Home Buying Guide

First Time Buyers

Congratulations! You are first time buyer. Welcome to your home buying guide. Here are a few things to bear in mind when considering this important step in your life:

• Deposit: The first thing to be aware of is that most lenders will look favorably on you having a cash deposit to put down on a property. This deposit can range from 5-15% of the purchase price. If you were buying a property for $300,000, an expected deposit would range from $15,000-$35,000. In certain cases, a lower or higher down payment may be necessary.
• Find a REALTOR®: Don’t buy a home without one. Besides helping you find the home of your dreams, a REALTOR® assists you with every aspect of your homebuying experience. From appraisals to inspections, contracts to disclosures, questions and concerns, our sales professional are experts in the industry and are eager to help you every step of the way.
• Credit Score: As a first time buyer, your credit score will be used to determine your loan and interest rate options. Credit scores range from 340 to 820. The higher your credit score, the better your loan and interest rate options will be. Guarantee Pacific Mortgage, our in-house lender, specializes in helping first time buyers and can provide you with financial assistance you’ll need to purchase your first home.
• Mortgage Payments: Make sure you know what your interest rate is. Many first time buyers go for a fixed rate so they know exactly how much their total mortgage each month.
• Bills: Buying and maintaining a property is not just about keeping up with the mortgage payments; it is also about paying your bills. Besides your mortgage payment, you will be responsible for gas, electric, water, and sewage bills, not to mention other household amenities (i.e. telephone, television and internet bills). Plan in advance for these costs to make sure you can afford to pay them each month.
• The Rewards: Once you have bought your first home, you can enjoy the benefits of freedom and independence. You will soon discover that it is the best thing you ever did, not just in terms of doing as you please, but also that financially you have made a start in paying back the biggest investment of your life. With property prices seen to be rising higher in the coming years make no mistake that your home will become your most valuable possession. Congratulations and enjoy your new (home!

Search for homes at www.CentralValleyHomes.com

CAROL PERDEW
Your Real Estate Professional
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.

 

Low Mortgage Rates Boost Home Sales

Mortgage rates holding steady

Low rates, falling prices boost sales

By Inman News, January 29,2009

Interest rates on 30-year fixed-rate mortgages were essentially flat this week, falling
two-hundredths of a percent from a week ago to 5.1 percent with an average 0.7 point, Freddie Mac said today.

Rates on 30-year fixed-rate mortgages — which averaged 5.68 percent a year ago — dipped below 5 percent in December to hit a 50-year low. Low rates, combined with double-digit year-over-year home-price declines, helped boost sales of resale homes by 7 percent during December, said Freddie Mac chief economist Frank Nothaft.

The Standard & Poor’s/Case-Shiller 20-city composite index registered an 18 percent annual decline through November (see story). The National Association of Realtors this week reported that national home prices were down 15 percent in December from a year ago, and that the supply of existing homes for sale fell 11.7 percent, to 3.68 million. That represents a 9.3-month supply of inventory, down from 11.2 months in November.

Freddie Mac said 15-year fixed-rate mortgages averaged 4.8 percent for the week ending Jan. 29 with an average 0.7 point, unchanged from last week and down from 5.17 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.27 percent this week, with an average 0.6 point, up from 5.24 percent last week but down from 5.32 percent a year ago.

One-year Treasury-indexed ARMs averaged 4.9 percent this week with an average 0.6 point, down from 4.92 percent last week and 5.05 percent a year ago.

SEARCH FOR HOMES AT CentralValleyHomes.com

 

CAROL PERDEW
Prudential California Realty

(209) 239-7979
wwwCentralValleyHomes.com

Refinance Home Loans are Up!

Take a look at this update on home loan mortgage rates and loan activity.  Refinance loans have increased with homeowners taking advantage of lower interest rates.  This information provides good advice for those starting the loan process.  I hope this is helpful! 

Bankrate.com
Mortgage refis surge
Holden Lewis

Mortgage rates went up this week from near-record lows as brokers and bankers scrambled to keep up with an influx of applications. – advertisement –

The benchmark 30-year fixed-rate mortgage rose 42 basis points to 5.84 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.39 discount and origination points. One year ago, the mortgage index was 6.31 percent; four weeks ago, it was 5.97 percent.

The benchmark 15-year fixed-rate mortgage rose 16 basis points to 5.46 percent. The benchmark 5/1 adjustable-rate mortgage rose 11 basis points to 5.95 percent.

