Archive for May, 2008
May 19th, 2008 -- Posted in Lending Info |
Interest rates are getting better on the
new conforming loan limits!!!
Â
It is now starting to come to fruitionÂ
that the new conforming loan amounts
between $417K-$729K are getting the lower
interest rates we had expected
when the stimulus package came out.
The rates are getting very competitive
to the $417K and under original
conforming loan amounts.
Â
As an example the interest rate on a
30 year fixed Full Doc qualification,
purchase for the higher conforming
loan amounts are at 6%.
Â
Rates are awesome so this is a
great opportunity to take advantage of this
money to purchase a home!!
May 16th, 2008 -- Posted in La Times, Local LA Real Estate News |
In an article on Wednesday plans to close to state parks was abolished. Read below:
If state’s numbers don’t come up, bet on a sales tax hike
The governor’s budget hinges on borrowing against lottery funds.
By Evan Halper and Jordan Rau
Los Angeles Times Staff Writers
May 14, 2008
SACRAMENTO — In his latest plan for closing a budget shortfall now estimated at $17.2 billion, Gov. Arnold Schwarzenegger will propose giving voters a choice between borrowing against the state lottery and paying more sales tax.
The sales tax proposal is a turnabout by Schwarzenegger, who came to office as an anti-tax crusader and throughout his tenure has steadfastly insisted he would never consent to new taxes. In recent days, the administration repeatedly denied reports that it has been laying the groundwork for a sales-tax increase.
Deep cuts in services would still be needed to balance the budget. According to advocates and lobbyists briefed by the administration, Schwarzenegger will propose reducing health services for the poor even further than he had suggested in January, in his initial spending plan.
At the same time, he is walking away from some cuts he proposed then that triggered loud howls of protest.
Schwarzenegger Communications Director Matt David said the latest proposal restores billions of dollars in school spending and abandons plans to close 48 state parks and release tens of thousands of prisoners early.
The governor’s new plan, to be released today, has already drawn resistance from GOP lawmakers, who have pledged to vote against any new taxes.
The lottery proposal, according to David, would come before voters as early as November and hinges on administration estimates that California could borrow against future profits to generate as much as $15 billion over three years.
The governor also will propose changes to the lottery intended to lure more gamblers, such as increasing payouts and updating the games offered by the state to include blackjack and poker themes.
Under the plan, if voters rejected the borrowing, or if the proposal fell through for any other reason — such as lawsuits or lack of a viable lender — state sales taxes would automatically increase by 1 cent to cover the loss.
The sales tax increase would stay in effect until the state’s finances were out of the red, for up to three years. A 1-cent sales tax increase would generate roughly $6 billion per year, according to state statistics.
Republican lawmakers, who support squeezing more cash from the lottery to help close the budget gap, said the governor’s plan to link it to a sales tax is a deal breaker.
“This is not something we can support,” said Assembly Republican Leader Mike Villines of Clovis. “The lottery is a great asset that we can use to pay down debt, but tying that to a tax increase is fundamentally the wrong way to go.”
The tax trigger would not go before voters but would need approval by two-thirds of the Legislature, requiring the support of at least eight Republicans.
Administration officials defend their plan as a responsible way to bring long-term balance to state finances.
They note it includes spending restraints, which would also go before voters, that would force the state to put billions of dollars into a rainy-day fund. It also would refund some of the new sales taxes if the state began generating budget surpluses.
Democrats say they will keep an open mind. State Sen. Darrell Steinberg (D-Sacramento) said the state will need even more new revenue than Schwarzenegger is proposing.
“But we may not have the luxury of discounting any potential source of revenue to avoid devastating cuts,” Steinberg said.
A similar plan was enacted under former Gov. George Duekmejian in the early 1980s. But voters never had to pay the tax because revenues picked up and the state made its way out of the red before the 1-cent sales tax kicked in.
Schwarzenegger’s proposal may be more likely to hit voters in the wallet.
It is linked to changes to the lottery that could run into legal trouble and resistance from well-funded gambling interests that could finance a significant campaign against competition from an expanded lottery.
Some of the biggest new cuts in the governor’s budget are aimed at Medi-Cal, which provides healthcare for the impoverished, including people receiving in-home support services.
