Refinancing your mortgage now may allow you to capture the lowest interest rate of your lifetime. But unlike a couple of years ago, when it seemed as though all you needed was a social security number and a pulse, today's process can be tedious. That's because the demand for refinancing is high, guidelines are strict, and the number of people processing mortgages is down. If you are willing to be patient, provide full documentation & probably jump through a few hoops then you should be able to acquire a great deal on a low interest, long term fixed rate loan. Here's what you should know before you refinance.
What's the outlook for rates?
No one knows exactly where rates will be going, but the assumption is that they will have to head upward. The real question is when. Expect the 30-year fixed rate to hover near 5% for the rest of this year, and as we get further inflation data expect these rates if anything to possibly creep upward. Right now financing for 30 year Fannie Mae & Freddie Mac loans up to $729,250 is extremely competitive with rates under 5% available.
Who qualifies for the best rates?
If you're taking out a conforming loan (loan amounts under $417,000) or a jumbo-conforming loan (loan amounts from $417,001 up to $729,250), and if your credit score is at least 720 with equity of 20% or more, typically you will get the lowest rate on loans backed by Fannie Mae or Freddie Mac. Other factors that will help are if the property you're refinancing is the single-family home you live in, if you don't take out some of your equity in cash when you refinance, and if you don't take out a home-equity loan or line of credit.
What documents will I need?
When you apply to refinance your mortgage, you must provide pay stubs from a recent month, two months of bank and other financial statements, two years of W-2s and, if you're self-employed, two years of tax returns showing self-sustaining income. This is quite a change from just two years ago when the majority of loans were processed with little or no income documentation. Another step you may take to speed up the process is to get your application in the hands of your mortgage broker & order your appraisal as soon as possible. As of May 1, 2009 all Fannie Mae & Freddie Mac loans must have appraisals completed by their approved appraisers as part of a new initiative to regulate lending further called HVCC, or Home Valuation Code of Conduct.
These new regulations as part of HVCC are making borrowers wait longer to be able to lock or fund their loans. This is due to the additional steps in the appraisal process, appraisers slower than normal turn times & a general lack of knowing where a homes value may come back on any given appraisal – which makes it difficult to lock in a loan when you are unsure if you even have the necessary value to complete the refinance. For best results my advice is to get your application in to your broker asap, order your appraisal and be patient.
Should I lock in the offered rate?
Locking in a rate is a good idea for a couple of reasons. First, if the mortgage pushes the limits of what you can afford, you want ensure that rising rates won't ruin the deal. Second, the risk that rates will change before the deal closes is higher these days because loans are taking so long to process. Because mergers and layoffs have decimated many lenders' staffs, refis are taking an average of 60 days to close.
Of course, rates may decline further. Working with a broker allows you the security to lock in the best possible rate, but also the flexibility that if rates, terms or approval were to change you still would have the option of going elsewhere without needing a complete new application & all other paperwork involved.
How much equity must I have?
Fannie and Freddie require a minimum of just 5% equity in your home. However, you must get private mortgage insurance if you have less than 20% equity. Right now, obtaining PMI for loans above 85% is nearly non-existent, so although Fannie & Freddie will allow for you to borrow that money, you may have to get creative to complete the transaction.
During the boom years, homeowners avoided PMI by taking piggyback mortgages -- for example, a first mortgage for 80% of the home's price and a second mortgage for the balance. That tactic has almost disappeared.
Buyers & existing homeowners are using some creative tactics to abate this expensive and typically non-deductible mortgage insurance. The most common way we see people being able to avoid mortgage insurance is by coming up with the difference in cash – typically borrowed. Many will borrow against their 401k or retirement vehicle as the repayment on those loans typically are much cheaper than the mortgage insurance payment. Also, you can borrow from family if possible, or if you are buying the home can ask the seller to carry the financing, in which case the person selling you the home becomes the lender in 2nd position. There are many options to try and avoid mortgage insurance so contact your mortgage professional to discuss the options available to you.
