Home >> California Current >> Archive for the 'New Home loan' CategoryCalifornia Home Sales Jump While Values Continue to Dive

Archive for the 'New Home loan' Category

Home Equity Loans

California Home Sales Jump While Values Continue to Dive
Published
by
Heindrick
on October 22, 2008
in New Home loan
. 3 Comments

California Mortgage Highlights

Bay Area Home Sales Jump 45% while Median Prices Dive 36%. This brings the median home price in the Bay Area down to $400,000 compared to $625,000 in September 2007. Foreclosure resales accounted for much of the Bay Area home sales activity, ranging from a low of 9.5% in San Francisco to 67.9% in Solano County. The remaining counties fell between this range, with the average right around 37%. According to DQNews, the typical monthly mortgage for residents of the Bay Area fell to about $1890, down from $3171 from last year. In addition, mortgage activity showed that adjustable rate mortgages are near all time lows and multiple mortgages are down as well. [Full Report at DQNews]

Southern California Home Sales Jump  65% while Median Prices Dive 33.2%. Median home prices in Southern California neared $308,500, down from $462,000 in September of 2007. As for the foreclosure activity, Southern California had numbers showing numbers a consistently worse than those in Northern California. Foreclosure home sale activity ranged from 36.8% in Orange County to 68.9% in Riverside County. The remaining counties had an average of 48%, significantly higher than that in the Bay Area. In Southern California, typical homeowners had mortgages with monthly payments of about $1458, down from $2198 last year. They also shared the same trend as the Bay Area with ARM financing and multiple mortgages decreasing. [Full Report at DQNews]

Interpreting the Data
The trends and data that have been presented clearly show the onslaught of foreclosures continuing in California’s housing market. Bargain hunters are definitely responsible for most of these home sales transactions as sales numbers rise while prices continue to dive.  One thing that September 2008 data shows us is the reminder of the significant lack of activity in September of 2007. The numbers we see are definitely convincing of the bargain shopping going around in California, but one can’t forget the terrible times of September 2007. Home sales activity and mortgage activity became stagnant in California as the credit crisis began emerging and everyone sat around during that period. 

What we are seeing unfold before our eyes is the correction of home prices throughout California. Until enough of these bargain hunters can snatch up more of these discount homes, we still have quite a large inventory of homes sitting in our hands. The balance point will be struck when home sales and median prices adjust accordingly; meaning no jumps in one and dives in the other. Eventually, we’ll be hoping for sales activity to rise, with median prices holding steady and possibly increasing as well. As for now, I guess we should be thankful that at least home sales are up, despite the continuing drop in home prices.  Next month’s data will also be interesting as this last month brought us a series of economic woes and breaking headlines; a definite factor when considering the average home buyers mindset and considerations.

1 Star2 Stars3 Stars4 Stars5 Stars (8 votes, average: 4.75 out of 5)
Loading ... Loading ...
Home Equity Loans

Proposition 12 Will Support Veterans in California With CalVet Mortgages
Published
by
Heindrick
on October 20, 2008
in New Home loan
. 4 Comments

 Proposition 12 - Veteran Bonds Act of 2008
This measure will allow California to issue $900 billion in bonds to help veterans buy homes with low interest rate mortgages. Specifically, veterans will be able to qualify for these traditional fixed rate mortgages through the CalVet program.  Typically, these mortgages would carry rates below market and would cater to the needs of veterans.  While this measure will be voted for on November 4th along with the presidential election, the CalVet program is certainly no stranger to California.

What is CalVet?
The CalVet program began in 1921 and this November 4th will be the 27th time it has been on the ballot. As with most government program, the California Department of Veteran Affairs confirms that the CalVet program is “tightly controlled and heavily regulated“.  The program makes sure to verify the veterans eligibility as well as their ability to repay these loans. The department also keeps a close eye on the offered mortgage rates and may adjust these rates to make sure the bonds are paid back without assistance. Since 1923, the program has helped over 425,000 Californian veterans; veterans who have served from World War I, World War II, Korea, Vietnam, and most recently Iraq and Afghanistan.

