Westlake Village Real Estate Blog

The Obama administration unveiled its long-awaited white paper titled “Reforming America’s Housing Finance Market,” which proposes solutions to revamping the nation’s mortgage system. The Administration’s intent is to wind down the federal mortgage giants Fannie Mae and Freddie Mac and to curtail the Federal Housing Administration (FHA). To help reduce the government’s role in mortgage funding, the white paper focuses on a series of short steps to increase fees and down-payment requirements which will make government loans less attractive and allow banks to compete in offering loans without government guarantees.

To get that ball rolling HUD has already announced an increase in the FHA annual mortgage insurance premium of 0.25% effective April 18, 2011That increase would take the annual premium from 0.90% to 1.15% and increase a borrower’s monthly payment by $60 on a $300,000 purchase.

The second step would take effect Oct 1, 2011 with the plan to lower the ceiling on jumbo conforming loan limits in high-cost markets from $729,750 to $625,500.

Whether you are buying or selling a home within the FHA price range, take note. These changes will reduce the number of buyers who can qualify.

I’d like to thank Brownie Stanisch, at Prospect Mortgage, once again for this information.

If you want to follow the trends, just follow the headlines. In the past two weeks we have seen headlines pointing to a more positive real estate market. From the Huffington Post and other news outlets, 30-Year Mortgage Rates Top 5%. Why is this positive? As interest rates creep up, sooner or later home buyers begin to notice. The sentiment that there is no hurry, that an even better deal will be there tomorrow, begins to slip away. As this article points out, if interest rates rise from 5% to 6% and the price of a home drops from $500,000 to $450,000, the actual cost of the home over 30 years will be $90,000 higher.

From the LA Times, California Luxury Home Sales Jump 21% (even the wealthy like a bargain). And the Wall Street Journal, Cash Buyers Lift Housing, cites data from the National Associations of Realtors indicating 28% of home sales last year were all-cash deals – double the rate in 2008.

Finally, from the LA Times again, Now May Be the Time to Buy a Home. Says the usually pessimistic economist Christopher Thornberg, principal with Beacon Economics in Los Angeles, “Certainly, we’re pretty sure we’re at the bottom” for home prices, as quoted in the luxury home sales article.

What does it all mean? If you are a home buyer, it may be time to step up to the plate. Stories of homes selling in multiple offers are not uncommon. This means you could soon find yourself paying both a higher interest rate for your mortgage and a higher price for your home.

If you are a seller who is buying up, now may be the time to pick up that dream home. And if you are selling because of a personal or financial situation, don’t wait for prices to rise dramatically unless you have a lot of time. During the 1990s, in the LA area,it took 9.5 years for home prices to regain their 1990 peak.

I am happy to report that I have just completed all coursework for a certification from the National Association of Realtors in Short Sales and Foreclosures. For homeowners facing either of these situations, there are a number of resources on the Internet that discuss federal assistance programs. These include:

Making Home Affordable. You can click here to find out if you are eligible for various governnment programs.

The Basics: Short Sales will give you additional information as well as updates on various initiatives by mortgage holders.

And here is a link to a recent newsletter, courtesy of Buffini and Company, that presents a chart (page 2) comparing the impact of a short sale to that of a foreclosure:

Options for Homeowners to Avoid Foreclosure

In addition, there may be legal and tax issues, so if you are contemplating a short sale, or foreclosure be sure to seek advice from your legal, accounting and tax advisors. After seeking such advice, if you decide to move forward with a short sale, be sure your Realtor has the experience and knowledge to guide you through the process. Folks, this is not for amateurs! I work with an experienced short sale agent-negotiator, Emill Hartoonian, to the benfit of my clients.

If you are a home buyer, make sure your agent confirms that the listing agent has a level of expertise with short sales and that your agent has briefed you on what to expect. These are not “typical” home sales! If you and your agent do not have confidence that the listing agent can close the deal, it may be best to move on to another property.

Mortgage interest rates are at historic lows, home prices have dropped dramatically and a reasonable selection of properties is on the market. Yet sales are lagging. Trulia takes on this question and offers advice if your home is on the market: 6 Reasons Buyers Aren’t Biting.

