Mortgage Protection Program

Through the CA Assn of Realtors (CAR) Housing Affordability Fund Mortgage program, 1st time homebuyers who lose their jobs due to layoffs may be eligible to receive $1500/mo, for up to 6 mos, to help make their mortgage payments.  A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750/mo for up to 6 mos.

Qualifications: First-time home buyer who has not owned a home in the last 3 years; Open escrow 4/2/09 and close on or before 12/31/09; purchase property in CA; be a W2 employee.

Info: www.CAR.org/aboutus/hafmainpage/CARhafmortgageprotection/

Belmont, CA market update (2009 Q1 andQ2)

source: Multiple Listing Service stats

• Closed Sales: 23 (Q1) v. 48 (Q2)
• Average Days on Market: 63 days (Q1) v. 45 days (Q2)
• Median Sales Price: $810K (Q1) v. $836K (Q2)
• Current active listings: 39
• Current pending sales: 29
• SOLD within last 3 months: 38

With only 39 homes on the market as of today ( Aug 24), it looks like buyers are cautiously returning to the market due to sustained low interest rates.  Buyers continue to watch signs of employment recovery and the state budget problems, which are rooted in the collapse of the housing market.  Well-priced and well-marketed homes continue to sell.

One of the critical success factors is working very closely with the lenders to ensure that the Ts are crossed and Is are dotted.  Add-on fees, tough underwriting guidelines, and lower appraisal value, longer close, etc. are a few things to educate buyers. 

Until next time…

Advice to Buyers regarding short sales

Short sales (also known as pre-foreclosures) are starting to be more prevalent.  Whether you are specifically looking for a short sale property to purchase or just bumping into one, here are a few tips:

- About.com has a good consumer-oriented website about the various aspects of short sal – definition, what to look for, what questions to ask, etc.
- The main ingredient is PATIENCE.  This is not a regular sale situation in which you may hear back from the seller within 24-48 hours.  Although the seller is the property owner, you still need the lender’s approval for the short sale.
- Have your realtor call the listing agent to find out out whether the seller qualifies for a short sale. 
- Make sure that you work closely with your realtor to advise you on the process and offer strategy.  Don’t assume that you can put a low-ball offer and get away with it.  Lenders are looking at mitigaging their losses and they will have the appropriate due diligence before approving the sale.
- Be prepared to order your own inspections.  Most short sales will not have the usual inspection reports paid for by the Seller as part of the pre-sale disclosure packet.

If you do your homework and put a comprehensive offer package together, you will increase your chances to purchase a home at fair or below market value. Be patient while waiting for lender’s approval.

Housing update – CAR 6/17/09 Newsline update

Fast Facts (source: CA Assn of Realtors – Newsline 6/17/09)
Calif. median home price – April 09: $256,700 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 09: Santa Barbara So. Coast $840,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 09: High Desert $106,530 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index – First Quarter 2009: 69 percent (Source: C.A.R.)
Mortgage rates – week ending 6/11/09 30-yr. fixed: 5.59% Fees/points: 0.7% 15-yr. fixed: 5.06% Fees/points: 0.7% 1-yr. adjustable: 5.04% Fees/points: 0.7% (Source: Freddie Mac)

Decline in Assessed Value

There have been several property tax re-evaluation scams coming by mail.  Proposition 8 allows for the temporary reduction in assessed value.  Once enrolled, the property assessed value is subject to annual review.  The county tax assessor does not charge the homeowner a fee to evaluate their property value.  For San Mateo County, information and application form about Decline in Assessed Value can be found at www.smcare.org, under Homeowner Resources.  Contact me via email if you need help with comparables to support your application.

Why do mortgage rates change?

When you purchase contract is ratified, one of the main questions on your mind is “How much will my mortgage rate be?”  “What happens when rates go up or down?”.  Here is a simple explanation.

Interest-rate movements are based on the simple concept of supply and demand.  If the demand for credit (loans) increases, then so do interest rates.  Conversely, if the demand for credit reduces, then so do interest rates. 

Another rule of thumb:

Bad news (i.e. a slowing economy) is good news for interest rates (i.e. lower rates).

Good news (i.e. a growing economy) is bad news for interest rates (i.e. higher rates).

Another concept: there is an inverse relationship between bond prices and bond rates.  When bond prices move up, interest rates move down, and vice versa.  This is because bonds tend to have a fixed price at maturity – typically $1,000.  If the price of the bond is currently at $900 with 10 years left on the bond, and if the interest rates start moving higher, the price of bond starts dropping.  When next time you hear your mortgage broker talking about ‘watching bond prices’, then you’ll know why.

Stimulus package updates

Here are some important updates regarding housing and President Obama stimulus package you might be interested in. Please send me an email or call me if you’d like to receive further details.

• the U.S. Senate passed the American Recovery & ReInvestment Act of 2009 and the stimulus bill passed at $787.2 billion. • The conforming loan limit is now capped at $729,750 (up from $625,500).

• First-time homebuyer credit was increased from $7500 to $8000. The bill removes the requirement that the credit be paid back if the buyer stays in the home for at least 3 years (program expiration date is December 1, 2009).

• Interest rates to come down 125-150 basis points (please get further details from your lender).

• Over $50 billion for foreclosure mitigation

• Mortgage interest deductibility, real estate deductibility, and the $250K/$500K capital gains exclusion, are still preserved

To pay points or not?

Many borrowers do not have a clear idea about up-front points when applying for a mortgage loan.  In previous real estate cycles, paying 1 point was equivalent to shaving off approximately .25%  of interest.  In today’s market, one percentage point can lower the interest rate by as much as 1%, reducing a 6% rate to 5%.  This could translate into a big saving in the borrower’s monthly housing expenses.  Just make sure that you have calculated the payback period if you choose to pay the point(s) up front.

Senate approved $15K tax credit for homebuyers

Housing could get a big boost from the latest addition to the mammoth stimulus bill working its way through Congress.
Senate legislators unanimously approved a proposal Wednesday that would allow a tax credit for home buyers of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers