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IRS Favors Taxpayer on Mortgage Interest Reduction

by Andy Block - Mortgage Advisor

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Of Resolutions and Retirement

by Andy Block - Mortgage Advisor

There is a proverb, “No matter how far you’ve gone down the wrong road, turn back.” With the new year just around the corner, it’s a time when many people make resolutions – and a perfect time for you to get your retirement on the right road!

Retirement Study Calls 73 the new 65

A recent Retirement Readiness Study by Nyhart, a leading actuarial and employee benefit consultancy since 1943, reviewed nearly 10,000 retirement accounts from employees at 110 public and private companies throughout the U.S. The study evaluated how employees’ contributions to their 401(k) would affect the age at which they could retire and found that 81% will not be able to retire by the age of 65.

The leading cause of this shortfall was their failure to contribute enough of their income towards their retirement. The study further uncovered that employees who rely on their 401(k) as their primary retirement vehicle will not be able to retire until the age of 73.

The Million Dollar Retirement Plan

There was a time when having a million dollars for retirement implied complete financial freedom and a life of luxury. Spread out over a 30-year retirement, this $1 million will likely make you comfortable, but not especially wealthy, as Emily Brandon explains in her recent US News & World Report article. What it takes to save this amount over the course of a working career is a clear plan and a willingness to save more of your income if needed.

For example, reducing your monthly expenses and increasing your retirement savings by even just 2% to 4% of your income can help you to accelerate the growth of your nest egg, especially if you have begun retirement savings later in life. Depending on what you estimate your expenses and lifestyle ambitions will be in retirement, it’s realistic to expect that you need to have a seven-figure portfolio when you retire.

When it comes to planning, saving and investing for your retirement, it’s never too late to make a resolution to get on the right road. Let me know how I can help you get your retirement plan on track.

May your holidays be filled with joy and your new year be prosperous!

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

Is Your Retirement Plan on Track?

by Andy Block - Mortgage Advisor

Retirement planning is just one of the ways Opes Advisors can help you to make better financial decisions today to ensure that your desired financial future and ambitions are obtainable. Millions of Americans are unprepared for retirement and the average U.S. family faces a 37% shortfall in the income they will need in retirement, according to a recent McKinsey & Company study.*

Interestingly, this shortfall is caused less by stock market declines and more fundamentally by insufficient savings rates, poor investment choices and the limited accessibility of retirement plans. Furthermore, the study showed that U.S. families of all ages and income groups — not just lower- and middle-income households — are unprepared for retirement. According to McKinsey, more than one third of households with access to a qualified retirement plan, such as a 401k or 403b, do not take advantage of it, and those who do participate do not contribute nearly enough to sustain them through retirement.

In the book, Wealth Management in the New Economy: Investor Strategies for Growing, Protecting and Transferring Wealth, co-authors Norbert M. Mindel and Sarah E. Sleight outline the six things you need to know before you retire. Our approach at Opes Advisors reframes this as “The six most important things you need to know in order to understand the financial and economic aspects of your retirement and the impacts of your financial decisions.”

1. Your retirement planning should consider the likelihood that you will live to 100 and that during your retirement the cost of living will double at least once.

2. You must establish in advance a concrete idea about how much money you will need during retirement.

3. You should expect to withdraw no more than 4% annually from your savings while in retirement if you want to avoid outliving your income.

4. You will most likely need to be invested in equities and manage the risk of that equity exposure.

5. Certain kinds of protection are essential to prepare you for unexpected changes in your health and your income sources.

6. Your retirement planning will be more accurate and comprehensive if you work with an advisor.

The above points are invaluable, though they are frequently overlooked. It’s surprising how often we hear our clients discuss their retirement finances without having a clear idea about how much money they're going to need in retirement. Preparing for retirement can be difficult, but with comprehensive scenario analysis and in-depth planning you can be sure that your finances will be sufficient to support you through a long and vibrant retirement.

Call me if you'd like to discuss your financial goals and how we can help you get your retirement plan on track.