I'm underwater on my mortgage and my payment is killing me. What can I do?
Small consolation, but you have a lot of company: One in five homeowners now owes more than their home is worth, according to First American Core Logic. The goal here isn't necessarily to lock in the lowest interest rate, but simply to qualify to refinance with a mortgage you can afford. You may have two options, presuming that you have a job and meet other qualifications.
The first is the Home Affordable program. Announced in March by the Obama administration, this helps homeowners who owe more than their home is worth and need a more affordable payment. The Home Affordable refi will feature a market rate of interest that's fixed for at least five years.
It's no magic potion however. You'll qualify only if Fannie Mae or Freddie Mac owns your current loan (to find out more, visit http://www.makinghomeaffordable.gov/). The loan amount can't exceed your home's value by more than 5%. That limit disqualifies plenty of homeowners in distressed markets in California , Arizona , Nevada and Florida , where home values have plummeted. This program will end in June of 2010.
The second is the Hope for Homeowners program. This may help if you're at risk of default or already in foreclosure or bankruptcy. So far, these FHA-insured loans have had relatively few takers (recently only 51 of the loans had closed). That's because the cost is high for both lenders and borrowers -- although hopefully less onerous to both than the cost of foreclosure.
The Obama administration has proposed fixes to the program to make it more effective, including easing eligibility requirements for borrowers and reducing their costs. For more information about eligibility and where to apply, visit www.hud.gov/hopeforhomeowners.
Friday, May 29, 2009
Friday, April 17, 2009
105% Fannie Mae Refinances!
For people whose home values have declined, here is a Fannie Mae program that has recently been established for the purpose of helping those homeowners who have seen their homes value drop, but still would like to capitalize on these low refinance rates. Fannie Mae is allowing borrowers to go up to 105% of the properties current value without requiring new mortgage insurance - which is a great deal! We have been seeing a lot of people getting help from this program, maybe it can help you as well. Below is the information published directly from Fannie Mae's website:
WASHINGTON DC -- Fannie Mae (FNM/NYSE) has begun making initiatives on its Home Affordable Refinance program, available to its servicers and borrowers as part of the Obama Administration's Making Home Affordable program. The initiatives are designed to significantly expand the numbers of borrowers who can refinance or modify their mortgages to a payment that is affordable now and into the future.
"Making Home Affordable provides crucial tools to mortgage lenders and homeowners coping with financial hardship and declining home prices," said Herb Allison, president and chief executive officer. "Potentially millions of homeowners could qualify for and benefit from these initiatives. The people of Fannie Mae will do all they can to make the program a success for homeowners across America and to advance the nation's housing recovery."
Home Affordable Refinance
Home Affordable Refinance includes new refinancing flexibilities for homeowners whose loans are owned by Fannie Mae. Key features include:
Additional Flexibilities: Most borrowers refinancing an existing Fannie Mae loan will not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home's value. Any existing mortgage insurance may be carried forward to the new loan. In addition, Fannie Mae can refinance loans up to 105 percent of a home's value with this new flexibility, so even borrowers who are "underwater" -- who owe more than their home is worth -- may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
Streamlined Processing: Beginning in April, all 1,600 lenders and 29,000 mortgage brokers using Fannie Mae's Desktop Underwriter® platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.
What Borrowers Need to Know:
WASHINGTON DC -- Fannie Mae (FNM/NYSE) has begun making initiatives on its Home Affordable Refinance program, available to its servicers and borrowers as part of the Obama Administration's Making Home Affordable program. The initiatives are designed to significantly expand the numbers of borrowers who can refinance or modify their mortgages to a payment that is affordable now and into the future.
"Making Home Affordable provides crucial tools to mortgage lenders and homeowners coping with financial hardship and declining home prices," said Herb Allison, president and chief executive officer. "Potentially millions of homeowners could qualify for and benefit from these initiatives. The people of Fannie Mae will do all they can to make the program a success for homeowners across America and to advance the nation's housing recovery."
