CalSTRS Loans Allow for 3% Down Payment

These are great loans for employees of the California public school districts or California community colleges--and, being a first-time buyer is not a requirement. This program is for any employee, and is not restricted to teachers only.

The 80/17/3 program means the buyer's down payment is 3%, and the 2nd trust deed is the 17%. The interest rates on the 1st and 2nds are the same, and right now they are at 5%. A borrower can take out 50% of what is in their account, and the FICO score requirement on the 3% down is 620.

Buyers, if you belong to STRS, these are great opportunities. Other than FHA and VA loans, there are virtually no other opportunities for low down payment programs. And while currently an FHA loan may be allowed as high as $729,750, the maximum CalSTRS loans go as high as $650,000 which is still very competitive for many Southland and Long Beach areas, and certainly for much of the condominium market.

For a conforming sales price of $521,250, 1st loan amount of $417,000 and 2nd of $88,612, borrower's 3% down payment, the principal and interest at the current 5% interest rate would be $2238.55 (excluding property taxes and insurance, no payment on the second for 5 years).

One year ago the rates were 6% and that same loan amount scenario required a P&I payment of $2538, or $300 more.

For loan amounts over $417,000 up to %650,000, interest rates are currently at 6%

Rates are current as of today, April 1.

To find a lender doing STRS loans in the Long Beach area, please contact me.

562-896-2609

www.juliahuntsman.com

Sales Trend is Getting Stronger in Long Beach Area

If you saw the post from earlier in the month, you read about the strong decline inventory in Long Beach for February 2009 to 6 months and under, especially compared to the same time last year (data courtesy of RealDataStrategies and the SoCalMLS). The chart at the right shows the upward movement (although I don't believe "median price" data is necessarily applicable to all local areas or neighborhoods due to many other conditions). There's additional news around about some 2008 markets actually increasing over 2007, per Anthony Carr's post at Realty Times, including:

"Texas - 3.6 percent, South Dakota – 3.6 percent, Montana – 2.6 percent, Mississippi – 1.7 percent, Utah - 1.5 percent, New Mexico - 1.3 percent".

This data comes from a Bloomberg.com report using data by FirstAmerican CoreLogic, based in Santa Ana, California.

And, per Dataquick's March 19 report for California statewide sales, the increase has been going on here for the last 8 months, while the median price remains stable:

"An estimated 29,225 new and resale houses and condos were sold statewide last month. That was down 0.8 percent from 29,458 in January and up 42.5 percent from 20,513 for February 2008. Sales have increased on a year-over-year basis the last eight months."

Dataquick's report for February for Southern California: "Sales have increased on a year-to-year basis since last July."

"The market is so tilted away from normal mainstream activity that it's impossible to generalize or predict based on the atypical patterns we're seeing. That means that normal demand and supply is building up. The floodgates could open once mortgage credit starts to open up," said John Walsh, MDA DataQuick president.

Further, in the Long Beach area, February of this year is reportedly 3rd highest in sales after October and November of 2008. And today, Freddie Mac states mortage rates are near or at the bottom, and any further reductions would be "incremental". Rates for 30-year fixed mortgages are at 4.85%, the lowest in its history of surveys which began in 1971, "down a full percentage point from a year ago", and rates for a 15-year fixed mortgage dropped to 4.58%.

With constant repetition in the media about foreclosures and the hard times of many, it's hard for buyers to believe that by waiting, they can be waiting too long for their area. If the current decline in housing inventory persists, the competition scenario is likely to emerge at some point in time in certain areas, in fact it already has for some properties judging by the show of hands at last Thursday's broker meeting from agents dealing with multiple offers for their clients.

Homebuyer's Remorse and Does It Go Away?

I'll get straight to the answer: Yes, if you work at it, in about 6 months (for many people). It starts going away after you begin to get used to your new monthly payment, fall out of love with the property and see it through normal clear lenses, and realize that in fact you did look at other houses, but you chose the one you're in. The operatives words here are: "you chose the one you're in", because after all, in California in particular, there are many contingencies, many opportunities to review disclosures and reports and ask questions, review the seller's disclosures and approve or disapprove them, plus have a full contingent 17-day period in which to cancel without losing more than the cost of your physical inspection. (You did get one, right?)

Yet people like to play a little game, and somehow minimize, or even erase, their part in the decision-making, or worse yet, lie to themselves: "The self-interested devil made me do it." Well, we all do a little of that at one time or another, it takes the pain away, but if you're really grown up about yourself, you finally and quickly wake up and stop kidding yourself.

Webster's dictionary defines remorse as: "A gnawing distress arising from a sense of guilt for past wrongs." So how can you minimize this period (because it's bound to happen to one degree or another)?

• Did you buy this property after you thoughtfully considered your needs and desires, or did you buy it to please someone else?
• Did you take the time during escrow to really review your documents and ask questions.
• Did you drive the neighborhood or talk to neighbors?
• Did you try to get married, throw a debutante party, go abroad for at least two weeks and then come back and work 100 hours a week?
• At the close of escrow, did you still feel this was the right property for you?
• Did you review your loan documents and ask your lender questions?
• Have you ever handled a monthly payment in your current amount, and did you review that amount carefully prior to close?
• Did you feel that you did enough homework about your purchase, or could you have done more?
• Did you work out a budget for yourself taking into account your new purchase, i.e., property taxes, homeowner insurance, monthly maintenance and bills.
• Did you consult with your tax accountant so that you can realize the full benefit of all your federal and state tax deductions, including mortgage interest and property taxes?
  

So you bought this for yourself, you knew what your monthly payments would be and you believe you did all your homework? One more important thing: It's important to be emotionally ready to own a home, because there is a responsibility that you don't have as a renter. Otherwise, what you have is the common phenomenon known as buyer's remorse--refer back to Webster's definition and the involvement of guilt.

This remorse goes away, usually after you get through your first year and learn about the financial plusses of having bought a property where you may build equity over time, having numerous tax advantages, and knowing you cannot be evicted by a landlord. For a little more perspective, read this New York Times article on homebuyer's remorse.

Homeowner Associations and Fannie Mae Loans

Effective March 1, 2009, Fannie Mae is implementing changes to their condo financing guidelines “in light of the current condo market and the need to mitigate risk on condo loans”. Some of these changes may affect a buyer’s ability to obtain conventional condo loans for new and established condos, and have consequences for condo sellers, principal residence buyers and investor buyers in condominium projects.

Whether you're a buyer or a seller, it will pay to consider these issues in advance of buying or putting your condo on the market. You are more likely to attract a strong buyer if your HOA meets these guidelines, and if you are an investor buyer, you especially would want to find out the nature of ownership in a project if you're obtaining a loan, and even if you're a cash buyer, you would probably want to anticipate your future selling situation. Underwriters/lenders do review association documents during escrow, and these are some of the things they're measuring.

According to FNMA, these guidelines may be modified on a case-by-case basis, but here are the basic guidelines for established HOAs:

• No more than 15 percent of the total units in a project can be 30 days or more past due on the payment of their condominium/association fee payments.
• Fidelitybond/fidelity insurance required for new and established condominium projects with more than 20 units-- thus ensuring that homeowner association funds are protected.
• The borrower must obtain a “walls-in” coverage policy (commonly known as HO-6 policy) unless the lender can document that the master policy provides the same interior unit coverage. The HO-6 insurance policy must provide coverage in an amount that is no less than 20 percent of the condominium unit’s appraised value.
• No single entity (the same individual, investor group, partnership, or corporation) may own more than 10 percent of the total units in the project.
• The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible.
  

The Long Beach Market Inventory Slips Below 6 Months Supply

For February 2009, out of 11 zip codes in this report for Long Beach, only one zip code area had slightly more than 6 months' supply of inventory--in some areas the inventory for detached housing was as low as 1.6 months supply. This is a definite decrease from December 2008 when the months' inventory spread was from 2.9 to a high of 9.1 months of supply.

