Real Estate Information

The federally funded Home Buyer Tax Credit incentive offered a credit of $8,000 to first-time home buyers, along with a “long-time resident” credit of up to $6,500 to repeat buyers. The deadline for the at large credit was April 30^th to have a binding contract and June 30, 2010 to close on the home (the closing date deadline has now been extended to September 30^th, 2010.)

The National Association of Realtors reported a significant drop in May of existing home sales and the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions showed a large drop in all home buyer traffic in May. Significantly, most of the drop was attributable to first-time homebuyers, who had been playing a major role in home sales since late last fall. The loss of traffic will result in June and July sales and fall closings.

“The decline of first-time homebuyer traffic is undoubtedly related to the expiration of the federal homebuyer tax credit,” noted Thomas Popik, research director for Campbell Surveys. “Homebuyers had until April 30 to sign a purchase and sale agreement and receive the credit. Once we entered the month of May, the government stimulus disappeared.”

At least one market has responded to loss of the government stimulus. California enacted a new $10,000 first-time homebuyer tax credit just in time to miss the drop cause by the end of the federal Home Buyers credit.

California has one of the highest foreclosure rates in the nation. The bill to enact the tax credit, signed by Gov. Arnold Schwarzenegger in March, provides $200 million for homes purchased between May 1 and Dec. 31 and between Dec. 31 and Aug. 1, 2011.

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If you are obtaining financing to purchase a new home, it is important to understand that your lender will look at what is called a debt-to-income ratio. Of course your lender will look at various different aspects of your financial situation but this is an important aspect and the loan could be denied if the ratio is too high. Below is more information on why is it important to you and how it effects your financing.

What the debt-to-income ratio means is that lenders will do a comparison of the money you earn to the money you owe. It includes credit card debt, existing mortgages, auto loans, and any other personal debt.

Your mortgage lender will look at your Debt-To-Income (DTI) to evaluate your ability to afford your new mortgage. You should have a good idea of what your DTI ratio is before you approach a lender or consider buying a new home.

You ultimately want to achieve a low DTI ratio. A high number means that you have less disposable income and less ability to maintain the home once you purchase it. With foreclosures at an all time high, lenders are not willing to assume any additional risk in lending.

Most lenders seek DTI ratios in the 20-36% range or lower, with no more than 28% of debt dedicated to the mortgage itself. While some lenders will consider higher ratios, DTIs in the upper 30% range are considered high risk.

There are several different calculators available online to help you determine your ratio, and you can always check with your financial institution for guidance on determining your DTI ratio.

Here’s a simple formula:

1. Add all your monthly payments (mortgage or rent, car, credit cards, any other debt payments)
2. Add your gross income (before taxes), bonuses, alimony, or any other outside income and divide by 12
3. Then divide the total number in (1) by the final number in (2)
4. The result is your DTI ratio

Whether you are ready to buy a new home or are just interested in your financial health, it’s a good idea to know your DTI and understand the steps to lower your ratio and become as close to debt-free as you can.

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With most things in life, it’s nice to be ahead of schedule. However, last week The New York Times noted that in 2010 the social security system will pay out more benefits than it receives. While we all knew this day would come we, unfortunately, didn’t expect it to arrive six years ahead of schedule.

The facts are we’ve seen a dramatic shift in the burden of accumulating for one’s retirement. Individuals are responsible for accumulating enough wealth to support their retirement. And the good news/bad news is that we are experiencing a significant change in life expectancy. We get to enjoy life longer but we will probably work longer and have a considerably longer retirement than our parents. We also face uncertain health care costs that can drain portions of our retirement savings.

Here’s the good news:

• Studies show that doing planning for these financial matters changes actions (if we don’t know where we are heading, the likelihood of getting there is slim). Once we understand how much will be needed at retirement and what choices available (and that we do have choices), we can move into action to change the trajectory of accumulation and produce satisfactory results.

At Opes Advisors, we regularly work with our clients to help them understand the interdependence of their Stocks, Bonds, Real Estate, and Real Estate Financing and to make effective financial decisions. Managing our clients investments and liabilities through the conflicting tradeoffs of these four components is our unique expertise. This is especially relevant in the Bay Area where real estate is one of the most important assets in our clients' portfolios.

Every financial decision matters. Please contact me for help in making informed and strategic financial and/or mortgage decisions.

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

In most states a termite inspection is a necessary requirement in the home sale process. If a home has termites, they can create significant damage and even destroy a home if left untreated.

