How Much Can Be Saved With a 15-Year Mortgage Payment?

15 year loan vs. 30 year loan payments

A 15-year loan mortgage payment is not what all buyers can afford, but lower rates are making them very attractive for those consumers who have the ability to make the higher payments.

The 15-year mortgage accounted for nearly a third of all refinanced loans in the first 7 months of 2012, compared to 2007 when they made up just 8.5%.   And the California Association of Realtors reports that "statistics from the Mortgage Bankers Association show that a 15-year loan accounted for 23 percent of refinancing applications in November of last year."

Not only are the long term interest savings for a new purchase evident in the chart to the right, some owners could also actually reduce their current 30-year payment depending on when they took out their existing mortgage:

". . . a couple who signed up for a 30-year $300,000 mortgage in January 2004 with a 5.75% fixed rate would have a roughly $1,751 monthly payment. By refinancing the remaining balance of about $255,828 into a 15-year fixed rate loan at 2.81%, the new monthly payment would be slightly lower at almost $1,744."



Another advantage is that equity is built into the home faster with a short term loan.  Don't miss the opportunity to take advantage of today's lower interest rates if you possibly can!



Are You a California Owner of A Timeshare Property? Beware of Fraud

Timeshares . . . can be a flexible vacation option for many people.  It's a form of property ownership shared with other owners, usually for resort condominiums and vacation home purposes, and can often be utilized in various states and even countries, and offer cheaper accommodations than staying in a hotel or B&B for a week.  The downside is, timeshare ownership may be tough to sell in a down market; there just isn't a huge demand for it when money is tight and/or the market values have declined.

The California Department of Real Estate has just issued a warning and consumer alert concerning the latest wire transfer fraud schemes being perpetrated on timeshare owners. 

Beware of websites, or any other marketers, promising and to buy or help you sell or rent a timeshare, after an upfront fee is paid.  Scammers are requesting payment by money order, wire transfer, bank cashier's check, or upfront cash by the victim, after which they disappear and no further sale or rental of the timeshare takes place.  Vacation timeshares are popular in California, Hawaii and Florida, but properties owned in Mexico are popular targets right now, so avoid dealing with telephone calls or e-mails.

Do not fall for something that sounds "too good to be true", and the DRE advises the owner to contact the timeshare resort developer concerning the communications he/she may be receiving.  The DRE states that amounts wired by gullible owners range from $3250 to $85,000.

Beware of any requests for upfront money to be wired to anyone's account for work not yet done!

Here is more information about who to contact and what you can do if you have been scammed (i.e., the California Attorney General; local district attorney and law enforcement; FTC; FBI, and others.

And, please be aware that in California, proper licensure for upfront fee payment must be obtained.

Please don't let yourself be taken in by fraudulent schemes.

Buying or Renting--What's Best for You?

What should buyers be considering BEFORE they buy?  Looking on the internet gets people into the initial stage of exposure, before they even call a REALTOR.   Most people think the property viewing stage is fun, both on the internet and in person, and it should be enjoyable.  But what about the advance homework?  Internet photos and marketing can get you hooked, but it can also be a nervous, even fearful time, coming to the decision to submit an offer when you're new to the process. Even if you're a repeat buyer, buyer's remorse or indecision will have far less impact if you think over some things in advance, and consider now what your fears may be (it's not unusual to have a few).

Sticker Shock:  Renting might be cheaper than owning -- do you have a mortgage pre-approval with estimated costs before you go out and look?

Home Maintenance: Are you prepared to spend time on painting, fixing leaks (or hiring someone), mowing a lawn, saving up for a new roof? Do you know how much it will cost to heat that pool every month--or just keep it clean? And then there's annual insurance premiums.  Just some of the things to think about.

Have you checked out all utility bill costs for a house vs. your one-bedroom apartment? It would be a smart thing to do now. 

Being a Buyer In An All-Cash Competition

I hear from buyers who put in offer after offer, but don't get the house because of losing out to the all-cash buyer or mostly cash buyer. 

What does such a buyer need to do?  First of all, be prepared to be persistent, and persevere. Next, be totally pre-approved with a good lender.  Know the difference between the average "pre-qualification" letter and a good pre-approval letter from a reputable lender with a local track record and who can close on time, and not surprise you with last-minute underwriting issues that could have been avoided up front.  A good REALTOR can be of tremendous assistance here by pointing you in the right direction, not only with all buyer preparation for an offer, but with the local market. See how quickly you can close, and be willing to negotiate with the seller on some extra days to accommodate their moving date. Be prepared to provide all necessary documentation at the time you submit your offer, sellers want to know they can close the deal with motivated and qualified buyers, not get stuck putting the house back on the market again.

Keep in mind that cash buyers may not offer a seller the most attractive offer, and that a good price from a well-qualified buyer who is getting a loan may stand a very good chance with a motivated seller.  Keep your offer terms clear and simple, and bear in mind that trying to change your contract terms after acceptance by the seller could cause them to cancel and go with one of their backup offers.

Let the seller know you are very interested in their property as your next home (presumably you are), and tell them that when you make an offer.

