We may have seen the worst in the run up in mortgage rates

Pasadena Mortgage rates for July 22, 2008.  Loan amounts up to $417,000:

 

3/1 ARM              5.750%

5/1 ARM              5.875%

7/1 ARM              6.250%

10/1 ARM            6.500%

30 Yr Fixed          6.500%

 

All rates offered to the borrower with 1 point cost.  Rate quotes assume a purchase transaction with a 20% down payment, 720 credit score, and full income qualification.  Rates are subject to fluctuation.  Custom rate quotes and rate lock advice are available by calling (858)-777-9751.

 

PASADENA MORTGAGE RATE TREND:

 

Next 7 days:      Slightly Lower

Next 30 days:     Lower

Next 3 months:  Neutral

 

What a difference a week makes, huh?  Last Tuesday, I signaled that a short-term increase in rates was likely when I changed the 7-day outlook to "slightly higher" from neutral.  I felt that the rally in mortgage bonds was overdone and that traders would sell off a bit; I had no idea it would be this drastic.

 

If you click the link, you'll see that I offered a 30-year fixed at 6.0%. last Tuesday- today, the 30-year fixed rate loan is a full .5% higher.  In fact, almost every loan program is .5% higher than it was last week.  The problem?  Wall Street thinks the worst is over for banks and that inflation is going to be the #1 target for the Fed in the next few months.  ' Treasury Secretary Hank Paulson is certainly telling the markets that the banking crisis should be averted by Christmas.

 

So will the Fed raise interest rates in 2008?  I'm not so certain that they will.  The housing decline has been the worst since The Great Depression.  Fed Chairman, Ben Bernanke, is an expert on monetary policy in the Depression.  He subscribes to the Milton Friedman theory that monetary policy must accommodate a healthy banking system.  His 2004 speech signaled two things two us:

 

(1)- Bernanke believes that tightening during a slowdown could cause further economic declines:

 

According to Friedman and Schwartz, the Fed's tight-money policies led to the onset of a recession in August 1929, according to the official dating by the National Bureau of Economic Research. The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October. In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it. Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930.

 

(2) Bernanke believes that a contracting banking sector withdraws a HUGE amount of money out of the economy:

 

The banking crisis had highly detrimental effects on the broader economy. Friedman and Schwartz emphasized the effects of bank failures on the money supply. Because bank deposits are a form of money, the closing of many banks greatly exacerbated the decline in the money supply. Moreover, afraid to leave their funds in banks, people hoarded cash, for example by burying their savings in coffee cans in the back yard. Hoarding effectively removed money from circulation, adding further to the deflationary pressures. Moreover, as I emphasized in early research of my own (Bernanke, 1983), the virtual shutting down of the U.S. banking system also deprived the economy of an important source of credit and other services normally provided by banks

 

His conclusion is foreshadowing:

 

Some important lessons emerge from the story. One lesson is that ideas are critical. The gold standard orthodoxy, the adherence of some Federal Reserve policymakers to the liquidationist thesis, and the incorrect view that low nominal interest rates necessarily signaled monetary ease, all led policymakers astray, with disastrous consequences. We should not underestimate the need for careful research and analysis in guiding policy. Another lesson is that central banks and other governmental agencies have an important responsibility to maintain financial stability. The banking crises of the 1930s, both in the United States and abroad, were a significant source of output declines, both through their effects on money supplies and on credit supplies. Finally, perhaps the most important lesson of all is that price stability should be a key objective of monetary policy. By allowing persistent declines in the money supply and in the price level, the Federal Reserve of the late 1920s and 1930s greatly destabilized the U.S. economy and, through the workings of the gold standard, the economies of many other nations as well.

 I don't see the Fed aggressively raising interest rates to prop up the dollar.  I think reduced demand will bring oil prices below the $100/barrel mark which will strengthen the dollar.  The Fed's focus should have been (in the 1930s) and will be (this decade) to promote a healthy banking system.    While the banks are reporting lower losses, they still aren't healthy. The recent good news from the banking sector needs to be sustainable.  Look for the Fed to restrain itself from raising rates until 2009.

