Brexit May Hurt and Help the Economy

Brexit -- the exit of Britain from the European Union via the U.K. June 23rd vote -- brought a sharp reaction in global markets. The drop in the Euro and the British pound, to the U.S. dollar rate, is good news for U.S. travelers going there. But Britons will now need to pay more for U.S. exports, and it may mean fewer goods sold by American to the U.K. in the future. But the U.K. only accounted for less than 4 percent of American exports in 2015, so the effect on the American economy is not likely to be direct.

There are other impacts though, as Brexit further delays any increase in Fed rate hikes, the rate hike that has been so long predicted to be coming. While this can be seen as great news by buyers and homeowners wanting to refinance, it also decelerates U.S. economic growth. On the other hand, Treasury yields on the 10-year note went down, followed by mortgage rates. Mortgage rates may well stay at 2012 levels.

--from California Association of Realtors Market Snapshot


How Long to Wait to Buy After Foreclosure or Other Negative Event

According to The State of the Nation's Housing 2015 report published by Harvard University, "Up to 1 million households who lost their homes to foreclosure have already restored their credit standing, making them again eligible for FHA and other mortgages, and 1.5 million more could do so shortly."

Return buyers are coming back into the market, and will continue to do so, but one of the problems is, many buyers out of the millions who were foreclosed upon between 2008 and 2014 are not aware of the guidelines under which they may repurchase. Plus, many buyers are under the impression that all purchases for owner occupied mortgages require a 20% down purchase.  This is not a mandatory requirement but depends on which kind of loan being applied for, and how long it's been since the negative event was concluded in the past. Briefly, FHA loans allow for a minimum of 3.5% down, VA has similar program, and conventional loans may be 5%-10% down and offer different interest rates and scenarios for the buyer.  Twenty percent down loans are great to have, but many people cannot meet that level, so please understand there are other options.

A lot of buyers who suffered a financial hardship in the past are genuinely surprised when they realize that the FHA or VA loan allows them to purchase again after just 1-3 years, depending on circumstances. Let’s take a look at the 2016 mortgage waiting periods:

Conventional loan:  Close of escrow, meaning new loan date, must be 7 years from foreclosure date.  And, under a new rule, if you included the foreclosure in a bankruptcy, you can qualify after 4 years instead of 7 years. Contact your lender for more details on how to qualify under this new rule.

FHA  It is 3 years before you can repurchase again using FHA financing. Contact your lender to find out how you may quality after just one year (this means meeting "special circumstances" which fewer borrowers will be able to meet).

VA.  It is only 2 years before you can repurchase again using VA financing.


Conventional.  It is 4 years before you can repurchase again using Conventional financing.
New Rule: There was a new change implemented recently (see below), whereby if you included the short sale in a bankruptcy 13, you can qualify after 2 years instead of 4 years.

FHA. It is 3 years before a buyer can repurchase again using FHA financing. But there are 2 less commonly used ways to help you qualify in less than 3 years if you can meet them under suffering an "economic event" as defined by FHA.  Contact your lender for more information on this, but be aware that showing loss of income and other events must be documented and approved in the loan.

VA. It is only 2 years you can repurchase again using VA financing.

Here are the current 2016 waiting periods when you can purchase or refinance again after a Bankruptcy and want to obtain either Conventional, FHA or VA financing.

Conventional. For a chapter 7 Bankruptcy it is 4 years and 2 years for a chapter 13 bankruptcy, before you can repurchase again using Conventional financing.

FHA. For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before you can repurchase again using FHA financing. Or, see above for how you can qualify again after just 1 year if you experienced an economic event.

VA. For a chapter 7 Bankruptcy it is 2 years, and 1 year for a chapter 13 bankruptcy, before you can repurchase again using VA financing.

Another option if you want an alternative to these guidelines, is a portfolio lender (a loan that is not  re-sold on the market after close of escrow), which may be an option, but there may be higher loan rates.

To find out your eligibility, I can help you with finding resources to doublecheck on dates, so please contact me, or, contact a lender if you know one who is well-versed in these guidelines, to find out your eligibility for a mortgage.


