Tuesday, June 25, 2013

Home buying tips: How to buy a house

First time home buyers have a million questions, and luckily, Author and Fox Financial Correspondent, Gerri Willis, has a million answers. Here's what you need to know before you buy a home

Saturday, June 22, 2013

June 2013 Vacaville View

A Hollywood movie star comes to Vacaville; a quick look back at the recent Recreation Expo; and the Doolittle Museum unveils a plane built by two brothers back in the 1910s.

Wednesday, June 19, 2013

Weekend Warrior Presented By Big Valley Mortgage

Despite the absence of major market moving news in the U.S., stocks have had a wild ride for the first 4 days of the week.  The market volatility has been primarily based upon speculation about what the Fed will do regarding interest rates and economic concerns over seas.  The market finished Thursday only down 100 points for the week after being down over 300 points at the start of Thursdays trading.

Mortgage rates have been continuing their march higher although the pace of the increase has slowed somewhat.  On Thursday rates recovered slightly, however many investors continue to remain on pins and needles regarding the value of their bond portfolio.  As rates rise, the value of bond holdings deteriorate.  Despite the increase in rates investors seem to be waiting for what the Fed will do.

Next week the Fed holds their Open Market Committee meeting and will release a statement on Wednesday at 2:00PM.  In addition, the Fed will also be releasing their forecast for the future of the economy and rates.  This meeting can be a game changer for the markets.  For the last few week interest rate increases have been fueled by speculation that the Fed will start slowing its stimulus program in the coming months.  The reduction of Fed involvement in the bond market will cause rates to rise as the 85 billion dollars in monthly bond purchases is what has been keeping rates artificially low.

Many are expecting the Fed to give further indication on what they will be doing with the stimulus plan and many investors believe that the Fed will have stronger language indicating they are even closer to reducing the stimulus program.  Despite this feeling many investors continue to sit and wait for the release of the statement on Wednesday and hope that the indication of a reduction in the program is further off than rumored.  One thing is for sure, any language from the Fed that indicates they are closer to slowing or exiting the stimulus program will cause a significant jump in interest rates.

The good news in real estate for the week is that despite rising mortgage rates, applications for both purchase and refinances increased 5% in the prior week.  Many believe that homeowners and home buyers are finally accepting that mortgage rates are not going back down to historic lows and that they better take action now before rates jump further.

Indications are that the job market is continuing to improve.  This week’s report for first time jobless claims declined by 12,000 to 334,000.  As we get closer to the 300,000 mark employment optimism always seems to grow.  Claims are down for the last 3 out of 4 weeks.

In one more sign that the economy is improving the retail sales report showed an increase of .3% for the month of April.  Even when volatile gas prices are removed from the equation the increase remained at .3%.  Analysts were expecting only an increase of .1%

Many market moving economic reports are on tap for next week:

  • Tuesday June 18th – Consumer Price Index and Housing Starts
  • Wednesday June 19th – MBA Applications, FOMC Announcement & Forecasts
  • Thursday June 20th – Jobless Claims and Existing Home Sales

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at 707-455-7070

Sunday, June 16, 2013

FHA 203K Mortgage - A Great FHA Mortgage Loan to Rehabilitate a Home!

To comprehend exactly what a FHA 203K Mortgage is we should for starters have an understanding of exactly what a FHA mortgage loan is.
The FHA provides federal government assured mortgages to home purchasers that provides the lenders the assurance to loan money to individuals they might not typically grant a home loan to.
It's not to imply that you will be borrowing funds coming from the federal government neither is it to say that by applying for a FHA mortgage loan you might routinely be accepted.
However it is to say that you will be more probably to be accepted for a FHA mortgage loan than the usual conventional mortgage when you have average or substandard credit rating, such as a bankruptcy, as well as lower than 20% for a down payment. Presently the down payment requirement is 3.5% and that is significantly lower than conventional mortgages.
One of the best deals currently offered by FHA and HUD is the HUD $100 Down Payment Incentive Program. You can buy a HUD foreclosed home with only $100 down payment and if you want to you can still use the FHA 203K Mortgage to rehab it if needed.
Now that we can comprehend the fundamentals of the FHA mortgage loan, it is time to introduce the fact, besides what the regular FHA loan provides, that there are numerous additional FHA home loan programs which home purchasers may decide to take benefit.
These includes the traditional 30 year fixed rate mortgage loan, traditional 15 and 20 year mortgage loans and even many types of adjustable rate mortgages also. You may also get qualified for refinancing or taking out the home equity by way of a home equity loan through FHA programs also.
It appears, although, that probably the most favorite FHA home loan programs that exist is a FHA 203k Mortgage. These loans have the common features of standard FHA mortgages such as versatile credit, assumable mortgages, as well as lower down payment to name some. Yet, they will go one step more by making it simple to rehabilitate a home all in a single loan grouped together.
Having an FHA 203K Mortgage may help individuals who have to renovate their present homes by acquiring financing to do. Also, home buyers may use these mortgages to buy and rehabilitate a pre-existing house in another place.
This could help everybody involved from the neighborhood by making surrounding places better for all the people of the community, to the property owners themselves by permitting people to buy what might be their own dream house, and as well as offering the money for making your dream home possible.
All of this, plus under one mortgage package deal, in the current unpredictable real estate marketplace, taking benefit of FHA programs is certainly the strategy to use!
Considering the glut of foreclosures in the marketplace which includes HUD homes for sale that a number of them needs repairs, the FHA 203K Mortgage could be the solution to acquiring or rehab your own dream home at a discount cost!

Article Source: http://EzineArticles.com/3847860

Thursday, June 13, 2013

Rent vs Buy

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. Here are some terms and information that might help answer your questions.
Price of home
Purchase price of the home you wish to buy.

Cash on hand
Cash you have for the down payment and closing costs.

Interest rate
The current interest rate you expect to receive on your mortgage.

Term in years
The number of years over which you will repay this loan.

Property tax rate
Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.

Home insurance rate
Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.

Loan origination rate
The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.

Points paid
The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.

Other closing costs
Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

Association and maintenance fees
Any association fees you are required to pay per month with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.

Total for down payment
Total funds remaining for down payment.

Mortgage amount
Total amount of loan.

Monthly rent payment
Amount you currently pay for rent per month.

After-tax investment return
The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.
The actual rate of return is largely dependent on the type of investments you select. For example, from December 1999 to December 2009, the average annual compounded rate of return for the S&P 500 was -0.6%, including reinvestment of dividends. From January 1970 to December 2009, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Income tax rate
Your current marginal income tax rate.

Expected inflation rate
What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2009. The CPI for 2009 was -1.0%, as reported by the Minneapolis Federal Reserve. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.

Home appreciates at
Annual appreciation you expect in the home you are purchasing.

Future sales commission
The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.

House payment
Total of principal, interest, taxes and insurance (PITI) paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.

Initial tax savings
The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250. (At a tax rate of 25%).

Initial principal payment
Total of principal paid per month on your mortgage.

Net house payment
Your initial house payment minus the value of the tax deduction and principal payment.

Net home price
Net selling price of your home after subtracting any sales commissions.

Monthly PI
Monthly principal and interest payment.

Monthly PMI
Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

Monday, June 10, 2013

What is a "rate lock period?" How can you make sure your rate is low?

A rate lock or a rate commitment is a lender's promise to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This prevents you from going through your whole application process and at the end of it finding out the interest rate has gone up.
A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to "hold" your interest rate and points for a longer period, say 60 days, but in exchange the rate and maybe points are higher than with a shorter rate lock period, for example. 

There are many ways besides opting for a shorter rate lock period to get a lower rate, though. A larger down payment will result in a lower interest rate than a smaller one, because you're starting out with more equity. You can pay points to lower your rate over the life of the loan, but that means you pay more up front. For many people, this makes sense and is a good deal. 

