Quick Search

Home Financing Trends in California

Home_Financing_TrendsHome Financing Trends

  • 91% of buyers financed their home
  • 85% obtained a 30 year loan
  • 83% obtained a fixed-rate loan
  • 91% had no problem with their appraisal
  • The average downpayment was 25%

It is very positive to see the lending market get healthy again and that people are being responsible with their loans. There are many loan programs and options available now to buyers. Even though as a state the average downpayment is 25% sometimes that is hard to do, especially in the more expensive areas.  That may not be feasible or what is best for your situation. There are conventional loan programs with 5% down. There are government loans with 0% down. You maybe be buying that stepping stone condo or house until you get to the next home. You plan on being there 5 to 7 years. It might not make sense financially to get a 30 year mortgage. The good thing is that you can get the right loan for you. Let’s sit down and talk about your goals.

Homes for Sale in Huntington Beach

See all Huntington Beach Homes $750k to $1mil.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,831 sq ft
    Lot size: 5,663 sqft
  2. 3 beds, 1 full bath
    Home size: 1,000 sq ft
    Lot size: 6,534 sqft
  3. 3 beds, 2 full baths
    Home size: 1,653 sq ft
    Lot size: 7,405 sqft
  4. 5 beds, 2 full, 1 part baths
    Home size: 2,340 sq ft
    Lot size: 5,227 sqft
  5. 3 beds, 2 full, 1 part baths
    Home size: 2,750 sq ft
    Lot size: 2,750 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

New Mortgage Rules for 2014

DSC_0134New Mortgage Rules

Starting on this past January 10th, 2014 the mortgage industry started adopting some new federal rules. This came about to protect the consumer when getting their mortgage loan. The goal here is for the lender to determine if the borrower has the “ability to repay” the loan and that you get a loan that you can afford. They are referring to these types of loan as QM or Qualified Mortgage.

New Debt-to-Income Ratio

For conventional loans they have dropped the debt-to-income ratio down to 43%. FHA, VA, USDA are still at 50%. The lender will look at the amount of money you will have left over each month to pay for things like food, utilities, etc.

The lender is going to look at 8 types of information:

  1. Your current income or assets (pay stubs, bank statements, savings accounts, 2 years W-2′s, tax returns, S Corp, LLC, 1099′s)
  2. Your current employment status
  3. Your credit history
  4. The monthly payment for the mortgage
  5. Your monthly payments on other mortgage loans
  6. Your property taxes
  7. Your other debts (child care, tuition, HOA Dues, insurance, etc)
  8. Debt-to-Income Ratio- monthly debt payments compared to monthly income (pre-tax income)

The lender may also look at how much money you have left over each month after paying your debts.

Qualified Mortgages can not have the following features:

  1. An interest only period
  2. Negative Amortization
  3. Balloon Payments
  4. Loan terms longer than 30 years

Recommendation

It is a good idea to go through the loan process 6 months or so prior to buying a home.

  1. This will give you an idea of what you can afford.
  2. In case there is a negative item on your credit report it gives you time to get it removed.
  3. You will be able to file taxes appropriately to show the lender.

Homes for Sale in Huntington Beach

See all Huntington Beach Homes $600 - $750k.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,433 sq ft
    Lot size: 6,098 sqft
  2. 3 beds, 1 full, 1 part baths
    Home size: 1,213 sq ft
    Lot size: 6,098 sqft
  3. 4 beds, 2 full, 1 part baths
    Home size: 2,400 sq ft
    Lot size: 6,098 sqft
  4. 4 beds, 1 full, 1 part baths
    Home size: 1,286 sq ft
    Lot size: 7,405 sqft
  5. 4 beds, 2 full baths
    Home size: 1,950 sq ft
    Lot size: 6,098 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

What Is All This Talk About Pocket Listings?

DSC_0155I have recently been seeing a lot of posts by agents stating that they have “pocket listings” and the home can only be shown by them. What would be the advantage to the seller to “hide” the fact that the house is for sale? Does the agent just want to double-end the sale (they want both the selling and buying commission). In my opinion this is a complete breach in the fiduciary duty that the listing agent/broker has to the seller. Their duty is to get the highest price possible to the seller. How does the seller know if that is the highest possible price that would be offered on their property if the open market hasn’t been told about it? Also, how do you get the highest possible price for the seller at the same time trying to get the lowest possible price for the buyer. There is a little conflict of duty here. My suggestion to the agents that are practicing this. Market the property with quality marketing and advertising. Create as much interest as possible. Let the open market see the property by putting it on the MLS, internet websites like Realtor.com, Zillow, and Trulia etc. Then let the open market decide the highest value for the home. What are are your thoughts?

