Inland Empire Mortgages Creep Below 5%

Rates on 30-year fixed Inland Empire mortgages fell slightly this week, dipping below 5 percent, the mortgage financier Freddie Mac said Thursday. The average rate on a 30-year fixed mortgage was 4.97 percent this week, down from an average of 5.01 percent last week. Last year at this time, the rate for a 30-year fixed mortgage averaged 5.16 percent, Freddie Mac said. Rates fell to a record low of 4.71 percent in early December. They have held around 5 percent thanks to a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. That program is set to end March 31.

Low rates also can spur refinancing activity. More than two out of three mortgage applications were for refinance transactions over the first six weeks of this year, according to the Mortgage Bankers Association. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds. The average rate on 15-year fixed-rate mortgages fell to 4.34 percent from 4.40 percent last week, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, down from 4.27 percent a week earlier. Rates on one-year, adjustable-rate mortgages rose to 4.33 percent from 4.22 percent. The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year mortgages. It averaged 0.6 point for 15-year, five-year and one-year loans.

Rates will start to creep back up here in the next few months so now is the time to buy! Visit www.temeculabargainproperties.com to get on our buyer’s list and we will find you your dream home and get you financed today!

Inland Empire FHA Loan Defaults On The Rise

The default rate in the single-family FHA portfolio reached 9.12% in the 4th quarter of 2009, climbing from 6.82% in Q408, according to the Federal Housing Administration December monthly report.

The total number of FHA-insured single-family mortgages in default reached 531,671 in Q409, a 66% increase from 319,741 in Q408. In that same period, modifications on FHA-backed loans increased 54% to 23,973 in Q409.

At the American Securitization Forum, Margaret Burns, director of single-family development for FHA said the 2009 portfolio is “solid,” and reiterated the FHA is not taking huge losses that eat into the reserve account.

“Everything is in good shape at FHA,” she said.

At the start of December, Shaun Donovan, secretary for the US Department of Housing and Urban Development (HUD) told lawmakers that FHA is “not the next subprime” despite the growing default rate.

By the end of 2009, the FHA insured $752.6bn in single-family mortgages. That number jumped 24.4% from 2008, a sign that not only is the origination market condensing toward FHA but so is the risk. In November 2009, 40% of homes purchased used a FHA-insured mortgage, according to a survey from the National Association of Realtors (NAR).

Linda Simmons, the general manager of mortgage finance at Overture Technologies told HousingWire that originators are developing products that fit the FHA mold.

“The investors are insisting on no surprises at closing, no surprises at delivery and are doing loan-level audits, which we’ve never seen before. Intuitively, this mortgage industry is very self-correcting, and my guess is what they’re doing is developing products that are mores suited to this kind of process,” Simmons said.

She added that the market for first-time homebuyers who do not qualify for FHA is not insignificant. She sees some of those borrowers going to small and mid-size lenders, who keep those loans on the their books.

If you are running into trouble with your Inland Empire home, make the smart choice to avoid foreclosure.  Visit www.webuyhousesinlandempire.com today or e-mail justin@smoothtransitionsrealty.com to learn your options.

No More Inland Empire Seasoning Requirements!

 

Inland Empire Real Estate Investors rejoice!!  Effective February 1st, 2010, the FHA seasoning requirements have been lifted!  There are a couple requirements including a 20% limit on profit but this is good news for all.  Read the article below:

By ERIC WOLFF – ewolff@nctimes.com | Posted: January 15, 2010 7:40 pm | No Comments Posted | Print Font Size: Default font size Larger font size On Feb. 1, the Federal Housing Administration will place a one-year moratorium on its anti-flipping rule, which will allow buyers with FHA-backed loans to purchase homes that have been held for less than 90 days, officials said Friday. The move will open a new pool of homes to first-time homebuyers who have been losing bids to cash buyers, but shouldn’t have much effect on home prices, analysts said. “Opening up to FHA buyers means I can sell it to anybody. That’s big,” said investor Bruce May, owner of SoCal Homes. FHA buyers made up 28.1 percent of the market in San Diego County, and 50.1 percent in Riverside County, according to real estate data firm DataQuick. Analysts said cash buyers take up much of the rest of the market, and many of them are speculators and investors. The new rule will connect the two groups. “Give the consumers as many options as possible,” said Nathan Moeder, a real estate economist with the London Group. “Someone who’s buying an investment property to flip it, isn’t buying a junk property where there’s holes in the walls. From the consumer side, I’d be happy about that.” The new rules limit seller’s profits to 20 percent above the purchase cost, unless an independent appraiser confirms that renovations and repairs justify the higher price. “They didn’t want to facilitate speculators,” said Mark Goldman, an instructor at San Diego State University. May thinks this move will grow the number of transactions in coming months: More buyers for investors will motivate investors to buy and renovate more houses. “It should be good for everybody and the economy,” he said.

