The OCRealtress Blog

Home Buyer's Loan Options in 2011

2011 is the year of CHEAP MONEY!  With interest rates so low it is a great time to buy a home, or refinance a current loan.  Recently, I held a Home Buyer's Seminar where Mr. Jeff Parks, Bank of America Loan Officer, spoke about current financing options.  Watch his video about Types of Loan Programs.

GOVERNMENT LOANS:

• –FHA
•  –203 K “rehab” loans for homes that won't qualify for financing or upgrades financed
• –VA
• –Fixed Period “Hybrid” Arm
• –15 and 30 Year Fixed
• –GIFT FUNDS can be used
• –LOW DOWN PAYMENT 3.5%/NO DOWN PAYMENT
• –NON OCCUPYING CO-BORROWERS
• -Current Maximum Loan $729,750

  CONVENTIONAL LOANS

• –Higher down payment (minimum 10%, normally 20%, non-owner occupied minimum 25%)
• –Fixed Period “Hybrid Arm”
• –10,15 and 30 Year Fixed
• –“Conforming” Maximum Currently $0-417,000
• –“High Balance Conforming” $417,00-$729,750
• –“Jumbo” Over $729,750

The maximum for FHA loan limits and Conventional Conforming limits is set to expire 9/30/2011 and will be reduced to $625,000 if it is not renewed.  It is not expected to be renewed, so if you are considering a home purchase that will require a loan limit over 625K, you may want to get locked into your loan by the end of summer.

A couple of programs that Parks did  not mention are the FNMA HOMEPATH financing program and the CalSTRS program for California public school/district/community college employees. 

Homepath is for properties that are owned by FNMA 

• Require only a 3% down payment
• Allow a larger seller paid closing cost contribution
• No appraisal necessary
• Condo association requirements are looser

CalSTRS for CA Public School/District/Community College Employees

• 3% Down payment required with at least 1% direct from borrower
• 80% First mortgage and 17% Second mortgage
• Maximum loan limit $650,000 1st and 2nd combined
• Second loan is deferred for first 5 years

It is imperative to know all your options before setting out on your home search.  These programs are constantly evolving so be clear on what works for you, your budget, and future life decisions.

Share the word.

A Tale Of Three Short Sales

 As Forest Gump says:  [Short-Sales are] like a box of chocolates.  You never know what you are going to get.  

 

This past month I had the pleasure (and fortitude) to close three very different Short-Sales in Southern California.  No two are ever exactly alike.  I refer to them as “fluid” financial transactions.  They can drip, flow, gush, or dry up.

 

Short-Sale #1 Anaheim Hills - Representing the Seller.  My client bought at the height of the market and was ready to get out.  We put it on the MLS in May 1, 2010 and closed January 28, 2011.  That is almost 9 months of paperwork, negotiating, and perseverance.  There were plenty of buyers who wanted to purchase the home, and the seller was exceedingly cooperative, but the two lienholders were in no rush to respond.  Both banks approved the short-sale late November.  Then the buyer’s lender caused another month of delays and if a buyer’s lender asks for a Short-Sale approval extension you never know if it will be granted – Nail-biter!  All the banks involved got a D for effort, but the hard work of everyone else got the job done. 

 

Short-Sale #2 North Tustin - Representing the Buyer.  My buyer made an offer in August of 2010, got Short-Sale approval beginning of December and closed January 18^th 2011, a 6 month turnaround.   It was fairly clean, but an attorney was negotiating the sale, which meant their exceptionally high fees were folded into my client’s purchase price, thus taking a bit of extra time to get approved.

 

Short-Sale #3 North Corona – Representing the Buyer.  This short-sale had only one lien holder and the seller was short by only a small amount.  Another buyer’s offer had already been approved by the bank and they pulled out of the transaction.  My buyer submitted an offer and immediately went into escrow.  From offer to close of escrow it was only 30 days.  This is a shockingly quick.  My buyer paid below market value and got 6K towards his closing costs.  Sweet deal.

 

30 days, 6 months, 9 months, or never at all: Flexibility is the key to a Short-Sale transaction.  Be patient, hire experienced professionals, and manage your expectations.  Share the word.

Buying and Selling a Home is a Gift and a Future, NOT a Transaction

Practicing Real Estate in Orange County right now is hard, emotional, time consuming, and a great GIFT.  Buying and selling a home is a relationship and a future, not a transaction.  I am honored and grateful for the opportunity to be a part of your lives. 

THANK YOU for sharing with me:

• Your first home purchase
• The births of precious little babies
• Your wedding joy
• Quiet moments of mourning
• Your second home to be near your amazing children and grandchildren
• Finding the perfect home to house your extensive collections
• Your hard decision to short-sale your home
• Tears of joy and tears of frustration
• Purchasing smart investment properties that will bring income to your family
• Starting a new chapter in your life 

THANK YOU for:

• Humoring me during my rants on Real Estate Ethics
• Forgiving me when I do/say something stupid
• Caring about my feelings when you have to use another Realtor
• Letting me get all “Pit Bull” on your behalf
• Hanging in there when it takes multiple offers to buy/sell a home
• Encouraging me
• Supporting me
• Referring me wonderful new clients 

And most importantly, THANK YOU for entrusting with me the promise of your future.  It is forever imprinted on my heart.  

