The Wilkas Group » Lending

A New HomeBuyer Assistance Program in Millbrae

lenorewilkas — Tue, 27 Sep 2011 00:21:57 +0000

It’s sure been a while since I’ve seen anything like this one. If you want to buy a new home and are in need of some financial assistance to do so, you just might want to check this out. If you qualify, there’s a $15,000 cash assistance program for you. There is a catch, though. Isn’t there always one? You must be buying a new condo only at the Belamor Millbrae Paradise and it must be done before November 30,2011.

The good news is that BMR units, that’s Below Market Rate units are included in this program! This condo property is really beautiful and the condos are done with all of the bells and whistles you’d hope to find in a high-end property. They’re close to the transit hub in Millbrae for CalTrain or BART commutes.

Here are the Rules.

1. If you intend to buy a unit you need to download an application for this program here.

2. Be Pre-Approved for a loan before you apply for this program but make sure your lender is aware of this program and has seen the application.

3. Go to 151 El Camino Real in Millbrae and pick your new home.

4. Sign the contract for the purchase. If you need a Realtor to represent your interests, and I suggest you have one, call us.

5. You also must bring your application, which has been filled out in full, along with you when you’re ready to buy your new condo. Make sure you have made a copy of it to give to your lender.

6. Once you’ve been approved by your lender, you must notify Belamor Millbrae Paradise that the loan underwriter has approved you so they can proceed with the paperwork with the City of Millbrae. The City will deposit $15,000 into your escrow account. You will not be able to choose the title and escrow company for your purchase so be prepared to work with the company Belamor Millbrae Paradise has selected.

7. Once you have signed all paperwork at the Title company, and have been notified that you are on record with the County of San Mateo as the home owner you then go to the sales office of Belamor Millbrae Paradise to get your keys and a home warranty.

This really is the first home assistance program I’ve seen in several years. Don’t expect the offer to last long. Once the amount of money Millbrae has set aside for it is used up, you’ll be out of luck.

If you need help with this contact us.

Thinking of Buying a Home? There’s Going to be a Cost in Waiting: San Mateo CA

lenorewilkas — Mon, 25 Jul 2011 17:12:04 +0000

I like to work with several lenders and it allows me to refer our clients to different personalities and companies. We generally prefer working with a loan broker who has access to many different loan programs, rather than having a bank as the lender. You are stuck if you chose a bank and they don’t have any good programs for you. You’re at their mercy. Look for loan brokers. They offer so much more to their clients.

Shashank Shekhar is one of my lenders of choice. He’s just done this little video to explain why there’s going to be a cost in waiting to buy a home if you’re still thinking things will drop in price. Believe me, in our part of the world, what I like to refer as Fantasy Island, don’t expect to see anything dramatic happen with prices. We just don’t have enough housing for the people who need it. That’s why prices remain higher than any other place in the Country.

Take a few minutes to listen to what he has to say. If you aren’t already pre-approved for a loan and want to buy, then do something about that now, before it costs you more by waiting. You can reach Shashank at Arcus Lending and his contact information is at the end of his video.

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Here’s what’s happening in the San Mateo real estate market. Contact us if you see something you like.

Showing properties 1 - 30 of 60. See more city of San Mateo real estate.
(all data current as of 2/11/2012)