For attached housing (i.e., condos) the inventory supply is more: Across the same zip codes, the months' supply extended from 2.0 to 7.6, with the biggest inventory for condos under $400,000.

Comparing all of Long Beach to detached properties (houses) in other cities, Long Beach has 3 months inventory supply overall, which is more than La Palma, Cypress, Lakewood, Cerritos, La Mirada, Buena Park and Norwalk have, in that order. La Palma is down to .9 months of inventory left, overall. However, certain price categories may be different than the overall picture: for instance, houses in the $300,000 to $400,000 price range in Cerritos have 6 months, the greatest amount of supply, with some higher price ranges down to 1.1 months of inventory supply.

As you might already know, the 6 month line in real estate cycles is nationally considered the benchmark between a buyer's or a seller's market, so for some locations in these cities, choice for a buyer may now be more critical than in the past 2-3 years. "Supply and demand in the housing market is considered balanced when the inventory settles at about six months," according to the National Association of Realtors.

At least two reasons for this decline in inventory are great difficulty for buyer qualification for loans and loan origination guidelines which are increasingly stringent; and/or sellers not getting their price and thus taking properties off the market.

So for sellers who are ready to take advantage of this market, whether you're selling short or you've got equity, you may find a buyer!

How Are Your Buying or Selling Decisions Really Made?

"Predictably Irrational" sounds like a book about the real estate market. But it’s not, at least not directly. It is certainly relevant reading for real estate agents, brokers, and managers. The full title of the book is Predictably Irrational: The Hidden Forces That Shape Our Decisions (HarperCollins, 280 pp.). It is written by Dan Ariely who holds a joint appointment at MIT between the Media Laboratory and the Sloan School of Management. He is one of that relatively new breed, a behavioral economist.

While not every insight in this book would have a direct application to real state, some come pretty close. Consider this passage from the chapter, “The Truth about Relativity”:

Suppose you’re shopping for a house in a new town. Your real estate agent guides you to three houses, all of which interest you. One of them is a contemporary, and two are colonials. All three cost about the same; they are all equally desirable; and the only difference is that one of the colonials (the “decoy”) needs a new roof and the owner has knocked a few thousand dollars off the price to cover the additional expense.

So which one will you choose?

The chances are good that you will not choose the contemporary and you will not choose the colonial that needs the new roof, but you will choose the other colonial. Why? Here’s the rationale (which is actually quite irrational). We like to make decisions based on comparisons. In the case of the three houses, we don’t know much about the contemporary (we don’t have another house to compare it with), so that house goes on the sidelines. But we do know that one of the colonials is better than the other one… Therefore we will reason that it is better overall and go for the colonial with the good roof, spurning the contemporary and the colonial that needs a new roof.

Ariely fills this chapter with examples and experiments that show how our decisions and expressed preferences demonstrate “the problem of relativity – we look at our decisions in a relative way and compare them locally to the available alternative.”

What do you think? Are your decisions sometimes made according to "behavioral economy?"

Thanks to Bob Hunt of C.A.R. for this article

First Time Buyer Programs in 2009

The timing is right, and financial opportunity is here, ... in the form of buyer programs, they are also called mortgage assistance programs.

A basic requirement is that the buyer be a "first-time buyer". If you haven't owned any property in a long time, that may also qualify you.

These programs are invariably sponsored by a local city, or Los Angeles or Orange Counties.

Another feature is there may be a "silent second", which means there is no monthly payment due until a certain date, or the property is sold, depending on the program. These are down payment assistance programs provided through qualified entities.

There may be income restrictions and household size maximums, geographic area buying restrictions in some programs, or current residence requirement restrictions, and U.S. citizenship or permanent resident status is required.

Principal residence (no income investments) of a single family home, condominium or townhome.

