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

Caveat Emptor for Watsonville Investors

Seb FreySanta Cruz Real Estate

They are not looking to speculate on real estate – that’s how so many people ended up getting foreclosed on in Watsonville, and in California, and in many other places throughout our glorious but fading homeland . green_eyeshades.jpg A Speculator is someone who is placing a bet – they put some money down, and there bet is that the value of whatever they buy will go up. … These clients of mine are probably not what you would call professional real estate investors – but they want to buy real estate as if they were – and after they do buy a few properties, and if they keep with it, hey, before you know it – they will be professional investors, after all, every professional has to start somewhere. … What this means for my clients is that the amount of money they can afford to pay for a property, given their higher interest rate and lower rental rates means that they can offer less for a property than they had first thought – in order to make that 10% (or near 10%, anyway) return on their investment. … And, of course, the unemployment rate in Watsonville is reported to be at 25% – that’s huge, and I think it means a lot of people are going to be sharing housing, families living with families, rather than each family having their own individual place as I’m sure they’d prefer in many cases but owing to the weak economy cannot afford to do so at the moment.

Santa Cruz Conforming Loan Limit 2009

Seb FreySanta Cruz Real Estate

Of course, the reverse was true on the way up – ridiculously easy credit , liar loans , lax underwriting standards , and mortgage fraud – all of this played a part in the enormous run-up in prices that we in Santa Cruz enjoyed for most of the early years of this decade. Wether you are a prospective home buyer or a home owner, the role of credit is very important to you – it strongly shapes your ability to buy a home, or the price for which you will be able to sell your home. … The good news is, the conforming loan limits for 2009 will stay the same as in 2008: For Santa Cruz County, the new “high-balance” limits are: 1 unit $625,500 2 units $800,775 3 units $967,950 4 units 1,202,925 For Monterey County, we weren’t as fortunate. Here are the new limits: 1 unit $483,000 2 units $618,300 3 units $747,400 4 units $928,850 I asked the lender if a house with a legal accessory dwelling unit (aka “granny unit”) that could be rented would count as a “2 unit” property.

Billions, Trillions and a House in Santa Cruz

Seb FreySanta Cruz Real Estate

Flushing Money

I should have just sat there and watched as my hard-earned dollars evaporated, sucked it up, been a man, and lost all that cash, the price to pay for participating in our capitalist system. … So let me assure you – if you want to buy a house in Santa Cruz, and you have decent credit (at least a 580 FICO Score to qualify for an FHA loan, I believe) and you have the debt-to-income ratios required by the guidelines. … Mind you, the median price these days in the county is $585,000 (as of August), so it’s getting to the point where you can actually buy a habitable structure in a somewhat central location for that kind of bread. … That would leave you with a whopping loan of $482,500 and payments (all-in, including principal, interest, property tax, and insurance) of about $3,500 a month (roughly, approximately – and that’s before your considerable mortgage interest tax deduction ).

Santa Cruz Real Estate – What’s In, What’s Out

Seb FreySanta Cruz Real Estate

You know me, I never look a gift horse in the mouth – if the boss is going to give me an opportunity to be in front of a bunch of potential real estate buyers, I’m there! … I know about all kinds of real estate aside from foreclosures, but I imagine they’ll let me chime in if I have something I feel needs to be said on another topic. … The panel discussion will be held on Thursday, May 8th at 6:00 PM at Santa Cruz Title Company in Capitola – 1955 41st Avenue , just three doors down from Starbucks (behind the Burger King, Citibank, and various other corporate logos ). … They say “Space is Limited, Call now to Reserve a Seat” – but I don’t imagine the fire marshall will be on-hand to shut us down if we should exceed the rated capacity from the room.

Santa Cruz Gets Highest FHA Loan Limit – $729,750

Seb FreySanta Cruz Real Estate

Counties that get the $729,750 maximum for FHA loans are likely to get that same level for Fannie and Freddie mortgages, experts said.

… In California, the counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. At the other end, Lassen, Modoc and Trinity counties are subject to a loan cap of $271,050 — a standard amount in an area with normal home prices.

…Oh, and if you do know anyone who was waiting to buy a house once the Guv’mint got its at together and raised the conforming loan limits – won’t you send ’em my way?