APRIL SHOWERS...ENOUGH ALREADY!

Important Dates:

April 10^th your Real Estate Taxes are due!  You will be penalized if you don’t pay them in a timely manner.  Online is easiest!

April 15^th your income taxes are due.  Be sure to file an extension if you are not filing your returns on the 15^th.

Rate and Market Updates

Well, The Fed is not cooperating with us on interest rates.  Why?  New job creation continues at a strong level, the largest since last May.  Basically, the economy is still strong and although inflation has reduced dramatically from the highs, not enough. 

As of Friday the 5^th the published Freddie Mac average rate on a 30 year fixed rate mortgage (under 766K) is 6.8%.  But remember, this rate is affected by FICO score, Loan-to-Value, loan purpose and other factors. 

San Diego is leading the charge on home price gains with an 11.2% increase over the last 12 months.  Los Angeles and Orange County are up 8.6%.

With inventory continuing at a low level, bidding wars are picking up again.  The Millennials are back, representing nearly 40% of buyers.  And, average down payments hit an all-time high last year! 

Myth busting around the NAR lawsuit regarding agent commissions.

·         This is good news for buyers…NO!.  Buyers cannot finance the commission for their agent in their loan.  They either need to pay out of pocket for that service, or go without an agent.

·         Why bother paying an agent to show me homes when I can check them out on Zillow?  Well, unless you are a real estate expert and intimately acquainted with the RPA (Residential Purchase Agreement) and all the attendant requisite disclosures, you are frankly incapable of adequately representing yourself.  There are 1000 things that can go wrong without an agent representing your best interests.

·         Ever hear of a pocket listing?  You won’t find that without an agent working on your behalf.  That is a listing that never hits the MLS.

·         Dual Agency is fine (The listing agent also represent the buyer) NO!  No agent can honestly and fairly represent both sides of a transaction and provide the best result for both.  Impossible.

·         Home prices will be lower since the seller is not paying for the buyer’s agent.  DOUBTFUL  Think again. If you are selling your home, are you going to offer less than true market value to be kind to the buyer?  Or, do you want the most $$ out of your home?

·         The seller can’t pay for my agent as a buyer.  WRONG.  Yes they can, but it may not be called out in the MLS as a commission to buyer’s agent.  However, the listing agent may note a seller concession for “closing costs” which can include the fee to the buyer’s agent.  Remember, everything is negotiable!

This situation is fraught with danger signs.  I anticipate many more lawsuits if dual agency becomes the norm.

AND, WE ARE OFF TO THE RACES!

Someone somewhere turned the light on, finally! Buyers are coming off the sidelines and sales activity is picking up, as we have been predicting since last year. 

RATES AND THE MARKET

Although rates are still holding steady fairly close to 7%, we are seeing much more application activity in the last two months.  We still expect to see the Fed reduce the Fed funds rate by June, although we continue to see mixed economic indicators. Inventory remains on the low side, keeping home prices up in most markets.

BE A “SCOUT” AND BE PREPARED!

With the recent increase in activity, we are getting more and more phone calls that go like this:  “Hi, how are you?  I need a pre-approval letter today so I can see a property that was just listed”  or even worse, “I need a pre-approval letter now, so I can make an offer.”

Preapproval letters do not grow on trees--- and are not automatically issued (at least not by ethical lenders) upon request.   We always perform our due diligence and review bank statements, W2s, paystubs, and tax returns as applicable, depending on income streams. We pull a “soft” credit report and run automated underwriting on most loans for “automated loan approval.”  This can take us a day or two, depending on workflow and the speed with which clients provide us the documentation needed.

Please contact us early on so you are prepared to pounce when you find the right property.  That way, you won't miss out because you did not get your preapproval the same day you asked. 

Further, we oftentimes work for a month or twelve with clients on credit repair, increasing savings, accessing gift funds or down payment assistance, car loan payoffs, etc.

REMINDER FOR SELF-EMPLOYEDS             

Our self-employed borrowers face special challenges.  Their income streams are typically more complicated, and oftentimes they have more latitude on the amount of expenses they deduct from income.  This can make or break a purchase or refinance loan.

We always want to review your business and individual tax returns PRIOR TO FILING.  This way we can be certain you will qualify for the loan you desire.  We like to collaborate with your tax preparer and/or CPA to coordinate for a successful loan transaction.

