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Posts Tagged ‘home loan San Diego’

Why Interest Rates Are Set To Go To 6%! Sunday, December 6th, 2009

 

This past week sure has been a great week for interest rates and home loans in San Diego as they dropped to their all time record lows on the 30, 15 Fixed, 5/1 & 10/1 ARM’s – all loan types hit their lowest levels of the year! For the weekly Freddie Mac survey of all lenders, this is the first time that all have been at their lowest level. Some clients were lucky enough to get their home loan locked in at 4.5% this past week.

 

 Rates are artifically low

But it is imperative that all buyers understand though, that interest rates are artificially low right now! Last November, Ben Bernanke and the Fed put into place their mortgage backed securities (MBS) buying program to lower rates, essentially they are buying these securities in the billions every week so they can manipulate the markets and artificially suppress rates. That program though is due to end on March 30th 2010, as the Federal Reserve has already purchased over $1 Trillion of these mortgage backed securities this year, and with less than 20% of allocated funds left in the program, rates are sure to increase. The only questions remaining are by how much and when.

 

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The chart above shows the 30 Year Fixed Rate over the last 11 months. The first red arrow shows what took place when interest rates shot up in May, rising nearly 0.75% in a matter of days. Interest rates that were in effect prior to the implementation of the announcement of the Fed’s program last year were well above 6.00% and a return to those levels cannot be ruled out.

 

People on the fence
For example, a payment on a loan at 4.875% on a $350k loan is $1852 a month, versus $2098 a month at 6%. This $246 a month in savings amounts to $88,560 in overall loan savings for the 4.875% rate loan versus the 6% loan. So even though some people might be waiting for another 5% reduction in prices that might amount to only $10k, they would not be factoring in the $88k in lost savings if and when rates go back to 6% as indicated on the above example.

 
What will happen when the Feds stop buying MBS?

So the question on everyone’s mind is…what will happen when the Feds stop buying MBS come the 2nd quarter 2010? Well it will be difficult to see rates ever fight back to the levels we have seen this year, as there are both fundamental and technical reasons why a retracement back to these low rates will not happen. Fundamentally, the massive supply issue still exists, with no end in sight to the amount of debt still to be issued - the printing presses are just getting started, and the Fed now has to almost endlessly push sales of Bills, Notes and Bonds to raise the capital needed to continue to spend.

The Treasury has literally been printing money by way of Treasury auctions to pay for the massive spending and as we all know this is not going to stop next year.  These hundreds of Billions of dollars of new Bond supply will have to be absorbed by the markets, so the additional supply literally weighs on the entire Bond market and drags prices lower, thus raising rates. This supply must be absorbed, and while the Fed has been the largest  buyer recently, it will be difficult to see who will step in and take their place next year to balance all the selling. I am hopeful the Feds will make the decision to extend this MBS buying program at sometime next year, so they do not destroy the rate markets, just like the $8k tax credit program was extended to help the real estate market.

 
Get locked in soon

If you are interested in looking to refinance or are currently shopping for a home loan in San Diego, I would advise you to get your rate locked soon, so they can take advantage of the lowest rates we are likely to ever see in the future. If ever you have any questions regarding rates and mortgage bonds please feel free to contact me directly at 858-200-9602, I study market information daily and religiously and have software that tracks mortgage bonds live everyday, I think this is important so clients are always getting the right advice about what dictates interest rates and when and why they should lock their rates in. Also feel free to go to my websites at  www.michaeladeery.com or www.homeloansnsandiego.com for additonal information. I look forward to chatting soon.

 

Sincerely

Your mortgage planner

Michael Deery

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Posted in Interest Rates | No Comments »

Interest Rates Drop to Record Lows for Home Loans in San Diego Saturday, November 28th, 2009

 

Today represents a truly unique time to buy a home! Interest rates have dropped to almost all time record lows for San Diego home loans. Most buyers are now qualifying for rates in the 4.875% range on the 30 year fixed. This is truly a fantastic time to buy a home considering this low interest rate environment, the $8k home buyer credit being extended, and all the great low priced homes that are also available. But it is important that all buyers understand that these low rates for San diego home loans will more than likely go up next year, probably by summertime and here are the reasons why.

As you may or may not know, the Federal Reserve are actively buying  mortgage backed securities in record amounts to artificially lower rates down to record lows, so they can continue to kickstart a weak housing market. But they have advised they will stop buying these securities come the end of the first quarter next year, alll experts are predicting rates to jump back over 6% once the manipulation of rates is over. They have actually started easing the buying of these securities in the past 60 days, so there is not a drastic market reaction once they do offically stop buying the securities next year. If you have been thinking of buying recently, do not think twice right now because it is highly unlikely we will see these rates again in decades if not our lifetimes.

