Real Estate & Financing Blog

Due to current depreciating home values San Diego County the full-doc Fannie Mae programs such as MyCommunity and Flex100 loan-to-value has been reduced from 100 percent loan-to-value to 95 percent maximum loan-to-value.

This means that all buyers will have to bring in at least five percent down payment. There are no longer any 100% financing options available. Each program has different guidelines regarding the source of down-payment. Some programs allow for gift funds from parents or other relatives.

Buyers still have many great opportunities available and the limited financing will cause another drop in prices within the next few months. It is a great time to start saving and start working with your loan officer as soon as you start thinking of buying a home, so that you, your assets, employment, and credit history display you in the best light possible.

Please contact your loan officer with any questions, we are always here to help if you have any questions call (619) 498-8500 or send us an email at info@sdmref.com

Overall the news is not good for San Diego County. The real estate market continues to drop due to foreclosures, short sales, and the high-supply that leads to increased competition that causes Sellers to reduce sales prices. If that wasn't enough, there are only a handful of available Buyers who are struggling to find financing due to strict guidelines.

The good news: The Federal Reserve Board has cut rates an additional 0.25%, which has lowered interest rates for Buyers. In addition, for anyone planning to purchase a home there are FANTASTIC OPPORTUNITIES currently available.

It is expected that San Diego County home prices will continue to drop until late Fall 2008. In addition, prices are expected to drop an additional 30% in some areas of San Diego County. There are already homes being offered in the high $200s.

FOR SAN DIEGO COUNTY SELLERS

If you are currently offering your home for sale, there are several factors you have to watch closely. First of all be well aware of what is selling in your neighborhood. Are there a lot of for-sale signs? Are there a lot of short-sale or Lender owned properties? Second, be sure you keep your home competitive and attractive to Buyers. Third, reanalyze whether you really need to sell.

WATCH YOUR NEIGHBORHOOD CLOSELY: You must keep a close eye on all current listings and sales in your neighborhood. This is very important!!! There is a lot of competition, and if you fail to take notice of the new listing in the neighborhood it could result in you missing out on selling your home. In order to remain competitive in this market, you will have to adjust the price of your home often. It is very important to also reanalyze whether selling is still a valid and reasonable option for you, every time you have to adjust the price.

If there are a lot of Lender owed properties (REO Properties) please take note. Upon a foreclosure taking place, the Lender losses money. Then they hire an agent and put the market up for sale. Everyday the Lender has to hold onto the REO property they lose more money. They start with a low price- often the lowest new listing. Then as time progresses without the property selling, they will decrease the sales price even more--- which hurts the all Sellers drastically. This is the reason that many areas have experienced such dramatic decreases in value.

REMAIN COMPETITIVE & ATTRACTIVE: Here is the key thing to remember, there is a limited supply of Buyers! Meaning that if the Buyer finds two homes that are equal in all ways except Property A is selling for $400,000 and Property B, a Lender owed property, is selling at $350,000... the Buyer will easily select the lower priced Property B. Therefore, if you really want to sell your home you have to be ready to reduce your prices along with the Lender owed properties or at least offer plenty of incentives that REO properties do not offer.

There are many incentives that can be offered to Buyers including Seller credit to Buyer for closing costs, credit for new carpet or paint, or even a car. There is no guarantee that these incentives will be effective, but it will definitely make your property more attractive to Buyers.

A key advantage the Seller has over Lender owed properties is-- that the Seller can make the home look warm and keep the property well-maintained. Since you may still be living in the property, you can keep the grass well watered, keep the interior spotless, and offer great staging so the Buyers can visualize themselves in your home.

TIPS FOR SELLERS ON STAGING

1. De-clutter the entire home. This is a must!
2. Remove personal items. This allows Buyers to visualize their own presence in their future home.
3. Deep clean the entire home-- especially kitchens and bathrooms.
4. Use neutral colors inside and out
5. Improve the curb appeal of your home by improving landscaping.
6. Finally, remove evidence of your pet's presence by deep cleaning your carpet, making sure all rooms smell fresh & clean and limiting your pets presence in front of Buyers.

 If you would like to be added to a custom search of your neighborhood's current listings, pending sales, and sold homes please email cma@sdmref.com and we will provide you a customized search, no strings attached.

If you have any questions we can be reached at (619) 498-8500 or toll-free at (866) 498-8506

On August 31,2007 President George W. Bush announced a variety of steps that need to be taken to reform the Morgage Finance System and help families in distress keep their home.

Federal Housing Administration (FHA) Modernization

"FHASecure" a new initiative that will enable homeowners to refinance their existing mortgage, so that they may keep their homes and make their regular monthly payments.

In addition, the modernization bull currently in the Senate will provide additional opportunities for homeowner's to refinance their mortgages through the Federal Housing Administration.

The general public must continue to motivate their Congressmen and women to reform the Federal Housing Administration. Reforms must include an adjustment to the conforming loan limits in California. The median home price is California is reported by the California Association of Realtors (CAR) to be $594,260 a sales price well beyond the current comforming loan limit of $417,000. In order to make affortable, low-risk mortgages available to median and low-income borrowers, Congress must modify the loan limits to permit the use of government sponsored programs in California.

I motivate you to Contact your State Senator to ensure speedy passage of this important bill.

California Senators

Barbara Boxer            Phone (202) 224-3553                                          112 Hart Senate Office Bulding, Washington, DC 20510                          Web Form: boxer.senate.gov/contact 

Dianne Feinstein        Phone: (202) 224-3841                                       331 Hart Senate Office Building, Washington, DC 20510                        feinstein.senate.gov/public/index.cfm?FuseAction=ContactU...

Find your United States Senator:  www.senate.gov

Find your United States House Representative: www.house.gov

As many have heard on the news, radio and newspaper the current Real Estate market conditions in San Diego County are beneficial for Buyers, not necessarily Sellers.

Current Sandicor, Inc MLS statistics indicate that from January 1 through July 31 of 2007 there have been 20,208 Single Family Residences (SFR) in San Diego County placed on the market. Of those 20,208 SFRs only 10,083 (49%) properties have sold. The majority of these homes spent between 45 to 75 days on the market.

Property values vary throughout San Diego County and there are several areas which have experienced a larger decrease in value than others.

BE PREPARED!

If you are a Home Buyer entering the market, the key thing to remember is that you have a variety of choices in properties, but unless you are giving at least a 10 percent downpayment, you have to hurry. Financing is disapearing a fast rate. Be prepared with a strong credit history, good FICO Score, and pleanty of assets.

GREAT OPPORTUNITIES ARE AVAILABLE!

This is the time when you can find a real bargain out there. There are many beautiful and new homes for sale at bargain prices due to Seller hardship, foreclosures, and short-sales. BUYER BEWARE! Do not overlook the importance of obtaining home inspections, natural hazard disclosures, and all required disclosures from the Seller. Take your time to ensure your investment is secure and meets your expections & needs.

Be ready to negotiate persistently for your new home, with the help of your REALTOR you will be able to determine a good estimate of the property value. Obtaining recent comparable sales for the neighborhood you are purchasing in will help ensure that your Sales Price is the true market value of your home.  Remember it is still possible to end up paying a higher sales price even in this market, keep your calm and remember you are negotiating a big part of your future.

If you would like more information on how to negotiate a great offer in the current market please call 619-498-8500 or toll-free at 1-866-498-8506 we are happy to answer your questions or even help you in your next purchase or sell.  

Please feel free to post any questions or comments, or email us at info@sdmref.com

100% Financing continues to be available, but under strict guidelines. Documentation levels and reserves are the key to making 100% Financing a reality.

If you are planning to use 100% Financing to purchase your home it is recommended that you come in for a consultation at least two to three months prior to submitting your offer. We will discuss the following:

(1) Credit Report and FICO Score: This is one of the key factors used to determine whether you will qualify for 100% Financing. Lenders are making constant changes to their guidelines, but we will be able to help you improve your credit score and make sure that all items are being reported correctly.

(2) Assets/Reserves: We will make recommendations on how much money you should have in savings as reserves and to cover closing costs. It is important to have this money in your account at least 60 days prior to submitting the offer.

(3) Documentation Level: There are many borrowers who believe that they only qualify for stated income documentation, but upon review of their credit report we find that if they were to pay off certain debts they can use full documentation, thus obtaining a better rate and loan program.

The key in taking advantage of the all the low prices and terrific opportunities available in the current housing market are to be Financially prepared to be a homeowner. This means having a strong credit history, FICO Scores, and Assets. We can work with you to make your Loan Application the best it can be. It is important to work with professionals who understand both the Real Estate and Loan side of your purchase transaction in order to avoid losing your opportunity.

Basic Terms

Full Documentation- The Borrower will provide tax returns with all schedules, W2/1099, three months of recent pay stubs, statements for all checking and savings accounts, etc. This program is always recommended, and will provide you with the best rates available.

Stated Income- This documentation level is generally used for self-employed borrowers who have difficulty in providing evidence of income. This program may also be used for salaried/W2.

Reserves- Lenders generraly required two to six months Principal, Interest, Taxes, and Insurance (PITI) savings. These reserves are seperate from the money available to pay for closing costs.