Financing Energy Efficient Property Improvements via the HERO Program (aka PACE)

The clue to how these programs work when purchasing qualifying energy efficient improvements is in the name:  Property Assessed Clean Energy (PACE).  These particular programs are NOT loans or leases, they are County-approved financing programs whereby a bond is issued to the lender for projects permanently affixed to a property, repaid through property taxes.  Homeowners repay financing annually through an assessment on their property tax bill.  The projects could be solar panels, windows, doors, air conditioning and heating, to name a few.

While the attraction is in the no-money down for specific residential improvements (there are commercial programs as well),  the prospective customer should read the fine print before purchasing.  Under these HERO/PACE programs, the are liens placed on the homeowner's real estate tax bill which, because it's a property tax assessment, takes priority over a home loan. Should the homeowner wish to sell or re-finance, be aware that FNMA and Freddie Mac--source of most conventional mortgages--are prohibited by the Federal Housing Finance Agency from purchasing a mortgage loan on that property until the entire lien is paid off or does not have priority over a first mortgage lien.  (FYI:  most mortgages are sold to those entities.)   Here are additional words of warning from Kevin Nunn, a lender in the Sacramento area:
If the system is owned make sure it is not financed through one of the PACE programs that are being promoted right now. Homeowners are led to believe these “assessments” will just transfer over to a new buyer. Fannie Mae and Freddie Mac have been very clear that they will not purchase a loan with these “assessments” in place. It often comes as a very big surprise to owners and Realtors that the PACE must be paid off or they may only be able to sell to a cash buyer.
 On a Los Angeles County property tax bill, the lien assessment would be located under "Direct Assessments" section.  Some examples of how the assessment will appear are WRCOG Hero, LACEP RES PACE, LACEP RES 2016, LACEP COMM or California Hero to name a few.

If the homeowner stops making property tax payments, the assessment becomes a priority lien in front of a new first trust deed.  Also, when selling, the seller under California Association of Realtors purchase contracts, is required to make a disclosure to the buyer during escrow of any type of lien or lease of equipment on the property.  As an involuntary lien, it will also show up on a preliminary title report passed to the buyer during escrow, at which point the buyer may decided he/she doesn't want to pay an annual $3000.00 assessment in addition to regular property taxes.  

The seller or buyer may pay off the lien before close of escrow  (assuming the buyer is willing and able), or the amount may be split between them.  

While these programs have been most popular in the Inland Empire, they are now approved in Los Angeles County and almost all cities in  LA County, including Long Beach.  

However, there are other owned or leased equipment programs which are in place based on different criteria, and may be less complicated than those under HERO/PACE programs, so be sure to check the difference.


Down Payments and PMI: Get the Facts

If you're in the market to buy a home, your down payment is likely top of mind. And no doubt you've heard the rule of thumb that you shouldn't buy a home unless you can put 20% down. Before accepting this myth, it's important to do your homework, weigh the pros and cons regarding your down payment options and get the facts, such as:
  • A growing number of borrowers are putting down between 5 and 10%.
  • Today, you can put down as little as 3% through mortgage options like the Freddie Mac Home Possible AdvantageSM mortgage.
It's a fact that the more you put down, the lower your monthly mortgage payment will be and the less you'll owe the bank. It's also a fact that homebuyers who put at least 20% down don't have to pay Primary Mortgage Insurance (PMI), an added insurance policy that protects the lender if you are unable to pay your mortgage. However, if putting 20% down is not an option or will deplete all of your savings and leave you with no financial cushion, it's probably not in your best interest.
While you'll have to pay PMI for a conventional loan with a down payment of less than 20%, you'll still be able to take advantage of today's low mortgage rates – especially the 30-year fixed rate mortgage that can offer you security and peace of mind throughout the life of your loan.
Plus, once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.
THE MATH: $200,000 HOME – 5% Down vs. 20% Down
Down Payment$10,000$40,000
Loan Amount$190,000$160,000
Mortgage Type30-year fixed-rate30-year fixed-rate
Interest Rate4.5%4.5%
Monthly Mortgage Payment (Principal and Interest)$962.70$810.70
*Assuming an insurance rate of 0.51%; this cost can be cancelled from your payment once you reach 20% equity in your home for conventional loans.
**Does not include property tax and homeowners insurance payments
Carefully evaluate your finances to determine how much you can afford and talk with your lender or housing professional about down payment options that make best sense for you.