$349,000 : 1758 Shoreview Av, San Mateo

2 beds, 1 full bath

Home size: 820 sq ft

Lot size: 6,100 sq ft
$525,000 : 3502 Martin Dr, San Mateo

2 beds, 1 full bath

Home size: 1,000 sq ft

Lot size: 6,790 sq ft
$478,000 : 1654 Wolfe Dr, San Mateo

4 beds, 2 full baths

Home size: 1,540 sq ft

Lot size: 5,300 sq ft
$399,000 : 1668 Taylor St, San Mateo

3 beds, 1 full bath

Home size: 1,190 sq ft

Lot size: 5,356 sq ft
$595,000 : 124 31st Av, San Mateo

2 beds, 1 full bath

Home size: 1,000 sq ft

Lot size: 5,720 sq ft
$549,000 : 1317 Claudia Av, San Mateo

3 beds, 2 full, 1 part baths

Home size: 1,670 sq ft

Lot size: 6,000 sq ft
$550,000 : 1709 Royal Av, San Mateo

3 beds, 2 full baths

Home size: 1,080 sq ft

Lot size: 6,426 sq ft
$559,900 : 508 Rand St, San Mateo

3 beds, 2 full baths

Home size: 1,420 sq ft

Lot size: 6,250 sq ft
$568,888 : 1855 Maxine Av, San Mateo

3 beds, 3 full baths

Home size: 1,500 sq ft

Lot size: 5,500 sq ft
$349,000 : 1409 Young St, San Mateo

2 beds, 2 full baths

Home size: 1,130 sq ft

Lot size: 6,100 sq ft
$997,000 : 775 Edgewood Rd, San Mateo

2 beds, 2 full baths

Home size: 1,369 sq ft

Lot size: 8,125 sq ft
$825,000 : 3985 Oneill Dr, San Mateo

5 beds, 3 full baths

Home size: 2,320 sq ft

Lot size: 5,000 sq ft
$599,900 : 3980 Oneill Dr, San Mateo

3 beds, 2 full baths

Home size: 1,750 sq ft

Lot size: 5,000 sq ft
$374,900 : 149 N Delaware St, San Mateo

2 beds, 1 full bath

Home size: 1,040 sq ft

Lot size: 5,750 sq ft
$524,900 : 177 Mclellan Av, San Mateo

3 beds, 1 full bath

Home size: 1,360 sq ft

Lot size: 6,250 sq ft
$379,000 : 28 Prague St, San Mateo

2 beds, 1 full bath

Home size: 930 sq ft

Lot size: 5,000 sq ft
$999,800 : 3045 Greenoak Ct, San Mateo

3 beds, 2 full baths

Home size: 1,826 sq ft

Lot size: 7,000 sq ft
$409,000 : 1216 S Norfolk St, San Mateo

4 beds, 2 full baths

Home size: 1,470 sq ft

Lot size: 5,000 sq ft
$447,500 : 1403 Bradley Ct, San Mateo

4 beds, 2 full baths

Home size: 970 sq ft

Lot size: 4,160 sq ft
$750,000 : 404 W 38th Av, San Mateo

3 beds, 2 full, 1 part baths

Home size: 1,800 sq ft

Lot size: 5,336 sq ft
$390,900 : 1297 Pershing Av, San Mateo

3 beds, 2 full baths

Home size: 1,360 sq ft

Lot size: 5,890 sq ft
$675,000 : 20 Grand Bl, San Mateo

2 beds, 1 full, 1 part baths

Home size: 1,070 sq ft

Lot size: 3,404 sq ft
$722,200 : 1740 Roberta Dr, San Mateo

3 beds, 2 full baths

Home size: 1,380 sq ft

Lot size: 9,300 sq ft
$399,000 : 1502 Mefferd Av, San Mateo

3 beds, 1 full bath

Home size: 1,310 sq ft

Lot size: 5,200 sq ft
$899,000 : 1616 Toyon Ct, San Mateo

3 beds, 2 full, 1 part baths

Home size: 2,310 sq ft

Lot size: 3,638 sq ft
$779,999 : 1665 Wellesley Av, San Mateo

4 beds, 3 full baths

Home size: 2,270 sq ft

Lot size: 5,750 sq ft
$519,000 : 1601 Noe Av, San Mateo

3 beds, 2 full baths

Home size: 1,080 sq ft

Lot size: 5,500 sq ft
$899,000 : 430 Highland Av, San Mateo

3 beds, 2 full baths

Home size: 1,510 sq ft

Lot size: 4,560 sq ft
$699,000 : 4004 Martin Dr, San Mateo

4 beds, 2 full baths

Home size: 1,690 sq ft

Lot size: 5,000 sq ft
$680,000 : 19 Hillbarn Ct, San Mateo

3 beds, 2 full baths

Home size: 1,480 sq ft

Lot size: 6,800 sq ft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Loans Will Change on October 1 and Your Affordability Will Drop: Foster City CA

lenorewilkas — Mon, 04 Apr 2011 11:34:50 +0000

The home financing industry continues its turbulent trajectory

Conforming home loan limits are scheduled to decrease on October 1, 2011 from $729,750 to $625,500. What does that mean for you? Your home affordability will diminish. A lot. With a 20% down payment, the price range for a home buyer using a conforming loan will drop from approximately $910,000 to $780,000. The house you want and can afford today will be out of your reach by fourth quarter 2011. Unless you act now. The Housing Economic and Recovery Act of 2008 (HARA) temporarily increased the conforming loan limits to increase the housing market recovery. In high cost areas, like ours, HARA stipulates that government sponsored entities (GSE) can temporarily make loans up to $729,750. This temporary increase of loan limits allowed families to buy homes in our high cost area with conforming loans. This will not be the case too much longer because the United States Department of the Treasury and the US Department of Housing and Urban Development (HUD) issued a report to Congress in February, recommending and encouraging Congress to let the temporary conforming loan limits expire on October 1, 2011. This isn’t an issue for most parts of the Country, but to us in Fantasy Island, my pet name for our area, it’s a huge issue.

