Is Your Home Under Water? New FHA Refi might help!!!

 

So many home owners owe more than their home is worth (under water).  Some have tried to modify their loan, short sale, refinance and have run into a frustrating brick wall. 

Well here is a new alternative.  FHA has a new loan that will allow refinancing for homes under water.   They do have very specific requirement but it is worth a shot.  Please read the following article from the Sunday September 5, 2010 S.F. Chronicle written by Kathleen Pender in her Net worth column. Please do not hesitate to contact me for FHA approved lenders. lee@leesellsmore.com or 877-Lee-Sells

KATHLEEN PENDER
September 5, 2010

S.F. Chronicle
Net Worth

FHA to offer short refis

On Tuesday, the government will launch yet another program for homeowners who need help with their mortgages.
This one will let certain borrowers who are current on their payments and owe more than their homes are worth refinance into a new mortgage guaranteed by the Federal Housing Administration, but only if the owner of their first mortgage agrees to reduce the principal balance by at least 10 percent.
    It’s called the FHA short refi program. Instead of selling a home for less than the outstanding debt (a short sale), the homeowner refinances for less than the outstanding debt.
   Like the government’s other mortgage modification and refinance programs, this new one is voluntary on the part of lenders and servicers and has lots of restrictions. These factors are likely to limit its reach.
Some of the new rules: 
    The owner must use the home as a primary residence, be current on payments, be underwater (owe more than the home is worth), have a FICO score of at least 500 and meet certain debt-to-income ratios.
The existing loan can not be an FHA loan. It does not have to be owned or backed by Fannie Mae or Freddie Mac, although it can be.

   The homeowner must qualify for the new loan under standard FHA underwriting requirements. The new FHA loan can be fixed-rate or adjustable.
    The new loan balance must be less than FHA limits. In most Bay Area counties, the limit this year is $729,750 for a single-family home. To look up the limit in your county, see links.sfgate.com/ZKFV.
      The borrower’s first-mortgage holder must agree to write off at least 10 percent of the principal balance, bringing it to no more than 97.75 percent of the property’s market value. 
     If there is a second mortgage, its owner must agree to subordinate it to the new FHA loan. Also, the balance of the new first and second mortgage combined can not exceed 115 percent of the home’s market value. That may require the second-mortgage balance to be reduced, perhaps to zero.
   The government is providing incentives to owners and servicers (which are often the same bank) to reduce the balance on second mortgages. The servicer can receive $500 per loan. The owner can get 6 to 21 cents for every dollar the balance is reduced.
    The money for these payments is coming from TARP, the Troubled Assets Relief Program.
Second-mortgage holders might agree to this deal if they think the homeowner is likely to do a short sale or go into foreclosure, in which case they might get zero.

Will lenders agree?
The program is not making payments to first-mortgage holders, who must agree to accept less than 100 percent of what they are owed so the homeowner can refinance into an FHA loan.
    But some might agree to it if they think it will net them more than a foreclosure.
“There are a bunch of costs in a foreclosure you don’t have in a refi,” such as attorneys’ fees, maintaining the vacant home and paying an agent to sell it, says Diane Thompson, an attorney with the National Consumer Law Center.
“Investors have been asking for a short refi program for at least two years,” she says.
“One big concern they have is that losses are being hidden or delayed.”
      Some investors might prefer taking a loss now, rather than waiting and having the loan go into foreclosure or into a modification that fails.
      Most home mortgages were put into pools and the cash flows (mortgage payments) were divided up and sold to investors as securities. The highest-rated securities get paid first, the lowest-rated get paid last.
       In a short refi, investors who own the top-rated securities could get back all their investment. Owners of lowerrated securities could take a loss, but it might be less than what they would lose in a foreclosure.
A short refi “may be a way for (lenders) to bite the bullet and take the loss now, especially in markets that are continuing to decline in value,” says Rick Harper, director of housing with the Consumer Credit Counseling Service of San Francisco.
      Borrowers who want a short refi should contact their loan servicer. If that’s not fruitful, they can refinance through any FHA-approved lender, although the original servicer still has to approve the refi.

To learn more about short refis, see links.sfgate.com/ ZKFW.
Other refi options
The short refi program probably won’t help borrowers who are barely underwater and can afford their payments.
“If (lenders) don’t think the customer is in danger of imminent default, they may not be willing to write down the principal balance,” says Vicki Bott, a deputy assistant secretary with the U.S. Department of Housing and Urban Development.
It also won’t help borrowers who are not underwater, but who cannot refinance into a Fannie or Freddie loan because their loan-to-value ratio exceeds 80 percent. These borrowers might be able to refinance into a standard FHA mortgage, which allows loan-to-value ratios of up to 97 percent. Rates and closing costs are competitive with conventional mortgages, although FHA loans require mortgage insurance. For more, see links.sfgate.com/ZKFX.
Borrowers who are underwater but can’t get a short refi might qualify for the Home Affordable Refinance Program, but only if their loan is owned or backed by Fannie or Freddie.
Under this program, a borrower can refinance into a new Fannie or Freddie loan for up to 125 percent of the home’s market value, although not all lenders will go that high.
There is no principal reduction in this program.
For more, see links.sfgate.
com/ZHOC.
To investigate these and other options, including mortgage modifications (in which a lender changes the terms of an existing loan), contact a HUD approved mortgage counselor.
To find one, call (800) 569-4287 or go to links.sfgate.com/ ZEVN.
Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at kpender@sfchronicle.com. Read her blog at sfgate.com/blogs/pender.
“Investors have been asking for a short refi program for at least two years. One big concern they have is that losses are being hidden or delayed.”
Diane Thompson, National Consumer Law Center

Is Your Home Under Water? New FHA Refi might help!!!

To some Low Interest Rates are Better than the IPhone 4

Low interest rates also have apps. 30 yr., 40 yr., 15 yr., conforming, adjustable, 1 yr, 5 yr jumbo and more. Oh they are getting the best reception in years.

You may not see the lines out the door but look at the stack of files on the loan agents’ desks. We are in record low territory. Rates have never been this low in the 50 years of record keeping. How low? Below 5% fixed for the next 30 years. 3.75 fixed for the next 15 years. That’s how low. If you are buying you must understand these are not normal times. Take advantage. Jump in. What other industry will fix their price for the next 30 years. Ask the gas station on the corner if you would commit to buying your gas there for the next 30 years will they hold today’s price.

Homeowners, no matter when you re-financed last review the situation again with your loan agent. If you do not have one I can recommend some I work with.

A note to both homeowners and home buyers: If you are comparing rates you must compare at the same time. Interest rates fluctuate throughout the day and you want to be sure you are comparing apples to apples. You want to know what the fees will be. Also I strongly suggest you work with a person you have worked with previously or you know someone who has. The reason being a lender can quote any rate in a conversation but it is another issue to honor when reality comes. Also I suggest going with someone that only does loans. The lending rules, programs and policies are changing daily. One must be in the market continuously to be on top of it all. Going in and speaking to your favorite bank teller is not recommended. Call me and I will give you some names.

In today’s market if you put down 20% or have 20% in equity you will get the best rates. Interest rates break at $417,000 and below, at $729,750, and then again over the $729,750 each bank has their own policy. You can obtain financing with only 3.5% down or in equity. Yes you have to pay a little premium but that is nothing as compared if interest rates increase. The average interest rate over the last 25 years is about 8 %. Right now it is like the day after Christmas sale. It is almost half price. It was not that long ago that we had 14-18% interest. Try it! You will like it!

When refinancing you want to consider how long you will live in the home, how much of your present payment is going towards principal and how much will go with your new payment. It used to be if you can lower your rate by 2% then it is worth the while to refinance. I don’t think there is any real number that says you should refinance. It is a personal choice based on your finances and your goals. I suggest multiplying your old payment by the remaining term and or how much longer you think you will be in your home. Compare that cost vs. the cost at your new rate. Then compare your remaining balance. Many home buyers are putting in cash to buy the loan down to get the lowest rates and to have 20% equity. Many are re-financing into 15 year loans. Keeping the payments about the same but paying off the home in half the time. Some are financing and taking money out to buy investment property. This is an opportunity not to pass up. Talk to your accountant, real estate agent, mortgage person, financial advisor and or fortune teller.

Homebuyers don’t realize how good it is today. Let me quickly review some numbers. If you qualified last year for a $400,000 loan when rates were 5.5%, today you can qualify for $450,000 and have the same payment. Today a $400,000 loan will cost about $2000 a month. Last year that same loan wild cost almost $300 more. Don’t wait any longer. We in the business are surprised how low rates are and how long they have been low. My crystal ball tells me rates will increase but it won’t commit to when. Buying a home is an exciting and nerve racking event. With a good team (real estate agent, lender, and inspectors) supporting you we can help alleviate a lot of the stress. Call me toll free at 877-Lee-Sells and I will refer you to the good lenders I work with.

To read more click on: http://articles.sfgate.com/2010-06-24/business/21925746_1_mortgage-rates-track-michael-fratantoni-average-rate

www.leesellsmore.com

To some Low Interest Rates are Better than the IPhone 4

Prudential Ca. Realty Gives Locally

Prudential California Realty is more than just Real Estate Company. We in the San Bruno office are a group of very giving and caring local people with lots of knowledge and experience in Real Estate. A portion of each transaction is donated to Shelter Network in San Mateo, each year we adopt a family from San Bruno, South San Francisco or Millbrae for Christmas, one of our agents feeds the homeless monthly, another agent is continuously baking cookies to raise money for Cancer, others walk miles for their causes and we all graciously chip in. It is an honor to work with people who care.

Prudential California Realty recently awarded grants to local teachers from Brisbane, South San Francisco and Daly City. With school fiancés drastically cut this year I am sure it is greatly appreciated. These grants are awarded to teacher whom made an exceptional contribution to their students.

My wife is a teacher and I know that most teachers contribute to their students. Unfortunately we can’t reward all of them. I will say all teachers are appreciated.
This year the following teachers were awarded grants:
Brisbane Lynn Howe Brisbane Elem.
Daly City Jane Chang Junipera Serra
SSF Feleciana Stevenson El Camino High
Ray Galela El Camino High
Meg Milana SSF High
Joslyn Negherbon Westborough Mid.
Cheri Howard Westborough Mid.
Congratulations to the winners and Thank You to all teachers.

When thinking about Real Estate contact the Local company that gives back locally.

Click or copy and paste the link to read more. http://www.prurealty.com/ssc/company_information/press_releases/Ed%20Foundation%20Release%20-%20San%20Mateo%20County%20-%202010.pdf

Prudential Ca. Realty Gives Locally

Baseball's "Field of Dreams" for Sale

Yes! The baseball Diamond that Universal Studios built in
Dyersville, Iowa is for sale. Please let me know if you have interest. I would love to represent you in the negotiations. I can help you find a lender and possibly a moving company to more the field to San Mateo County. That would add value to our homes.

Follow the link
http://www.telegraph.co.uk/culture/film/film-news/7721998/Field-of-Dreams-for-sale.html

www.leesellsmore.com

Baseball's "Field of Dreams" for Sale

Remodeling? Don't do it to resell!

Midrange Remodeling Costs Vs. Payback from Remodeling Magazine
http://www.remodeling.hw.net/2009/costvsvalue/division/pacific/city/san-francisco--ca.aspx

Job Cost	Resale Value	Cost Recouped	Project	Job Cost	Resale Value	Cost Recouped	Change vs.. 2008-09
$13,114	$10,674	81.4%	Siding Replacement (vinyl)	$10,607	$8,476	79.9%
$12,760	$11,328	88.8%	Window Replacement (vinyl)	$10,728	$8,217	76.6%
$13,804	$12,175	88.2%	Window Replacement (wood)	$11,700	$9,044	77.3%
$47,052	$32,057	68.1%	Bathroom Addition	$39,046	$23,233	59.5%
$18,864	$14,517	77.0%	Bathroom Remodel	$16,142	$11,454	71.0%
$16,956	$13,922	82.1%	Deck Addition (composite)	$15,373	$10,904	70.9%
$12,838	$11,744	91.5%	Deck Addition (wood)	$10,634	$8,573	80.6%
$3,835	$2,930	76.4%	Entry Door Replacement (fiberglass)	$3,490	$2,275	65.2%
$1,353	$1,732	128.0%	Entry Door Replacement (steel)	$1,172	$1,470	128.9%
$100,023	$73,551	73.5%	Family Room Addition	$82,756	$54,051	65.3%
$83,463	$45,245	54.2%	Sunroom Addition	$73,167	$37,118	50.7%
$184,839	$143,073	77.4%	Two-Story Addition	$156,309	$107,286	68.6%
$63,803	$53,923	84.5%	Major Kitchen Remodel	$57,215	$41,260	72.1%
$124,579	$90,616	72.7%	Master Suite Addition	$103,696	$67,578	65.2%
$23,210	$21,991	94.8%	Minor Kitchen Remodel	$21,411	$16,773	78.3%
$24,712	$18,829	76.2%	Roofing Replacement	$19,731	$13,133	66.6%

Remodeling? Don't do it to resell!

Bay Area Prices up 20%????

The headline reads Prices Up 20%.

What do these numbers mean? I am sorry to tell you, your home did not increase 20%. Buyers don’t get scared off and sellers don’t put your home on the market for 20% more than you paid last year.

These numbers are totally misleading. Prices are increasing in some areas and in some price points but not by 20%. Possibly 3-5%.

You can make numbers do whatever you want. First you need to know if the numbers are for Single Family homes or Condominiums or both. Then are they comparing it to the same month in a previous year or just the previous month. Are they talking about median price or average price. The Median price is the price that is in the middle; there are an equal number of transactions above and below. These numbers are very general. It is interesting and might give a slight indication as to the market in the country, in your state, in your city but Real Estate is very localized down to the neighborhood in the city. If you want to know the value of your home call your Real Estate consultant.

An example of Median prices:

220,000
350,000
480,000
490,000
510,000

AVER IS 410,000

MEDIAN =480,000

The numbers recently announced are really telling us that higher priced homes are beginning to sell. In San Mateo County 32% of Single Family homes sold in Feb. 2009 were under $500,000 that dropped drastically to 13% in 2010. Homes over $500,000 increased from 50% to 59% from Feb. 09 to Feb. 10, driving the median price up. Homes over $1,000,000 increased 11% from 17% to 28%.

The number that shocks me is that over 27% of all sales in the nine county Bay Area were paid in cash. That is with a median price of $354,000. Many people are taking money from the stock market and or IRA account and equity from their homes. Cash is King.

Please look at the numbers below. Inventory has decreased more than 10%, sales have increased almost 10% and the days on market has decreased a dramatic 25%. This is for single family homes listed on the MLS. All the numbers are indicating good things ahead.

San Mateo Cty. Inventory Sales DOM
Feb. 2009 1576 208 83
Feb. 2010 1346 228 64

http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay100318.aspx

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/03/19/BUG81CHVGJ.DTL

Bay Area Prices up 20%????

Good News! Good Bay Area Real Estate News!!!

A lot of positive bills, thoughts and activities have been happening on the Bay Area Real Estate Front. I have been trying to write this for a while. Each time I sit down to write there is more I have to add to it. That is a good problem. So exciting! Enjoy the Good News.

Home Buyer’s Delight
You can still get the federal Home Buyer Credit of $8000 for the first time buyer or $6500 for the move up buyer. You must be in contract by the end of April and close by the end of June.
For additional information: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Because California Home Buyers are special Governor Schwarzenegger signed into law a State credit for home buyers. I personally think this program is great. It helps many people purchase their first home and it puts people to work. A Win-Win!!!
Under the provisions, the bill:

• Provides a 5% tax credit, up to a $10,000 limit, to all buyers of new, never-occupied homes.
• Provides a 5% tax credit, up to a $10,000 limit, to first-time buyers of existing homes.
• Sets aside $100 million for each program, for a total of $200 million.
• Requires buyers to close escrow between May 1 and Dec. 31 to qualify. New-home buyers have until Dec. 31 to sign a purchase contract, and then must close escrow by Aug. 16, 2011.
• Requires buyers to live in the home for at least two years.
• Provides for the tax credit to be paid in thirds over a three-year period.
• Sets no income limitations on buyers.
• Requires buyers to repay the tax if they fail to live in the home for two years or fail to close escrow on a new home by Aug. 16, 2011.

For additional information: http://gov.ca.gov/

http://www.mercurynews.com/news/ci_14758523?nclick_check=1

Bay Area Home prices increase 20%
The number of home sales in the 9 County Bay Area were down for Feb. 2010 as compared to 2009 but the median home price increased more than 20%. I wish I can tell you that your home went up 20%. What I can say is that the higher priced homes are beginning to sell after months of being stagnant.
For more details:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/03/19/BUG81CHVGJ.DTL

Having trouble making payments? Have no fear help is finally on the way.

Bank of America has announced a program for a select group of Countrywide loans where they will forgive the principal. Yea! Let’s hope others will follow.
Please click on the link for the details. http://www.bankrate.com/finance/mortgages/bank-of-america-offers-home-loan-forgiveness-1.aspx

HAFA –Home Affordable Foreclosure Alternatives
The federal government has recently announced a new program to take effect April 1 2010. It will make the loan modification and short sale process easier and more systemized.
For additional information: http://www.realtor.org/government_affairs/short_sales_hafa

Just yesterday Obama announced and even newer program focusing on people owing more than their home is worth, people underemployed or unemployed. Stay tuned. The details of that are not out yet.

All these programs are great but my solution I think is more of a Win-Win. I propose to reduce the principal to market value and then the bank and owner should share in any equity build up when the home is sold. Under the Lee’s Act, the homeowner stays in their home, we maintain home pricing by putting a stop the deluge of short sales and foreclosures and the banks and homeowners have a chance to make some money down the road. Everyone wins; Homeowner, bank and neighbors by stabilizing home prices and avoiding blight!

Tax Relief for Debt Forgiveness
State Tax Relief for those who incurred debt forgiveness from a lender through the loss of their homes to foreclosures and or short sales is still up in the air. I believe the IRS is ok with it until 2014 but California is still up in the air. Governor Schwarzenegger is asking for a proposal before April 15.
Click the link for additional information. http://www.sacbee.com/2010/03/16/2609494/california-tax-relief-for-forgiven.html

Homeowner Savings
Are you considering purchasing a new appliance. The California’s “Cash for Appliances” begins on Earth day, April 22, 2010 and runs only for a month. Purchase a new energy efficient appliance and recycle your old one and you are eligible to get up to $100 per appliance.
The program highlights are:
Purchases starting Apr 22, 2010 until May 23, 2010

· Claim within 30 days of purchase

· Claim by Jun 22, 2010

• May be combined with other rebates
• Must recycle existing appliance
• State resident

Click on the link for the real details. http://www.energy.ca.gov/recovery/energystar.html or http://www.kcra.com/cash-for-appliances/21363879/detail.html

and More Energy Efficient Savings:
Our federal government still offering a credit if you purchase an energy-efficient product or renewable energy system for your home. You may be eligible for a federal tax credit if you replace water heaters, solar energy, windows, doors, heating and cooling systems and more.
You will find an overview of the federal tax credits for energy efficiency by clicking on the link: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Capital Gains Tax
If congress does not act Capital Gains tax will be increasing by 5% in 2011. They could propose to increase it even more. Due to the economy it is doubtful for them to maintain the current capital gains rate OF 15%. If you are considering selling an investment property today might be the right day. Call me toll free at 877-Lee-Sells. http://money.cnn.com/2010/02/01/pf/taxes/obama_budget_tax_changes/index.htm

So there you have it in a nut shell. Hope you found it enjoyable and helpful. Please, I encourage you to share your good news, comments, updates and questions. If clicking on the links do not work please copy and paste.

Please visit me at: www.leesellsmore.com

Good News! Good Bay Area Real Estate News!!!