Home Affordable Refinance
Home Affordable Refinance includes new refinancing flexibilities for homeowners whose loans are owned by Fannie Mae. Key features include:
Additional Flexibilities: Most borrowers refinancing an existing Fannie Mae loan will not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home's value. Any existing mortgage insurance may be carried forward to the new loan. In addition, Fannie Mae can refinance loans up to 105 percent of a home's value with this new flexibility, so even borrowers who are "underwater" -- who owe more than their home is worth -- may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
Streamlined Processing: Beginning in April, all 1,600 lenders and 29,000 mortgage brokers using Fannie Mae's Desktop Underwriter® platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.
What Borrowers Need to Know:
- To qualify, your mortgage loan must be owned by Fannie Mae.
- You must have a solid payment history on your existing mortgage.
- The expanded refinance flexibility ends in June 2010.
Contact George with any questions regarding this Fannie Mae Home Affordability Refinance at 650.558.5326 or via email at george@redoakcorp.com
HUD Warns Against Foreclosure Scams
With the release of President Obama's Making Home Affordability Program and recent media coverage on low mortgage rates, many new loan modification and foreclosure prevention scams have started to surface. So much so that HUD (Department of Housing) issued a press release and sent an e-mail to all HUD partners warning of the potential destruction of these foreclosure scams.
The biggest key point in HUD’s warning lies here: as a homeowner, you will never have to pay to participate in the President’s Making Home Affordable plan. Also, mortgage consultations and counseling should never cost you money.
Since April is National Fair Housing month, I have included an excerpt from HUD’s foreclosure scam warning in today’s mortgage news to keep my clients educated. You can find the press release in its entirety on HUD’s website.
Treasury is issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain "red flags" that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR (Suspicious Activity Report) by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory.
As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which Department of Justice has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department's commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department's work with the FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on competition and consumer fraud issues. The Attorney General also discussed DOJ's focus on investigating and prosecuting lenders who discriminate against borrowers based on race, national origin, or other prohibited factors.
"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others," Attorney General Eric Holder said. "The Department of Justice's message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you."
On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams - including one company that spent 9 million dollars on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
With that said, their is use for honest loan modification professionals, as most people who have tried modifying their own loan will tell you. Working directly with a bank to modify your loan is extremely time consuming, requires lots of follow up and is not always going to get the borrower the best deal as banks know many borrowers are desperate and will take the first modification deal offered. The advice I give to my clients is that if they want to try modifying the loan on their own nothing is wrong with that, and if you are unsuccesful then to hire a modificaion specialist. If you do hire a modification specialist, I personally would only employ someone regulated by the Department of Real Estate. The reason for this is the DRE allows for a modification specialsist to collect money up front, but if the modification is not completed within 90 days the person modifying the loan must return at least 75% of the up front fee. So, if the cost is $3000 for a modification, you are risking $750 if the modificaion can not be completed withint those 90 days, and if it is completed we typically have seen the ability to make back that $3000 within a few months. If you have any questions though please do not hesitate to contact George with all of your Real Estate Finance needs.
http://www.hud.gov/news/release.cfm?content=pr09-033.cfm
The biggest key point in HUD’s warning lies here: as a homeowner, you will never have to pay to participate in the President’s Making Home Affordable plan. Also, mortgage consultations and counseling should never cost you money.
Since April is National Fair Housing month, I have included an excerpt from HUD’s foreclosure scam warning in today’s mortgage news to keep my clients educated. You can find the press release in its entirety on HUD’s website.
Treasury is issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain "red flags" that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR (Suspicious Activity Report) by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory.
As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which Department of Justice has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department's commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department's work with the FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on competition and consumer fraud issues. The Attorney General also discussed DOJ's focus on investigating and prosecuting lenders who discriminate against borrowers based on race, national origin, or other prohibited factors.
