Westlake Village Real Estate Blog

Posts Tagged ‘Market Update’

Many people think that if their mortgage balance equals or exceeds the market value of their home, they cannot get new financing. Actually, they may be wrong. If your loan is owned by one of the three big government entities – FHA, Fannie Mae or Freddie Mac – you might be eligible for a “streamline refi.” (Remember: these programs do not hold loans that are higher than $417,000 or $729,750, depending on when you got your loan.)

Questions to ask yourself: First of all, are you a mortgage holder in good standing? If you have never missed a payment, have excellent credit and the underlying owner of your loan is one of these government programs, you may be in good shape. If you have one of these loans plus a second trust deed, the task may be tougher or impossible.

What to do: Call your loan servicer – the company you make your payments to – and ask if Fannie, Freddie or FHA holds your loan. If so, ask to speak with the department that could discuss refinancing.

Next, ask if FHA, Fannie or Freddie is the underlying owner of your loan. You have a legal right to know this. If the answer is yes, discuss refinancing the loan. You cannot “shop’ the loan between servicers (again, the name of the company on the mortgage statement) but you may be able to do a streamline refinance without an appraisal.

What NOT to do: Do NOT ask for a loan modification if you want to find out about refinancing. These two departments don’t know what the other is doing, and the “loan mod” folks have no incentive to forward your inquiry. (In fact, they have very little incentive to process your loan modification, which explains why only some 1,350,000 loan modifications had been approved by March of last year.)

Botton line: A streamline refi is worth a try if you meet the basic criteria.

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.

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.

If you would like to receive reports for your area on a regular basis, please send me your e-mail address and geographic area of interest. This information is part of a bi-weekly report offered through Ewing and Associates Sotheby’s International Realty.

End of Home Buyer Tax Credit Unlikely to Deter Most Real Estate Buyers | RISMedia“>Prudential Real Estate Survey

The Homebuyers Tax Credit expires this week! Thousands of dollars could slip through your Ffngers!

The heat is on for those who are out shopping for homes right now – as the Homebuyers Tax Credit is about to come to an end.

Last November, the government expanded and extended the new Homebuyers Tax Credit. According to the program, first-time homebuyers are eligible for a tax credit of up to 10% of the purchase price of the home, with a maximum credit of $8,000. And current homeowners are eligible for up to $6,500.

Although military personnel may qualify for a special extension, the vast majority of homeowners must have contracts in effect no later than April 30, 2010 and must close no later than June 30, 2010 to qualify for the credit.

This means that homebuyers now have less than one week to get their paperwork going to qualify for this credit, before it goes away!
Here are some important details about this tax credit.

Dollar-for-Dollar Benefit

The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction” or reduction in tax liability that would only reduce $1,000 to $1,500 when all was said and done.
So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Even Better… It’s Refundable!

Remember, because it’s a tax credit, it’s refundable! That means a homebuyer can receive a check for the credit if he or she has little or no income tax liability.

For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

What are the Income Caps?

Single tax filers with incomes up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers with incomes of $145,000 and above are ineligible.

Joint filers with incomes up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers with incomes of $245,000 and above are ineligible.

What’s the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

If you or someone you know is in the process of purchasing a home, this is an important week to take action – feel free to forward this article to anyone who it might benefit. The clock is ticking and the deadline is Friday!!

For this article I thank John Mallett, Mainstreet Mortgage.