The Latest News on the Mortgage Scene
May 5, 2008
Short Sale = Long Shot?
Did you see the price on that house next door? He paid $400,000 for that two years ago and now the agent is asking $210,000 on a short sale.….What’s a short sale?
In my opinion, a short sale is a long shot, or wishful thinking on the part of a desperate seller or determined Realtor. By definition, a short sale is the process of asking your existing lender to accept LESS than the full balance owed on the home. You are effectively “short” funds to pay the loan off.
The first question is, why would a lender even consider this type of agreement? Primarily to avoid the much longer more expensive foreclosure process on a home that is usually in default by the owner, or heading in that direction soon. If a home goes into foreclosure, the lender is at risk of the property becoming damaged, or losing elements of the home to theft. Additionally, the foreclosure process is slow and costly for the bank. Therefore, a short sale may be more acceptable to all involved. Sounds easy enough, but in reality, it does not happen very often. A majority of the lenders will NOT tell their homeowner or the listing agent how much “shortage” they are willing to accept up front. Instead, they keep everyone guessing about the discount the bank will accept. The banks will only respond to offers. Therefore, it is up to the listing agent to “guess” what price will attract an offer to the property. What is the best way to get an offer on a home? Drop the price below everyone else and become the lowest priced home on the street. Great! Now you have an offer on your home to submit to your bank for short sale approval. Typically a bank will take about 3-6 + weeks to respond to your offer. By this time most active buyers have moved on to find another home. If the buyer has waited patiently, they will typically find that their short sale offer is rejected or countered back to be something near the price every other home in the neighborhood was asking originally. Hence, you have a very frustrated buyer, seller & realtor, and now the rest of the neighborhood is mad at you for “bringing down” the value of their homes with your short sale listing. Keep in mind, If someone sees your home offered at $210,000 (short sale) and every other similar home offered at $300,000 +/-, you can be darn sure that prospective buyers in your neighborhood will be stuck on the $210,000 price for ALL of these homes. Despite the fact that your home will NEVER be sold for $210,000, this short sale offering has done some damage to the whole neighborhood value.
How does this compare to a BANK OWNED home?
Now we are in a much better position to get a good value. A bank owned home has already removed the previous homeowner. The home has been lost to foreclosure or some other means and now the bank owns the home outright. The price listed on this house has already been established by the bank as a price they will accept, often still lower than the neighboring homes that are not bank owned. Banks do not like to own vacant properties. They are costly to maintain and subject to vandalism and theft. Therefore, they are very often priced attractively right up front. Does this mean you can still “lowball” an offer to a bank? Sure, you can try. However, my experience lately has shown that the offering price on these homes is already a great deal and many bank owned homes will often receive multiple offers on them, many times above the banks asking price. If you find a bank owned home you like, at a price you can afford, don’t play games, jump on it!
Most bank owned home will still participate in paying for closing costs or contribute to the Nehemiah program so you can get in for $0 out of pocket. This may require that you offer ABOVE asking price to insure that you beat all other offers and the bank ends up with a NET amount of money for which they are satisfied.
The NUMBER ONE (#1) key to success in buying ANY home? Pre-approved loan. When you have your pre-approval out of the way and there is NO question you can buy the home you are making an offer on, success will follow!
Jeff Tarbell
Managing Director
(916) 718-5171
April 7, 2008
HUD Releases New FHA Loan Limits For California
HUD released the new FHA loan limits for California and median home price data that allows you to calculate the new conforming loan limit for Freddie Mac and Fannie Mae (it's 125 percent of the median home price, or $417,000, whichever is more, up to a maximum of $729,750).
All told, 14 California counties saw their loan limits for FHA, Fannie and Freddie bumped all the way up to the $729,750 cap. Most were in the San Francisco Bay Area or northern California (Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Cruz, Santa Clara) with five more in the L.A. area (Los Angeles, Orange, San Benito, Santa Barbara, and Ventura).
| County | Median price |
FHA limit |
Conforming loan limit |
| Alameda County | $995,000 |
$729,750 |
$729,750 |
| Alpine County | $438,000 |
$547,500 |
$547,500 |
| Amador County | $355,000 |
$443,750 |
$443,750 |
| Butte County | $320,000 |
$400,000 |
$417,000 |
| Calaveras County | $370,000 |
$462,500 |
$462,500 |
| Colusa County | $318,000 |
$397,500 |
$417,000 |
| Contra Costa County | $995,000 |
$729,750 |
$729,750 |
| Del Norte County | $249,000 |
$311,250 |
$417,000 |
| El Dorado County | $464,000 |
$580,000 |
$580,000 |
| Fresno County | $305,000 |
$381,250 |
$417,000 |
| Glenn County | $230,000 |
$287,500 |
$417,000 |
| Humboldt County | $315,000 |
$393,750 |
$417,000 |
| Imperial County | $260,000 |
$325,000 |
$417,000 |
| Inyo County | $350,000 |
$437,500 |
$437,500 |
| Kern County | $295,000 |
$368,750 |
$417,000 |
| Kings County | $260,000 |
$325,000 |
$417,000 |
| Lake County | $321,000 |
$401,250 |
$417,000 |
| Lassen County | $200,000 |
$271,050 |
$417,000 |
| Los Angeles County | $710,000 |
$729,750 |
$729,750 |
| Madera County | $340,000 |
$425,000 |
$425,000 |
| Marin County | $995,000 |
$729,750 |
$729,750 |
| Mariposa County | $330,000 |
$412,500 |
$417,000 |
| Mendocino County | $410,000 |
$512,500 |
$512,500 |
| Merced County | $378,000 |
$472,500 |
$472,500 |
| Modoc County | $125,000 |
$271,050 |
$417,000 |
| Mono County | $370,000 |
$462,500 |
$462,500 |
| Monterey County | $599,000 |
$729,750 |
$729,750 |
| Napa County | $615,000 |
$729,750 |
$729,750 |
| Nevada County | $450,000 |
$562,500 |
$562,500 |
| Orange County | $710,000 |
$729,750 |
$729,750 |
| Placer County | $464,000 |
$580,000 |
$580,000 |
| Plumas County | $328,000 |
$410,000 |
$417,000 |
| Riverside County | $400,000 |
$500,000 |
$500,000 |
| Sacramento County | $464,000 |
$580,000 |
$580,000 |
| San Benito County | $790,000 |
$729,750 |
$729,750 |
| San Bernardino County | $400,000 |
$500,000 |
$500,000 |
| San Diego County | $558,000 |
$697,500 |
$697,500 |
| San Francisco County | $995,000 |
$729,750 |
$729,750 |
| San Joaquin County | $391,000 |
$488,750 |
$488,750 |
| San Luis Obispo County | $550,000 |
$687,500 |
$687,500 |
| San Mateo County | $995,000 |
$729,750 |
$729,750 |
| Santa Barbara County | $615,000 |
$729,750 |
$729,750 |
| Santa Clara County | $790,000 |
$729,750 |
$729,750 |
| Santa Cruz County | $719,000 |
$729,750 |
$729,750 |
| Shasta County | $339,000 |
$423,750 |
$423,750 |
| Sierra County | $228,000 |
$285,000 |
$417,000 |
| Siskiyou County | $235,000 |
$293,750 |
$417,000 |
| Solano County | $446,000 |
$557,500 |
$557,500 |
| Sonoma County | $530,000 |
$662,500 |
$662,500 |
| Stanislaus County | $339,000 |
$423,750 |
$423,750 |
| Sutter County | $340,000 |
$425,000 |
$425,000 |
| Tehama County | $250,000 |
$312,500 |
$417,000 |
| Trinity County | $200,000 |
$271,050 |
$417,000 |
| Tulare County | $260,000 |
$325,000 |
$417,000 |
| Tuolumne County | $350,000 |
$437,500 |
$437,500 |
| Ventura County | $599,000 |
$729,750 |
$729,750 |
| Yolo County | $464,000 |
$580,000 |
$580,000 |
| Yuba County | $340,000 |
$425,000 |
$425,000 |
February 26, 2008
What The Heck Is Going On?