NOTE: No 100% financing--buyers must have "skin in the game", although on one program the buyer contribution is only 1%, most are up to 3% and 5% down payment levels, depending on FHA or conventional loan requirements, and must be from the borrower's own funds.

The exciting news is that if the buyer falls into a program's guidelines, there could be a difference of several hundred dollars a month difference in the monthly loan payment vs. a loan without an assistance program.

So who has these programs?

• The City of Fountain Valley offers up to $150,000 in the form of a "silent" second, with an annual gross income starting at a maximum of $70,600 for a single buyer, up to $133,200 for a household of eight.


• Orange County has a Mortgage Assistance Program offering up to $40,000 for a "silent" second; income starts at maximum of $52,100 for a single buyer. Good in 15 cities including Seal Beach, Stanton, Cypress, La Palma, Los Alamitos, plus unincorporated areas.


• The WISH Downpayment Assistance Grant provides up to $15,000 for each household (funds available on first come, first serve basis). Must purchase in Orange County.


• Orange County Housing Trust has up to 25% of the purchase price (no more than $115,000), for downpayment assistance. Purchase must be in Orange County.


• City of Bellflower Downpayment Assistance Program offers up to $40,000 in a "silent" second, with a single buyer income no higher than $42,450, going up to a maximum of $80,050 for a household of eight.


• City of Long Beach offers a program currently "on hold" but still taking applications.

For more assistance in finding a home in 2009, and getting financial program help, please contact me.

Saving Energy Saves Money in Your Home

Just recently I was in our local Belmont Shore shopping zone and kept walking by a large sidewalk bin of CFL (compact fluorescent light) light bulbs. Somehow, it gradually dawned on me that at $.99 each, these were a real bargain and far below the going price of $5.00+ in most retail stores.

According to flexyourpower.org, replacing standard incandescent light bulbs with compact fluorescent light bulbs savs 75% of lighting costs. If you live in household of several people where the lights may be on as much as half the day, or you live in a condominium building requiring public lighting, this can be a tremendous savings in a year. Not only is it a savings to you, it's a savings for everyone. "If all Californians replaced five bulbs with CFLs, it would be like taking 275,000 cars off the road. "

So I bought a lot more than 5 bulbs, well worth it at $1.00 each--not only are they energy saving, but a 23 watt CFL bulb equals a 100 watt incandescent bulb, and the CFL will burn up to 10,000 hours.

HINT: After trying out different brands, you'll find the right tone for you.

I used the "warm white" from MaxLite, but the end result also depends on the lamp shade or other globe the light will be shining through.

Go to FlexYourPower.org and check out the many other energy saving tips. You really can't lose.

And if you are in Belmont Shore soon, Billings Hardware has a great supply of CFLs.

Brief Explanation of New Buyer Tax Credit

Buyers have until November 30, 2009 to take advantage of this credit. As you may know, not everyone who buys a home in 2009 qualifies for the new $8,000 Federal Tax Credit for a home purchase. Here is the qualification criteria:

• Buyers must be a first time homebuyer (no home ownership in the last 3 years)
• Home must be purchased between January 1, 2009 and November 30, 2009
• The home must be kept for minimum three years
• The home must be owner-occupied
• The credit is $8,000 or 10% of the home's value, whichever is less
• A single person cannot make more than $75,000 for the full amount ($95,000 max. for partial credit)
• A couple cannot make more than $150,000 for the full amount ($170,000 max. for partial credit)
• AND, if someone meets the above criteria AND buys a newly built home, they will receive the $8,000 Federal Tax Credit and the $10,000 California state tax credit as well.

How's that for an incentive to buy a home! Go to my website http://www.juliahuntsman.com/ to find properties under $300,000; for example, right now in Long Beach along there are about 480 condos listed in the MLS, many in the lower price ranges.

More on Tax Credits and Tax Savings for the Energy Efficient

Follow the link to this article for more about tax credits in the Stimulus Bill for being energy efficient, i.e., tankless and solar water heaters!