 

 

Ssshh.....Short-Sales: Take Two - Options

These are challenging times in the American economy, to say the least!   Many California Homeowners have been hit particularly hard with loss of equity, wacky loans, and loss of jobs.  It is imperative that all options are evaluated, and the one that best fits the situation is put into motion.

If a homeowner wishes to SAVE their home they may choose:

• REPAYMENT - The mortgage holder agrees to add delinquent payments to the current monthly payment.  If a loan is simply late, not upside down, this may be a good choice.
• FORBEARANCE - The late payments are added to the balance and it will be dealt with in the future.
• MODIFY - Change the payments or loan balance. 
• SHORT REFINANCE- The mortgage holder(s) agree to refinance at current market value even though the balance is higher than market value.  For example, home is worth $500K, mortgage is $650K, so lender agrees to refinance and lower balance to $500K.

If a home-owner wishes to LET GO of their home they may choose:

• FORECLOSURE - Once a loan is in default the lender can take legal recourse by:
• 1. Judicial Foreclosure - Homeowner goes to court and owes legal fees.
• 2. Non-Judicial Foreclosure - Homeowner gives up right to recourse and does not go to court. Most common in CA.
• DEED-IN-LIEU - The deed is signed over to the lender holding the mortgage upon mutual agreement between the borrower and lender.  This is not that common, but does have its place.
• BANKRUPTCY - This judicial process does not make the home mortgage go away.  A Short-Sale is often done before or after a BK.
• SHORT-SALE - The homeowner chooses to sell their home SHORT of the current mortgage amount.  A hardship package is completed and submitted along with a buyer's offer, to the lender(s) holding the mortgage.

Each "option" has many details that need to be explored with the appropriate professionals: Accountants, Attorneys, and REALTORS.  Yes, it is complicated, but the BEST choice for YOU can be determined after careful exploration of the process. Share the word.

Ssshh...Short-Sales: Take One-Timelines

Let me introduce you to a very misunderstood and often despised Real Estate transaction:  Short-Sales.  Some REALTORS run from them, some buyers run TO them, and many homeowners are overwhelmed by them.  Unfortunately, Short-Sales will be here to stay for several years to come, so it is time to get to know them. 

Each homeowner's situation and each Short-Sale transaction have its own nuances and variables.  There may be a playbook but it is rarely followed and it is always being rewritten.  In this series I will break down the components in their simplest forms starting with foreclosure timelines.

Foreclosure Timeline:

• 1 Month late on a payment - Phone starts ringing
• 3 Months late on a payment - Lender CAN Post a PUBLIC Notice of Default (Posted on property and in newspaper)
• 6 Months late on a payment - Lender CAN Post a PUBLIC Notice of Auction
• 7 Months late on a payment - Lender CAN Auction your home (In CA these are done on the county courthouse steps where either a private investor purchases the home or the bank takes it back)
• 8 Months late on a payment - After your homes has been sold at auction you CAN legally be evicted

You probably noticed the word CAN.  Due to the high volume of non-paying homeowners lenders are frequently slow to react, however, both sellers and buyers need to be aware of the timelines.  If a homeowner is trying to do a loan modification the clock CAN be slowed.  On the other hand, even if a lender approves a short-sale the right hand may not be talking to the left over at the bank and the home CAN be sold at auction.  This doesn't happen very often, but the point is there are no certainties (yet). 

Stay tuned for Take Two. Share the word.

Marathons and OC Real Estate: Kindred Spirits

Anyone who knows me knows that I am obsessed with running and real estate.  In many ways these two seemingly unrelated topics share much in common. 

Marathon training requires many months of building strength and endurance to run a 26.2 mile race. It is essential to be dedicated to your goal of crossing the Finish Line! 

Likewise, purchasing a home starts with laying the foundation.

• Creating a financial plan that starts with deciding on down payment amount and then securing financing with a direct lender
• Mapping out where you want to live and determining your wants, needs, and essentials in the home and neighborhood.

Next comes the weekly runs, or the home search.

• Historically low inventory means it may take multiple months to find a home. Fourth quarter 2009 sales pace would take only 3 months to sell all homes on market (norm is 6-9 months):  http://www.trendgraphix.com/CAR/charts/7GBL_F001_01_01_0135_1_38_Bed0111_FB0111_HB0111_YB0132_75_07_200912.htm
• Low inventory means it may take several offers (Yes, I know it may be hard to believe, but MANY Orange County homes receive multiple offers).

Lastly, the perils and pitfalls of Escrow require commitment and a positive attitude so you can make it to hear the words: "Escrow has closed!"

Negotiating a short-sale is much like training with an injury.  The race may not be finished, but you keep doing what is necessary with hopes that your body/the bank will cooperate. 

• Short-sale planning begins with a "seller's hardship package" and a buyer's offer that is submitted to the bank who holds the mortgage.
• The bank approval process can take 2-6 months. Similarly, it takes 3 -6 months to train for a marathon.

Like running with an injury, short-sales require patience and perseverance because you have no idea what obstacles may lay ahead. 

Plan your path and stay true to your goal, your race, and your real estate decisions. 

Run strong!