What Should I Look for in a Neighborhood?
Posted by Pam & Joanna | Leave A Comment »
Some neighborhoods speak loud and clear at first glance; the quality of life is apparent in the streets, parks, buildings, homes and yards.
You get a feel for it (either for or against) just by looking.
A real estate agent can, of course, fill you in on community details not so obvious at first glance:
- Where schools, supermarkets, libraries, hospitals, places of worship, fire and police stations are located.
- What zoning regulations apply.
- What community services are available.
- What construction plans are in the offing.
- What shifts in transportation facilities are occurring.
- How home values have been affected by foreclosures.
- What taxes prevail.For a more intimate impression,you should walk around a neighborhood that looks attractive to you. Visit the schools your children will attend to confirm district boundaries and comparisons with other other schools.
Talk with local people (ask about commuting schedules and costs), in shops (chat about where the best stores are), in parks (get folks talking about recreational programs), in front yards (ask what they like and dislike about the neighborhood).
You might take photos as you tour different locales. They’ll help you later when you want to keep different streets and homes seperate in your mind. Also take notes to later compare, especially addresses and prices.
Inspecting a neighborhood is as necessary as inspecting the home you may buy. An old real estate maxim says. “The best time to think about selling your home is when you’re buying it.” That’s because location will be a prime factor influencing future buyers when it comes time to sell your home.
Information provided by California Title Company and contributed to this article.
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FHA Update: Down Payment And Mortgage Insurance
Posted by Kevin Kueneke | Currently 1 Comment »
We finally have some clarification regarding the effective dates of the new Federal Housing Administration (FHA) down payment requirement as well as the new FHA Upfront and Monthly Mortgage Insurance Premiums.
As many of you will remember, FHA is increasing their minimum investment from the buyer from 3.0% to 3.5%. There were rumors that this was going to be effective October 1st, 2008. We now know that January 1, 2009, is the effective date for the down payment increase. 
FHA mortgage insurance, on the other hand, is changing effective October 1, 2008.
For purchase transactions, FHA has both a onetime upfront mortgage insurance premium (UFMIP) as well as monthly mortgage insurance (MIP), except for loan terms less than 15 years combined with a down payment of 10% or more.
The following is a breakdown of the new mortgage insurance for purchase money transactions with FHA case numbers assigned on or after October 1, 2008:
Loan Term > 15 Years
Loan to Value Upfront Premium Monthly Rate
<=95.00% 1.75 0.500
> 95.00% 1.75 0.550
Loan Term < 15 Years
Loan to Value Upfront Premium Monthly Rate
<=90.00% 1.75 None
> 90.00% 1.75 0.250
So how do these changes affect the typical home buyer? Most FHA loans fall into the category of less than 5% down payment and a loan term greater than 15 years. This makes sense since most first-time home buyers are looking for the least amount of down payment and the lowest monthly payment.
The old upfront premium was 1.5% of the base loan amount (base loan calculated using sales price minus down payment for this example, the actual calculation is slightly more complicated), and the old monthly insurance amount was 0.50% of the base loan amount divided by twelve months. Let’s look at a property with a sales price of $350,000:
Base Loan Amount: $339,500
Old Monthly Mortgage Insurance: $141.46
New Monthly Mortgage Insurance: $155.62
Difference of roughly $14.16 per month.
Old Upfront Mortgage Insurance Premium: $5,092.50 (of which $5,050 can be financed)
New Upfront Mortgage Insurance Premium: $5,941.25 (of which $5,900 can be financed)
If these amounts are financed, the difference in the payment at today’s 30 year fixed rate of 5.875% would be $5.03 per month. Add that to the slightly higher monthly mortgage insurance, and you are looking at just over $19 more per month with the new numbers.
An additional $19 per month is still relatively small considering FHA’s more lenient credit guidelines and down payment requirements. FHA is more strict though regarding the condition of the property versus typical conventional financing, helping to assure that the property is in a reasonable and safe condition.
With the new, higher FHA loan limits, FHA is taking more risk. As with any insurance whether it be auto, home, or mortgage, higher risk goes hand in hand with higher premiums. I think an extra $19 per month is worth paying to keep this program around.
Do you have a specific example you would like to discuss? Please feel free to call me at (760)500-1919 or email me: Kevin@MyCWMtg.com
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A Change In A Buyer’s Expectations
Posted by Kevin Kueneke | Leave A Comment »
The home buying landscape is significantly different than this time last year. For those of us in the industry, this is obvious.
The media has mentioned this in countless articles and news broadcasts, but there are still many homeowners looking to buy a new home that expect to get the same loan they got when they purchased their last home. They expect, and in some cases demand, a No-Documentation loan or a No Income Verification loan with little money down. 
These loans were so easily attainable that many people forgot what “real” qualifying is like. Questions like, “What do you mean you want to see a paystub?” or, “My tax returns… you need every page?” are becoming quite common.
However, I had a very refreshing meeting the other day with a new client. Refreshing in the sense that the client understood that lending guidelines have actually changed over the last 12-18 months…but it took a little time for it to sink in.
We first spoke on the phone two weeks ago and at that time he was determined to buy a home that was outside of his full-documentation price range, but well within his “stated income” or “no doc” price range of years past. He is a 100% commission employee with significantly lower income than two years ago, and has about 15% down payment (he is selling his current home and is fortunate enough to have equity). However, his loan amount will still be over $417,000 (but under $697,500 - the current Agency Jumbo limit in San Diego County) and his once high credit scores are now considered average.
Two weeks ago, he sounded obviously frustrated by the fact that his No-Doc loan was no longer available. I explained that lending guidelines have changed since the last time he purchased a home and options are far more limited, especially with a down payment of less than 20%. He was still in the year 2006, the year where anyone with a pulse could qualify for a home loan.
He then left for a week-long family vacation. It took another few days for us to finally meet, during which time I encouraged him to call several other lenders, including his servicing lender. They all told him the same thing…lending has changed and banks are stricter than before and that his ocean view dream home is outside of his budget. But they forgot to tell him how much home he can afford. 
We ran the numbers and found that if he was willing to live a little further away from the ocean, that he could still afford a nice home. Nicer than what he has now but for less money. He even said that his current payments are a little steep and that he always thought it was strange that he was able to purchase his last home even though he did not have a job at the time.
If the mortage market had not crashed and his No-Doc loan was still available, this client admittedly would have purchased a more expensive, more unaffordable home like so many others have. Fortunately, he was forced to re-evaluate. He was forced to change his expectations. And he was willing to do so.
Any questions or comments? Please feel free to call me at (760)500-1919 or email me: Kevin@MyCWMtg.com
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Do You Have Your Loan Emergency Kit Ready?
Posted by Kevin Kueneke | Leave A Comment »
I was reading an article by Laura Rowley on Yahoo Finance today regarding the importance of being prepared for potential natural disasters. It reminded me that many people that live in Southern California have some sort of emergency disaster kit stashed away in their garage. A typical kit may include drinking water, some can goods, flashlight, batteries, candles, medications, etc. 
As a homebuyer, you should prepare your loan paperwork the same way and have all items ready in case of a loan emergency. Even though you provided your lender with the items necessary to process your loan, it is a good idea to keep a “shadow file” or Loan Emergency Kit just in case something gets misplaced…or the copier eats the only copy your lender had of your last paystub, W-2, you name it.
That credit card late payment or mortgage late payment you had removed last year might show up again. Do you have the letter from the creditor handy? What about your landlord from a year ago. Do you still know how to contact them?
Here are some other items to keep in your Loan Emergency Kit:
- Proof judgments and/or tax liens have been paid.
- Copy of divorce decree and/or child support order.
- Paperwork regarding length of time a student loan is deferred.
- If retired, awards letters for social security or pensions.
- Quarterly asset statements (401k’s for example).
- Receipts or canceled checks for rent payments. More and more lenders are requiring this type of proof of payment if the landlord is a private individual.
- Bankruptcy papers including list of creditors and the discharge paper. If your lender did not ask for these at the beginning of the process, chance are that they will need them at the end.
- Tax returns with all schedules.
- W-2’s.
- Paystubs – save them all until the deal is closed.
Getting a call at the 11th hour from your lender requesting something you have already provided can be extremely frustrating. Sure, you could stomp your feet in anger and really give your lender a piece of your mind. You could spend a few extra days thinking of ways to cause them the same emotional stress that they are causing you. Or, you could just re-fax or re-email the missing item. Remember, you are dealing with people and all people, including you, make mistakes.
Is there any excuse for these occurrences? Of course not. But underwriters are going over every file with a fine tooth comb these days and having your information at the tip of your fingers can iron out a small wrinkle before it becomes a giant speedbump.
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