesterday morning that represents a 25 basis points improvement on most FHA Loans (not to interest rate, but to the Annual Mortgage Insurance Premium charged by HUD on FHA loans)
The Revised MIP schedule is effective for Endorsements of Mortgages with a Closing / Disbursement date on or after January 27, 2017. Closing / Disbursement date is defined as the later of the date of the signing of the Mortgage or the Disbursement of the Loan Proceeds as is entered in FHA Connection. Unlike changes in the past the change is effective based on the closing date and not the case number assignment date!
The Revisions applies to all FHA Title II Forward Programs excluding Mortgages insured under the National Housing Act section 247 (Hawaiian Homelands).
Here is a Summary of the changes
What does this mean in regards to $$…payment reduction when a buyer/borrower is purchasing a home?
Old – $550K base loan amount based on 0.85% MIP = $389.58 per month
NEW – $550K base loan amount based on 0.60% MIP = $275.00 per month
That’s a $114.58 reduction in MIP payment, which means lower overall payment for buyers/borrowers and more BUYING power!
On November 23rd the Federal Housing Finance Agency (FHFA) announced that the maximum conforming loan limits for Fannie Mae and Freddie Mac in 2017 will increase, which of cources has now taken place. This will be the first increase in the baseline loan limit since 2006. In higher-cost areas, higher loan limits will be in effect as shown below.
This change has already taken place for FHA and VA loans limits as well.
2017 Conforming and High Balance Loan Limits-
SAN DIEGO NEW LIMITS $424,100 Conforming and $612,500 High Balance
LOS ANGELES NEW LIMITS $424,100 Conforming and $636,150 High Balance
ORANGE COUNTY NEW LIMITS $424,100 Conforming and $636,150 High Balance
*See attached spreadsheet for more counties and limits for 2-4 unit properties
|Number of Units
||Maximum base conforming loan limits for properties NOT in Alaska, Hawaii, Guam & U.S. Virgin Islands
||Maximum base conforming loan limits for properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
High Balance/Super Conforming:
|Number of Units
||Minimum/Maximum Original Loan Amount
||Properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
Please refer to the full County Loan Limits list attached or just contact Elvin Wesley at Ranch and Coast Mortgage
(CA DRE license: 01316249, NMLS: 234795):
f 866.683.5399 toll free
Monday, November 28th, 2016
If you have been looking for a home recently you may realize that doing so has become tougher: there is less inventory out there and when a great home lists there are often multiple offers. So how does a buyer get ahead to secure a home when many others are in the same situation? Here are some tips.
Hire a great real estate agent. This is above all the number one way to find a home in a tough market. Not only can your agent give you advice about what price and terms may get you that house you love, but they are also locally connected, which can make all the difference in the world.
Here is an example – After losing out on a few multiple offer situations I found buyers a home through my connections with other local agents – one that had not gone on the MLS yet. In another situation, I notified buyers of a home that was about to come on the market (they lost out on purchasing my listing in the same neighborhood), and they got into contract prior to the home going on the MLS. Some say this is unfair for the other buyers out there as they never had a chance to see or bid on the home, but many real estate sales work this way. Those of us who work particular areas often stay in touch and know when there is a listing coming up. Having that on your side as you search for a home is priceless.
Be Paperwork Ready: There is no better advice than to be ready to make an offer. This means you need to be preapproved with a lender (the lender should have all your paperwork so s/he is ready to go once you write an offer, and you should have a preapproval letter). Have a copy of your latest bank or investment statement showing proof of funds for your downpayment, in order to submit with your offer. Your offer should be as strong as possible so speak with your agent to determine what needs to be in there and what may be left out in order to avoid a multiple offer situation.
Know what you want: Often this is difficult when one is focusing on multiple areas or neighborhoods, but if you really know those you prefer, including floorplans and other amenities, you will be able to act quickly to see the home and make and offer. Even if multiple offers do come in, being first to present can often be helpful. Start looking at areas and homes before you are ready to purchase – the more information you have the better and more prepared you will be when the time to buy is right.
All in all, buying a home in a low inventory market can be tough. With interest rates rising every day counts – if you can lock in a rate prior to another rate increase that is great – and it just means you need to be ready when that right home becomes available. Of all the above tips, having a great buyer’s agent is the best advice I can provide. Many people think they can find a home without an agent, but a good agent is worth her weight in gold when it comes to finding the right home.
Happy home shopping!
