The following is Part III of an ongoing series of interviews with my Preferred Lender:Dean Wong. His contact info follows the Interview. Thomas Ray:Dean, how are you these days? Dean Wong:Thomas, I am great! Hopefully we can help clear up some questions your clients might have with all the new regulations and products. FHA questions: 1).Thomas Ray:Dean, my clients are showing renewed interest in FHA loans. Can anyone qualify? What is the upfront cost..2%? Are there income restrictions? Do Sellers respond well when they see offers with this loan? Dean Wong:FHA loans have been around for a long time. Actually FHA (Federal Housing Authority) has insured more than 37 million home loans for Americans since 1934! It was primarily designed to help mainly first time homebuyers (even though you do not need to be a first time home buyer anymore) to purchase a primary residence with as little as 3.5% down payment and FICO scores as low as 620. In the recent past, FHA only accounted for about 3% of home loans originated but now accounts for close to 30%! The reason Thomas is that a first time homebuyer may not have 15% down payment or a 720 FICO score that a conventional loan requires. Anyone who can qualify full documentation (pay stubs, W2s, tax returns, bank statements), has a 620 FICO, 3.5% down payment, no federal liens outstanding as is looking to buy a primary residence can qualify for an FHA Loan. FHA charges an upfront MIP (Mortgage Insurance Premium) of 1.75% of the base loan amount. FHA allows this premium to be financed. Then there is also a monthly MIP until one reaches 20% equity in their home. The monthly MIP is required for a minimum of 5 years and run 55 dollars a month per every 100k borrowed. Example for a 300k loan your buyer will have $5,250 for the upfront MIP financed into the loan amount and monthly MIP will be 165/month. There are no longer income restrictions either. More and more sellers/listing agents are beginning to come around and accepting FHA loans. Look at it this way - As a seller, all things being equal, FHA financing opens the doors to more potential buyers as again, most first timers do not have 15% or a 720 FICO score. Sellers shouldn't be scared of FHA buyers as it's a full documentation loan so if they are Pre-Approved by a legitimate lender the buyer is just as qualified as a Conventional buyer.
Buyer Tax Credit questions: 1)Thomas Ray:The President signed into law some new regs. as they relate to the Buyers Credit. What are the changes and who qualifies now? Dean Wong:President Obama recently signed a bill extending the FTHB (First Time Homebuyer's) tax credit which was due to expire on 11/30/09. New provisions now include higher income limits as well as allowing "repeat" home buyers to take advantage of the tax credit! First timers receive 8k and repeat buyers can receive 6.5k now! I went ahead and attached a nice cheat sheet from NAR (National Association of Realtors) for you and your clients regarding the tax credit bill. Please call/email or have your clients do the same should you have further questions.
Finding a good lender: 1)Thomas Ray:My clients are worried that choosing the wrong or inexperienced lender could affect their escrow. How could this happen. Dean Wong:This does happen far too often Thomas. The lending environment is much more detailed oriented now than ever before. Buyers should work with a trusted lender that has experience and know how to navigate the lending process from beginning to end. For example, I've seen very often lenders "Pre-Approve" a buyer for X price point without even asking for income data like pay stubs or tax returns! Problem is that improper expectations are set for a certain price point, you as a realtor show homes in this price point, get the offer accepted, buyer gets into escrow and when it's time to submit the income data to the underwriter for loan approval, guess what? Escrow needs to be canceled as the inexperienced lender did not do a good job Pre-Approving the buyer from the get go. This makes you look bad in the real estate community by representing unqualified buyers and buyers are now discouraged. They find out their real price point and of course it doesn't compare to the house they were in escrow on but wasn't qualified to buy! Everyone is frustrated.
Thomas Ray:Is using a "Lending Tree" type service a good idea to shop rates? Dean Wong:It is not Thomas. Such sites are advertising portals for banks. A buyer's information is sold as "leads" to numerous lenders who pay for this information. A buyer consents to having their credit information run, not once, but as many times as there are buyers of these leads! It has always astonished me how people ask for referrals for restaurants but when it comes to one's most important purchase in their lives they look on the internet and are willing to trust someone they do not know. A buyer should work with someone their trusted realtor, accountant or attorney referred to them. Or possibly even working with a referral that a friend or family member recently worked with for their loan is okay too if they have glowing reviews about them closing on-time and as quoted. But I'd never go blindly into a transaction of this size with someone I found on the internet because the closing costs is say 50 bucks cheaper. If you refer me a client Thomas, my main goal is to take care of your client to the best of my ability so you and the clients are comfortable in referring others to me. Unfortunately, someone you may find on the internet who "advertises" a too good to be true rate probably has no allegiance to you or the buyer outside of closing just that one deal. And unfortunately, what you and I have seen far too often I'm sure is one who fall victim of internet bait and switch advertisement, get too deep into an escrow to cancel and just "takes" the final rate as they really want the home. It's a shame. For me, you and my clients are life long. I've been in the business close to 9 years now and my client satisfaction rate is 99.3%. My philosophy is simple - I do what I say and I deliver what I quote on time and with no excuses. Thank you Dean!! Your knowledge and passion are unmatched in the industry. I look forward to our next mutually satisfied client. Please contact Dean Wong and tell him you saw this interview on my Blog:www.RealEstateBlogLA.com Dean Wong First Capital Mortgage Office:310-656-8210 Cell:310-344-3252 Dean Wong Link Email: dwong@firstcapitalmtg.com Please contact Dean AND also use our Mortgage Calculator. Thomas Ray,M.S.,Realtor Search the MLS like an agent on my Site: www.LAexclusiveProperty.com My Daily Blog: www.RealEstateBlogLA.com Have a great week everybody!!...Tom and Dean
Last week (11/13) the Federal Reserve stepped in with more buying of Mortgage Backed Securities (MBS), helping Bond prices recover from news of a weak Treasury Auction. Overall, home loan rates bounced around last week and ended the week very slightly improved.
