Understanding Mortgage Insurance Premiums

UNDERSTANDING MORTGAGE INSURANCE PREMIUMS Russ and I recently found a California home loan that allows borrowers to put down only 1%. It does require mortgage insurance and is a great way for buyers who don’t have a lot of cash to take advantage of today’s market. Many buyers in today’s market don’t have the 20% down payment needed to get a home loan without paying some type of mortgage insurance. Different types of loans require different mortgage insurance. No matter what type of loan you may be obtaining the mortgage insurance premium protects the lender in case you default on the payments. There are 2 main types of mortgage insurance. Thanks to Derek Beisner at Intercap Lending for providing us with the following information and chart. “There are two main types of MI: an Up Front Mortgage Insurance Premium (UFMIP), which is generally financed into the loan, and an additional monthly mortgage insurance premium (MIP), paid as a part of your normal monthly mortgage payment. Here are some additional details to keep in mind:”     CONVENTIONAL “MI” FHA  “MIP”** USDA “GUARANTEE FEE” Basics MI can be monthly or all up front 1% UFMIP rolled into loan amount + Monthly Premium 2% UF Guarantee Fee + Monthly Guarantee Fee Potential Benefits Upfront MI can save significantly on monthly payments. Conventional MI often has lower monthly payments than FHA. Income requirements are relaxed compared to conventional MI & USDA. There is more flexibility in credit scores. Seller paid closing costs is allowable up to 6%. The monthly premium is typically almost 1/4 the cost of FHA. Potential Pitfalls Seller paid closing costs is limited to 3% if ≤5% down payment. Credit requirements and income requirements are more stringent. The monthly premium is typically higher than conventional & USDA. There are specific geographic and income eligibility requirements. Income requirements are much more stringent than FHA. Dropping MI When the value reaches 78% of the original sales price, MI automatically falls off. You can request removal if the principal balance reaches 80% (i.e. accelerated payment of principal or, in some cases via an appraisal of the property showing increased value). You must meet two tests to drop FHA’s MIP: 1. You must PAY the balance down to 78% of the original sale price of the property (you can’t just get an appraisal to show equity). AND 2. You must pay the monthly MIP for a minimum of 5 years. The USDA Guarantee Fee remains on the loan for the entire term. It can never be dropped from a USDA loan until the property is sold, refinanced or the loan is paid off. ** Note that the FHA MIP example is based on a 30 year example.   Perhaps you or someone you know could benefit from the 1% down payment program. Please ask them to contact us for details.

QR CODE: www.gr8re.com It allows you to instantly search homes that are listed for sale, get details and view photos on any data-enabled phone. It works in all neighborhoods, it’s available 24/7 and it’s our gift to you at no cost. It even has a GPS feature that goes to work for you. Click on the icon and it gives you all the details. CA DRE License # 00936907 & 00981979

Federal Mortgage Relief

President Obama has laid out a plan to help responsible borrowers and support a housing market recovery.  Funding for the proposed program must be approved by Congress which may take some time. Russ and I feel this issue is very important and we’ll be watching it and share the information as it becomes available.

The California Association of Realtors made some observations that we think are worth passing on to you.

• “Operated by the Federal Housing Administration, the plan would allow underwater homeowners to refinance into cheaper federally insured loans.  Borrowers with good credit who are current on their loan payments are eligible.
• The measure also streamlines the process of refinancing an underwater mortgage, eliminating the need for an appraisal or submitting a new tax return.
• To qualify, borrowers must be current on their mortgage, have a minimum credit score of 580, and must be refinancing a loan on a single-family owner-occupied principal residence.

   

• Lenders only need to confirm that the borrower is employed.  Loans that are more than 140 percent of the home value probably would not qualify until banks wrote down part of the balance.

Congress must approve $5 billion to $10 billion in funding, leading housing experts to praise the plan’s objectives with skepticism of it passing this year.”

 

Should you or someone you know want to discuss any aspect of home ownership please contact us. We offer no obligation real estate counseling services based on over 30 years of personal experience.

Only 1% Down Payment!

Now there is no reason to rent a home when you can purchase with as little as 1% down. Russ and I searched this program and it is legitimate. Here are the details:

First time have an option for assistance with the CHDAP program.  One of the greatest benefits of this assistance program is that it can be used with almost any other home loan financing, like FHA, Fannie Mae conventional, USDA or VA. 

    CHDAP Features:

• Assistance is up to 3% of purchase price to be used for down payment or closing costs      
• Program limited to first time home buyers (have not owned a primary residence in past 3 years)
• Home price must not exceed sales price limits
• Home buyer income limits apply
• Payments deferred until the sale or refinance of the first mortgage
• Low interest rate – loan balance accrues simple interest at an incredibly low rate 

As long as you can contribute 1% of the sales price or $1,000 (whichever is greater), then the California Home buyer’s Down payment Assistance Program could be helpful to you. 