Monday, September 19th, 2016
I don’t know if it’s just bad luck, but I have been having MAJOR issues with lenders lately – messing up (and almost killing) escrows at the 11th hour. (I should say that these mistakes are not from MY preferred lenders, but from lenders whose clients are purchasing my listings). Here is what I know: lenders are held to high standards, most importantly they must check all paperwork and needed documentation during the buyer’s loan contingency process. Here are some of the dumb things that I have seen lately from buyers’ lenders:
1. Not checking buyer documentation. I had a lender this past week that on the day of the loan contingency removal deadline realized that there were two parties to a trust for which they based funds going into the loan. Now I have to assume that they had a copy of this trust for 21 days, and that they vetted it to make sure their borrower qualified. However, on day 21 I find out that they “just realized” that there were 2 trustees, not one, and therefore the borrower actually had half of the money to his name instead of the whole trust amount, on which they based approval.
This is unacceptable folks! These are basic inquiries a lender needs to make when processing a loan! How could the lender not have known the borrower’s stake in the trust when it should have had that trust documentation, which clearly identifies trustees and is a vital document when funds are coming from it?! Unbelievable.
2. Sending over loan docs with a change in borrower names. Believe it or not, a lender this past week sent over loan docs to escrow to be signed by the buyers, with closing slated for the following day (which happened to be a Friday so there was no room for screw-ups). The problem was that the docs had DIFFERENT buyer names than the contract/escrow documents – they basically eliminated a buyer! Now, I don’t know about you but it isn’t rocket science – it is pretty basic common sense that if you have a contract between parties, you cannot just change or eliminate the name(s) of a party without proper documentation (it also happens to be the law). Lenders KNOW this!
Suffice it to say that in this particular case escrow and I had to jump through hoops and the lender had to re-draw docs at the 11th hour. It was very stressful. This is absolutely unbelievable. The lender has copies of the contracts and all documentation relating to the purchase agreement. For them to do something like this is just crazy.
The moral of my crazy lender scenario week is that there are often problems in a real estate transaction, so prepare for them. But those who are charged with qualifying borrowers need to be much more careful. Things like this should not be happening. This past week was officially named by me “lender screw-up week.” I sure am glad those lenders that I work with are so on top of things, and hope to never work with either of these particular lenders again.
Wednesday, August 31st, 2016
A good real estate agent is golden when it comes to assuring that all your needs are met as a buyer – from searching for the right home to negotiating, to making sure all obligations are met as a buyer and that everything needed from the seller has been provided. It not just about getting to the close of escrow, but also about protecting your legal rights as a buyer and making sure there are no surprises once you do close escrow.
When it comes to the purchase of a new construction home many buyers end up using builder sales representatives, partly because they are there on site and make it easy, and partly because buyers do not know why this can actually be detrimental when it comes to their rights. Here are the top reasons why working with your own real estate agent can help you when purchasing new construction:
1. Dual agency dilemma: When you work with a builder representative, their first allegiance is to the builder. Once they represent you as well then dual agency comes into play. If you are a frequent blog reader you know how I feel about dual agency (click here to read more), and the dangers it brings. In the alternative, it is better if you have your own representation so that the allegiance is only to you – that person can look our for ONLY your best interests.
2. Extra set of eyes and problem solver: Once again, if you have your own representative Realtor to look over the new construction contract then s/he may point some things out to you that you might be able to alter to suit you better. For example, including items that do not come with the home, or extending deposit dates. A good real estate agent is there to assist you and make sure that you benefit. The builder does not care to whom it pays the commission – they just want to get the home sold. Even if you the builder uses its own contract (as opposed to state or local real estate association documents), your agent can still be with you while the documents are presented and help you decipher them.
3. No extra cost to you: Many buyers make the mistake of believing that if they work directly with a builder sales representative, they will save money on the purchase of their new home. This is not true – the builder takes into account the commissions when setting home prices. The builder wants to sell the home, and while it may (key word – “may”) pay out less commission to an on-site sales rep, most builders do cooperate with brokers and advertise such. A buyer is not going to gain anything by working with an on-site sales rep versus an outside agent. In fact, an outside agent who is a good negotiator may be able to help negotiate perks and price adjustments on your behalf. Either way the builder is going to pay a commission, so why not take advantage of independent representation – someone who has ONLY your interests in mind and not those of the builder. There is no cost to you as a buyer.
When looking at the possibility of purchasing a new construction home, make sure you are well represented. Your interests should be first and foremost.