 The programs offered by CalVet are quite traditional and provide a stark contrast to the trend of exotic and creative mortgages we’ve seen recently. As an example, CalVet would offer home loans at a simple 5.5% 30 year fixed mortgage while nationwide averages might be at 5.87%. Interestingly, the CalVet program has not costs taxpayers a single dime since its origination in 1921-so far, veterans have paid back every loan.

Supporters of Prop 12
In Sacramento, the Assembly and Senate voted unanimously for the legislation; quite an unusual surprise not often seen in Sacramento legislation. Supporters of the proposition hope to show their support for these brave veterans by extending this program to ensure their housing needs. If the veterans payback their loans, the measure would come at no cost to taxpayers; a likelihood when compared to the significant trend since its origination.

Opposition of Prop 12
There is some opposition of Prop 12 and the most common arguments come down to eligibility and money. First of all, some argue that the program should be strictly limited to veterans who saw combat during these wartimes, instead of all veterans including noncombat individuals. Financially, while the trend has been promising, there is still a chance for taxpayers to end up paying for such a measure. While the costs are supposed to be paid back by borrowers, there is always the slight chance that taxpayers could foot the bill in the future.

There’s almost a general expectation that this measure will pass, but if you’re looking for a way to support your troops, Proposition 12 is a great opportunity for you to do so. On a side note, I couldn’t help but observe the spectacular streak of non-default within the CalVet program myself; if only more would have stuck to the traditional 30 year fixed mortgage. If only.

 Full Story @ SFGate & PasadenaNews

CalVet Website

1 Star2 Stars3 Stars4 Stars5 Stars (12 votes, average: 4.92 out of 5)
Loading ... Loading ...
Home Equity Loans

Mortgage Tip – Pay Attention to Your Debt to Income Ratios
Published
by
Heindrick
on October 15, 2008
in New Home loan
. 2 Comments

Aside from the great weather and beautiful views, one thing residents of California can expect is higher median home values. Although our median incomes are adjusted to meet these higher prices, the penalty for error when managing your debt to income ratios increases as well.  As lenders realize the importance of filtering out those who cannot truly afford their homes, debt to income ratios are once again strong indications of ones financial ability.  During the housing boom days, debt to income ratio standards weakened as stated loans emerged as the popular method of “verifying” ones income.

Well, earlier this month, the Mercury News put into perspective how poorly homeowners in California are keeping these debt to income ratios in mind. In fact, according to the U.S. Census Bureau of 2007, all nine Bay Area counties ranked in the top 40 spots with the highest percentage of homeowners spending more than 50% of their income on housing. 

More than 50%. The problem is that the more you spend on your housing, the less income you have for other expenses, and the less financial flexibility you have. Keep in mind these figures are only for housing and do not include various expenses such as car payments, insurance, food, cell phone bills, entertainment expenses, and so forth. Add those all together, and if you’re spending more than 50% on housing, you’re either very close to living paycheck to paycheck or well past that point already.

In California, these problematic statistics are shown to increase steadily from 2004 to 2007. Aside from stated loans, people also grew more comfortable with leveraging their money so heftily; expecting home values to continually rise. The problem is that when it comes time to refinance because of your adjustable rate mortgage, and you can’t–you’ve given yourself no wiggle room. If you’ve maxed out your debt to income ratios in the first place, by the time your payments begin to increase you’ll have no more room to breathe.

That being said, here are a few tips I’d like to share regarding your debt to income ratios:

  • Don’t just consider your DTI another loan qualification obstacle. Seriously consider this ratio and see if you’re actually qualifying within these limits. With loans more stringent these days, you’ll most likely have to document your income. But, if you are stating your income, make sure your stated numbers are true to what you make. You may feel like you’re scoring a great deal or getting past the system, but these ratios are in place for a reason.
  • Plan ahead and consider the future, but don’t bank on anything. Don’t rely on home price trends or future expectations to calculate how much you can afford. There are cases where great predictions can mean great opportunities and sweet profits, but take the current economy as a lesson to see what happens when these future expectations aren’t met.
  • Think carefully about any type of adjustable rate mortgage. Again, there are opportunities where adjustable rate mortgages can be great. But, consider the possible scenarios if your payments were to increase. Could you afford it? Would you be even willing to pay that much? Refinancing is usually an option to transition back into a fixed rate mortgage, but again, see what is happening to people today who are stuck in their ARM mortgages.