Recently a client who was fully pre-approved went ahead and filed his 2023 returns--showing less income with more expenses, and we had to cut his loan amount after he was ready to make an offer.  Don’t be that client!

I recently visited my sister and her chickens.  We love the fresh eggs they provide!

 Welcome to spring and daylight savings!  YAY!!!  

As always, call us with questions!

Karen, Katie and Stephanie

 

 

SUPERBOWL and SWIFT Insurance Changes!

I had to get a comment in about the increase of younger women, “Swifties” watching the Superbowl.  Wow!  What a great game, a nail-biter up to the end!  And the half-time show was entertaining!  Of course I am an Usher fan.  We watched the game at Dana Point Yacht Club, here is the sunset view.

Rate and Market Updates

Rates have crept back up near their highs.  The next move down will depend primarily on the CPI figures coming out this week.   If inflation is decreasing, we should see a reduction in the Fed rate sooner than later.  If not, we may be waiting for June before we see any appreciable change.

Regardless, activity is definitely picking up, with many coming off the sidelines when rates started their drop at the end of last year. To quote a local Real Estate professional, “Stop holding your breath waiting for prices to fall.”  They won’t, barring a National or International Disaster.

Baby boomers are not selling their homes and, for the most part, are not moving.  So, get into the market if you aren’t already, any way you can, even if you have to buy an investment property and/or combine forces with a friend or relative.  Don’t wait for your dream home or you may be priced entirely out of the market here in California.

Insurance Woes

In case you have not heard, we have an insurance crisis.  Insurance costs are rising dramatically for homes, cars and more.  A number of carriers have stopped writing insurance on homes in California, or pulled out of our market altogether.  This means many homeowners have had their policies cancelled by their carriers, and find they now have to resort to the “Fair Plan” provided by the State, with an additional “wrap” policy.  These are all expensive! 

Why is this happening, may you ask?   Well, fires, floods, and earthquakes.  Climate change is bringing more frequent and more serious weather events.  The number of weather-related disasters have risen dramatically in the US over the past 20+ years.  Insurance companies are losing money, and they are for-profit enterprises. 

So far, the companies that have exited or stopped writing new policies include The Hartford; State Farm, Allstate, Farmers, Kemper, and USAA.

Auto rates are climbing as well, primarily due to high costs to repair autos. 

What does this all mean?  Well, it has a rather dramatic effect on home affordability if your insurance premium is double or more than initially expected. Lenders require insurance and it is not wise for anyone to go “bare” without insurance, even if you don’t have a loan on your property.

We have to remind our clients to get busy contacting agents to get insurance in order ASAP,  or it can and will slow down closings.

However, if you think it is bad here, take a look at Florida.  There, many homeowners are being forced to sell as they can’t afford the enormous increase of their insurance policiy.  Others are paying off their mortgage and going “bare” so they don’t have to pay giant premiums where policies have doubled or tripled due to hurricanes.

If you need help with insurance, reach out!  We can help!

We are looking forward to Spring!

Karen, Katie and Stephanie

MYTH-BUSTING THE REAL ESTATE NEWS

Welcome To 2024!  There is a lot of information floating around out there that is either in conflict from one day to the next, wishful thinking, or just plain wrong information.  We are here to inform you of what is happening in the real estate market today, and provide real up to date information.

Recession?  Nope!  Employment is too strong, and unemployment is still relatively low.  This is going to provide what economists call a “soft landing” for the country, unless we have an unforeseen catastrophe.  If we do enter recession, it will be very mild.

Wave of Foreclosures?  No way!  Homeowners have far too much equity to go into foreclosure.  Should a homeowner lose their job, and be unable to pay their mortgage (although there are still lots of jobs out there) they can sell and retain their equity before they might go into a foreclosure situation.

It's Too Hard to Qualify?   Although rates are higher than most of 2023, they have begun to come down.  At the same time there are more programs to make it easier for self-employed borrowers to qualify without providing tax returns.  Minimum down payments have been reduced for some loan programs, and there are many DPA (Down Payment Assistance) programs out there.  It has been a full-document environment for so long, there is nothing more difficult about today’s lending environment.  Both FHA and conventional programs are pretty liberal when it comes to debt-to-income ratios.  And, gift funds are always allowed to help with down payment.

