| Rates Finally Drop For Jumbo Conforming Loan Limits | May 14th, 2008 |
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It’s taken three months, but lenders are finally offering favorable rates for these larger loans. Last week a mortgage broker I work with placed a $700,000 fixed loan at 5.875%. I got a quote from another loan professional at 5.625%. This makes a purchase of a home in San Francisco at our median price of around $750,000 far more affordable. This doesn’t mean these loans are easy to get– you still need to go ‘full-doc’ (meaning you need to have a job that provides 1040s and pay-stubs), and put at least 10% down. You also need good credit scores– some of my sources say a minimum 660 is required. Others say your scores need to be at least 700. Call me if you want to crunch the numbers on a purchase and figure out what you can afford. Getting prequalified and understanding how the numbers work on your monthly payment is a critical first step when shopping for a home. |
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Back in February I added a posting about how | Small Mortgage Update. . . | May 4th, 2008 |
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The Fed lowered the rates by .25 point yet again, which is not terribly exciting to buyers seeking a new loan or owners wishing to refi. While any kind of rate cut is a good thing, it rarely has an immediate impact on mortgage rates. Some good news is that lenders are loosening their requirements a bit and that 90% loans with decent rates are available from some lenders. We have a great lender now who can do 80% limited doc on interest only for 5 years to well over $1,000,000. So call us for specifics. I hope you are having fun out there, and we look forward to helping you and your clients, as always. Dorian can be reached at 415-544-2609. |
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Dorian Sarris of Americorp Funding delivers this update on the mortgage front:| The Mortgage Madness That Isn’t. . . | May 4th, 2008 |
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A little background for first-timers or those just sticking their baby toe into the real estate market: Back in the day when real estate prices skyrocketed and money grew on trees, many Adjustable Rate Mortgages (ARMs) started with absurdly low introductory rates that were scheduled to jump at the end of a one-or-two year introductory period. The new rates were generally tied to a Treasury or London Interbank (Libor) index, with the mortgage rate typically set at 2 to 6 percentage points above that index rate. Thereafter, the rate is scheduled to adjust annually. The good news is that Libor rates have been stable, thanks in part to the actions of the Federal Reserve to lower interest rates. For example: Let’s say a borrower in Spring 2006 obtained a mortgage indexed at five points above Libor (then at around 5 percent). That would have meant an indexed rate at that time of 10 percent. However, a two-year introductory rate capped the payment at 8 percent. As of last week, Libor was at 3.08 percent, which means this fictional mortgage would reset at 8.08 today – only a slight change for the borrower. You can read the full story in SFGate. |
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As ARMs reset, little of the expected chaos is coming to fruition. Worries that subprime mortgages would sideswipe borrowers with giant monthly payment increases have been reduced by Federal Reserve rate cuts and other steps to stimulate the nation’s credit markets. In fact, some borrowers with resets occurring today are finding their monthly payments staying much the same.| A Missive of Hope from one of the Bay Area’s Crummiest Real Estate Markets | May 2nd, 2008 |
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This email message was forwarded to me from Dan Baker of Countrywide (yes Countrywide was sold to BofA, but the complete transition hasn’t happened yet). It comes from Tony Machado of RC Appraisal. As many of you know I have been saying for quite a while now the housing market is showing some momentum in the right direction and the purchase market without a doubt is picking up. What I am tired of is listening to the Media who are constantly putting out a negative message. In my business alone more than 50% the assignments in Q-1-2008 have been purchase transactions. To give you a comparison, in Q-4-2007 purchase assignments were less than 10% of my business. Just this morning I completed a market analysis in Antioch showing that in 2007 based on the subject CMA (comparative market analysis) there were a total of 3 sales in all of 2007. In Q-1-2008 based on the same criteria there have been 9 sales which translates to a 300% increase! By the way a CMA analysis is based on just a 1 mile radius of the subject property and only criteria which fit the subject parameters. I could analyze the whole City but you get the point. I’m certain that Tony’s appraisals aren’t coming in nearly as high as they were before the mortgage (and market) meltdown of last summer, but higher sales activity translates into higher demand, which will ultimately draw down the oversupply. Low supply/high demand means a gradual increase in prices. Of course all this hinges on a decline in foreclosure sales so that less inventory come on. |
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| It’s Official– Conforming Loan Limits are up, Up, UP! | February 15th, 2008 |
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Hello My Favorite People!