There’s definitely a lot of things shaking up this housing market, but the bottom line is always your dollar. Home prices and slowing economies are definite causes for concern, but the bottom line is what’s coming in and out of your pockets every month. Take this consideration carefully, and you’ll see why debt to income ratios are still such important mortgage qualification tools.

1 Star2 Stars3 Stars4 Stars5 Stars (5 votes, average: 4.8 out of 5)
Loading ... Loading ...
Home Equity Loans

The Bailout Rescue Bill and California Home Owners
Published
by
Heindrick
on October 8, 2008
in New Home loan
. 4 Comments

Last week was quite a roller coaster of financial emotions. On Monday, the House had initially rejected the Rescue bill and by the end of the week in was back in President George W Bush’s hands to sign. Within those 96 hours, stock markets panicked and confidence in our economy was severely shaken. But with the rescue bill finally in place, here’s what home owners in California can look for in the future.

Some think Bailout Is Just Not Enough
The Sacramento Bee wrote that the Rescue Bill simply won’t be enough to cure the foreclosures in their region of Sacramento. The San Jose Mercury News also writes that the bailout doesn’t detail specific provisions for “strapped homeowners” and will do little to cure this economy.

Meanwhile, the FHA has also stepped in to provide insurance of up to $300 billion worth of troubled mortgages in their Hope for Homeowners program. Then there are individuals who are saying that the bailout bill was wise to avoid specific details, as it places most of the responsibility on the market itself to correct the housing industry.

Giving the Bailout Time to Work
Financial analysts concur that this economy will get worse before it gets any better. And without a bottom in sight just yet, a lot of government officials and individuals will be under pressure to simply do something. There are a few steps that California has already taken, mostly addressing the issue troubled homeowners either facing foreclosure or already in the process.  But the notion that we must hit rock bottom is definitely a cause for concern. If you take a look at the trends in home prices in California, we saw a dramatic increase in home values over a period of many years.

What we can’t expect is for this mortgage crisis to cure itself within a fraction of that time. It’s been addressed by many before, but home prices in California need to return back to “normal” levels; unfortunately, this is what’s putting so many on the edge of their seats. Everyone wants this troubled economy to improve and for the housing industry to return back to normal, but people aren’t that excited about losing the value of their home. I wouldn’t be either, but it’s a fact we must face. If we expect these “bubble” values to continue, and avoid the inevitability of the “normal” values to return, it’ll be a very long time before we can expect any turnarounds in this economy. Expecting the bill to cure markets overnight is simply too optimistic.  For right now, the bailout rescue bill allowed us to avoid a collapse in the markets; a glimpse we were able to catch post Monday’s rejection.

 Here’s Some Links to Interesting Reads:

LA Times - Giving the Bailout Time

InsideBayArea - Bailout will Restore Confidence, slowly.

1 Star2 Stars3 Stars4 Stars5 Stars (11 votes, average: 4.91 out of 5)
Loading ... Loading ...
Home Equity Loans

3 Tips to Avoid Getting Taken Advantage of In Your Next Home Loan
Published
by
Heindrick
on October 1, 2008
in New Home loan
. 2 Comments

I recently wrote about the Mortgage Reform legislation for California that was vetoed by Governor Schwarzenegger and I wanted to give you some positive responses. One of the main issues this reform addressed was the increased restrictions over California mortgage brokers; it would take preventive steps to cure some of the mortgage lending problems we encountered in the recent years.