Real Estate Crash?  No Way! Since the major “Meltdown” of 2008 – 2010 many things in the lending industry have changed.  Foremost of these is that virtually all homeowners who bought after the Meltdown qualified for real on paper for their loan.  And, today they have an absolute TON of equity in their home.  The last and biggest crash in 2008 was precipitated by an enormous number of “liar loans” where there was no income documentation required.  Those loans were packaged and sold to pension funds all over the world as “AAA” paper mortgages.  When they began to fail, the domino effect took over.  It was devasting for many people both in and out of the RE industry.  It absolutely can’t happen again with the safeguards now in place.

Home Prices will Drop? Prices have to come down, right?  Not in most areas of California.  We are uniquely insulated from major price fluctuations due to location, location, location...especially the closer to the Coast you are.  Most in the industry believe that as soon as rates begin to normalize into the low 6’s and 5’s, all the prospective buyers sitting on the sidelines will come out in droves, creating a frenzy of buying and bidding wars.

You Should Wait for rates to come down!  This is one of our favorites. The Cost of Waiting is enormous as you miss out on property appreciation and equity buildup through amortization (principal paydown).  Homeowners build wealth through real estate ownership. If you wait for five years on an $850K purchase you lose $275K. YES.  $275,000.  The interest rate is not as important as the price of the home.  Regarding prices, see above.

We hope all this helps you to see through the barrage of non-information coming your way.  We look forward to a productive 2024 for all!

Happy New Year from The Card Team!   

Karen, Katie, Stephanie

YEAR END REFLECTIONS - GOOD RIDDANCE 2023!

Well, what a year we’ve had!  As 2023 winds up, we are glad to see her in the rear view mirror!  2024 should bring lower rates and more inventory for home buyers to choose from! 

MARKET AND RATES

While the volume of home sales hit a record low this year, prices have continued to rise in most of Southern California.  If you are planning a home purchase, we strongly recommend that you move sooner than later.  We will experience a buying frenzy as soon as rates get a bit lower (they have already softened in the last month) and buyers will come off the sidelines in droves.  With lower rates, more homeowners will list their homes.  One might think more homes on the market would mean prices will drop.  But, there is so much pent up demand there is no indication that home prices will come down.  Don’t delay!

A REAL STORY  

In the last week, two different clients called us, ready to make an offer on a property.  They had gone to an open house, and loved the home.  However, in both cases, they were not yet pre-approved.  We had not had time to collect data and strategize with them.   By the time they provided us the documentation required (income and asset information primarily) so we could pull a credit report and run automated underwriting, the home was already in escrow and pending close.  Get Pre-Approved ahead of time!  Don’t delay and miss out on your dream home!  We work with some buyers over a year to prep ahead of time.

GOOD NEWS FOR 2-4 UNITS

Until last month, buyers or owners of 2-4 units needed to have a minimum of 15% down or more.  The Agencies (FNMA and FREDDIE) have reduced the minimum down payment required for 2-4 unit properties to 5%, so long as one of the units is owner-occupied.  This is fabulous news.  Remember, you will receive credit for 75% of the imputed rental income for the other units, so this actually helps qualify for a purchase!!

NEW INCREASED CONFORMING LOAN LIMITS

Conforming loans meet FNMA and FHLMC guidelines.  These guidelines are more lenient vs. Jumbo loan programs, so the rise in the loan limits is good news.  Many counties throughout California have different loan limits-- so we always need to check, depending on property address. 

$1,149,825 – LA and Orange County; San Diego is slightly lower.

$766,550 – Riverside and San Bernardino

TAX RETURN REMINDER

Please don’t file your federal returns for 2023 until we can review them, if you plan to buy or refi next year.  This can make or break a successful transaction.

MERRY CHRISTMAS and HAPPY HANNUKAH TO ALL.  REMEMBER TO BE SAFE, BE KIND, AND CHERISH YOUR LOVED ONES.  WE LOST A DEAR FRIEND THIS MONTH.

As always call us with any questions or concerns you may have.

Karen, Katie and Stephanie

TRICKS, TREATS AND TURKEY!

Well, that was fast!  Halloween has come and gone, and daylight savings is over.  Personally, I dislike the darkness in the late afternoon.  Time to get out my light therapy lamp! 

