Recently, Forbes released its top 10 list of real estate markets in the country. San Jose, CA was on that list. According to MSNBC, San Jose is expected to have an increase of 3.3% in jobs. Further, there has been a huge influx of people over the past two years. As is demonstrated by the rapid growth in housing construction, San Jose is slotted for a stellar year in the real estate market. If you are looking to invest, look towards San Jose. If you are looking to sell, this may very well be your year. Below is a little information about the city. To learn more about the Bay Area at large, visit lealrealtyonline.com.
San Jose, the county seat of Santa Clara County, is the largest city in the San Francisco Bay Area with a land area of 178.2 square miles. Surrounded by mountains on three of its sides, San Jose has a mild, Mediterranean climate with an average temperature of 73 degrees and over 300 days of sunshine annually. San Jose has its own airport that is primarily serviced by Southwest and Alaska Airlines. The city offers culturally diverse neighborhoods, such as Japantown, which is home to the Japanese American Museum of San Jose. Despite its size, San Jose provides all the amenities of city living within a relaxed, laid-back atmosphere.
If your home is on the market during the holiday season, it’s important to find a compromise between creating a decorated house that is still appealing to buyers and still enjoying your holiday season. Some people may say that holiday decorations are a don’t when your home is on the market because, if done incorrectly, they can be very off-putting to potential buyers. While there is some truth to this concern, I contest that buyers could actually be compelled by well-done decorations that highlight the home’s positive features. Here are a few tips to follow if your home is on the market during the holiday season:
1. Less is more. You should avoid, at all costs, cramping the space of your home. Buyers need to be able to move comfortably from room to room and oversized trees or excessive lights can make the home seem small and cluttered. Thus, I would suggest limiting your decorations to very specific areas of the home. Also, if you have a smaller house, opt for a smaller tree. Large trees immediately shift the focus to the room-size. You want to highlight the home’s good qualities, not draw attention to its downsides.
2. Outside lights should emphasize the architectural details of the home. Too many lights can be overbearing, but a few lights that line the perimeter of the home and the outlines of the windows can catch the eye of a potential buyer driving by. Also, consider classic, neutral colors, nothing too flashy.
3. Finally, be sure to take your decorations down!! Keeping decorations up until mid-January will create a confused atmosphere for potential buyers. You want your home to look fresh, not stuck in the already-passed holiday.
The holidays can be a great opportunity for sellers to have their home viewed by travelling buyers, buyers who may not have had the opportunity to see your home in person during other times of the year. Thus, embrace the spirit of the season, but be ever-cognizant of the atmosphere your decorations are creating.
What was on the negotiations table during the summer debt ceiling crisis has crept its way back into lawmakers’ thoughts. How do they increase government revenue without raising taxes?? Tax the lower and middle classes through the backdoor—the mortgage system.
Right now, Obama is trying to push the Senate and House to approve an extension of the Bush payroll tax cuts. Although I am certainly a fan of such a proposal, the current discussion regarding how to pay for said tax cuts is actually a tax in disguise. Many democrats and republicans, alike, are looking to reap more profit from Fannie and Freddie by insisting that they charge lenders a higher guarantee fee, money used by Fannie and Freddie to repay investors in the case of default. Currently, banks pay approximately one quarter of one percent of the loan, yet both the House and Senate bills are looking to raise that fee by as much as one tenth of one percent of the loan. Seems like a brilliant, relatively painless way to pay for the payroll tax cuts.
YET, this is assuredly a backdoor, sneaky way of taxing the middle and lower classes. Banks will raise their interest rates in order to pay for the higher guarantee fees, and thus it is the buyers who will ultimately pay for their own tax cuts (and not wealthy buyers, mind you, as they usually pay for homes with cash, altogether avoiding mortgages). Further, this is setting a precedent that allows the government to tap into the real estate system whenever they need a little extra cash. Ultimately, Congress needs to look elsewhere for revenue generators.
Right now is definitely a buyer’s market. Prices are at all time lows, and interest rates are dipping in under 4%. However, if you want to take advantage of the low interest rates, it is vital that you avoid certain pitfalls. Here is a list of 5 common mistakes that buyers make when shopping for mortgages:
1. Make sure you get pre-approved. This is a free process that can highlight important aspects of your credit report in order to provide you with valuable information about how much money you can qualify for. Getting pre-approved may also illuminate issues with your credit report that should be fixed before applying for a loan. Not only does it give you a chance to have another eye read over the report for mistakes, but most brokers will give advice on how to up your score.
2. Fix your credit report. After the pre-approval, make sure to fix any problems credit problems. Take all the information that you received in your pre-approval and decide how to tackle any credit issues. If you need to correct mistakes, be sure to do so prior to applying for a loan. Also, if you need to up your score, make a detailed financial plan of how you intend to accomplish this.
3. Shop around for rates. Not every bank will give you the best deal, so shopping around for quotes is a fundamental part of the process. You want avoid future concerns about whether or not you got the cheapest mortgage. If you obtain numerous quotes, you will be able to make an informed decision on where to purchase your loan. Be sure to look out for lender fees. Sometimes these can be justified, necessary fees; however, make sure you know exactly how much you are paying and what you are paying for. If it seems like a bloated price, start asking questions.
4. Remember to include closing costs in your mortgage figures. Unless you can negotiate with the seller, it is the buyer’s responsibility to cover closing costs, which usually comes out to 2-3% of the purchase price. It is important to calculate these costs in order to be fully prepared for the financial burden of buying a home. Also, be sure to think about the first mortgage payment. If you over-stretch your savings, or forget to figure in closing costs to your budget, you could end up struggling to make the first payment on time.
Preparation is imperative to the home purchase process. In order to take advantage of the current buyer’s market, it is essential that you properly prepare for the entire process, including shopping for a cheap mortgage.
Although it is currently a buyer’s market, in that buyers are more scarce, whereas sellers are plentiful, it is still vital to properly structure an offer. Here is a list of 3 factors that should be considered when you write an offer:
1. Buyers should be well aware of the particular neighborhood’s comps, or “comparables”. Comps inform the buyer as to the average price range that nearby properties have sold for within the past 90 days. These figures help to determine home value, which in turn can dictate property taxes. The comps for a particular neighborhood will compare the selling prices of homes of similar age, size, and condition. Further, home values will be determined by numerous factors that are a result of the location of a home. For instance, good school districts, well-paved sidewalks, and low-traffic streets will have a positive effect on home values, especially if other properties in the area are in good condition and selling for high prices.
2. It is important that you are well aware of any needed repairs to the home. Not only will this play a role in determining the home’s value, but different types of loans will not finance the purchase of a home with certain structural problems. FHA loans are generally denoted as resulting in the strictest appraisals. According to the HUD-FHA website, any needed repairs cannot infringe on the following requirements: safety, security, and soundness. Safety refers to any deficiencies that could cause significant danger to home occupants. Security refers to deficiencies that might obstruct the security of the property. Soundness refers to any issues with the structural integrity of the home. Understanding both the appraisal requirements for your loan type, as well as the needed repairs for the home you are looking to purchase, are crucial components of a well-structured, winning offer.
3. Lastly, be sure to take note of any competing offers. Competition occurs in various ways, including actual price offered, type of deal offered—cash or loan, and how much the buyer is asking the seller to pay for in terms of closing costs and repairs. Understanding competing offers is necessary to writing a successful offer.
The key to writing a successful offer is to make sure your Realtor and lender are productively communicating, so that the previously mentioned components of good offers are thoroughly examined and included within the purchase offer. Therefore, it is often to your benefit to look for realty companies that are partnered with lenders. For instance, Leal Real Estate, a realty company, partners with Bay Equity Home Loans, a direct lender, which means that staff from both companies work together closely to more efficiently and effectively take you through the entire looking, offering, and escrow process. However, regardless of where you choose to do business, paying close attention to these 3 suggestions will aid in the successful completion of an effective and competitive buyer’s offer.
Last month, the Senate voted for a 2-year extension of higher loan limits for government insured mortgages, and encouraged the House of Representatives to follow suit and raise the loan limit from $625,000 (the limit it fell to on October 1, 2011) to as much as $729,750 (the limit prior to October 1, 2011). However, the bill is currently stalled in the House, as lobbyists on both sides of the issue have planted their heels firmly in the ground. Republicans do not want to continue to give taxpayers’ money to Fannie and Freddie, and real estate agents are battling against real estate insurers. The Wall Street Journal claims that what is at stake is a question about the ultimate purpose of government aid in the real estate market. Alan Zibel writes, “Is it best to support the weak sector or at least do no harm to it? Or, should the top priority be reducing the federal government’s footprint in the $10.4 trillion U.S. mortgage market, given that the federal government stands behind more than nine in 10 new loans?” (http://blogs.wsj.com/developments/2011/11/04/lobbying-titans-square-off-over-loan-limits/ ).