The Year My Mom and Dad Bought Our House

California-home-prices-a-history_72     It was 1971 and my mom, dad, and brother were living in a 2 bedroom house in Temple City (near Pasadena). Then I came along. The house all of sudden got a little cramped. They went around looking for a bigger place. They come across a home around the corner that was just perfect. It is a 3 bedroom 2 bath home on a half an acre. It has a huge park like back yard with a 1 bed, 1 bath home in the back with its own garage and workshop. They were really nervous about the price of the home. But they decided to go for it. Can you guess what they paid? Can you believe it was $19,000 and the interest rate was 7.48%. That was a whopping $132.59/mo payment! My mom still lives in and owns the house today. That back house really came in handy. When were going through some tough financial times they were able to rent out the back house to cover the mortgage payment. Can you guess what that house is worth today? My best guesstimate is that is is worth $750k! I know my parents never dreamed that would happen. They were just looking for a place to take care of their kids. Check out the chart and see what housing has done over the past 40 years in California.

FHA Premiums Going Up Again on April 1st, 2013

DSC_0019     On April 1st, 2013 the FHA premium is going up from 1.25% to 1.35%. Let’s say you have a loan of $400k, 30 year fixed at 4%. That means your monthly mortgage insurance is going to go from $417/mo to $450/mo.  Then on 6/3/2013 the requirement for having mortgage insurance changes to throughout the life of the loan. It used to be only 5 years and 22% equity. Let’s say in the same example your paid the MI for the 5 years which would be $25,164. Then you had the equity so you asked for it to be removed. Congrats no more monthly MI. Now let’s say you had to keep it throughout the life of the loan. You have paid $86,673. That is an extra $61,509 that you are going to pay. There are other alternatives. There is a 5% conventional that has a little higher interest rate but no monthly MI. Your monthly mortgage payments are going to be much less. Plus you will not have to worry about trying to refi in the future knowing that the interest rates are going to be much higher 5 years from now.

Huntington Beach Homes for Sale

See all Huntington Beach Homes $600 - $750k.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,433 sq ft
    Lot size: 6,098 sqft
  2. 3 beds, 1 full, 1 part baths
    Home size: 1,213 sq ft
    Lot size: 6,098 sqft
  3. 4 beds, 2 full, 1 part baths
    Home size: 2,400 sq ft
    Lot size: 6,098 sqft
  4. 4 beds, 1 full, 1 part baths
    Home size: 1,286 sq ft
    Lot size: 7,405 sqft
  5. 4 beds, 2 full baths
    Home size: 1,950 sq ft
    Lot size: 6,098 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Top 10 Legal Mistakes Homes Buyers Make

OCT_TopTen_8-271

1) Simply writing an offer without proof of being able to purchase will not allow a seller to make a decision on your offer. Make sure you also have proof of funds and an approval letter from a lender.

2) There are many things that you can do when writing an offer to make it stand out from the other offers. Knowing how to package the offer will make all the difference in whether your offer will be considered, countered, or accepted.

3) Be careful that your offer is not “shopped” around by the listing agent to try and get a higher offer.

4) Being proactive when writing offers is very important in this market of low inventory. Sometimes it is necessary to write offers on multiple properties. Knowing how to write the offer so that you are not committed to buying the multiple properties is the key.

5) You always want to make sure that the seller actually has the authority to sell the home. Otherwise you are wasting your time.

6) There are key dates to when you must perform by. The biggest ones are the inspections, disclosures, and loan. Due diligence is of utmost importance to get these done in time or you risk losing the home.

7) Always obtain all the sellers disclosures. If there is a yes to any of the questions, there needs to be an explanation attached, signed, and dated.

8) Due your due diligence in getting the home inspected and pull any permits from the city.

9) Make sure you run the numbers that you can afford the home. Beyond the payment of principal and interest there are: taxes, insurance, maintenance, utilities, etc that can add up.

10) Buy a home warranty just in case the water heater, air conditioner, etc fails a couple of months after owning the home. File the claim with the warranty company immediately.

