“Keep in mind that there will be a pretty hefty lock extension fee  if an escrow extends past the original lock period. Any delays could be quite costly to the buyer.”

Attention buyers: don’t delay on jumping in and starting your inspections and negotiations, and be you and your agent stay on top of your escrow timeline.

Yes, cash!

I just had a listing in Berkeley that received 6 offers, 2 were all cash.
My 2-bed El Cerrito listing received 4 offers, 1 was all cash.
Another listing of mine in El Cerrito received 2 offers, 1 was all cash.
My clients just presented an offer on a cute house in Berkeley, they lost to all cash.

Where is everyone getting so much cash!!??!!

I asked some people and here is what they said:

1) “My parents gave us the cash, we are paying them back.”  (couple, 34 and 35 years old)
2) “We pulled all of our money from the stock market in 2010.” (couple, 41 and 44 years old)
3) “Stocks and 401K.” (39 year old single woman)
4) “We have saved for 6 years.” (38 year old and 44 year old couple)
5) “My company gave me a loan.” (46 year old single man)

Guess there is still some cash floating around in the Bay.

In addition to propping up the ceiling, which dropped to $625,500 on Oct. 1, the Senate amendment would also restore through 2013 the formula in use during much of the downturn for determining the upper loan limit in high-cost housing markets.

This is great news for the Bay Area!

The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hindering the ability of families in California to purchase homes by making them less affordable.

1) 30 Year Mortgage. You can get a 30 year mortgage today with as little as 3% down.

2) Appreciation. According to the Macro Market Home Pricing Survey home prices are expected to appreciate starting in 2012, by 1.29%.

3) Interest Rates. Rates are on an increasing trend, and are expected to hit above 5% by the summer.  In November, 2010, rates were at 4.17%, today they are at 4.86%.  This small increase will cost you more money each month on a house that is priced the same.  Example: a $100,000 loan at 4.17% = $487.27/mo versus a $100,000 loan at 4.86% = $528.30/mo, a difference of $41.03/mo.  Yearly this difference adds up to $492.36 and over 30 years this adds up to $14,770.80.  If only you had bought in November instead of trying to chase down prices.

4) QRM. Quality Residential Mortgage- this is something you will start to hear more of in the future and it isn’t pretty.  The QRM will address 4 main issues: 1) they type of mortgage 2) The ratios between a purchaser’s income and their payment/overall debt 3) The amount of down payment which should be required (20% is being proposed) 4) The minimum FICO score for a borrower.  To give you an idea of the severity of these proposals, for the average mortgage written in 1997 (well before the housing mess), only 20.4% would have qualified for these current suggested QRM requirements. As mortgage underwriting has become much more stringent in the past three years, for mortgages written in 2009, only 30.5% (less than a 1/3) would qualify as QRM.  Here in the Bay Area this will be extremely problematic because of the high cost of housing.  Again, another reason that NOW is the time to buy.

5) Best Long Term Investment. Renters have only a fraction of the net worth that home owners do.  Real Estate has proven time and time again to be the best long term investment for your money.

Sounds like a good reason to me to buy now.

1) Just heard that rates are at their lowest for the year

2) Just heard that you can now obtain a conventional loan with as little as 3% down (will include mortgage insurance).

3) #2 applies to condos!

4) Just heard that transactions are closing in as little as 20 days!

5) Just heard that you can get a JUMBO loan with 30 year, 10/1 ARM and 10/1 Interest Only ARM!  80% ltv to $1million and then 75% ltv to $1.5 million.

Now that is some great mortgage news!

The New FHA Inspection Requirements

With the FHA loans becoming extremely mainstream due to the recent mortgage crisis, I thought I would share what they are looking for in their required Home Inspection.  If you are selling or considering selling you will want to make sure the home can meet these requirements.  Otherwise… you may be eliminating a large portion of the Buyers in the market.

FHA INSPECTION REQUIREMENTS:

ELECTRICAL

A single main shut-off breaker is required. If more than one breaker must be tripped to disconnect the power, a new service panel is required. The main service must be at least 100 amp. If it is less, a new service is required. NOTE: These electrical requirements eliminate most pre-1960 homes that have not had an electrical upgrade. If FHA is the only financing option, then a 203K program should be considered to finance the improvement.

HEATING

The heating and cooling system must have at least 2 years of remaining life. Wood stoves or solar heating are not acceptable as the sole heat source. NOTE: These heating requirements may eliminate most pre-1960 homes that have not had a heating system upgrade. If FHA is the only financing option, then a 203K program should be considered to finance the improvement.