"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others," Attorney General Eric Holder said. "The Department of Justice's message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you."
On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams - including one company that spent 9 million dollars on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
With that said, their is use for honest loan modification professionals, as most people who have tried modifying their own loan will tell you. Working directly with a bank to modify your loan is extremely time consuming, requires lots of follow up and is not always going to get the borrower the best deal as banks know many borrowers are desperate and will take the first modification deal offered. The advice I give to my clients is that if they want to try modifying the loan on their own nothing is wrong with that, and if you are unsuccesful then to hire a modificaion specialist. If you do hire a modification specialist, I personally would only employ someone regulated by the Department of Real Estate. The reason for this is the DRE allows for a modification specialsist to collect money up front, but if the modification is not completed within 90 days the person modifying the loan must return at least 75% of the up front fee. So, if the cost is $3000 for a modification, you are risking $750 if the modificaion can not be completed withint those 90 days, and if it is completed we typically have seen the ability to make back that $3000 within a few months. If you have any questions though please do not hesitate to contact George with all of your Real Estate Finance needs.
http://www.hud.gov/news/release.cfm?content=pr09-033.cfm
Thursday, April 9, 2009
An Explanation We Can All Understand
Financial Engineering at its Finest ....
Shannon is the proprietor of a bar in Oakland . In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Shannon's drink-now pay-later marketing strategy and as a result, increasing numbers of customers flood into Shannon's bar and soon she has the largest sale volume for any bar in Oakland . By providing her customers' freedom from immediate payment demands, Shannon gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Shannon's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert traders transform these customer loans into DRUNKBONDS, ALKIBONDS and PUKEBONDS - all rated AAA by Snooty's Investor Services, Snitch and Standard and Get Poor's - for a fee, of course. These securities are then traded on security markets worldwide. Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses.
One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Shannon's bar. Shannon demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy.
DRUNKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 70 %. The decreased bond asset value destroys the banks liquidity since the banks borrowed up to 32x their initial capital to buy the bonds (even more in their off balance sheet bar companies) and a mere 20% drop in these bonds would wipe them clean, save government intervention. The events effectively prevent it from issuing new loans since the market won't give them more than 30 cents on the dollar for the best of them. The suppliers of Shannons bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers. The Oakland stock market drops, then rallies vociferously as the Fantasy Accounting Standards Boards states, under duress and a sleeper choke hold from honest politicians that causes them to tap out (UFC style), that the bank may now use their discretion in valuing these bonds due to the fact that no on in the entire world wants to buy them really has no bearing on their true value!
The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed middle-class non-drinkers.
Finally an explanation that alI can understand .....
Shannon is the proprietor of a bar in Oakland . In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Shannon's drink-now pay-later marketing strategy and as a result, increasing numbers of customers flood into Shannon's bar and soon she has the largest sale volume for any bar in Oakland . By providing her customers' freedom from immediate payment demands, Shannon gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Shannon's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert traders transform these customer loans into DRUNKBONDS, ALKIBONDS and PUKEBONDS - all rated AAA by Snooty's Investor Services, Snitch and Standard and Get Poor's - for a fee, of course. These securities are then traded on security markets worldwide. Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses.
One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Shannon's bar. Shannon demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy.
DRUNKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 70 %. The decreased bond asset value destroys the banks liquidity since the banks borrowed up to 32x their initial capital to buy the bonds (even more in their off balance sheet bar companies) and a mere 20% drop in these bonds would wipe them clean, save government intervention. The events effectively prevent it from issuing new loans since the market won't give them more than 30 cents on the dollar for the best of them. The suppliers of Shannons bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers. The Oakland stock market drops, then rallies vociferously as the Fantasy Accounting Standards Boards states, under duress and a sleeper choke hold from honest politicians that causes them to tap out (UFC style), that the bank may now use their discretion in valuing these bonds due to the fact that no on in the entire world wants to buy them really has no bearing on their true value!
The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed middle-class non-drinkers.