 

Who do you know that can benefit from this? A few years from now this opportunity will be the greatest thing since sliced bread. Give us a call or text us and we’ll refer you to lenders who are reputable. 949-661-4663 or text: 714.343.6300

Free Mobile App!

• You’re driving down your street and there is a house for sale. You wonder, how much are they asking for that house?
• You are in a neighborhood you like and ask, how much are the houses in this area selling for?
• You are infront of a house for sale and want to know what the price is and how many bedrooms and what’s the square footage?

Russ and I found this tool for your smart phone and we thought we’d share it with you.  

It allows you to instantly search homes that are listed for sale, get details and view photos on any data-enabled phone. It works in all neighborhoods, it’s available 24/7 and it’s our gift to you at no cost. It even has a GPS feature that goes to work for you. Click on the icon and it gives you all the details. Below are instructions on how to load this on your smart phone. Feel free to share this with your family, friends and coworkers.

iphone User instructions: 
1. Open Safari on your iPhone.
2. Go to the website gr8re.com. The app will appear on your screen.
3. For one-click access, bookmark the site and choose “Add to Home Screen”.
4. The next time you want to search, just click on the icon.

Android User instructions: 
1. Open the web browser on your Android device.
2. Go to the website gr8re.com. The app will appear on your screen.
3. Use the menu button to bookmark the site.
4. Go to your bookmarks, press the gr8re.com bookmark until the menu appears and select “Add shortcut to Home”.
5. The next time you want to search, just click on the icon.

PROPERTY TAX BILLS ARE BEING CHANGED

compliments of the OC Register 1/13/12

 

Have you been one of the many homeowners who take your entire property tax amount on your income tax deductions? That may be about to change.  Now the California Franchise Tax Board will be reviewing property tax bills. Beginning with the 2012 tax bill which will be due in April of 2013, your tax bill will show what is deductible and what is not.

What that means for practical purposes is if you included Mello-Roos bonds or Vector control or sewer bonds, etc. as part of your property tax deduction you will be on alert that these are NOT permissible deductions. In the past these fees have not been deductible however; many homeowners took the deduction because they appeared as part of their property tax bill.

 

With the new tax bills all items will be categorized as deductible and non deductible. Russ and I will be happy to email you a copy of Understanding Property Taxes. Just send us an email or call or text to 714-343-6300 and we’ll send you a copy.

Why people retire to warm climates…

http://v5.tinypic.com/player.swf?file=11b45jk&s=5
Original Video – More videos at TinyPic

Christmas Day in Dana Point, CA: 74°F.

REAL ESTATE RECOVERY. ARE WE THERE YET?

Are you confused about what you’re reading? Russ and I think we are all victims of too many opposing opinions. Since real estate is so localized we can only speak for our market in Orange County. Even then, some areas vary greatly.

We believe that we are in store for more of the same for 2012. Some areas like the coast will do better than inland. Investors are the leading edge for real estate recovery, followed by first time and move up buyers. Investors are making purchases now since prices and interest rates make sense, especially with rentals being in demand.

High end homes are also doing well when marketed correctly. The wealthy understand that high end homes cannot be replicated at the prices they are selling for today.

Are we there yet? We think we are moving in the right direction but slowly. We should expect another year slight improvement.

Happy Holidays,

Your friends in the business,

Lee and Russ

IS FEAR HOLDING YOU BACK FROM BUYING A HOUSE NOW?

Have you been thinking about buying a house but are afraid because of everything you read and hear in the media? Housing prices are similar to weather– they vary by location. So when you hear that prices are going to go up or down, you need to look at the location that you’re interested in buying.

This is a wonderful time to buy a home, especially during and just after the holidays. Interest rates are at or below 4%, and homes are at all time low prices. There aren’t a lot of people out looking during the holidays which is better for you to negotiate the lowest possible price. Lenders are loosening their criteria and making more loans available, even with low down payments. 

If you are renting now, ask yourself what rent you paid did for you. Were you able to build potential equity? If you buy now at the bottom of the market, in time real estate will appreciate and you’ll have equity. You can use that equity to begin your very own wealth development. When you buy a home, you are making a long term investment that you have the benefit of enjoying.

 We teach investors how to buy rental properties and how to increase their cash flow by raising the rent. Has that happened to you as a tenant? When you own your own home with a fixed rate loan your loan payment never increases. You can plan for the future because you know that your cost of living is going to be “X”. 

As a tenant, you have limitations on what you can do to your environment. When you own your home and for example want a bigger closet,you can make the change and do it your way. You have the flexibility and you make the decisions. You create your own environment and while doing that you build your equity. 

Now is the best time to make a positive move and enjoy all the benefits of the American Dream!

WHEN LESS IS MORE

When rates are at 6% it takes an annual income of about 90,000$ to qualify for a 320,000 home (variables apply). When rates dip to 4.5, the annual income qualifications for that same home are about 78,000.