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As it takes ususally 60-120 days to find a home, get in contract and then close on the transaction, it would be a good idea to begin the home buying the process soon. To receive the $8k home buyer credit, you need to be in contract by April 30th 2010. If you are looking for more information on how to obtain a home loan in San Diego, please contact me directly at 858-200-9602. Or you can visit my website at www.michaeladeery.com.

Sincerely

Your mortgage planner

Michael Deery

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HomePath’s 97% Financing with No MI and No Appraisal! Saturday, November 28th, 2009

 

With all the negativity surrounding the lending world recently about available financing options, good news is always welcome. I wanted to advise you of a home loan program that is now available for all new buyers. It is a new loan program offered by Fannie Mae called HomePath, that involves getting financing on Fannie Mae foreclosed properties up to 97%, and there is no mortgage insurance or an appraisal needed on the transaction. Fannie Mae is also offering a credit of 3.5% towards closing costs on all transactions that close between January 28th and April 30th.

What is HomePath and who Qualifies?

•As Little as 3% down for owner occupied properties
•As Little as 10% down for investment properties
•As little as 10% down for 2nd homes
•No MI
•No appraisal needed-value determined by sales price

HomePath was created to facilitate the purchase of the bulk of REO properties currently serviced/guaranteed by Fannie Mae. In summary it is a new San Diego home loan program offered by Fannie Mae that offers special financing on foreclosed properties already owned by Fannie Mae. Their goal is to offload and sell these properties as quickly as possible in order to minimize the impact on the community.

How to Qualify for HomePath

They are offering 97% financing up to $417k, the 3% down payment can be gifted or borrowed, you only need a 620 credit score, and all loans must be full documentation, there is no mortgage insurance and you don’t need to do an appraisal on the transaction. This can offered on condos, SFR’s, Puds and multi family units. 2nd homes and investment properties can get financing up to 90% LTV.

I believe that for a full market recovery it is imperative that we make more of these financing options available for all buyers. There are only a few lenders offering this new home loan in San Diego at this time as directed by Fannie Mae, so if you are interested please contact me directly at 858-200-9602. .

Sincerely

Michael

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Posted in Home Loan Programs, HomePath Loans | 6 Comments »

Qualifying for Condo Financing and What You Need to Know! Sunday, October 11th, 2009

 
What is going on with Condominiums? Almost not a day goes by when I do not get a call from a client asking me why they cannot get approved for  condo home loan. There sure are some great deals out there in the condo market for our clients with these low prices not seen in San Diego for some time, but many can’t seem to qualify for a condo home loan in San Diego for many different reasons.

Either the owner occupancy rates are not high enough, the HOA are more than 15% delinquent, the complex is not FHA approved etc etc. So with all these rules and changing guidelines, what is the best way to get our clients approved for a home loan for a condo? Here are some great tips for you to know when your client is interested in buying a condo.

Is the condo complex FHA or Fannie Mae approved?

 First of all it is imperative to check and see if a complex is FHA approved or Fannie Mae approved if you plan on getting financing through one of these sources for your clients. Here are the links you need to check right away to make sure the particular complex is approved.

1. For FHA financing use the link https://entp.hud.gov/idapp/html/condlook.cfm

2. For Fannie Mae financing use the link below and then click on “California” to make sure the complex you are looking for is on the list for Fannie Mae approved complexes. https://www.efanniemae.com/sf/refmaterials/approvedprojects/index.jsp?from=hp
 

Spot Approvals are gone as of February 1st!>

 It’s official and as of February 2nd FHA are no longer allowing “Spot Loan Approvals” (SLAs). The decision to eliminate spot approvals in my opinion, will deny ownership to many potential condo purchasers, as this allowed people to purchase a condo in a project without having to go through the project approval process. Now the whole project will have to get approved. Previously, only the FHA could grant approval to condo projects for FHA financing, but now the FHA will allow Lenders to determine project eligibility and review project documentation.

It will be interesting to see what lenders will step up to participate in this new process, given the extra liability processing and certifying their own condo approvals will entail, it is my hope that the FHA will reverse this decision soon because this will definitely hurt condo sales in our markets.
 
What if complex has more than 15% HOA delinquencies! A Limited Condo Review is the solution!

Another rule that FHA and Fannie Mae have come up with, is that there cannot be more than 15% of the units in the complex be delinquent on their HOA fees. I have run into this problem myself a few times recently when the HOA cert comes back and it shows that 20-25% of the properties are delinquent..this will kill the deal immediately as the property will not get financing.

Now most people assume that the lender always requires a HOA cert on every condo loan file, this is not true. Here is the solution if you have more than 15% delinquencies in your particular complex! First of all, you should always do a little homework upfront on the specific complex, or if you can request a HOA cert upfront on the complex and determine the data of the complex. If your borrower has the following requirements..is owner occupied or 2nd home, has a loan amount <$417k, complex is more than 50% owner occupied, complex is not involved in litigation etc, some lenders will allow you to complete a “limited condo review” on the complex, which eliminates the need to request a HOA cert which lists the delinquencies.

You are eligible for a limited review when you run DU (Fannie Mae desktop underwriter) on your client’s application,  DU will advise you if you are eligible to qualify for a limited review for the complex. If you qualify for a “limited review” you will not have to send in a HOA cert which of course would list the HOA delinquencies of the complex…so bingo.. your borrower now qualifies for financing. I should also point out it is important that the appraiser inputs the correct data regarding the condo on the appraisal, as not listing this correct data may trigger a HOA cert and then kill the deal.

Please note there are only a few lenders that I know off that allow a limited review on a complex, so if you have a file that has HOA delinquencies over 15% let me know and I can help you get your client approved. 

 What if I cannot get a Limited Condo Review?

If you cannot get a limited review (as described above) then you are going to be subject to a “Full Review” of the complex and a full HOA cert is required for the loan file. Make sure you are aware of the requirements to be eligible for FHA and Fannie Mae financing. Here are some of them but make sure you know what all of them are for a specific lender you are trying to get financing with. For example, you will need 51% owner occupied, no litigation, 70% of the units must be presold or under contract, no more than 15% of the units can be delinquent on their HOA fees, one investor cannot own more than 10% of the total number of units, etc.

 
Mortgage insurance and Condos!

Obtaining mortgage insurance on condos for high loan to value financing has also become quite difficult. Thankfully the FHA will allow mortgage insurance (MI) up to 96.5% on condos. Fannie Mae now only allows conforming financing up to 80% on condos and this is because none of the MI companies will insure higher than 80% here in CA, as CA is still determined as a declining market.

While values continue to decline, (although it seems at last they are stabilizing in CA) MI companies will limit their exposure on condos. When the market picks back up again and values have stabilized, you will see MI companies come back to the fore again to offer MI on higher LTV financing on condos.

 Help your clients qualify for single family homes instead of condos!

There is no doubt it is getting tougher to get financing on condos, even some of the sellers will not even allow FHA financing on some of their condos. But I do think there will be many more opportunities opening up soon for our buyers, as the lenders have to allow their condo inventories to unclog at some time. So when they do it is imperative that we know what our clients can qualify for and what requirements need to be met for financing.

From working with lots of first time buyers, many of them assume they can only afford a condominium as this is where their price range is and affordable monthly payment is. But there are ways to help them qualify from “condo buyer to single family home buyer”.

Here are a few tips that I have used recently to help some of my clients move into a position to qualify for a single family home, just by helping them restructure their debt a little and also by giving them the right advice. Lets say your buyer is looking for a condo, by eliminating for example $300-$400 HOA fees from a buyers debt ratios, this enables them to afford $55k-$75k more on a single family home. Perhaps they also have a $500-600 car payment they can turn in for a cheaper payment to help them afford more financing.

Perhaps they can get a loan from the family to payoff some high interest payment credit card debt and lower their debt ratios, and in turn they can pay them back with the $8k tax credit (it is my opinion that this tax credit will get extended for 6 more months). Perhaps they can ask one of their family members to help them co sign for a single family home because they cannot get condo financing, many times they did not know co signing was an option, and only asked their parents after I advised them too.

I hope this information and some of these ideas help you and your clients, if ever you have any questions please do not hesitate to contact me.

Sincerely

Michael

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Posted in Condominium Financing | No Comments »

Home loan San Diego-What are Trigger Leads? Protect your Personal Information Tuesday, August 18th, 2009

After you have applied for your new home loan in San Diego, did you know that the credit bureaus will sell your personal data? Believe it or not, this is actually true. Borrowers who have applied for a home loan in San Diego will be immedietely flagged and sold to the highest bidders, who are looking for “hot leads” or potential homebuyers to call on.

 

For about $35 to $75$ more, your name, address, mortgage or rental history, phone number and fico score range will be sold to to these highest bidders who will call you up blindy and solicit your business. What results is unwanted phone calls and mailings to your home, providing you with offers for a loan that you did not request.

 

At this current time, there is no legislation that exists to stop the credit bureaus from profiting from selling your information. You just have to be aware that you will be receiving quite a few too good to be true offers over the phone and in the mail, with many of them trying to discredit the already established relationship you have with your trusted mortgage advisor or real estate agent.

 Now there is a way that you can remove yourself from these unscrupulous sales tactics that may come your way, and this is what i recommend to all my clients once we have begun the application process. You can ”opt out” of the credit bureau solicitations by going to the website called www.optoutprescreen.com and inputting the required information. For all new homebuyers and exisiting homeowners, this is definitely the easiest way to sidestep this problem immedietely.