Are higher mortgage rates on the horizon?  Sure, in 2009.  The run up in mortgage rates I predicted, two weeks ago, has already happened.  I don't think mortgage rates go much higher in 2008.

http://www.pasadenacarealestatehomes.com/007669

Pasadena Real Estate blog welcomes Brian Brady!

Pasadena Real Estate Blog is very excited to announce that Brian Brady is going to author weekly posts about mortgage rates and mortgage industry.

Brian is a 19 year veteran of the financial services industry.  He started his career with Merrill Lynch, as a financial adviser, right after he graduated Villanova University. 

He moved out west in 1992 and have worked in residential real estate lending since 1994.  He has originated loans, managed branches, was the National Sales Manager for a regional mortgage bank, and successfully turned around an ailing mortgage banking firm to profitability.

He is now back to his first love - working with clients in a financial advisory capacity.  Ron Feinberg appointed him as a Managing Director at World Wide Credit Corporation. a long-time mortgage banking and brokerage firm in San Diego.  Brian considers himself a Mortgage Planner, which is a new title for mortgage originators who have expertise in financial planning.  This means that you'll get a whole lot more than rate and points from him.  He'll show you how to properly structure your debt so as to increase your liquidity, safety and return on your investments.  He'll even show you a tax trick or two to run by your CPA.

Brian, welcome to the Pasadena Real Estate Blog!!!

http://www.pasadenacarealestatehomes.com/007668

In the wake of Pasadena California IndyMac bank being seized by Federal Regulators today, the question most of us are asking is how safe are our deposits whether we were banking with IndyMac, WAMU, Wachovia, Wells Fargo or any other bank?

A quick background for those of you that are not aware of the situation.  IndyMac specialized in what many in the real estate industry called "Liar Loans".  If you could breathe and sign your name, IndyMac was glad to lend you money to buy a home whether or not you were financially qualified. 

Now... I'm being a bit harsh here, but really risky lending practices did get IndyMac in major trouble and put them in a precarious financial situation.

To help IndyMac along, Senator Schumer (NY) caused an old-fashioned bank run when he wrote a letter to the San Francisco Fed President concerned about IndyMac Bank's ability to weather the storm....then, he made that letter public. IndyMac Bank ceased new loan operations, in an effort to manage the loans they have on their books, on Monday. On Friday, the Feds closed IndyMac Bank down.

Read More: Brian Brady's Mortgage Rates Report - July 14, 2008

IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC.

Read More: IndyMac Bancorp is Seized

If you have money in IndyMac, what does it mean to you?

If you visit www.IndyMac.com, you will see that there is a link to the FDIC Website which provides some general information.  Here's an excerpt:

Principal and interest on insured accounts, through July 11, 2008, are fully insured by the FDIC, up to the insurance limit of $100,000.  You will receive full payment for your insured account.  Certain entitlements and different types of accounts can be insured for more than the $100,000 limit.  IRA funds are insured separately from other types of accounts, up to a $250,000 limit.

All accounts that exceed the $100,000 insurance limit, and/or all accounts that appear to be related and exceed this limit, are reviewed by the FDIC to determine their ownership and insurance coverage.  If you think you might have uninsured deposits you should call the FDIC Call Center to arrange for a telephone interview with  a Claims Agent at         866-806-5919        .

If it is determined that you have uninsured funds, the FDIC will generate and mail to you a Receiver Certificate.  This certificate entitles you to share proportionately in any funds recovered through the disposal of the assets of IndyMac Bank, F.S.B.  This means that you will eventually recover some of your uninsured funds.  The FDIC declared a 50% advance dividend for uninsured deposits.

If you have a home equity line of credit with IndyMac, the word on the street is that it has been frozen and will be reviewed on a case by case basis.

Credit lines to commercial construction contractors also will be frozen pending a review, but construction loans made to individual consumers will not be affected.