Homes for Sale in Huntington Beach

See all Huntington Beach Homes $750k to $1mil.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,831 sq ft
    Lot size: 5,663 sqft
  2. 3 beds, 1 full bath
    Home size: 1,000 sq ft
    Lot size: 6,534 sqft
  3. 3 beds, 2 full baths
    Home size: 1,653 sq ft
    Lot size: 7,405 sqft
  4. 5 beds, 2 full, 1 part baths
    Home size: 2,340 sq ft
    Lot size: 5,227 sqft
  5. 3 beds, 2 full, 1 part baths
    Home size: 2,750 sq ft
    Lot size: 2,750 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Top 10 Legal Mistakes Home Sellers Make

OCT_TopTenlegalmistakesofsellers2

When selling your home there are many things that can cost you 10′s of thousands of dollars not to mention liabilities of disclosure. Here are some of the most important ones to consider.

1) Just because a buyer has offered the highest price does not mean that it will net you the highest amount in your pocket. In this market of rising prices appraisals have become an issue. Asking a buyer to remove their appraisal contingency means that they are going to buy the house at the offered price regardless of what the appraisal comes in at.

2) The timing and dates on when are where to sign on the multiple offers is extremely important. By not clicking a box could cause you to commit to selling your home to multiple buyers or accepting a lower offer.

3) There is balance act here that comes into play. You want to have a back-up offer in case the first buyer can not perform. At the same time you don’t want to lose out on the ability to get a higher offer.

4) Asking for an earnest money deposit of at least 3% of the purchase price shows that the buyer is serious and if they were to back out after removing all the contingencies the seller could retain that deposit.

5) You don’t want to go in and out of escrow. Don’t take the buyers word that they have the money, verify all bank statements that they are current and there is liquid assets in the accounts.

6) Nobody wants to go to court. Always disclose all facts that affect the value of the home (flight patterns, noises from dogs, trains etc).

7) You want to disclose anything that could pertain to the value of the home. You don’t your lack of disclosure to come rear its ugly head after escrow closes.

8) Don’t make it about he said she said. Always get everything in writing, signed, and dated.

9) You want the buyer at some point (17 days is the default) to remove any all contingencies. You do not want the buyer to be able to cancel escrow in the 11th hour and for you to not get compensation for it.

10) If you want to keep anything in the house that is bolted down or could be considered part of the home, (plants, tv’s, window coverings) write it up in the counter offer that they are not to be included with the sale of the home.

Huntington Beach Homes for Sale

See all Huntington Beach Homes $600 - $750k.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,433 sq ft
    Lot size: 6,098 sqft
  2. 3 beds, 1 full, 1 part baths
    Home size: 1,213 sq ft
    Lot size: 6,098 sqft
  3. 4 beds, 2 full, 1 part baths
    Home size: 2,400 sq ft
    Lot size: 6,098 sqft
  4. 4 beds, 1 full, 1 part baths
    Home size: 1,286 sq ft
    Lot size: 7,405 sqft
  5. 4 beds, 2 full baths
    Home size: 1,950 sq ft
    Lot size: 6,098 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Lowering Your Property Taxes In Orange County

Has your property value dropped and are you still paying the property taxes on the old value? Here is how you go about lowering your property taxes. The Office of the Assessors Website and the PDF Form to fill out.

  • If the market value of the property on January 1, 2012, was lower than your Proposition 13 assessed value, you may receive a temporary reduction in taxable value for the upcoming year.
  • You will be notified of the results of this review on your Property Value Notice in July 2012. If you disagree with the value on your Notice, you may file an appeal with the Clerk of the Board. The filing period is July 2, 2012 to September 15, 2012.
  • Please provide Comparable Market Data Information – Comparable Sales or listings of similar properties in your area. Include any additional information on a separate sheet that you feel is relevant to the above comparable properties. Sale date no later than 3/31/2012.

Let me know if you need the printout of the comparable sales for your area.

 

Huntington Beach Housing Report – Have We Passed The Bottom?

The housing market in Huntington Beach, like most cities, has been in a constant flux of change over the past year. Let’s take a look at the changes and what is currently going on in the housing market. Currently we do not have a problem of houses selling we have a problem of not enough inventory of houses to sell. What do the numbers show us?

This chart is for all home types (single family and condos) with no price limit in the city of Huntington Beach.

All of Huntington Beach

In the past 14 months: we have had a 49% reduction in inventory of active homes for sale, a 138% increase in pending sales, and a 75% increase in homes sold.

We have gone from 8.1 months of inventory to 2.4 months of inventory. That is a 70% drop in available months of inventory. That means if nothing else came on the market we would completely run out of house for sale in 2.4 months!

Homes for Sale under $700k

If we look at house prices under $700k it get a little more dramatic. In the past 14 months: we have had a 58% reduction in inventory of active homes for sale, a 151% increase in pending sales, a 102% increase in homes sold, and just 1.5 months of inventory. To compare, in a normal or neutral market we would have about 3 months of inventory of homes.