Closing costs are fees paid by the lender, which the lender in turn charges you to close the loan. Many people pay closing costs when they sign on the dotted line, but a person can also finance their closing costs. Paying closing costs when the loan closes will reduce your interest rate. 

Finally, the interest rate a lender is willing to offer you depends on your credit score and your debt-to-income ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.

Friday, June 7, 2013

Top 10 Reasons to Buy a Home

Though the housing market has been turned on its ear, this is a great time for anyone thinking of buying a home. Yes, it may be more difficult to get the credit that you may need; it is still possible, and now prices are so low you may not need as much financing as you originally thought. If you are on the fence, here are some reasons to consider buying a home sooner than later.
Favorable Interest Rates
One of the greatest and most obvious reasons to consider buying a home is the interest rates. Interest rates today, are some of the lowest rates that we have seen in years. It is possible that they will go even lower. You may think that getting a home loan in order to take advantage of these rates is impossible. Although credit standards and loan approval may be higher than before, obtaining a loan is well within the reach of homebuyers with a good credit rating and a steady income that can support the monthly mortgage payments.
Tax Benefits
The second best reason to buy a home is the tax savings. For most workers buying a home may not only allow them to deduct the mortgage interests, it also gives them the ability to itemize their deductions, which they may not have been able to do previously. Once you have lived in your home for two years, you are able to exclude an amount of profit from your capital gains. In addition, you are able to take advantage of this exclusion every two years, even if you decided to sell the home after you have lived there for at least two years.
Unlike cars, houses appreciate over time. Therefore, your house will more than likely be worth more in a few years than you paid for it. Some people take full advantage of the appreciation factor and sell their homes for a profit.
Plenty to Choose From
However, another great reason to buy a house now is the selection. Unfortunately, due to rising foreclosure, there are numerous houses on the market in every state. Regardless of your tastes or preferences, you should be able to find just what you are looking for.
Acquire Equity
Houses are also good sources for future credit and or financing. Homeowners are able to turn the equity that they have in their home into a loan or line of credit through refinancing. This benefit has proven to be important, in a down economy or in situations where medical bills are unmanageable, home repairs or improvements are needed, or kids need funds for college.
Personal Reasons
However, it may be a larger factor for some more than others there are personal and family related reasons for buying a home. The family reasons are usually the most obvious and typically include the need for additional space due to a growing family or relocation for a job or business opportunity. Yet, personal reasons are not always considered. For many, the desire to be able to customize a living space without asking for permission is strong and often a great motivator for young adults to buy their first home. Others grow tired of the noise, neighbors, and cramped quarters of apartments and/or dorm life.
Owning your Home
One of the more traditional reasons for buying a home is that you are purchasing property that you can actually own rather than paying for the use of someone else's property. As we start to get older, the desire to have a place to settle down and retire in becomes more pressing. If you buy a home, you own property that you can not only retire into; but also, pass on to your children.
Asset Ownership
The idea of owning property that can be passed down is the reason many people work and save, which leads us to the next reason to buy a home. There is a pride and peace of mind that comes with owning a house. This is the ability to see why you go to work day in and day out, work two or jobs, or work two or more shifts. This sense of accomplishment cannot be duplicated when renting.
Becoming Part of a Community
If you are searching for a strong sense of community, than you need to consider buying a home. When you own a home in a good neighborhood, you take the time to meet and get to know your neighbors. In addition, you are more likely to become involved in neighborhood activities and community programs.
If you have entertained the idea of starting your own home based business, you may find that it is much easier to convert an extra room in your home into a home office than it is in a rental or apartment setting. You may be able to have a designated entrance for clients, as well as space for a small waiting area. However, depending on the type of business you are considering more elaborate modifications may be required. For example, you may need to bring a restroom up to ADA standard or install an additional sink.