Customers of IndyMac's reverse-mortgage subsidiary will continue to have access to their funds. Reverse mortgages provide older homeowners with periodic payments or a credit line secured by their homes.

Read More:  IndyMac reopens after seizure

How diversified are your bank accounts?  Do you have all your accounts in the same bank?  Are you over FDIC insured limits?

I was over at Washington Mutual in San Marino earlier today making a deposit.  As I was waiting in line, I heard several conversations about FDIC limits.  Everyone is nervous, myself included.

There were long lines today on Lake and Walnut in Pasadena as IndyMac customers were trying to withdraw funds.  Some stood in line as long as 4 hours per my conversation with a bank representative of Wells Fargo who has been busily opening accounts all day today for IndyMac customers and others who want to diversify their accounts with various banks.  By the way, if you were fortunate to get through the long line and have a cashier's check from IndyMac, Wells Fargo is putting a hold on the money to ensure that it clears. 

What can you do to protect your money?

1.  Don't keep all your accounts in one bank.  Even if you are within the FDIC insured limits, how long will it take for you to get your money?  Open several accounts in different banks. 

2.  Make sure that you are under the FDIC insured limits.  FDIC stands for Federal Deposit Insurance Corporation.  It is an independent agency of the US government.  Its purpose is to protect you against the loss of your depoists if an FDIC insured bank or savings association fails.

FDIC insures all deposits including checking, CDs, NOW and savings accounts.

FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, anuuities, or municipal securities, even if you purchased these products from an insured bank.

Basic FDIC Insurance Amount is $100,000.

The basic insurance amount is $100,000 per depostor per insured bank.  Certain retirement accounts, like IRAs are insured up to $250,000 per depoistor per insure bank.

Coverage over $100,000.

You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

The most common ownership categoires are: 

• Single Accounts
• Certain Retirement Accounts
• Joint Accounts
• Revocable Trust Accounts.

Call FDIC for more information at 1-877-ASK-FDIC (    1-877-275-3342    )

You can also calculate your insurance coverage using the FDIC's online Electronic Deposit Insurance Estimator at:  http://www.fdic.gov/edie/.  Please note, some literature provided by the banks has the estimator at www.fdic.gov/edie.  This is not correct.  See the link in red above.

Protect yourself with knowledge and keep your money safe!

Posted By: Irina Netchaev - Pasadena California Real Estate Agent- Irina Netchaev & Associates.  Irina and her Team of Real Estate experts work in the beautiful Keller Williams Realty in Pasadena California specializing in Pasadena Real Estate, San Marino Real Estate, South Pasadena Real Estate, San Gabriel Real Estate, Altadena Real Estate, Alhambra Real Estate, Monterey Hills Real Estate, Arcadia Real Estate, Sierra Madre Real Estate and surrounding communities.

       (626) 204-3340       

http://www.pasadenacarealestatehomes.com/007667

One of my readers emailed me and posed this question about FHA loans today:

       Is there a set rate for FHA home loans that's standard around the country?

For complete information about FHA loans and programs, I'd suggest visiting FHA's website at www.fha.com

I also asked Ernest Tepman of OCD Group who specialize in FHA loans and programs to give us an answer to this question and here's what he says:

The answer is that there is no standard rate for FHA loans, each lender and at times even individual Loan Officers from same lender can offer different rates. The guidelines for the FHA programs are almost identical from lender to lender (but there are lenders who sometimes add individual overlays on FHA guidelines above what FHA actually dictates), which results in strange things occasionally, where a specific file will be eligible for FHA financing with one lender and not the other, not often, but it does happen. Keep in mind FHA only insures the loans, the actual loans are made by banks, so even though your loan is FHA, it is still from Chase, Wells Fargo or Countrywide :-) 

READ MORE:    Advantages and Disadvantages to FHA

http://www.pasadenacarealestatehomes.com/007666

Pasadena home buyers asking home sellers to pay for some of their closing costs need to be very careful at how the California Purchase Contract is written.