Last, but not least, review the 10 items to the right to remind you about being a successful buyer! I'm experienced with both 1st time and repeat buyers and can help you position yourself towards success for your next purchase, contact me at 562-896-2609.

People Still Want to Own Their Own Home



The majority of adults still think buying a home is the best long-term investment, and see homeownership as an important long-term financial goal. The majority of renters want to own in the future, and over half of first-time homebuyers bought because they were tired of renting. Over 90 percent of adults surveyed were happy with their decision to buy!

 

 

Are you ready to prepare for buying? Contact me, a Long Beach Realtor with 18 years' experience.

California's Housing Market Projected to Rise in 2013

The good news is that prices are rising in California and the share of underwater mortgages is dropping, but the fact is that 29% of California mortgages are still "underwater" and 15% of them are still more than 125% loan-to-value.

Housing affordability is at records highs with California still over the 50% mark, meaning more than half of California households can afford to buy. Mortgage lending is very tight and "defensive", and appraisals are problematic (example: Many 20% down borrowers are finding their new property doesn't appraise as high as what they agreed to pay for it, but if they can put down another 10% of the purchase price, the lower loan-to-value erases the appraisal issue), and listing inventory is down by more than half compared to one year ago, so opportunity is scarcer.  In fact, in Los Angeles County, we have an average of 2 months of inventory--down from 8 months 2 years ago.  For December, Long Beach had 1.9 months of inventory. 

Why is this?  One reason is that many sellers are stuck where they are due to underwater value, or they are skeptical of moving on, and also because large amounts of foreclosed inventory is being bought up by investors in bulk and rented out.   Distressed sales volume is decreasing gradually, and in California statewide, equity sales are now about 64% of the market.  But expect short sales to stick around, they have been about 23-24% of the market since 2011.

2013 California Market Recovery

There is a pent-up housing demand, and job creation is one thing that can loosen up the housing market--the prediction is that new housing construction will begin again in California with the improvement in jobs. 

Each city and each area has it's own local real estate market, but tight inventory, short sales, and loan issues are very much a universal picture in the local, state and national areas.  Overall, the California market is predicted to increase in 2013.


And, another important fact:  According to a REALTOR survey, buyers are more optimistic than ever before about buying, in spite of all these other factors -- because housing affordability still makes this a great time to buy (something seller need to think about also).  Thanks to Leslie Appleton-Young, California Association of Realtors, and her report of January 11,2013.

For an agent very familiar with the Long Beach/Lakewood/Cerritos areas, please contact me at julia@juliahuntsman.com, or my phone!

Benefits of the New (and Extended) Tax Laws for 2013

Much has been written about the last-minute passage of the "fiscal cliff" issues by the federal government.  But, remember there are state level issues as well, some of which are still being worked on in California., specifically SB 30.

In 2007, the new law provided, for five years, incentives for sellers to accept short sales by, in many instances, forgiving taxes that would have been due for the forgiven debt amount.

Previously, when a lender forgave a portion of borrower debt, the forgiven amount was, in many instances, considered taxable income for the borrower.

This tax incentive for sellers to participate in short sales was just extended by Congress for another year, expiring January 1, 2014; however, California's exemption under the Mortgage Forgiveness Debt Relief Act expired at the end of 2012, and currently forgiven mortgage debt is taxable state income.  SB 30 (Calderon) has been introduced, and if and when passed by the California legislature, it will make California conform to federal law, and will be retroactive to January 1, 2013.

Not all debt is forgiven in every instance. Sellers should check with their tax consultant for exceptions. For example: Maximum amount that can be forgiven is $2,000,000. To be forgiven, the debt must have been used to buy, build or substantially improve their principal residence

Other housing-related provisions brought into effect with the new laws are:

• A 10% tax credit up to $500 for homeowners' energy improvements to an existing home, and is retroactive for 2012.
• Capital gains rates remain at 15% for incomes under $400,000 (individual) and $450,000 (joint); above those income levels gains will be taxed at 20%.  On sale of principal residence, the gains rate remains at $250,000 (individual) and $500,000 (joint).
• An 2011 expired tax deduction for mortgage insurance premiums (MIP and PMI on loans) has been restored and is retroactive through 2012.
• The new "Pease Limitations", per California Association of Realtors, are at "$300,000 for married taxpayers filing jointly and $250,000 for single taxpayers (i.e., a married couple with an AGI of $400,000 would be $100,000 over the threshold; the couple’s deductions would be reduced by $3,000 which is 3% of $100,000). No matter how high a taxpayer's AGI, the Pease reduction cannot exceed 20 percent of the amount of itemized deductions otherwise allowable for the year." These were named after Ohio Congressman Don Pease and were first enacted in 1990.
• The first $5 million dollars in individual estates and $10 million for family estates are now exempt from the estate tax. After that, the rate will be 40%, up from 35%. The exemption amounts are indexed for inflation.
• More at http://www.toptennewhomecommunities.com/blog/fiscal-cliff-bill-addresses-some-key-housing-issues/