Finally an explanation that alI can understand .....
Thursday, April 2, 2009
2009 - Year of the Professional
As something that has come up frequently in casual discussion with friends, family & clients, I feel it is of value for me to reiterate that this year is a great year to be a professional. Going around town and talking with people, most will tell you they have seen significant drop in business, and even the strongest businesses may not see a drop, but will have a tough time exceeding previous years output. Combine that with the fact that less business is being done, people are more weary of who to do business with, every transaction regardless of how big or small are under much more scrutiny than years past and you can see why a vast majority of the business right now is being done by a small minority - the professionals.
Wikipedia defines a professional as a person in a profession that requires certain types of skilled work requiring formal training or education. I will take this a step further. Not only does it require certain skills or formal training, it also embodies a certain work ethic & level of integrity that perpetuates a high degree of trust in those you work with. Regardless if you are in the trades, real estate, tech or any other field, if you aren't bringing that level of professionalism good luck advancing further in your career. Long gone are the days past where little work production, no pride of ownership of your work and just staying under the radar could actually get you ahead in your career - regardless of the field. Now employers want to know that you are the type of person who can step your game up, not out. Clients want to see the extra step being taken, and not on the golf course. Vendors want to work with companies or business that can show them they are in it for the long run, not just to make a quick buck. All of these things are a pretty radical shift in how a lot of business had been done in the not so long ago past. And this is why the professionals have the market cornered right now.
See, while a lot of people out there are trying to figure out what has happened, why its happened and when it will stop, professionals take action. Most of the people that are the best at what they do are not interested in the answer to those questions, rather they are interested in what actions they need to take to maintain their level of success, and if that means changing and adapting their own business model so be it. If that means acquiring additional training or schooling then fine. If that requires a few extra hours of work or taking some work home to complete what is needed then great. Whatever it takes to stay the professional they will get done.
Now, I am sure some of you reading this are saying to yourself well if these professionals have the market so cornered then why should I try - and if that is your attitude then you probably shouldn't try anyway because you have already set yourself up for failure. See a professional looks at a challenge with excitement, not angst. And this is what I am here to encourage in all of you. Now is not a time to feel bad for yourself, crawl under a rock and wait for the repo man to come and take your stuff. rather, now is the time for you to make yourself the professional and take some of that business form the other professionals out there. Trust me, even in this down market we have seen now for almost two years, there is plenty of business to go around. The problem for most people though is that the business now is only going to the real pros. So, take that step. Do what you have to do. Educate yourself, take training or do whatever you need to set yourself apart from the rest of the other non-professionals out there. Do something though, because the more you sit by asking yourself why me and how did this happen, the further you are falling behind the new curve.
Wikipedia defines a professional as a person in a profession that requires certain types of skilled work requiring formal training or education. I will take this a step further. Not only does it require certain skills or formal training, it also embodies a certain work ethic & level of integrity that perpetuates a high degree of trust in those you work with. Regardless if you are in the trades, real estate, tech or any other field, if you aren't bringing that level of professionalism good luck advancing further in your career. Long gone are the days past where little work production, no pride of ownership of your work and just staying under the radar could actually get you ahead in your career - regardless of the field. Now employers want to know that you are the type of person who can step your game up, not out. Clients want to see the extra step being taken, and not on the golf course. Vendors want to work with companies or business that can show them they are in it for the long run, not just to make a quick buck. All of these things are a pretty radical shift in how a lot of business had been done in the not so long ago past. And this is why the professionals have the market cornered right now.
See, while a lot of people out there are trying to figure out what has happened, why its happened and when it will stop, professionals take action. Most of the people that are the best at what they do are not interested in the answer to those questions, rather they are interested in what actions they need to take to maintain their level of success, and if that means changing and adapting their own business model so be it. If that means acquiring additional training or schooling then fine. If that requires a few extra hours of work or taking some work home to complete what is needed then great. Whatever it takes to stay the professional they will get done.