There are two types of closing costs.  They are Recurring and Non-Recurring costs.

Recurring Closing Costs are charges or fees which will occur more than once.  For example, home property taxes, fire insurance, mortgage insurance, HOA (Home Owner Association) dues.

Non-Recurring Closing Costs are charges or fees which only occur one time during the purchase of your Pasadena home.  These charges include escrow fee, title insurance, recording fees, notary public fees, loan origination and discount point fees.  In essence, anything that is a one-time fee and will not be paid again.

The reason that it is important to specify the types of closing costs a buyer is asking the home seller to pay is because as a buyer, you'd want to use the full amount of closing costs allocated to you by the seller.

For example, your offer is asking the Pasadena home seller to pay $5,000 of your closing costs.  The costs are not described as recurring or non-recurring.  Most lenders will allow the escrow company to credit you non-recurring closing costs only.  If these non-recurring closing costs come up to only $4,000, you will not be able to apply the remaining $1,000 towards your Pasadena home purchase.

Make sure to work with your lender and Pasadena Real Estate agent to understand what kind of closing costs your mortgage lender will allow and the percentage of the sales price that can be applied towards these costs.

Don't be caught unawares.  Be an informed home buyer!

READ MORE:  How much can you expect to pay in closing costs and what are they?

If you are ready to start your Pasadena home search, please call me at 626-627-7107 or email me at irina@irina4realestate.com.

 

http://www.pasadenacarealestatehomes.com/007684

To continue with my series of FHA posts, today, we're going to look at advantages and disadvantages of getting an FHA loan.

 

 

 

ADVANTAGES:

• LOW CASH OUTLAY - Pasadena buyers can get an FHA loan for as much as 97% of Pasadena home purchase price.  Only 3% down, not a bad deal.
• FHA LOANS ARE FULLY ASSUMABLE.  Yes, you read it correctly.  These loans are assumable as long as the new buyer qualifies and is not an investor.

• FHA LOANS DO NOT HAVE A PREPAYMENT PENALTY.  FHA loans do not have penalties for paying off all or part of the loan before the scheduled term. This feature also gives the FHA buyer the opportunity to refinance the loan to lower interest rates if rates decline (with some additional costs involved in refinancing).

DISADVANTAGES:

• SOME SELLERS FEAR FHA APPRAISALS:  There are some sellers and real estate sales people who would prefer not to sell their homes to buyers seeking new FHA loans. This stems from past appraisals which were lower than the sale price or had extensive repair requirements. While the appraisals still may be a roadblock in some areas of the U.S., FHA now uses independent "fee" appraisers rather than FHA "staff" appraisers, which has eliminated many of the discrepancies.

• LOAN PROCESSING TIME: FHA loans generally take about 2 weeks longer to process and close than conventional loans. Normal FHA processing time is 4-6 weeks, compared with 2-4 weeks for conventional loans. However, many FHA lenders are now approved for automatic loan approvals which can speed up processing substantially.

READ MORE: What YOU need to know about FHA Loans - Part I

                          What YOU need to know about FHA Loans - Part II

                    Distressed Market and FNMA Announcement

http://www.pasadenacarealestatehomes.com/007665

Yesterday, I outlined FHA NON Allowable expenses for a seller to be aware of when considering an offer from a buyer using FHA financing.

READ MORE:  What Pasadena Sellers need to know about FHA Loans - Part I

Today, I wanted to provide both the Pasadena sellers and Pasadena buyers with a list of items that FHA ALLOWS buyers to pay for.  So, with no further ado, here it is:

• BASE Escrow Fees
• Title Insurance ALTA
• FHA Appraisal Compliance Inspection Fee
• 1% loan Origination Fee
• FHA MIP premium
• Loan Discount Points
• Credit Report Fee (Actual Cost)
• Appraisal Fee (Actual Cost)
• Interim Interst
• Hazard or Flood Insurance Premiums
• Reserves for Taxes and Insurance
• Notary Fee $10 per signature
• Recording Fees - Actual Fees
• Termite (Initial Inspection is okay, but no repairs unless approved inwriting by lender)
• Home Warranty - only if stipulated in escrow instructions and with prior approval of lender
• Amortization Schedule Fee
• Real Estate Commission (if prior approval in writing by lender)
• Broker Fees (if prior approval in writing by lender)
• Tests or Treatments required by HUD (if prior approval in writing by lender)
• Compliance Inspection Fee

Questions?  Please comment.

http://www.pasadenacarealestatehomes.com/007664

FHA loans have been in the news recently due to the increase in the FHA mortgage limits, up to $729,750 for single family homes and the fact that buyers can get an FHA loan with a much smaller down payment - as low as 3% down.

READ MORE:  Distressed markets and FNMA announcement

If you are a Pasadena home seller, it is critical to be aware of the following:

• Pasadena home buyer with less than 20% down in almost all instances will need PMI insurance (Property Mortgage Insurance.) 
• PMI rates are going up quickly and making it more expensive for home buyers which in turn makes the home that they want to purchase NOT affordable.  Most home buyers are not aware of these changes in the lending/mortgage industry until they are already in escrow. 

FHA loans have very specific requirements for home buyer expenses.  These fall into allowable and NON-allowable expenses.  Non-allowable expenses are usually paid by the SELLER!

To qualify for an FHA loan, Pasadena home buyers can NOT pay for the following expenses:

• Sub-Escrow Fee to Title Company
• ALTA Endorsement Fees
• Some Inspection Fees
• Recording Assignment Fees
• Processing Fees
• Document Preparation Fees
• Tax Service Contract
• Any Messenger Fee including Overnight Delivery
• Loan Tie-In Fee
• Bring-Down Fee
• Title Binder
• Tax Stamps/City Transfer Tax Charges
• Homeowner Association Transfer Fees
• Repairs or work required on FHA appraisal (unless approved in advance by lender in writing)
• Home Warranty Program - (unless stipulated in escrow instructions and approved by lender in writing)
• Photo Fee/Photo Inspection Fee
• Reconveyance Fee
• Preliminary Change of Ownership Report
• Commission
• Transaction Coordination Fees

If you are a Pasadena Home Seller and you receive an offer from an FHA home buyer or are in escrow with an FHA home buyer, please be aware that these fees will most likely come out of YOUR pocket.

FHA loans offer a very viable financing option for many buyers and I think that we will see more home buyers with FHA financing in the coming months, but Pasadena home sellers need to understand the financial impact to them. 

Make sure that your Pasadena Real Estate Agent provides you with an estimated closing costs statement so that you know your home sale bottom line.

Remember information is KING!

Questions?  Comment below.

http://www.pasadenacarealestatehomes.com/007683

Or, are you just listening to the white noise?

As I was getting ready to go to work this morning, I overheard a news report that my husband was watching about the real estate market.  What struck me as odd was not that it was yet another "chicken little" report about the downfall of the Los Angeles real estate values.  Let's face it, there's nothing like fear to get viewership.

No... what struck me as odd was that immediately after that dreaded real estate "for sale" sign, there was an image of a No Vacancy sign and a discussion about the difficulty renters are having finding good housing at a reasonable price.

So let's see... the prices are going down and the rents are going up, does anyone see an opportunity here?  Savvy investors do.

It's common sense, isn't it? 

There's an opportunity for investors to get into properties at a reasonable price and get them rented quickly.  Demand is there!

Now is also a great time to purchase that investment property at pretty decent interest rates. 

Finance costs will rise as the economy recovers, so trying to time real estate might not pay off - Justin Sullivan / Getty

Let's take a look at the price of homes in its relationship to the price of financing:

Scenario #1 - Price of a Pasadena home decreases 5% and interest rates increase .5%

Scenario #2 - Price of a Pasadena home decreases 10% and interest rates increase 1%

Today	Scenario #1	Scenario #2
Home Price: $600,000	Home Price: - 5% $570,000	Home Price:  -10% $540,000
Interest Rate: 6%	Interest Rate: +.5% 6.5%	Interest Rate:  +1% 7%
Your Mortgage Payment: $2,878	Your Mortgage Payment $2,882	Your Mortgage Payment $2,874

The assumptions for the above scenarios are 20% down and a 30 year fixed mortgage.