Inland Empire Real Estate Investors get on a buyer’s list today to get access to great deals.  Visit www.temeculabargainproperties.com.

What Are Closing Costs?

Everyone has heard the advertisements for home mortgages with no closing costs. Likewise the Federal Trade Commission has heard those ads and, like you, they know when something sounds too good to be true it usually is.

While Home Equity Lines of Credit (HELOCs) often come with no closing costs it is virtually impossible for originating lenders to offer first mortgages without any closing costs. Eliminating closing costs all together on a first mortgage is difficult even in the best of situations because of the number of moving parts there are in the closing process.

Minimally there are six or more parties who do work which ends up being due at closing. Those costs will be paid one of three ways, generally, which include the seller paying them, the buyer paying them or the lender paying them from the proceeds of the loan. Understanding how each of these affect you is important because what may be advantageous to one borrower may be detrimental to another.

Closing costs are somewhat misunderstood by most home loan borrowers because it is rare for the mortgage broker or loan officer to take the time to provide some basic information about the home loan process and more specifically the closing costs associated with a new home loan. While this article intends to introduce the reader to closing costs it is not within the scope of this article to identify and explain each cost individually. Costs that are paid at closing can be broken down into categories:

True closing costs

True closing costs of a home loan are costs that are incurred because there is a loan. There are other costs that would be included at closing which are not true closing costs. What we will refer to as true closing costs are fees associated with the loan such as mortgage origination fees, underwriting fees, processing fees and other lender fees. Lender’s title coverage is also a true closing cost as would be any inspections or other legal fees required by the lender.

Incidental closing costs

Regardless of whether or not one is using a mortgage company to secure a home loan or paying cash for a property there are fees which would be prudent if not required. These include attorney’s fees and title certification fees, appraisal fees and even inspection fees if the home buyer so desires. While these are included on the settlement statement they would also be due if the lender was not being used – in other words if there was no home loan associated with the transaction these fees would still exist.

Pre-paid items

There are costs which are shown on the HUD1 settlement statement which are paid to third parties such as property taxes, home owner’s association fees and dues and advance insurance payments. While these items may indeed be part of the funds brought to the attorney at the closing table they are fees neither charged by nor benefiting the lender, the seller or any other agent involved with the actual property sale.

Agency fees

While this one is rarely line itemized as a closing cost it generally consists of the largest portion of fees being disbursed at closing. Virtually every agency fee is paid from the seller’s proceeds at the closing table but there are rare instances when the agency fees are paid in cash by the buyer at the closing table.

Negotiable

Almost every closing cost is negotiable by the buyer. Mortgage companies and loan officers are also able to help with closing costs by adjusting loan amounts and interest rates which is where the advertising originates saying there are no closing cost loans. The truth is the closing costs are still due and they are being paid by the home loan borrower but in some way different than bringing cash to the closing. Whether or not it is a wise decision to have the loan structured so that the borrower is bringing less cash to the closing table is a cause for an individual consideration with a trusted, experienced, home loan expert.

To get help with your other Inland Empire home buying questions, e-mail justin@smoothtransitionsrealty.com or visit www.temeculabargainproperties.com.