In THIS  MARKET…You save 3 ways:

1.PRICES have plummeted= big savings up front

2. Save HUGE over the life of a LOAN  (thousands upon thousands)*

3. Buy more house with less income qualifications with a LOWER PAYMENT than you will have when interest rates RISE and they WILL!

That same 320,000 loan would be paid back at 888,000 over the life of a 6% loan. If the rate is 4.5% folks, the payback amortized over 30 years is 781,000. (these numbers are estimates not exact).

Let’s dedicate ourselves to spreading the word, that in EVERY WAY Less is More in this great current market of buying opportunity. We are here to help you with all your real estate needs.

Your friends in the business,

Lee and Russ

SoCal MLS Regio…

SoCal MLS Regional Sales and Price Activity

October 2011

 

 

SoCal MLS Median Price Percent Change in Price from Prior Month Percent Change in Price from Prior Year Total # Units Percent Change in Sales from Prior Month Percent Change in Sales from Prior Year Oct-11 Sep-11 Oct-10 Oct-11 Sep-11 Oct-10 MLS Wide SOCAL Region Counties Orange (Condo) $275,000 7.9% -1.8% 597 -4.3% -3.1% Orange (Single Family) $475,000 -4.5% -7.6% 1,260 -13.3% -3.1% SOCAL Region Cities Single Family Only Aliso Viejo $565,000 -3.3% -2.6% 19 -13.6% 46.2% Anaheim $335,000 0.6% -4.3% 99 19.3% 3.1% Anaheim Hills $527,500 -11.0% -6.6% 28 -6.7% -28.2% Brea $411,500 -11.4% -7.5% 20 -23.1% -13.0% Buena Park $350,000 -0.3% -6.7% 35 -18.6% -10.3% Corona Del Mar $1,580,000 -8.4% -1.3% 9 -10.0% -10.0% Costa Mesa $475,000 -11.2% -18.8% 45 0.0% 45.2% Coto De Caza $879,000 1.3% -41.4% 17 6.3% 88.9% Cypress $418,000 -9.6% -15.1% 24 -17.2% 50.0% Dana Point $610,000 -5.3% -17.4% 17 -41.4% -29.2% Fountain Valley $535,000 1.9% -5.3% 25 4.2% 4.2% Fullerton $401,813 -0.2% -9.6% 46 -28.1% 4.5% Garden Grove $360,750 -2.5% -5.6% 65 25.0% -12.2% Huntington Beach $600,000 -1.1% -3.7% 80 -4.8% -2.4% Irvine $670,250 -2.2% -1.4% 60 -20.0% 39.5% La Habra $355,000 16.4% 2.9% 22 -31.3% -4.3% La Palma $535,000 6.2% 3.0% 3 -25.0% -25.0% Ladera Ranch $623,000 0.5% -1.5% 17 -10.5% -5.6% Laguna Beach $1,600,000 31.7% 18.6% 26 0.0% 8.3% Laguna Hills $540,000 2.4% -18.5% 19 5.6% 18.8% Laguna Niguel $635,000 -1.1% -15.7% 37 -2.6% -11.9% Lake Forest $467,450 0.5% -10.1% 36 16.1% 9.1% Los Alamitos $657,500 14.3% 7.6% 1 -85.7% -50.0% Mission Viejo $464,950 -2.5% -7.9% 56 -13.8% -3.4% Newport Beach $1,305,000 -4.3% -3.1% 32 -40.7% -31.9% Newport Coast $2,675,000 81.0% -4.0% 12 0.0% 100.0% North Tustin $635,000 -5.9% -8.0% 13 -31.6% 0.0% Orange $440,200 -2.2% -9.2% 48 -36.8% -5.9% Placentia $450,000 -8.2% -3.2% 29 45.0% 16.0% Rancho Santa Margarita $469,000 -8.0% -2.3% 31 -27.9% 3.3% Rossmoor $670,000 -17.8% -8.2% 7 -30.0% 40.0% San Clemente $600,000 -7.7% -14.3% 42 -26.3% -28.8% San Juan Capistrano $535,000 -20.7% 0.8% 27 17.4% 28.6% Santa Ana $315,000 -1.6% -6.3% 85 -26.1% -30.9% Seal Beach $585,000 -24.0% -41.5% 6 -33.3% 100.0% Stanton $298,500 -0.5% -2.1% 8 0.0% -11.1% Tustin $503,000 14.1% -8.2% 26 -13.3% 8.3% Villa Park $750,000 -1.3% -29.2% 3 -40.0% -57.1% Westminster $397,500 1.3% -6.0% 32 -11.1% -22.0% Yorba Linda $580,000 -10.6% -9.4% 36 -37.9% -12.2%

Single Family = Single Family Res Detached, Single Family Res Attached, Single Family Res NA
Condo = Condo Attached, Condo Detached, Condo NA
Reports generated from Clarus MarketMetrics