Jumbo Loan programs aren’t there any longer

We just don’t have the loan programs available for Jumbo loans that were available several years ago. Jumbo loan interest rates tend to be higher than rates for conforming loans. The $130,000 loss of buying power is huge to our market so for this reason alone, you should be active in the real estate market.

If you need financing with a loan amount between $625,500 and $729750 to either purchase a one to four unit residental property or refinance an existing loan secured by a one to four unit residential property, you may want to secure your financing prior to September 30, 2011. Jed Thibodeau, with Banker’s Preferred in Burlingame, is our lender of choice and he’s ready to help you.

There aren’t a lot of homes for sale

We are entering the most active time in real estate, the summer market. We don’t have a huge inventory of homes for sale any more and that means we are seeing multiple offers on the best of the best. San Mateo County has never seen a large surplus of housing. In fact, we have a shortage of housing for our communities which is why prices remain high. If you keep sitting on the fence, expecting prices to drop, you not only won’t see that but you won’t be able to buy as much as you can today. Short Sales and Foreclosures are around but not in large numbers. We are here to help you find your new home and the best loan available for you. We can provide you with the latest information on the housing available for you within your pre-approved budget. Let’s get started now! Give us a call.

Here’s what’s currently for sale in Foster City

Showing properties 1 - 21 of 21. See more city of Foster City real estate.
(all data current as of 2/11/2012)

$539,000 : 880 Carina Ln, Foster City

2 beds, 2 full, 1 part baths

Home size: 1,546 sq ft

Lot size: 840 sq ft
$699,950 : 1423 Marlin Av, Foster City

3 beds, 2 full, 1 part baths

Home size: 1,530 sq ft

Lot size: 1,757 sq ft
$1,179,000 : 269 Avocet Ct, Foster City

5 beds, 3 full baths

Home size: 2,690 sq ft

Lot size: 6,630 sq ft
$369,000 : 625 Portofino Ln, Foster City

2 beds, 2 full baths

Home size: 1,395 sq ft
$675,000 : 740 Promontory Point Ln #3304, Foster City

2 beds, 2 full baths

Home size: 1,980 sq ft
$869,000 : 632 Matsonia Dr, Foster City

4 beds, 2 full baths

Home size: 1,760 sq ft

Lot size: 5,320 sq ft
$415,000 : 820 Sea Spray Ln #108, Foster City

2 beds, 2 full baths

Home size: 1,233 sq ft
$999,990 : 850 Gull Av, Foster City

4 beds, 2 full, 1 part baths

Home size: 2,160 sq ft

Lot size: 5,320 sq ft
$1,529,000 : 1001 Monterey Av, Foster City

3 beds, 2 full, 1 part baths

Home size: 2,170 sq ft

Lot size: 8,540 sq ft
$640,000 : 1082 Gull Av, Foster City

3 beds, 2 full, 1 part baths

Home size: 1,460 sq ft

Lot size: 1,757 sq ft
$329,900 : 8209 Admiralty Ln, Foster City

2 beds, 1 full, 1 part baths

Home size: 998 sq ft
$244,500 : 3106 Admiralty Ln, Foster City

1 bed, 1 full bath

Home size: 748 sq ft
$975,000 : 54 Port Royal Av, Foster City

3 beds, 2 full, 1 part baths

Home size: 1,890 sq ft

Lot size: 6,798 sq ft
$652,000 : 1117 Outrigger Ln, Foster City

3 beds, 3 full baths

Home size: 1,540 sq ft

Lot size: 974 sq ft
$255,000 : 7202 Admiralty Ln, Foster City

2 beds, 1 full, 1 part baths

Home size: 998 sq ft
$506,902 : 126 Albacore Ln, Foster City

2 beds, 2 full, 1 part baths

Home size: 1,370 sq ft

Lot size: 1,875 sq ft
$1,189,000 : 760 Coronado Ln, Foster City

3 beds, 2 full baths

Home size: 2,110 sq ft

Lot size: 4,857 sq ft
$360,000 : 661 Portofino Ln, Foster City

2 beds, 2 full baths

Home size: 1,395 sq ft

Lot size: 1 sq ft
$439,900 : 2213 Admiralty Ln, Foster City

3 beds, 2 full, 1 part baths

Home size: 1,505 sq ft
$849,000 : 921 Swan St, Foster City

5 beds, 3 full baths

Home size: 2,540 sq ft

Lot size: 5,700 sq ft
$499,000 : 764 Comet Dr, Foster City

2 beds, 1 full, 1 part baths

Home size: 980 sq ft

Lot size: 1,955 sq ft

Listing information deemed reliable but not guaranteed. Read full disclaimer.