Many people were disappointed by the veto for various reasons. I won’t go into detail or justify any of these political standings. But I will offer this piece of universal generalization; no one wants home owners to get taken advantage of. Yes, the legislation would have addressed many issues. Fortunately, there are still many things you have control of to make you are not take advantage of. Here are three simple tips any home owner can follow:

1. Do your research

Negative amortization loans, interest only loans, adjustable rate loans. “Creative lending” has caused California quite the headache as many homeowners are now realizing what these loans actually mean. These loans exist for a reason, so make sure you understand the reason behind them. By doing so, you’ll be less likely to sign for these loans simply because of a sales technique or marketing tactics.

2. Ask and Ye Shall Receive - Not Quite

Don’t get anxious or overbearing, just be cautious. Question your broker. Question the Lender. Question the Docs. Don’t be afraid to ask a question if you don’t understand. This is one of the biggest financial decisions you’ll make in one of the most chaotic markets in history.  By asking questions along the way, you’ll stand a much better chance of receiving the loan terms you originally asked for.

3. Stop and Think.  Relax then Focus.

Take a moment and seriously consider the decisions you are about to make. I’m not saying to take your sweet time - in fact, time isn’t on your side given the volatility of the mortgage market. But don’t just sign anything that comes your way. There’s a lot of pressure going both ways during a mortgage transaction and things can get pretty crazy pretty fast. Time is of the essence, but rushing won’t get you anywhere.

While we didn’t get the actual legislation to curb some of these predatory practices, there are many ways you can protect yourself. Follow these simple steps in your next mortgage transaction and you’ll avoid a lot of the headaches without any fancy bills or legislation.

1 Star2 Stars3 Stars4 Stars5 Stars (6 votes, average: 4.67 out of 5)
Loading ... Loading ...
Home Equity Loans

California Housing Data for August Comes as No Surprise
Published
by
Heindrick
on September 22, 2008
in New Home loan
. 0 Comments

Home sales surge while prices plummet.

According to DQNews, 46.9 percent of homes sales in August 2008 were foreclosure resales; this is compared to 44.9 percent last month and a miniscule 9.4 percent in August of 2007.  As one could expect with this type of data, home sales significantly suffered throughout California.

The Los Angeles Times reported that SoCal median home prices fell to $330,000; a 34% decline compared to last year, bringing values back to prices seen in November of 2003. The decline was even steeper for Los Angeles County where median home prices fell $20,000 from July to August.

The Bay Area’s Silicon Valley also posted declining numbers as Santa Clara County reported numbers not seen since September of 2004. The media price in Santa Clara County dipped below $600,000 to $592,750, compared to a median home price of $805,000 in August of 2007. The worst decline seen in the Bay Area belongs to Contra Costa County where median prices plummeted 48 percent from last year down to $315,000. DQNews estimates that 36 percent of Bay Area transactions were foreclosures last month, with Solano and Contra Costa County breaking the 50 percent mark.

One thing worth mentioning is that in areas like these where prices have plummeted, activity and transactions rose significantly. In Contra Costa County, the most statistically damaged county in the Bay Area, sales jumped 70 percent from last year’s levels in August 2007.  But considering the data, these seemingly opposite numbers do go hand in hand. Bargain hunters love this market and as more foreclosure transactions are completed, the lower prices will continue.

Buyers were expected to save this housing market and we will just have to endure the cycle we are now facing. Until the inventory of discounted homes in California is less saturated, the more transactions we see, the further we can expect prices to drop.  Bottom line, this is the price we will pay for the inflated and “bubbled” values until they return back to normal levels.

1 Star2 Stars3 Stars4 Stars5 Stars (11 votes, average: 4.91 out of 5)
Loading ... Loading ...
Home Equity Loans

CalHFA Now Available in Bay Area’s Alameda County
Published
by
Heindrick
on September 15, 2008
in New Home loan
. 5 Comments

Last week I mentioned how you could find a home at a bargain price. Today, I want to highlight a program made specifically available to Californians. The program is the California Housing Finance Agency, also known as CalHFA.

This program has been around for awhile and has helped offer fixed rate financing to first-time homebuyers in California since 1975. The program is financed by non-taxpayer funds to help California families live in a home with a mortgage that they can afford.

