Newport Beach, Newport Coast, Crystal Cove and Coastal Orange County, CA Real Estate with Michael Salas 949.370.7792

In the hot market of years past, I used to hear this question frequently. Today, not so often, but it still comes up.

The number one reason for hiring a real estate agent is market exposure. If you’re selling your home yourself, you’re marketing to a limited audience. If you have a sign in front of your house, you’re limited to reaching the people who drive by. Even an ad in the local paper reaches a limited market. The way to ensure the highest and best price for your property is to expose it to every single person out there looking for a property—and that’s done through primarily the Internet, direct mailings, print advertising, the Coldwell Banker network and agent networking (marketing to agents). When you factor in what you save versus what you might be losing, you’re better off using a real estate agent. Consider this question: Have you made more money in your life, or saved more? It’s the same in real estate. The bottom line is not whether you save the commission, but what you net at the end of the transaction. I recently watched an owner sell his own house. He was determined to save the commission, and he did—but he sold his house for $85,000 under the most recently sold comparable homes! In the end, he lost much more than he saved. The National Association of Realtors found that agents can sell houses for 27 percent more than people selling themselves. And today in our California market, the disclosure laws have become so burdensome that a person selling his or her home without full knowledge of disclosure requirements could leave themselves exposed to legal action. You’re far better protected if you have a real estate agent who knows the ins and outs of the law and can expose your home to the broadest possible market. I could go on about this topic, but for now, this is enough. I will write more on this from time to time.

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Welcome to the Newport Beach Real Estate Weekend Mortgage Rates Update.

 

My aim is to bring you the most current mortgage rates for your weekend house hunting and decision making. 

 

Tim Sibley from First Capital Mortgage, in Newport Beach, is providing this information.  

 

 

I hope this information is useful. Have a great weekend!

 

 

 

 

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If you borrow money — doesn’t everyone? — You know your FICO score is important. The Fair Isaac folks, the ones that deliver FICO scores to lenders, insurance companies, employers, etc., recently announced they are changing the way they calculate the scores.

If you are thinking of looking into a mortgage loan, car loan, any type of credit, you will want to keep up and know the score — Check out this video from Money Talks News.

It usually takes, at least, a month or two for changes to appear in your credit score — planning now may make a difference.

While it may not be easy to change your scores, it is easy to get a free once-a-year look at your history, go to Annual Credit Report and get your copy.

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Welcome to the Weekend Mortgage Rates Update.

 

My aim is to bring you the most current mortgage rates for your weekend house hunting and decision making. Tim Sibley from First Capital Mortgage, in Newport Beach is providing this information. Take a look at these rate tables  and listen to Tim’s podcast.  

 

 

I hope this information is helpful. Have a great weekend!

 

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The Stimulus Plan - Conforming Loan Limits. This is a hot topic!

 

I want to try (emphasis on “try”) to tell you about this, but stay tuned, because all of this Conforming Rate information is confusing and changing daily.  As most of us know, The Economic Stimulus Plan has been signed by President Bush and is now law. Breathe a deep sigh of relief here! Well, all that glitters is not gold. After a discussion today, with our Mortgage Guru, Tim Sibley of First Capital Mortgage, I came away informed and slightly confused. Not Tim’s fault.  Tim shared the following memo with me. Of course, I am going to share the memo with you. Read it for yourself and see what is being given out to mortgage broker’s today. Everyone is learning about the new guidlelines.  The missive was sent to him by one of his lenders. Of course, Tim has some thoughts and observations on the whole thing. But wait, I’m getting ahead of myself. Let me give you some more of the facts.

 

The GSE’s (Government Sponsored Entities ~ Fannie Mae and Freddie Mac) and HUD (Department of Housing and Urban Development) now need to determine how they will implement these changes and communicate the product and process guidelines to mortgage investors and lenders.  While mortage companies are working diligently to release new products as soon as possible, most of them must wait for formal communication of the guidelines before finalizing the approach to the new legislation. The new conforming rate for Newport Beach real estate (probably most of Orange County) will be $729,750. I don’t know about you, but that seems like a strange number to settle on.