Weekly national mortgage survey

Results of Bankrate.com’s Dec. 24, 2008, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:

	30-year fixed	15-year fixed	5-year ARM
This week’s rate:	5.84%	5.46%	5.95%
Change from last week:	+0.42	+0.16	+0.11
Monthly payment:	$972.35	$1,344.69	$983.96
Change from last week:	+$43.76	+$13.95	+$11.60

Almost no one is getting an ARM nowadays. Adjustable-rate mortgages accounted for 1 in 125 loan applications last week, according to the Mortgage Bankers Association. Not only are initial rates on ARMs higher than those on fixed-rate mortgages, borrowers are wary of getting loans with rates that could rise in the future.

Last week’s surge in mortgage applications came mostly from homeowners who wanted to refinance their home loans. According to the MBA, overall applications were up 48 percent last week as refi applications grew almost 63 percent and purchase applications rose about 11 percent.

This refi boomlet isn’t on the scale of the long boom of 2003 and 2004, when almost everyone with a mortgage refinanced, and a lot of people refinanced more than once. But now there are fewer people in the mortgage business — and, therefore, fewer people to accept applications and process the loan paperwork.

As loan applications pile up on brokers’ and loan officers’ desks, it becomes important to make sure that your application gets moved along instead of languishing near the bottom of the stack of papers. That makes it important to get the paperwork in as quickly as possible. If the lender wants tax returns, deliver them fast. Cooperate with the appraiser by returning phone calls and being flexible with your schedule.

 

CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com

Fed Cuts Rates up to .25 Percent

U.S. News & World Report
6 Things to Know About the Fed Rate Cut
By Luke Mullins  

The Federal Reserve on Tuesday cut its federal funds target rate by more than three-quarters of a percentage point to a range of between 0 and .25 percent. The decision signals that Fed Chief Ben Bernanke is more concerned with the rapidly deteriorating economy–which has been mired in a recession since December of last year–that the prospect of stoking inflation. “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined,” the rate-setting Federal Open Market Committee said in its statement. “Financial markets remain quite strained and credit conditions tight.”

Here’s how the Fed’s actions affect you:   

1. Fixed mortgage rates: Today’s rate cut will have little if any impact on 30-year fixed mortgage rates, which are determined by factors that operate largely outside of the Federal Open Market Committee’s reach, says Keith Gumbinger of HSH Associates. “Any change in the rate has little to do with long-term mortgage rates,” he says. But in its statement the Fed said it could expand a recently announced program to buy up debt and mortgage-backed securities from Fannie Mae and Freddie Mac that has already driven mortgage rates down to a very attractive 5.28 percent, according to HSH Associates. It also reiterated that it was looking at the possibility of buying long-term Treasury bonds. Both of these announcements could work to bring rates even lower.

2. Prime rate loans: The real impact of today’s cut will be felt by consumers with loans that are tied to the prime rate, a benchmark rate that typically moves in lock step with the federal funds rate. “The only place where you would see a concrete impact at the consumer level would be things that are directly tied to prime,” says Mike Larson, a real estate analyst at Weiss Research. Many home-equity lines of credit and certain credit cards with variable interest rates are tied to prime rate. As such, borrowers with these loans could see their interest rates decline.

3. Home-equity savings: Home-equity loans averaged 5.5 percent in October but dropped to 5.26 percent in November following the Fed’s half-point cut. Gumbinger says he expects average rates on home-equity lines of credit to experience similar declines this time around–but not everyone will be able to take advantage of them. That’s because many of the interest rates on these loans are already at their minimums, and are contractually prohibited to go any lower. So check the terms of your home-equity loan to see if you are eligible to cash in on the decline.

4. Target vs. effective: When credit markets are functioning normally, Fed rate cuts reduce banks’ cost of funding, which allows them to widen profit margins and pass along savings to consumers in the form of lower interest rates. But today’s credit conditions have changed all that. Although the Fed’s target rate stood at 1 percent before today’s cut, such funds were actually being traded in the market at much less than that–just 0.18 percent as of yesterday before the Fed’s action. Although the Fed can usually control the effective rate by buying and selling government securities, the credit crisis has eroded its ability to do so. “Any juice that you would get from a funds rate cut in a normally functioning market, you’re not really going to get that here,” Larson says. “It’s not going to lower the banking industry’s cost of funds, because the banking industry’s cost of funds is already below the target rate anyway.” That means that interest rates tied to the federal funds rate won’t decline as much as they otherwise would have.