Inland Empire FHA Guidelines Getting Stricter

WASHINGTON – The Federal Housing Administration is raising fees and tightening lending standards to shore up its strapped finances and avoid a taxpayer bailout. The government agency has seen its losses rise with the foreclosure rate. Its reserves have sunk below the minimum level required by Congress. A healthy FHA is vital for the housing market because it insures roughly 30 percent of new loans, and is the largest backer of mortgages to first-time buyers. The changes, which will go into effect in the first half of the year, “are among the most significant steps to address risk in the agency’s history,” FHA Commissioner David Stevens said in a prepared statement. Story continues below

The FHA does not make loans, but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans only require down payments of 3.5 percent of the purchase price — and that didn’t change. The new policies, to be announced Wednesday, are designed to bring more revenue into the agency, while at the same time keeping loans available. Under the changes, homebuyers will: Pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount, up from the current level of 1.75 percent. A borrower taking out a $200,000 mortgage would pay a $4,500 fee, for example, rather than the current fee of $3,500. Borrowers will still be able to wrap these fees into the total amount borrowed. FHA officials also plan to ask Congress to increase the maximum annual premium that FHA can charge. Need a credit score of at least 580 to qualify. Many FHA lenders already require a higher score, but there had been no standard requirement across the program. Borrowers with a score lower than 580 will need a down payment of at least 10 percent. The changes come as borrowers with loans backed by the agency have increasingly been falling into default. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 14 percent for all loans, according to the Mortgage Bankers Association.

Now is the best time to buy a house that we have seen in our lifetimes!  Guidelines are getting stricter and stricter so get it while you still can.  To get on our buyer’s list and to get pre-qualified for a loan, visit www.temeculabargainproperties.com

What Makes A Good Real Estate Investment?

So often, beginning real estate investors focus on techniques that they lose sight of the important issue: Is this a good deal? Learning to recognize a good deal takes research, education and, above all, experience. Here’s a good formula to determine whether a potential real estate purchase is a deal. It’s a simple acronym called C.L.E.A.R.

Cash flow

“Will this property cash flow?” Well, that depends on a lot of factors, such as the strength of the local rental market, the interest rate on the financing, and how much of a down payment you make. It also depends on whether it is a single-family or multi-family dwelling. All of these factors considered, ask yourself, “Will this property provide income?”

Then ask the question, “How will this property cash flow compared to other potential properties?” For example, a $150,000 house that rents for $1,000/month has a better income potential than a $300,000 house that rents for $1,600/month. A four-unit building that costs $400,000 may bring in $3,000/month in the same neighborhood.

Now, of course, whether the property will provide income to you begs the question of whether income is important to you. Is it? Do you earn other income? Do you need more income now, or is future equity growth more important? There’s no right answer to these questions, but are all factors to consider when looking at a potential purchase.

Leverage

Leverage is important for investors because the less cash you put down on each property, the more properties you can buy. If the properties go up in value, your rate of return goes up exponentially. However, if the properties go down in value and you have a lot of debt on the property, this can result in negative cash flow (see above).

Since real estate is generally cyclical, negative cash flow is only a short-term problem and can be handled if you have other income or a cash reserve to handle the negative. “Nothing down” investing is very attractive for the high-leverage investor, but should be approached with caution.

If you are a long-term player, leverage will generally work in your favor if the markets in which you invest appreciate in the long run and your income from the properties can pay for most of the monthly debt service.

Equity

Does the property you are purchasing have equity? Equity can take a number of forms, such as:

• A discounted price
• A potential fixer upper
• A rezoning opportunity
• A poorly managed property
• A foreclosure

There are many ways to create equity, but buying into equity is your best bet. Find a motivated seller who wants out of his property and is willing to give up his equity for less than full value. Or, buy a property that needs work that can be done for 50 cents on the dollar or less.

In other words, if the property needs $10,000 in work, make sure you get a $20,000 discount on the price or better.

Appreciation

Buying in the right neighborhoods in the right stage of a real estate cycle will result in appreciation and profit. However, timing a real estate cycle is difficult and is speculative. If you buy properties without equity or cash flow solely for short-term appreciation, you are engaging in a very risky investment.

Buying for moderate, long-term (10 to 20 years) appreciation is safer and easier. Look at long-term neighborhood and city-wide trends to pick areas that will hold their values and grow at an average 5% to 7% pace. Combine this tactic with reasonable cash flow and buying into equity, and you will be a smart investor.

Risk

Risk is a consideration that too few investors consider. Now ask yourself, “What if my assumptions are wrong?” In other words, do you have a “plan B”? If you bought for appreciation and the property did not appreciate in value, can you rent for positive cash flow?

If you buy with an adjustable rate loan and the rates go up, will this put you out of business? If you have a few vacancies, can you handle the negative cash flow or will it break the bank for you? Expect the best, but prepare for the worst. And remember, whenever you look at a property to purchase, think CLEAR: Cash flow, leverage, equity, appreciation, and risk.