In most cases if  evidence of termites is seen, there’s a good chance the infestation is already quite advanced.

If you are a homeowner and have any concerns about termites in home, the best course of action is to locate a pest control or termite inspection to confirm any problems.. Of course, pest inspections are an important part of the overall inspection process, so make sure you hire an expert in the field:

1. Check out online or yellow page listings under Pest Control for a licensed, bonded inspector. Your real estate agent can also be helpful in location a company for you.
2. Request estimates for the inspection cost and compare rates.
3. Make sure that you get a copy of the inspection report and course of action needed before signing any contract papers.

As mentioned above, most states require a clear pest control if you are buying or selling a home. The inspector looks for termite infestation as well as other pest infestation, plumbing leaks, obvious roof leaks, dry rot and water damage. Make sure that all areas of the home are accessible for the inspector. Try to stick with companies that do inspection and treatment only – and leave any wood repair to carpenters or contractors.

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Everyone is gearing up to spend time with family and friends this 4th of July, so grab your flags and head to one of the many events being held in the Bay area this year!

Party at Pier 39

Pier 39/Beach Street & The Embarcardero,San Francisco, July 4th  Times:  3:00 p.m. - 9:30 p.m. Cost:  Free  Info:  Beginning at 3:00:  free live band performances in the Pier 39 Entrance Plaza

3:00 - 5:00:  Mustache Harbor concert (music)

6:00 - 9:30:  Tainted Love concert performance (80's music hits)

9:30:  Over the bay -- City of San Francisco's fireworks show

All day:  Street performers; marionettes; face painting. Free admission.

Fourth of July Waterfront Festival

Pier 39, The Cannery, Beach Street, The Embarcadero & Fisherman's Wharf

Festivities at The Cannery begins at 11:00 a.m. at Courtyard Stage

Face painting:  11:00 a.m. - 3:00 p.m.

Live music through 8:00 p.m.

Crissy Field

603 Mason Street, San Francisco, CA

Cost:  Free

9:00 p.m. -- Fireworks show

Info:  Get there early.  Very popular place to view fireworks.  Crowded!

4th of July Fireworks Cruise

Pier 39 Marine Terminal, The Embarcadero at Beach Street, San Francisco, CA

(415) 705-8200

8:15 p.m.:  Non-Alcoholic cruise sets sail from Pier 39

Cost:  Adults - $52;  Child age 5-11 - $42  Family Package:  $162 (2 adults and 2 children)

Tickets available online at blueandgoldfleet.com or at box office at Pier 39.  Boarding begins 30 minutes prior to departure.

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Interview by Samia Morgan, Broker/Owner Samia Realty Group with Gene O'Neal, President of the Golden Gate Better Business Bureau. Gene discusses the current Job Related scams.

Even with a sluggish real estate market, there is good news for homebuyers. Mortgage rates are and have remained steady and are still at a record low.

Qualified buyers can find rates as low as 4.375% for a 30-year fixed FHA loan. 15-year fixed FHA loans are being obtained at 4.5% with zero origination fee. 5/1 ARM FHA rates are at 3.5%

On a daily basis, FreeRateUpdate.com researches over 2 dozen wholesale lenders' rate sheets for brokers. They locate the most accurate and lowest rates available to those borrowers who are qualified.

The recent drop in stocks have caused the mortgage-backed securities prices to increase which push the mortgage rates down. Most of this is due to investors moving towards safer investments such as bonds.

If you are doing your research on the best rates available,  check out Google's mortgage results to compare available rates from various lenders. 

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Recently I’ve had a lot of questions about the California tax credit, so I thought I’d send along this reminder for you to forward to your clients as appropriate.

Beginning May 1, new California legislation took effect that provides a tax credit up to $10,000 to residents who buy their first home or a newly constructed home.

This legislation has allocated $200 million to fund tax credits for qualified home purchases; $100 million is for buyers of new, unoccupied homes and the other $100 million is for first time buyers of existing homes.

The tax credits are available to home buyers on a first-come, first-served basis. This is an incentive for buyers to act now (as a reminder, the $100 million allocated for last year’s new home buyer program was depleted in just four months).

A notable feature of this year's legislation is that buyers of newly constructed homes may choose to reserve a tax credit prior to the close of escrow. This will become important as California nears the $100 million cap for homes that may not close escrow before the cap is reached. Buyers that are applying for the First-Time Buyer Credit (purchasing existing homes) will not be able to reserve the tax credit before escrow closes. Details about how to reserve the tax credit can be found here.