Now, I am sure some of you reading this are saying to yourself well if these professionals have the market so cornered then why should I try - and if that is your attitude then you probably shouldn't try anyway because you have already set yourself up for failure. See a professional looks at a challenge with excitement, not angst. And this is what I am here to encourage in all of you. Now is not a time to feel bad for yourself, crawl under a rock and wait for the repo man to come and take your stuff. rather, now is the time for you to make yourself the professional and take some of that business form the other professionals out there. Trust me, even in this down market we have seen now for almost two years, there is plenty of business to go around. The problem for most people though is that the business now is only going to the real pros. So, take that step. Do what you have to do. Educate yourself, take training or do whatever you need to set yourself apart from the rest of the other non-professionals out there. Do something though, because the more you sit by asking yourself why me and how did this happen, the further you are falling behind the new curve.
Helping Homeowners
How many homeowners have been watching or reading the news and wondering when will I get a bail out – or at least some help? I know this thought has gone thru my mind a few times over the past year, and I am sure not to be alone there. Although it seems most of the help and stimulus has been designed to assist people looking to buy homes, there are actually a fair amount of programs the government has put together to assist current home owners. And even though they are not getting the same sort of publicity as the homebuyer stimulus programs, they actually should be more effective in helping individuals and our economy overall.
The first step taken by the government that has been put into action is not only encouraging lenders to modify loans, but in fact subsidizing the modifications for existing home owners. This is a huge help to a great deal of home owners who do not want to lose their house, but are facing increased payments or even foreclosure. As well, the criteria for modification is rather basic, requiring that you can qualify at the reduced payment, are in fact experiencing a hardship & have depleted savings and assets necessary to make payments, along with few other restrictions. I encourage any of you fitting this basic criterion to either contact your lender directly to see what can be worked out, or to work with a trusted professional to help lower your payments and even possibly lower your principal balance or eliminate a 2nd mortgage.
Another great plan that has been put into action is that the government is subsidizing some loan refinance transactions. Starting April 4, anyone with a current Fannie Mae or Freddie Mac loan can apply for a refinance of up to 105% of the current homes value! This is a great deal for people who have little or negative equity but do want to stay in their home. We all know interest rates are down, but until now if you didn’t have significant equity in your home there was no ability to refinance without paying down your loan balance drastically to qualify or acquiring costly mortgage insurance. For example, if you had bought a house for $500,000, put 20% or $100,000 down payment, but now find the house worth only $380,000 what would you do? Well recently a lot of these people would just walk away since all of their equity is gone, now owe more than the property is even worth and typically have seen their payments increase due to an adjustable mortgage. But as long as you can qualify for the new loan, the government will help you borrow up to 105% of the homes current value on a fixed rate mortgage, effectively allowing you to stay in the house with much better loan terms and or a decreased payment – and all of this without requiring mortgage insurance.
Also, aside from seeking government aid, for those who can fit the requirements, interest rates are extremely low right now and refinancing is a great option for many home owners. Recently the jumbo-conforming loan limit was raised again, and that brings us back up to over $729k for the Bay Area. We have been seeing these loans with rates as low as 4.5%, and averaging closer to 5%, but still are extremely cheap for a 30 year fixed. Although requirements have tightened, a lot of these loans are being done and we are seeing homeowners saving significant amounts of money through refinancing. And not only are these government backed loans looking great, some really strong jumbo financing for loans up to $2M and even home equity lines are coming back around.
Lastly, homeowners need to feel encouraged by all that has been done to promote buying opportunities. Even if you do not want to sell your home, the fact that buyers are getting more confident will help create a floor on housing prices. The sooner we can find that bottom, the better it is for all home owners. That said, for those who may be looking to sell, the fact that there are more buyers out there will help you to sell faster, negotiate better terms on your sale, and even help prop up home values. As we have seen in years past, when there are multiple people bidding for your home the chances of you getting your asking price is a lot great than when having one bidder.
