There are currently many ways for a mortgage lender to restructure a FHA loan and refinance it through a FHA Streamline Refinance. Typically, this type of loan is more common in extremely low interest rate environments as there are still fee’s and expenses associated with the new mortgage. When interest rates fall low enough, lenders can absorb some, many or all of the costs associated with the new mortgage while still being able to offer the borrower a lower interest rate and payment.
One word of caution if you are considering a FHA streamline refinance, review your numbers. Consider how many months or years you have paid into your current loan. In addition when considering monthly savings, do you have a plan on what to do with the savings? A family that will be saving $300 per month could either invest or save it on a monthly basis or pay it towards the principle to accelerate the payoff and offset an increase in term.
If you have an existing FHA loan, you paid an up front mortgage insurance premium, this is partially refunded at the payoff of your current loan and a new mortgage insurance premium is added to the new mortgage. The up front premium will decrease after October 4th, but will increase the monthly mortgage insurance costs.
What does this mean? The window of opportunity to get locked in to the current FHA monthly expense structure will close in a month. The changes are real and it is unclear how long interest rates will remain low in this volatile economy.
We are seeing the lowest interest rates in the last 50+ years, the beauty of a 30 year fixed mortgage, is that you are guaranteed your rate and payment for 30 years. When you lock in the lowest rates in 50 years for 30 years, I am sure that external pressures like inflation will make the mortgage even more affordable along the way.
To put it into perspective, a 30 year fixed mortgage 30 years ago would have been around 13% interest, which is $2,250 a month for $200,000. Today, a 4.25% fixed rate mortgage would cost $1,001 per month. Or on the flip Side the buying power of $1,000 a month is $200,000, in 1980 @ 13% it would have been $90,000.
See how interest rate makes a difference?
At the end of the day, owning real estate is not easy or effortless, but there are rewards. You get to be your own landlord, there are attractive tax benefits, by paying off principle in your payment there is forced savings and you can bring pride of ownership to a community.
For more information please email: rafael@thehomemap.com or in California, you can apply directly at: Apply for a FHA Streamline Refinance
Licensed by the California Department of Corporations NMLS ID 258379
For more information about the CalSTRS mortgage loan please email rafael@thehomemap.com
Thank You Teachers for All YOU do!
Flip the House? Well not exactly, but similar opportunity for home buyers!
I once heard all the money in Real Estate is made when you buy it. At first I didn’t understand this statement, as clearly people cash out when they sell real estate at a profit. As I learned more about real estate, it became clear to me that the moment of purchase is the most critical financial moment in the life span of owning real estate. If you overpay for a home or buy in a deteriorating neighborhood you could start day 1 as a home owner with negative equity and will have some recovery to do before there is one cent of capital gain. If this same home is in an area with low rental prospects (or low rent amounts) your financial options are limited should you ever need to relocate or downsize/upsize. As opposed to someone who buy’s below market value, or in a neighborhood with high demand for rentals, not only do you have equity as a cushion, there are more options available when it comes to converting an existing home into a rental if selling doesn’t make sense.
Over the last 5 years many people saw the shows about “flipping” homes and sat their dreaming at the end of each episode of the possibility of making $50-$400 thousand dollars in a month. Many amateurs went out looking for any fixer they could find and for many people the “Dream” ended in disaster. If you compare the episodes where the home flipper ended in the green (at a profit) and those where the investor ended in the red, the key distinction could be made at the moment of purchase and the basic math used (or lack of it.) Those that bought the home at enough of a discount to account for repairs + acquisition costs + finance costs + resale expenses and still had room for miscellaneous expenses with a good profit margin ended up doing great while those who bought based on the “potential” they saw in the home rather than the financial viability of the project ended up walking away without a profit (if not a major loss.)
Something can be learned from those shows, it pays to take a moment and run the numbers before getting emotionally invested into the idea of owning a home. Buying a home can be a very wise financial move, but getting a great deal, being careful and creating some equity, can exponentially multiply the chances of the purchase becoming a great financial move. Unfortunately, people aren’t just giving away homes at a discount. The term “market rate” exists for a reason, that is the price the market is willing to pay for an average home in the area. So unless you are privy to some great information, the chances of walking into a home full of equity are very slim. This is true especially with the purchase of an average – above average home, someone else has already invested the resources to get “top dollar” for the home and it leaves little room for a buyer to make a profit at the point of purchase as well.
However, it is possible in today’s marketto get a great deal with room for some equity building right away. With a little bit of vision, some critical knowledge, patience and a vigilant eye great deals can be created in today’s market. In addition to “all the money in real estate is made when you buy it,” I have also heard “it’s smart to want the lowest priced home in a nice neighborhood, not the nicest home in a low priced neighborhood.” Another phrase is “location, location, location.” One may ask where these low priced homes, in great neighborhoods or locations can be found? The answer, in fixer upper homes. I know that many people don’t want to lift a finger with painting a home nor do they want to spend a day ripping out orange carpet. It is not commonly known that there are loan programs available that allow you to finance the repairs made by a contractor (or yourself) into the purchase price of a home.
An example of this is the FHA 203k rehab loan. You could purchase a home that needs a little help for below market value and finance the repairs. If the comparable sales are more than the acquisition amount (purchase price + repairs) then you could be setting yourself up to walk into some equity, as well as giving yourself the opportunity to select things like paint, carpet, cabinets and more. In essence, it’s like buying a “used” house with the “new” home experience of choosing flooring, colors, cabinets, etc.
This strategy does require patience and a good Realtor. It is not easy to actually get an accepted offer when you are competing against the same investors who are out there looking to flip the homes and make a quick profit (who happen to have large downpayments and cash.) However, with perserverance, preparation (being pre-approved in advance) and knowing what you want (and pulling the trigger when you find it) there are great deals to be had.
For more information on the FHA 203k loan in California please contact me at Rafael@theHomeMap.com or I can be reached at (619)928-0128.
Standard FHA guidelines do apply, 620 FICO minimum, 3.5% down payment of acquisition cost (purchase price + repairs.) Subject to underwriting approval of qualified buyers. Certain restrictions apply. Rafael Perez is a licnesed loan originator with imortgage, licensed by the California Department of Corporations 4130969 .
Posted via web from TheHomeMap
The informational flyer below has the details on eligibility for the Canadian foreign national vacation home program. Please email me with any questions, Rafael@theHomeMap.com
Snowbird Financing in Warm Southern California
Tags: 2nd home, Canadian, Laguna Beach, Malibu, Palm Springs, San Diego, US Mortgage, Vacation Home
“Going Green” seems to be a term we are hearing more often as the level of
awareness towards our impact on the environment is constantly increasing.
Cities are requiring recycling and utility companies are providing
incentives for improving the efficiency of your home. There could also be
financial benefits in being aware of the energy consumed by your home. When
buying a new home, there are loan programs that exist that allow you to
finance energy efficient improvements to you home (some without additional
income qualifications!) This is a relatively simple process that begins
with the new home intended to be purchased getting an energy efficiency
rating by an approved rater. This will identify the deficiencies in the
energy efficiency of the home and will prioritize them. Sometimes it doesn’t
take putting an expensive solar system to cut down energy usage (although
in many cases that can be financed too,) many times it is as simple as
properly insulating/sealing the home and ducts. As energy costs go up in the future, investing into the energy efficiency of
your home at the point of purchase, may turn out to be one of the best
financial AND environmental decisions you ever make. For more information on
California energy efficient mortgages please contact Rafael Perez with
imortgage, Rafael.Perez@imortgage.com (619)928-0128 direct.
With the Canadian dollar virtually at par with the US dollar and a still depressed real estate market looming in the southwest, purchasing a vacation home for next winter is looking a lot more attractive to many Canadians. Although next winter is far from many peoples minds there are still Canadian buyer’s searching for next winters new vacation home and areas like Palm Springs and San Diego are prime targets. In addition, with interest rates still being historically low, the risk of investing in a US vacation home is a lot lower than it was 5 years ago. Conventional financing is available with as little as 30% down and mortgage rates are still near historical lows.
More information about Canadian Vacation home financing is available at: http://thehomemap.com/canadian-2nd-home/
-Rafael Perez
Rafael@TheHomeMap.com
It seems as if for the last 60 days all the financial experts have been
predicting an increase in interest rates as the Fed continues to exit the
market as a buyer of the Nation’s mortgage backed securities. After
sustaining record low interest rates for the majority of the month of March
in 2010, for the last two days interest rates have seen extreme volatility
and as the market goes down, the rates are on the rise… and their moving
fast.
It is never guaranteed that they will ever go back down and historically the
interest rates are still really low. This may be the last chance buyers and
those is a position to refinance have to take advantage of the historically
low mortgage rates before we leave the “low 5′s,” possibly forever. (Remember the reason they got so low was because the Fed was absorbing the
bulk of the market ,with them out…. Whose going to do the same for such
low interest rates?)
Here is the 3 month view showing the ytd averages, not looking good:
-Rafael Perez, Rafael@thehomemap.com
Reverse Mortgage vs. Downsize?
Deciding whether to take out a reverse mortgage or to downsize your home maynot be an easiest choice. Many people will be put in a position to make this
decision over the next few years. A once certain retirement may not seem so
certain these days with the decline in real estate values and other assets.
