Can you believe how fast the year has gone by? Now that’s a haunting thought. The real scary thought is how many buyers and sellers are just sitting on the sidelines, too afraid to make a move. Waiting and waiting for some apparition or a sign from the great beyond, telling them it’s safe to buy a home or that their house value is going to go up in value in the next six months. Hoo-hoo-haa haa!!! Maybe I can shed some light where the dark monster of real estate fear may be lurking.
History has always been the best champion through murky and unstable times, guiding us through and out of the darkest of real estate slump markets and back into the light of day. This has been the roughest and scariest real estate market down turn since 1978 thru 1982 or maybe 1990 thru 1994.
Looking back to 1982, home loan interest rates were 18% & 19%. That was Scary! Creative Financing was born! President Reagan regained control of the economy by lowering taxes and we enjoyed stable real estate growth until late 1989. Then came the S & L financial collapse, whereas many huge companies such as Ford, GM, Anheuser Busch, Toyota, Robert Shaw, etc., left California. Unemployment was terrible! Money was tight and banks weren’t lending. In 1990, interest rates were floating around 11.9% to 13%. Hoo-hoo-haa -haa!!!!”” The Adjustable Rate Mortgage (ARM) became the light to save the day!
Even in the darkest of nights, the scariest of storms, eventually, the sun starts to shine and the storm passes. Both of these down markets lasted approximately 5 1/2 Years. What happened after the storm “Katrina” had passed? They began to rebuild and New Orleans was back, with the huge success of Mardi Gras in 2010 and 2011.
In 1995 & 1996 the R.E. Market was flat. Interest rates were around 8%. Property values were not going up nor were they going down. The monthly entry level mortgage payment was about the same as monthly rent in a good neighborhood. The bottom of the market had finally hit. However, buyers and seller’s were to afraid to move. Boooo!
Flat sales & low R.E. inventory left buyers and sellers sitting on the sidelines! Overall a pretty frighten public opinion of the housing market! History “SHOWS US” that was the time to make some moves! Hind sight is 20/20!
Now, I don’t want you to think that the “Mean Old Real Estate Boogeyman” does not exist, because he does exist. He exists in good markets as well as tough markets. Getting good and solid advice from an experienced Realtor, is the best decision one can make. With good information one can make good decisions, taking the fear away.
We all know people who purchased homes at the bottom of the market. They had the same fears that many buyers and sellers have today. “Is this the right time to buy? Is this the right time to sell? Will the home I buy go down in value after I buy it? If I wait to sell will the price go down further or should I wait and watch what happens next year or the year after?”
How have the buyers and sellers of 1996, 97, 98 through 2004 faired? Pretty darn good. I believe that in today's R.E. market, there are real opportunities to do well.
Whether you are planning to move up or you’re empty nesters looking to down-size, there are opportunities on both sides of the transaction.
Today's interest rates are absolutely fabulous! With conforming rates around 4% and Jumbo rates around 5.25% there is no cheaper money. Entry level mortgage payments are the same or cheaper than renting. Home prices have or are stabilizing, in the markets below $450,000, especially in Orange Co. The higher end markets are still selling; Maybe not as high as in the past, but they are still selling. Sellers with equity are finding some real bargains with their purchasing power today.
Fear and sitting on the sidelines has driven many real estate agents out of the business, as well. The less experienced, or the agents who did not embrace real estate as a career or were in the business just for the quick buck, have left or will be leaving soon.
According to Robert Kleinhenz, Deputy Chief Economist for the California Association of Realtors (CAR), there are approximately 162,000 licensed real estate agents state wide. At the recent Broker/Manager meeting in Orange, CA, he said he expects that number to drop again by the end of next year, to 152,000.
Do you want to hear something really scary? In 1980 – 1983 the realtor population decreased from 148,350 to 102,600 (-31% of Realtors), and decreased again in 1990 to 1997 from 146,000 to 90,500 (-38% of Realtors). From the beginning of this real estate decline in 2006, there were 211,300 Realtors to date. There has been a 26% decline in realtors to 162,000(Sourced CAR data). I also believe that many realtors will not renew their local & CAR dues next year and that we should hit a 30% decline in Realtors by the end of summer next year! Only the dedicated professionals will survive. My opinion only.
(Here is the fun scary stuff!) Do you think history will repeat itself once more! 1982 President Reagan won election over Pres. Jimmy Carter therein 1984 through 1990 there was a 6 year upswing in the RE market and prices went up. Pres. Bush Sr. left a surplus for Pres. Bill Clinton who began spending & implemented the ease of loan requirements. In 1998 George Bush Jr. takes office and that upswing ride lasted 8 years. The top of the market was 2005. We’ve been in decline for 6 years and next year is election year. I think the year will be flat, prices won’t go up or down. However, check out the buying power with today's interest rates; between 3.5% and 4.5% 30 Year Fixed Rate. I’m banking on a history repeating itself this coming election. Now that’s a scary thought. Boo!
Monday, October 17, 2011
Wednesday, September 14, 2011
Putting the Puzzle Together
It has been a while since my last blog, must mean we've been busy over here! Well, we are now moving into the last quarter of the year and can you believe how fast this year has gone by?The kids will be banging on the door soon for their "trick or treats!" They always look so cute in their Halloween costumes with their looks of expectation as they arrive at the front door.
The holidays will be here before you know it. Once again, we all can give thanks for being here, safe in America. It is great getting together with family and friends. I can smell the turkey and pies as I write! I just love this time of year. The trees changing colors, the chill in the evening air, the smell of wood burning in a fireplace.
I find that during this last quarter, I start to think about what's going to happen next. The economy is in the tank and the Real Estate market is right there in the middle of it all.
With so many other industries that are connected to the real estate industry it is a real puzzle trying to figure out what I can do to help them to stay afloat during this market swing. My company, The Shire, has been hanging on during these tough times as well.
My clients that are depending on their home to be sold, so they can move on, ask what they can do to help sell their home.
My buyer clients, want to buy a home, but are afraid they will be making a bad decision. They are asking what happens if the market goes down further..then what?
This is the part of the economic puzzle tyhat we've all been talking about. This discussion has been going on for some time now. How long can this go on? How far will real estate prices fall? What is going to get the American economy started again? Where's our manufacturing? How much more will they be taxing us?
We have all had to tighten our belts and watch our pennies, as did our parents when they went through this type of downturn in their lives. This includes our government.
The depression of the 1920s and 1930s was no picnic. The 1950s, after the Korean war, was tough; 1970s after Vietnam when Nixon changed from the gold standard; 1980s with interest rates at 17% and above for a home loan. Let us not forget about 1990 through 1995 when all the S&L's went out of business and also the manufacturing that left California for other parts of the country or left the country completely. Yes, these were some tough times as well, and we did not fall into the ocean.
Guess what? America go through those times and came out even stronger. As we adjusted, the jobs came back, pricess of homes rose and we went through one of the longest economic upswings ever recorded.
I believe this November will be the start of finding that missing piece of the puzzle. I also think the part of the puzzle that's missing is "CONFICENCE. And from confidence, we will see the slow turning around of the American economic machine.
I don't have all the answers, if I did I would be a real bore to be around! However, in America, we are all entitled to our opinions and may speak them freely.
Here is one of my favorite quotes from Benjamin Franklin. "In America, a man may rise as high and as far as his wits will permit."
After November, you will still find me here...selling real estate, helping people achieve the American Dream and answering questions. THIS AMERICA IS NOT GOING OUT OF BUSINESS ANYTIME SOON!
The holidays will be here before you know it. Once again, we all can give thanks for being here, safe in America. It is great getting together with family and friends. I can smell the turkey and pies as I write! I just love this time of year. The trees changing colors, the chill in the evening air, the smell of wood burning in a fireplace.
I find that during this last quarter, I start to think about what's going to happen next. The economy is in the tank and the Real Estate market is right there in the middle of it all.
With so many other industries that are connected to the real estate industry it is a real puzzle trying to figure out what I can do to help them to stay afloat during this market swing. My company, The Shire, has been hanging on during these tough times as well.
My clients that are depending on their home to be sold, so they can move on, ask what they can do to help sell their home.
My buyer clients, want to buy a home, but are afraid they will be making a bad decision. They are asking what happens if the market goes down further..then what?
This is the part of the economic puzzle tyhat we've all been talking about. This discussion has been going on for some time now. How long can this go on? How far will real estate prices fall? What is going to get the American economy started again? Where's our manufacturing? How much more will they be taxing us?
We have all had to tighten our belts and watch our pennies, as did our parents when they went through this type of downturn in their lives. This includes our government.
The depression of the 1920s and 1930s was no picnic. The 1950s, after the Korean war, was tough; 1970s after Vietnam when Nixon changed from the gold standard; 1980s with interest rates at 17% and above for a home loan. Let us not forget about 1990 through 1995 when all the S&L's went out of business and also the manufacturing that left California for other parts of the country or left the country completely. Yes, these were some tough times as well, and we did not fall into the ocean.
Guess what? America go through those times and came out even stronger. As we adjusted, the jobs came back, pricess of homes rose and we went through one of the longest economic upswings ever recorded.
I believe this November will be the start of finding that missing piece of the puzzle. I also think the part of the puzzle that's missing is "CONFICENCE. And from confidence, we will see the slow turning around of the American economic machine.
I don't have all the answers, if I did I would be a real bore to be around! However, in America, we are all entitled to our opinions and may speak them freely.
Here is one of my favorite quotes from Benjamin Franklin. "In America, a man may rise as high and as far as his wits will permit."
After November, you will still find me here...selling real estate, helping people achieve the American Dream and answering questions. THIS AMERICA IS NOT GOING OUT OF BUSINESS ANYTIME SOON!
Tuesday, February 23, 2010
What's the News!?
What is new in Real Estate for 2010?
Well, the Fed's and the state have passed over 700 new laws that effect California real estate, and some of these laws have to do with the new disclosure laws for the loan industry side of real estate. Many of the other new laws have to do with how buyers and sellers are going to be purchasing and selling homes from now on in California. There are new requirements regarding Probate, Trust, REO properties (bank owned) and Short Sales to mention a few. There are also many language changes in existing contracts, disclosures and their procedures.
I started reading and going over these new laws with my agents at our first meeting of the year, although this is very dry reading, be assured that I will have all of these new changes and laws understood, and have the new forms ready for you when you need my services. I have to say, "Most of these changes and new laws are for the better."
What is the good news?
With all this doom and gloom, it is getting harder to find the good news, especially in real estate. Here are some bright spots from the past year and in the year to come:
- In September 2009, I got married to my wife, Patsy Garcia, a wonderful person, and I am one of the luckiest guys in the world!
- The Shire Real Estate Group just celebrated its 10th year in business in December of 2009 - hard work pays off!
- The $8,000 tax credit for first time buyers has been extended to April 30, 2010, one thing the government did to help!
- Interest rates are holding, Conforming Interest rates are steady between 5 and 5.5% for a 30 year fixed rate, and Jumbo Loans are about 1/2% higher, around 6 to 6.25% for a 30-year loan. The same rates as in 1959 through 1966! Yeah!
- I normally don’t get too political with this newsletter; however, finally yet importantly, I have noticed that America is waking up! The November elections are only 9 months away and I, for one, cannot wait!
Thursday, November 5, 2009
What's Going To Happen Next?
For the most part, I like to think of myself as an optimistic and practical kind of guy. I would normally start of writing about Real Estate this and Real Estate that...However, these are some very difficult times we are living in.
My grandpa Doc worked for Good Year Tires for 45 years, and I remember him saying that he had gone up to Azusa Canyon, in Azusa, CA, panning for gold just to make ends-meet. You see - he lived in the great depression and I am begining to get worried that we may not be far behind those times today.
Bob Dylan said it the best - "You had better start swimming or you'll sin like a stone, Oh the times, they are a changing." (Great song from the 60's).
I have had several clients this year who had lost their jobs and homes. I tried to get them a "loan modification" without success due to the fall in property values.
The real estate market has always gone Up & Down...I've been selling through four of these real estate cycles. In the past - there has always been some other industry that usually has pulled the USA out of its economic troubles.
My company has had its share of tough times and cut backs over the last three years...But I am proud to say that "The Shire" is celebrating its 11th year anniversary. To quote my uncle Denny, "calm seas do not make a good sailor."
To navigate throught these waters, I have attended severl advanced training classes to brush up on short sales, foreclosures, and the new lending procedure laws. Additionally, I am hosting similar training classes for my agents.
The loan side of real estate has also gone through some huge changes as well. These changes in te lending disclosure laws and the new appraisal rules and procedures have a dramatic effect on the purchasing and the selling of residential homes. This is effecting all homeowners as well as real estate professionals and the way we do business.
The government has now taken control of the appraisal industry. Basically turning it into a "Union Hall." This new policy has cut the average appraiser's income in half, offering nothing of value in return.
You might ask - "How does this effect me?" - good question! Many of the more qualified and experienced appraisers are leaving he residential side of the market. Meaning...
The fee charged for the average home appraisal is between $410 and $460 taking 3 - 5 hours of work to complete. An appraiser could run his business, pay staff and make a decent living if he worked hard. NOW the ramifications of this new policy has changed things for everyone!
Now the appraiser is paid about half for the same work and the "Union Hall" gets the other half. Lenders may no longer rely upon past relationships with LOCAL AND EXPERIENCED appraisers. The appraiser may even come from out of the area. This last month I had two out-of-the-area appraisers, one from Riverside and the other from Temecula, for a Brea and Lakewood sale! Both were challenged for review appriasals - more money out of pocket to the Buyer or Seller.
Banks have impemented some new strategies. Once such strategy is withholding many of the foreclosed properties from the market, in an effort to reduce inventory, artivicially driving up prices. Hiring Property Management Companies - such as mine0 to renovate and rent-out these houses.
Unfortunatley, this tactic is a couble edged sword. In theory - it will help to stablize the fall of prices. However - all over Southern California I see appraisals coming in lower than the agreed sales price, or the appraisal is challenged by the Buyer's Lender and the Review Appraiser then cuts the priced due to short sale comps.
I believe there is not a master conspiracy - Too many panks have TARP money allowing time to be on their side - hoping to ride out this market and reduce their loss from it.
What's going to happen next? If I knew the anser to this question - I would be as wealty as Donald Trump (with a better hairdo).
I believe the real estate market may dip a little more (3-5%) by the end of 2010. The real estate market should then flatten in 2011 and 2012 - prices won't go Up or Down, allowing the market to right itself - FINALLY! A new real estate cycle should start to increase home prices - at whatever number the cost of living index is - in the spring of 2013.
The changing of the trees is a strong indication that Fall is here. An economic in congress - stop the spending and bail-outs - maybe all we need to change the economic "Fall" of America's economy and the real estate market.
My grandpa Doc worked for Good Year Tires for 45 years, and I remember him saying that he had gone up to Azusa Canyon, in Azusa, CA, panning for gold just to make ends-meet. You see - he lived in the great depression and I am begining to get worried that we may not be far behind those times today.
Bob Dylan said it the best - "You had better start swimming or you'll sin like a stone, Oh the times, they are a changing." (Great song from the 60's).
I have had several clients this year who had lost their jobs and homes. I tried to get them a "loan modification" without success due to the fall in property values.
The real estate market has always gone Up & Down...I've been selling through four of these real estate cycles. In the past - there has always been some other industry that usually has pulled the USA out of its economic troubles.
My company has had its share of tough times and cut backs over the last three years...But I am proud to say that "The Shire" is celebrating its 11th year anniversary. To quote my uncle Denny, "calm seas do not make a good sailor."
To navigate throught these waters, I have attended severl advanced training classes to brush up on short sales, foreclosures, and the new lending procedure laws. Additionally, I am hosting similar training classes for my agents.
The loan side of real estate has also gone through some huge changes as well. These changes in te lending disclosure laws and the new appraisal rules and procedures have a dramatic effect on the purchasing and the selling of residential homes. This is effecting all homeowners as well as real estate professionals and the way we do business.
The government has now taken control of the appraisal industry. Basically turning it into a "Union Hall." This new policy has cut the average appraiser's income in half, offering nothing of value in return.
You might ask - "How does this effect me?" - good question! Many of the more qualified and experienced appraisers are leaving he residential side of the market. Meaning...
The fee charged for the average home appraisal is between $410 and $460 taking 3 - 5 hours of work to complete. An appraiser could run his business, pay staff and make a decent living if he worked hard. NOW the ramifications of this new policy has changed things for everyone!
Now the appraiser is paid about half for the same work and the "Union Hall" gets the other half. Lenders may no longer rely upon past relationships with LOCAL AND EXPERIENCED appraisers. The appraiser may even come from out of the area. This last month I had two out-of-the-area appraisers, one from Riverside and the other from Temecula, for a Brea and Lakewood sale! Both were challenged for review appriasals - more money out of pocket to the Buyer or Seller.
Banks have impemented some new strategies. Once such strategy is withholding many of the foreclosed properties from the market, in an effort to reduce inventory, artivicially driving up prices. Hiring Property Management Companies - such as mine0 to renovate and rent-out these houses.
Unfortunatley, this tactic is a couble edged sword. In theory - it will help to stablize the fall of prices. However - all over Southern California I see appraisals coming in lower than the agreed sales price, or the appraisal is challenged by the Buyer's Lender and the Review Appraiser then cuts the priced due to short sale comps.
I believe there is not a master conspiracy - Too many panks have TARP money allowing time to be on their side - hoping to ride out this market and reduce their loss from it.
What's going to happen next? If I knew the anser to this question - I would be as wealty as Donald Trump (with a better hairdo).
I believe the real estate market may dip a little more (3-5%) by the end of 2010. The real estate market should then flatten in 2011 and 2012 - prices won't go Up or Down, allowing the market to right itself - FINALLY! A new real estate cycle should start to increase home prices - at whatever number the cost of living index is - in the spring of 2013.
The changing of the trees is a strong indication that Fall is here. An economic in congress - stop the spending and bail-outs - maybe all we need to change the economic "Fall" of America's economy and the real estate market.
Tuesday, August 25, 2009
If I Kick Up Enough Dust!
Have you hard "A LOT" of complaining lately? The president's complaining that there is another crisis, Congress has lost touch with the people who put them in office and yes some real estate agents have been doing the "whiny thing" about this tough market. Well, I am sure tired of hearing about it.
I'm not complaining! I am doing whatever it takes to improve my life, my career and my country. I'm assisting those who call for my services with the best positive attitude and expertise. I have always embraced the real estate business as a career.
I have been assisting people buying and selling homes through all types of markets over the last 24 plus years. Up markets, Down markets, Seller's markets, Buyer's markets, Flat and Stagnant markets. You see, Real Estate is a simple business, it is NOT an easy business.
In whatever market we happen to be in, there's one thing that has always made America strong and able to weather any economic Storm thrown at her...
It is America's unstoppable attitude! And, in Real Estate it is the "American Dream" of home ownership that drives the market. Prices go up and prices go down. However, the unstoppable "Dream of Home Ownership" will have people always looking to improve the quality of their life.
If it makes sense for you to sell now, for whatever the reason, then it's time to sell. I think you will want the Broker that says "I am going to get this sold for you."
If you are thinking of buying or investing, for whatever reason, then it's time to purchase. I think you will want the broker that says "I am going to find just the right home for you."
I have been pounding the pavement, kicking up dust, showing properties and holding open houses almost every weekend since January. The year is half over and I have helped 17 people buy and sell their homes so far this year. My agents are busy and doing well also.
"Lead by example" is what my mother told me when I was young.
My thinking is "if i kick up enough dust, I believe I'll get some dust on me." A positive attitude is what is needed in this type of real estate market.
There are so many great real estate opportunities to invest in right now! For example, the $8,000 Tax Credit for First Time Buyer's is a great way to help you or your children get into their first home.
How about those retirement dreams? Laguna Beach, San Clemente, Lake Arrowhead? These areas have dropped to more then reasonable prices!
Thinking of selling? Curious to what's working in this market? Target marketing is doing really well for the executive home. First Time Buyer seminars are doing great for the more modest priced homes.
Interest Rates have been holding steady at just above 5% for conforming loans and 6.75% for Jumbo Loans. Easy Docs and No Income Qualifier Loans do not exist anymore. We are in a full documentation loan market. Good Credit and income provide for fabulous opportunities.
As always feel free to call me with ANY questions, I'm here to help 714.626.8880
Have you hard "A LOT" of complaining lately? The president's complaining that there is another crisis, Congress has lost touch with the people who put them in office and yes some real estate agents have been doing the "whiny thing" about this tough market. Well, I am sure tired of hearing about it.
I'm not complaining! I am doing whatever it takes to improve my life, my career and my country. I'm assisting those who call for my services with the best positive attitude and expertise. I have always embraced the real estate business as a career.
I have been assisting people buying and selling homes through all types of markets over the last 24 plus years. Up markets, Down markets, Seller's markets, Buyer's markets, Flat and Stagnant markets. You see, Real Estate is a simple business, it is NOT an easy business.
In whatever market we happen to be in, there's one thing that has always made America strong and able to weather any economic Storm thrown at her...
It is America's unstoppable attitude! And, in Real Estate it is the "American Dream" of home ownership that drives the market. Prices go up and prices go down. However, the unstoppable "Dream of Home Ownership" will have people always looking to improve the quality of their life.
If it makes sense for you to sell now, for whatever the reason, then it's time to sell. I think you will want the Broker that says "I am going to get this sold for you."
If you are thinking of buying or investing, for whatever reason, then it's time to purchase. I think you will want the broker that says "I am going to find just the right home for you."
I have been pounding the pavement, kicking up dust, showing properties and holding open houses almost every weekend since January. The year is half over and I have helped 17 people buy and sell their homes so far this year. My agents are busy and doing well also.
"Lead by example" is what my mother told me when I was young.
My thinking is "if i kick up enough dust, I believe I'll get some dust on me." A positive attitude is what is needed in this type of real estate market.
There are so many great real estate opportunities to invest in right now! For example, the $8,000 Tax Credit for First Time Buyer's is a great way to help you or your children get into their first home.
How about those retirement dreams? Laguna Beach, San Clemente, Lake Arrowhead? These areas have dropped to more then reasonable prices!
Thinking of selling? Curious to what's working in this market? Target marketing is doing really well for the executive home. First Time Buyer seminars are doing great for the more modest priced homes.
Interest Rates have been holding steady at just above 5% for conforming loans and 6.75% for Jumbo Loans. Easy Docs and No Income Qualifier Loans do not exist anymore. We are in a full documentation loan market. Good Credit and income provide for fabulous opportunities.
As always feel free to call me with ANY questions, I'm here to help 714.626.8880
Thursday, May 21, 2009
What's the Difference?
Just a couple of weeks ago, I had a buyer come into one of my open houses who just loved the house. He and his wife wanted to write an offer on the house right then. The home at the open house was priced over a million dollars. They both had great jobs, good credit and had heard on the radio that loan rates were down below 5%. They assumed that they could get financing without any problems due to their outstanding credit rating and they were planning to put 20% down. Well of course they can get a great loan, a "JUMBO LOAN" at the rate of 6.5%.
Like so many other buyers, they were shocked to learn that the difference between a Conforming Loan and a Jumbo Loan was nearly $1,003 in their payment per month. They asked a lot of questions after I explained what their new payment was going to be. With this new information, they didn't qualify for this home.
So what is the difference between a "Conforming Property" and a "Non-Conforming Property?" What is the difference between a "Conforming Loan" and a "Non-Conforming Loan," or a "Jumbo Loan" and a "Super Jumbo Loan?"
A "Conforming Property" is any residential property of 1 to 4 units. It can be a Condo or Town Home, as well as a Single Family Residence.
A "Non-Conforming Property" would be any property of mixed use, or 5 or more units, etc. An example of this might be "The Lofts" in the redevelopment of downtown areas such as: LA, Fullerton, or Brea, or store front properties with apartments above. Note: these can be good investments, however, it is hard to find a lender to loan on these types of properties...usually a "Commercial Bank."
The "Conforming Loan Rate" is the rate that you will normally read about or hear advertised. The Federal Housing Finance Agency (FHFA) has determined that the "Conforming Loan" loan limit will remain at $417,000 for 2009 in most areas in the U.S., with higher limits in certain cities and counties. (Feel free to call me and inquire about the loan limits in your area 714.626.8880).
A "Jumbo Loan" is any residential loan above $417,000. The "Jumbo Loan" typically carries a higher interest rate than conforming loans. Jumbo Loans have varying limits for different areas of the country as well.
A "Super Jumbo Loan" is a specialty type of loan. Usually an "Adjustable Rate Loan" with a shorter term limit of 5,7,10 years. An example of this type of loan is a $25,000,000 home with 50% down leaving a loan amount of $12,500,000.
You may ask, "What difference does this make to me?"
If you are buying or selling a home, or just thinking about it, it could mean the difference between you or your potential buyer qualifying for a loan or not. Or, in having to put down a larger down payment to get a better interest rate.
EXAMPLE #1: If your original purchase price is $521,000 and you put 20% down ($104,200), your loan amount would be $416,800, a "Conforming Loan."
EXAMPLE #2: If your original purchase price is $750,000 and you put 20% down ($150,000), your loan amount would be $600,000, a "Jumbo Loan."
This is where we separate the proverbial men from the boys, or ladies from the girls. Good Realtors, from the inexperienced.
In this market, of the buyers purchasing property with the maximum conforming loan limit of $417,000, they would have a payment of approximately $2,839 with taxes and insurance included. This means the buyer should have approximately $8,500 in income per month before taxes.
If the purchase price is $750,000 with 20% down ($150,000), a loan amount of $600,000, a "Jumbo Loan," the payment would be approximately $4,982 with taxes and insurance included. This means the buyer should have approximately $15,000 in income per month before taxes.
The above is an EXAMPLE ONLY. When you are thinking of buying or selling, or if you have any questions regarding loans, give me a call. There is a difference in Realtors.
