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Last night, I got into a good discussion with some family and friends about how things have changed in Real Estate...Specifically...For Young Couples!
Over the past few years, there have been some MAJOR changes in the Real Estate Market!
Homes across the United States have doubled, tripled and even increased in some parts by 5-600%! I know condos in Southern California that were selling for $150,000 that are now appraising and on the market in the mid $500,00's! A half a million dollars for a 1000sq foot condo! And, the association dues are a couple hundred dollars a month as well! Ouch!
The game has changed up drastically...and you want in the game! Or maybe you don't want to be in the "game", but you simply want to take part in the pride of ownership to provide for your family like your parents have and you're simply trying to figure out a way to get there...
Everyone in my age bracket (late 20's) is in the same boat. Our parents started off their families and were able to save the 20% to put down on a home (which wasn't that much in the scheme of things...often borrowed.) Back then, many of them purchased their first home for the average price of a new car these days...Have times really changed that much over time? Sure, interest rates were higher and wages were lower back then...But was it REALLY THAT MUCH DIFFERENT? I think proportionally, it's MUCH DIFFERENT!
Now we must work more hours, invest wiser, find higher paying jobs, save more and have a great budget in place...Not an easy thing to do with my generation. One that has a "have it now" personality..That's right..Have it now...pay for it later!
So...What can you do?
Lenders have "First Time Home Buyer" programs that allow you to finance up to 106% of the purchase price on a home. That's right, you can increase the purchase price and have the sellers offer you a closing credit at the close of escrow to take care of your closing costs. This reduces the amount of cash that you need to come to the table with to purchase the home.
Affordability Factor? In California, I've read statistics that vary between 12-14%. That means that out of 100 people, 12-14 people are in a position to afford that home. Many assume that they are the ones that wouldn't qualify...You might be suprised! The only way to find out is to put yourself out there and try. Find a mortgage professional that understands and can identify with your situation. The worst thing that can happen is you find out where you lie if you don't qualify...but you can set-up a game plan with goals to put yourself into a situation to increase your chances of qualifying.
What are many of us doing?
Moving to areas that are more affordable - I moved my family to Chico, California. We purchased a new home in late 2006 for under $300,000! More home for less...Many of our parents are even making the decision to move to a more affordable area...Why? Most of their net worth is in the form of equity in their home. So, they are "cashing out" and moving to a place where they can get more square footage for less...
Interest-Only Loans -Many of the loans in California are on an Interest-Only product. This means that you are paying what is due to the bank in interest and that's it...no more..no less..So, do you think property values will continue to go up? If so, this might be a loan product for you! The alternative is a "fully ammortized" loan, which will reduce the balance of your mortgage on a monthly basis.
Lease with the option to buy transactions -Young couples that have little,no or bad credit can lease a home from the owner with the option to buy. In such a transaction, the homeowner allows for a "predetermined" amount of your rents to be placed towards the purchase price...Not a bad deal and it works quite well for those that wouldn't traditionally qualify for a home loan.
Purchasing a home is one of the biggest decisions that you can make! Be sure to work with a mortgage professional that takes the time to go through your scenario, treating you with the respect you deserve. You'll be glad you did!
Scott Gormley
Broker/Owner
Oak Valley Mortgage
Direct: 530.592.8362
eMail: Scott@OakValleyMortgage.com
Website: http://www.caloan.com/
Are you feeling lost with your current California Home Loan? You don't know when your home loan is about to adjust...But, you know it's soon! You don't know when it is going to "flip to an adjustable rate." You don't know when the prepayment penalty is over from your previous refinance.
Don't feel alone! There are thousands of California home owners that are going to refinance their homes in 2007, getting out of their adjustable rate mortgages and back into a "fixed loan." Why? They are recognizing an increase in their monthly payments and it is putting pressure on their monthly budgets. These homeowners want to take back the control in their monthly payments and their mortgage, while taking advantage of low long-term 15,20,30 and now 40 year fixed loans!
If you fit into this category...feel free to give us a call. We'll take the time to treat you right and go through your individual scenario. We'll even tell you if we think you should stay in your current loan, if it works to your advantage!
There are lots of things to take into consideration when you are looking to possibly refinance your home. Making sure that you are in good hands, we'll keep you informed throughout the entire loan process and we typically take 3 to 4 weeks from start to finish. So give us a call...
We seek Win Win relationships with our friends,family and clients.
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://www.caloanblog.com/
"You find the perfect home, we'll find the perfect loan!"
Everything in the mortgage industry is geared towards the rate. What are your rates? Who h
as the best rates? What are the rates doing?
I'm here to tell you that the mortgage industry goes far beyond what the rate is. The rate is just a number! Yes, a number the ultimately determines the amount that a client will pay on his/her mortgage every month...but it still goes deeper than that. For example, "Does the rate really matter if you don't get the loan to begin with?"
The mortgage industry is about people. With that, it's about asking questions and understanding the goals, objectives and financial abilities of an individual client. What may be right for one client is completely different for another!
For example:
Family A: Mom and dad are "empty nesters." Their children, Jason and Michelle are out of the house and now they have much more space in their home than they needed before. Most of their "net worth" is in their home, because they have been focusing their money on paying down their mortgage and they have been realizing a great deal of appreciation on their home. The couple's intention is to move into a smaller condo in a few years, but they want to start investing in the stock market or they want to start traveling while they can. They sit down one night and decide to do a "cash out refinance" on their home. In this scenario, it makes sense for the client to be in a short-term adjustable product. Why? The couple's intention is to be in the home for a short period of time before selling and they can benefit from getting a lower interest rate on a short-term loan....n
ot a 30 year fixed!
Family B: A young couple purchases a new home and their intentions are to raise their children in the home. For this couple, it makes more sense to protect themselves from rate increases by locking in on a long-term loan, such as a 15,20 or 30 year fixed. Why? Over the long term, rates will likely increase. Having the comfort of set payment, especially on a new home, will help the young couple set a budget and have a "game plan."
Working with a mortgage professional that understands this concept and works towards understanding your needs will make the entire loan process much more enjoyable. Purchasing or refinancing your home is one of the biggest decisions that you will make and knowing that you're in good hands is VERY IMPORTANT!
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.caloan.com/
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
This blog is to everyone in the Active Rain community and professionals in states outside of California! If you have clients that are looking to relocate to California from your state and you don't have a resource for them...I would appreciate the opportunity to be it! I own Beach Town Mortgage in Southern California and Oak Valley Mortgage in Northern California. Through Active Rain and several other networks and events, I have an extensive network of people in California that can help your clients make a hassle-free and smooth transition from their old home to their new home. Feel free to give me a call or pass my information onto your clients. There is a comfort in knowing that your clients are still in good hands when they have decided to relocate to California, which can be stressful by the process itself. I moved to California in 1990 with my family from Rhode Island and I can relate to the changes that a family must go through in the transition. Even though a client may not be purchasing property or needing your services now that they are moving to California, they certainly have a network of family and friends that will be referred to you for your good service to them of helping in the relocation. As we all know, referrals from friends and family are the lifeline to our business and I will continue to respect that relationship!
Feel free to contact me if you need any help for your clients as I would appreciate the opportunity to extend the
good service that you have shown them for all those years!
Regards,
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
I was offered a 5% fixed for 30 years, can you beat it?
More often than not, borrowers get so caught up in the "rate" that they fail to look at the actual product being offered to them. My goal is to help you avoid this pitfall to save time and money. There are virtually hundreds of loan products that are offered on the market today. More often than not, receiving a "rate quote" on the Internet or over the phone is meaningless if you don't understand the terms that apply to that rate. I always tell my clients to make sure we are comparing "apples to apples" and not "apples to oranges". Comparing offerings is a crucial part of the purchase or refinance decision. By following these 5 simple steps, you will be able to ask the right questions and choose the best loan option for you!