The January version of the budget had $4.7 billion in healthcare cuts, including termination of Medi-Cal coverage for dental work and optometry, and increases in premiums for the state’s Healthy Families program.
Healthy Families provides medical care for about 800,000 children whose parents earn more than the poverty level but still are low-income.
The changes restrict eligibility for these programs. But defenders of in-home supportive services, which the governor has selected for cuts in the past, have noted that it is far cheaper to care for ailing people in their own homes than to put them in nursing homes.
The administration sought to brace healthcare advocates in a private briefing Tuesday. Aides to the governor said they have not given up trying to expand healthcare in California — the goal of a $14-billion Schwarzenegger proposal that the state Senate rejected in January — but it would have to wait at least until next year, according to people at the meeting.
Healthcare advocates said they were not assuaged and plan to loudly criticize Schwarzenegger’s proposal when it is formally released.
Schwarzenegger’s decision to drop his prisoner release plan will allow him to avoid continued protest against it. The proposal infuriated law enforcement and victims’ groups, and no state legislator has agreed to sponsor it in the nearly five months since he offered the idea.
Matthew Cate, Schwarzenegger’s newly appointed secretary of corrections, said projections for the state prison and parole population had fallen enough that the early release plan was no longer needed to save money.
“We agreed the first thing we’ve got to do is take the early release off the table,” Cate said. “We’ve got a golden opportunity here to do that, and that’s what we’ve done.”
Since January, the state has cut its projection for the prison population next year from 177,000 to nearly 171,000, and the estimated number of those on parole was cut from 133,000 to 123,000.
evan.halper@latimes.com
jordan.rau@latimes.com
Times staff writer Michael Rothfeld contributed to this report.
May 12th, 2008 -- Posted in Home Ideas and Tips, Local LA Real Estate News |
“Beauty is in the eye of the beholder” is never more true than when purchasing a home.
No one needs to remind sellers that today’s market is a challenging one. In fact, there are on average more than 11 months of inventory on the market at any given time.
So it is vitally important that you make sure all of your listings stand out above the others that are competing for the buyer’s attention.
Here are some very basic pointers you can print out and share with home sellers to help get them headed in the right direction:
1. De-Clutter: This one is simple. De-clutter everywhere; inside and outside. If it’s taking up space it is a potential candidate to be thrown out. The sellers need to make that all important mental conversion from “home to live in” to “house for sale.” Personal things are a big distraction as you want the buyers to be able to visualize their own belonging in the house.
2. Repair: Buyers want everything working so don’t disappoint them - dripping faucets, broken windows, leaking roofs, damaged walls and doors, etc, beg the question in the buyer’s mind…What else is broken or doesn’t work?
3. Lots of Light: The last thing home buyers want to see is a dark home with all of the doors and windows covered. Let the light in and open some windows to let in some fresh air. Room deodorizers leave the impression of covering something up as does a window that has the blinds drawn.
4. Clean Windows: Buyers want to know and see the view they will have from every room - don’t make them look through dirty windows. If they do, the impression of a having great view is literally going “out the window.”
5. Kitchen and Bathrooms: Two of the most important rooms in the house. They must be spotless and first class. Just cleaning up isn’t going to be good enough - you need to “deep clean” all counters, floors, cabinets and all the fixtures in the bathrooms. In the bathrooms consider new fixtures or countertops and perhaps redoing the shower and tub enclosures. If new fixtures are not in the budget you may want to consider having them refinished. Think about having all the tile steam cleaned and make sure all grout is free from grease and dirt.
6. Odors: Absolute deal killers are cigarette or pet odors. If this is a problem - have the drapes, carpets and furniture professionally cleaned and please…”no smoking” in the house. Also, cooking odors are not a good thing. The best bet is to always for plan fresh air. Often a little lemon oil mixed with water in a spray bottle used lightly used will add just a bit of freshness without overpowering the house.
7. Paint: A fresh coat of paint on the outside or inside is an excellent way of freshening up your home. Be sure to use neutral colors and avoid accent painting. Don’t try and guess what a potential buyer will like. In most cases they should use a professional painter because it’s always a bigger job than most people think.