5. Now what? Nariman Behravesh, chief economist at IHS Global Insight, expects rates to go all the way to zero in a matter of weeks. “The Fed has already cut the federal funds rate to 1 percent and is likely to take it all the way to zero by the end of January,” Behravesh said in a recent report, issued before today’s announcement. “Once the overnight rate is at zero, the Fed may have to engage in ‘quantitative easing’ [direct purchases of long-term Treasuries].” Even if it doesn’t bring rates all the way to zero, the Fed signaled Tuesday that it’s not about to push rates higher anytime soon. “The Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” the Fed said in the statement.

6. Expect more unexpectedness.

With only less than a quarter of a percentage point left to cut, look for the Fed to get even more creative in its efforts to revive the financial markets. New programs to support different corners of the credit market could certainly be introduced in 2009. “The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity,” the Fed said in the statement.   

FOR MORE REAL ESTATE INFO GO TO www.CentralValleyHomes.com

 
CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com

Worst Market Showing Improvement

The hardest hit real estate market is California’s Central Valley. Many homeowners owing more than their home is worth are being forced into foreclosure. The inventory of home has dropped to a low level of a 2-3 month supply of available homes. The Central Valley may have felt the worst financial crises but very well may be the first to experience signs of recovery.

Safe Havens in Real Estate
Excerpt by Louis Jones

Worst Market

California Central Valley

12-month change in home values:
Merced: -42.3
Stockton: -40
Salinas: -38.7
Modesto: -37.9
Riverside: -36.8
Vallejo: -34.5

The market hit hardest by the housing bubble is the Central Valley in California, where aggressive development and price hiking has yielded more homes than jobs. Now many homeowners owe more than their house is worth and are being forced into default.

Still, it’s not all doom and gloom for the California housing market. The drop in home values has created an affordable market for first-time home buyers. And, on average, monthly sales have almost tripled from last year. Although the Valley has seen the worst of the crash, it may well be one of the first areas to recover.

Thanks,

CAROL PERDEW

(209) 239-7979
wwwCentralValleyHomes.com

Fannie Mae & Freddie Mac Implement Loan Modification

Fannie, Freddie suspend holiday foreclosures

Streamlined loan mods launch Dec. 15

BY INMAN NEWS

Fannie Mae and Freddie Mac have ordered their loan servicers and attorneys not to evict about 16,000 troubled borrowers or sell their homes while they implement a streamlined loan modification program that could save some from foreclosure.

About 10,000 borrowers who have Fannie Mae loans scheduled for foreclosure between Nov. 26 and Jan. 9 will be contacted directly by the attorney handling the case to discuss workout options, the company said. Freddie Mac issued a similar statement pertaining to about 6,000 borrowers.

The temporary suspension of foreclosures is designed to allow borrowers to keep their homes while Fannie and Freddie work with mortgage servicers to implement a streamlined loan modification program scheduled to launch Dec. 15 (see story).

The streamlined modification program is aimed at borrowers who have missed three or more payments on their primary residence and have not filed for bankruptcy. The program could help some obtain a more affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan, or deferring payments on part of the principal.

Fannie Mae said its loan servicers are also prepared to work with borrowers who have already tried, but failed to obtain workouts. Seriously delinquent loans are being reviewed under the company’s “Second Look” initiative to determine if the borrower has been contacted and all workout options have been exhausted.

Presented by
CAROL PERDEW
(209) 239-7979
wwwCentralValleyHomes

Builder States Foreclosures Have Hit Bottom

Manteca foreclosures hit bottom?
Builder notes demand puts dent into resale housing supply

Dennis Wyatt
Managing Editor
Manteca Bulletin

The Manteca foreclosure market is at its bottom.

It’s a bold statement for a builder to make but when you’re chief executive officer of a firm such as Florsheim Homes that puts its money where its mouth is, the observation carries a lot of weight.

Florsheim CEO Joe Anfuso drew a lot of flack from other builders back in January when his firm started offering price guarantees to homebuyers at their Valley Park and Valley Blossom neighborhoods southwest of Airport Way and Woodward Avenue.

It was a simple offer. Buy a house from Florsheim anytime in 2008 and if they lowered the base price during that year you’d get a refund on Jan. 1, 2009 for the difference.

It was a risky gambit in the eyes of some other builders who were slashing their prices $5,000 to $10,000 every few months during 2007 to try and compete with the downward spiraling resale market driven by a rising tide of foreclosures. Other builders gritted their teeth at what they thought was another marketing gimmick they may be forced to match especially in light of several builders who had to pacify home buyers who discovered the home they bought just six months previously was selling for as much as $25,000 less when they actually moved into them.

Florsheim Homes has only two of the roughly 30 buyers since the first of the year that they will be sending a refund check to when 2008 ends.

Floresheim – which shifted its product to a price point that targeted entry buyers when they saw the market changed three years ago – won’t debate that its still a rough road for new home builders.

