Calendar Posted Tue Oct 05 12:00AM

 

Anyone looking to buy a home in California might feel a bit of urgency after hearing the latest news on sales trends in the state. Sales are up a bit, though not as strong as they could be – but prices are getting hotter by the minute.

The statewide median home price increased 1.2 percent from July and was up 8.6 percent from a year ago, according to a recent report from the California Association of Realtors.

This news, along with the incredibly low interest rates on long-term mortgages should be enough to push anyone off the fence. Sales are still slow enough to offer many buyers a good deal, while the price trend shows strength in our underlying market forces.

Is it a good time to buy in California? My instinct is to say "you bet it is." Market conditions agree. But of course, this is now and always will be a highly personal question with an answer that is unique to the person asking.

Buyers today need to be prepared for a rigorous mortgage process – one that requires reams of documentation, stellar credit and an impressive cash deposit. You'll need to have worked at this for some time (good credit and cash unfortunately don't fall from the sky).

If you're interested in a home in California, don't rule it out, though, if you think you don't qualify. FHA, for example, is still writing mortgages, which don't require as high a downpayment as those made from private lenders.

I urge you to act – though not in haste and not alone. Today's market is perhaps the most confusing time in our industry’s history. But don't view this as an obstacle – view it as a potential opportunity.  Real estate is alive and well in the Golden State. But it's murky, slow and full of unexpected twists and turns. Don't risk missing out, though, because it all seems so unfamiliar. Enlist the my help and get the insight you need to navigate these rocky waters.


Calendar Posted Wed Sep 15 12:00AM

Some good news came on the housing scene the other day: federal housing officials announced nearly $1 billion in funding to buy up foreclosed properties. The money will go to state and local governments so they can purchase, redevelop or demolish these properties.
 
Foreclosures have become the face of this recession. They can be like a disease that whisks in and infects an entire neighborhood or metropolitan area. The anti-American Dream, foreclosing on a house symbolizes rock bottom for a family’s financial situation.
 
But the new cash infusion should help to turn it around. Foreclosure is bad, but it can also symbolize a new beginning. If the funds can help state and local governments to transform foreclosures into much-needed affordable housing and rentals, then ultimately it’s better for the community, the local housing markets and local economies.

 

So far, the money seems to be headed in the right direction. Nearly half of the $970 million will go to the states hit hardest by foreclosures: Arizona, California, Florida and Nevada. Another big chunk is going to states in the Rust Belt, which have also been hit hard by foreclosure and tremendous job loss.
 
The government said funds can be used to buy property, demolish or rehab abandoned properties, and provide down payment and closing cost assistance to low-to moderate-income buyers, which should help to pump some life into this market segment.
 
I think it’s a much-needed boost and money well spent. We’ve said all along that there are opportunities in this market despite the gloomy numbers and forecasts. Here’s an opportunity for the state and local governments not only to create a better housing situation for some residents, but to create jobs associated with demolishing and rebuilding, boost confidence and improve their communities.
 
That’s real forward motion!


Calendar Posted Tue Aug 10 12:00AM

 

In this type of market, it’s best to focus on what’s working, what’s favorable, what’s reality. And when preparedness meets opportunity you get success. Whether you’re a buyer, investor, seller or agent trying to make sales, you strive to find the opportunity for success.
 
Distressed home sales continue to represent this opportunity. Distressed homes – those homes that are in danger of going into foreclosure or are for sale because the homeowners defaulted on their mortgage – were 32 percent of home sales last month, compared with 31 percent in May, according to a recent report from the National Association of Realtors.
 
What’s happening here and why should we pay attention?
 
In a word: inventory. Distressed properties more and more are making up a huge chunk of the inventory in many markets around the world (not just here in the U.S.). But wait! Remember that great Warren Buffet quote about when to get interested in an investment? He said:
 
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”
 
At first thought, you’d think that something that already represents a third of the market for home sales is past the tipping point. But I don’t believe that. We’ve been doing very well at Intero by studying the market and moving swiftly to seize distressed opportunities. So should you.  In fact, the true real estate lovers saw this coming long ago and stashed cash accordingly.
 
And sure, for the average consumer, buying a distressed property is going to be a mind-boggling experience (if it even happens in the first place). But all the more reason to study the process and figure out how to make it work if you’re really interested in pursuing this opportunity. When preparation meets opportunity you get success.
 
You just have to remember another quote from the great Warren Buffet:
 
“Risk comes from not knowing what you’re doing.”
 
Which takes us back to that studying process and being prepared.
 
Where can you learn about the market for distressed properties? We have knowledgeable agents who can help. Many are specializing in this field right now for this very reason. Even so, I’d advise you to do some reading on your own as well. Take the time to choose the right agent and be sure you’re armed financially.
 
Just because we’re in a “slow” housing market, doesn’t mean you can’t profit in the end.

CALL ME to discuss how I can help you!


Calendar Posted Tue Jun 29 12:00AM

 

It's safe to say now that the action brought to the nation's housing markets by the Homebuyer Tax Credit is over. Any buyers who wished to take advantage of this credit had to have been in contract by April 30 and now must close by June 30.

 But please remain seated before exiting this ride and declaring the housing market D-O-O-M-E-D (as several headlines have cried this week). See, there is still a very key factor in place that is working in homebuyers' favor:

 Historically Low Interest Rates

 This often-overlooked little fact is actually a really important point to ponder. That's because when you look at today's rates, which average around 4.75 percent on a 30-year fixed rate mortgage, according to the Mortgage Bankers Association's latest survey, you realize what a win this is for borrowers – even for those who missed the tax credit deadline.