I wanted to pay special attention to them today because they have just recently given access to prospective home buyers in my hometown area of Alameda County. Each county will have different eligibilities, but for Alameda, families of three or more can earn up to $120,540 and still be eligible. With this program, eligible buyers now have access to below-market, fixed-rate mortgage loans to finance foreclosed homes in specific zip code areas. In addition, some lenders have also agreed to offer sale prices at 12 percent below estimated market values.

CalHFA estimates that the available financing for this program will be able to put 800 to 1,000 homebuyers into their first home.

In July 2008, CalHFA helped their 150,000th family into a home and I certainly hope the trend continues. This program has also been available in Sacramento County, allowing families of three or more with incomes up to $99,400 eligible as well. Visit their site, for the full list of eligibilites and zip codes.

For more information about CalHFA, be sure to also visit their homepage at http://www.calhfa.ca.gov/

In addition to helping homebuyers, they have put up a page to help those in risk of foreclosure. Visit the site here to see what you can do if you are facing a foreclosure in California.

1 Star2 Stars3 Stars4 Stars5 Stars (15 votes, average: 4.93 out of 5)
Loading ... Loading ...
Home Equity Loans

Fannie and Freddie Bailout: How to Jump Start a Dead Car
Published
by
Heindrick
on September 11, 2008
in New Home loan
. 3 Comments

You go to start your car and then, nothing. Unbelievable, the battery just died. But no worries, you call for help and within the hour you’re back on the road.

But, there are a few caveats. Keep the engine running for at least 15 minutes to charge up the battery. And if it’s dead, don’t turn off the engine till you’re at the nearest store that carries a new car battery.

Well Fannie and Freddie just got bailed out and there’s a few warning signs we should definitely consider - caveats, if you will.

Mortgage rates on 30 year fixed loan dipped below 6% finally, but guidelines are still tight. And here in California, our “jumbo” loan amounts are going to shrink from $729,750 to $625,000 starting January 1st 2009.

Keep It Running. Well, so far we’ve seen good news in dropping rates, but we better keep the engine running. If we want this market to pick up, we have to keep this momentum. Like a dead battery, if we shut it off too early we’ll be right back where we started.

This bailout has hit every news headlines and my one hope is that buyers are listening. California is amongst the top states in the nation to get hit hardest by the foreclosure wave and we simply have too many homes sitting in our inventory. Take a look at this top 10 list of riskiest mortgage markets and notice how we own 8 of the 10 spots. What we need are buyers, and hopefully the reassurance that comes with this bailout gives them that extra kick.

Are We Dealing With a Dead Battery?

If we are, no matter how much momentum we have - it just won’t be enough. In a way, this bailout was meant to be a preventive measure and not a cure. If there wasn’t a bailout, we would have had a whole new set of problems.

So what will it take then? Here are a few things the San Francisco Chronicle wants to see on top of this bailout:

  • Easier underwriting guidelines
  • Larger conforming loan limits
  • Lower jumbo rates

I would love to see all of this happen - but, what do you have to say?

  • What’s your opinion on this latest bailout?
  • What changes do we need to see to really jump start this housing market?

1 Star2 Stars3 Stars4 Stars5 Stars (8 votes, average: 4.63 out of 5)
Loading ... Loading ...
Home Equity Loans

Five Tips to Score a Bargain Short Sale
Published
by
Heindrick
on September 5, 2008
in New Home loan
. 6 Comments

Short sales are nothing new, but the current housing market has put these little gems at the top of every bargain hunters list.  Thanks to dropping home prices in California and tighter lending guidelines, you can expect to find a handful of short sales within your area.  But, buyer beware. Short sales are not for the faint of heart and can often become more troublesome than they are worth. If you are considering a home that is offered as a short sale, keep these helpful tips in mind.

Be Patient
In a short sale, lenders effectively sell the house below market value and take a loss on their loan.  As a result, you can expect every decision to go through a series of supervisor approvals and various department oversights.  Sellers are facing financial hardships and lenders are combing through these transactions with a fine tooth comb. There’s nothing certain about short sales - but be patient and your time could pay off.