$4,320 Down to Buy a $432,000 Home, Really? : San Mateo CA

lenorewilkas — Mon, 20 Dec 2010 13:33:15 +0000

Yes, only for California first-time home buyers! by Jed Thidbodeau, Bankers Preferred Mortgage

It gets even better with a below market interest rate on a 30 year fixed rate mortgage.

Thanks to the California Housing Financing Agency (Cal HFA), first-time home shoppers can finance the purchase of their home with just about the same amount of money needed for a security deposit and first month’s rent required to move into a rental home.

Cal HFA currently provides 1.0% down payment, below market interest rate financing along with a little closing cost assistance to help home buyers finance the purchase of their first home. This program combines the Cal HFA FHA 30 year fixed rate mortgage currently (as of December 17, 2010) at 4.0% (APR 4.81%) with the California Homebuyer Down Payment Assistance Program (CHDAP) simple interest, silent mortgage at 3.25% (APR 3.25%). The CHDAP loan amount cannot exceed 3.0% of the lessor of the purchase price or appraised value. To take advantage of the low interest rates, the Cal HFA FHA and CHDAP programs must be used concurrently. The numbers…

Down Payment & Loan Amount

The maximum loan amount for this program adheres to the national conforming loan limit of $417,000. With this loan amount and the minimum down payment requirement, a $432,000 purchase price reaches just below the upper limit for use of this program. Let’s look at some numbers based on a $432,000 purchase price.

The Federal Housing Administration (FHA) loan serves as the foundation for the Cal HFA program. FHA loans require a minimum 3.5% down payment. The CHDAP program allows up to 2.5% of the 3.0% maximum loan to be used for down payment assistance, which leaves a 1.0% down payment requirement for the first-time home buyer! With this $432,000 purchase example, the down payment equals $4,320. Additionally, the home buyer who negotiates their purchase contract such that the seller covers their closing costs can potentially purchase a $432,000 home for nothing more than $4,320 out of pocket. That’s exciting!

Rate & Payment

As mentioned above, this first-time buyer loan boasts a below market interest rate of 4.0% (APR 4.81%). Here’s how the monthly payment figures look for a $432,000 purchase…

On the 1^st mortgage, the principal component of the monthly payment actually equals $606.66! The below market rate of 4.00% drives the principal reduction amount up to this level. At over $600 principal balance reduction per month, the unpaid principal balance shrinks quickly. This means that when the home owner sells their home the unpaid principal balance absorbs less of the sales proceeds, putting more money in the home seller’s pocket upon sale.

The CHDAP loan sometimes goes by the moniker of “silent second” in that the loan does not require monthly payments. The loan becomes due in full upon either the end of the first mortgage 30 year term, upon transfer of title to the property securing the loans (e.g., sale of the property), or upon refinance of the 1^st mortgage. Terms of the CHDAP provide the borrower with the liberty to make payments without penalty at any time during the life of the loan. Payments apply to reduce accrued interest first, then to reduce principal.

Interest on the CHDAP loan accrues via simple interest. The principal balance of this loan does not increase. Without principal reduction payments the CHDAP loan in our example accrues $421.20 annually. A monthly payment of $35.10 covers the accrued interest, leaving the principal balance undiminished. Payment of $56.40 or $91.07 includes principal reduction and retires the entire principal balance in 30 years or 15 years, respectively, via amortization.

Below-Market Rate vs. Market Rate Comparison

Aside from the minimal down payment feature, Cal HFA FHA & CHDAP program provide interest rates lower than a rate available in the general market place for non-first-time buyers. As of the date of this writing, the market rate for an FHA 30 Yr. Fixed program hovers around 4.75% (APR 5.567%). Interest rate markets currently move with a high degree of volatility for a variety of reasons, therefor, the rates shown in this comparison may become obsolete shortly after this writing. However, this comparison does illustrate the relative benefit of a lower interest rate mortgage. The following numbers represent the total interest expense and mortgage insurance expense over the first seven years of these loans.

These numbers illustrate the benefit of lower interest rates. The Cal HFA FHA program provides 99% financing vs. 96.5% finance with standard FHA programs. Essentially, a first-time home buyer borrows more money with Cal HFA FHA and CHDAP, but pays less interest. Interesting, isn’t it? The below-market rate feature provides this long term benefit for the entire life of the Cal HFA FHA and CHDAP loans.

First Come, First Serve

California has limited funds available for this program. The funds will be disbursed to qualified loan applicants on a first come, first serve basis. Take advantage of the low interest rate, 30 year fixed rate mortgage while funds last.

Contact the Wilkas Group at info at wilkasgroup.com to start the search for your first home today.

You’re welcome to contact me at jedt at bankerspref.com to determine you eligibility for this first-time home buyer program.