8. Yard Work: Deal with overgrown bushes, shrubs and trees. Everything in the yard needs to be trimmed, watered, manicured and “living.” Remove everything lying around the yard including sports equipment, boats, trailers, toys, etc. You may also add some color by placing some annuals in planters in the back as well as in the front. Curb appeal makes that all important “first impression.”
9. Furniture: The bottom line… less is best. If it’s old, worn or dated, you should put it in storage. Remember that you are setting a stage and the actor needs to be the house - not their furniture.
10. Hardwood Floors: Hardwood floors can be a huge plus for buyers unless they look like a 20 year old basketball court. It may be a great investment to have them all refinished - but keep in mind that it’s not a simple weekend project.Â
Changing “lived in homes” into “houses for sale” is what it’s all about.
May 9th, 2008 -- Posted in Lending Info |
|
“KNOWLEDGE IS POWER.” It’s a phrase used by many, and last week was an important one to be in the know, as Bonds and home loan rates were affected by many big newsmakers and market shakers. Bonds and home loan rates found some improvement in the early part of the week, leading into the Fed’s big announcement on Wednesday of another .25% cut to the Fed Funds Rate. Typically, Bonds and home loan rates react poorly to Fed cuts, due to the increase in economic activity that lower Fed rates can cause, which turns into higher inflation. However, the Fed’s Policy Statement hinted that the present rate-cutting cycle may be nearing an end. As a result, Bonds and home loan rates reacted favorably to the Fed’s action.
However, speaking of inflation, the Fed’s most favored measure of it - the Core Personal Consumption Expenditure Index - arrived on Thursday, showing core inflation at 2.1%, just a whisker above the Fed’s desired range for inflation of 1 to 2%. This read wasn’t great news for inflation-sensitive Bonds…but the resulting market action was nothing, compared to what happened when the Jobs Report arrived on Friday morning.
Talk about a real mover and shaker…the Jobs Report brought word of 20,000 jobs lost in April, which was better than market expectations of 75,000 jobs lost. Initially, Stocks rallied higher and Bonds worsened dramatically, as the headlines were so much better than had been anticipated. But when the details of the report were unpacked, showing prior months worsening revisions - as well as a sobering realization that 20,000 jobs lost is still lousy news - the markets quickly reversed direction, helping Bonds and home loan rates improve once again. Another ultra volatile week - and when the dust settled, home loan rates improved by about .125% overall.
DID YOU KNOW THAT IN PARTS OF THE COUNTRY WHERE HOUSING VALUES HAVE REACHED A PLATEAU OR DECLINED…HOMEOWNERS MAY BE PAYING TOO MUCH IN PROPERTY TAXES? CHECK OUT THIS WEEK’S MORTGAGE MARKET VIEW FOR SOME POWERFUL KNOWLEDGE THAT COULD SAVE YOU HUNDREDS - OR EVEN THOUSANDS - OF DOLLARS A YEAR!
|
 |
|
|
Last week’s full economic news calendar led to some wild days, especially on Friday, as you can see in the chart below. But this week’s economic calendar is significantly calmer, with only a few low to mid-impact reports in store, including the Institute of Supply Management (ISM) Report on Monday, Pending Home Sales on Wednesday, and Initial Jobless Claims on Thursday.
If the news of the week tends toward being negative for the economy, Stock prices may suffer in response, and money could flow right into Bonds, which would cause home loan rates to improve. Additionally, Stocks have been in rally mode lately, and might be due to take a breather. While the coming week’s economic reports aren’t expected to be movers and shakers like the headlines from last week, count on me to be keeping a close watch on the market and staying in the know on your behalf in this very volatile environment.
|
| |
|
|
DON’T OVERPAY… FILE A PROPERTY TAX APPEAL
Property taxes seem to jump up year after year. Unfortunately, we’ve become so accustomed to rising taxes that it’s no longer a surprise. But here’s something that may surprise you. Did you know that over the last eight years, property taxes have actually outpaced even inflation? Those rising taxes - combined with the recent plateau in home values in some areas - mean you may be paying more than your fair share.
In fact, the National Taxpayers Union estimated that as many as 60% of home values were assessed too high, resulting in an incorrectly larger property tax bill.
Based on recent market activity and the rising property taxes across the country, there’s a chance you may be in the group of people paying too much. In fact, homeowners in declining markets are receiving solicitations from companies that charge up to $250 to help lower property taxes. But with the steps below, you can work with your local County Assessor to lower property taxes for free…and save yourself the $250!
The good news: it’s easy.
First, contact your local tax assessor’s office and ask for someone in the reassessment area. Find out when appeals are heard, and how the process for submitting a property tax appeal works.
Additionally, ask for a copy of your property card. Review the card and confirm that the basic information about your property is correct. For example, is the square footage and number of rooms for your home accurate? If the number is incorrect, the county may change the assessment without a formal appeal. If everything on the property card is correct but the assessed value still seems too high, your next step is to gather the following documentation to support an appeal. And don’t be surprised if the assessed value is lower than what you think the market value for your home is–many counties use a formula which uses a percentage of market value to determine assessed value. Ask what the formula is… because an assessment that is less than market value still might be too high.
If you have a current appraisal that supports the value being lower using recent market-value information, many counties will accept a copy of the appraisal with the appeal. If the appraisal is outdated, you can order a new one–just call me for a referral to a great appraiser. You can also visit the local assessor’s office or search online, and look through the public records for other homes that have similar features to yours, but have lower assessments. They will be able to give you current market information for your neighborhood, and help you see how your market value and assessed value stacks up against your neighbors.
Submitting an appeal is generally a fairly simple process, but make sure to take the time to fill out all forms in advance and be prepared with your documentation if there is an in-person hearing that needs to take place.
More good news…
According to the National Taxpayers Union, about 33% of property tax appeals succeed! Taking the time to review the accuracy of a tax bill could easily save you hundreds of dollars per year, adding up to thousands of dollars during the time you own your home. Please feel free to contact me for more information on this money-saving tip.
|
May 9th, 2008 -- Posted in Lending Info |
Credit crunch expands to cash-out refinancing, investment properties and vacation homes
New policies change the ground rules for cash-out refinancings, investment properties and vacation homes.
By Kenneth R. Harney, Washington Post Writers Group
May 4, 2008
WASHINGTON — Like a spreading infection, restrictions on credit are moving into more specialized niches of the mortgage market.
The latest to feel the pinch:
* Cash-out refinancings.
* Loans with less than full documentation of borrower income, credit and assets.
* Mortgages for certain second-home purchases.
* Investment loan applications in which the buyer already owns at least three other rental properties.
* Mortgages to borrowers with nontraditional credit.
* Short-term construction loans that convert to permanent mortgages.
* Adjustable-rate mortgages in which the first adjustment occurs within 60 months after closing.
In a move scheduled to take effect for all loans delivered after Aug. 8, Freddie Mac will restrict financing to second-home and investment purchasers who already have “individual or joint ownership” interests in multiple properties. In the case of second-home buyers, they will be ineligible for new mortgages through Freddie if they have ownership interests in more than four properties securing debt, including the one they propose to finance.
Similarly, loans for rental houses, rental condos and other investment properties will be ineligible if the borrower has ownership stakes in four units. Previously, Freddie allowed investors to own up to 10 rental properties carrying mortgages.
Freddie Mac also announced new cutbacks on refinancings in which the property had secured a “cash-out” within the previous six months. The company defines a cash-out as any refinancing in which the replacement loan balance exceeds the previous balance by 5% or more. Recently, according to the company’s quarterly surveys, more than 80% of refinancings involved equity-depleting cash-outs.
The rule changes, Freddie Mac said, are designed to “reflect the risk of these transactions” in the wake of post-boom property devaluations and higher rates of foreclosure.
Meanwhile, private mortgage insurers — who provide loss coverage for lenders and investors on loans with down payments of less than 20% — have begun rollbacks on a variety of products, especially in areas they define as distressed or declining.
Genworth Financial, one of the largest insurers, recently told lenders that after Monday, it no longer will consider applications for second-home purchases anywhere in Florida. The new policy is irrespective of borrowers’ credit scores, assets or other characteristics.
Also effective that date, in all “declining/distressed” markets, Genworth will not touch cash-out refinancings, investment properties of any type, nontraditional credit applications, construction/permanent loans or adjustable-rate mortgages with initial adjustments within the first five years.