 These low rates are far more significant than any tax credit in terms of savings and incentive to stoke demand. How is that? Well, let's look at the math:

 Let's say today's buyer is looking at a 5 percent interest rate on a 30-year fixed loan of $285,000. He's disappointed at missing out on the tax credit, but since he's able to lock in at a lower rate than he would've gotten two months ago at 5.25 percent, he's actually saving $15,782 in interest over the life of the loan, which according to my math is significantly higher savings than what that tax credit would've gotten him ($8,000).

 So today's buyer nearly doubles his savings in interest compared with the April tax-credit buyers? Doesn't spell D-O-O-M to me.

 Let's look at another scenario:

 This buyer would be able to lock in a 5.25 percent rate on a 30-year fixed loan of $400,000 in July. There's no tax credit to light a fire under his decision, but say the economic news circles expect a slight uptick in rates by the end of August. If he waits, he'll risk increasing his rate to 5.35 percent, thereby adding $8,943 in interest to the life of his loan.

I'm not saying that rates will save the day. Remember: There are no quick fixes. But we also have to be sure we understand the forces that are working in the market's favor.

Tax credits may come and go, but at the end of the day it's things like historic low interest rates that will keep buyers interested. 


Calendar Posted Tue May 11 02:16PM

Your Home, Your Money..

For a brief heady period, freelancers and the other self-employed folks found it easy to secure a mortgage: all that borrowers with a reasonably good credit score had to do was write in their income and swear with all the power of their own signature that, indeed, that was what they made. Also known as "stated income" mortgages, they were obviously susceptible to fraudulent borrowers and those whose income was unstable or temporary. By 2008, when the term "liar loans" started appearing in headlines and teaser clips, the boom was over, and for many hopeful borrowers -- even the honest ones -- so were the chances of owning a home.

The real pity is that when the recession cost so many people their jobs, it also cost them their ability to get a mortgage or refinance an existing one. Many unemployed workers turned to entrepreneurship and launched their own businesses -- putting them in the ranks of the self-employed. Yet, many of these new business owners haven't worked in this capacity long enough to rack up the two years of tax returns for their small business that lenders require. Worse, if they spent significant amounts of money to start up their business -- and ended up with a loss on paper, or just a nominal amount of income -- they will be evaluated skeptically by even the most small business-friendly of lenders.

But all hope is not lost. Believe it or not, the self-employed and freelancers of the world can still get a mortgage. It will, however, take a little blood, sweat and (possibly) a few tears. A pair of freelancing friends of mine bought a house near my home in 1997, and the process took several months but they're still ensconced in their sweet little home in a great neighborhood. Here's what you'll need to remember:
Can your partner get a W-2? My friends, Larissa and Martin, are both grant writers in the non-profit world. They had planned for years to start freelancing so Larissa could spend a few days a week working on her art projects. Martin had a few clients already and Larissa was about to quit a job she didn't much like when they found a great house. Larissa agreed to stay in the job months longer than she would have liked just to secure the loan (she quit the day they closed on the house.) Says Sally Aquire of Moneycrashers, if "there is one steady income that can be relied upon, lenders have greater confidence that you won't default on your mortgage payments and can look on your self-employed status more favorably."

Do you have a regular client, or several?
If you're self-employed, you'll have to document your income far more carefully than those who get W-2 statements. A few years of tax returns is just the beginning. You'll also need invoices from clients and even a few letters written by them, assuring your lender that you're a good person who will likely continue to be paid for your great work. If you have one or two that have paid you monthly or quarterly, and you can demonstrate a relatively steady stream of cash coming from them, your lender will be more likely to approve a loan. When I worked for a company that employed a large number of freelancers, I provided several letters indicating that an individual had been paid monthly for years, and as far as I was concerned would continue to receive those payments. The reliable freelancers got the loans, financial meltdown be damned.

If you don't have regular clients but can demonstrate your regular income with a variety of clients -- using tax forms and profit and loss statements -- you may still have a chance. If you don't have a knack for balance sheets, get a good bookkeeper to prepare some for you; the investment will be worthwhile.

Good credit is a must. A credit score that is lower than 700 will make it extremely hard for you to get a mortgage as a self-employed individual. If your credit is much lower than that, you may as well just get a great apartment and work on improving your credit.

A track record of bank-approved success is required. If you've managed to slide most of your family's expenses into your business -- I'm a food writer, for instance, so I have put most of the cost of groceries and kitchen implements into my self-employment expense column -- that's probably not going to work for a lender. One WalletPop writer tells me that she's been described as "unmortgageable" because her income just isn't provable for the banks, despite that fact that she makes enough to carry mortgages on two homes and has a great credit score.

Another writer's son, a musician, wasn't even able to secure a $40,000 FHA loan. "The rules are the rules," she says, mourning that she couldn't co-sign for him. If a mortgage is really important to you, holding down a job for a few months (even if you hate it) is probably the best way to go. Failing to list things you've considered expenses for a few years -- and paying lots of taxes as a result -- is an expensive route to the American Dream.


Save up a big deposit. Without a W-2, lenders typically look for at least 20% down. You may need even more if you haven't been making more than $50,000 to $60,000 in gross income a year. It doesn't seem fair, but you can comfort yourself in the knowledge that you'll probably never end up with an underwater mortgage.

Getting a loan as a freelancer is definitely not easy. But once you've signed the documents, you can do as you like. And as long as you pay each month, your lender no longer will have you under the magnifying glass. As they say, nothing worth doing is easy, and it goes double for a pretty house in a neighborhood you love -- one that you can afford, and have the life you want, too