Starting in 2016, Delinquent HOA Fees May Be A Part of Your Credit Score

Consumers' financial obligations for mortgages, auto payments and credit card payments have long been part of their credit profile. However, HOA dues payments have not. Although non-payment of HOA dues, in California, can eventually even trigger foreclosure by the Board of Directors, these payments have not been in included in credit reporting agencies. Now, Sperlonga, a credit data aggregator, is the first company to provide HOA payment and account status data to Equifax, which is one of the three major credit-reporting agencies. "A full rollout of the new HOA reporting to Equifax will go live in October 2016. And property owners who do pay on time will see a similar reflection on their credit scores.

According to the Community Association Institute, homeowner associations and property management companies collect approximately $70 billion in HOA payments each year through at least 333,000 community associations." Owners with a history of delinquent payments and/or non-payment can cause a great deal of financial problems for an association, especially smaller associations fewer than 10 units where there is a smaller risk pool. An HOA's operating budget and reserve funds may not be able to keep up with needed maintenance and infrastructure replacements without timely payments by all members, and those associations with more available funds will be stuck with fees and costs of pursuing delinquent owners, an eventual cost to all owners.

If you're contemplating buying a condominium or other property within a homeowner association, you are also agreeing to pay for your share of the common area upkeep, including insurance and maintenance costs. This is one of the reasons why your lender must order certain documents from the association during escrow to make sure you are well qualified to cover the fees and costs, as well as including that information in your upfront loan qualifying process. For people who may have reasons for temporarily falling behind in payments, a board may well be negotiable in setting up a payment plan--it would pay to approach the Board or your property manager for a discussion before becoming a delinquent owner.


Beautiful Signal Hill Home in Skyline Estates Waiting for a Buyer!

Home on Sea Ridge
This desirable highly sought after home is still on the market.

It is located in the beautiful Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 
View towards San Pedro
Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round. 

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS#  PW16034526.
View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609.

Sales Volume in Los Angeles County is Down, Prices Continue Upward in 2016

Long Beach, a great city to live in.
The median price of an existing, single-family detached Los Angeles County home rose in March to $545,000 from $535,250 in February. The March 2015 median price was $510,000.  All data comes from Realist. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.

But while prices are going up in the County as a whole, sales volume has decreased dramatically:
the number of single family homes sold in March 2016 was 1,853; in February, 2016 it was 3,924; in March 2015 homes sold was 6,380 and in February, 2015 it was 5,109.  This is a sales volume decrease of 50% and greater compared to the same time last year.

The 2016 sales volume for Orange County is a similar picture, but with lower numbers: total SFR sales are 1432 and 1407 for February and January, respectively.

Less inventory means much more competition for buyers in Long Beach, especially in the lower prices range under $500,000 which sell in 40-60 days on average (or less), while properties in the $1,000,000-plus range are on the market for well over 90 days on average.

While housing prices continue upward, housing affordability in California is increasingly a topic of concern.  Another indication of housing prices is that investors are buying fewer single family and multi-family properties.  California Association of Realtors's 2016 California Investor Survey found 10 percent of real estate investors purchased more of the other types of properties, such as commercial, land, and mobile homes, in the past year compared to previous years.

Lack of inventory, especially in Southern California, can be an issue for sellers who want to move on--but for those moving out of the area, or for those who have all cash for a purchase, the ability to move on may be much easier, and would bring more housing inventory onto the local market for sale. From that standpoint, it's a good time to sell while interest rates are still so low.  Please contact me for a customized report on home value for your property!


Some Homeowners May Be Helped by New Principal Reduction Plan

Grow a new start
While the number of distressed properties on the market has declined greatly, there are those homeowners who are still suffering through with high mortgage payments.  While the Los Angeles/Southern California home market has risen greatly and lifted many "underwater" mortgages out of the pits, some may still find help in this new loan principal reduction program by the Federal Housing Finance Agency.