You and your devoted real estate agent have been shopping for a home for what seems like an eternity. You have finally gotten an offer accepted on your dream home and are in escrow. This is not the time to relax! Stay focused and make sure that your mortgage loan does not derail at the last minute.

Lenders are now initiating fraud-detection systems that will alert them if loan applicants make any changes to their credit profile that could impact their ability to make monthly mortgage payments. Follow these simple common-sense rules:

• Do not shop for, purchase, or lease a car
• Do not apply for or increase home equity or personal lines of credit
• Do not apply for, accept, or obtain any new credit cards
• Do not accept offers to increase revolving credit limits
• Do not transfer balances between credit cards
• Do not make any large purchases on existing cards
• Do not accept any deferred payment offers
• Do not cancel credit cards or initiate credit disputes

This advice once again comes from Brownie Stanisch, Prospect Mortgage.

You and your devoted real estate agent have been shopping for a home for what seems like an eternity. You have finally gotten an offer accepted on your dream home and are in escrow. This is not the time to relax – stay focused and make sure that your mortgage loan does not derail at the last minute. Lenders are now initiating fraud-detection systems that will alert them if loan applicants make any changes to their credit profile that could impact their ability to make monthly mortgage payments. Follow these simple rules:

• Do not shop for, purchase, or lease a car
• Do not apply for or increase home equity or personal lines of credit
• Do not apply for, accept, or obtain any new credit cards
• Do not accept offers to increase revolving credit limits
• Do not transfer balances between credit cards
• Do not make any large purchases on existing cards
• Do not accept any deferred payment offers
• Do not cancel credit cards or initiate credit disputes

These words of wisdom come from my trusted mortgage advisor, Brownie Stanisch, at Prospect Mortgage.

This encouraging article appeared in the 9/16/2010 edition: 10 Reasons To Buy a Home – WSJ.com.”

I have fielded a lot of questions about using FHA financing to buy a condo or town home. Here are several points to keep in mind.

1. Is the property a condo or town home? This may seem like a simple question, but actually, seeing is not always believing. In Thousand Oaks a number of neighborhoods, while appearing to be single-family homes, are deeded as condos, that is, they are zoned as condos on the county tax assessor’s record.

2. If the property is a condo, then ask, Is the complex approved by FHA? If the complex is already on the FHA-approved list, the escrow process can go fairly quickly and smoothly – a must if you are buying a short-sale or bank-owned property. For an FHA-approved complex, lenders only need to certify that the project remains in compliance with current FHA guidelines. This streamlined process involves a 1-page questionnaire completed by the property manager.

3. If the complex is not FHA-approved, you may still be able to use FHA financing for the purchase, provided you and your lender can get FHA approval during the escrow process. To obtain FHA approval on a complex that had not been reviewed, the lender must obtain significantly more documentation – including a complete set of homeowner governing and financial documents and title records of every unit in the complex. Collecting the required documents is a time-consuming process which necessarily translates into the need for a longer escrow (typically 45-60 days). It is important to plan for that when you make an offer. Most short-sale and bank-owned [properties will not allow the extra time needed.

4. Consider the monthly cost of homeowners’ dues when you are choosing a condo or town home. These can be more than $400 a month – a fair chunk of your monthly payment. HOA monthly dues typically pay for fire/hazard insurance, earthquake insurance, property management fees, and such services as housekeeping, gardening, pool service, plumbing, roof repairs and general building upkeep – all things you would be paying out-of-pocket as a homeowner. However, some complexes have been able to hold costs down for various reasons, while others have seen their monthly dues go up substantially.

5. Give careful consideration to your choice of lender for your FHA financing. Direct-endorsement lenders have contracts with FHA, allowing them to approve and fund the loans directly; generally, these lenders also have the authority to approve condominium projects. If your lender is not a direct-endorsement lender, your loan will be brokered to a third-party for approval and funding. This process will take longer and will be subject to more restrictive guidelines.

For more information, including the latest list of FHA-approved condo complexes, visit the FHA website, or call Brownie Stanisch at 818.681-2401, Prospect Mortgage, your direct-endorsement FHA lender.