In its advisory, Genworth said the restrictions are intended to promote “prudent underwriting standards” in light of higher risks prevailing “nationally and at localized levels.”
PMI Group, another high-volume insurer, banned cash-out refinancings, limited documentation loans and all mortgages secured by investment properties in “distressed” markets. In nondistressed areas, cash-out refinancings on second homes and rental houses no longer are eligible for coverage, nor are interest-only loans on investment real estate and all mortgages on properties containing three to four units.
PMI also boosted minimum credit score requirements for “jumbo” loans nationwide to a FICO of 700 and now will require at least 10% down payments. The company also ruled out “stated income/stated asset” mortgages on duplex purchases, in which one unit is occupied by the owners and the other is rented out.
MGIC, the largest private mortgage insurer, recently eliminated coverage of all “option ARM” loans that have either scheduled or potential negative amortization features that increase borrowers’ principal debt rather than reduce it monthly. MGIC’s new ban is nationwide.
The company also no longer will insure cash-out refinancings using limited documentation, temporary rate buy-downs on investment real estate and nontraditional credit applications to buy second homes.
Why the continuing rollbacks, and how long could they continue? Lenders and insurers are carefully studying the sources of their greatest losses from mortgage vintages between 2003 and 2007. In the areas where they see inordinate risk, they are reacting by eradicating that risk.
Some of those high-loss loan products — mass-marketed option ARMs with minimal down payments and “stated” incomes, for instance — probably never will be seen again. Others are likely to return only with tougher underwriting standards and higher fees tied to credit and geographic risks.
In the meantime, consumers have little choice: Get used to it. It’s not going away any time soon.
kenharney@earthlink.net.
May 7th, 2008 -- Posted in Uncategorized |
The steps in getting a home loan
The process involves qualification, preapproval, approval and lock.
By Jack Guttentag, Inman News
May 4, 2008
Home buyers sometimes get into trouble because they aren’t clued into the sequence of steps involved in financing their purchase. These are qualification, preapproval, approval and lock.
Qualification (or pre-qualification, as it is often called) is an opinion that your income, assets and current debts qualify you for a loan of some specified amount. The opinion may come from a lender, but whatever the source, the opinion does not take your credit into account, and no one is committed by it.
It used to be that real estate agents did a lot of the qualifications, often back-of-the-envelope affairs, so that they would not waste time looking for houses in a price range the buyer could not afford. Increasingly, they asked borrowers to become preapproved by a lender because it is more reliable than a qualification, and lenders are willing to provide it free of charge as a way of bringing in business. Home sellers also have learned to ask potential buyers for a preapproval.
Preapproval is a conditional commitment by a lender to make a loan before the identification of a specific property. On a preapproval, unlike a qualification, the lender verifies the information you provide and checks your credit. A preapproval will stipulate a loan amount or monthly payment, but not necessarily the loan type or the price.
The lender’s commitment under a preapproval is always conditional, but rarely are the conditions spelled out. Preapprovals don’t have expiration dates, but some considerable time may elapse before the borrower receiving a preapproval comes back to convert it into an approval.
During that period, things can happen that cause the lender to back out. For example, the borrower’s credit deteriorates or she loses her job. No one can reasonably expect a lender to approve a loan in those circumstances.
Less clear-cut are the effects of adverse market changes, such as the tightening of underwriting requirements, on outstanding preapprovals. If a lender has preapproved a loan and the market changes to where the same loan would not now be approvable, will the lender honor its obligation? In most, if not all, cases, the answer is no.
Approval is a commitment by a lender to make a loan. Unlike a preapproval, a specific property (along with its appraised value) is identified, and the loan details are spelled out. These include the type and purpose of the loan, the down payment and type of documentation. It will also include an interest rate, even though a rate is not firmly established until it is locked.
The presumption underlying an approval is that the probability of closure is high — much higher than with a preapproval.
It is not 100%, however, because borrowers sometimes drop out, and sometimes one or more of the conditions that accompany the approval are not met. Approval letters contain checklists of nitty-gritty details that must be completed before the final documents are drawn, and before funds are disbursed. Sometimes, one of these details derails the train.