Until now, conforming loan amounts were limited to $417,000—a negligible amount in San Francisco where the median home price is around $725,000 (this figure factors in TICs and condos along with single family homes). An 80% first mortgage on a purchase of this size would be at least $580,000 unless you had an unusually large down payment. A conforming loan is a fixed rate loan that is packaged for resale on the secondary mortgage market to Fannie Mae or Freddie Mac, two quasi-governmental agencies that buy mortgages from cooperating lenders. Both agencies set limits annually on the size loans they’ll buy. This guaranteed market for conforming loans leads banks to offer lower rates on them– usually they run about 1% lower. Adjustable rates on conforming loan amounts also run lower by about ½ a percent. Although the increase in the conforming rate is good news, it may take a bit of time before most lenders start offering lower rates on larger loan amounts. There’s a chance that some will start making larger loans at conforming loans right away, but most lenders offering the best rates will be more cautious as they wait for guidance from Fannie Mae/Freddie Mac on how the loans will be bought. And as always, the best loans go to the most qualified– conforming loans tend to have the most stringent criteria. If your credit is shaky or you have been job-hopping in recent years, you may have to pay a higher interest rate. |
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The big news this week is that conforming loan limits are up, Up, UP in San Francisco– President Bush signed the economic stimulus bill into law on Tuesday – and for us, the most important piece of the legislation is the increase in conforming loan amounts to $729,750. | Update on Possible Increase of Conforming Loan Amount | January 29th, 2008 |
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Currently the bill can only allow the conforming amount to go up during 2008– there are no current plans to extend the change into 2009. If/when the House approves, the Senate will review next week and we expect the final bill to be completed for approval by the President by Feb 15th. There is some concern being expressed in the Senate about the increase in the conforming loan limit. There is the possibility the increase may not go all the way up to $729,750. Predictionists expect som increase in the conforming loan limit, but it is not clear right now how much that increase will be. Some FAQs: When? If all goes as planned and the President approves the bill on 2/15, we believe that mortgage bankers/originators would be able to start making loans almost immediately after bill is signed into law. How Long? While the current version limits origination period to 2008 only, most feel that once the program gets going its going to be hard to stop. Most investors want any program to be longer term to ensure liquidity. |
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The House is set to vote on economic stimulus plan today (1/29). This includes provision to increase the conforming loan amount to $729,750 in 2008 (up from| Conforming Loan Limits to Rise??? | January 24th, 2008 |
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The Senate and White House still must sign off on the proposed stimulus plan, which also includes tax rebates for Americans. Right now the higher cap would only apply for one year. The National Association of Realtors, one of the country’s most powerful lobbying groups was a key player in getting congress to consider this cap increase. Other groups representing bankers and home builders were pushing hard for this increase even before the mortgage meltdown began. A higher cap on the conforming loan limit is designed for an expensive housing market like San Francisco. The $417,000 loan limit has curtailed our ability to get the best rates available– this new limit makes the monthly mortgage payment on any purchase below $781,000 far (far) less expensive. |
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CNNMoney.com reported today that the government’s ambitious economic stimulus plan may raise the conforming loan limit by up to 50% . This would allow buyers to have significantly lower rates on loans up to $625,500!| Afraid of the Foreclosure Monster? Don’t Stick Your Head In The Sand. . . | January 11th, 2008 |