As you can see, even if the prices go down 10%, but the interet rate goes up by only 1%, your monthly payments will be about the same.  Interesting relationship between prices and rates.

With the rental prices going up, interest rates still being historically low and the home prices more affordable, the time could be right to buy a Pasadena home or investment right now.

The question is, is the time right for YOU to buy a Pasadena home right now?  I don't know.  It depends on YOUR individual needs.  

What I would suggest though, is that you get together with a Pasadena Real Estate agent who can sit down with you and take a look at your long term personal or investment plans.  Someone that can provide FACTS not conjecture and then make a decision that is right for YOU.

Also, there's an interesting article in Times Magazine that provides a level look at the housing market - see it here.

If you are ready to see if the time is good for you to buy a home, please do not hesitate to call me at 626.627.7107 or email me at Irina@Irina4RealEstate.com.

http://www.pasadenacarealestatehomes.com/007693

FNMA announced today that it's raising its Loan to Value (LTV) limits.  This means that home buyers can put a lot less money down to buy their dream home. 

It all sounds great, right?  Fabulous news!

NOT Really!

Well it's not as it seems just like all the other announcements that have been made recently.  FNMA is trying hard, but we need to look at other factors.

• Yes... FNMA will allow you to get a loan with as little as 3% down. 
• Any loan amount or a combination of loans, if you're fortunate to find a bank that will offer a 2nd trust deed at this time, over 80% will require Property Mortgage Insurance (PMI).
• Word in the banking industry is that there are announcements from PMI companies indicating significant mortgage insurance retractions that impacted a host of programs - meaning that beginning immediately it will be much more difficult and more expensive to get PMI insurance.

If you are a home buyer in the Pasadena and surrounding cities, be prepared to still come up with a significant downpayment between 20% and 25% down.

There are investors that are offering programs with less money down, but they require FICO scores higher than 700 and at least 6 months of payments in reserves.

Mortgage industry guidelines and programs are changing on a daily basis. 

It is critical that buyers are speaking with a Mortgage Professional early in the process.

Sellers make sure that your Real Estate Agent doesn't just show you a pre-approval letter for a potential buyer, but gets on the phone and speaks with the lender to understand if the buyer is truly qualified and approved to purchase your home.

Be aware of the changes in the market place and stay tuned.  I'll be posting more information on mortgage industry changes as it becomes available.

In the meantime, if you have questions or would like me to address specific issues, please do no hesitate to comment here or send me an email at Irina@Irina4RealEstate.com

http://www.pasadenacarealestatehomes.com/007682

Pasadena, CA - If you currently have a home equity line of credit, don't be surprised if you hear from your banker.  Banks are reassessing the value of ALL Pasadena and Los Angeles County homes that have a Home Equity Line of Credit, otherwise known as HELOCs.

With Los Angeles County being considered by banks as a declining value market, banks are ordering new appraisals to see if the value of your home decreased.  

Letters are going out daily to advise Pasadena home owners that their HELOC has been reevaluated to a lower amount.  Some HELOCs have been lowered by hundreds of thousands of dollars.

Can the banks do it?  Sure.  When you signed your loan docs for a line of credit, language was already built into it allowing banks to reappraise the value of your home.

Don't be caught unawares!

If I can be of any assistance with your Pasadena Real Estate needs, please do not hesitate to email me at Irina@Irina4RealEstate.com or call me at (626)627-7107.  Thank you!

 

http://www.pasadenacarealestatehomes.com/007663

Last week, I wrote a post about buy down loan programs.  What they are and how these buy down loan programs can be advantageous for both Pasadena home sellers and Pasadena home buyers.