If you are looking to get into Real Estate InvestingI may be able to help.  I am a wholesaler who buys between 5-10 houses a month.  Visit www.smoothtransitionsrealty.com to get on our buyer’s list to get access to great deals before they hit the market.

Housing Inventory In Temecula

The homes that are not for sale in TemeculaI have people ask me all the time why it is so hard to get an offer accepted on a home with so much inventory out there.  It is a buyer’s market right?  There are empty houses on every street, how come I can’t get one?

In reality, there are currently only 592 homes for sale in Temecula and a large majority of these are short sales.  This compares to around 850 homes for sale just 9 months ago.  What this means for you is a lot of competition and a lot tougher time getting your offer accepted.

Smooth Transitions Realty is here to help.  We will not only get you financed if you are not already, we will find you your dream home anywhere in the Inland Empire.  We are not agents, but rather investors who get a large inventory of houses every month.  We do not list these homes, but instead e-mail them out to our buyer’s list so they get first dibs.  You have less competition, don’t have to pay any commissions, and we guarantee a smooth and hassle free home buying experience.  Visit www.temeculabargainproperties.com today to get on our buyer’s list.

 

Inland Empire Mortgage Lender’s New Requirements

The federal government’s efforts to eliminate settlement-cost surprises for home mortgage applicants may have opened the door to a new, and potentially costly, set of consumer problems. Starting this year, mortgage lenders nationwide must issue new good-faith estimates to applicants, covering loan fees and settlement charges. Under the regulations set by the Department of Housing and Urban Development, the estimates that lenders provide upfront must be accurate — the same or nearly the same as the fees charged at closing. The idea is to eliminate some of the most controversial practices in mortgage lending — the intentional or inadvertent underestimation of fees. Under the old system, some lenders lowballed their estimates to lure applicants away from competitors. In the end, unwary consumers were hit with eleventh-hour surprises at closings — fees sometimes thousands of dollars higher than the initial estimates. In the past, no federal rule penalized lowballing. Loan officers and others who provided the estimates were not held responsible. As of this year, all that was supposed to change. The reformed good-faith estimate, or GFE, requires lender-related fees to remain unchanged from application to closing and allows only up to a 10 percent difference for estimates in other areas such as title insurance and closing fees. Now when the charges at settlement exceed the estimates, the lender — not the customer — must eat the difference. The GFE also is designed to facilitate rational comparison-shopping on fees and other loan terms. It contains boxes allowing consumers to compare up to four lenders’ quotes and estimates, each essentially guaranteed to be accurate at closing. Consumer groups applauded the new rules. Banking and mortgage industry groups grudgingly accepted them and complained that the Jan. 1 start date did not allow much time to master all the complexities. So how have the first two weeks of the reforms been going? Not exactly as planned. Many loan officers and lending institutions are sidestepping the new, price-bound GFE by giving shoppers “worksheets” and “loan scenario” forms that come with no legal requirements for accuracy; these documents were not even contemplated under the reforms. In effect, they are substitutes for the new GFEs, wide open to lowballing and bait-and-switch games under the wrong hands. The worksheets purport to contain much of the information provided by a GFE. Typically, they are issued only when shoppers do not provide — or are asked not to provide — key information that constitutes an “application” under HUD’s definition in the rules. For example, if a consumer does not provide the address of the property to be financed, technically there is no application and therefore no requirement to issue a GFE. Loan officers defend the worksheets — which they get blank from several national software suppliers — as necessary adaptations to HUD’s get-tough regulations. They argue that HUD is forcing them to provide hard and fast estimates on services or charges that they cannot always lay down with accuracy — especially those involving title and settlement services. “We can’t be 100 percent certain on every cost that HUD is asking us to be certain about,” said Steve Stamets, a loan officer for Union Mortgage Group in Rockville. “So when there is no full application, or you’ve got people just shopping around, we can help them” with the worksheet estimate. Tom Balk, a senior loan consultant for Mortgage California, said the worksheets allow him to give clients “an accurate sense of the fees they’d pay if they move ahead to a full application,” at which point he’d be able to issue an official GFE, he said. Asked for HUD’s position on all this, Vicki Bott, the agency’s deputy assistant secretary for single-family housing, said that although the rules are silent on the subject, worksheets “can be a useful tool when the consumer doesn’t want to give enough information” for a formal application. However, Bott said, if worksheets become commonplace and threaten to water down the consumer protections on settlement fees provided by the GFE reforms, her agency will need to take a thorough look at the situation and possibly issue “updated guidelines.” In the meantime, if you want hard and fast guarantees on fee estimates and you’re serious about comparing competing loan costs, demand a GFE. If loan officers will provide you only worksheet estimates, be on alert: The lowest quotes you get may not be for real.