Article Source: http://EzineArticles.com/1858035

Tuesday, June 4, 2013

Real Estate: Good Reasons to Buy a Home

You won't run into many real estate experts who will downplay the benefits of buying a home. Renting an apartment is a great solution for young adults getting to know the feeling of independence for the first time. Renting a house can be a nice go-between step for people who need to get used to the idea of their own property. But these shouldn't be permanent solutions. Buying your own property means no longer throwing money at something with no return. For the same amount of (monthly) money, you can often find a house with twice the space. More importantly, you're building wealth. Here are some other good reasons to buy a house.
Even if you try to be as selfless and free of ego as possible, there is a feeling of pride that comes with owning a home that can't be denied. Nor should it. A man's home is his castle. If you're a woman, the same feeling applies, of course. You are restricted when you live on someone else's property. Sure, you have fewer responsibilities, but you also have fewer freedoms. If you want to paint the walls, the best you can do is find a colored lamp and shine it in the right direction. Buying a house means you can do what you want with your real estate. That is a powerful feeling.
Building Wealth
You're not building wealth by renting an apartment. You're just making someone else rich. When you buy real estate, you're not just giving yourself a place to call your own. You're making an investment. For many people, it will be the most expensive investment they ever make. But it will-more often than not-be one that appreciates in time. Certainly, the market has its fluctuations. You can't be guaranteed that your house will be worth more in ten years. Over a long enough period of time, however, you can be almost certain that your house will be worth more than you paid for it.
Financial Advantages
You're not just building wealth when you buy real estate, you're also qualifying for a host of tax exclusions and breaks that you would never have if you stayed a renter. These can make a big difference at the end of the year. Mortgage interest deductions can take a nice chunk out of your tax burden as long as your balance is smaller than the total price of your home. Property tax deductions are available for certain first time homebuyers. These advantages can add up.

Article Source: http://EzineArticles.com/7302330

Saturday, June 1, 2013

The Top Mistakes You Could Make When Buying An Investment Property

I owe much of my financial security to real estate property investment. Having worked in real estate my whole life (well – since I was 15, so it feels that way!) it’s what I know and it’s also what I love. But it’s not for everyone.

Here are my top mistakes you could make when buying an investment property:

1. Borrowing an amount that’s going to stress you financially to repay. This is the bottom line. People’s circumstances change, you could lose your job, have a/nother child, have an extended period of vacant time, interest rates could dramatically change. Are you prepared for that and will you still be able to (comfortably) afford your investment property.

2. Not having the appropriate insurance. I call a specific landlord protection insurance a “sleep easy” policy. While it doesn’t cover you for everything it sure covers you for a lot more than your building insurance with a tack-on landlord component and is a must – especially for owners with only one property.

3. Having a property manager who doesn’t wait for the right tenants and simply puts in any old tenant. Correct tenant selection eliminates 90% of all future problems and you need a property manager who understands that.

4. Worse still – managing the property yourself. You could do your own appendectomy if you wanted to, but you wouldn’t. Many privately managed properties attract worse tenants, aren’t inspected regularly, the tenants aren’t reference checked, have leases which aren’t up to date and condition reports that aren’t adequate.

5. Don’t listen to the sales agent. With all due respect to my wonderful colleagues in the sales side of real estate – their job is to sell you the home. Confirm any rental projections of any form (projected rental price, likely tenant etc) with a specialist property manager. In the same way that I, as a property manager could tell you what your home may sell for – it’d be nowhere near as accurate / reliable and researched as if you went to someone who did that job function all day every day. 

6. Buying a property and becoming a property investor if you’re not mentally prepared for it. I have clients right now who know they’re not made for being property investors. They’ll sell their homes when the market is right for them and never look back with a moment’s regret. A property investor has to be able to have a good level of emotional distance from their investments. Own a property long enough and you will have tenants who do not respect your investment. Own a property long enough and you’ll have (even with great tenants) damage done to your investment. There will be times when the gardens aren't done perfectly or the internal presentation isn't up to scratch (isn't it this way at your home at times too?) and if you drive past your investment property all the time you will see these occurrences. 

Republished from Kirsty Dunphey blog. www.kirstydunphey.com