Luba Muzichenko San Francisco Real Estate

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San Francisco Mortgage & Financing Info

New Condo Fees from Fannie Mae Heading Your Way

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According to The Chicago Tribune, it’s going to get more expensive to buy a condo. 

Yeah, I know, I know.  That sucks, but please, don’t shoot the messenger. 

According to the article:

With many lenders already casting a wary eye on condo loans because of their default rate, Fannie Mae has upped the ante by adding a fee of .75 percent of the loan amount of a 30-year fixed mortgage, for borrowers who put down 25 percent of the purchase price or less, effective April 1.

I asked a local mortgage broker, Marc Geshekter, for a little insight into the situation.  Here’s what he had to say:

Fannie Mae and many other major institutional lenders believe that a condo purchase carries an additional layer of risk compared to an SFR and the pricing for these loans are adjusted accordingly. 

 

These new loan fees will be in addition to any other pricing overlays that are currently in place for products sold directly to Fannie Mae.  Fannie Mae is currently only purchasing loans with a balance of $625,500 and below. 

 

In a nutshell what this means for a consumer buying a new condo is the upfront cost to obtaining the purchase financing may become more expensive or these costs can be rolled up into a higher interest rate. 

 

Since many lenders have already applied additional condo pricing overlays consumers buying a condo today are already feeling the effect of higher fees or higher interest rates for these types of real estate purchases.  Since Fannie Mae is implementing the higher condo fees on April 1st,we may see lenders also further increase the fees for obtaining condo financing in addition to what is listed on lender rate sheets today.

What does that mean for San Francisco home buyers? 

My feeling is that this is penalizing the first-time homebuyer. 

First, 10% and 15% down loans started to become scarce, and now the historically low interest rates which have resulted in a lower cost of homeownership will be offset by the increase in the condo penalty Fannie Mae will be imposing.  Sigh. 

The good news? 

These changes haven’t kicked in just yet.  If you manage to find a SF condominium you like, get the offer accepted and close the whole deal before April 1st, you might just be able to avoid the extra fee.  If you are considering buying a condo in San Francisco, and need a little advice whether now is the right time for you, give me a holler.  I’m always happy to talk “real estate.”

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Will You REALLY Save Money on That Refinance?

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Down Arrow smallIf you don’t know that interest rates are at historic lows, you’ve been living under a rock.

But just because interest rates are low, that doesn’t mean that refinancing will save YOU money.

Refinancing costs money.  Included in the cost of refinancing is:

  • appraisal fee
  • title policy
  • document preparation
  • loan origination fee
  • any points paid to lower the interest rate
  • other miscellaneous fees

After factoring your monthly savings at the new interest rate, you need to look at the cost of refinancing and see how long it will take for you to break even.

For instance – refinancing costs you $10,000 in loan fees, title fees, points, etc.  But, by refinancing, you’ll save about $425 a month on your mortgage payment.  At that rate, it will take you 2 years to recoup your refinancing costs and really break even… and THEN the real savings will really begin. 

So if you’re planning on selling your home in 1 year, you may as well not refinance, because even though your monthly payment will be lower, you will have lost $5,000 on the refinancing costs by selling after just 1 year.

So, is refinancing now right for you?

I can help you figure it out with a handy little spreadsheet.  Contact me and I’ll help you crunch some numbers, or if you like – I can send you the spreadsheet and you can crunch them yourself.  And depending on your goals, you’ll be able to figure out if now’s the right time for YOU to refinance.

 

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SF Real Estate Blog Readers Ask: Is a 10% Downpayment Still a Fantasy?

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A reader of this here San Francisco Real Estate Blog wrote in and asked:

“Have you heard any updates on the 10% down payments?  Is it still pretty much impossible for me to buy without a hard money loan?”
 
Being that my expertise lies in helping you buy your home and not finance it, I turned to Marc Geshekter with Residential Pacific Mortgage for an answer. 
 
Marc says:
 
“Lenders are offering the 10% down program, but mortgage insurance (MI) companies are not insuring loans over $417k with less than 15% down.  The only 10% down program that is insurable with MI is for a loan amount of $417k which backs into a purchase price of $463,333.  Not sure what’s available in the city for that price.

 
The only other 10% down option is if the borrower finds a private money 2nd (not impossible…) or the seller carries back the additional 10% on the sale which really only works if the seller is highly motivated and there’s no other offers.
 
Wish I had better news.  Its a 20% down market these days.”
 
So, Marc didn’t bring us good news, but it’s nice to have a reality check.  There are, of course, some other options, including FHA loans, and of course, the private money 2nd option.  If you are looking to buy and have just 10% down, contact me and we can explore your options and whether we can get creative to make something work, or whether you need to work a little harder to make your homeownership dreams come true.
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Mortgage Update for the San Francisco Real Estate Market

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With all of the bad news about the housing market, there are at least three pieces of very good news to report (from the Daily Real Estate News).

    • Mortgage rates are at historic lows. Long-term mortgage rates last Thursday were reported at the lowest in the 50 years they’ve been recorded – 4.96 percent.
    • Households are growing. The Echo boomers – children of the baby boomers — are getting ready to buy homes, ready to make up a big demographic of buyers, which will lead to a higher number of households.
    • Housing prices have fallen and affordability is at its best levels since the 1970s, Berson said.

There’s NO doubt.  It is more difficult to get a loan these days.  But you can do it.  There are, in fact, lots of options. 

Conforming Loans – Ideally, you have a 20% down payment, a good credit score, qualified underwriting, and a conforming loan balance (which in San Francisco and the surrounding areas means a loan amount of $625,500 with a purchase price $781,875 if you have 20% down).  This is the simplest option with the least creative strategizing to get you into a home.  And frankly, there’s a good selection of homes out there that would cost you less than $781,875 right about now.

Some typical rates for this basic scenario are:

30 Year FIXED @ 5.000%
20 Year FIXED @ 5.250%, *Agency High Balance @ 5.625% (*Agency High is the gray area between the national conforming loan limit of $417,000 and $625,500, the conforming loan limit for San Francisco)
15 Year FIXED @ 4.875%
5 Year ARM @ 4.750%

Jumbo Loans – If you have more expensive needs, more expensive tastes or just find that the home you want will cost you $781,875.01 or more, , but less than $1.25M, then you need a different loan package.  These days, you’re looking at 25% down payment, a good credit score, qualified underwriting, and a 1 point charge (a point is one percent of the mortgage loan. Lenders will give borrowers a lower interest rate on the loan in exchange for points up front) and if you can handle all that, then some rates for this scenario are:

30 Year FIXED @ 6.550% 
5 Year ARM @ 5.800%
7 Year ARM @ 5.900%
10 Year ARM @ 6.150%

(With the particular lender that shared this info with me, If the home is a condo, then add .30 to the rate.)

FHA & VA Loans – If you have steady income, but little money to put down, then one of these two loans might work for you.  For FHA loans, you’ll need to have at least 3% to use as a down payment, and another 3% or so (ballpark estimate) to pay for your closing costs.  There are, of course, other restrictions on the type of property, etc.  VA loans have other restrictions too.  You need to have a Certificate of Eligibility from the Veterans Administration.  But in many cases, there is NO down payment required, though a loan amount fee between 2% and 2.75% will be applied (that can, however, be wrapped up into your loan).  Oh, and if the Veteran can make a 5% down payment, the loan fee will be reduced.

Some rates this this scenario (for loan amounts of $100,000 to $625,500) are:

30 Year FIXED @ 5.000% *FHA HIGH BALANCE @ 5.500%* (*Again, this is that gray area between $417,000 and $625,500.)
15 Year FIXED @ 5.000%

Fractional TIC Loans – Tenancy in Common loans come in many shapes and sizes.  In some cases, several parties will each pay their individual share of one large loan.  But there is another option and it’s known as a Fractional TIC Loan (sometimes referred to as individual TIC financing.)  There are only a handful of banks that offer these loans, and the rates are high in comparison to any of the loan options mentioned above.  But, in some cases, you can put just 10% down, which is a definite bonus for many homebuyers.

Some rates for this scenario are:

25% Down payment
3 Year ARM @ 7.250%
5 Year ARM @ 7.000%

20% Down payment
3 Year ARM @ 7.500%
5 Year ARM @ 7.250%

10% Downpayment
3 Year ARM @ 7.750%
5 Year ARM @ 7.500%

(With the particular lender that shared this info with me, add .50 to the rates for loan amounts over $650,000 and add 1 point to the loan amount for all of these loans.)

Of course, you might not fit into any of these categories.  (At the time of this writing for instance, I hadn’t had a lender respond with various options for loans over $1.25M, though they are available.)

If you don’t fit into the above categories, but you still want to buy a home, contact me and I’ll try to put you in touch with the right lender for your particular situation.  And, there is, no doubt, a possibility that your financial situation won’t permit you to buy a house with the current lending guidelines that are in place today. 

And if you find that you’re not financially fit enough to buy a home in today’s real estate market, don’t take that as the end all to your dreams.  Get fit. 

Take the information you get after talking with a lender and put a plan in place to eventually purchase your home.  That may mean tightening the belt to increase your down payment, it may mean increasing your credit score, or it may mean readjusted your vision of your dream home to accommodate your financial reality. 

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How Credit Scoring Works

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No matter what you think of Donald Trump (or his hair style) – we can all agree that the man knows a little sumptin sumptin about money. 
So, when I ran across this article in The Trump Blog, I thought the info in it would be worthy to share with you.
The article talks about the fact that “basically ALL lenders use “risk-based pricing” or “tiers” when determining what interest rate to offer. The methodology behind this is to fairly compensate lenders for the risk they are taking by lending money.”
The magical way that they determine just how much of a risk you really are is by using a mysterious number we all know as a credit score.   
The article goes to say that there are “5 ways a person’s credit score is derived.”  It also goes on to say how the various parts of our financial lives are weighted to come up with the credit score.  According to the article, the breakdown is as follows:

35% – Payment History
30% – Amounts Owed/Balances
15% – Length of Credit History
10% – Types of Credit
10% – New Credit Inquiries/Accounts

The article goes on to say that:

Now more than ever, every FICO point matters and keeping our scores maximized will allow us to potentially save thousands of dollars in interest over our lifetimes. For example, with Fannie Mae or Freddie Mac backed financing, a borrower will pay over ½% more in rate if they put 20% down and have a 719 credit score rather than a 720. 
My advice is to be vigilant in your participation of activities which may lower your scores and beware of too many inquiries. It is said that inquiries can cost you 3-5 points each time your report is pulled. 

If your credit score is high (over 760), congratulations!  You’ve been doing something right! 
But if it isn’t as high as you’d like, here are some ways to increase your score.

  1. Pay down your credit cards and revolving debt.
  2. Don’t use your whole credit line every month, even if you pay your balance off in full every month.
  3. Ask a friend or family member to add you as a card user to an established credit card.  (You don’t have to use it, just be listed as an account holder.)
  4. Dispute old negative charges if they are incorrect.
  5. Look for any errors and contact the creditor and ask them to correct the information.

Most importantly, use your credit wisely.  It’s much easier to have a good handle on your credit score if you never abuse your credit to begin with. 

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Got San Francisco Real Estate Tools?

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Are you looking to buy a house in San Francisco?  Or maybe you’re pondering selling that little SF condominium or TIC? 

Whether buying a house, condo or TIC, investment property,etc. or looking to sell any of the above in the City, you want TOOLS!

I’m not talking hammers, table saws and drills – I’m talking about tools that provide you with HONEST and UNBIASED information about the San Francisco Real Estate Market!

So – you want to know what kind of tools you can get your hands on?

 

The City Update(TM) – The Best San Francisco Real Estate Newsletter Ever!

The City Update(TM) is a little SF real estate newsletter delivered straight to your inbox (almost) every Friday.  It has ALL sorts of awesome features including:

  • San Francisco Market Reports from the Altos Research folks
  • All of the NEW San Francisco real estate listings from the previous week
  • All of the SOLD San Francisco real estate listings from the previous week
  • Links to SF Open Houses, SF Foreclosure Listings, and more
  • Commentary about the SF Real Estate market from yours truly
  • SF Property “Pocket Listings” that I hear about (properties that AREN’T available to the general public!)

You can SIGN UP HERE or you can check out the site (just keep in mind that frankly, the site sucks – but I created it myself and since my HTML skills are LACKING, I’m just happy I got THAT far with it!)

 

SF Real Estate Market Updates

If you just can’t get enough San Francsco real estate market updates between this blog and The City Update(TM), you now have one more option when it comes to getting the latest deets on what the market is doing. 

Again, brought to you by the Altos Research folks, you can narrow down your reports by zip code or property type AND you can sign up for as few or as many zip codes as you like (you just have to reenter your info for each new zip code/property type). 

Go ahead, get your SF real estate data fix on!  You can SIGN UP HERE.

 

100% Complete Access to the San Francisco MLS

Know everything that’s on the San Francisco market in real time.  Just like a REALTOR, you’ll get access to ALL of the listings in the MLS. 