Although a lot of what we hear on the news has been of a doom & gloom scenario, there have become many reasons for homeowners to be quite optimistic. The government is doing all they can to assist current homeowners, they are encouraging new home buyers and overall people are feeling a lot better about the economy than they did 6 months ago. Combine that optimism with the ability to capitalize on these record low interest rates - or even a loan modification for those who thought they had no options left - and it’s obvious why homeowners are getting more excited. Although these programs can’t help everybody, they sure are helping a lot of people already, and will help many more in the future.
If you have any questions about your particular scenario and would like further assistance please do not hesitate to contact George at 650.558.5326 or George@RedOakCorp.com.
The first step taken by the government that has been put into action is not only encouraging lenders to modify loans, but in fact subsidizing the modifications for existing home owners. This is a huge help to a great deal of home owners who do not want to lose their house, but are facing increased payments or even foreclosure. As well, the criteria for modification is rather basic, requiring that you can qualify at the reduced payment, are in fact experiencing a hardship & have depleted savings and assets necessary to make payments, along with few other restrictions. I encourage any of you fitting this basic criterion to either contact your lender directly to see what can be worked out, or to work with a trusted professional to help lower your payments and even possibly lower your principal balance or eliminate a 2nd mortgage.
Another great plan that has been put into action is that the government is subsidizing some loan refinance transactions. Starting April 4, anyone with a current Fannie Mae or Freddie Mac loan can apply for a refinance of up to 105% of the current homes value! This is a great deal for people who have little or negative equity but do want to stay in their home. We all know interest rates are down, but until now if you didn’t have significant equity in your home there was no ability to refinance without paying down your loan balance drastically to qualify or acquiring costly mortgage insurance. For example, if you had bought a house for $500,000, put 20% or $100,000 down payment, but now find the house worth only $380,000 what would you do? Well recently a lot of these people would just walk away since all of their equity is gone, now owe more than the property is even worth and typically have seen their payments increase due to an adjustable mortgage. But as long as you can qualify for the new loan, the government will help you borrow up to 105% of the homes current value on a fixed rate mortgage, effectively allowing you to stay in the house with much better loan terms and or a decreased payment – and all of this without requiring mortgage insurance.
Also, aside from seeking government aid, for those who can fit the requirements, interest rates are extremely low right now and refinancing is a great option for many home owners. Recently the jumbo-conforming loan limit was raised again, and that brings us back up to over $729k for the Bay Area. We have been seeing these loans with rates as low as 4.5%, and averaging closer to 5%, but still are extremely cheap for a 30 year fixed. Although requirements have tightened, a lot of these loans are being done and we are seeing homeowners saving significant amounts of money through refinancing. And not only are these government backed loans looking great, some really strong jumbo financing for loans up to $2M and even home equity lines are coming back around.
Lastly, homeowners need to feel encouraged by all that has been done to promote buying opportunities. Even if you do not want to sell your home, the fact that buyers are getting more confident will help create a floor on housing prices. The sooner we can find that bottom, the better it is for all home owners. That said, for those who may be looking to sell, the fact that there are more buyers out there will help you to sell faster, negotiate better terms on your sale, and even help prop up home values. As we have seen in years past, when there are multiple people bidding for your home the chances of you getting your asking price is a lot great than when having one bidder.
Although a lot of what we hear on the news has been of a doom & gloom scenario, there have become many reasons for homeowners to be quite optimistic. The government is doing all they can to assist current homeowners, they are encouraging new home buyers and overall people are feeling a lot better about the economy than they did 6 months ago. Combine that optimism with the ability to capitalize on these record low interest rates - or even a loan modification for those who thought they had no options left - and it’s obvious why homeowners are getting more excited. Although these programs can’t help everybody, they sure are helping a lot of people already, and will help many more in the future.
If you have any questions about your particular scenario and would like further assistance please do not hesitate to contact George at 650.558.5326 or George@RedOakCorp.com.
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