If you have been looking at homes for sale in Huntington Beach, Newport Beach or Long Beach and need a mortgage, you should keep reading. Here is a quote from Barry Habib from Mortgage Market Guide:
“Yesterday’s Fed Meeting Minutes revealed that Fed members discussed extending the end date for the Mortgage Backed Security purchase program, so as to not disrupt a fragile housing market. However, several Fed members judged that a “tapering of agency debt and MBS purchases could be helpful.” The program is currently set to end at the end of December. Obviously, we will have to watch this story closely, and we are handicapping the odds of an extension to be around 50-50. If the Fed does not extend the buying of Mortgage Backed Securities, count on rates moving back above 6% by January.”
Don’t look a gift horse in the mouth. I met with clients last night with a conforming loan at 6% and we can move them to 4.875%. Now is the time and it might not be here for that much longer.
As you know, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Long Beach CA mortgage and need help putting together a plan, then give me a call or send me an email.
Thank you!
CA Mortgage Situation
By · CommentsIf you’ve been shopping for a Long Beach CA Mortgage, then you need to pay close attention to this post.
You probably heard about the Federal Reserve’s program to buy $1.25 Trillion in Mortgage Backed Securities earlier this year, right? Right after it was announced home mortgage interest rates took a BIG drop and the continued buying by the Fed has keep rates artifically low.
Well the party is about to be over. While the program last until the end of the year, the purchase of long term Treasuries ends the end of October.
So What? What does this mean for you, for friends and my industry.
It means that the governments huge spending program that has artifically kept rates low is ending and that means that rates are going up soon.
Too many times in the last year have people listened to the media about 4% or lower rates coming to them, passing up the 4.75% that was available, and it is about to happen again. We are in the low 5% range now, but once the mortgage bonds are being bought and sold on the open market without government intervention, those rates will rise, probably 1-2 percentage points.
So if you’ve been looking for a Huntington, Newport, or Long Beach or Newport Beach CA home and need a mortgage, then now is definately the time to buy so that you can lock up these low rates now!
As you know, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Long Beach CA mortgage and need help putting together a plan, then give me a call or shoot me an email.
Why Home Values Will Go UP – 2 Reasons
By · CommentsReason #1 – An Increase in Population = An Increase in Demand
The population of the USA has an annual growth rate of 1.27% and has had this each year 1900. At our current population levels, we are adding about 3 million people to our population every year. Not too long ago we reached 300 million and some forecasts put us at 400 million in about 35 years. That means that about 1.3 – 1.5 million new households that are formed each year. These can include people who graduate from college and enter the work force, and adults who are currently living with their parents that decide to move out on their own.
The National Association of Realtors estimates that about 40% of all home buyers in today’s market are purchasing their first home – a perfect indication that this segment of the marketplace will continue to thrive even in the midst of our economic downturn.
The growth in population isn’t the only thing that increases demand for housing. Approximately 300,000 housing units are demolished each year due to functional obsolescence because buildings become old and outdated. This means that the actual demand for new housing is about 1.7 million new units each year in order to replace the demolished homes and house the new households that are formed. Okay; so now that we understand the demand for housing, what does the supply look like?
Reason #2 – Less Building = Less Supply
It’s no secret that home builders (and many others) are struggling in this economy. In fact, the number of new housing units being built went from a peak of 2.1 million in 2005 to less than one million in 2008, with 2009 also projected to come in below one million as the market continues to work off the excess supply of housing that was built during the last few years. Here’s an interesting breakdown of new housing starts since the year 2000:
- 2000 = 1.6 million new household units
- 2001 = 1.7 million new household units
- 2002 = 1.7 million new household units
- 2003 = 1.9 million new household units
- 2004 = 2.0 million new household units
- 2005 = 2.1 million new household units
- 2006 = 1.8 million new household units
- 2007 = 1.3 million new household units
- 2008 = less than one million new household units
- 2009 forecast = less than one million household units
As you can see, from 2000 – 2002, the supply of new housing units each year was right on to meet the demand of 1.7 million as outlined above. However, things started to get overbuilt from 2003 and 2006. Not surprisingly, home values went into decline from 2007 – 2009 as the market started working through this over-supply.
However, sometime during the next 1-2 years, the current oversupply of housing units will be completely absorbed due to the demand outlined above. In fact, if the trend continues, there could even be a housing shortage at some point in the next two years unless builders start building new household units at a much quicker pace! Do the math yourself:
- Demand for New Housing Units: approximately 1.7 million new units annually
- Supply of New Housing Units: less than one million annually
- Bottom Line: Demand will become greater than the supply at some point in the near future, and house prices will go up.