Step 1
Get a "good faith estimate" from your broker or lender. The "good faith estimate" is an industry standard document, which breaks down all of the costs associated with the loan and rate you were offered. The "good faith estimate" is required to be sent to you within 3 business days of your initial application by law. If you don't receive one, the old saying, "buyer beware" comes to mind. By placing the "good faith estimates" from each offer side by side, you will be able to do a breakdown of the costs associated with each loan and make an informative comparison.
Step 2
Find out what criteria the loan officer used to get that rate. All investors have documentation guidelines. Main components such as credit worthiness and the ability to provide income/asset documentation play a factor in quoting a rate. If a loan officer quotes you a rate without looking at your credit report and asking what income and savings documentation you can provide, this should be a red flag! Comparing "apples to apples" includes the type of documentation you will need to provide in order to get the rate offered. Ask the loan officer whether he priced you on a "full documentation" or "stated" program. These components make a difference in the paperwork you will need to provide and the pricing you are offered.
Step 3
Find out if the rate you were quoted is a fixed or adjustable rate. Most loans are typically fixed for 15, 20, 30 and now 40 years! If you are offered an adjustable, you may hear the word "fixed". Make sure you don't get confused. Adjustable products such as 2/28's, 3/27's, and 5/25's may be "fixed" for a set period of time, however, they adjust periodically thereafter. For example, a "2/28" is an adjustable loan, that is "fixed" for the first 2 years, but adjusts after that period. If the loan is an adjustable, find out what index the loan is tied to (COFI, MTA, LIBOR, etc..) and what the predetermined margin is. Remember the Index + Margin = Your fully indexed rate!
Step 4
Make sure you compare loans that have similar characteristics. It does no good to compare one loan that has a prepayment penalty with one that does not. The difference is usually 6 months of interest charged in penalties on a loan, which adds up to thousands of dollars if you make a mistake! Also, make sure you know if the offers have an interest only option on them. Simply looking at the expected payment on a "good faith estimate" will not suffice. One lender may send you a "good faith estimate" with an interest only payment being reflected, but it does no good if your main goal is to pay off the home faster with a fully amortized payment.
Step 5
Finally, thinking "outside the numbers", borrowers must also compare who is making the offer. Questions such as, "Was the loan officer knowledgeable and willing to answer my questions in a clear and straight forward manner?" are very important! Purchasing or refinancing your home is one of the most important decisions you will make in your life. Choosing the right person to work with can make all the difference in having a positive home loan experience!
Scott owns Oak Valley Mortgage in Chico, California. Scott is the 2006 Chairman of the Chico Association of Realtors Affiliate Committee. You can find great home loan information at http://www.oakvalleymortgage.com/ or call Scott at 530-592-8362 for all of your mortgage needs. Free Pre-Approvals!
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.caloan.com/
"You find the perfect home, we'll find the perfect loan!"
By Michael McDonald
Dec. 18 (Bloomberg) -- Homeowners may give the biggest Treasury rally in
four years a boost as falling bond yields trigger a rush to refinance
mortgages and increase demand for government debt.
Mortgage refinancing applications reached the highest level in a year this
month as average rates on 30-year home loans fell to a 14-month low,
according to the Mortgage Bankers Association. Demand for home loans helped
push yields on 10-year Treasuries to 4.4 percent on Dec. 1, the lowest since
January, because investors who own bonds backed by mortgages tend to buy
government debt when they get their money back early.
Another $100 billion in mortgage-backed securities may be repaid should
rates fall more, according to Dominic Konstam, head of interest-rate
strategy at Credit Suisse Group in New York. That would increase purchases
of Treasuries and help drive yields on 10-year notes to 4 percent, he
predicted.
``The market rallies, mortgages prepay, and all of a sudden people have to
buy,'' said Alec Crawford, head of agency and mortgage-backed strategy at
RBS Greenwich Capital in Greenwich, Connecticut. ``It can turn into
something that snowballs and causes the market to rally for a significant
period of time.''
The yield on 10-year notes, the benchmark for 30-year fixed- rate mortgages,
fell 1 basis point to 4.59 percent as of 12:48 p.m. in Singapore, according
to bond broker Cantor Fitzgerald LP. The price of the benchmark 4 5/8
percent note due in November 2016 rose 1/32 to 100 1/4.
Refinance Applications
Treasuries have gained 3.6 percent this year, the best since 2002, on
expectations the Federal Reserve will reduce its target rate for overnight
loans between banks next year. The central bank raised the rate 17 straight
times between June 2004 and June 2006, and left it unchanged at 5.25 percent
last week.
Increases in mortgage refinancing boosts Treasuries because investors who
get repaid typically reinvest in longer-maturity government bonds, which
benefit the most from falling interest rates, according to Konstam.
The Washington-based Mortgage Bankers Association said Dec. 13 its index of
applications to refinance loans rose 16 percent in the week ended Dec. 8 to
the highest since September 2005.
The average rate for 30-year fixed mortgage rose to 6.02 percent last week
from 5.98 percent in the week ended Dec. 8, according to the group. The rate
has fallen from a high this year of 6.86 percent in June.
Yields Drop
Mortgage-backed securities are created by pooling loans and selling bonds
with coupons based on the average underlying rates. About 60 percent of the
bonds in the U.S. are guaranteed by Fannie Mae, Freddie Mac and the
Government National Mortgage Association, or Ginnie Mae.
The yield on 30-year Fannie Mae securities fell to 5.49 percent on Dec. 1,
the lowest since September 2005, and was at 5.68 percent on Dec. 15.
About $500 billion in 30-year fixed-rate ``agency'' mortgage backed
securities had 6 percent coupons in early December, while about $800 billion
had 5.5 percent coupons, according to data from the issuers compiled by
Bloomberg. The longer the current coupon trades below these rates, the
greater chance the securities are paid off, according to Bear, Stearns &
Co., the largest underwriter of mortgage-backed securities.
``That puts us on the cusp of change,'' Steve Abrahams, a senior managing
director at Bear Stearns in New York, wrote in a Dec. 6 report. Refinancing
mortgage-backed securities ``would likely explode'' if 10-year Treasury
yields dropped below 4 percent, he wrote.
Less Equity
Mortgage bond investors helped push Treasury yields down by about 10 basis
points when they declined to 4.4 percent, according to Richard Volpe, head
of U.S. government bond trading at Bear Stearns.
Not everyone is convinced there is another spurt of refinancings coming.
Richard Kovacevich, chief executive officer in San Francisco at Wells Fargo
& Co., the second biggest mortgage lender, says the drop in U.S. home prices
made it less attractive to borrow money through refinancing.
``Rates have to go a lot lower to really get into a refinance boom, a true
refinancing boom, because everyone's refinanced'' in recent years,
Kovacevich said during an interview on Dec 12. ``You need another 50 basis
point or so.''
`Substantial Cooling'
Fed policy makers said in a statement accompanying their decision to leave
interest rates unchanged last week that there was a ``substantial cooling''
in the housing market. The median price of previously owned homes dropped
3.5 percent in October to $221,000, the biggest year-over-year decline on
record, according to the National Association of Realtors.
The realtors group also said this month that sales of existing homes will
increase at an annual rate of 6.29 million in the first quarter, snapping
five consecutive quarterly declines.
There are $6.2 trillion in mortgage securities outstanding, according to the
Securities Industry and Financial Markets Association, the largest segment
of the U.S. fixed income market. Foreign investors held about 10.7 percent
of the securities last year, up from 5.6 percent in 2003, according to UBS
AG.
Mortgage-related buying is an ``undercurrent'' that will drive Treasury
yields lower, said Steve Rodosky, a head of trading at Newport Beach,
California-based Pacific Investment Management Co., manager of the world's
biggest bond fund. Pimco is a unit of Munich-based Allianz SE. ``In order to
participate in the rally, they buy Treasuries,'' he said.
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
I was insired to write this blog after I read an Active Rain blog called, "Is it Fate?" by Jay McGillicuddy.
On a random day a few years ago, I was scheduled to work as a server at Salt Creek Grille in Dana Point, California. At this point, I was at the end of my server career and ready to move on after passing my brokers exam and putting all of the puzzle pieces in place for the mortgage company, Beach Town Mortgage Inc. The California DRE takes a while to get the paperwork in place and I needed to make some extra bucks to support my lavish lifestyle at the time..Rent,power,cable and maybe some Top Ramen in there...
Anyhow, I decided that I was going to play "hookie" and take the day off. I called in sick and decided to go to an Angels baseball game in Anaheim. Many don't like doing such events on their own...they need somebody..I've always been pretty independent and this was my salvation for the week. With that, I purchased my ticket on ebay and I was off.
While driving up the I-5 freeway, I decided to listen to an AM station. Why? It's different and much better than 90% of the crap on FM. I probably spend 3/4 of my time listenting to AM. On this particular day, I tuned in to a station that was talking about men's health issues and I'm kinda interested...at that very moment, the show picks up a call and it's MY DAD! I knew it right away and it blew me away! The topic was prostate and prostate cancer, which is the number 1 villan against men. At this point, I'm speechless. I have to say that I felt 5 again and I didn't know what to say or do, which isn't the norm. I pulled off the freeway and listened..a million questions went through my head...Is he ok? Why would he need to call it in? Why with strangers? And much worse off....Is he dying and afraid to tell the family?
Yea, heavy stuff! They went to break and I was sweating at this point. When they came back from break, the call finished up and they told him to stay on the line to talk with someone else...The radio guy, just looking for good air time and touching the surface with callers pushed him along. Now I'm boggled...I called up my dad after his call ended and I told him that he just threw me for one of the top 3 loops in my life... so far...He was speechless! Needless to say, he is ok. But, it's amazing how GOD has your paths cross sometimes.
For everything to come together...
Being scheduled and taking the day off...
Listening to an AM radio station while driving for 20 minutes to get to the Angels Stadium...
Him calling in on an AM radio station...LIVE! (And his only time doing so!)
It still amazes me!
I told my dad, "for now on, just talk to me first!" I'm a firm believer that many of our paths cross for a reason, which we can't explain but have a purpose! With that I say, get out there...kiss your children and families and do people right!
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.caloan.com/
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
Each and everytime we get a new client at Oak Valley Mortgage or Beach Town Mortgage, we go to bat for our clients! What does that mean? Here's a list of things that you can expect from us...
1.) We look out for YOUR BEST INTERESTS! I.E. What are your goals? What are you trying to ac
heive with your Real Estate investing or personal finances?
2.) Setting you up to Win the game. That's right, win the game! It does no good to have random offers thrown at you if you wouldn't qualify for them to begin with! So, we study the pitches thrown in the industry and know what signs to look out for to help your averages of actually qualifying for the loan and getting on base!
3.) Many clients can't take full swings by providing all of the documentation requested by banks and investors. Documentation such as 2 years tax returns, pay stubs, employment verification, banks statements, investment portfolio statements, etc. We recognize that and we've found banks and investors that allow us to bunt for you. That's right, put the squeeze on the play and allow yo
u a better chance of qualifying for a loan and rounding the bases.
So get a hold of us and let us know how we can help you. Together, we can be a team! There are many ways to win a game, but working with a batter that knows all of the conditions in a game can make a huge difference to the results. The forecast of the Real Estate industry is creating some interesting weather and having a good mortgage company in your dugout can help you drastically!
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://activerain.com/blogs/lendingmagician
"You find the perfect home, we'll find the perfect loan!"
