Last Chance: 3.5 Percent Down- Bay Area Real Estate

Mortgage industry changes: Low rates and terms may soon be history

You are going to be hearing a lot about restructuring the mortgage industry in the next months and years.

But the bottom line for home buyers is buy now and get financing in place by as early as May. The great terms of recent years will soon be gone, and probably gone forever.

Experts say you will probably never again see down payments in the 5 percent range (even now becoming harder to find) or 30-year fixed rates under 5 percent.  The median down payment in nine major U.S. cities rose to 22 percent late last year. This was the highest requirement since 1997 on properties purchased through conventional mortgages, according to a Wall Street Journal report.

In many areas, however, a down payment of only 10 percent of the mortgage amount could be available for people with high credit scores.  The lowest down payments are still offered by the Federal Housing Administration, FHA. They will finance a home with a 3.5 percent down payment.

But a recent Obama Administration white paper on the mortgage industry hints that this very low down payment might change as the federal footprint in the mortgage market shrinks.

According to CNN Money, Congress will be considering raising FHA down payment requirements, approving higher insurance fees for FHA mortgages, and changing rules for ‘qualified’ mortgages. This could mean higher interest rates for consumers and higher down payments, perhaps up to 30 percent.

With its low down payment requirements, low interest rates, and lower credit score requirements, FHA now has a 30 percent market share in the mortgage arena but plans are to reduce its activity to just 10 percent.

Administration officials say the planned process could take some time, but it might include phasing out federal backing of Fannie Mae and Freddie Mac. Since the mortgage crisis began, the government has bailed out the federally backed entities to the tune of $150 billion.

Please keep in mind that I’m always available to serve you and others with the best possible home financing programs.

FHA Loans Could Undergo Changes-Bay Area Real Estate

With its extremely low down payment, the Federal Housing Agency (FHA) loan is the primary method for financing for homebuyers across the country. According to a recent Wall Street Journal article, the FHA loan will be undergoing some changes that could have a major effect on affordability.

“About 56% of mortgages for a home purchase were FHA-insured in 2009, up from 6% in 2007,” reported the WSJ. According to the Mortgage Bankers Association, up to 80% of those who received an FHA loan were first-time homebuyers.

Currently these loans can be for up to $729,750 in high-cost markets, but the Obama administration is recommending that these high limits expire in October. $625,500 would be the new high limit.

More changes to the FHA program are seen on the horizon. “On April 18, the annual mortgage-insurance premium on new FHA loans is set to rise by a quarter of a percentage point on 30- and 15-year mortgages,” states the article. In addition, some predict that the standard 3.5% down payment could soon rise to 5%.
What do you think about these expected changes to the program and the impact it might have on the market?
For more helpful information visit http://www.bayareahomebuyersinfo.com/

What to know about fire extinguishers-Bay Area Homeowner's

I’d like to share some homeowner tips with you. As you may know, the use of more electric and natural gas appliances in our homes creates the opportunity for fire.

·         A two-story house should have a fire extinguisher on both floors.

·         Keep an extinguisher in the kitchen, since more fires start there.

·         Keep one in the bedroom, especially if there is a smoker. Even if there isn’t a smoker, if you’re headed for another room to fight a fire you can grab the one in the bedroom.

·         Fires are a threat in the garage, laundry room and a child’s room. Why not place an extinguisher in each?

·         An ABC fire extinguisher covers these categories: Class A: Wood, cloth, paper, rubbers and other ordinary combustibles. Class B: Flammable liquids such as gasoline, oil, grease, tar and oil-based paint. Class C: Electrical appliances, wiring, circuit breakers and fuse boxes.

·         Consider a medium-sized (60 ounces) or larger model (80 ounces) for a fire that may rage on.

For more helpful resources visit BayAreaHomeBuyersInfo.com!

Avoiding the 10 most common tax mistakes-San Mateo County

Here are some money-saving strategies to consider when planning your taxes.

Avoiding the 10 most common tax mistakes

1.      Failing to keep good records. Use tax preparation software and basic file folders for file statements.

2.      Not withholding the right amount of taxes.

3.      Getting help when it’s too late. A tax pro can help you no matter what your circumstances are.

4.      Not contributing to a tax-deferred investment program.

5.      Not replacing personal debt with mortgage debt to the extent possible. You may want to consider a home equity loan to pay off your personal debt.

6.      Forgetting to check last year’s income tax return for important items, such as carrying forward any losses.

7.      Not taking a profit because you’re afraid to have a capital gain.

8.      Choosing the wrong filing status.

9.      Anticipating a large refund. If too much in taxes is withheld from your paycheck, the IRS is getting an interest-free loan.