Tuesday, June 28th, 2016
Attention home buyers and sellers: home inventory is growing. Over the last few years we have seen decreased inventory in many areas, including here in San Diego County. This has made it tricky for many buyers as supply has not met demand, but has been positive for sellers as the seller market picked up speed. But inventory appears to be growing and there are many extenuating circumstances that make now a good time to sell or buy real estate.
Home ownership holding period – Over time most homeowners have tended to occupy their homes on the average for about 6-7 years before selling. But over the last few years this number increased and many sellers were staying in their homes 9-10 years due to economic factors. However, there has been a trend downward lately due to equity increases and market conditions.
Equity – The last few years have brought equity gains to many homeowners, and low interest rates make it a great time to buy – this combination is positive news for housing. But like any market there will be a correction in time, where equity stops rising as quickly. Here in San Diego County we are starting to see slight slow downs with sales – sales prices are dropping slightly and many homes are sitting on the market longer.
Seller Market – It has been a seller’s market for some time now, due to lack of inventory in many housing markets, combined with a healthy demand. but with external changes on the rise more sellers will likely consider selling due to strong market conditions and other economic factors that may make them question how long the equity rise will continue. As inventory increases it may turn into a buyer market so long as demand is still prevalent and supply increases.
Economy – There are several economic factors that may influence a seller or buyer, and moving forward these will likely play a role in decisions to buy or sell. For buyers, low interest rates and international economic conditions that affect our US economy could play into the decision- making process. As markets are cyclical most buyers and sellers know that low rates will not last forever. The looming Presidential election could also factor into housing, as well as international situations like Brexit and terrorism.
The bottom line is that no one has a crystal ball. Many predictions abound and feeding into them can make a buyer or seller crazy. Each individual has to consider their own factors – equity, supply, prices, external and personal economic factors. Talk to your accountant and an experienced real estate professional – but don’t wait too long because the market will change at some point.
Monday, November 30th, 2015
Winter is a busy time of year for people – the holidays are here and there are so many things to accomplish before the end of the year. You may wonder how people think about real estate at such a busy time, but believe me they do! Many wonder whether it is a “good”time to buy or sell a home now, so here are some things to consider.
Buying a Home at the End of the Year
1. Less inventory to peruse. There is typically less inventory to see at this time of year, as busy homeowners focus on holidays and accordingly wait to sell or take their homes off the market.
2. Serious sellers could = lower prices. Those who do have their homes on the market need or want to sell, and are not deterred by the holidays and slower traffic. This is a great situation for buyers, as they may be able to negotiate better prices.
3. Less Competition. With fewer buyers out looking at homes it makes it a great time to be a buyer.
Selling a Home at the End of the Year
1. Less competition inventory. There are typically fewer homes on the market during the winter/holiday season, so it is a great time to market your home.
2. More serious buyers. Unlike summertime, when there seem to be a lot of “looky-loos,(especially if you live in a beautiful area like San Diego where there are a lot of summer tourists) ” buyers out looking at homes at this time of year tend to be more serious and ready to purchase.
Buying a Home in the Spring/Summer
Buyers who wait until Spring to start their home searches tend to encounter:
1.More inventory to choose from
2. More buyer traffic, which could mean more competition and multiple offer situations
3. Prices tend to be higher
4. Shorter market times, which means less time to really look around and make a decision.
Selling a Home in the Spring/Summer
1. More inventory on the market, thus more competition
2. Prices tend to be higher
3. A larger buyer pool
The best time for you purchase a home will depend on many things. Make sure also to check with your accountant to see if there are any benefits for you that could affect your purchase window. Whenever you decide to purchase, make sure you do your homework and contact an experienced agent to assist you. Happy shopping!
Monday, April 20th, 2015
One of the most challenging situations any real estate agent can face is working with a couple where each person has different ideas on what their new home should look like, where it should sit, or what amenities it must contain. Personally, I like challenges because they are like puzzles that need to be solved; once I help buyers work through them and we find a home that makes them both happy, it is extremely rewarding for me as well.
Some buyers start out excited to look at homes and quickly realize they are not on the same page; for others it takes longer – they make find a home that one loves and the other could never imagine living in. Or they may see two homes that are very different, or in different neighborhoods, and divide on which one they would like to purchase.
