Archive for San Diego Homes for Sale
January 14 2011
Let me start by stating the fact that 75% of loans in San Diego and across the country are Fannie Mae and Freddie Mac products.
Both GSE’s started with a call “risk-based pricing” to be able to price in risk from borrowers who have lower credit scores. It looks like these fee-based premiums are now for most Freddie Mac and Fannie Mae loans even for borrowers with stellar credit.
Under the new pricing borrower with 800 credit score is putting 24% down will have to pay .25% to fee. To put this in perspective on a $400,000 loan that’s $1000 more in fees. A borrower with a 679 score at 79% loan-to-value would be hit with an astronomical 2.75% fee on the same $400,000 house that’s $11,000 in fees! Some of the other new adders are for condominiums there is a .75% fee and there is an adverse market fee which is pretty much every neighborhood in the country (according to Freddie and Fannie ) of .25%.
I understand the risk-based pricing model is to charge more for borrowers who pose more risk but it seems now that everybody needing a loan is seen as a risk by the GSE’s.
This is only a few of the price increases that make it nearly impossible for San Diego home buyer to get that ” billboard” interest-rate that most companies advertise.
Above is a chart of a few of the price adds that go into effect next week. Please note that none of these ads apply the 10 or 15 year mortgages.
If you or someone you know can use my help or advice on a home mortgage product or guideline please call me at 619-285-2921 or APPLY HERE
Yesterday on the radio show (thank you again Jeff for having me on) I mentioned how home buyers who are waiting to see if San Diego Real Estate prices will drop more might be missing the boat on the total cost of waiting. Here is a quick example on how interest rate can affect the total cost of the home more than home value in this market.
Let’s compare a home with a 5% 30 year fixed mortgage and the same property with a 6% mortgage with a 5% reduction in price. For the example below I used a home priced at $400,000 at 5% interest and the same home at 5% less for the purchase price with the higher rate ( where analysts say rates will be by the end of the year) but the example can be modified for any purchase price and rate range. As you can see the higher purchase price and loan amount has a LOWER payment by $105 per month. I understand that $105 dollars is not a huge amount of money but it might as well be a million dollars if it puts a buyer over the Debt-To-Income level that is needed to qualify for the loan.
In this image you can see that over the life of the loan that $105 per month really adds up to $53,730 in net savings. Hopefully at this point you can see the value of the savings and please note that this is at 0% interest so if the savings was properly invested or even just put in a savings account it would be much more (due to compound interest).
Here is where the real magic happens!! If that extra $105 dollars a month was put toward the mortgage payment you can see that the mortgage would be paid off in 26.42 years instead of 30. this would result in a total savings over the house at a “LOWER” price of $95,766.
For more information on how to reduce the total cost of a new loan or your existing loan (without a refinance) give me a call at the office @619-285-2921.
If you are in front of your radio tonight between 6 and 7 tune in to 107.9 FM to hear the radio show. If not you can hear the show live online at www.my1079.com by clicking the listen now button. I will be speaking about San Diego Real Estate and Mortgage market with Jeff Campbell from Jeff Campbell and Associates and we will be taking questions via his e-mail. Send an e-mail with any questions to myfavoriterealtor(at sign)yahoo.com to have your questions answered on the air.
Another appearance on XETV San Diego 6. This time on San Diego Living I was with John Dupree from Jeff Campbell and Associates going over some big reasons that NOW is the time to buy San Diego Real Estate. There are big changes coming for FHA financing, we still have the home buyer tax credit and a program that should be HUGE in the San Diego market 95% condo financing with a conventional loan. We will also be putting on monthly loan modification and Short Sale workshops free of charge.
For more information give me a call at (619)285-2921
The segment from last Thursday of John Dupree of Jeff Campbell and Associates talking about short sales. I was giving some information about high loan to value and 100% financing options for San Diego home buyers and the avaliability of high LTV San Diego Mortgage loans.