Today, I wanted to give you an idea of the types of temporary buy down loan programs available.

One of the most common forms of buy down in use today is the 3-2-1 interest rate buy down.  This is a temporary buy down, which would reduce the buyers overall interest rate by 3% in year 1, 2% in year 2 and 1 % in year 3.

For example, this buy down can reduce the buyers payments by up to $200 per month in the first year, $100 per month in the second year and $50 per month in the third year. The $200 per month reduction in payments is equivalent to giving the buyer an $800 raise in income for loan qualification purposes.

 

 

It will increase the effective income ratio from 28% to approximately 38% for the buyer. Probably more importantly, it gives the buyer time to build up to the higher payments.

The cost to the Pasadena home seller to provide the 3-2-1 interest rate buy down is approximately 5% of the sale price. Since many Pasadena sellers are willing to drop their prices by 5% or more to make the sale, this buy down is within the sellers capabilities.

The advantage is the Pasadena buyer will purchase the sellers house at 4% interest instead of 7% during the first year, giving the Pasadena seller a greater competitive advantage, while giving the buyer a greater perceived purchase value!

Read Also:  Buy Down Loan Programs help Close the Deal

If I can be of any assistance with your Pasadena Real Estate needs, please do not hesitate to email me at Irina@Irina4RealEstate.com or call me at  (626)627-7107 .  Thank you!

 

http://www.pasadenacarealestatehomes.com/007662

City of Pasadena has a great program assisting first time home buyers with down payment assistance.  Herere the requirements:

Prospective applicants must be first-time homebuyers and qualify as Lower or Moderate Income:

#Persons In Family	Lower Income	Moderate Income
1	$42,450	$50,300
2	$48,500	$57,400
3	$54,600	$64,600
4	$60,650	$71,800
5	$65,500	$77,500
6	$70,350	$83,300
7	$75,200	$89,000
8	$80,050	$94,800

• A minimum 3% down payment is required. Purchase prices may not exceed $425,000.
• Monthly payments on the HOP (Home Ownership Opportunities) loan are amortized over the 45-year term but in certain circumstances payments during the first 5 years of the loan term may be waived.
• Upon resale of the home or refinancing, the borrower is required to repay the outstanding amount owned on the HOP loan plus a potentially substantial share of the propertys appreciation in value.
• Homes purchased with HOP loan assistance must be owner-occupied. Other criteria and restrictions apply.
• In addition, interested HOP loan applicants must complete an approved NeighborWorks 12-hour homebuyer education program and be recommended for assistance by Pasadena Neighborhood Housing Services (PNHS)

Please contact PNHS at (626) 794-7191. The Program is undergoing modifications which are expected to be in place by July 2008.

For more information contact Aldra Allison, Project Manager at (626) 744-8314 or email aallison@cityofpasadena.net.

If I can be of any assistance with your Pasadena Real Estate needs, please do not hesitate to email me at Irina@Irina4RealEstate.com or call me at (626)627-7107.  Thank you!

 

http://www.pasadenacarealestatehomes.com/007661

In my previous posts, I referred to Buydown Purchase Plans that Pasadena sellers should be aware of and use to help sell their Pasadena home in this changing real estate market.

Heres a primer on what a Buydown Purchase Plan is:

Buydown purchase plans or ˜buydowns are monetary subsidies given to a Pasadena home buyer to lower his effective interest rate, his monthly mortgage payments and help him qualify for the loan. In times past the homebuilder or seller of the property was generally the party who provided the funds necessary to provide the buydown from sale proceeds. Today, other parties in addition to seller or builder are allowed to participate in buydown plans, including relatives, employers, the buyers themselves, and in some instances investors.

Buydowns have been available for years but were generally permanent buydowns, that is, the buyers overall Interest rate was reduced between 1/2% and 1 % interest for the entire term of the loan. This permanent buydown resulted in the buyer saving $25-50 per month for the entire 30 year term. However, it was very costly to the Pasadena seller and it only resulted in a small decrease in the buyers monthly payments. Temporary buydowns came into being in the late 1970s as interest rates climbed dramatically, putting the payments out of reach for many would be homeowners.