Adversaries to the loan limit increase argue that the FHA program was intended to help lower-income families, or first time home buyers, purchase “average” homes. Thus, these politicians claim that an increase to the loan limit is unnecessary to the implicit agenda of the FHA. However, high priced markets, such as San Francisco, boast an average household cost well above the $625,000 mark. According to CityData, in 2009, San Francisco’s average house and condo value was $751,600, just slightly higher than the old loan limit. In a blog earlier this summer I discussed the importance of nuanced politics, a politics that realizes the danger of universal claims. Such universalized politics is currently threatening the health of higher-priced housing markets, as politicians in opposition to the loan limit increase attempt to define what an “average” property should cost across the nation.
Ultimately, the market needs a quick response in order to keep housing prices from slipping even farther in high-priced areas. If loan limits do not increase, families will not have access to enough financial support to be competitive buyers in the market. Without buyers, home prices will fall and the housing slump will continue to drain the rest of the economy. The real estate market needs action that will support their climb back into solvency.
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Agents, Buyers, General Market Information, Mortgages Tags:
Appraisals, Bank Owned/REO, Buyers Market, Conventional Loan Program, Fannie Mae, FHA Loan Program, Freddie Mac, VA Loan
As many of you have probably heard, Obama’s proposed American Jobs Act, subject of a recent blog, has been rejected by the Senate.
However, Obama has something else up his sleeve. Recently, he announced potential changes to refinancing options for homeowners that are estimated would help approximately 1+ million households. Under current rules, many homeowners cannot take advantage of the record low interest rates through refinance because they are underwater—they owe more on their home than it is worth.
Yet, Obama’s new plan would allow “responsible” homeowners to refinance their homes even if they are underwater. If homeowners are current on their mortgage payments, which according to CNN means that they have missed no more than 1 monthly payment within the previous year, they can apply for a refinance at the current low interest rates with certain restrictions.
But (the big but), the banks, Fannie, and Freddie must agree to the details and terms of this plan in order for it to take effect. During the next few weeks, FHFA will be finalizing the details and presenting said details to large lenders on, or shortly after, November 15th. Without the banks’ support, the plan is dead in the water.
Although I hope that the banks accept the plan and move towards a simpler refinancing process, I am still looking out for further legislation that will address homeowners who are not deemed “responsible.” Due to the incredibly high unemployment rates, many families at risk of foreclosure are not current on their mortgage payments, but are already working towards default. Unfortunately, this plan excludes this portion of the population; however, there is talk of legislation coming from the Obama administration in the near future.
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Agents, General Market Information, Investors, Mortgages Tags:
Appraisals, Cash-out, Conventional Loan Program, Fannie Mae, FHA Loan Program, Freddie Mac, Legislation, Refinance, Short Refinance, VA Loan
A home appraisal is the lender’s investment inspection. Prior to funding a loan, banks need to make sure that, in the case of default, they can make their money back by selling the foreclosed home. Therefore, it is essential for the bank to establish value and ensure that the loan amount does not exceed the appraised value. Appraisals are done by a third party, financially uninvolved professional, and the appraisal is generally, though not always, paid by the potential buyer. If a property is appraised for less than the contracted purchase price, a lender will lower the amount they are willing to lend. In such a case, the buyer must either come up with the difference in cash, renegotiate the purchase price, or withdraw from the process entirely. Thus, a successful home appraisal is vital to sellers because it can often negate a previously negotiated contract.
In California, purchase contracts generally award buyers a period of 17 days to remove contingencies. During this time, appraisals are completed and analyzed by loan underwriters. In the case that the appraisal negatively effects the granted loan principle, buyers are legally able to withdraw themselves from the contract.
Recently, the Wall Street Journal published an article that detailed 10 tips to improving your home appraisal. Check these out by visiting the Wall Street Journal blogs.
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Agents, Buyers, General Market Information, Mortgages, Sellers Tags:
Appraisals, Conventional Loan Program, Fannie Mae, FHA Loan Program, Freddie Mac, HVCC, VA Loan
Buying a home for the first time is undeniably a daunting process. Credit scores, differing loan types, mortgages, down payments, and homeowner’s insurance are all looming financial nightmares that complicate and frustrate the buying process, and can be especially unnerving for first time home buyers. So, here is a list of your first steps towards a successful home purchase:
1) Find a good real estate broker. A real estate broker will facilitate the entire home buying process and will act as a negotiator on your behalf when finalizing a deal. In order to buy a home, one must have extensive knowledge in real estate law, financial planning, and a detailed understanding of mortgages. For first time home buyers, especially, having a real estate broker takes the pressure off of you, allowing you to focus on finding your dream home. Brokers will guide you through the paperwork, work with you on loan pre-approval, help you navigate the different types of mortgages, and negotiate you into a great deal.