Remember, there is no “national housing market” as all real estate is local. Therefore, a state like Michigan that is losing population may take longer to see house prices recover; while a state that is gaining population, like Texas, may see house prices go up much sooner. In all cases, talk to your mortgage, financial, and real estate professionals for more details regarding your specific marketplace.
If you are even thinking that now might be a time for you to consider making a real estate purchase, then you definitely need to at least fully explore your options with a Certified Mortgage Planner and a Realtor. Low interest rates and low property values won’t stay this way forever, and I believe that if you are in a position to buy, now is the best time to do it! Great success to you!
Home sales price doesn’t matter!
By · Comments“WHAT!” you say. Of course price matters. You want to buy your home for the lowest amount possible because that’s how you save the most amount of money, right? Well actually, no.
Let me demonstrate with an example. Suppose you are looking for Huntington Beach or Newport Beach CA homes for sale, or that you need a Long Beach CA mortgage. Let’s say your Realtor finds a $640,000 home you would like to purchase. Let’s assume the interest rate for a 30 year fixed mortgage of this amount with a 20% down payment was 5.875% (6.031APR) and that you are a well qualified buyer with the income, assets, and credit scores to qualify. The payment at this purchase price and this interest rate is approximately $3,775.67 a month.Let’s also assume that the sellers are pretty firm in their asking price. There is some room to negotiate a lower purchase price, but not as much as you’d like.
Let me ask another question. If you had the choice to offer a purchase price of $628,500 with the same 5.875% interest rate, or $640,000 with a 5.25% interest rate, which would you pick?
Most people would go with the lower purchase price, but that is a mistake. The better strategy is to give the seller their asking price and take that price concession that they are willing to give and instead use those funds to buy down the interest rate to 5.25%.
By asking the sellers to lower their purchase price to $628,500, your payment only drops $54 a month to $3,721.25. If instead you purchase the property for $640,000 and have the sellers pay 2.25% of your loan discount points, then your interest rate drops to 5.25% and your payment drops $201/month to $3,574.28!
I like to demonstrate this a different way. If you took the new, lower payment, and applied it against the original loan terms and worked the equation backwards, it is like you were paying $605,703!
WHAT, you say. Explain that again.
Ok, I will.
If you put $605,703 as the original purchase price and use the 5.875% interest rate you will get a monthly payment of $3,574.28, the same payment you would have if you paid $640,000 and the interest rate was 5.25%. That’s a theoretical price discount of $34,297 based on monthly payment.
Plus you’ll save over $12,000 in interest costs over the first 7 years by having the seller buy down the interest rate, and since the payment is lower, it is easier to qualify as you’ll be able to show about $5,000 LESS annual income to qualify. Believe me, anything you can do to make it easier to qualify for mortgages right now is a very good thing.
The bottom line is that if the sellers are willing to accept $628,500 then they should be willing to accept full price and pay the discount points because it is the same net proceeds amount to them.
As a buyer you can still ask for price reductions, but the main point to remember is to take the as much of the concession as you can in interest rate reduction before you ask for price reduction as that will save you more money!
So, now do you believe that price doesn’t matter as much as interest rate reduction. I am more than willing to answer any questions and the last point I’ll make is that while this example is for a Long Beach CA mortgage, the strategy should work anywhere, especially for Huntington Beach and Newport Beach CA homes for sale!
Cheers to you and my greatest wish is that you’ve learned a strategy that will save you lots of money when it comes to buying your next home!
Thank you!
Do You Have a Plan for Buying Your Next Home? Part 5
By · CommentsThis is the last in the series focusing on excerpts from my Home Buyers Guide that will help you if you need a Long Beach, CA mortgage or are searching for Huntington Beach and Newport Beach CA homes for sale. I’ve heard from clients that taking these extra steps is just too much work.
The first point down below breaks down what your potential savings could be, factored against the extra time it took you to achieve that savings, and puts it in terms of an hourly wage rate. The point is that it is worth the time to do whatever you can to save the most amount of money on your real estate purchases because of the compounding effects. A dollar saved today could save you several dollars down the road.
The second point helps you if you have to sell your current home first. You really should read the entire report though. Click here for the full report.
Here are the last two points from the guide:
- You get what you Negotiate – If all of this seems like a lot of work, bear in mind that we are talking about the amount of money you will be spending for what may well be the biggest financial investment you’ll make in your life. If you spent a total of 40 hours doing your homework (including meeting with me for a personalized Strategy Session), being patient, and as a result saved $20,000 off the “listing price” of the home you’d bought, you’d have made $500 per hour for the time you spent – not bad!
- What to do if you have a home to sell – If you already own a home and haven’t sold it yet, you will want to approach the sale of your home and the purchase of your new home as an integrated strategy. The price you get for your home, the price you pay for your new home — and the timing of all of that – are all interrelated. With regard to the sale of your existing home, it is critical that it be priced right for the market.
I just can’t stress enough that you need a full strategy BEFORE you start your Huntington Beach or Newport Beach CA home search. At least you should do if you want to find the right home in the best neighborhood, with the best terms and lowest price. Give me a call and schedule a Complimentary Strategy Session with me. I’ll help you develop your plan.
As you know, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Long Beach CA mortgage and need help putting together a plan, then give me a call or shoot me an email.
Thank you!
Do You Have a Plan for Buying Your Next Home? Part 4
By · CommentsI was talking with my clients that are searching for Huntington Beach CA homes for sale the other day and really spent some time going over the first point down below. It is important that you keep your “Poker Face” when previewing properties, being sure to ask the same questions of EACH property and being careful to not let on which is your favorite. Remember, once you have been pre-qualified by me, YOU are the one with the leverage so don’t give it away freely. Click here for the full report.
Just because these clients are buying a home in Huntington Beach CA, the strategy works for any market including those searching for Newport Beach and Long Beach CA homes for sale. Where ever you’re looking, you need a plan, so get my Home Buyers Guide and develop your plan. Here are two points from the guide:
- How to look at homes; what to ask, what to say – You have given the Realtor the profile or criteria of the house you want to buy. The Realtor has done a search, and now wants to take you to see these homes. How you conduct yourself during this part of the process will be critical to your success in finding the right home, and paying the lowest possible price for it.
- How to make an offer - During your first tour of a home, you can count on the Realtor to try to get you to make an offer. He or she may tell you that the property is sure to sell quickly, or even that an offer has already been made for the home (or that one is expected in the next 24 hours).
I think these points again make the case to a plan BEFORE you start your Huntington Beach CA home search. At least you should do if you want to find the right home in the best neighborhood, with the best terms and lowest price. Give me a call and schedule a Complimentary Strategy Session with me. I’ll help you develop your plan.
As you know, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Huntington Beach CA homes for sale and need help putting together a plan, then give me a call or shoot me an email. I look forward to meeting with you soon. Feel free to forward this blog post to anyone you think it would help.
Thank you!
Do You Have a Plan for Buying Your Next Home? Part 3
By · CommentsWe talked the other day about clients of mine that needed a mortgage for the Long Beach CA home they were buying. While these clients are buying a home in Long Beach CA, the strategy works for any market including those searching for Newport Beach and Huntington Beach CA homes for sale. Where ever you’re looking, you need a plan.
Here are two more excerpts from my Home Buyers Guide:
- Put Time on your side – Generally speaking, the Sellers are likely to be under considerable time pressure to sell their home. They may be planning to relocate for a job transfer; they may have already bought another home and don’t want to be making two mortgage payments; or they may have had their home on the market for a while and are getting anxious about selling it. This can be a negotiating advantage for you as a Buyer.
- Fall in love with a person, not a house – Love is a wonderful thing, but a good rule of thumb is that you don’t want to fall in love with someone (or something) who can’t love you back. When Realtors take you through a home for sale, they’re looking for the telltale signs of love. If they can see that you (and/or your spouse) are going gaga over the house, their eyeballs start turning into dollar signs – and you are toast, as far as your negotiating position is concerned.
I can’t stress enough that you have to have a plan BEFORE you start your home search. At least you do if you want to find the best home, for the lowest price, with the best terms. Give me a call and schedule a Complimentary Strategy Session with me. I’ll help you develop your plan.
As you know, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Huntington Beach CA homes for sale and need help putting together a plan, then give me a call or shoot me an email. I look forward to meeting with you soon. Feel free to forward this blog post to anyone you think it would help.
Thank you!
There is more bad news on the over-regulation front. If you are about to purchase a Newport Beach CA home for sale, you will find that there is the great potential that an extra 7-10 business days will be needed to close the deal.
You may have heard of a new regulation, known as H.E.R.A. (Housing Economic Recovery Act), that requires consumers be given extra days to review the initial loan disclosures at the beginning of the transaction. If the interest rate APR changes more than .125% from the initial Good Faith Estimate, then a full 7 business days must go by before you can sign your loan documents. Given the volatility of mortgage rates right now, it doesn’t take much to move the needle by that much or more.
I don’t want to get into all the details of H.E.R.A. as it can be a little confusing. The bottom line is that there will be more documents to sign, more trees will be killed to print all those extra documents (what we need is a Paperwork Reduction Act in the Real Estate and Mortgage industries, not MORE paperwork) and potential delays to closing.
I typically recommend 30 days to close a conforming, straight forward transaction, 45 days to close a FHA loan, and longer for the tricky self employed or luxury buyers. Until we see how this shakes out I’m recommending a few more days to get your new Newport Beach CA home sale closed. It is just NOT worth the stress to try and close earlier than that. We are all at the mercy of the lenders and it doesn’t do anyone (Buyer, Seller, Realtors, Mortgage Planner, Processor, Underwriter, etc.) to try a quick close.
One last point to remember is first time buyers need to close by December 1, 2009 in order to receive the $8,000 tax credit. We can forecast that there will probably be a surge in transactions leading up to that, causing further delays. Don’t think you’ll be able to get under contract in November for a FHA loan and have it close by 12/1/09. It might happen, but don’t bank on it. Give your self time to make for smooth, stress free transaction and make the transition to that Newport Beach CA home a great experience!
By the way, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Newport Beach CA homes for sale and need help putting together a plan, then give me a call or shoot me an email. Feel free to forward this blog post to anyone you think it would help.
Thank you!
Do You Have a Plan for Buying Your Next Home? Part 2
By · CommentsWe talked the other day about clients of mine that were searching for Huntington Beach CA homes for sale and the importance of having a plan in place before starting the home search. While these clients are looking in Huntington Beach CA, the strategy works for any market including Newport Beach CA homes for sale and those that need a Long Beach mortgage. Where ever you’re looking, you need a plan.
Here are two more excerpts from my Home Buyers Guide:
- Know your buying power; Take appropriate steps to strengthen your negotiating position – Whether or not you already own a home, it’s important to know – before you start looking at homes – your buying power, your budget, and your spending limits. There are two numbers that are important to you: the first is your maximum purchasing power and the second is your comfortable spending limit.
- Understand the role of Realtors – what they will do for you and what they won’t do. This is critical to understand, BEFORE, you meet/select/speak with a realtor.
The complete title of my Home Buyers Guide is How to Negotiate the Lowest Possible Price for Your Next Home. If you would like a complimentary copy then please contact me and I’ll send it over right away.
As mentioned before, the point is to have a plan. Once you’ve read the Home Buyers Guide and start working on a plan, then I’ll have you come into our office for a complimentary strategy session.
By the way, I work exclusively on referrals. The best part of that is that the money I save in advertising can be filtered back to my clients in the form of lower fees. So if you or someone you know is looking for Huntington Beach CA homes for sale and need help putting together a plan, then give me a call or shoot me an email. I look forward to meeting with you soon. Feel free to forward this blog post to anyone you think it would help.
Thank you!
John
Luxury Home Financing in Newport Beach CA
By · CommentsDid you see in USA Today the other day about how Jumbo mortgage loans are so tough to get that it is keeping the housing market from recovering? Well if you are looking for Newport Beach CA homes for sale, then you need to contact me because I have excellent loan programs up to $5,000,000 and higher.
Do you need more than a pulse to get a mortgage like that in Newport Beach CA or other luxury home markets? Yes of course. You actually have to have verifiable income that supports being able to make the payments, cash reserves and excellent credit scores, but if you do, I have Jumbo luxury home programs with as little as 20% down. The higher up you get in purchase price and loan amount the more down payment you will have to come up with. But the truth is there are funds available for qualified buyers/borrowers.
Which leads me to my next point – Don’t believe the media! You’ve probably heard that before and say that you don’t, but be sure that you keep that in mind when you evaluate a story. Have spent decades in the sports, tv and radio industries I have seen first hand countless times where the I knew what the real story was and then saw how wrong the media got it. Put it this way, any article you’ve ever read regarding tv and radio audience ratings probably didn’t interpret those numbers correctly.
Anyway, back to Newport Beach CA homes for sale and luxury mortgages. Just because the media says they aren’t available, doesn’t mean it is true. As I mentioned, you do have to be well qualified. But isn’t that a good thing? All the prognosticators whining about how all these poor people were misled into getting loans they couldn’t afford now are whining about how people can’t qualify for loans. You can’t have it both ways as much as Barney Frank would like it!
So what does verifiable income mean. It means you either have tax returns that show net taxable income that supports making the payments, or you don’t. Oftentimes luxury home buyers and borrowers own their own business and in the guise of reducing their taxes, don’t show as much income as they could or should. This could be short term thinking hindering a long term goal as if you’ve minimized your taxes by showing less income, that could mean you can’t get the loan you need to buy the house you want.
So if you or someone you know needs to learn more about Newport Beach CA homes for sale and the luxury financing it will take to purchase one, please have them contact me. Thank you!