Lock is a commitment by the lender to a specified price — rate and points. Ordinarily, lenders lock at the borrower’s request, and view the borrower as being committed as well, though they don’t always communicate this very well, or at all. Because locking imposes a cost on lenders, some charge a nonrefundable fee, which may be credited back to the borrower at closing.
I recommend that prospective home buyers get preapproved as a way of establishing their good faith to home sellers and agents. Only one preapproval is needed, and it does not commit them to the issuing lender. It is only fair, however, to include that lender among the loan providers you shop when you have a contract to purchase and need a loan. But bear in mind that if you switch to lender B after being preapproved by lender A, you must be approved by B.
It is recommended that when your loan is approved, you lock the price the same day, because that is when you know the price. Holding off because you expect market interest rates to decline is a bad gamble. No one can forecast interest rates.
Jack Guttentag is a syndicated columnist and professor emeritus of finance at the Wharton School of the University of Pennsylvania. Questions or comments can be left at www.mtgprofessor.com.
May 7th, 2008 -- Posted in La Times |
RENTAL SAVVY
Let your fingers do the walking — use the Web to explore new city
By H. May Spitz, Special to The Times
May 4, 2008
Question: I’m relocating to another city and don’t know what area to consider. How can I tell whether a neighborhood is convenient? Safe? Close to what I want to do?
Answer: Thanks to the wonders of the Internet, checking out a new stamping ground is easier than ever before.
In fact, more than 70% of renters start their apartment search in front of their computers, according to a recently released report from the National Multi Housing Council. When looking for advertised rentals, check out one of the many free national sites. Local rental sites are available for no charge through some management companies; for-fee sites also abound.
But what neighborhood should you consider? If you’re moving from far away, looking at a “For Rent” ad won’t tell you much when it comes to neighborhood details.
Start by pinpointing possible neighborhoods that fit your needs by asking friends, colleagues or co-workers who know the area. Also make a list of your location must-haves in priority order, such as convenient commuter routes and places to shop, dine or find entertainment.
An amazing tool for doing research is earth.google.com. Once downloaded from the Internet and onto your computer, for no charge you have a satellite view of the world. Views can be as close as 300 feet from above, and with a scroll of the mouse can be brought into sharper focus. Using a street address is best, so gather a few choices first.
When looking for community details, don’t overlook the Census Bureau at www.census.gov. The “American FactFinder” option offers a vast array of information, including housing type, density and economic and household details.
The search can be based on any address, ZIP Code, city, county or state.
How are you planning to get to work or school? Maps that pinpoint and provide directions between locations can be found through a number of sites, including maps.google.com, www.mapquest.com, as well as maps.yahoo.com.
Want to look into public transportation? Most such transit options are detailed on the mapping sites. For specific routes and information covering the Greater Los Angeles area, go to www.metro.net, which details 200 bus and rail lines.
Map sites also offer links to many area offerings. Restaurants, shops and even religious institutions can be found under the business listing option. The choices are astounding, but not all listings represent every offering, since some pay for placement. Selected choices offer a distance range from 90 miles away to as close as 2,500 feet from your prospective front door.
What about personal safety? In California, registered sex offenders can be tracked at www.meganslaw.ca.gov. For details regarding other state registry sites, access www.klaaskids.org for links.
Information about burglary, car theft and other crimes in a particular area is usually available through the local police or sheriff’s office. In L.A., a good resource is www.lapdonline.org, which has detailed crime maps and offers information by street address and ZIP Code.
What about local schools? In California, all schools must participate in a statewide student testing program. The site star.cde.ca.gov details standardized test scores and other information provided by the California Department of Education. Local schools often have individual websites too.
Any special hobbies or interests that appeal to you? Check out local community colleges for evening or weekend programs.
Enjoy shopping at farmers markets? Stroll through www.ams.usda.gov/farmersmarkets for directions. Like to garden? Some areas have communal growing space. Dig through www.localharvest.org for details and how to obtain organic foods through various sources.
Keep in mind that although using the Internet is no substitute for visiting the real thing, it does help kick off an informed search for a place to call home.
Reader comments may be sent to hmayspitz@gmail.com.