To find a lender who has your best interests in mind, visit www.temeculabargainproperties.com.  We will find you the perfect lender and then find you the perfect house anywhere in the Inland Empire.

Inland Empire Short Sale DONTS!

Inland Empire Short Sales can be a discouraging process. For a seller that is looking at a pre-foreclosure situation its important to deal with things in a timely manner. The process can take any where from 45-180 days and you do not want to be the one holding up the process. A delay on your part can cause a delay of weeks or even months. Here are a few Inland Empire Short Sale don’ts:

Do Not!!

1. Use exact figures when preparing your financial statements. Round up to the nearest whole number. It is easier for everyone to read and quicker to determine your financial viability.
2. File bankruptcy or hire credit counseling until you have exhausted all your options. The minute you file bankruptcy or hire a credit counseling company you have effectively stopped the porcess and must start all over agian.
3. Wait until the foreclosure process has started. At the first sign of trouble contact your loss mitigation department. Many short sale specialist are well versed in your options and can counsel you in the best options for your individual circumstances.
4. Procrastinate. Get your financial package completed and mailed. Time is of the essence and it is important to get documents to the bank in a timely manner. One delay can cost you weeks or even months in the process.
5. Leave out any information. Every time the bank has to contact your for more documents it drags the process out. Take the time and make sure you have the information the bank wants the first time around.
6. Sign your house over to another person. If you do that you lose all rights to the property but still owe the money.
7. Give up!! Its a frustrating process but if you hang in there, positive things can happen. A short sale is far better for you than a foreclosure and it is worth going through.
8. Forget Home Selling Basics. You still need to make your home available to potential home buyers and keep your home in selling condition. It is hard when you are losing your home but remember you have a vested interest in completing a short sale.

 

Remove the emotion and get organized and stay organized. Keep all your bank statements, mortgage correspondence and paycheck stubs current and in an easy to access spot. Make sure you are working with a real estate agent with the right experience and one who preferably uses an attorney to handle the short sale process. Stay in communication with your Realtor and Negotiator and update them with any correspondence from the bank.

Stick with it and you will be successful.

If you are looking for help getting out of your upside down mortgage visit www.webuyhousesinlandempire.com.

Caution to Inland Empire Short Sale Homeowners…

Moody’s Economy.com estimates that 3.8 million homes will be lost in 2009 and 2010 because borrowers cannot make their mortgage payments.  The same story is told all over the real estate community, with many real estate agents and short sale investors urging underwater homeowners to walk away from their homes.  Things are rarely as easy as they sound:

In A Short Sale May Not Mean You’re Home Free the Wall Street Journal highlights that lenders are increasingly seeking deficiency judgments against distressed borrowers who walk away from their homes in short sales.

Deficiency judgments are court remedies awarded to lenders to help their recuperate losses from short sales.  If a homeowner owes more than his property is worth and is able to negotiate a short sale with his lender he may find himself stuck owing part of the negative equity balance .

The good news for California homeowners is that all purchase-money loans for 1-4 unit residential properties are except from deficiency judgment.  This means that for most homeowners their first mortgages are safe from lenders pursuing further claims.

The catch for many homeowners is that hard money second mortgages are not except, and lenders are increasingly pursuing court judgments to recoup losses.  Borrowers usually need to file bankruptcy to expunge these debts, or pursue another type of debt settlement.

The takeaway is that things are rarely as easy as they seem, despite emphatic salespeople who might lead you to believe otherwise.  Nonetheless, you do have options and all economic hardships can be overcome.  Do your research, consult an attorney or a real estate professional.  We will negotiate a short sale for you and make sure your lenders cannot come after you for deficiency judgements.  For more information e-mail justin@smoothtransitionsrealty.com or visit www.webuyhousesinlandempire.com.