Fannie Mae Lowers the Debt to Income Ratio to Qualify for Home Loans.
Fannie Mae has said that the debt to income (DTI) requirements for all applicants will be going down from 55% to 45% (more income to qualify) so anyone looking for a San Diego mortgage loan should re-qualify as soon as possible. On a regular basis Fannie Mae reviews the DU system (desktop underwriter) to limit losses and to ensure that credit risk assessment will stay strong on as many future loans as possible. The new rules will go into effect between now and December 12th and one major lender has already changed guidelines to the new levels. This new change in the San Diego mortgage and home buying process should not be a surprise considering the recent mortgage loan performance in San Diego and the rest of the country. From 2003 until just last year the maximum debt to income ratio on most home loans was 60%, these ratios do not include food , utility bills, gas, insurance or anything else that is not listed on the credit report. If you factor these in it is easy to see why home buyers didn’t have much left over at the end of the month. With just a few unexpected expenses a home owner qualifying at such a high ratio could easily contribute to the recent “correction” that we have seen in the San Diego real estate market.
Make Sure that You or Your Client Still Qualify for that New San Diego Mortgage Loan!
It is extremely important that all perspective home buyers get re-qualified for their San Diego Home Mortgage. Since most soon to be San Diego home buyers have been putting in multiple offers on many properties to try and have one accepted for MONTHS they might be pre approved at a higher DTI and will no longer qualify for the same price home. Working with an experienced mortgage planner is more important than ever because with a proper file there are some exceptions for this new rule. Fannie Mae has announced that on an exception basis some loans will be approved at up to 50% DTI. There must be strong compensating factors like a steady job history, a large amount of assets and high credit scores. It is extremely important that all documentation is packaged properly UP FRONT before the property search even starts and before anything is submitted to the lender to ensure that a strong case can be made for any exceptions. It may be necessary to pay off a few small debts or to restructure a file completely even if a borrower was pre-qualified just a month ago.
If you or someone that you know is looking to buy or refinance a home in San Diego now is the time to make sure you still qualify. Give us a call at 619-285-2921 or click here to apply online. You can also download out printable mortgage planning package by clicking here.
San Diego Home Mortgage : Hope for San Diego Short Sale Buyers and Sellers.
For the past 2 years I have had many pre-approved clients that more than qualify for a San Diego home mortgage that have either settled for their “second choice” home or have pulled out of the market to wait for more inventory. The main reason that they are passing on homes that they really want, can qualify for and are listed for sale is that they are short sales. While I do work with a few agents that have a 100% track record on getting their short sale listings approved and sold, the Sandicor (San Diego MLS) numbers show that on a county average only between 45 and 50 percent of short sale listings end in a closed escrow. In many of these, the ones that do close take between 4 and 9 months to close. This can be a big problem on the financing side of the transaction because credit approvals for a San Diego home mortgage are only good for a period of 90 days and a new approval with new documentation and a credit pull is required after that point. The short sale market and San Diego housing market might be in for a change for the better because the Obama administration has just announced new universal short sale guidelines. These new guidelines for investors (banks and mortgage company’s) should help San Diego home mortgage applicants that are looking to buy real estate in San Diego in a few different ways and a higher percentage of short sales should be closing and closing faster.
While speaking at the annual Mortgage Bankers Association that was held in San Diego a few weeks ago, Lori Maggino from The Treasury Departments Office of Home Ownership and Preservation said that they haven’t reinvented the wheel, but their goal is to cut down on paperwork and to standardize forms. By creating an industry standard they hope to eliminate the time consuming back and forth negotiations between the Realtor and the investor. That negotiation is the part of the short sale transaction that can take the better part of a year. Hopefully when these changes and guidelines come out, we will see more movement in the “pending” inventory of homes on the market and more San Diego home buyers will actually be able to buy the homes that they have offers in on. I will update the blog as more information and implementation is available.