Affordability

Why is this happening? Well we just finished talking about supply the other thing would be affordability. Let us look at what a payment would be since 1999.

This Chart is from the April 2012 Edition of Orange County Realtor and an article by Steve Thomas

That is a 37% drop in price since 2006 and a 39% drop in interest rate. We have not seen housing payments this cheap since somewhere between 1999 and 2000.

Conclusion

If you are a seller it might be the right time for you to put your home up for sale. If you are a buyer be very prepared, have your loan completely in place, and be ready to go up against many other buyers with multiple offers on many of the homes.

Even with all these numbers, remember they are just numbers. Hopefully they give you a snapshot of what is going on right now. But, what is right for you is based on what your wants and needs are. You want to raise you children in a particular school district, you want to be able to control (and have a fixed) living expense, you want the pride of owning your own home, you want to downsize because you do not need all the space anymore, you want to upsize and have more space, you want a manageable commute to work, etc.

What are your thoughts?

Huntington Beach Real Estate Listings for Sale

See all Huntington Beach Homes $600 - $750k.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,433 sq ft
    Lot size: 6,098 sqft
  2. 3 beds, 1 full, 1 part baths
    Home size: 1,213 sq ft
    Lot size: 6,098 sqft
  3. 4 beds, 2 full, 1 part baths
    Home size: 2,400 sq ft
    Lot size: 6,098 sqft
  4. 4 beds, 1 full, 1 part baths
    Home size: 1,286 sq ft
    Lot size: 7,405 sqft
  5. 4 beds, 2 full baths
    Home size: 1,950 sq ft
    Lot size: 6,098 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Should I Wait For Property Values To Rise?

The Scenario

You are sitting in your house and are thinking about selling your current home and buying the next home. Maybe you have outgrown your home. You have more kids than when you first bought. Kids are getting bigger and the house is feeling so much smaller. Maybe you have been there for years and the kids are gone and you want to go get your dream home. So you say that you want to wait for the market value to increase another 10% before you buy the next house. That you want a little more equity in the home in order to take the money to the next place. Let’s look at the numbers to see if that makes sense.

The Numbers

Let’s say you own a home that currently is worth $500k and you want to buy a home that is currently worth $750k. Now let’s say a couple of years have passed and housing values have increased 10%. The home that you are currently living in is now worth $550k and you are thinking “great I just gained $50k”. The only problem is that the home that you want to buy also has gone up 10% and is now worth $825k. You just had a net loss of $25k.

Now let’s look at the payment. If you were to buy that $750k house today with 20% down ($150k) at 4% fixed for 30 years the payment would be $2,864/mo. Your taxes would be $687/mo ($8,250/yr). For a total payment of $3,551/mo. Now let’s look at the payment if you were to wait for the 10% increase in value. You buy the home for $825k with 20% down ($165k) at 4% fixed for 30 years and the payment would be $3,150/mo. Your taxes would be $756/mo ($9,075 year). For a total payment of $3,906/mo. Your P&I payment just went up $286/mo and your taxes just went up $69/mo for a total payment increase of $355/mo.

In this scenario we are assuming that interest rates would not go up at all in the next 2 years. What if they went up from just 4% to 5%? Your payment would increase another $393/mo to $3,543/mo.

The Conclusion

If you were to wait for a 10% increase in property value (and we are assuming that this would happen over the next 2 years) and interest rates were to rise just 1% you would be paying an additional $748/mo or $9,000 a year, you would have a net loss of $25k in property value, and you would be paying an additional $184,282 dollars in interest over the life of the loan. Does it make sense for you to wait?

Huntington Beach Real Estate Listings

See all Huntington Beach Homes $750k to $1mil.
(all data current as of 7/23/2014)

  1. 4 beds, 1 full, 1 part baths
    Home size: 1,831 sq ft
    Lot size: 5,663 sqft
  2. 3 beds, 1 full bath
    Home size: 1,000 sq ft
    Lot size: 6,534 sqft
  3. 3 beds, 2 full baths
    Home size: 1,653 sq ft
    Lot size: 7,405 sqft
  4. 5 beds, 2 full, 1 part baths
    Home size: 2,340 sq ft
    Lot size: 5,227 sqft
  5. 3 beds, 2 full, 1 part baths
    Home size: 2,750 sq ft
    Lot size: 2,750 sqft

Listing information deemed reliable but not guaranteed. Read full disclaimer.