Sunday, April 27, 2014

Heading Into This Week....

I sat down at my computer to begin writing this weeks market newsletter and my hands began to tremble.  I consider myself a glass half full individual and always look for the bright side in everything, I found myself this week struggling to find housing news that would be positive for the readers.

Heading into this week I was very optimistic about the numerous housing reports to be delivered only to be disappointed.  I know that you as a reader of this newsletter, you are an individual that pays attention to housing data as you have an interest in real estate information.  (Ok I have stalled enough, it is time for me to get to the less than stellar real estate news)

The first housing report of the week was the sales of existing homes.  It appears that sales are yet to recover from the Federal Reserve's decision last year, to begin tapering the economic stimulus program.  For the seventh time in eight months, sales of existing homes declined.  For the month of March sales dropped 0.2 percent in March to an annual rate of 4.59 million. More concerning is that sales of existing homes are down 7.5 percent from the same time last year.  This is the steepest rate of sales contraction since May 2011.  This month the weather does not seem to be a factor for dismal report.

Higher mortgage rates, although still very affordable, are considered one of the reasons for the sales weakness.  The other more significant factor is the higher home prices that exist because of strong housing demand with very limited available inventory.  Where sales are down from the same time last year, home prices for existing homes are up 7.9 percent.

According the Federal Housing Finance Agency the housing market continues to improve in terms of home prices appreciation.  The FHFA reported that home prices are up 0.6 percent for the month of February.  This rise follow a 0.3 percent gain for January.  The one positive influence rising home prices is having is that consumer confidence is growing and real estate values seems to be the catalyst. 

The biggest negative of the housing reports this week is the data on new home sales.  Sales in this segment of the housing market plummeted 14.5 percent in March.  The report is far below most analyst?s expectations and is raising new concerns for near future trend of new home sales. 

Prices once again seem to be the arguable culprit.  The cost of building materials continues to rise as well as demand for new construction.  These combined forces are placing significant upward pressure on home prices which ultimately impacts home affordability. 

Next week the potential market reports are:

        Monday April 28th  Pending Home Sales
        Tuesday April 29th  S&P Case-Shiller Home Value Index
        Wednesday April 30th - MBA Applications, ADP Report, GDP & FOMC Announcement
        Thursday May 1st - First Time Jobless Claims
        Friday May 2nd  National Employment Report

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

Thursday, April 24, 2014

6 Rules When Buying An Investment Property

Investing in properties is a good way to make money and build up your net worth. It is a very safe option of getting rich over the long term, as real estate values generally increase over time. However, returns are not very fast and you have to wait for considerable time before you make substantial money from real estate. To make the most of your investment into real estate, follow the six simple rules below.
1. Use Your Expertise and Knowledge
When purchasing investment property, look into your areas expertise and knowledge. Do you know about vacation homes, single-family homes, multi-family buildings, or commercial properties? You should know how and when to sell the property to earn the highest returns. If you are unaware of all rules and regulations relating to that property type, you may not be able to sell the property at a high profit.
2. Study Your Options
It is not essential to sell an investment property immediately after purchase. You can hold on to your investment until real estate values increase and then sell the property. Sometimes, it is best to bide your time and wait for real estate booms to sell and earn good profits on your investment. Another opportunity is to make suitable renovations and sell the property at an escalated price to earn very good returns. Property values increase over time and net worth of your investment increases. You can invest in real estate to receive a regular income from rent while you are waiting for property values to rise.
3. Consider the Benefits of the Location
Purchase your investment property in an area experiencing higher growth than other local areas. Inspect properties in different areas and choose those that satisfy necessary requirements. If you plan to invest in the property for several years, look into how the area will develop in the next few years and whether you can receive desired returns. You should have sufficient foresight and knowledge of the area.
Visit local councils and research what developments are happening in the vicinity in the near future. Drive around and scout for development and other area investments. Check the property is located near essential amenities like schools, hospitals, banks, transport, and supermarkets.
4. Reflect on Rental Demand
Your investment property yields good returns if there is sufficient rental demand for the property. Renters should be interested in renting the property. Normally, rental demand is high in densely populated areas like cities. Countryside locations do not have high demand and rental income could be substantially less.
5. Buy Property for Less than the Current Value
If you want to make money from real estate investing, choose properties that are being sold for less than the current market value. These properties may not be in the best shape and condition, so plan to incur repair and renovation costs. Before buying, hire a renovation consultant or home inspector to evaluate the cost of all repairs and renovations. Decide on the purchase price after deducting all additional costs. Ensure you can make a good profit when you sell the property after the renovation is complete.
6. Gather Financial Support
Investment property purchase requires strong financing. You may not be able to pool the entire cost, so consider the options for property loans. Assess all your mortgage options, so that you do not have excessive burden of repayments. If you are renting the property, apply the rent directly to the mortgage. Select a mortgage that can be repaid from the sale of property without additional fees or penalties for early repayment, especially if you plan to resell the property quickly.
Real estate investing for profit is a good option to earn money if you are an educated real estate investor. Investing in real estate is wise and can give even conservative investors high returns in the long-term. Renting the property while waiting for the best time to sell will increase your current income and cover the mortgage repayment costs.

Article Source:

Friday, April 18, 2014

A Positive Sign For The Real Estate Market

In a positive sign for the real estate market, housing starts picked up in March.  Although not as much as expected, the increase was welcome news for a market that has not seen growth in recent months as so many experts has predicted would occur.  The best part of the report is that the strength in the data came from the single-family component.  Overall starts rose 2.8 percent after a 1.9 percent increase in February. Although housing starts are down 5.9 percent from the same time last year, the gap seems to be closing.  Single-family starts jumped 6.0 percent, following a 2.9 percent rise the month before.

A larger than anticipated decline in mortgage rates over the last few weeks has rekindled some of the fire for homeowners to refinance their existing loans.  The Mortgage Bankers Association reported that in the prior week refinance applications jumped 7.0 percent.  Purchase applications were not impacted in the same way as they only inched up a mere 1.0 percent.  Next week the FHFA House Price Index along with the existing, and new home sales reports will be released.  Early speculation on the reports is that they will continue to show a modest improvement in the housing market.  (Stay tuned for next week?s report for all the details)

Additional positive news for the housing market, surging home prices have helped nearly two million homeowners get back above water on their mortgages over the past year. During the first quarter of 2014, an estimated 9.1 million, or 17%, of homeowners were seriously underwater on their home,  Seriously underwater is defined as their mortgage debts exceeds the value of their home by 25% or more according to RealtyTrac.  This number is down from 10.9 million which represented 26%, of all properties a year earlier.

It seems that spring is here and the economy is beginning to feel the bounce of consumers coming out from the winter doldrums, at least when it comes to retail sales.  Sales grew 1.1 percent in March after rebounding 0.7 percent in February.  Although much of the latest increase came from motor vehicle sales, which rose 3.1 percent, following a 2.5 percent rebound in February, the increase is a welcome sign.  Even when you take out motor vehicle sales from the report, sales still increased a strong 0.7 percent, following a gain of 0.3 percent in February.  American Express reiterated the report of the improving retail market with a stronger than expected profit report for the first quarter of 2014.

Investors welcomed comments from Fed Chair Janet Yellen in that the Fed plans on keeping rates at historic lows for an extended period of time.  The Fed reiterated that they plan to continue on the path of tapering the government bond buying stimulus program as planned.  Where it was expected that the government tapering would have a dramatic impact on causing mortgage rates to increase, thus far there has been minimal impact on rates.  Although mortgage rates are higher than the record lows we have seen in years past, mortgage rates are still very low and have had minimal impact on home affordability. 

Next week the potential market reports are:

        Tuesday April 22nd - FHFA House Price Index and Existing Home Sales
        Wednesday April 23rd - MBA Applications and New Home Sales
        Thursday April 24th - First Time Jobless Claims and Durable Goods Orders
        Friday April 25th - Consumer Sentiment

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

Tuesday, April 15, 2014

Rent Or 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: 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.

Saturday, April 12, 2014

A Typical Week?

What was shaping up to be a typical trading week in the stock market radically changed on Thursday.  Monday through Wednesday trading volume was moderate and the indices remained in close proximity to plus or minus 100 points on a daily basis.  Thursday the market, almost from the opening bell, tanked.  By the time the smoke cleared the DOW had dropped 266 points.  What was even more eye catching was that the tech heavy NASDAQ plummeted just under 130 points.  It is extremely rare for this index to have triple digit declines in a single trading session whereas with the DOW it is far more common place.

Investors on Wall Street were asked their opinion for the major sell off in the tech sector and there seemed to be little common reasoning amongst investors.  Some felt that because of the recent run up in the tech sector, some investors were just looking to cash out their profits.  Others felt that some tech stocks had risen too quickly and that a fall was coming sooner than later so they cashed out in order to avoid getting caught short.  Unfortunately once momentum of selling starts, regardless of the motivation, it takes on a life of its own which also seems to be playing a role in Thursday?s losses. 

The investor who tends to be less active in day to day trading will often jump into the selling fray when they see the market tanking.  They may not even know or understand what is really happening.  However what they do know is that they want to mitigate their losses and the only way to do that is sell.  When you have thousands of investors jumping in to sell at the same time, the market tanks even though there may not be any real justifiable reason for selling at that moment in time other than false panic.

As far as real news which could have had the potential to impact the markets, that came and went with little fanfare.  On Wednesday the Federal Open Market Committee minutes were released.  As expected, the committee intends on keeping monetary policy loose for the coming years.  What this means is that interest rates are expected to be kept artificially low even though the Fed is continuing to taper their stimulus program a little more each month as scheduled.

The first time jobless claims report released on Thursday showed claims to be at their lowest point in 10 years.  Claims were 300,000 which was approximately 20,000 lower than most experts anticipated.  The spring holiday time of Easter and Passover can have an impact in employment numbers.  Additionally, in the month of April, Spring Break is happening for many school districts around the country and that has many people going on vacation during the month.

Mortgage applications for home purchases increased 3.0 percent according to the Mortgage Bankers Association of America.  Refinance applications declined by 5.0 percent.

Next week the potential market reports are:

        Monday April 14th - Retail Sales
       Tuesday April 15th - Consumer Price Index
       Wednesday April 16th - MBA Applications, Housing Starts and Industrial Production
      Thursday April 17th - First Time Jobless Claims
        Friday April 18th - Good Friday; Markets Closed

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

Tuesday, April 8, 2014

Top 5 Reasons For Buying A Home

Maybe you have seen a lot of people buying homes and it has hit you that maybe you should be doing the same. But since buying a home is a very huge commitment as well as undertaking, you will need to know what you will benefit from this action. This is one of the biggest decisions you may ever make in your whole life. The top 5 reasons for buying a home are the following:
Protection against increasing rents
Unlike a while ago when renting a house used to be a cheaper alternative to people had the aim of saving so that they can later on buy their own homes, landlords nowadays have set the rent prices so high that it is hard for some people to save. In many places, it is cheaper to buy a house compared to renting. 1500 dollars or more is a lot of money to part with every month to pay rents. It will be even better off if you buy a house that has a fixed rate mortgage because you will never have to worry about the monthly payments increasing.
Taking advantage of low mortgage rates
Mortgage rates have dropped tremendously as of now and therefore you will benefit a lot if you buy a home now since that trend may be short-lived. Therefore the best time to act is now especially if you are a bargain shopper. With the current low rates, you will never have worries about refinancing in the future and therefore you will be able to save a lot of money in closing costs on loans that you may have taken.
Taking advantage of low home prices
There are those years is one those when the cost of buying a home really goes down. But the prices may start rising and go up really fast. You will therefore need to take advantage of the situation and buy a house sooner if you want to get great deal.
Helping your credit
You may also buy a home if you want to boost your credit score. If you are able to handle a mortgage, it implies that you are responsible and therefore credit bureaus will not have a problem rewarding you for that. That will help you overcome situations that might cause you to incur a lot of interests.
Making the home your own
When you are living in a rented apartment, there is a limit to the modifications that you can make to that house, and you will also need to seek consent from the owner to be able to make any change to the house. If it is your own home, you can upgrade the kitchen to suit your own taste, paint the walls in the living room and the master bedroom using your favorite colors and also put up a garden in the backyard. You will have full control over your home so you can personalize it as you want.

Article Source:

Saturday, April 5, 2014

Life And Growth This Week

The stock market this week has shown signs of life and growth.  The large jumps and drops we have all become so accustomed to lately have subsided for the time being and that creates confidence in the economy.  The lack of any significant economic news or world events has investors enjoying trading stability.

As is normal, the first week of the month is when the employment data is released.  On Wednesday the ADP report was released and they estimated private payrolls to have increased a strong 191,000.  This follows an upwardly revised 178,000 from the prior month.  Although the ADP report does carry some weight with investor behavior, all eyes for the week remained on the Labor Department?s employment report released on Friday.

At 8:30AM on Friday the Labor Department reported that the labor force hit a milestone in the month of March.  The March employment report showed an addition of 192,000 jobs.  This marks the first time since the Great Recession that the labor force has returned to the peak numbers of employed which occurred back in 2008.  Essentially what is being stated is that all of the private sector jobs lost in the recession have been recovered back into the labor force.  The unemployment rate remained steady at 6.7%.  Despite this past winter being one of the harshest on record, the unemployment rate did not appear to be significantly impacted.