John Chesshire
714.626.8880
Like so many other buyers, they were shocked to learn that the difference between a Conforming Loan and a Jumbo Loan was nearly $1,003 in their payment per month. They asked a lot of questions after I explained what their new payment was going to be. With this new information, they didn't qualify for this home.
So what is the difference between a "Conforming Property" and a "Non-Conforming Property?" What is the difference between a "Conforming Loan" and a "Non-Conforming Loan," or a "Jumbo Loan" and a "Super Jumbo Loan?"
A "Conforming Property" is any residential property of 1 to 4 units. It can be a Condo or Town Home, as well as a Single Family Residence.
A "Non-Conforming Property" would be any property of mixed use, or 5 or more units, etc. An example of this might be "The Lofts" in the redevelopment of downtown areas such as: LA, Fullerton, or Brea, or store front properties with apartments above. Note: these can be good investments, however, it is hard to find a lender to loan on these types of properties...usually a "Commercial Bank."
The "Conforming Loan Rate" is the rate that you will normally read about or hear advertised. The Federal Housing Finance Agency (FHFA) has determined that the "Conforming Loan" loan limit will remain at $417,000 for 2009 in most areas in the U.S., with higher limits in certain cities and counties. (Feel free to call me and inquire about the loan limits in your area 714.626.8880).
A "Jumbo Loan" is any residential loan above $417,000. The "Jumbo Loan" typically carries a higher interest rate than conforming loans. Jumbo Loans have varying limits for different areas of the country as well.
A "Super Jumbo Loan" is a specialty type of loan. Usually an "Adjustable Rate Loan" with a shorter term limit of 5,7,10 years. An example of this type of loan is a $25,000,000 home with 50% down leaving a loan amount of $12,500,000.
You may ask, "What difference does this make to me?"
If you are buying or selling a home, or just thinking about it, it could mean the difference between you or your potential buyer qualifying for a loan or not. Or, in having to put down a larger down payment to get a better interest rate.
EXAMPLE #1: If your original purchase price is $521,000 and you put 20% down ($104,200), your loan amount would be $416,800, a "Conforming Loan."
EXAMPLE #2: If your original purchase price is $750,000 and you put 20% down ($150,000), your loan amount would be $600,000, a "Jumbo Loan."
This is where we separate the proverbial men from the boys, or ladies from the girls. Good Realtors, from the inexperienced.
In this market, of the buyers purchasing property with the maximum conforming loan limit of $417,000, they would have a payment of approximately $2,839 with taxes and insurance included. This means the buyer should have approximately $8,500 in income per month before taxes.
If the purchase price is $750,000 with 20% down ($150,000), a loan amount of $600,000, a "Jumbo Loan," the payment would be approximately $4,982 with taxes and insurance included. This means the buyer should have approximately $15,000 in income per month before taxes.
The above is an EXAMPLE ONLY. When you are thinking of buying or selling, or if you have any questions regarding loans, give me a call. There is a difference in Realtors.
John Chesshire
714.626.8880
Tuesday, March 24, 2009
Times can be rough and times can be hard!
Don't you sometimes wish that someone would come and bail YOU out? I sure do. However, I don't think that is going to happen for my company or me anytime soon!
Like most of you, I'm one of those working guys who believes that this real estate market will too pass. It goes up and it goes down and sometimes you just have to go along for the ride. Keeping a good attitude in the face of troubled waters will always win over the doom and gloom of what's heard on TV, radio, and read in the newspaper.
Remember 1979 - 1982 and 1990 - 1994? Well even if you don't... Like today's market, those were some pretty rough times for real estate. The home loan interest rate was 16 - 19% in the early 80s...and unemployment was over 14% here in California. Chrysler, Ford, GM and Anheuser Busch plus a few other major companies even left California, causing the loss of thousands of jobs! Yes, times can be hard.
One of the most valuable lessons I learned during those tough times was to not buy into the doom and gloom of the day. There are always positives to every situation. Our lives are only so long, and between here (however old you are) and whenever there comes, we must strive to be happy.
Attitude creates energy! If people around you are upbeat you will tend to be upbeat as well. If they are negative and baa-humbug about everything...well you get the idea.
During these trying times we must remember every morning to count our blessings, especially the little ones...good health...good friends...the shared love of your family. Toward the end of the year I will be getting married, and let me tell you...I picked a winner! I thank my lucky stars everyday for her, and I am so thankful to have her in these hard times. And most of all, let's all remember that we do live in the greatest country in the world.