 

We understand that buying a home can be an arduous journey with many unknown hurdles along the way, that is why when you apply for your new home loan in San Diego with my company, you can feel safe and secure knowing that you have a professional mortgage planner who has your best interests at heart. For more information on the homebuying process and what other steps you need to take to obtain your new home loan, please visit www.michaeladeery.com or call me directly at 858-200-9602. 

 

Your mortgage planner

 

Michael Deery

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Posted in How to Purchase a Home | 2 Comments »

San Diego Home Loan- How Much Money Should you Borrow? Sunday, August 16th, 2009

How much money should I borrow for my new San Diego home loan? While it might be tempting to borrow the amount of money your mortgage lender is willing to give you, it is very important to decipher how much you will actually need to borrow  in order to purchase your new home. From the amount you will need for the down payment, the closing costs, for property taxes and the home owners insurance, there are many factors to consider when making probably the largest financial decision you will ever make for your new San Diego home loan.

 

What may surprise you, is that there is no exact formula for accurately calculating the dollar amount you should borrow when purchasing your new home. But many economists agree that you should only borrow more than 2 1/2 to 3 times your annual income, or that 28% to 40% of your income is the maximum amount of debt that you should ever take on for a mortgage.

Now while these calculation insights may help you in your thinking of the overall loan process, i believe meeting with a professional mortgage planner and getting properly pre-approved for your loan is really the only way to know exactly the amount of money you really can afford and can qualify for. By getting properly approved, you not only improve the odds of finding the perfect home, but you now also become a “cash buyer” that increases your bargaining position imensely.

 

As a professional mortgage planner, i see my role much differently than a typical loan officer. Not only is my job to match your profile with the best mortgage available, it is also my role to make sure that this is the most responsible loan product for you as well that suits your goals and needs. That is why we have our detailed mortgage concierge program, that will go over in detail your goals and plans for the next 10-20 years.

 

I hope you now are more aware of the amount of money you may need to borrow for your new San Diego home loan. Some lenders will offer you the maximum amount of money that you may qualify for, whether you actually need the whole amount or not. This is why it is very important that you sit down with a professional mortgage planner that you can trust, who will help you decipher the amount you can afford for your new purchase. For more information on how to purchase a home correctly and avoid the mistakes that a lot of first time buyers make, Please visit http://www.michaeladeery.com/index.php?option=com_user&task=links&id=39. My next posting will go over the process of “how purchase loans are made”.

 

Your mortgage planner

 

Michael deery

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Posted in How to Purchase a Home | 5 Comments »

First time buyers race to find a home loan in San Diego to beat $8k tax credit deadline! Saturday, August 15th, 2009

The first time home buyer frenzy is on to find a new home in San Diego. With the $8k tax credit deadline of November 30th fast approaching, many new first time home buyers are now scrambling to get a home loan in San Diego. Competition is certainly hot out there in this demographic, as over 43% of sales in the 2nd Quarter were attributed to first time buyers. Real estate agents are also advising that new buyers need to be in contract before September 30th, due to the fact that closing on a transaction for a new home loan in San Diego is taking almost two months in this current market.

But the biggest problem right now in the San Diego market is that there is not enough inventory out there to choose from, and it is especially more difficult for first time buyers who have limited funds for downpayments and closing costs. This is why this $8k tax credit is so important among first time buyers, as it is helping buyers get into homes that they could not afford otherwise. Many first time buyers are taking advantage of the $8k in a few different ways. The two most popular ways are as follows, firstly where they borrow the $8k funds from a family member and then they can pay back the family member immedietely after closing, as the IRS allow you to amend your taxes and claim this $8k as a refund right away. Secondly, borrowers are borrowing the funds from a 401k account, and then paying back those 401k funds immedietely after closing with your $8k refund. Both of these methods for down payment assisstance are allowed by the FHA, which is fast becoming the most popular choice among buyers for new home loans in San Diego. The FHA also only requires 3.5% for a down payment.

Many real state agents are advising that they are seeing a surge of first time buyers who want to close before November 30th, the deadline for the credit. But now that the overall loan process is taking longer, it is advisable for people to get into contract as soon as possible, because many buyers are now seeing several weeks being added onto a typical transaction due to inspections, appraisal delays and slower loan approvals.

Once this $8k tax credit approaches its deadline of November 30th, they are many who are optimistic that this tax credit will be extended going into 2010. There is no doubt it has helped a battered housing market, so keeping this tax carrot going into 2010 will only help to keep our San Diego market moving along. For more information on how to obtain a new home loan in San Diego, please visit www.michaeladeery.com, Here you will be able to find all the information you are looking for on the home buying process.

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Posted in $8k Homebuyer Credit | No Comments »