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It helps to remember that the bank isn’t thrilled about the prospect of taking back your home. The foreclosure process is expensive and selling your home (especially for a bank) is a big hassle that they would just as soon avoid. Often your lender will work with you to see if they can forego payments for awhile or restructure your loan. Following are a handful of links to help you figure out the best way to handle the prospect of a foreclosure on your home: 1. How to Avoid Disclosure by the U.S. Department of Housing and Urban Development (“HUD”). I found this PDF enormously helpful and easy to understand. It breaks it all down in a way that is simple and non-threatening. 2. List of Approved Credit Counseling Agencies by the U.S. Department of Justice.When you’re in a financial bind, all kinds of con artists can crawl out of the woodwork, offering guarantees to stop the foreclosure process. This list tells you which counseling agencies are legit. 3. You Can Avoid Foreclosure and Keep Your Home by the FHA. If you think your financial squeeze is temporary, this one is worth a look. 4. Questions and Answers on Home Foreclosure and Debt Cancellation by the Internal Revenue Service. Canceled debt can be taxable. This article will tell you when and why. 5. Neighborhood Networks Center for Foreclosure Solutions as presented on the Federal Reserve Board. Neighborhood Networks is rallying people across the country to learn how to help others avoid foreclosure. This hopeful site describes training and outreach efforts to people who should learn what all their options are when they face foreclosure. |
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San Francisco has a low foreclosure rate, but there are pocket neighborhoods in the Southern neighborhoods where owners are in over their heads with high payments on mortgages larger than what their property is worth. When they get behind on loan payments, it can be scary, especially when the bank starts calling you to see what’s going on. It’s tempting to not pick up the phone or decide not to call them back.| New Neighborhood Perspectives And A Word About That Rate Cut | November 2nd, 2007 |
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If you’re in the mood for facts– skip to the bottom for information on the Federal Reserve cut and its anticipated affect on average Joes like us. **************************** New Ways To Visit Your Neighborhoods Those of us who have lived in San Francisco for awhile pride ourselves on knowing San Francisco’s secret corners. In the past I’ve written about places like the Vulcan Stairway, the views from Green and Leavenworth, and the tower at the De Young Museum. Even with all (I think) I know however, I’m still surprised at what other people can teach me about SF’s neighborhoods and history. Following are three resources rich with ideas and info about new ways to learn and explore the City- San Francisco City Guides City Guides volunteers offer free walking tours design to share the fun of discovering San Francisco and its neighborhoods. Along the way they help preserve and perpetuate the history and folklore of San Francisco. Decades ago, I trained to become a City Guide– a phenomenal 6-month experience of Saturday seminars which led to a short career as a walking tour guide of North Beach-my tour started at northwest corner of Washington Square Park and ended at the North Beach Museum hidden away on the second floor of the Eureka Bank building at 1435 Stockton St. Today’s City Guides have an incredible, eclectic array of tours. There are between fifty to seventy different walking tours depending on the time of year. Among the unusual offerings are the “Cityscapes” tour through the Financial District’s hidden parks and rooftop gardens, and an “Inner Sunset: The Birth of a Neighborhood” tour which explains how this charming neighborhood rose from windswept dunes. Other tour titles are “The Palace Hotel,” “Lands End: Sutro Highs and Lows,” and “Art Deco Marina.” To see which tours, are on tap for November, click http://www.sfcityguides.org/current_schedule.html?month=November%202007 ************ SFGate.com Neighborhood Guide Buried deep in SFGate.com is the most comprehensive San Francisco neighborhood guide I’ve ever found. Written by San Franciscans for San Franciscans, it breaks down the City into 24 different districts. Whenever I read it, I learn something about something new-like the shoe garden in Alamo Square or Erich von Stroheim’s filming of the 1924 epic “Greed” at the corner of Hayes and Laguna. The guide is particularly rich with shopping, dining and entertainment tips. Even though some info is outdated (A-1 Hubcaps in NOPA land is sadly gone, as is the Lotta Jansdotter store on Lower Nob Hill), it’s still an amazing site to visit for a refresher on the cool spots you may have forgotten about and a good way to learn new ones. The list of eateries for each neighborhood is exhaustive and mouth watering, and they even have a section devoted to the “Deco Ghetto,” a neighborhood of vintage furniture shops centered around Market and Valencia. Joie de Vivre’s Joy of Life Joie de Vivre’s boutique hotel chain is renowned for offering inspired, creative lodgings. I