 

One of Tim’s observations – Some of the programs just don’t make sense. For example, one product, a 5-Year ARM, has interest rates into the 8% range. Whoa! That’s getting up there. I thought this program was supposed to save us money. There are better programs around without having to pay such a steep rate. The names of these programs are interesting; Conventional Conforming, Agency Jumbo, Conforming Jumbo and, old faithful, the Jumbo. Each will have it’s own interest rate structure. I would say this is where you really need an expert to guide you through all this muck. 

 

The following is a memo from one of Tim’s lenders…it does make for interesting reading. The status is changing daily. Enjoy…

 

For Conventional Conforming Business

 

Here’s what we can tell you thus far for Conventional Conforming loans… again nothing is final until Fannie Mae/Freddie Mac and HUD make their formal announcements.

 

Fannie Mae and Freddie Mac need to consider many factors as they determine how to implement the new products. Once they have, they will send a formal announcement with the details.  The general target for release by the GSE’s is the beginning of April.  Because it is a temporary measure, this will not be as quick and easy as past increases to the maximum loan limits that were tied to home price appreciation.

 

Below are some high level details that Fannie and/or Freddie have provided to date:

 

• The new legislation sets maximum loan amounts based on calculations tied to the HUD Median House Price amounts:
  • The maximum loan limit will be increased to 125% of the HUD Median House Price based on Metropolitan Statistical Area (MSA) up to 175% of the current conforming limit, never to exceed $729,750 for a single-family property
  • The new loan limits will not be uniform across the country
  • HUD is required to publish revised median house prices to implement the legislation within the next 30 days
• Product parameters will be more restrictive than conforming products:
  • Full Documentation and Full Appraisals will be required
  • 660 minimum credit score
  • 90% LTV maximum for primary residence purchases and rate/term refi’s (lower LTV limits for investment properties,  second homes, and cashout refi’s)
  • 0×30 on all mortgage debt in past 12 months
  • 12 months minimum seasoning for cashout refinances since prior refinance
  • Full project review required on condos
  • The declining markets policy will be in effect (5% reduction of maximum LTV / CLTV for properties located within a declining market)
  • Product types will likely be limited to 5-yr ARMs (P&I and IO), 15- and 30-yr fixed P&I products
  • Full documentation means that variances such as VIP will not be eligible for loans within this product
• There will be special Pricing and Delivery requirements
  • Pricing will not be the same as current conforming product (we expect pricing to be somewhere between current jumbo and conforming pricing)
  • Because of the special requirements, PHH will release new products to identify these separately

Please note: the abovementioned product parameters are based on preliminary guidance only and are subject to change by Fannie Mae and/or Freddie Mac.

 

For FHA Business

 

We have not received any information as to whether or not HUD will impose any additional LTV, credit, or documentation requirements beyond standard guidelines for FHA products. As we become aware of these details, we will let you know.

 

Regarding HUD Sales Price Limits, the following describes how HUD derives their limits and how this new Law impacts these calculations.

 

For most areas, FHA limits are set at 95% of the median home price for the area.  However, there are Floor and Ceiling limits that are applied to low and high cost areas.

• Floor: The 1-unit “Floor” will now be $271,050 (currently $200,160)
  • The “Floor” is derived from calculating 65% of the conforming limit for 1-unit properties (previously calculated using 48%)
  • The “Floor” is used for areas in which 95% of the median home price is less than $271,050
• Ceiling: The 1-unit “Ceiling” will now be $729,750 (currently $200,160)
  • The “Ceiling” is derived from calculating 175% of the conforming limit for 1-unit properties (previously calculated using 87%)
  • The “Ceiling” is used for areas in which 95% of the median home price exceeds $729,750

As is the case for GSE eligible loans, exact limits per MSA cannot be determined until HUD releases the latest Median Sales Prices per MSA and confirms each MSA’s maximum loan limit.

 

As we find out more, we will send you updates…

In the interim, if any Real Estate Offices or Clients ask, you can let them know that we have been working on this for some time now, and we will react quickly once the GSE’s and HUD make their formal announcements.

 

~End of Memo~

 

You can see from the above memo, even the lenders have not figured out all of this stuff. 

 

Beyond the new Conforming Loan Limits, I know, from talking with Tim, loans are being made. There are great rates and programs available. I would suggest and strongly advise, in these uncertain financial times, seek out a true mortgage professional, like Tim Sibley, to assist you with obtaining a mortgage. Give Tim a call at: 949.718.1511. It will be a smart move and probably will save you a lot of money.