Most buyer couples quickly realize that they may have to compromise a bit in order to find a home that makes them both happy. Here are some great suggestions that will help these buyers find a home that meets most of what both are looking for:
1. Make a list. This is the good-old suggestion that I always throw out there no matter what difficult decision is facing someone – I have taught my kids to do it too and it really does put things into perspective. Ask each of your buyers to make a list of things they must have in a new home, things they would like to have, those they don’t particularly care for but could possibly live with if they had to, and those things they absolutely do not care for. The easiest way to do this is to draw columns so you can compare all these things side by side. It is important that each person who is a decision maker does this along, without the help of the other decision maker(s).
Once the lists are complete, I like to look at them myself and prepare a “report,” that finds the commonalities and the complete differences. It really helps for the decision makers to see what they actually do have in common and what they completely disagree upon. It helps to discuss this together – not to argue or get frustrated, but to understand where the partners are coming from.
2. Encourage an open mind. Conflicted couples know that they will likely have to compromise (whether they like it or not), but they may not know there are other options out there that neither has considered. By encouraging them both to have an open mind, I can go to work to find properties that they may not have even considered. Armed with their lists I can research, visit homes and then report back to them – hopefully getting them to agree to have a look. I have had many couples start out looking in particular neighborhoods, yet end up purchasing elsewhere – somewhere they would never have considered in the beginning.
Similarly, a home that would have been overlooked at the start, let’s say because the yard was too small and both parties really wanted a larger yard, may be a possibility if changes can be made to expand the yard – this of course will take some research but if the outcome is positive it may open up possibilities for the buyers.
3. Decide which items each party is willing to concede. As for the items that are completely opposing in the lists that were created, the couple needs to think about which items they will each concede – in other words, where are they willing to cooperate? If one insists on hardwood flooring and the other loves a home with travertine tile flooring, can one of them live with the flooring that would not be their first choice? If one wants to be in a neighborhood that is walking distance to shops and eateries and the other wants to be more secluded, who is willing to give in and look at conceding personal desires? Of course, with a concession there is the expectation that the other party will give in as well on another point, so it is important to discuss (see number 4 below).
4. Be ready to compromise. If one person likes modern style homes and the other likes traditional, both will want to consider a compromise. Maybe they find a Craftsman home and combine interior design styles so that there are modern and traditional elements.
5. Don’t let your relationship be affected by your design tastes. Keep in mind that buying a home is a big decision, and don’t let your relationship take a toll during such an important decision-making process. It IS possible to find a home that will make you both happy, but you need to be open, willing and ready to make concessions.
Purchasing a home is definitely not an easy process, but that doesn’t mean that it should be made more difficult due to clashing personal preferences. If buyers recognize the needs of their partners and make a plan to compromise and have open minds, it IS possible to find a home that will make them both happy – I have seen this happen many times so I know it is true.
Tuesday, October 7th, 2014
I received an email from one of the preferred lenders with whom I work, telling me about a client of his who was having a difficult time deciding whether to purchase now or wait. She told him that her friends had advised her to wait to purchase, since home prices are high right now. He shared with her the report from CoreLogic that came out today, which details the rising market and demonstrates more than ever why now is a great time to buy.
CoreLogic, a leading data, analytics and global property information provider, reported this morning that home prices rose 6.4% year over year in August 2014 from August 2013. Furthermore, prices are expected to rise 5.2% between August 2014 and August 2015. According to the report, “this change represents 30 months of consecutive year-over-year increases in home prices nationally.”
The report predicts that home prices will increase .02% month over month from August 2014 to September 2015. California was named as one of the five states with the highest home appreciation value, at 9.2%. While the peak of appreciation is and will continue to slow down, the real estate market will balance out and future home buyers will have less pressure when it comes to affordability.
The data points to the fact that the market is still strong and now is a great time to buy. To sum it up, here are the reasons why buying now is smart:
1. Interest rates are still low
2. Prices are slowing down but still will continue to rise (albeit more slowly) moving forward
3. Many lenders are providing more products that will make it easier for buyers to get qualified, thus meeting the demand for loans
4. Inventory is still on the low side and market times in many areas are longer, but the majority of sellers need or want to sell so it is a great time to be a buyer.
To read the entire report click here.
Friday, October 3rd, 2014
First time buyers have faced challenges over the last several years – from qualifying for loans to finding inventory that meets their needs at the price that fits within their budgets. But the biggest challenge by far has been competition from investors.
Investors jumped back into the housing market in a big way in the last several years, often times buying up entry level priced homes for cash, thus beating out many first time home buyers who were qualified, since cash is usually a safer bet in the eyes of a seller. However, cash investors have slowed down this year, mostly due to the rise in prices.