If things are hard here...they are even tougher outside the US. Where in the world is better then here? Russia? Germany? France? Spain, Egypt, Italy? Greece, Africa? Any part of South America? Japan? North or South Korea? China maybe? NO, I think not!
I don't profess to have the answers to the economy, or to Wall Street's issues or even the Real Estate market...in which i am an expert in. I do however, have an answer to changing things that are happening around me during these times.
The answer is a positive ATTITUDE.
I can control my attitude. I'm helping my neighbor take out her trash...I am putting in a little more time with one of my favorite charities, HBIC...and when someone asks me "How's it going in the real estate market?" I say, "When it's tough, the tough get going!" with a BIG SMILE!
I believe the same amount of people are still getting married this year...the same amount of babies are getting born...moving up in size...moving down in size...relocating out of the state and coming into Southern California...We all have to have a place to live and that's where i come in.
Think about it...who would you rather be dealing with when it comes time to utilize a service, be it a doctor..dentist..mechanic..check-out clerk..or in my case a real estate broker...when the times comes you want to deal with a professional with a positive attitude! Next time you see your neighbor give away a big smile and say..."It's just another day in paradise!"
One final positive thought about how tough the real estate market is...Most of the part-timers and the wannabe agents who jumped in for a quick buck...etc. have left the industry That means that cream rises. This has always been a fabulous career for me and I wouldn't give it up for the world.
When it comes time to buy or sell your house, who do you want working for you? a wannabe...or an experienced, professional real estate agent with a positive attitude. I know what my choice would be!
Don't hesitate to call me if you have any questions, or comments, or even just to say "hello" :)
John Chesshire
714.626.8880
Like most of you, I'm one of those working guys who believes that this real estate market will too pass. It goes up and it goes down and sometimes you just have to go along for the ride. Keeping a good attitude in the face of troubled waters will always win over the doom and gloom of what's heard on TV, radio, and read in the newspaper.
Remember 1979 - 1982 and 1990 - 1994? Well even if you don't... Like today's market, those were some pretty rough times for real estate. The home loan interest rate was 16 - 19% in the early 80s...and unemployment was over 14% here in California. Chrysler, Ford, GM and Anheuser Busch plus a few other major companies even left California, causing the loss of thousands of jobs! Yes, times can be hard.
One of the most valuable lessons I learned during those tough times was to not buy into the doom and gloom of the day. There are always positives to every situation. Our lives are only so long, and between here (however old you are) and whenever there comes, we must strive to be happy.
Attitude creates energy! If people around you are upbeat you will tend to be upbeat as well. If they are negative and baa-humbug about everything...well you get the idea.
During these trying times we must remember every morning to count our blessings, especially the little ones...good health...good friends...the shared love of your family. Toward the end of the year I will be getting married, and let me tell you...I picked a winner! I thank my lucky stars everyday for her, and I am so thankful to have her in these hard times. And most of all, let's all remember that we do live in the greatest country in the world.
If things are hard here...they are even tougher outside the US. Where in the world is better then here? Russia? Germany? France? Spain, Egypt, Italy? Greece, Africa? Any part of South America? Japan? North or South Korea? China maybe? NO, I think not!
I don't profess to have the answers to the economy, or to Wall Street's issues or even the Real Estate market...in which i am an expert in. I do however, have an answer to changing things that are happening around me during these times.
The answer is a positive ATTITUDE.
I can control my attitude. I'm helping my neighbor take out her trash...I am putting in a little more time with one of my favorite charities, HBIC...and when someone asks me "How's it going in the real estate market?" I say, "When it's tough, the tough get going!" with a BIG SMILE!
I believe the same amount of people are still getting married this year...the same amount of babies are getting born...moving up in size...moving down in size...relocating out of the state and coming into Southern California...We all have to have a place to live and that's where i come in.
Think about it...who would you rather be dealing with when it comes time to utilize a service, be it a doctor..dentist..mechanic..check-out clerk..or in my case a real estate broker...when the times comes you want to deal with a professional with a positive attitude! Next time you see your neighbor give away a big smile and say..."It's just another day in paradise!"
One final positive thought about how tough the real estate market is...Most of the part-timers and the wannabe agents who jumped in for a quick buck...etc. have left the industry That means that cream rises. This has always been a fabulous career for me and I wouldn't give it up for the world.
When it comes time to buy or sell your house, who do you want working for you? a wannabe...or an experienced, professional real estate agent with a positive attitude. I know what my choice would be!
Don't hesitate to call me if you have any questions, or comments, or even just to say "hello" :)
John Chesshire
714.626.8880
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