Last week's newsletter carried a lot of data regarding housing which left this week absent of any major market moving housing reports.  However, as always there is something happening in real estate and a report to be found.  The Mortgage Bankers Association announced on Wednesday that purchase applications increased a minor 1.0 percent in the prior week.  Any increase is welcome however applications for purchases are still 17 percent below the same time last year.  Mortgage rates have been creeping up ever so slowly and the increase does effect refinance applications.  The MBA report showed applications for refinances declined by 3.0 percent.

In February, spending for new construction edged up 0,1 percent following a decline of 0.2 percent in January.  The strength in the report comes from the private nonresidential area of the market.  Spending for private residential construction declined 0.8 percent following a boost in January of 1.3 percent.  The one real positive to the report is that overall construction spending is 8.7 percent higher than a year ago.

The biggest challenge facing the housing market today is the limited inventory available.  There is absolutely no shortage of home buyers searching for homes.  The challenge they face is locating a home as homeowners still remain very slow to place their homes on the market for sale.  There has been an upswing in recent weeks, but not quite as much as is typical for the start of the spring market.

Next week the potential market reports are:

        Wednesday April 9th - MBA Applications and FOMC Minutes
        Thursday April 10th - First Time Jobless Claims
       Friday April 11th - Producer Price Index

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

Wednesday, April 2, 2014

What You Need

Here is a list of information mortgage lenders will use to consider your Loan Application:

For all loans:

Social Security Card for each borrower.
Current Driver’s License for each borrower.
Most recent 2 year address history.
Most recent 2 years employment history; name of employer(s), dates of employment, employer address for current work location,  number of years on current job, number of years in same line of work/profession, current position, main business phone number for current work location.
Current paystubs covering most recent 30 consecutive days.
Last 2 years 1040’s (Federal Tax Returns), including all W-2’s and 1099’s.
 If applicable, Award Letters for Social Security Income and Pension Income and verification of receipt.
2 months statements for all asset accounts, i.e. bank accounts, 401k’s, IRA’s, Investment Accounts (include all numbered pages).  All non-payroll deposits that exceed 10% of combined monthly gross income must be sourced/papertrailed. Any other deposits may require additional documentation, subject to underwriter discretion.  Prior to any questionable deposits, first discuss with us.
If a homeowner, current monthly mortgage statement, tax roll and home insurance policy on your property(s), and rental agreement if applicable.
If a purchase, please contact an insurance company of your choice and request an insurance quote for property once in contract.  Have insurance agent fax or email the quote to us showing coverage and premium amount.
If renting, 2 year residential history showing name, address and phone number of landlord(s).
List of liabilities and balances.
 If applicable, bankruptcy papers, divorce papers or explanation for delinquent accounts.

Other income information you may need:

If you are self-employed:
2 years 1040’s (Federal Returns) for Sole Proprietorship
If a Partnership, include 2 years 1065’s and K-1’s
If an S-Corp , include 2 years 1120S and K-l’s
If a regular Corporation, include 2 years 1120’s
Note: current Balance Sheet and Profit and Loss signed by a CPA may be required.

If you are employed by a family member:
Most recent paystub(s) documenting 30 days income.
W-2’s covering the most recent 2 years.
2 years 1040’s (Federal Returns), verifying no ownership interest in the company.  If not addressed in the personal tax returns, a CPA letter is required to verify no ownership in the company.
Written Verification of Employment covering the most recent 2 years.
A minimum of 24 months average of income must be used in qualifying.

If you are divorced or separated:
Complete executed Divorce Decree and Settlement Agreement.
Payment history of alimony/child support over the past 12 months, if it is a financial obligation.
If you choose to have this be considered as part of your income, (you do not have to) be prepared to provide 12 months cancelled checks or bank statements reflecting income deposits.

If you own real estate:
If you are selling your home but it has not closed: a copy of the sales contract.
If you have sold your home and it has closed and you will use the proceeds for your new down payment:  A copy of the Hud-1 Uniform Settlement Statement.

If you are buying a home:
Purchase Sales Contract or offer to purchase and all addendums and counter offers, fully executed with signatures of buyer, sellers and agents.

If  the source of your down payment is a gift:
Name, address and relationship of donor.
Gift Funds will be verified in both the donor and recipient’s accounts.
Note: Not all loan programs allow gifts to be a part of your down payment.

For VA Financing:
DD214 and Certificate of Eligibility

For Construction/Perm Loan:
Contact us regarding permanent financing requirements.