Investigate
Short sales often result from home owners who either faced financial hardships or were just financially irresponsible. The last thing you want to do is to buy their problems along with the home.  Check for unpaid taxes, liens, debts, and any cloud left on the title.

Invest in Success
With the recent popularity of short sales, there are a number of individuals trying to ride this wave as well. Make sure you find a Realtor who has proven success in the very different world of short-sale transactions. Don’t be afraid to simply ask them how many short sale transactions they have completed in the past year.

Find Value
Short sales are sales where lenders accept a purchase price below the amount due on the loan. However, this doesn’t automatically mean you will score a bargain. Actually, you might find many short sales available simply because home prices were so highly inflated in these past few years.  Make sure you get a complete analysis of the market area as well as recent comparable sales. Sure, it may seem like a bargain since you’re paying less than the previous owner; but if market values don’t support the sale price, well then that’s no bargain at all.

Get Ready to Buy
If you are serious about finding a bargain, you’d better be serious about buying.  In a short sale transaction, everyone is likely to be at the edge of their seats. Make sure you get properly financed and have the means of actually paying once you find this bargain deal.  Again, time is of the essence and lenders will have no choice but to process the home into foreclosure if that time runs out.

There’s definitely a lot of action in the short sale market, and with the housing market where it stands - you can definitely expect to see more of these so called “bargains” popping up. Just remember though, short sales are not some super secret get rich quick real estate scheme. Like any transaction, do your research ahead of time before rushing into your new home.

1 Star2 Stars3 Stars4 Stars5 Stars (14 votes, average: 4.57 out of 5)
Loading ... Loading ...
Home Equity Loans

Down Payment Assistance: Let the Countdown Begin
Published
by
Heindrick
on September 4, 2008
in New Home loan
. 6 Comments

The Labor Day holiday has now passed and it’s now officially the end of summer. No more late nights in front of the TV because of the Beijing Olympics. The kids are all back in school and Presidential elections are rounding the corner. But, things are just getting started.

Come October 1st, there are going to be many changes made because of the recent Rescue Housing Bill. One of the biggest changes is that September will be the last month FHA will offer homeowners down payment assistance. In addition, they are also increasing the current 3% required down payment to 3.5%.

With over 40 percent of FHA borrowers facing foreclosure utilizing DPA, the government has acknowledged this pattern and hopes to now change this.  Subprime lenders went first, Alt-A felt the crunch, and now FHA is doing its part to eliminate this risky lending practice.

Analysts have hinted that it will be first-time home buyers who will cure this housing market. But with legislation like this, it almost seems counterintuitive.  The fact is that home buyers are less likely to default if they invest a significant amount of money into their homes.

Unfortunately, FHA down payment assistance is all too similar to the exotic loans we are now paying for.  It should be interesting to see how September and subsequent month’s home activity is reported; expect noticeable spikes. There is definitely going to be a significant amount of pressured home buyers hoping to beat this buzzer before October 1st.

Interested in more information? Read more about qualifying for a home loan in today’s tough market. Bottom Line: If you want to buy a home, expect to Bring Cash.

1 Star2 Stars3 Stars4 Stars5 Stars (8 votes, average: 4.38 out of 5)
Loading ... Loading ...
Heindrick So

About the Author:

Heindrick So is a mortgage consultant at a local Bay Area Real Estate Brokerage - specializing in residential wholesale lending.



Like our blog?

Get the widget!





Today's Mortgage Rates

5/1 Adjustable Rate:
30-Yr Fixed Rate:

Find Your Lowest Rate!


What type of loan do you need?
Mortgage Refinance
Home Equity Loan
Debt Consolidation
New Home Loan

In what state is the property in question located?


What is the property type?


Credit Rating?




A GuideToLenders.com Partner


0

Start your Mortgage Search Now

Step 1

Select a loan type:
Mortgage Refinancing
Home Equity Loan or Line
Debt Consolidation
New Home Loans
 Property State:

Property Type:
Credit Rating:

Home | Site Map | Privacy Policy | California Privacy Policy
© 2008 CMR. All rights reserved.