Low Mortgage Rates Improve Household Economics: San Mateo CA

lenorewilkas — Mon, 22 Nov 2010 21:16:16 +0000

Get Your Mortgage Now!! Jed Thibodeau – Bankers Preferred

If you are looking to finance the purchase of a home or refinance an existing mortgage, now is a great time to secure your interest rate. Here’s why…

One score and 19 years ago, 7.63% was the rate on a 30 year fixed, conforming mortgage. Today, mortgage interest rates sit a four decade low.. The chart below shows the 30 year fixed, conforming interest rate history from 1971—since the Federal Open Market Committee (FOMC) has been tracking this rate—to September 2010. Source data for this chart can be found at www.federalreserve.gov.

Excluding the high interest era of late 1979 through late 1985, the average 30 year fixed mortgage interest rate during the time period is 7.99%. Currently, a conforming, 30 year fixed rate mortgage can be had at a 4.00%. If you are looking to finance the purchase of a home or refinance an existing mortgage, now is a great time to secure your interest rate.

To fully grasp the benefit of securing financing while this low mortgage interest rate environment lasts, let’s compare the amount principal and interest in a monthly payment on a $400,000 mortgage at 4.0% and at 7.99%.

On a $400,000 30 year fixed mortgage at 4.00%…

Payment	P&I Payment	Principal	Interest	% Principal	% Interest
1	$1,909.66	$576.33	$1,333.33	30.18%	69.82%
2	$1,909.66	$578.25	$1,331.41	30.28%	69.72%
3	$1,909.66	$580.18	$1,329.48	30.38%	69.62%

On a $400,000 30 year fixed mortgage at 7.99%…

Payment	P&I Payment	Principal	Interest	% Principal	% Interest
1	$2,932.27	$268.94	$2,663.33	9.17%	90.83%
2	$2,932.27	$270.73	$2,661.54	9.23%	90.77%
3	$2,932.27	$272.53	$2,659.74	9.29%	90.71%

Notice how much more principal applies to the 4.0% mortgage as compared to the 7.99% mortgage; $576.33 vs. $268.94 on the first payment. The following pie charts show the payment allocation of principal and interest for the full 30 year term of these mortgages.

The 4.0% mortgage reduces the principal balance faster, builds equity faster and ultimately, helps the household build a strong financial foundation more quickly than any other time over the past 40 years.

To discuss your eligibility for obtaining financing to purchase a primary home, a vacation home, or a piece of residential investment real estate, you’re welcome to contact me at jedt at bankerspref dot com.

Attention FHA Buyers!!! BIG Changes are Coming October 4th – San Mateo, CA

lenorewilkas — Wed, 11 Aug 2010 01:05:25 +0000

One of the loan brokers we like to refer our clients to is Jed Thibodeau who is with Bankers Preferred in Burlingame. He often speaks at our weekly office meetings and told us about a major change coming to FHA loans beginning on October 4, 2010. This change will cost you money every month for the entire length of your FHA loan and it’s a huge change. If you think this change is short notice, it’s better than what we heard on Monday, with the original date in early September. Either way, don’t wait too long to make a purchase if you are planning on using FHA as your loan source. Take your time reading this because there is a lot of alphabet soup in it.

Please read below:

Avoid increasing costs of FHA financing. On Thursday, August 5, 2010 Assistant Secretary for Housing/Federal Housing Commissioner, David H. Stevens, issued a memo informing the housing industry of changes to Federal Housing Administration (FHA) mortgage insurance premiums. The changes are scheduled to take effect on October 4, 2010. These changes increase borrower costs for using FHA financing. To avoid this cost increase make sure to start your FHA loan prior to October 4. It is worth noting that these changes will not affect mortgage insurance premiums on existing FHA mortgages.

Before going further, it is important to know that FHA MIP factors vary, and will continue to vary, slightly with down payment amount, 30 year fixed and 15 year fixed loan programs. This article addresses the most common FHA financing scenario, a minimum down payment of 3.5% with a 30 year fixed loan program. You’re welcome to email me at jedt at bankerspref dot com to ask about the MIP factors associated with your particular financing scenario

To establish a frame of reference to help gage the impact of these changes, let’s first review FHA mortgage insurance premiums (MIP) in general, then review current FHA MIP factors and lastly, compare the current MIP factors with the MIP factors that become active October 4, 2010.

FHA has two types of mortgage insurance, an Up Front Mortgage Insurance Premium (UFMIP) and an annual mortgage insurance premium (MIP). The current UFMIP is typically added to the loan amount (loan amount = purchase price – down payment) in the amount of 2.25% of the loan amount. The annual MIP is calculated with a factor of 0.55% and is paid monthly with the mortgage payment. FHA uses the proceeds from these two mortgage insurance premiums to fund claims on FHA insured mortgages.

Home Purchase Amount of $430,000

On October 4, 2010 the UFMIP factor for the aforementioned scenario drops from 2.25% to 1.0% and the annual MIP increases from 0.55% to 0.90%. The following table provides perspective on the actual dollar amounts of these changes with a $430,000 home purchase.

Here we see a reduction of the UFMIP by $5,187 and in increase in the monthly MIP by $121.03. More dramatic, is the total interest and MIP expense for the first 60 months of the loan. The MIP factors taking effect on October 4, 2010 will cost the homeowner an additional $5,891.

Home Purchase Amount of $750,000:

As the purchase price increases the dollar amounts increase. Let’s look at a $750,000 purchase.

Here we see a reduction of the UFMIP by $9,047 and in increase in the monthly MIP by $211.09 and an increase in total interest and MIP expense for the first 60 months of $10,275.

After October 4, 2010 FHA financing becomes much more expensive for the borrower. If you are planning to use an FHA loan program to purchase a home or refinance your home, it’s economically prudent to move quickly to avoid the increase MIP expense.

A copy of the memo can be found at the following link: http://portal.hud.gov/portal/page/portal/ver-1/HUD/federal_housing_administration/docs/August_Special_Edition_2_FromtheDeskOf.pdf.

If you have questions or if you would like to discuss your personal financing circumstances, you are welcome to email me at jedt at bankerspref dot com.

San Mateo County is Seeing Short Sales But Are They Good Buys?

lenorewilkas — Fri, 16 Oct 2009 19:36:39 +0000

Foreclosures are at an all time high in California, and yes, they are also popping up here in San Mateo County, too. Not in large numbers, they have been around mostly in the entry level market of condos in Daly City and San Bruno and small houses in North County, Daly City, Pacifica, South San Francisco and in San Mateo and Redwood City. I have been tracking the Notice of Default records for a long time but I’m getting more interest now in Short Sales and “if I get involved in a Short Sale will it be a good buy?” And the answer is……

The answer is maybe the deal will be a good buy and then again, maybe not. Here’s the reason why I say this. If a property is being sold as a Short Sale it means that the loan on the property is for more money than the property can be sold for. There is a shortage of funds due the lender. Sometimes a lender will forgive this amount and sometimes it will not. If the amount is forgiven it may not be a win for the seller because they may have to show this amount “forgiven” as income in their taxes the following year. It must be shown as income because it was money that was owed by the seller through a note to buy the property, but not paid back to the lender and the IRS looks at this as money in your pocket even though you never see the money. Update: The IRS has put a hiatus on the tax due for a short sale in order to assist sellers. This may not last forever but it is helping them today.

A Short Sale may save the home owner from going into foreclosure but there are potentially major tax consequences in doing one. If you are a buyer looking for a deal is this the way to find one? Maybe if the price being asked for the property is where it should be in the market. If the seller is trying to break even, pay off his loan, pay the commissions to the Realtors involved in the transaction, and then move on the price might be “at market”. But if the market today says the property is over priced, it sits and sits and sits. Sometimes we see these properties have been listed for hundreds of days and with no appreciable price reduction. If the seller is truly anxious to sell, they aren’t reducing the price right way unless they are working with an agent who is specifically trained in foreclosure and short sale, like Alex, a CDPE. If you need to sell you need to price aggressively and be willing to take the hit in order to get out from under.

Selling a home prior to it going into foreclosure when it is worth more than the loans on it involves a lot of steps and isn’t easy to do. One has to swallow their pride and talk to the lender about their situation, follow every step the lender requires and price the home aggressively in order to sell it. Many people do the first part but forget to do the latter part, the price aggressively part. You need an attorney and accountant as a part of your team. You must follow every step you are told to or you’ll find a foreclosure on your credit record and that’s a 5 year hit. A short sale is only a maximum of a 2 year hit and sometimes even less than that. Think about it, which would you rather have on your credit report? Your FICO score drops about 50 points with a Short Sale and 150+ with a foreclosure.

Buying a property during a Short Sale could also mean that you also buy past-due taxes owed by the seller and any other liens that might be placed on the property such as homeowner association fees that are past due. In effect, you get it all — the good, the bad, and the ugly.

Around San Mateo County, for some reason we haven’t been seeing a lot of aggressively priced listings so these short sales sit and sit. We know there are a great number of homes close to default and these homes should be put on the market but when is the $64,000 question. People are afraid to face the inevitable and unfortunately it’s often human nature not to do what is necessary before it becomes a panic. A CDPE Realtor, like Alex Wilkas, can help facilitate the many steps necessary to price a home and get it sold.