The California Association of Realtors reports that in 2013 cash transactions dropped for the first time in seven years in California. Personally, only one of my many investor clients is still active right now, but slowing down, so this is accurate on a personal level as well.
The good news is that this offers some great opportunities for first time buyers. Although local inventory picked up slightly over the summer, it is still on the low side. Furthermore, many markets are becoming buyers’ markets, so that offers further opportunity to many buyers to be able to negotiate IF they can find a home.
The biggest challenge right now for buyers remains to be limited inventory. If you are a buyer it is imperative to find a skilled real estate agent who can understand your criteria, help you narrow down the areas and neighborhoods that you like, and be ready to view new listings and present offers as soon as they hit the market, in order to avoid competition.
First time buyers should get fully pre-approved by a lender and have a great agent on their side. They should understand the market(s) in which they are focusing, and be ready to go when the right home is found. For those who may be considering purchasing in the future, I highly recommend connecting with a real estate agent early – even up to a year early – in order to narrow down your criteria and start viewing homes and neighborhoods. That way, once you are ready to purchase you will be completely educated about the local market and the purchasing process, and you will be ready to act when the right property comes up.
Happy house hunting!
Monday, August 25th, 2014
When buying a home most buyers have a contingency period, a standard 17 days under the California Residential Purchase Contract (RPA), but negotiable by contract for longer or shorter periods. This time is meant for the buyer to conduct investigations and inspections in order to discover information about the home that may affect ownership or present hazards. Buyers can then ask for credit or repairs, or choose whether to remain bound by the terms of the purchase contract if things are discovered that may alter the value of the home. (Check your area contracts and consult with your real estate agent to understand your rights)
Let’s look at some of the types of inspections and investigations that are important during this time:
1. Home inspection. Most buyers have home inspections during the contingency period, and I always recommend them. If buyers hire a skilled inspector, he or she will be able to point out potential problems, issues or hazards that may not be obvious. I have sold homes before that looked to be in fantastic shape, only to learn of issues that needed to be addressed via home inspectors. Inspectors will not only point out possible issues or hazards, but will also recommend the buyers contact specific experts whose expertise goes beyond that of an inspector (for example, if the inspector detects high moisture readings in a room he may recommend a mold specialist).
2. Civil engineer inspection. A civil engineer is a necessary person to call out for certain types of homes, such as those built on cliffs, or where a cracked slab has been noted. If your inspector advises a call to an engineer, or if there is information in the seller disclosures that warrant doing so, I highly recommend taking the advice.
3. Roof inspection. Some home inspectors do not check the roof. Depending on the age of the roof, and any signs of leakage or information indicating such in the disclosures, a roof inspection may be a smart move.
4. Contractor inspections/estimates. If your home inspection reveals there may be repair issues needed to the structure, or if there is information in the seller disclosures that warrant, you may want to have a licensed contractor come out for an evaluation and estimate; if you are planning on any future additions or structural changes this is also a good idea, so that you are aware of any possible restrictions or code requirements (also see #6 below).
5. Other specialist inspections/estimates – plumbers, electricians, HVAC specialists, etc. A good home inspector will alert you if s/he thinks there is something that needs further evaluation. I highly recommend taking the advice and calling a specialist. If you are planning on asking the seller for help with repairs or replacement, you will know the cost of doing so, so that you can make sure you ask for the correct amount of credit or repairs.
6. Investigate permit issues. This is an issue of which many buyers and agents are unaware. If the home you are purchasing has had any alterations or additions in the past, you need to see if permits were pulled. Usually you can do this easily with a visit to the County or City offices, or wherever building codes are enforced and records are maintained.
If you know of any past alterations or additions that should have been permitted, but cannot find permits filed, you need to understand your liability down the road – and this can vary depending on local rules and regulations. For example, if there was an addition that wasn’t permitted and down the road you decide to apply for a permit to do some other additions or work, the inspector can site you for the previous additions when s/he comes out to inspect your current project. This means that you could be liable for getting any past unpermitted work up to code. This could cost you a lot of money, so make sure you know what you are up against before you buy.
The importance of the contingency or investigatory period is great. Buyers should exercise discretion and listen to suggestions made by their home inspector and real estate agent on which experts may be needed, as well as pay close attention to what is revealed in seller disclosures. Paying a bit extra for peace of mind that you are buying a sound home (or knowing what issues may be present if you are purchasing a fixer-upper) is well worth it.