Unlike other Real Estate search sites, Zephyr MLS Direct gives you the most complete, accurate and up-to-date listing information available, which lets you find properties as soon as they hit the market. 

It also lets you save your searches and new listings that match your criteria emailed to you as soon as they hit the market!  And you can save your favorite properties, watch them go into escrow, and if they’re in your “favorites” folder, you can even see the price they sold for (which we all know is super secret data.)  You also get notified of any changes that occur to the property listings that match your criteria AND Friday Open House reports.  Cool or what?

You’ll have to give up some personal info, and “agree” to work with me as your REALTOR (it’s a technicality that the MLS requires), but I NEVER EVER EVER hold you to it.  To really build a client/agent relationship, we have to meet in person to decide if we’re a good fit to help you achieve your real estate goals.  And you’ll have to CONTACT ME to make it happen.  WHY?  Because I’m just not into stalking and I’m easy to find. 

Want your own MLS access?  You can SIGN UP HERE.

 

So, go ahead, sign up for one, two or all three of the San Francisco real estate tools above!  And if you think you’d like me to represent you in the sale or purchase of a property, call me at 415–307–1392 or shoot me an email.  I’m happy to schedule a free consultation with you to see if we’d work well together.

Oh, and as a reminder, should you sign up for any of the tools above, as always, your info will not be sold, rented, shared, abused, danced on, or in any other way misused. Just thought you’d like to know.

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Can't Afford Your Mortgage? What to Do To Avoid Foreclosure

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San Francisco has weathered the foreclosure storm much better than most places in the country. 

But, I’d be flat out crazy if I believed that there aren’t at least some of you out there that got in above your head.  No down payment loans, negative amortization loans and loans whose rates reset within a short period of time have put many homeowners in uncomfortable situations. In some cases, those situations are just plain painful. 

Because there are those of you that need help, I thought I’d pass on some information provided by the California Association of Realtors.

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) has created consumer information sheets detailing the various mortgage modification programs available through the larger lenders and government entities, and also has created an easy-to-use reference chart about available programs.

· The consumer sheets contain information such as eligibility requirements; who to contact to apply; costs associated with the program; and other vital data. In general, the loan modification programs on the chart and consumer information sheets are intended for primary residences only.

· Mortgage loan modifications typically are handled on a case-by-case basis. Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available: loan number; income information and documentation; most recent mortgage statement; bank statements; and a letter demonstrating financial hardship.

To download the mortgage modification sheets, please visit:
http://www.car.org/legal/mortgage-workout-programs/?view=Standard

What if you don’t qualify?

The majority of the mortgage modification programs from the larger lenders only are available to homeowners who either already are in default or are at risk of defaulting on their primary residences. However, some homeowners, in particular those who may default on a vacation home or an investment property, have some options available.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Homeowners who are in default or at-risk of defaulting should contact a reputable credit counseling agency to discuss possible options other than foreclosure. When calling a credit counseling agency, the homeowner should have their loan number, most recent mortgage statement, bank statements and a letter demonstrating financial hardship. To find a credit counselor, visit the U.S. Dept. of Housing and Urban Development’s (HUD) Web site at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=CA or the non-profit organization National Foundation for Credit Counseling at http://www.nfcc.org/.

· Homeowners should contact their loan servicer as soon as possible to try to work out potential solutions. According to the Federal Housing Finance Agency (FHFA), some borrowers who do not meet the requirements for an existing mortgage modification program may still be considered for a loan adjustment based on personal circumstances.

· If a mortgage modification is not possible, homeowners may want to consider a short sale — sell the home for less than the amount of the mortgage. Although a short sale enables a homeowner to avoid foreclosure and often causes less damage to the homeowner’s credit score than a foreclosure, the lender must agree to accept the loss and in some cases the homeowner may have to pay taxes on the difference. Also, many lenders are overwhelmed by the large number of short sales being submitted by homeowners, so it could take longer than usual to receive a short-sale acceptance from the lender.

· If a homeowner cannot qualify for a mortgage modification or a short sale, some lenders will consider a deed in lieu of foreclosure, where the homeowner transfers the title to the lender in exchange for debt forgiveness. Properties that have additional debt, such as home equity lines of credit or additional mortgages, may not qualify for a deed in lieu of foreclosure. Homeowners who have additional debt tied to the property must share this information with their lender for consideration when applying for a short sale.

To read the full story, please click here:
http://online.wsj.com/article/SB122643638528218301.html

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Say Good-bye to $729,500

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Back in the beginning of the year, the conforming loan limit was temporarily increased from $417,000 to $729,500. 
 