 

The temporary buydown only reduces the buyers interest rates and payment for a short period of time such as 1-5 years but it reduces the initial payments much more dramatically for the homebuyer.  Instead of a $25-50 reduction for the entire mortgage term, the buyers payments could be reduced by as much as $200 per month in the first year, $100 per month during the second year and $50 per month during the third year.  This much larger reduction of the buyers payment puts more buyers in the position to be able to qualify for mortgage loans and make the required monthly payments. The temporary buydown is better suited to many Pasadena home buyers today because they will probably only live in their homes an average of five years, nationwide. As the subsidies are withdrawn the payments will rise but so will the average buyers income. Buydown purchase plans have many names such as discount point buydowns, proceed buydowns, pledged account buydowns, interest rate buydowns and many more.

Even though, the interest rates are at an all time low (or pretty close to it) the Pasadena home buyers can benefit from temporary buydowns since they make it easier to qualify for a loan and allow buyers to afford ˜more house, especially in the first few years of the loan.

The important thing to remember is that all buydowns can be divided into two categories, permanent buydowns and temporary buydowns. 

1. Permanent buydowns will reduce the buyers payment a small amount for a long time. 
2.  Temporary buydowns will reduce the buyers payments a substantial amount for a short time. 

Which is best for you as a buyer will generally be determined by the length of time the you expect to live in the home and how much payment you can afford to make.

If I can be of any assistance with your Pasadena Real Estate needs, please do not hesitate to email me at Irina@Irina4RealEstate.com or call me at (626)627-7107.  Thank you!

 

 

Thanks to Jeff Eliass comprehensive guide for detailed information on buydowns.

http://www.pasadenacarealestatehomes.com/00769F

The Fed has been working hard in trying to make homes, or at the very least home loans, more affordable to buyers.  With the average home prices in Pasadena being around $787,000, the first mortgage loan limits of $417,000 forced many Pasadena CA real estate buyers to get a much more expensive 2nd loan for the difference between the first mortgage and the buyers down payment.

Solution:  the new ˜high balance˜conforming loans that are being offered to Pasadena real estate consumers.   These new loans allow Pasadena buyers to get the first trust deed as high as $729,750.  This applies to most of the Los Angeles county and includes Pasadena, San Gabriel, San Marino, Monterey Hills, Arcadia, Temple City, Monrovia, Sierra Madre, La Canada, Arcadia, Duarte, Burbank, Glendale and surrounding cities. 

Will this help?  Maybe¦   These loans do allow a higher loan amount, but these high limit new conforming loans have pretty strict guidelines and cost more than what we previously have come to expect from our conforming loans.

To make it easier for our Pasadena buyers, I put together a quick outline of the features of these ˜high balance loans that home buyers can refer to:

 

• You can now get your Pasadena First Trust Deed home loan amount up to $729,750
• Buyers will need to have a MINIMUM credit score of 700 (FICO)
• Most lenders require a minimum of 10% down, mostly 15% to qualify.
• Available programs include 30 and 15 year fixed loans.  Loans that are fixed for 10, 7 & 5 years and then move to an adjustable.  Also being offered are 30 and 5 year interest only loans.
• These loans apply to Single Family Homes and are not allowed for 2nd or vacation homes or multiple units.
• You will need to occupy your Pasadena home to qualify.  Non-owner occupants are not eligible.
• Cash out refinances are NOT allowed.
• Refinance to combine current 1st and 2nd mortgages are NOT allowed
• The buyers debt to income ratio needs to be a max of 45%
• Full verification of employment or income is required
• A maximum of 3% seller contribution allowed.

 

AND most importantly, these loans will cost you about 1% higher than the standard ˜conforming loan (under $417,000) and 1% lower than jumbo loans.

 

http://www.pasadenacarealestatehomes.com/007660