10.  Forgetting to attach the right copy to your tax returns.

For more helpful resources, vistit BayAreaHomeBuyersInfo.com

5 Rules for Mortgage Insurance Tax Deductions

March 25, 2011

President Obama has signed a bill that has extended the tax deduction of mortgage insurance through 2011.  Here are the rules to remember in regards to this tax deduction:

1. Your purchase or refinance loan must close before Dec 31st, 2011.

2. Household income must be $100,000 or less to get the full write off of the insurance premium.

3. The amount of the write off is reduced by 10% for every $1000 over $100k,  with it phasing out at $109,000.  This means if you make over $109k as a household you can not write off mortgage insurance.

4. It applies to your primary home and one other residence that the tax payer uses.

5. All forms of mortgage insurance qualify for this.  So if you have a FHA or conventional loan, they qualify.  If you have paid upfront mortgage insurance with a VA, FHA or USDA loan you can also use this as a tax deduction.  The amount is just divided over a 7 year period.

The above is not intended as tax advice. Seek out a tax professional for advice about mortgage insurance deductions.

VA Home Loan 101 - Bay Area Real Estate

So why should a Veteran choose a VA Loan over a conventional home loan? There are a number of reasons, but most Veterans who have used a VA Loan say the number one benefit is that there is no down payment required.

Another noteworthy benefit is that VA Loans tend to have lower interest rates than conventional loans, and they are easier to qualify for as well.

The VA also offers these looser qualification requirements for Veterans because of their understanding of the sacrifices Veterans have made for our country; it’s a nice way of saying “thank you.” Because of the guaranty from the VA lenders are also much more likely to approve higher-risk borrowers.

Another reason to choose VA Loans is because borrowers do not have to pay private mortgage insurance (PMI). Unlike conventional and FHA financing, Veterans do not have to bear the burden of mortgage insurance payments without a substantial down payment for their loan.

Once you’ve earned your entitlement to a VA Loan, there is no specific time limit for choosing to use it. As long as you are eligible for a VA Loan you can use your entitlement. You can also use your entitlement again if you have a VA home loan that uses your guaranteed entitlement and you pay the loan back by getting a new loan by refinancing or purchasing a new home.

However, if you transfer the loan to another person by letting them take over payments on your existing VA loan, then your entitlement is still in use with this loan and you can’t get another VA home loan until that loan is paid off.

Another benefit of taking out a VA Loan is that approval is not based on credit score nor will your credit score affect your rate. Since approval is based on a number of factors including income and job stability, less than stellar credit will not stop you from getting a VA Loan. However, having a clean credit history for the past twelve months will factor into whether or not you will be issued a loan.

Also, having a past bankruptcy or foreclosure does not automatically eliminate you from taking out a VA Loan. While conventional lenders will not issue a loan within four years of a bankruptcy, the VA only makes borrowers wait two to three years.

Of course, there are a number of other factors that go into whether or not you qualify, but if your bankruptcy was more than two years ago it will not be an issue when applying for a VA Loan. Two to three years must pass following a foreclosure for a Veteran to be issued a VA Loan. However, a borrower will be unable to qualify if the previous foreclosure was on a VA Loan.

The current maximum VA loan limits for Alameda, San Francisco and San Mateo counties is $1,000,000 and apply to all loans closed January 1, 2011 through September 30, 2011.

For more information please visit

www.CAVALoans.com

First-Time Buyers Fading

March 8, 2011

According to a recent report in the Wall Street Journal, the domination of cash-buyers and investors has been steadily increasing since July.

Capital Markets reported that “cash buyers and investors together have driven 70% of the increase in existing home sales seen since last July, while first-time buyers have been responsible for just 6%.”

This means that home prices are lower, and are expected to continue decreasing as demand for home weakens.

Locally, Santa Clara and San Mateo home sales are also dominated by cash-buyers and investors. As more homes are pushed to sale via foreclosures, demand will lower along with housing prices.

Maintaining Your Sphere of Influence: Events

With any sphere of influence, there are those that are more valuable – that refer their friends and associates to you. Susan Castaneda and Shawn Miller, successful real estate agents, emphasized that it is vital to keep these relationships strong, and make these people feel special.

Putting on events free to past clients, or the VIPs of your sphere, is a fun way to reconnect and to solidify these relationships. This applies to any small business owner, self-employed person, or entrepreneur – the people you know can give you referrals, giving you business.

“Every year we rent out the local downtown Los Gatos movie theater and have a showing of the big kids’ movie of the summer,” said Shawn. “We go in with other agents, which really helps out on the cost of throwing these events. The families look forward to it, and we have a barista to make the parents lattes and a chocolate fountain at the theater.”

Less high budget events are easy and fun, such as renting out a few lanes at a bocce ball court or bowling alley, hosting a summer barbeque, or maybe even a kids day at a local pumpkin patch. “The important part is to make them feel special and valued,” said Shawn.

They advise maintaining mailers and phone calls and making an effort to consistently stay in touch so the events don’t feel “awkward.” They also recommend trying to take at least one past client to lunch or dinner each week.

Events don’t need to be flashy or expensive to have an impact. Face-to-face events that make the people in your sphere feel valued and enjoy themselves are a powerful way to maintain the strength of your sphere of influence over time.

photo credit: TinyTall