But he sees a lot of good news in the feverish pace of home buying in the resale market.

“It’s good for us (new builders) because the foreclosures have to clean up before our demand picks up,” Anfuso said.

As of last week, there had been 967 previously owned homes that closed escrow so far this year with 750 of those being foreclosures. More telling is the fact there are 393 active resale listings in Manteca – down from a record 670 in September 2007.

Anfuso said from the prices that homes are selling for – the median deal price on 160 foreclosures now in escrow is at $192,193 – represent a price point that has brought enough buyers to put a serious dent into foreclosure inventory.

“It looks like it has pretty well hit bottom in Manteca,” Anfuso said, adding that it isn’t a straight-line bottom with small dips and rises.

He expects the resale market to stabilize in 2009.

Anfuso noted that you wouldn’t “officially” know the bottom has been hit until after several months when various statistics are examined.

“It’s pretty well there, I’d say,” Anfuso said.

Last week, as an example, 30 homes closed in Manteca while 32 new listings were added to the Multiple Listing Service for previously owned homes. Eight months ago, the number of homes going on the market exceeded those being sold each week by 50 percent.

Anfuso said the current economic problems are the outgrowth of loose lending policies.

“We found out that if you offer people free money they’ll take it,” Anfuso said.

Now he said buyers are down to earth and are putting “skin” in the game.

“Buying a home now makes a lot of sense if you’re going to hold on to it, live in it, enjoy it, and raise a family in it,” Anfuso said.

CAROL PERDEW
(209) 239-7979
wwwCentralValleyHomes.com

 

Signs of Advantageous Market Conditions for Home Buyers

Why I continue to be hopeful …

Perspective: CEO sees opportunity in downturn

By J. Lennox Scott,
Inman News 

With the volatility of the stock market of late, there’s understandably some uncertainty about how all of this will impact the real estate market. I’ve had the opportunity to listen to several economists recently, including Lawrence Yun from the National Association of Realtors, and believe it or not, I feel good about what I’m hearing.

Here’s why:

The bottom line is that the situation is manageable and things will improve.

The most recent decline is due to the psychological impact of the stock market.

People are still buying and selling homes, just not at the same levels.

The recent passage of the “bailout” bill (see Inman News) is a step in the right direction, but it will take time to see the results work their way into the economy.

The volatility of the financial markets is causing many home buyers to pause, but the truth of the matter is that market conditions are ideal for some first-time buyers, move-up buyers and investors.

Recent actions by the federal government are starting to thaw the credit freeze.

We’re starting to see some stabilization in the more affordable markets and markets that are close to major job centers.

Interest rates are at historic lows for conforming and FHA loans and there are a variety of great mortgage options available, despite perceptions to the contrary.

Consumer confidence will take time to rebuild, but in the meantime it’s important to understand that advantageous market conditions currently exist for those who are motivated to buy.

With the end of election season, consumers should be less distracted by political campaigning.

J. Lennox Scott is third-generation chairman and CEO of John L. Scott Real Estate, a Seattle-based brokerage company founded by his grandfather in 1931.

CAROL PERDEW
(209) 239-7979
www.CentralValleyHomes

Short Sell Tips for Homeowners

Here is an informative article about the growing challenge of short sales on the real estate market. Short sales are a solution for homeowners who need to sell without equity in their homes. Selling a home as short sale is an alternative to foreclosure. Since short sales are expected to continue to grow, it is helpful to understand the short sale process. Hope this helps!

Short Sale – Buyer & Broker Beware!

by Walt Harvey

Recently, more short sale properties have come on the market. A short sale is
a situation where a property seller needs to sell and the sale proceeds are not sufficient to pay off the existing mortgage. It is an alternative to foreclosure. The term short sale or short pay refers to a process whereby the mortgage company must agree to a reduced payoff in order for the sale to take place. All sale costs must be included and the seller receives nothing, except debt relief and not having a foreclosure on their credit record.If you’re a prospective buyer on such a property, beware! The seller may accept your offer; you may invest $1000 in
an appraisal and a property inspection, but you may not get the property because the mortgage company may not agree to reduce their payoff. The mortgage company is a third entity that is not a party to your contract, yet their decision will affect the outcome of the transaction. The mortgage company will review the short sale proposal and closing the sale will depend on their response.

Many short sales fail because the mortgage company representative is unfamiliar with the local market and responds with an unrealistic proposal. When buying a short sale property, don’t expect a quick answer and don’t expect the mortgage company to respond logically. They will seek any additional assets the homeowner may have. They may demand the seller to sign a personal note to pay back the shortfall. Remember, the mortgage company wants to recover as much of the loan as possible and if the property goes to foreclosure, well that’s another department’s problem.

