LOAN PEDDLERS

San Diego VA Home Loan Limit $593,750 Through 2012

President Bush signed the Veterans' Benefits Improvement Act of 2008, extending the enhanced VA loan limits (current $$593,750 for San Diego), through December 31, 2011.

In addition to the loan limit extension, the VA extended ARM products through September 30, 2012.

VA refinance loans are now allowed for up to 100% of the value of the home and up to the full $593,750 loan amount.  This is notable inasmuch as refinance transactions couldn't exceed 90% of the value of the home and had a loan limit up to $417,00.  This should help many veterans who are stuck in non-prime ARM loans about to adjust upwards.

VA loan limits were scheduled to revert back to the $417,000 limit on January 1, 2009.  This legislation rescinds that schedule.  FHA  and conforming loan limits, scheduled to adjust downwards to $625,000, in San Diego County, on January 1, 2008, should follow the VA's lead.  If that were to happen, my opinion about San Diego's 2009 real estate market outlook might be tempered.

Brian Brady is San Diego County's VA Home Loan expert.  He has helped existing sailors, marines, soldiers, and airmen finance their first home by using the power of the VA-guaranteed home loan with NO MONEY DOWN.

Here's an excerpt of what one Navy family said about Brian:

I literally was one of the first loans to close this kind of VA loan and Brian was able to pull it off, which is no small task in today's market.  I really can't say enough good things about him and he even put me in touch with some amazing real estate agents.  If you can use your VA benefits I would suggest doing it before the end of the end of the year, when the guidelines change again.  Look this mortgage guy up and give him a call, seriously!  Cuz the closest next option is 3% with FHA and mostly 10% with Conventional.

While the loan limits have been extended, San Diego housing prices have fallen to their lowest level in 4-7 years.  Service members have a great opportunity to own a home they can afford.

Call Brian at (858)-777-9751

Searchlight Crusade: Monthly Consumer Articles Catalogue

Dan Melson, the other mortgage blogger in San Diego, hosts a monthly contest on Searchlight Crusade.  I missed the top tier by a smidge.  Here are the recommended articles from Dan:

RECOMMENDED

I disagree with some of what Brian Brady writes in San Diego Real Estate and Housing Outlook for 2009, but it is well reasoned and he makes a good case. Were it of broader area applicability, I would have put it in the "strongly recommended" section.

Fed Policy, Economics 101 & the Housing Market talks about some of what causes housing prices to rise or fall.

Dave McCormick On Restoring Global Stability has some good macro-economic information.

$7500 First Time Homebuyer Tax Credit is a good basic overview.  It is called a tax credit, but it really is a tax loan, not a tax credit.

Your host presents Will I Qualify for the Loan to Buy Real Estate During The Market Meltdown?

I had the pleasure of meeting Dan at the SDBloggers Meetup, earlier this week.  I tried to bribe him with the offer of a free drink but the man is completely beyond corruption.  Notwithstanding, it was a pleasure to meet Dan and talk industry talk with him all night. 

Both Dan and I contribute monthly to the San Diego Special Edition, hosted by Carole Lane. Carole was at the SDBloggers meetup.  I tried to bribe her, too but she is as virtuous as Dan.

San Diego Mortgage Rates Report: Fed Cut To Prompt Lower Mortgage Rates Into November?

We analyze mortgage rates by examining the mortgage-backed securities market and its reaction to economic data and events.  Today, the Federal Reserve cut the Fed Funds rate to an historical low of 1%:

The Fed funds rate target is now 1%, the lowest level in more than four years. In announcing its decision, the Federal Open Market Committee cited a drop in spending by consumers and businesses, and predicted that consumption may slow further due to tighter lending standards.

"The pace of economic activity appears to have slowed markedly," the FOMC said in a statement, "owing importantly to a decline in consumer expenditures."

Why's the economy in the tank?  You just aren't spending enough money, Joe the Plumber.  Of course, you can't borrow any either so you're hesitant about spending.   Hence, the Fed cut in rate.  Normally, a Fed cut should be followed by a RISE in mortgage rates but it looks like the mortgage-backed securities market anticipated the cut a week ago. 

Let's take a look the crystal ball (market chart):

See what's happening here?  Two weeks ago, we had a six day BIG drop, which caused rates to rise from 5.875% to 6.5%.  That drop was followed by a 5 day rally, which brought rates back down to 5.875%.  Then, we had a six day BIG drop, driving mortgage rates back up to 6.5% (today)...

...and I think the market overreacted which means I think we'll see lower mortgage rates into the beginning of November.

This is the kind of volatility we've come to expect.  Mortgage rates should drop to 6.25%, pause, then drop again to the 6% level or below.  No guarantees but November closings should get a peek at 6% or better rates soon.

100 Under 100K: Phoenix Offers Opportunity For Investors

Investors take notice!  Phoenix home prices led the nation in declines:

The Case-Shiller indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.

The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.

Phoenix real estate broker, Greg Swann of Bloodhound Realty, assembled a list of 100 homes listed for less than $100,000.  Greg reports that not EVERY home on the list is tenant-ready but that there are gems hidden among the heap of lender-owned properties:

Click on this link for a PDF file of listings for 100 potential rental homes selling — right now — for $100,000 or less. These are lender-owned homes, so they’re going to be fixers. And some of them will need so much work they’re not worth bothering with. But some of them will need next to nothing — $5,000 or less in repairs — and they will be cash-flow positive from the very first tenant.

For the most part these are not Cadillac homes, but they still have a lot going for them: 1,400sf and above, stucco and tile, built 1995 or later, with back yards and garages. These homes can attract decent rents — $800 and above in most cases — and many of them will be appealing to owner-occupants on resale.

I sell a lot of rental homes, and the homes I sell stay rented. A list like this might produce ten workable rentals. But they’ll be choice rentals, attracting premium tenants and selling at a premium price when you’re ready to move on.

Investment properties make good sense when leveraged to the point where the rental income covers all costs.  Most mortgage lenders require 25% down for the best rates.  On a $100,000 property, that means that an investor will need some $30-35,000 for down payment, closing costs, and repairs to make the home tenant-ready.  A $75,000 loan will most likely have a PITI payment of about $600.

Check Greg's list out and contact him to run the numbers.  The big question you need to ask him is "Can the property command at least six hundred bucks a month in rent?"

I think you'll be blown away by his answer.

San Diego Mortgage Rates Report: October 27, 2008- Float Club Playing All Next Week

Friday, mortgage rates jumped from 5.875% to 6.25% as mortgage-backed securities traders joined the world wide sell-off.  Global stock markets plunged Friday and the Asian markets were weak for Monday.  Investors world wide don't want to be invested in ANYTHING.

When the world panics, we FLOAT mortgage rates.  So, roll the projectors!  The movie "Float Club" is playing all next week.

Interestingly enough, gold isn't skyrocketing in price.  Long held as a "safe haven" during times of turmoil, investors are opting to hold their portfolios in cash instead:

Bullion is down 15 percent this month as the dollar climbed to a two-year high against the euro and the Standard & Poor's 500 Index headed for its steepest monthly loss since 1938.   

`We're seeing some consolidation in the market today as investors pause for breath following the roller-coaster we had last week,'' Zhu Lv, research manager at Shanghai Tonglian Futures Co., said from Shanghai today.          

Gold for immediate delivery gained as much as 1.7 percent to $746.91 an ounce, and traded at $735.33 at 10:29 a.m. in Singapore. The metal fell below $700 on Oct. 24. Silver for immediate delivery was up 1 percent at $9.4575 an ounce.   

Gold still benefits from its safe haven properties, although these days, more and more are choosing to hold just cash instead, so it won't be surprising to see gold below $700 again,'' said Zhu.

What's that mean?  It means that while investors are cautious, they aren't completely terrified and that bodes well for mortgage-backed securities.  When investors buy mortgage-backed securities, mortgage rates drop; that's what we think will happen in the next 7-10 days.

I cautioned borrowers to lock in all October closings last week when mortgage rates dipped below 6%.  That opportunity had a short-lived window.  Like all panics, reason eventually prevails.  Central banks world wide are slashing interest rates to avoid an economic recession.  This make US dollar denominated investments, especially mortgage-backed securities more attractive.

Hold out for a mortgage rate below 6% if you're closing in November.

San Diego Mortgage Rates Report: October 21, 2008

Mortgage rates are finally below 6.0% again.  If you're closing in October, take any rate under 6.0% and lock it in to closing.  In the beginning of the month, I suggested to wait for lower rates if you were closing in the last two weeks of October.  I said:

You can safely delay mortgage locks if your closing after October 17th.  Delaying your lock is a bit different from a "float" recommendation.  It means that you should expect lower rates and jump on one when you feel it's "good enough". The market should remain volatile.  The par rate (with no yield spread premium to the originator) should drift as low as 5.625% in the next 60 days but it may have to go through 6.125% to get there.

We made it through the 6's but never lower than the original 5.875%.  If I still think there is room for improvement in mortgage rates why am I recommending to lock for October closings?

My strategy is more about limiting higher rates than gambling for better rates.  I try to avoid unnecessary risk by being biased to locking unless there is irrational fear.  While I was dead on about the irrational fear in the mortgage-backed securities market, my timing was off.  If you're closing a loan this week, and delayed your lock, I might have cost you some money.

The mortgage-backed securities markets are finally able to focus on the economy now that the drama is over on Wall Street.  Economic fundamentals drive mortgage rates and the economy doesn't look real healthy.  Expect rates to improve to 5.625% and fluctuate between 5.625% and 6.25% through the rest of the year.

If you're closing after November 1, 2008, delay that lock until 5.625% is available.  All October closings, take what you can get today.

San Diego Mortgage Rates Report: October 14, 2008

If you're closing your loan after Friday, I left you naked (not locked).  I told you that the fundamentals of the economy would bring rates lower after the bailout was announced.  Rates were at 5.875%, today they're at 6.5%.  What's in store for the rest of the month?

Eric Holloman of Rate Link offers this two-minute research report about why "headline risk" should be replaced by economic data as a determination of mortgage-backed securities pricing.  If he's correct (and I think he is), the next three days will be important for the direct of mortgage rates through the end of the year.

I'm still recommending that you float your mortgage rates; I believe we'll see rates come back down under 6% within the next 7-10 days.  If the economic data suggest that we are NOT headed for a recession,mortgage  rates will stay in the 6.25-6.75% range.  If the data are as indicative of a downturn as I think they will be, lower rates should be on the horizon.  As always, keep checking back.

Originally posted on Long Beach Real Estate Home

Can More Than One Person Be On a VA Home Loan?

I was asked this question when someone was searching for a VA home loan in San Diego, today:  How many people can "go on" a VA home loan?

The borrowing veteran and his/her spouse can be borrowers for a VA home loan.  The veteran and her fiancee can not.  The service member and his girlfriend can not.  Only spouses can be co-borrowers on a VA home loan...

...UNLESS...

Both borrowers are eligible for VA home loan benefits.  An example:

Bill is an active-duty, Petty Officer Second Class.  As an E-5 without dependents, Bill receives $1,650 for his housing allowance and about $200 for his sustinence.  He earns about $2,400/month in base pay.  With monthly obligations of $400, he qualifies for a home loan for $150,000-$175,000.  While that may help him buy a condo, in San Diego, Bill has his eye on a single-family home.

Bill's ship mate, Frank, is also an E-5 with similar benefits and monthly expenses.  Buying a home together expands their buying power to about $350,000.  That makes the prospect of a single-family home more attainable.

If Bill chose to have his father, a former Navy yeoman (from the Vietnam service era) buy and live in the home with him, he would qualify because he has VA home loan eligibility.  Certainly, he must qualify on her income and credit as well.  If Bill's father were deceased, his mother may have "inherited" her late husband's VA eligibility if she hasn't remarried.

Marriage is the only relationship outside of shared VA eligibility that allows for a non-eligible co-borrower

San Diego's VA Home Loan Broker

I had the good fortune of closing another VA home loan for a Navy family this month.  I was stoked to read that our team delivered a superb experience for them over on a Redfin Forum:

I am just going to do a cut and paste from another thread but I figured there is alot of good info I just learned thru the course of my recently closed VA loan.  I have to say I found it important to consider a good agent familiar with VA.  It was especially helpful during negotiations with REO's or "great deal" properties with multiple offers.  A good agent can calm the seller's fears that a VA loan will take forever and isn't as strong of an offer.  I had a couple of retired Marine Captains as my agents and I could speak their praises all day long. (Mike chiesl and Dan Chapman)  I also had a great mortgage broker- who was able to pull off 100% financing above the previous $417 cap.  Anyway you can read more of my recent experience below.  Good Luck!

 

 

I just got a approval on VA- the no down payment is correct but there is a 2.13% VA funding fee which can be funded into the loan (the perk with this is there is no PMI)   So over 2.5 years the fee is less than paying like $300/m PMI.   Also the seller needs to cover closing costs.  Other than that you will be caped at 417K and after that you pay 25% on the difference.  So a $450K loan - 417 = 33K and you pay 25% cash on the 33K difference so $8300 or so.  Which is still lower than conventional - most of which are wanting 10% down now.  Google says the guy I got qualified with is America's #1 mortgage broker- after a hour on the phone with this guy I would agree.  Brian knew his stuff.  Never thought we would need our VA benefits but without liquid assets it is a good choice in today's market.

 

An update to my previous post-

 

         I may have been one of the first VA loans to close without any money down since the President signed H.R. 3221, the Housing and Economic Recovery Act of 2008 on July 30th.  I couldn't be happier that I was able to buy a great house here in San Diego and use the money I saved on a down payment on remodeling instead all thanks to Brian (America's #1 Mortgage Broker on Google).   VA Benefits just got that much Sweeter in California (where you are hard pressed for a house under 417K in a lot of areas) .  You now can go over the $417 K cap without paying the difference of 25%.  Under old guidelines your benefit was good for 0 down up until $417 at which point you had to come up with 25% of the difference.  So say on a 600K home you subtract 417K and then take 25% of the difference = $45,740.00 -Ouch!   But they just changed the guidelines thru the end of the year!  So any home in San Diego County, for example, under $697,500 (you can check your area cap at https://entp.hud.gov/idapp/html/hicostlook.cfm) is eligible to pay 0 down with VA, which is great.  You can read the details of the bill at http://www.homeloans.va.gov/circulars/26_08_11.pdf .  I literally was one of the first loans to close this kind of VA loan and Brian was able to pull it off, which is no small task in today's market.  I really can't say enough good things about him and he even put me in touch with some amazing real estate agents.  If you can use your VA benefits I would suggest doing it before the end of the end of the year, when the guidelines change again.  Look this mortgage guy up and give him a call, seriously!  Cuz the closest next option is 3% with FHA and mostly 10% with Conventional.  And then a good agent can negotiate getting some of your closing costs, VA funding Fee, and even a point paid by the seller, like I did.  -But you really need to be careful with who you choose to get your mortgage.  It can be dicey with all these lenders going bust.  It would be awful to find you dream house, get thru negotiations, start a loan with the wrong person, who starts your paperwork with a bank who goes bust 3 weeks into the process and then you lose your escrow monies and the house.  So just be really choosy and go with someone who is familiar with the VA process from before the boom loan time to save yourself some money and headaches.  Now can be a great time to buy with the new rule, the foreclosure deals, and since rents are up somewhere around 13% in San Diego area-just make sure you have a good team behind you

Now...that is a testimonial worth having.

Radio Mortgage: When Will It Ever End?

Sean Purcell and I recorded a 15 minute episode this afternoon about what the stock market crash means for working REALTORs.  We may come across as a couple of polyannas but we think the stock market might get some respite from…Columbus Day.

We talk about the great opportunities for investors and how REALTORs can court them.

Listen to the episode here

Originally posted on Bloodhound Blog