We all knew that the fun just couldn’t last, and in September, the powers that be announced that the conforming limit would be permanently set to $625,500.  Now, it’s a BIG improvement from the previous permanent conforming loan amount of $417,000, but it’s over $100K less than the current level.
 
Now – this decrease from current levels was supposed to take place in January, but lenders are ready to throw in  the towel NOW!
 
If you’re looking at a loan between $625,500 and $729,500, get off your duff and buy something. 
 
All of these loans need to fund and close the before December 1st.  Lenders are starting to cut off this program since the temporary loan limit increase that was instituted as part of the economic stimulus package earlier this year ends on December 31st.  Lenders are wanting to get these off their portfolio before January 1st.
 
To make a long story short, if you’re in this “in between” category for loans, your purchase power will decrease by December 1st.  Now – I kid when I say “go out and buy something now,” but if there’s a property you’ve got your eye on, you might just want to strike while the iron’s hot.
 
And if you have questions about all of this, holler.  You know I love to talk real estate.
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SF Real Estate Blog Reader Comments: Loan Failures

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I few days ago, I wrote about escrow failures and a reader wrote in with more anectodal evidence that lenders have tightened up standards.

Here are two new ways to fail to get a loan.
1) If you have an open building permit not marked as COMPLETE on the DBI web site on a property the loan app can be rejected.
Reason given by lender was that some people begin a project like a kitchen remodeling then walk away from their mortgage leaving the lender with an unfinished and un-saleable house.   Of course, that assumes everyone in S.F. takes out building permits for remodeling work. Nonsense.
2) If your name has not been on the title for less than six months a refinancing can be rejected.
Neither of these two “rules” were mentioned on the loan application documents or in face to face meetings with the bank until after we paid for the loan application package.
 
Thanks kind blog reader!  It’s true.  Lenders have all sorts of new restrictions they’re throwing into the mix.   I recently had an FHA loan fall apart because one person in the building owned more than 10% of the units (one person owned 3 units which put it at 14% for the building.) 
 
Do you have San Francisco real estate stories you’d like to share with others?  Questions you’d like answered?  Holler.  Other readers can (and want to) learn from you. 
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When the Feds Party with Fannie & Freddie, SF Real Estate Reaps the Benefits

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So by now, I know you’ve heard all about the fact that Fannie Mae and Freddie Mac have been rescued by the federal government. 

What you may not realize is the impact that it’ll have on the San Francisco real estate market. 

We (as in SF real estate agents) got the word that interest rates fell today – not just once, but TWICE!

What does this mean to you???

Well, historically, the week after Labor Day, at least in SF, means that real estate sales pick up speed faster than a boulder rolling down a mountain (not a witty analogy, but a good one, none the less.)  Inventory increases, buyers come out of hiding and the next month or two means that most SF REALTORS (including yours truly) will not be taking a day off.

The combination of the usual seasonal upswing in the SF Housing market with dropping interest rates add up to (in my humble opinion) a SWEET time to buy or sell a house (at least in comparison to the last few months that weren’t, by any means, ugly, but weren’t pretty either.) 

And when you combine lower interests rates with the fact that as of January 1st, 2009, the amount of a conforming loan drops from it’s current level of $729,750 to $625,500 (which will take a decent chunk of purchasing power away from buyers) it appears that those home buyers that have been on the fence about buying a home don’t have a worthwhile reason to wait any longer (assuming they are buying for the LONG term, have good income and a strong down payment, of course!)  Oh, and prices in SF have remained relatively stable.  While there have been some decreases across the board, they have not been what can be called drastic by any measure. 

Just a reminder, if you read this blog, you know that I’m not the one to be ever cheerful.  Yes, I believe the SF Real Estate market is strong, especially compared to the rest of the country. 

So why am I screaming that NOW is a good time to buy a home in San Francisco (and therefore a decent time to sell as well)?

  1. Rates are going DOWN!
  2. Prices are staying STABLE!
  3. Loan limits will soon be going down and BUYERS WILL LOSE PURCHASING POWER!

If you’ve been on the fence about buying real estate in San Francisco (again, assuming they are buying for the LONG term, have good income and a strong down payment, of course!) , might I suggest you get off your behind and do something about it.  And while you’re doing something about it, find yourself a fabulous San Francisco REALTOR to work with.    Give me a holler to see if I’m the right SF real estate agent to help you achieve your buying or selling goals!

 

 

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