Rancho Santa Margarita Blog

LOST IN TRANSPARENCY 

Big changes are coming to the mortgage industry as of January 1^st, 2010; most at the cost of the borrower.  

Attempting to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate. Please hold the applause. And what goodies will the borrower get with the new 2010 Good Faith Estimate: 

1. A new and improved 3 page Good Faith Estimate adding two more documents to read. The old 1 page document that clearly listed fees, rate, payment, and cash to close was just too confusing for those that didn’t complete grade school.
2. Have your pencils ready. The new Good Faith Estimate has a scratch pad were you can compare rates and fees from different lenders; or just doodle. Simply putting different Good Faith Estimates from different lenders side by side was too complicated.
3. Your monthly mortgage payment is in bold print. The payment will include principle, interest, and any mortgage insurance. However, the payment will no longer disclose property taxes, homeowners insurance, or HOA dues. TOO much information. The disclosed monthly payments in bold will now leave the borrowers feeling warm and fuzzy because it appears so low. Surprise; it is.
4. And finally, HUD didn’t want to burden the borrower with knowing how much money they would need at closing. Keep your pencils out; you will have to do the math yourselves.  

The new HUD approved 2010 Good Faith Estimate will be disclosed by a mortgage company near you starting January 1^st, 2010. Also, changes in yield spread premiums are likely to be implemented come January 1^st, 2010 which will ultimately lead to higher fees to the borrower.

Senate has unanimously passed the extension of the $8,000 home buyer tax credit and the House of Representatives have approved it. The bill now awaits the President’s signature.

The bill does two things, first the extension will push the December 1st deadline through till May 1, 2010. This is an $8,000 tax credit that is available now for first-time purchasers before May 1, 2010. Added to this bill is stipulation that prospective purchasers with binding contracts in place as of April 30, 2010, will be permitted an additional 60 days to complete the transaction. This gives time for those in the process of escrow to properly close.

Second, added to this bill is a new $6,500 tax credit for repeat buyers who purchase between December 1, 2009, and May 1, 2010. For those buyers who have used their home being sold as a principle residence consecutively for 5 of the 8 years, they will be able to receive the new $6,500 tax credit.

Both tax credits are given an extra 60 days to close if they are in binding contracts as of April 30, 2010. Also, the income limits have been expanded to $125,000 on a single return and $225,000 on a joint return. This is an incredible time for home buyers to take advantage of purchasing their first or new home in Rancho Santa Margarita.

For information on buying or selling your Rancho Santa Margarita Home please feel free to call me at (949) 858-1770 or email me at margo@margomurray.com.

Your neighborhood realtor since 1988,

Margo Murray

Prices of property are at a historic low. The time to purchase a house is now, because we may not see such low prices again for some time and because sellers are motivated.

Investors may lose confidence in U.S. dollars. Erosion of confidence will be the main driver for devaluation of the U.S. currency. The time to purchase a house is now,  while the dollar is still strong against major foreign currencies.

It is a fact that the government will face an astronomical deficit and will try to stimulate the economy. Current interest rates are extreamly low. Although, soon we will all compete for chip money, including the federal and local government. The supply and demand will push interest rates up. The time to purchase a house is now,  when the interest rates are low.

Massive borrowing are essential ingredients for high inflation. High inflation will devalue your savings. During inflationary periods, owning property is considered a wise way to park money.  The time to purchase a house is now, before inflationary pressure checks in. 
                                          Click the link below to find             

                Best deals in Rancho Santa Margarita or Orange County

         Are you “On The Fence” About Buying a Home?

• It helps transform the mortgaged-back securities.
  This keeps access to capital for borrowers high and
  interest rates low.

• Conforming/jumbo conforming rates should drop in
  the coming weeks by as much as a percentage point.

• It improves confidence in the stock market allowing
  investors to once again realize profits, which they in
  turn can re-invest in mortgages.

• Credit will flow again bringing new, qualified buyers
  into the market to take advantage of the investment
  opportunities currently available.

• Modified mortgages will allow some homeowners to
  restructure their mortgages and avoid foreclosure.

If you’re on the fence, now is an excellent opportunity to realize
dramatic savings on a home purchase before the market shifts,
and we begin the next ‘UP’ stage of the cycle.

The dynamics of short sales and REO transactions present distinct challenges to REALTORS® and Buyers. 

Short Sales

Short pay transactions or “short sales” are transactions where the seller owes more on his or her home than the home is worth.  The distinct nature of these listings enable a third-party  the lender to intervene in the terms of sale and the lender will dictate after a buyer may have had his offer on that home that the lender will want the seller to counter and
sell the home for more than was originally agreed to by the buyer and the seller.
This is possible, because the lender will have to discount the note, so although the seller has signed a legally binding
contract subject to lender approval of the short sale.

(more̷

There is more to a home purchase offer than the price. Ideally, the offer, including any counteroffers, should encompass all the terms and conditions that will apply to the purchase transaction.

In some states, attorneys draft purchase offers. In other states, like California, most residential purchase offers are filled out by real estate agents using pre-printed contracts that were drafted by attorneys. In either case, make sure to read the offer and understand it before it’s presented to the sellers.

In addition to the price and contingencies, the purchase offer should include such specifics as the deposit amount, the closing date, the date the sellers will deliver possession, any personal property such as a washer or dryer that is included, and any real property such as a light fixture that is excluded from the sale. It is best to be as specific as possible. (more̷

One of the sings of an improving real estate market is “cherry picking.” What happens is buyers look for the best property they can find. It has the best location, best amenities, best upgrades, best landscape and most important-
best price. As these properties begin to be priced at a number that corresponds to the buyer’s specific set of parameters, homes start to sell. One by one, the really good deals begin to sell. As these homes begin to sell, other buyers, who waited too long, get nervous and decide they had better purchase also. Once all the “cherries” are gone, we then have the “dogs” that no one wants. They are priced the same as the “cherries,” but are inferior in some way.  As these properties begin to sell, the new market value for the neighborhood is set. This is the new fair market value which guides both buyers and appraisers. After all the “dogs” are sold, sellers who have been on the market for months and years have a decision to make. They must either drop their price to fair market value or take their home off the market. As this process begins, inventory will drop and won’t be replaced very quickly. Many sellers will not want to sell their homes for the lower fair market value. When those properties, owned by sellers who are motivated and are willing to take fair arket value, sell, the real estate market will begin to stabilize. Unless the government does something stupid, we will slowly get back to a normal market where prices are negotiated over 10,000 to 20,000 dollars within the listing price.

There will always be some properties in neighborhoods that will sell for more or less. This stabilization has happened after each of the other cycles in the 1970’s, 1980’s and 1990’s. Always remember the golden rule in real estate, “long term.” No one has ever been hurt by owning their own home for 20 years. That also means you don’t use your home’s equity as a savings account. If you kept the same loan on the property that you had when you purchased it 20 years ago, you’d have equity in your home and te value would be higher. Period.