Additionally, many loans have PMI (Private Mortgage Insurance) that will cover a portion of their loss so the mortgager’s motivation to reach an agreement may be less because they’re covered regardless. You may have to start negotiating with the PMI Company, adding additional time to the sale process. Unless you have considerable experience with short sales, foreclosures and working with lenders’ loss mitigation departments, be very cautious in submitting an offer on a property in a short sale situation.

Buyers, ensure that you have an escape provision if the process takes longer than you want or if a more suitable property becomes available.

Sellers, be realistic. Consult with your accountant and your attorney on the tax and legal ramifications of a short sale. You may have to be willing to undergo an asset evaluation and even be willing to walk away and let the lender have the property.

Brokers, you will have to work two to three times as hard and may never help your seller clients achieve their goals of a sale, and your buyer clients may go through months of negotiation and several fees but not be able to close successfully on the home of their dreams.

Lenders, wake up! Work with the buyers and brokers who can ultimately save you money. History shows that a property that goes through this process nets less money to the lenders.

Walt Harvey, ABR, CIPS, CRB, CRS, GRI, SRES, AHWD, ePRO, QSC, RSPS and TRC, is a real estate Broker who partners with his wife Arla and together they specialize in residential, commercial and investment real estate.

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

 

 

 

LAWS SLOWING FORECLOSURE PROCESS

Foreclosure filings down 12% in September

New state laws slowing foreclosure process

By Inman News

New state laws that require loan servicers to give advance notice before filing a notice of default helped push down foreclosure-related filings by 12 percent nationwide in September, data aggregator RealtyTrac.

California, which accounts for nearly one-third of foreclosure activity, passed legislation that took effect in September requiring lenders to make contact with borrowers 30 days before filing a notice of default. Notices of default in California dropped 51 percent in September, with a corresponding “significant impact” on national numbers, RealtyTrac said.

RealtyTrac said notices of default fell 66 percent in North Carolina, a state that now requires lenders to provide homeowners and the state commissioner of banks 45 days’ advance warning of plans to file a notice of default.

Lenders file notices of default as the first step in the foreclosure process, in most cases after borrowers fail to make two or more payments. A notice of default starts the clock ticking on a forced auction sale or bank repossession of a delinquent borrower’s home.

Foreclosure-related filings include default notices, auction sale notices and bank repossessions. Because many borrowers refinance, get current again on their loans, or negotiate a short sale or loan modification with their lender, not all properties subjected to filings are actually repossessed or sold by lenders.

But in many instances, the new laws governing notice of default filings may only delay lenders from initiating the foreclosure process.

After a new Massachusetts law took effect in May requiring that lenders give homeowners a 90-day right-to-cure notice, initial foreclosure filings were lower than normal for the following three months. But initial foreclosure filings were up 465 percent from August to September, RealtyTrac said, as the first loans subject to the new rule emerged from the 90-day window.

Nationwide, RealtyTrac counted foreclosure related-filings on 265,968 properties in September, down 12 percent from August but up 21 percent from a year ago.

At the state level, Nevada saw foreclosure-related filings jump 11 percent in September. The rate of foreclosure-related filings in Nevada — one for every 82 homes — was the highest in the nation, and more than five times the U.S. average of one filing per 475 homes.

With one filing for every 178 homes, Florida moved from fourth place to second on the list of states with the highest foreclosre rates.

In California, the dramatic decline in notices of default contributed to a 32 percent decrease in foreclosure-related filings. Still, one in 189 homes was subjected to a filing, the third-highest rate in the nation.

Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado rounded out the list of the 10 states with the highest foreclosure rates.

For the third quarter, RealtyTrac counted foreclosure filings on 765,558 homes, up about 3 percent from the second quarter and 71 percent from a year ago.

Six states — California, Florida, Arizona, Ohio, Michigan and Nevada — accounted for more than 60 percent of foreclosure-related filings.

The 10 cities with the highest foreclosure rates among the nation’s 100 largest metropolitan areas in the third quarter were located in California, Florida, Arizona and Nevada.

They were Stockton, Calif.; Las Vegas, Nev.; Riverside-San Bernardino, Calif.; Bakersfield, Calif.; Fort Lauderdale, Fla.; Phoeniz, Ariz.; Sacramento, Calif.; Orlando, Fla.; Fresno, Calif.; and Oakland, Calif.

Search Bank Owned Homes at CentralValleyHomes.com 

Carol Perdew
Prudential California Realty
(209) 239-7979