 *Click to read the PDF version of the McKinsey & Company Restoring American’s Retirement Security study.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

Time to Buy...or Not?

by Andy Block - Mortgage Advisor

Open a newspaper or search online news on any given day and you can easily find contradictory articles telling you why now is the best time to buy...or conversely, why now is not the right time to buy. What we know from working with our clients is that there is no ‘one-size-fits-all’ right or wrong time to buy. Financial lifestyle and retirement goals need to be given priority consideration in any assessment of when to buy, refinance, sell or “move up.”

For example, interest rates that have been at their lowest in more than 50 years have recently begun to rise, and are expected to continue to rise through 2011. This means that as rates go up, the loan amount you will be able to qualify for will most likely go down. Additionally, last month the California Real Estate Association released their 2011 yearly outlook and indicated that home sales and the median price paid for a home should improve slightly next year, even as the economy continues to struggle. So with both interest rates and housing prices at their lowest levels in years (but expected to rise in the coming year, slowly albeit), this may be a very good time to consider buying, refinancing, selling or “moving up.”

Keep in mind that as you consider making any type of change, you’ll want to make a thorough assessment of all of your financial obligations and ambitions – and both the short-, and long-term impacts your decision will have on your retirement goals. Every important financial decision you make has a lasting impact on your retirement. Knowing how different scenarios will play out can equip you with the information you need to make a wise decision.

If you’re considering buying, refinancing or selling at this time, give me a call and I will begin a thorough assessment of your financial situation so that you’ll be completely prepared to make the decision that is right for you.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

New Fannie Mae Guidelines Effective Dec. 13th

by Andy Block - Mortgage Advisor

New Fannie Mae lending guidelines that go into effect December 13, 2010 will make securing a mortgage easier for some and more difficult for others. Here are some specifics you should know about these new guidelines:

DTI RATIO

 

  • The new maximum debt-to-income ratios will drop to 45% from 55%, which could make it more difficult for some buyers to secure a mortgage loan.
  • Borrowers who are at the end of their current mortgages with 10 or fewer payments will now have these remaining balances counted in the DTI ratio, which is a departure from previous Fannie Mae rules.

 

MISSED PAYMENT

Buyers who miss a payment will have 5% of the total balance added to their debt-to-income ratios. (Previously, Fannie Mae ignored a missed payment or required that the lender add a few percentage points to the total balance when calculating the DTI ratio.)

BORROWERS WITH FORECLOSURE EXCLUED FROM FANNIE-BACKED LOANS FOR 7 YEARS

Borrowers who have gone through a foreclosure will be excluded from obtaining a Fannie-backed loan for seven years (up from four). This change was announced separately from the gift and debt rules, but will also take effect in Fannie Mae’s automated underwriting systems next month. 

GIFTS/GRANTS TOWARDS DOWN PAYMENT

Buyers can use grants from nonprofit groups or gifts from family members for their minimum 5% down payment (which is the threshold set by Fannie Mae). Previously, borrowers had to contribute a minimum 5% down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20% down: all that money could come as a gift. The gift rules apply only to single-family principal residences, including town houses, co-ops and condominiums, and covers mortgage amounts in excess of 80% of the property’s value.

FANNIE LOAN LIMITS THROUGH SEPTEMBER 30, 2011

Fannie Mae has indicated that the general loan limits for mortgage loans originated on or before September 30, 2011, will remain unchanged from 2010 limits, which means $417,000 for a one-unit property in the continental U.S. and $729,750 for designated high-cost areas for a one-unit property in the continental U.S. For mortgage loans originated after September 30, 2011, revised "permanent" high-cost area limits will apply.

Though some of these guideline changes are more significant than others, they are all evidence of Fannie Mae’s attempt to protect itself against recent problems seen in the mortgage industry. Keep these in mind as you work with clients interested in purchasing a new home.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

The Perfect Storm

by Andy Block - Mortgage Advisor

We are in a unique time in history. Home prices are down even in our most desirable areas and interest rates are at the lowest in 50 years.