Below are some highlights of the new tax credit program:

•    Buyers of existing homes must close escrow between May 1, 2010 and December 31, 2010.
•    Buyers of new homes can reserve their credit by entering into an enforceable contract between May 1, 2010 and December 31, 2010. They must file the proper paperwork with the tax board and close escrow by August 1, 2011.
•    First-time home buyers are eligible whether they buy a newly built or an existing home.
•    Current homeowners looking to trade up must buy a newly built home in order to receive the tax credit.
•    If a taxpayer qualifies for both tax credits, the law specifies that that the New Home Credit be applied (only one tax credit is allowed per taxpayer).
•    The tax credit is worth up to 5% of the purchase price of the home, or $10K, whichever is less.
•    The credit will be allocated evenly over three years. If a buyer qualifies for the full $10,000 tax credit, they’ll get up to $3,333 per year. They will need to consult with their CPA for details and eligibility as related to their specific situation.
•    The buyer cannot be a dependent and the home purchased cannot belong to a relative.
•    The buyer is required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

Please contact me to discuss your clients' 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

Eventhough the official start of Summer is a few weeks away, homeowners all over the Bay area are already in the midst of home projects and lawn care. Below are some tips to help you get your home in tip top summer shape.

1. Lawn tools and care – make sure your lawnmower and other lawn and garden tools are in good working order. Its a good idea to have a tune up and your blade sharpened. Adding fresh oil and fuel is also a good idea. Consider colored flowers and plants that will provide color in small spaces or on patios if you have limited garden space.
2. Clean up patio furniture and your outdoor grill, wash your windows and tidy up walkways. Now is the perfect time to create an outdoor living area for your family and friends. String lights or simple lanterns can also be affordable ways to add nice interest to your porch or patio. If you have a pool, make sure your filter systems and pumps are clean and ready to operate at full steam.
3. Treat for pests – find a reputable pest control company to do a general treatment for summertime bugs like spiders and mosquitoes; invest in citronella candles and family friendly bug spray.
4. Have your AC system serviced – it’s a good idea to have a semi-annual checkup before the real heat of summer puts pressure on your HVAC system.
5. Make sure your home is energy efficient – check weather stripping and window seals and make sure that none of that cool air inside is escaping outside; keep your temperatures moderate in the house so that your systems don’t go into overdrive during the hottest part of the day.

Enjoy the treats of long summer days – both indoor and outdoor comforts and pleasures. Summer always goes fast!

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Obtaining financing for a new home can be a challenge in this difficult economy. Many mortgage lenders have tightened their requirements. However, it is important for homebuyers to realize that it isn't always the lenders fault. Of course they would like potential customers to assume that they will be approved but the loan industry is a very risky one right now and they have to protect their assets. 

Many potential homebuyers are finding that their application has been denied, so if you have been denied recently or in the past for a loan, it's time to take control of the situation. Educate yourself, ask questions and do your research to help change that NO answer to a YES answer! Here, to help you out are some suggestions.

• Consider a co-signer if your income simply is not high enough to qualify for the actual loan. The co-signer's income can possibly be considered as an amount towards your loan regardless if the person is living with you or helping you pay the actual bill. In many cases, the cosigner might also be able to compensate for your low credit. It is important however to understand that there are risks for your cosigner and if you default on your mortgage, the lender can actually in turn go after your cosigner for the full amount!
• Wait it out.  Sometimes the best advice you can get, especially if the conditions in the housing market is slow or the economy is bad, is to simply wait. Oftentimes when conditions improve in the economy, the lenders will be more willing to let you "borrow" the money for your loan. While you are waiting, you can take this time to work on your credit score. While you are waiting, home prices could also drop!
• Consider a less expensive property. We all want what we want, but you might have a better chance of being approved if you switch to a less expensive option. For example, if you wanted a house, but you cannot wait and you cannot qualify for the loan, you might consider switching to a smaller home or to a town home instead. Later on down the line when your financial situation improves, then you can trade up the property and move to the location and home you really want to.
• Apply with a different lender. The world is full of lenders, if you don't like what one says or you get denied - try someone else! However, if every single lender you go to denies you, you should become aware that it is for a reason - in fact, if they all list the same reason then you will know what you need to fix.  Use common sense and stay away from predatory lenders. We have heard some pretty scary stories about these places - so just don't do it. You could literally be signing your life away.

Keep in mind that if you are denied, keep trying and work on your credit and then in a few months try again! With a little time, patience and understanding, you could be able to turn the situation around to your favor!

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