Truthfully there is about a year’s gap between a buyer and a seller’s understanding on what’s happening in the real estate today. Buyers are always ahead of the curve because they are out there looking at property a lot and they begin to see the pricing trends way before sellers do. Sellers only see what their neighbor sold their home for and they want to sell for that same amount, or more and what the news is telling them. They’re looking in the past not in the future, or even at today. That past could be six months ago or longer. They don’t understand what is happening to the market today unless they are actively out there looking to buy, and when they do figure it out they may find their mortgage is for more money than they could sell their home for today. They are then “underwater” because they owe the bank more than what their home is currently worth. Is this bad? Yes if you can’t afford the payments and can’t refinance to bring them down to where you can afford them. It’s not bad if you went into your home with a fixed rate loan and you don’t plan on moving any time soon. You keep on making those payments and hopefully by the time you are ready to sell your equity has moved back into a positive position.

The biggest issue in looking at buying a short sale is understanding that you may not get the property you place an offer on and the reason is complex. Generally most lenders are huge operations with thousands of loans in their portfolios. If some of those properties are “underwater” the lender isn’t concerned about this as long as the payments are current. They do become concerned when the homeowner stops making those payments. After several months the lender issues a Notice of Default to the owner and tells them they have a certain period of time to pay up what is owed or the property will be foreclosed upon. How long this takes depends on the lender. It is during this period of Notice of Default that one begins to see a home listed as a Short Sale.

The banks generally have several departments that handle these properties and if after a length of time the home has not been sold, it is bundled up along with hundreds of other properties and placed on a Notice of Trustee Sale notice where these properties are auctioned off, and yes it happens on the steps of the San Mateo County Court House in Redwood City.

You might be in escrow to buy one of these properties, but only one half of the bank knows this and if the other half decides to sell the place off and the Notice of Trustee Sale takes place, you lose your prospective home. You do not lose your deposits but you have, in effect, wasted a lot of time trying to buy something at what you hoped was under market. If you are willing to wait it out, and if the house you hope to buy doesn’t have a lot of mortgages against it, you will get a great buy. Patience is a virtue and this is one you want to make sure you have.

New Disclosure Guidelines For Lending May Impact Your Closing Date – San Mateo, CA

lenorewilkas — Fri, 31 Jul 2009 19:51:20 +0000

The United States Government is trying to make the lending industry more honest and transparent in everything they are doing. In doing so, you need to become aware of some new guidelines for lending that may impact your closing date, and possibly not in a good way. This new guideline is called the HERA Mortgage Disclosure Act.

What is the HERA Mortgage Disclosure Act and how will it help me?

We’ve been seeing many new government laws and other changes occurring in the mortgage industry of late, to help ensure that the home financing process is transparent and understandable to all customers. Compliance with these new requirements is mandatory for all mortgage lenders and mortgage brokers. The goals are to help prevent deceptive lending practices and to make sure that you, the borrower, are provided with the details and the time you need to make a more informed decision about the home financing product you choose.

The details that guide loan processing timelines have changed

Historically, the closing dates on the contract determined the financing timeline, but, not any longer. From now on, both the consumers who are obtaining a new mortgage and their Realtors now need to take into account some new mandatory timelines that may impact the processing of the mortgage application.

These new guidelines went into effect yesterday, July 30, 2009, and include the following new requirements:

When loan closings can be scheduled
When new Truth in Lending disclosures need to be provided to a consumer
What counts as a “business day”
When fees can be collected from the borrower

It is now critical that you and your Realtor consult your lender first about potential closing dates for the contract in order to set expectations for everyone involved in the agreement – that means the buyer, the seller, the lender and both Realtors representing the buyer and the seller. The minimum amount of time we need to plan on to complete the loan process is at least 30 days from our initial application.

What can affect the loan timeline?

A change in any of the following during the loan process could impact your Annual Percentage Rate (APR) and therefore impact your closing date:

Change in the mortgage product (no more shopping rates after the contract has been ratified)
Change in the closing or signing date (addendums have often change closing dates before, now we can’t do it)
Change in the loan amount
Unlocked rates
Change in fees by third parties – such as settlement agents

The interest rate on your loan impacts the APR. This means that until you lock in your rate, an exact APR cannot be determined.

What can you do to help keep the process on tract?

First and foremost, you must review the timeline and potential impacts with your mortgage professional upfront, and then throughout the entire loan process. You can keep your Realtor in the loop and informed about everything during the escrow process.

Plan on at least 30 days to complete the loan process. This is over and above the application phase, and after the contract has been ratified. Therefore, it is a good idea to ask for at least a 45 day closing rather than the old norm of 30 days.

Obtain a credit-checked pre-approval before you start to shop for a loan. This is why I never work with a client who has not been pre-approved before we go out. You know what you can afford, and I know what I can show you that you can afford. No one is spinning their wheels in the process.

Review the initial disclosures you receive from your lender. These initial disclosures include the Truth in Lending (TIL) which discloses in writing the terms and conditions of a mortgage, including the APR and other charges, so that you are clear about all of the details of the loan before moving forward. If you do not understand something, ask for an explanation and keep asking until you do understand it. Don’t be embarrassed to ask questions as you’re not a lender and do not deal with these things on a daily basis. It can become quite confusing so ask, ask, ask.

We are here to make sure your purchase is a smooth one and there are never any dumb questions in real estate. Our job as your Realtor and that of your lender, is to educate you through the process.

What Are Credit Scores?

lenorewilkas — Thu, 23 Jul 2009 06:51:38 +0000

What Is A Credit Score?

When a lender evaluates a loan application, a process called underwriting, they try to evaluate the ability and willingness of the potential borrower to repay the loan. The application the borrower fills out is sent to an underwriter, who is a real person and not a computer program. The underwriter then judges the borrowers ability to repay by reviewing the income and stability of past earnings. This practice helps the lender to determine if the borrower can afford the loan payments. The review of past credit history is used to judge the willingness of the borrower to repay the loan. This is the reason you are required to produce so many documents to substantiate your income when you’re filling out the loan application.

Lenders want this evaluation to be as accurate, objective and consistent as possible. To help achieve this goal, home mortgage lenders use credit scores to assist in the underwriting process. Credit scores are numerical values that rank individuals according to their credit history at a given point in time. A credit score is based on past payment history, the amount of available credit, and other factors. According to Fannie Mae and Freddie Mac, two largest investors in mortgage loans today, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan.

Credit scores are just one of many factors considered in the underwriting process. A lender will review all of the components that make up the financial situation of each borrower. Even when a credit score is low, there are other factors that could overcome the negative credit issues and satisfy other underwriting criteria. Today, FHA loans are filling the bill for people with low credit scores, less than 20% for a down payment or perhaps other reasons that make this loan enticing since it only requires 3.5% for the down payment.

What is a FICO Score?

“FICO” scores are a type of credit score developed by Fair Isaac & Company. FICO scores use credit bureau information to obtain a score which indicates how likely someone is to pay their loan payments on time. FICO scores range from approximately 350 to 900. The higher the score is the lower the probability of default on the loan.

How Can Credit Scores Affect the Price of the Loan?

Just as credit scores are one factor in determining loan qualification, they may also be a factor in determining the price of the loan. The price of a loan means the interest rate and the points charged by the lender. The price charged for a loan will be higher or lower depending on various factors.

Credit scores are used in determining the price of a loan because they are believed to be good predictors of a borrowers ability, and willingness, to repay the loan. Because of this, applicants with lower credit scores will pay higher prices for their loans because of the higher risk of default and loss on the loan. Many home loans are sold to investors, and investors will pay a more favorable price for loans they feel have a low risk of default.

There are lots of other factors relating to an individual borrowers situation that may also affect the price of a loan, often even more than credit scores. These include the type of property securing the loan, the amount of the borrowers equity in the property (meaning your down payment), the value of the property compared to property value in the area, the lenders cost to make the loan and the type of loan selected. For example, a loan secured by a single family residence will have a lower price than a loan secured by a condominium because condominiums are more difficult to sell than single family houses. Likewise, the price of a loan for which the borrower has made a 20% down payment may be less than a loan for which the borrower has made a 3.5% down payment because the first borrower has more equity in the property and, thus, a greater incentive to make the payments of the loan.

HUD Allows First Time Home Buyers to Use Their Tax Credit at Closing

lenorewilkas — Mon, 08 Jun 2009 22:50:10 +0000

The Department of Housing and Urban Development (HUD) announced Friday its plan to allow first time home buyers who qualify for the federal income tax credit to get the money advanced to pay closing costs and additional down payment. Buyers must use an FHA approved lender, like Mortgage California, and be able to put down at least 3.5% from their own savings.

Until last Friday, San Mateo home buyers who were eligible for the tax credit would have to wait until they filed their taxes to collect their money. With this new plan, lenders are allowed to buy tax credits from first time home buyers and collect the rebate directly from the IRS. Although first time home buyers must still come up with the entire 3.5% down payment from their own savings in California, they can use the rebate to help pay for closing costs and/or additional down payment money to reduce the loan amount and therefore reduce their monthly payments.

To discuss how you can finance your first home with little money down, please give me a call at (650) 520-0915 or send me an email at Chris@ChrisEWilliamson.com.