Clients I speak with often ask the questions, "But, what if housing drops further? And also, where are interest rates headed? How can I time the bottom of the housing market and the interest rates?"

As all of us know, we can never perfectly time "the bottom" or "the top". However, saying that, we think that now is one of the most opportune times.

There are two indicators that we believe illustrate this point. As shown in the graph below, after nearly a decade of deviating substantially from long-term projections, housing prices are now reverting closer to their 40-year trend line.

As illustrated in the graph below, mortgage rates are at their lowest level since formal recording of rates began 50 years ago.

The table below shows the impact of higher interest rates on purchase price. Generally speaking, for every 1% difference in rate there will be about a $86,000 differential in the purchase price for approximately the same monthly payments. Example below:

Note: Tax situations for every client will effect these results slightly.

 

In summary, a rise in interest rates will quickly offset any benefit of further price drops. We believe that this is worth illustrating to our clients so that they don't inadvertently miss an opportunity to own the home of their dreams.

We can't time the market, and we can't claim to know the future. However, when you look at the facts above, it is apparent this unique time in history provides our clients with an incredible opportunity.

 

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

Obama Extends Higher Loan Limits

by Andy Block - Mortgage Advisor

President Obama has signed into law H.R. 3081, which among other items is the authorization to extend current $729,750 temporary high-balance conforming loan limits provided through Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). This ensures that current loan limits for single-family residential mortgages will remain in place until September 30, 2011. The move to extend the higher limit will effectively keep interest rates super-low for a large swath of home buyers and borrowers with loan amounts between $625,500 and $729,750. The bill also appropriates $20 billion so that FHA can continue making loan commitments through the end of 2010.

Additionally, beginning today there will be changes in the way borrowers pay for the privilege of using low-down-payment, government-insured mortgages to buy or refinance a house. FHA will lower its upfront mortgage insurance premium from 2.25% to 1% (except for HECM's) while simultaneously increasing the annual premium from 0.55% to 0.9%, which is collected on a monthly basis. Because most borrowers choose to finance the initial fee as part of the loan amount, the net result for most people will be lower monthly payments for the first few years their loans are on the books. This change will affect purchase money and refinance transactions, including FHA-to-FHA credit-qualifying and non-credit-qualifying streamlined refinance loans.

Please contact me to discuss your specific mortgage or financial strategies.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors

Email Me
 
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group
Move2CA - our website
San Francisco Bay Area Home Search  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth? - get current market information for your San Francisco Bay Area home

Avoid These Deal Killers!

by Samia S. Morgan

If you are selling your home, you are probably aware of the  challenges that sellers face due to the current real estate market. Once you have located a buyer and are ready to being the process,  the last thing you want is to have your deal fall through at the last minute.

 While things do happen and sometimes buyers will back out, below are some of today’s top deal-killers and what you can do to minimize fall-out.

  1. Buyer’s remorse – Everyone gets it; and while you can’t prevent buyer’s remorse, there are a few things you can do to lessen the chances that your buyers will change their mind. First of all, be totally up front with the flaws of the house. Don’t let an inspection reveal problems that you should address with potential buyers and offer to fix.
  2. Financing– Everything from stricter credit requirements to increased down payments has thrown the mortgage market into a tizzy and many buyers are finding that they can’t qualify, even if they have been pre-approved for a mortgage. Consider owner financing if you can, or offer to pay for repairs that give the buyers more cash for down payment options.
  3. Low appraisals – Make sure that you know the true market value of your home BEFORE you put it on the market and adjust accordingly. You may have to take a hit on the house, but it’s better than spending money on it through the sale process only to lose that money and the deal because you can’t get the appraisal up.
  4. Failure to communicate – Negotiations are a key part of a home sale and you have to be flexible if you really want to sell your property. Don’t automatically reject low offers and contract contingencies – be willing to work with the seller and keep communications open. You may be able to agree at the end of the day.