recommended a perusal of these guides a few months ago when talking about my hidden views and secret spots. They are regularly updated and perfect for out-of-town visitors on their second, third or twentieth visit to San Francisco. Guide titles include “Mommy I’m Bored,” “Help!!! It’s Raining,” and “Romantic Hideouts and Peaceful Retreats.” The JDV Guides are also a treat for those who want to act like tourists for a day. Take a peek and I guarantee that you’ll find fresh inspirations on how to enjoy San Francisco. When I read them through today, I learned Herb Caen’s favorite rainy day route (too keep his fedora dry) from Café Le Central on Bush Street to the Chronicle Building at 5th and Mission. *********************** *********************** And now a word about that rate cut. . . The Feds cut a key short-term interest rate on Wednesday by ¼ point. If you have the stomach for incredibly dry text, you can read the Fed’s latest press release Generally a Fed Rate Cut means that: If you have a credit card with an adjustable rate, rates will fall. For a balance of $5,000, interest costs should fall a bit more than $1 a month. If you have a home equity line of credit, rates will fall. The decrease should come as soon as the November statement. If you have a maturing certificate of deposit, it is likely to renew at a lower rate. However, because banks need deposits, the rates paid on CDs should fall less than the quarter-point. If you want to borrow money for a car, impact will be minimal. Car loan rates are determined more by marketing concerns than pure economics. If you own stocks, prices should rise in the short run because the rates paid on some bonds will fall. This makes stocks more attractive. In the longer-run, however, the overall state of the economy will determine stock prices. If you are applying for a mortgage, the impact is unclear. I actually heard that jumbo adjustables rose the day of the cut, probably because most mortgage rates are tied to 10-Year T-Bills, which rose in response to the Fed cut. T-Bills tend to rise and fall on inflation concerns, not directly because of Fed actions. ************************************************* My aim with these postings is to inform and entertain and my interest in helping you and others continues.Should you think of someone who could benefit from my expertise, I’d love to hear from them! |
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Hello My Favorite People! If you’re in the mood for fun– read the first part of this Buzz.| Update on Mortgage Madness | October 12th, 2007 |
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I have some updates for you regarding recent changes in mortgage lending.1. Things have settled down to the point where at least I know what I am dealing with. No, it’s still not pretty, but at least I am understanding the trends and new limitations and figuring out ways to navigate around them. 2. Four weeks ago I would have advised against writing an offer without a financing contingency, but at this point, I would advise agents that you can write offers again with no financing contingency as long as you are dealing with a strong mortgage broker or lender whom you trust. If there are any questions about value, you can order a “pre-appraisal”, which will cost your borrower about 50% of the normal appraisal fee upfront. 3. The lenders with the best rates are still somewhat backed-up (one, notoriously so), but 21 to 30 days Cues are once more possible. 2. The buzzword in underwriting is now FIFE (fully indexed, fully amortized). FIFE has taken away one of the huge advantages of interest-only loans, namely, the ability to qualify with the interest-only payment. Most lenders now require that we qualify borrowers at the fully indexed (current index plus margin) rate, using the fully amortized payment. A similar rule applies to Option Arms. 3. Guidelines on stated income loans are tougher. This has been a trend in the past few months. Lenders now use third party data, such as salary.com or monster.com to come up with typical salaries based on job titles. If the stated income does not fall within 10 or 15% of the salary range, there will be a problem. Also, the lenders want a phone number to verify that the business exists, and they often require that the phone number be listed in a directory, I.e., 411. A work phone number can’t be someone’s cell phone number. I hope this helps you understand a few more pieces of the current lending environment. As mortgage brokers, we have lost some of our major, it’s true, but we are navigating our way through, and most of us are enjoying the challenge. I will keep you informed as things continue to settle down. |
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The following missive came to me via Natasha Lovas at Guarantee Mortgage:
