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

The rates are still staying low this week. We hit our lowest rates in over 37 years on Wednesday with a slight uptick in rates this morning. The 10 year treasury bill is trading at 2.10 this morning. Investors are still in dismay as they wonder how the banks continue to lend at the largest spreads ever on mortgages.

If we look at the spreads between the 10 year treasury and 30 year mortgages, I believe you can historically expect about a 180 basis point spread. So basically, you would add 1.8% to the 10 year treasury yield. Today the 10 year treasure is 2.1, hence our rates should be at 3.9% or so. The banks are currently at a spread of 275 or so over the 10 year treasury with rates trading around 4.875.

The investors for mortgage backed securities are demanding higher returns due to the risk of mortgages and the default ratios. The banks are also working on retrieving their losses by adding their spread to the treasury to rebuild their coffers. Make no doubt about it, the banks never lose!! The public will always pay for it in the long run. But, if they did just “absorb” the losses, they would become insolvent and then our money would be worth nothing. Banks are a for profit business and have to pay dividends to their investors. Therefore, the spreads will remain high until their balance sheets rebuilt.

Having said that, the rates are still fantastic and buyers are now coming out of the woodwork. Finally.

         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.

On CNBC’s Parting Shot on June 27, 2008 Dennis Kneale’s commentary tried to put some perspective on the reality of the housing crisis compared to the way the news media likes to glamorize doom and gloom. He provides a refreshing approach, rather than the gloom and doom that the media has provided. CLICK HERE to watch video.

Here is an outline of his talk.

1/3 of all homes are owned outright, no loans
1/2 of all homes were purchased prior to 2000 and have equity.
95% of homeowners are paying on time.
which leaves 5% or 4,000,000 of homeownes at risk.

Teledyne is a local high tech company here in Orange County. Owning their stock has made quite few of their employees and other local people Millionaires. I figured that everybody could understand making money this way. You simply bought Teledyne stock in the beginning and sold it after the price went up (way up).

Last Friday it closed at $65.17 per share. Back in March of ‘03 you could have bought some Teledyne stock for around $15.00. Now my question to you is, “Would it really have mattered to you if you had paid $14.50 or even $15.50? Sure, you want to make as much as you can, but if you had tried to “time the market” to buy it at $14.50 you might have missed it completely and had to pay upwards of $20.00 per share if you wanted in.

My advice to you is to buy when you can. Don’t worry about picking up every nickel off the table. Just get what you can. You would have gotten over 400% growth in the share price. Why be greedy? (more̷

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

The housing market is soft. Hard times for some can mean opportunity time for others. Could now be a good time to step into the housing market and pick up a bargain?

Generally, it is a better time to be a buyer than a seller, but this is not so in every market. In San Francisco, for example, there are still more buyers than sellers for prime upper-end properties. You’re not likely to pick up a bargain there.

Many more markets are suffering from too much inventory and too few buyers. These markets would seem to offer the best opportunities. However, this is not necessarily so. Even though the price you pay is relatively low, it could take some time before the value of your investment increases.
(more̷