Stay on top of your current market – don’t let national headlines guide your decisions. You should have a good feel for your local economy, neighborhood comps and your home’s current value. Become the expert on your market and you’ll be better equipped to deal with the challenges and deal busters that come your way!

Do you have any other  "deal breakers" that we did not list here? Let us know your thoughts to help other home sellers.

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Getting the Most from Your Mortgage Bank

by Samia S. Morgan

Lately we’ve had inquiries about the differences between a traditional bank, mortgage broker and mortgage bank, especially in light of recent Bank of America news that they are exiting their wholesale lending business. Realtors and other real estate professionals should be clear on the advantages and disadvantages of each lending sales channel.

A home buyer can get a mortgage loan in one of three ways: Through a traditional bank, a mortgage broker or a mortgage bank.

Traditional Bank
A traditional bank, such as B of A, Wells Fargo and Chase, works directly with retail loan officers at their respective companies and the bank underwrites and funds the loan. After the loan closes it is usually packaged with other loans and sold to the investment world. Each month the bank cashes the borrower’s mortgage payment, keeps a little for itself, and then passes the money on to the investor that purchased the loan. One benefit of getting a mortgage loan from a traditional bank is that they promise the money for the transaction; it is the bank’s checkbook that funds the loan. A downside to this type of mortgage loan is that the borrower is limited to that bank’s loan programs and rates, and it is time consuming and costly to switch to another loan provider.

Mortgage Broker
A mortgage broker is a person or company that has relationships with traditional banks through each bank’s wholesale channel. They also have the ability to broker to other lenders who would otherwise be unknown to the customer. The broker sends the borrower’s documentation to one of the lenders for the loan to be underwritten, approved and funded. Essentially, brokers can go to any of the banks they have relationships with, and they have the freedom to switch to any other bank. In practice, this has become more difficult due to disclosure regulations and timing. Additionally, during the past few years many banks have closed their wholesale channels. Bank of America is the most recent to do so. The benefit of working with a mortgage broker is that the customer has multiple choices of possible lenders, programs and rates. The major drawback is that the brokers have little control because they are not underwriting, preparing documents or funding the loan themselves.

Mortgage Bank
A mortgage bank, like Opes Advisors, can offer the best of both worlds. A mortgage bank is similar to a traditional bank in that it processes, underwrites, draws docs and funds loans, thereby maintaining control of the entire process. The mortgage bank will then sell the loans after the close of escrow. They typically sell these loans to one of the major banks through their correspondent channel. A mortgage bank can also broker loans when this option is optimal or necessary for the customer due to qualifying issues or program requirements.

So a mortgage bank maintains the two most important aspects of the transaction: it promises the money and it is also not beholden to any one lender, loan program or rate. If needed, at any time in the course of a transaction, a mortgage bank can switch to a different lender provided the lender’s guidelines are met by the borrower. With a mortgage bank your clients can get the best of both worlds.

Opes Advisors takes the ‘best of both worlds’ one step further when we help our clients make financial decisions that are inclusive of their overall financial goals. We review their financial plan and give them confidence that their decisions are consistent with their financial ambitions.

Please contact me to discuss your specific mortgage or financial strategies.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors
Email Me

Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601


Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

Author and Business are endorsed by Samia Realty Group Move2CA - our website
San Francisco Bay Area Home Search
  - find San Francisco Bay Area properties for sale
What’s Your San Mateo - San Francisco Bay Area Home Worth?
- get current market information for your San Francisco Bay Area home

Keep moving in the face of uncertainty

by Samia S. Morgan


In an uncertain economy, it's tempting to sit on your hands and see how things turn out. But small businesses can ill afford such inaction, writes Brett Nelson, who rounds up several experts for their advice on what you should be doing now. Among their tips: Focus on efficiency, launch a new product and invest in existing customers. 

Read the rest of this aricle by visiting Forbes

Read the article by visiting BusinessWeek.com/Today's Tip blog

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Samia S. Morgan, Inc.
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San Mateo CA 94403
650-678-3633