Mortgage Market update:
“Reports of my death have been greatly exaggerated”-Mark Twain
If you are following the general consensus of the print & television news lately, the real estate & mortgage markets have completely imploded, taking thousands of lives with it! While there is certainly some truth to this story, many of us are still alive & striving for excellence and a bright future. Additionally, this market has given life to a whole new group of people: first time homebuyers!
Here are some important changes & updates in the mortgage business that you should know:
- Mortgage rates fluctuate daily and sometimes hourly. 30 year conforming rates in the last 30 day window have seen a low of 5.375% & a high of 6.375% with no points. Jumbo & non-conforming rates are typically running in the high 6’s to low 7’s. The market for this type of loan product is very limited right now. Lower demand = higher rates to attract investors willing to buy Jumbo loans.
- Stated income & no qualifying loans still exist for those with good credit & good down payments or equity in your home. Many times the automated systems in underwriting will “grant you” stated findings. This means with very high credit, equity & reserves, the system may not even ask to prove income & you still get the same good rates.
- FHA is the new home for subprime & high loan to value borrowers, 97% purchases & 95% cash out refinances with NO LIMIT on 2nd mortgages. FHA is the rescue boat for many homeowners with diminished equity or low down payments trying to get in on this fantastic “fire sale” of homes.
- Risk based pricing is the new mortgage term of the month. Your rate on a conventional loan can now fall into a category of pricing adjustments based on your credit score. A 720 score may have 6% rate, 680-720 a rate of 6.125%, 620-680 a rate of 6.25% etc. Thus rewarding those who have maintained perfect credit over the years.
- The Federal Governments “stimulus” package may not stimulate many for long. The much anticipated bump up in conforming & FHA loan limits to as high as $729,000 in some areas is still very much influx. It may take weeks if not months for the powers that be to identify these new loan limits & get them implemented (only to expire 12/31/08). Of course, nobody ever thought to ask Wall Street, “will you buy these temporary notes?” The answer at this point seems to be “maybe” but not at the lower rates promised to the American public by your government. Once again it proves, government cannot solve all problems, the market must take care of itself in most cases. Is it curious to anyone else that the bulk of the stimulus rebate checks arrive in the mail only 60 days prior to the next election?
- 100% home loans still exist for many. First time homebuyers still have some options. Namely CalHFA, USDA, VA, & Nehemiah exist to help first time home buyers and veterans get into their first home. These programs remain a very viable option to achieve maximum financing on your first home, condo or manufactured home.
Many of you are probably looking around now, only to find your mortgage “professional” in a whole new line of work! After 15 years in an industry of Ups & downs, I am proud to say that I am still here & growing in this business. This is the time when opportunity exists to grow and reach out to new professionals. I invite you to tune in to my weekly radio program on KHTK Sports 1140am, Saturdays from 9-10am or via the web on www.khtk.com “listen live” link. For daily updates on the mortgage rates, you can check out my website at www.jefftarbell.com.
If you have any questions about home financing, refinancing, construction loans or Reverse Mortgages , please call me directly 7 days a week @ 916-718-5171.
Jeff Tarbell
Managing Director
August 15, 2007
HAS THE MORTGAGE WORLD COME TO AN END?
Despite all of the negative publicity in the newspaper, radio & TV, the world is NOT coming to an end…..for most! Yes, there are some problem loans and borrowers in the market. However 90+% of all homeowners & buyers are just fine!
THE GOOD NEWS ? The door is wide open for homebuyers. If you maintain good credit, you can still get great loans up to 100%. Remember when all the news was about how high home prices were getting and all of the people getting left out of the market? Don’t let that happen again. Now is an incredible time to buy a first home, move up home, 2nd home or pick up a bargain investment property!
FED SET TO DROP RATES? Word in the market is that the fed is poised to drop rates in the very near future!! Rates are great now and poised to drop back even lower..keep your ears & eyes open. ATM is still offering NO fee lines of credit. Call today!
For a complete weekly update of the financial & mortgage market, please tune in to “Talkin Money” every Saturday 9-10am Sports 1140am Jeff Tarbell @ 916-338-9400 x11