Nationwide, this program is expected to help approximately 33,000 borrowers, not a large number overall compared to the housing crisis at its peak, a fact the program's critics like to point out: too little too late.  The unpaid principal balance must be no more than $250,000, borrowers must be 90 days delinquent prior to March 1, 2016, and the loan-to-value must be 115% of fair market value. This program is considered a final effort to avoid foreclosure for borrowers who cannot afford to pay their mortgage.  (Just a reminder: a complete assessment of an applicant's financial status with all documentation to be submitted, will most certainly be required in order to apply and be approved.)

FHFA will be sending out solicitation letters by October 15, 2016.  Requirements are outlined at this link.

For another program, California Housing Finance Agency (CalHFA) offers Keep Your Home California, a program that over 62,000 Californians have qualified for so far.  This program offers four different kinds of assistance, including mortgage principal reduction assistance.   By following their online series of questions, you can find out if you qualify.


California Retrofits for Earthquake May Save A Lot of Grief

For 1000 owners living in certain Southern and Northern California zip codes including Los Angeles, Pasadena, South Pasadena, Santa Monica, West Hollywood, and elsewhere, money was available as of January 1 for grants up to $3,000 for earthquake retrofit. 

Although those owners have probably all been selected by now, basic retrofits are not costly overall and can be done by following the idea in the illustrations.  By doing simple bolting and bracing, a lot of damage can be prevented and may even cost less than $3000 depending on who performs the work or the construction issues of the foundation and walls.  Cripple walls are not present in all homes, but if they are, and the house is not bolted to the foundation (pre-1933 homes were not required to be), then a retrofit ought to be of special interest.
Crawl Space view

Since Long Beach is a larger city than Pasadena, and was developed in the same eras, it seems quite an oversight that it was not included in this program.

Earthquake Brace and Bolt, site for the California Residential Mitigation Program, explains more, and also provides FAQs and a search engine for licensed contractors.

Why should this be of so much importance? "California has two-thirds of the nation's earthquake risk. Some 2,000 known faults crisscross the state, producing an average of 102 earthquakes a day – more than 37,000 a year. Certain structures that lack adequate bolting and bracing are more vulnerable to earthquake damage. Older houses are often not bolted to their foundations and lack bracing on the wood framed exterior walls enclosing the crawl space. Houses without adequate bolting and bracing are prone to sliding or toppling off their foundation during an earthquake. This type of serious damage can be prevented with proper seismic retrofit of the crawl space."

What can you expect if you buy a pre-1933 home in Southern California?  You may very well find that no retrofit has been done, and it's not something that is ordinarily asked of the seller during escrow because it's not a "repair".  Such work is usually up to the new owner of the property, and is well worth the expense.   Why didn't the previous owner do that work? That's the topic of another post.

See http://www.latimes.com/local/lanow/la-me-ln-quake-retrofit-grants-expanding-to-more-california-single-family-homes-20151118-story.html


February Home Prices in the Long Beach Area for February 2016

February 2016 Los Angeles County Sales
Why the sluggishness in sales?  The ripple down from the top tier of sales is being felt:  "In markets like Oakland, Portland and Washington, the prices for high-end homes are rapidly rising — the rungs of the ladder are moving further apart — and that makes it harder for people who own mid-tier homes to trade up. And when they get stuck, people who own starter homes have a harder time trading up, too."  http://preview.tinyurl.com/gpdc3lj  San Francisco could easily be mentioned too.

It's always speculated in an election year that sales are affected, but it is more likely due to higher prices and lower affordability overall.  

In Los Angeles County, the median priced home in February, 2016 was $530,000 (up from $457,870 in January, 2016), and condos were at $450,000, (up from $409,000 in January, 2016). However, the February sales volume for each type was less than half of the prior year volume, and well below January sales numbers.

Below are average prices for Cerritos, Long Beach, Lakewood , and Seal Beach single family homes.  The four cities have changed between -1.8% to 14% from January.  Current average price - Long Beach $637,112; Cerritos - $682,431; Lakewood $4501,775; Seal Beach $1,066,938.

Average condominium prices increased only in Long Beach, by 22.8%, and are ranging from $237,666 (Cerritos) to $289,667 (Seal Beach), $292,500 (Lakewood) and $379,522 (Long Beach).

While there is an increase in Long Beach average home price, it has the advantage of offering greater types and prices in the housing market compared to surrounding cities.  Still a good time to buy with lower interest rates!


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