We have recently seen an increase in marketing promoting reverse mortgages
to those of retirement age, urging them to take out a reverse mortgage. An option that often is left out is downsizing to more suitable housing to
have an easier retirement. A large home may no longer be necessary for a
family whose kids have moved out. Maintaining such a large home may also be
a burden or luxury for many retired families. Rather than eroding at the
equity through a reverse mortgage, downsizing may be a better option for
some. For some people, a reverse mortgage may not even be within reach if they
have little equity. For those who can at least break even or walk away with
a significant amount of equity, downsizing is a good way to lower expenses
and create a more manageable household for those in or nearing retirement. Of course many people love their home and only wish to be able to spend the
rest of their life in their home. For those people who have equity and
cannot afford to maintain their home, a reverse mortgage may be the best
option. For many others who are not strongly attached to their home, there
may be more logical strategies that take just a little more planning and
willingness to make a change. -Rafael Perez, Rafael@thehomemap.com www.thehomemap.com
to “save the day.”
In many cases, there was a situation where a Realtor had abuyer come to them who was “already pre-approved.” Their friend, cousin,
former coworker, etc. worked part time for a mortgage broker and they wanted to go
through them on the loan. Not wanting to sound pushy, the agent hesitates to reccomend they go through their trusted lender and gives “their lo” a chance. After attempting to broker the loan and killing
valuable weeks from a 30 day escrow, the borrower calls their agent and lets
them know their lender couldn’t get the job done.
In the past this was an opportunity for a professional lender to “save the
deal,” review the file, properly qualify the borrower within the guidelines and make a sprint to the finish line to fund the loan, while closing quickly enough to save the escrow. This isn’t the case anymore.
- With the new 2010 Good Faith Estimate laws, there are several points in the loan process that now require certain steps that have certain extended timeframes.
- More importantly, FHA has begun to say they will NOT insure mortgages that were previously declined by another lender.
- Every FHA loan that is submitted and appraised is registered in what is called “FHA connection.” They are assigned a unique case # and the property address is matched with their social security number.
- If an underwriter makes a note in the FHA Connection system and states in the file that “credit was denied” then that borrower is now essentially blocked from being able to get an FHA loan on that property.
- This is the case, EVEN IF they really did qualify and just had a unprofessional loan officer submit a disaster of a loan package to their wholesale lender of choice, or was unaware of that wholesale lenders guidelines that supersede the FHA guidelines.
What to do if a buyer is caught in this situation?
- Do not panic! Although this situation could have been prevented with a thorough interview of the lender by the buyers agent, when is NOW a good time to start?
- After interviewing the lender and getting an accurate assesment of whether or not things will work out, make a judgment call and decide what decision will give the buyer the best chance of closing on their dream home.
- The market is not so easy to get into in California’s high demand markets, the last thing anyone wants to deal with is mid-escrow financing issues, get it right the first time… do your homework and interview the lender!
If you or a buyer you know is not feeling confident in their lenders ability
to get the job done, do everyone a favor and make sure they find a legitimate
lender who knows what they are doing. If things are really going sideways and the mortgage stands to get denied due to a poor loan submission CANCEL (if another lender is sure they can fund it) before the other lender’s underwriter does any permanent damage on their ability to get an FHA loan! If the buyer cancels, and another lender can do the loan everyone still has hope. However, if an underwriter makes a note in the FHA system “credit denied.” Say bye to the property/or buyer.
The solution is for buyers and agents to make sure that the right lender is
financing the purchase from day 1. As a buyer, make sure that you are
working with a reputable lender and ask for proof of success on previous
escrows. As an agent, it is the same idea: Are you trusting your buyer’s
ability to finance the biggest purchase of their life with their friends
cousins sisters boyfriend? Make sure that now more then ever you have a “go
to” relationship established with a good lender at a good company. Agents,
in this real estate environment you can’t afford to take risks with your
buyers (and the buyers of your seller’s homes!)
-Rafael Perez
Questions? I can be reached at Rafael@thehomemap.com
You don’t have to look far to see how far interest rates have climbed, dropped, climbed, dropped and everything in between over the past decade. More recently we have been faced with a time of government stimulation of interest rates through their investments into mortgage backed securities. Politics aside, this activity cannot sustain itself forever and at the end of the day… interest rates are still market driven.
For the purpose of illustration I have included some charts tracking the FNMA 30 year 4.5% coupon. Keep in mind when this goes “up” rates get lower and when this goes “down” rates increase. So up is good for rates and down is not (think climb vs. crash!)
You can see that the beginning of 2008 things were getting ugly fast and right towards the end of the year in November of 2008 we saw the coupon take a leap and the market breathed a sigh of relief.
As you can see rates were literally lifted from the 90 bps to 98 bps range to the 97-103bps range within a matter of days. You can also see how we don’t have much room to gain for the better but plenty of room to fall. I will continue to say, the clock is ticking on these rates and we are standing near the edge of a cliff. Look at the image and imagine it is a picture of a roller coaster….. what would instinct tell you is next? The images speak for themselves… now is not the time to be “iffy” about buying or refinancing, if it is in your plans…take action and take advantage of the times we are living in. If not, make sure you share this information with those you like and care about.
For any specific questions, I can be reached at Rafael@thehomemap.com
Here is today’s up close look on the FNMA 4.5% coupon:
