SAN DIEGO MORTGAGE AND REAL ESTATE

Accessory Dwelling Unit (ADU) Financing in San Diego

I like doing what I do because I can help people solve problems:

I met a lady today who has a 30 year old son who moved to Vegas three months ago-- he doesn't want to stay there. His girlfriend lives here and is getting a Master's degree and they plan on getting married.

His mother and stepfather own a home in Paradise Hills which they bought, 10 years ago, as a HUD repo-- they are sitting on a LOT of equity. Mother says, "I wish I could just buy a duplex so we could both live there"


"How much land do you have?", asks I.

"I have a huge backyard; I could build whole house on it" says Mother.

"Accessory Dwelling Unit. Build one for $50-70K, with already-approved plans from the City of San Diego, move the kids in and when grandchildren come, switch houses. " I offered.

"I love that idea. Now I just need $75K and someone to build it", replies Mother.

"I can solve BOTH of those problems for you. When do you and your husband want me to come over and meet with you?" I asked.

"How about next week?", she asked.

This is what turns me on. Helping young service members buy their first homes is cool. Helping retired people keep their homes with a reverse mortgage is cooler. But helping a mother keep her son and grandchildren in San Diego, and providing a safe retirement home for her is what this job is ALL about.

"Real estate is the husbandry of man to the land"-- Greg Swann

 Keeping families together and strong is REALLY what I do. I can't wait for this to happen for her family.

There are STILL great real estate investment deals in San Diego

Yes, you can still make money in San Diego real estate and no, I dont know if property prices are going to drop. Here is what I DO know; there is a housing shortage in San Diego and rental rates should keep rising.

 

This means that, if you buy a property at the right price, and intend to hold it for 7-10 years, you should really make some money. Let me share with you the most recent transaction I handled for an investor. I represented the investor and my wife Debra handled the financing.

 

Our investor bought a Mission Valley 2 BR, 1 BA condo for $355,000. We closed on it three days ago (June 12)   She put 30% down and, with closing costs, it cost here $113,000 cash-to- close. Her mortgage payment, including taxes, insurance, and HOA fee is $2096. You can see the whole financing breakdown here

 

I immediately advertised it for rent on Craigslist, Zillow, Trulia, Hotpads, and Cozy at $2095/month. Yesterday (June 14), we signed a multi-year lease with a tenant who has a credit score of over 750.   In two days, my investor signed a lease which covers all the debt servicing expenses.

 

I think rising inflation will double San Diego real estate prices in the next 10-12 years but, with just a 4% inflation rate, this property should sell for $525,000 in 2028. At that point, my investor will walk away with about $300,000, almost triple of what she invested today.

 

Was this easy?

 

Absolutely not. I toured over 40 properties for her and only showed her properties which met three criteria:

 

1- They were "clean", meaning it would cost less than $1500 in cosmetic repairs to move in

2- They were in a San Diego neighborhood which was in demand.

3- They had been on the market for 21 days and could be purchased for a price which produced positive cash flow with 30% down payment.

 

She spent a 4 hour period with me and saw 7 properties. She offered on three of them, we negotiated with two sellers, and settled on the Mission Valley condo

 

It wasn't easy for me but I made it easy for her, and now she has a great investment.

 

Want me to do this for you?

 

Call me at 858-777-9751. We'll meet for lunch and I'll listen to your investment needs and goals. If they match up with what I am doing, I'll find the perfect investment property for you. If not, we'll have a great time catching up with one another.

San Diego Mortgage Rates Report: September 1, 2014

Mortgage bonds have steadily strengthened since their August, 2014 levels, causing September mortgage rates in San Diego to drop.

You can follow the national average mortgage rates at Bankrate.com.  San Diego mortgage rates tend to be .125% LOWER than the national average.  Average rates as of August 1, 2014:

30 Year fixed conventional average=  4.06%
15 Year fixed conventional average=   3.17%
30 year fixed VA/FHA average=              3.65%
30 year fixed VA/FHA jumbo avg.=       4.0%
5/1 adjustable rate conv. average=         3.52%

We told you last month that San Diego home prices up but the price increases are decelerating.  While I believe that the long-term trend will track the increases in inflation, prices may soften through 2015.  I talked about this on Active Rain today and cited this Redfin article:

The first is a slowdown in home price growth. For the first time in five months, price growth was essentially flat in July. The second is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November

Deals are going to be made this Fall.  If you're buying a home, you have some price flexibility.  Making offers 15-20% below asking price is almost as nutty as pricing your property $100,000 over recent solds but, without a doubt, buyers will be driving fall sales in San Diego. 

We can lock rates up to 60 days so, if you have to be flexibile with a seller who is trying to close on another house, we can cover you.  Make sure you get a good price concession for your flexibility.

San Diego Mortgage Rates Report: August 5, 2013

Mortgage rates improved about 1/4% since last month's report.  Today's best execution rates average 4.375% for a conventional loan and 4.125% for a VA loan.  Keep in mind that a "best execution rate" assumes the highest credit rating, a debt-to-income ratio undee the guidelines limit, and at least 20% downpayment.  Each borrower is an individual and may or may nor meet that criteria.

But it's a guide if you're watching the mortgage rates market.  Speaking of which, you can receive a twice weekly update, via text message, by sending the word "RATE" to 313131.  I'll be sending a text message in the middle of the week and on the weekend with the best execution mortgage rates.  You can always unsubscribe too so I won't be text-spamming you.

July was crazy for the mortgage bond market.  Wild price swings were the norm, with rates getting as low as 4.275% for conventional loans and as high as 4.75%.  While that might not seem like a "wild swing" to you, the home buyer, it has been perpelexing to mortgage industry veterans because we can't get a read on the market at all. 

One school of thought is that the Federal Reserve Bank will stop subsdizing rates, through bond purchases, as early as September.  That would suggest rates could rise as high as 5.0% plus.  The other school of thought, that the Fed woul delay this "cold turkey" approach until next year, was confirmed by the less than robust jobs report.

I gave up trying to outguess the Fed when they started this who quantitative easing policy.  I'm locking all loans at application and recommend that customers do the same.  It's just too volatile and the risk of a being stuck with 5% mortgage is greater than the potential reward of waiting for a 4% rate.

San Diego Housing Approaches Rent Vs. Own Parity

Should you buy a home or rent one, in San Diego? 

As always, that depends.  If you're looking for a home in La Jolla, you may never find a one which is less expensive to own than rent, in today's dollars.  The physical beauty of the seaside burg is stunning and La Jolla has traditionally traded at a steep premium to rent v. own parity.

Nick Timiraos suggested that buying conditions are getting better for San Diego, in the Wall Street Journal:

Home ownership is also looking more affordable because after several years of declines, apartment rents will rise by around 4% this year, says Mr. Nadji. He says rents are poised "to pick up even more momentum across the country next year."

Rising rents are one reason a would-be home buyer should consider purchasing a La Jolla home rather than waiting for prices to reach parity there.  If inflation kicks in, and onc day it will, rents could increase a level far above what the mortgage payment, for a La Jolla home, would be today.

Even cities where it is still cheaper to rent than own have seen big boosts in affordability. In San Diego, the monthly cost of owning a home has averaged around 83% more than renting over the past two decades. During the third quarter, owning was 22% more expensive than renting, according to John Burns Real Estate Consulting

Take note of this figure.  In many San Diego sub-markets, (mostly the beach cities), housing prices will never reach parity with today's rents.  Like the La Jolla example, inlaftion may cure that in 2-3 years.  Still, some San Diego County markets have already reached parity meaning, it's cheaper to own rather than rent.  Even in some beach cities, like Oceanside or Imperial Beach.

I searched active Oceanside homes for sale and found one which is listed for $189,000.  With about $7,000 down payment,  and an FHA loan with a 4.88% APR, the monthly mortgage payment would be $1250, some $50-$100 below what it might fetch in rent.  That's one of many Oceanside properties which are at or below parity for the rent V own model.

I also found plenty of similar opportunities while searching for homes for sale in Chula Vista.  There were many more recently built homes, which command premium rents, listed under $250,000.

San Diego entrepreneur Bill Lyons intends to make these home searches easier when he releases his new website, Revestor.com.  Revestor organizes current listings, by capitalization rate or cash flow, to offer homeowners a chance to "rate" properties, by comparing the listed price to current rental data.

San Diego is still selling at a slight premium but this may be as good as it gets.  If mortgage rates continue to stay low, because of the Fed's printing press and quantitative easing, the bubble for low rates will soon pop, and inflation will kick in.  Locking in a price, and a low mortgage rate, might be the best way to insure you won a piece of our sunshiney paradise.

Jumbo Mortgage Rates Report--July 11, 2011

Jumbo mortgage rates gave returned to the end of June levels as the mortgage bond market reacted to a weak employment report and more fear about bloated PIIGS (European government default risk).  I talked about this in my Jumbo Mortgage Rates report for July 5, 2011.  

I digress but I'd be remiss if I didn't tell you that today is Free Slurpee Day.  Slurpees can cause Brain-Freeze.   I would love to freeze today's mortgage rates for a week or so but I'm not so sure the markets will accomodate.  Last week, I suggested you could hold out for lower rates; that happened.  Today, I think it makes complete sense to lock-in your mortgage rate at application.  While rates could trend lower, the risk of them rising another .25%...quickly, far outweighs the reward of them improving by .125%.  As always, my advice may not be perfect for you so it's best to speak with your loan originator.

Jumbo Mortgage Rate Indications, as of July 11,, 2011:

• 5/1 ARM----------4.000%/4.210% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.625%/4.807%APR
• 30 Yr Fix----------5.125%?5.557%APR
• 30 Y FNMJmbo-4.500%/4.724%APR
• 30 Y FNMA-- ----4.375%/4.615%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Rates Report- July 5, 2011

Why do La Jolla, CA home buyers keep watching the riots in Greece?

Once again Greece threatened default on its soveriegn deb.  This sent shockwaves through the world financial markets.  This time around, the European Union was offering less solidarity and more austerity to its little peninsular cousin.  Capital fled European markets and into American treasury bonds during the middle of June.  This drove bond yields down which caused jumbo mortgage rates to decline to their lowest levels since 2004.

Last Monday, we locked a $500,000 loan, at 4.75% (30 year fixed), with no fees or discount points.  We locked a $1.1 million loan at 5.125% (30 year fixed), with no fees or discount points.  Today, those same loans would be more expensive by a discount point (1% of the loan amount).  This means that the first buyer would have to bring an extra $5,000 to closing today, and the second buyer would have to bring $11,000 to closing today , just to get the same rates.

Why are jumbo mortgage loans so much more expensive today than they were last Monday?  Greece struck a deal with the European Union to get emergency loans.  That action reassured golbal financial markets that a Greece default would be stayed.  Money flowed into equities and out of the safe haven of US Government securities.  Mortgage bond investors demanded higher yields from mortgage originators which was passed onto the retial borrower.

In which direction will jumbo mortgage rates head this summer?  I believe rates will be stable through Labor Day with some erratic movements upwards.  The federal Reserve bank has halted its quantitative easing plan.  While this should pressure jumbo mortgage rates higher, Greece is but the first of many sovereign default crises bubbling beneath the surface of a calm Mediterranean Sea.  I expect those threats of crises will hold the upwards pressure in check. 

If you can, lock a jumbo mortgage rate under 5%.  If higher than 5% is offered, you might pause to read what's happening in Europe.  Anothe ron of these crises could afford you that rate under 5%.

Proposed Good Faith Estimate Should Be More Consumer Friendly

The Consumer Financial Protection Agency just released its proposed Good Faith Estimate (GFE) disclosure form.  The form will combine the best parts of the original GFE (which we still issue) along with the "new" GFE (which is confusing and we issue, per disclosure regulations).

This six-minute video will walk you through it:

Documents Required For A Short Sale in San Diego

 
Yalda Alawi, the San Diego Real Estate Lady, offers a free book about short sales, at the end of this article:

The documentation required to process a short sale is commonly referred to as a “Short Sale Package” and is usually submitted by the agent representing the seller or the seller of the property themselves if they are attempting to do the short sale on their own. Here’s a sample short sale package:

Note that items may vary depending upon the lender.

• Cover Letter.
• Authorization to Release Information (pgs. 11)
• Sellers Hardship Letter (pgs. 12-15).
• 2 years W-2′s.
• 2 months pay stubs.
• 2 months bank statements.
• Supporting Hardship Info – HOA liens, medical/disability statements etc.
• Repair Estimate for the property (when necessary).
• Comparable area sales (see BPO on pg. 23).
• Listing & Purchase Contract(s).
• Net Sheet (provided by agent).
• First mortgage holder may ask for a payoff amount from the 2nd (obtain pay-off statement from lender).
• Second mortgage holder may ask for a payoff amount from the 1st (obtain pay-off statement from lender).
• Lender may ask for an Initial Title Report.
• FHA and VA may have their own forms and special requirements as well.

If you plan to work with a real estate professional and can have your last two years tax returns as well as past two months bank statements and pay stubs together with your hard ship letter and authorization to release information statement for them at your initial meeting you’ll give them a running head start and they will love you!

This is ONE Page from the 40 Page Book “The Homeowner’s Guide to Real Estate Short Sales”

Request your FREE copy today: http://www.BreakForeclosures.com

Call Yalda at 858.863.3860 or, do what I do and stalk her on Facebook.

FHA Monthly Premiums Likely To Rise April 1, 2011

Remember when the FHA monthly mortgage insurance premiums rose from .5%(annual) to .9%(annual) ?  The NAR kicked and screamed about housing affordability but the move was made to shore up the ailing HUD reserves.  What many folks missed was that HR 5981 allowed for an increase for an annual premium of 1.55%:

The bill has already passed the house. The bill (H.R. 5981) allows FHA to raise its annual premium to 1.55% from 0.55%. Approved by unanimous consent, the legislation now goes to the White House for the president’s signature.

I haven’t decided that this is a good thing to happen to mortgage lending or a bad thing. One of the determining factors for me will be how much of the authorized increase FHA determines they will actually take. If they take the full 1.55%, it will literally take about 25% of the buyers out of the market.

According to the National Mortgage News, “With this new authority, FHA will lower its 2.25% upfront premium to 1%, but then raise the current 55 basis point annual premium, basing the hikes on loan-to-value ratios. FHA wants to raise the annual premium to 85 bps for loans with LTVs of up to, and including 95%, and to 90 bps for loans with LTVs above 95%.”

Well, it looks like HUD Secretary Shaun Donovan has decided to raise the FHA premium again:

Higher FHA Insurance. "As Fannie Mae and Freddie Mac's presence in the market shrinks, we will encourage program changes at FHA to ensure that the private sector – not FHA – picks up this new market share," states the Treasury plan. In addition to the change in loan limits, the Administration will put in place a 25 basis point increase in the price of FHA's annual mortgage insurance premium, which is paid in 12 monthly installments. FHA just increased the annual MIP payment to .85 percent last October. The new rate will be 1.10 percent. FHA currently accounts for 30 to 40 percent of all new purchase mortgages, and more than half of all mortgages taken out by first-time buyers.

What does that mean to the average FHA borrower, taking out a $300,000 loan in San Diego County?

• Six months ago, the FHA mortgage insurance premium would have been $125.00.
• As of October 1, 2010(and currently), that FHA monthly premium would be $225.00
• After April 1, 2011, expect that FHA monthly insurance premium to be $287.50.

It's more than doubled.  Can you blame HUD though?  As Greg Swann writes, while the Obama Adminsitration says they want to wind down the government's role in housing finance, it appears they just want to shift the responsibility to a growing agency.  That's not helpful for a sustainable recovery in mortgage financing.  Until the government completely withdrawals from housing finance, private lenders have no incentive to come up with a solution.