2) Get pre-approved. Once you decide that you’re interested in buying a home, one of your first steps should be getting pre-approved for a loan. Your real estate broker will usually do this free of charge. It’s an important step to take early in the process because you may have to do some financial homework in order to get your credit score up to a desirable level. Further, getting pre-approved for a certain loan principle allows you to enter the home search with some delimiters already in place. If you already know how much money you can get from a loan, you can begin to narrow your search to houses that fit within that financial range. According to HUD, Housing and Urban Development, here are the following items to make sure you bring to your pre-approval: “1. social security numbers for both your and your spouse, if both of you are applying for the loan; 2. copies of your checking and savings account statements for the past 6 months; 3. evidence of any other assets like bonds or stocks; 4. a recent paycheck stub detailing your earnings; 5. a list of all credit card accounts and the approximate monthly amounts owed on each; 6. a list of account numbers and balances due on outstanding loans, such as car loans; 7. copies of your last 2 years’ income tax statements; and 8. the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information.” Coming prepared will expedite the process of pre-approval.
3) Use a mortgage calculator to determine what an affordable monthly mortgage payment is for your individual budget. You can find mortgage calculators online in various places, including on the website: Leal Realty
4) Find a lender. Shop around for a lender. Make sure to give 3-6 weeks for a loan approval process. Different lenders will give you different loan packages, and its necessary to allow yourself enough time to examine each offer before making a final decision. Some real estate brokers are already connected to lenders, and thus, using a broker-lender pair may prevent potential communication snags in the escrow process.
5) Begin shopping around. Your broker and real estate agent will help you find the type of neighborhood that suits you and your family’s needs.
Numerous cities across California, including National City, Carlsbad, Chula Vista, and San Diego, have first-time homebuyer programs that can provide you with more detailed information as well as possible financial incentives. Check out these programs by visiting HUD’s website.
Earlier this month, President Obama released his jobs plan, American Jobs Act. Since then, it has gotten mixed reviews from media sources and politicians. As it stands, the bill will probably not receive much active congressional attention until October. Thus, there still remains several weeks where constituents can educate themselves as to the details of the bill in order to form opinions which can then be passed on to their representatives. For the purpose of this blog, I want to detail the propositions that will specifically effect the real estate market and the attention that these potential enactments have had from various media sources. There are 2 primary factors which impact real estate embedded in the American Jobs Act.
First, within the bill, Obama denotes an effort to work with Fannie Mae and Freddie Mac, as well as other industry leaders, to remove current obstacles that prevent many families from refinancing their home. According to the White House Fact Sheet regarding the American Jobs Act, Obama is claiming that making refinancing both available and accessible to homeowners could potentially put as much as $2000/month back into the accounts of American families.
The second, and perhaps most potentially influential, real estate facet of the act is Obama’s proposed Project Rebuild. This project will allocate $15 billion of government funds to the rebuilding of foreclosure properties, both commercial and residential. The four primary functions of Project Rebuild are:
- to stabilize communities by focusing on both distressed commercial and residential properties;
- to create property maintenance programs that create jobs, while also stabilizing the values of homes in neighborhoods that also host foreclosure properties;
- to provide federal funding aimed at the support of for-profit development projects that are consistent with Project Rebuild’s overarching goals;
- to provide financial support for land banks.
HUD estimates that Project Rebuild could create as many as 200,000 new jobs. Furthermore, HUD reports that versions of Project Rebuild are already at work at the local level; hence, Obama’s job act seeks to improve the already existing model and apply the model at the national level.
Based on the lackluster success of previous governmental programs created to address the housing crisis, such as the HAFA loan modification program and the expedited short sale procedures, the jury is still out as to how effective the new legislation would be in creating jobs in the housing market.
The other area of concern is the absence of any incentive for the residential builder who in previous years represented the engine of growth of the economy providing construction jobs, service jobs, finance industry jobs and real estate jobs.
To familiarize yourself with this bill, take the time to visit one of the following sites to further investigate the details of the American Jobs Act. Be sure to contact your representatives with your opinions!
Huffington Post
Fox Business News