 

 

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Occasionally, I meet young couples who are getting married and are thinking about building wealth with real estate in Newport Beach. They are not in a position to purchase their dream home and the idea of living in a condo is not appealing. They ask my opinion of purchasing a duplex.

I think that buying a duplex is a great option for people (married or not) just starting out in their real estate investing life. You’ve basically have someone else helping you purchase your real estate—because taking into consideration the income you’ll receive from the other half of the duplex helps you qualify for more of a loan than you’d get if you were just buying a single-family home. Let me be clear about this — when you apply for the mortgage loan, the lender will ask, what is the income from half of the property? The lender will count this as “Income”. In addition, because you will be living there, the duplex will be your “Primary” residence, you will qualify for a lower mortgage rate. If you have a 720+ FICO score and assets in the bank, at least 20% down — you are golden!

It’s a great way to start out. Assuming you’re going to do well in your career so that you can later afford to buy a home, the duplex can become the piggy bank for purchase money and be your first rental property. You’ll be starting out on a smart path to building wealth with real estate.

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While roaming through the real estate blogosphere recently I came across Laurie Manny’s blog.  A video I watched while visiting her site was astounding. I just have to share this with you. Have you heard of “Bump Keys?”

In Newport Beach, Newport Coast and Crystal Cove a lot of money is spent on security. Can you imagine someone with just a few dollars in tools could enter your home without any signs of a forced entry? The insurance folks would love that part. It doesn’t matter where you live – your home is your castle – full of things that cost real dollars and items that are irreplaceable. How would it feel to know within seconds someone could enter your home and take these things from you? Watch this video and if you take precautions, save yourself from the possibility of losing your valuables. 

Bump Keys in the News

 From the Perspective of a Locksmith

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While enjoying a glass of my homemade Zinfandel, I began to think about wine and real estate. As the amount of wine in my glass began to diminish, I began to ponder this question; What’s the relationship between wine, (is that fine wine or TwoBuck Charlie?) and real estate here in Newport Beach, California?

Well for starters, like wine bottles, homes in Newport Beach comes in many shapes and sizes. Just like a bottle of wine, who knows what you’ll get before you pop the cork or, shall we say, open the door. Go into the wine shop and start checking out all the bottles — Yikes! There is so much to choose from. Lots of inventory — heard that one lately? The prices — well, as any wine lover would say, you can spend a little or drop a ton. But, hey, it all goes down the gullet, whets the whistle and the effects will basically be the same. Well, you need a roof over your head and can you live with a one bedroom condo or do you need that super luxe resort home with the drop dead view? I’m thinkin’ Napa Cabernet!

The nose — pour it — let it breathe — give it a swirl — and, ahhhh, let it speak to you. What do you get? Blueberries, Raspberries, Lemon Chiffon Pie, Mint, Leather — there is so much to gain from taking that first whiff. Sorta like driving up to a house — take one look, drive-on or get out and check it out. What’s inside can sway you — is it clean, uncluttered, does it have pet odors — all of this can effect your taste — or should I say, opinion of the home.

Now, take that first sip, chew on it, thrust it around in your mouth — too much oak — just right — acid, just nice and crisp, swallow and now we’re talkin’ — it’s a good one. Was it an expensive wine? You know what the researchers are saying about the price of wine and our perceptions of quality? Well, suffice to say, our brain tricks us. Have you known people to say they want to live in this or that community because the perception was it was better because the price of admission was higher? Just like fine wines — Snob appeal. Pure and simple. It’s not a value judgment — it’s just the way it is.

Finally, the finish — are you left with a pleasant taste — does your mind start to race with the pleasant feeling of the wine going down? It makes me think about leaving a home I just toured — do I think about it, what is the feeling I am left with — good, bad or just indifferent.

Ah, after that fine meal and great bottle, let’s move on to the dessert wines — got a craving for something sweet — maybe a late harvest Zin Port with a little chocolate. Just like at the end of the day, kick off the shoes go out and soak up the backyard, the pool, the trees, the view. Man, this is livin’! Pass the bottle.

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