Mortgages for More than just Spring Chickens

Seb FreyCommentary

Spring Chickens

As all of the housing forces come together, rather strange results surface from time to time. The newest is relatively unprecedented, with Americans of retirement-age taking out long-term mortgages. To read an interesting article about never being too old for a mortgage, CLICK HERE. It wasn’t so long ago that Americans would work to pay off their homes, sell them, and use the equity to downsize and buy a small home all-cash, with the remainder serving as the nest egg. Yet with equity levels taking such a hit over the last few years, homeowners have been forced to rethink the way they navigate their retirement. Interestingly, age is a protected category within the Equal Credit Opportunity Act, a federal credit law that bars credit discrimination based on race, color, relation, sex, etc. With that said, as of late mortgages have gone out to borrowers nearing up to 100 years old, and everybody in between. In order to qualify for a mortgage, borrowers must demonstrate they have income rolling in. This can include retirement income, social security, etc. While previously such income would never help borrowers to qualify for anything, today’s low values and low rates are allowing retirement-age borrowers to get in the game. There are some unique issues that seniors must take into consideration. For starters, loan approval is based on current income levels, which in the case of retirement income could change after the death of a spouse. If this happens, the loan stays but the payment may prove to no longer be manageable. … Read More

The Incredible Shrinking Housing Market

Seb FreySilicon Valley Real Estate

The Incredible Shrinking Housing Market

Some new housing data was released, revealing the incredible shrinking housing market. For starters, 31% of all homes sold in Q2 of this year were either short sales or bank-owned foreclosure sales, which together are collectively known as “distressed sales”. The percentage of overall market activity that was distress-driven actually went up from 26% year-over-year, even thought the total number of distressed properties sold went down. More about that in a moment. One finding that deserves a good long look is the discount at which distressed properties are purchased. According to these findings, REO sales and short sales, on average were purchased for 32% less than comparable non-distressed properties. 32% is no chump change, by any means. The fact that he number of distress sales has dropped off yet they have gained market share can only mean one thing; that fair-market sales have dropped off further. This is indeed the case, as non-distressed homeowners are refusing to list their homes. This is due on part to the hit that their equity has taken over the last few years, but that is merely one part of the story. Fair-market listings are being undercut on price at every turn, meaning that even if they are listed, in many cases they are less attractive to buyers and don’t make it to the closing table. This is important to note because fair-market sellers have a special role to play in any healthy housing market. In many cases, fair-market sellers sell their home, and buy another, more expensive home. The mid-high … Read More

Wise Words to Aid Home Buyers

Seb FreySilicon Valley Real Estate

Happy Buyers

Sometimes the reporting on the world of real estate gets so caught up in the rapidly changing landscape that the elements of buying and selling real estate that are most important for the public are not given the attention they deserve. Yesterday a great article in the San Jose Mercury News came out where a series of industry professionals gave wise words to aid home buyers. Since the article is basically a series of quotes, it seems most fitting to just go ahead and list our some of the best ones, one-by-one. While they are pretty self-explanatory, they are very easy to lose sight of once buyers get into the process. Jim Walton, vice president of consumer credit with MetLife Bank in Irving, Texas “There is more to home- ownership than a housing payment. Homeownership requires a commitment to a property and to a community.” “A lender can tell you the maximum mortgage you qualify for, but financial experts recommend that you determine your own upper limit for a housing payment.” “Buyers should take a disciplined approach to saving for a down payment, and then they need to be able to continue to save after they buy, for home maintenance and emergencies.” “A rent-versus-own calculator can be a good resource, but generally these will show you the maximum mortgage you qualify for at the best rates.” “Buyers need to factor in maintenance costs which can run from 1 (percent) to 4 percent of the home value per year.” Marc Schindler, a certified financial planner in Bellaire, … Read More