INTEREST RATES

Rates have come down a bit over the past week, a welcome relief.  They are back down towards the mid-7’s but as always, the rate you receive is dependent on a number of factors. Why the downward trend?  Although the economy is still chugging along, new jobs numbers were lower than expected and unemployment figures are up.  We see consumer spending on the rise coupled with higher consumer credit use, and savings rates down.  Please stop discretionary spending so inflation can slow!  😊

The Fed did not raise their rate this month but has left the door open to a future increase...

HOME VALUES

Here in Southern California, along with most of the country, home prices are still rising due to the low inventory nationwide.  Be assured that an investment in real estate in Orange County is a solid investment for future growth.  Although rates will come down further at some point, home prices will not.  Buy now, Refi later is the Mantra of lenders and realtors alike.  Marry the Home, Date the Rate!

ATTENTION VETERANS!

Both VA loans and CalVet loans offer lower interest rates and up to 100% financing of the purchase price.  The CalVET program has rates lower than anything out in the market today, plus they offer down payment/closing costs assistance with a “silent second” that carries no payment for the first ten years.  We salute our Veterans on Veteran’s Day this November 11^th.  Thank you for your service!

ACCESS EQUIITY WITHOUT TOUCHING YOUR LOW-RATE MORTGAGE

Almost every day we hear from clients who want to access cash out of their home without touching their low-rate mortgage.  We are here to help!  You can use a personal loan to quickly access cash by clicking here:  Personal loan link

You can also access cash using a HELOC (Home Equity Line of Credit) and these come in floating rate lines or fixed rate loans.  Your choice depends on your needs.  We have programs available to assist you, so reach out!

Last but not least, you can access equity with a Reverse 2^nd Mortgage.  As an example, your home is now worth  $1.5M.  Assuming  you are age 70, and your current loan balance is $350,000, you can access up to $200,000 in a reverse loan in 2^nd position with no payment required.  These programs come in a few different setups.  One requires interest only payments for ten years, and then converts to no payment required.  The other is standard, with no payment from the get-go. 

THANKSGIVING

This is the time of year when we reflect on all that we have to be grateful for.  With all the turmoil in the world, we are exceedingly lucky to live in such a beautiful and relatively peaceful place.  From our Team to your family, we wish you a fabulous holiday with your family.

ADVERSITY, OPPORTUNITY AND FAST CASH!

 

MARKET UPDATE - ADVERSITY

The latest news for multi-family housing is developers have slowed/stopped new construction.  This is primarily due to higher interest rates coupled with greater difficulty qualifying for loans.  This will translate into higher rents, particularly in the coastal areas of California where housing is already in short supply and high demand.

Translation:  Prospective buyers should not wait for rates or prices to come down, as neither is likely in the next 12 months.  No one anticipates home values to decrease.

OPPORTUNITIES

We are offering a personal loan program – NOT a Mortgage loan – for auto loans, remodels, swimming pools, debt consolidation, recreation and more.  This is not recorded on your home and has no effect on the low rate first mortgage most of our clients have. The turn time on these loans is extremely short, even overnight, and offers a quick and easy way to access fast cash.

Loan amounts can vary from $5,000 to $100,000.  Loans are underwritten based on income, assets, and credit.  The process is completely digital and there are no up-front fees or prepayment penalties.

Click here for the link to a quick qualification process:  Personal Loan Link

REMINDERS

Real estate taxes are coming due, and must be paid by December 10^th to avoid penalties  The second half taxes are due by April 10th.  Such great timing for Christmas and tax time, huh?

Self-employed borrowers should have their taxes reviewed by us prior to filing if they are considering making a home purchase or refinance in the next two years.  Writing off too many expenses can kill a home purchase or refi, unless you want to use a bank statement loan which carries a higher rate.

PERSONAL UPDATES

I’m writing this from Madera (just north of Fresno)  where I am temporarily staying with my sister who suffered a stroke.  My sister lives alone and we were extremely lucky her daughter sounded the alarm when she could not contact her one morning. 

She is improving daily, and we expect a full recovery.  This has been a big wakeup call and reminder to be grateful every day, keep your loved ones close, always do your best and be kind to all.  And, take good care of your health.

As always, call us with any questions or concerns.