HOT WATER HEATER

MUST have an installed Temperature Relief Valve (TRP) valve. The TRP must have a discharge line that drains to the outside of the home. It cannot be reduced in size from the valve outlet. In the case of a basement installation with a drain the discharge line must exhaust 6″ to 24″ from the floor. NOTE: The Temperature Relief Valve (TRP) valve upgrade is usually under $50 for the valve plus installation. Proper Water Heater Straps should be installed with FHA compliance and or with proper local jurisdiction requirements.

LEAD-BASED PAINT

All properties built prior to 1978 should be considered as target housing for lead-based paint hazards. Defective peeling/flaking paint on any interior or exterior surface must be identified and repaired following the EPA guidelines.

SEPTIC SYSTEMS

Homes with septic systems are acceptable. Evidence of septic tank pumping within the last 5 years is required.

WINDOWS FOR SLEEPING ROOMS

Escape or rescue windows shall have a minimum net clear openable area of 5.7 square feet. The minimum net clear openable height is 24″ and width is 20″. The maximum escape window sill height is 44″. NOTE: These window egress requirements may eliminate most pre-1960 homes that have not had a window upgrade. Small basement windows can be enlarged and upgraded. It has been my experience that most FHA Appraisers overlook this requirement unless the windows are inoperable or are set into an underground basement with 60″ plus sill height. If FHA is the only financing option, then a 203K program should be considered to finance the improvement.

Tirso De Ubago, cio of Castle Rock Inpections.com is a FHA Certified Compliant Inspector (203k) and a Member in good standing with the American Society of Home Inspections (ASHI) and California Real Estate Inspection Association (CREIA) in the San Francisco Bay Area, He can be reached at  925-518-1124  or 1-800-995-8242  for your Sellers or Buyers in need of a FHA 203K and Home Inspection that require FHA Compliance Inspections during the Home buying process as well as FHA Underwriters final inspections.

This is all well and good, and a huge relief for many.  But sometimes I have to wonder if this is just a lot of PR hoopla.  Bank of America estimates that about 45,000 customers will qualify for its plan.  So based on BofA’s past performance, maybe half will actually succeed.  Banks keep throwing out these great plans but don’t have the infrastructure in place (can I say short sales?)  to support these plans.  A client of mine has tried to get through to BofA in the past to discuss loan modification and after being on the phone for 90 minutes and transferred numerous times, were told they don’t actually qualify.  Shouldn’t it be easier than that?

So, Bank of America, if you are listening,  I hope you hold true to your plan.  You have the ability to help so many troubled borrowers, don’t let them down!

Click here to read the original article from AP: “BofA to Start Reducing Mortgage Principle.”

Interested? Call me today and I will connect you with the best rehab mortgage guru I know.

Source: Minneapolis-St. Paul Star-Tribune

Get rid of your interest-only and high interest rate loans now!  Check it out…

My husband and I are in the process of refinancing our house into a 5%, 30-year fixed loan with no upfront costs.  Killer!  We are also refinancing our rental from a 10-year interest only loan into a fixed loan as well, for very little cost.  Sweet!  

In talking with different people it seems that most of you aren’t aware of the current rates.  WELL…I feel it is my duty to bring this to your attention.  

If you purchased your primary residence or any rental income property using the once-popular 5 or 10 year interest-only loan, NOW IS THE TIME TO REFINANCE.  If the rate on your house is a fixed loan ABOVE 5.5%, NOW IS THE TIME TO REFINANCE.  If you are underwater on your home, you may even be able to refi into another loan based on your CURRENT MARKET VALUE!  S e r i o u s l y ??  Yes, underwater peeps have the option of doing a short refi which would allow you to refinance with another lender by short “selling” your home to your existing lender. 

**Disclaimer** What I really should say is “Now MAY be the time to refinance.”  Everyone has a different situation: different income, different credit score, different rate, different payment history, different house, different needs.  But until you try, you just won’t know.  Plus, rates are expected to jump by the end of the year and I don’t want you to miss the boat.  

I have some great mortgage brokers in my toolkit so if you are thinking: “Hmmmm, I hadn’t realized…” then call me today. 

“Today, February 1st, is the beginning of the new FHA Condo project guideline changes. From this point, any FHA loan for a condo will require an approval from HUD. This means that in order to do the loan, the financials from the Condo Project will need to be submitted and approved by HUD. HUD has recently said it’s taking about 8 weeks for project approvals under HRAP, but anticipates that within a couple months it may be upward of 4-6 months since there are something like 40k or more condo projects in CA alone that have yet to be submitted for approval.”

Any questions, let me know and I will put you in touch with Chet to answer your questions.

Cheers!