But that said, we can't "push our luck" and think the Fed will continue to step in and help support home loan rates...we have to remember that the Fed is actually winding down exactly this type of buying support.
The Federal Reserve's purchases of MBS peaked at an average of $25 Billion per week back in May - and they are getting closer every day to being done spending their allotment of $1.25 Trillion. Since they announced that their remaining purchases would be rationed out until the end of March 2010 - but that they wouldn't be making any additional purchases beyond the original commitment - the average purchases per week have been moving lower, down to $14 Billion per week so far in November.
Why is this important? Because home loan rates are based on MBS - so when the Fed agreed to be a big buyer, it helped provide a market and helped keep MBS prices high and home loan rates low. So as the Fed's program wraps up and eventually stops, home loan rates are quite likely to be on the rise. So while rates are still very good, they may not be for long. Let's be sure to talk if you haven't yet explored how the current rate environment might benefit you or someone you know.
More employment news arrived, and it is interesting to hear the media and other experts proclaim it to be "all good news". Initial (or First Time) Jobless Claims came in at the lowest reading in 10 months and Continuing Unemployment Claims also fell lower as well - and at first blush, this seems to be very good news. But looking closer, we see that the lower Continuing Claims number was probably the result of unemployment benefits expiring before people could find work - rather than people dropping off of benefits because they found a job. Now that unemployment benefits have been extended by new legislation, we should get a more accurate look at how many people are actually unemployed.
Please let me know how I can assist you in your home purchase. I look forward to earning your business. Thomas Ray,M.S.,Realtor,Cell:310-420-1149 Search the MLS like and agent on my site: MLS Search Page Almost daily Blog Updates on my blog: www.RealEstateBlogLA.com
Element Lofts in Marina del Rey,CA are going to Auction in December..please see my post on this on my blog: www.RealEstateBlogLA.com
*IMPORTANT UPDATE::If you plan to bid, you must be PRE-APPROVED by BANK OF AMERICA. This is part of the settlement judgement.
There is also an Auction Training Class in December that you need to attend. With any of my clients interested in bidding, I will be with you at the auction (I have to be there), helping you understand the market value based on SOLD COMPS in the area. This will assure your bidding will be appropriately competitive.
ELEMENT LOFTS ON AUCTION Please contact me, Thomas Ray, if you are interested in the Auction. I will need to Register you at the Element Lofts so you have an Agent representing you. Thomas Ray,M.S.,Realtor Cell:310-420-1149 Search The MLS like an Agent on my Site: www.LAexclusiveProperty.com My Blog: www.RealEstateBlogLA.com Have a great week everybody!
This court-ordered auction offers you a phenomenal opportunity to purchase a new beach-close home for as low as $295K.
MINIMUM BIDS STARTING AT $295,000 - UP TO 66% OFF!
There is so much information that we would like to share with you and because registration and pre-qualification are required to participate in this event, we highly encourage you to visit us as soon as possible during our convenient hours; open 11 a.m. to 6 p.m. Monday - Friday, and 10 a.m. to 6 p.m. Saturday and Sunday.
Element is located at 4141 Glencoe Avenue in Marina del Rey. Please be sure to visit the team in suite 210 and we will answer all of your questions, as well as get you started on a tour of this beautiful community. Lenders are also available daily at Element to answer all of your financing questions and to pre-qualify you to attend this exclusive, one-day court ordered auction event.
Because this amazing event is happening so quickly, on December 13 at the Ritz-Carlton, Marina del Rey, NOW is the time to act and to vist Element to tour the beautiful models, as well as the 41 available condominium homes that will be offered at historically low prices.
Please contact me, Thomas Ray, if you are interested in the Auction. I will need to Register you at the Element Lofts so you have an Agent representing you. Thomas Ray,M.S.,Realtor Cell:310-420-1149 Search The MLS like an Agent on my Site: www.LAexclusiveProperty.com My Blog: www.RealEstateBlogLA.com Have a great week everybody!
· Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers who purchase between December 1, 2009 and May 1, 2010. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000. · Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30, 2010. · Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010. · Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits. · How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
As always, please let me know how I can help you, your family, or friends with their Real Estate needs. Thomas Ray,M.S.,REALTOR,Cell:310-420-1149 Search the MLS like an Agent at my site: www.LAexclusiveProperty.com And, read my BLOG: www.RealEstateBlogLA.com Have a great week everyone!!
"The bear market continues; HOME PRICES are back to their March 2004 levels," (Is this the Bottom????)...says David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "Both composite indices and 14 of the 20 metro areas are reporting new record rates of decline. As of October 2008, the 10-City Composite is down 25.0 percent from its mid-2006 peak, and the 20-City
Three of the metro areas have given back, on average, more than 30 percent of the value of homes since October of last year. Phoenix remains the weakest market, reporting an annual decline of 32.7 percent, followed by Las Vegas, down 31.7 percent, and San Francisco down 31.0 percent. Miami, Los Angeles, and San Diego were close behind with annual declines of 29.0 percent, 27.9 percent and 26.7 percent, respectively.
Here are some of the advantages that investing in Multi-units Buildings has over Single Families.
Cash flow on a multi-family is always greater than that of a single family. Simply because you have more rents coming in. The more units you have under one roof, the less risk you have. If you have a single family house and you lose your tenant, you've lost 100% of your income. In some instances, this could be your entire profit for the year. If you had a three family and lost a tenant, you still have two rent coming in to pay your expenses.
Economies of scale are in mulit-unit buildings. If you have six single family houses opposed to one six family, you have six roofs to be replaced or repaired, six lawns to be maintain, six tenants spread out through out your city or town. In your six family you have one roof, one lawn and your tenants are centrally located. Economies of scale are in your favor.
There's a lot less competition than there are in single family houses. Why? Because no one is out there teaching how to do it and all the single family guru's make flipping single family houses sound as easy as chewing gum in the dark. The smart investors put multi-units in their portfolios along with single family houses.
Because of the bigger cash flows, you can afford to hire management companies to manage your tenants, thus eliminating that hassle while you go out and do what you do best (or should do best), find and finance them.
Your pay days are a lot bigger when you finally sell your property. This is because an apartment complex cost more than single family homes, because of this they obtain a greater dollar amount of appreciation. For example, a $100,000 single family house will in a market that appreciates 10% will be worth $110,000 while a three family house worth $300,000 in the same market (10% appreciation) will increase to $330,000. That's $20,000 more money in your pocket! You've know a few people who have made a lot of money flipping single family houses, but if you think of the all the people you know who have become extremely wealthy through real estate, you'll realize that they did it through owning multi-units (apartments).
Dr. Sam Chandan (formerly Chief Economist with REIS) speaks on the status of the Multi-Family Apartment market. I normally do not post links on my Blog, but Dr. Sam has his finger on the pulse and speaks on why now is the time to Buy! Here is the Link Please contact me for all your Investment needs. My site:www.LAexclusiveProperty.com Market Conditions, Trends, Multi-Family, Apartment Buildings
(Please contact me to discuss your long term Passive Income Strategy that includes the purchase of Multi-Family Property. My Team at Keller Williams will show you the benefits in this down market.)
The Apartment Rental Market continues to benefit from weak home sales!
"...multifamily is the bright spot," George Ratiu, economist at NAR Research said. "This is in large part due to a high number of foreclosures, and the fact that people still need housing, no matter what is going on in the economy."
"Demand for this sector is healthy with rent growth being positive, if not stellar." NAR forecasts multifamily vacancy rates for the third quarter of 2009 at 5.8 percent, unchanged from the third quarter of this year, which is still low compared with other sectors. Markets with the tightest vacancies include San Diego, northern New Jersey and Boston, with vacancy rates of 4.2 percent or less. Areas with the highest vacancies include Jacksonville, Fla.; Phoenix; and Orlando, Fla., with vacancies of 8.5 percent or higher.
"To a large extent, this is true for the multifamily sector as well," says Ratiu. According to NAR's research, multifamily lending stood at $9.7 billion in the third quarter of 2008 but is expected to drop to $1.5 billion in the fourth quarter, according to estimates made by NAR. "This is a significant drop because financing has pretty much come to a standstill. This is mainly because of a lack of financing. Also, there is a wave of refinancing across the country but very little capital going around," says Ratiu.
Lawrence Yun, NAR chief economist, says there are serious structural problems in commercial lending. "Although access to residential mortgages has improved, the opposite is true for commercial loans," he says. "We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space."
Yun added that default rates on commercial real estate loans are very low by historical standards. "However, commercial defaults could deteriorate significantly without a properly structured stimulus that addresses liquidity for commercial mortgages," he said.
The year 2009 is expected to fare better, according to Raiu, with demand going further up. "This is partly because single-family construction has pretty much halted, and with mortgage being extremely difficult to get, people are turning toward multifamily housing. In addition, with the economy being where it is, and home prices falling, consumer confidence is down and people are wary of buying, not knowing when the bottom will be reached."
All this is having a modest impact on rent increases. "Rent is expected to increase 2.8 percent in 2009 as opposed to 2.9 percent in 2008, 3.1 percent in 2007 and 4.1 percent in 2006," says Ratiu.
Multifamily net absorption is expected to be 24,400 units in 59 trackedBy Anuradha Kher, Online News Editor
Washington, D.C.--With the exception of the apartment rental market, which continues to benefit from weak home sales, all commercial real estate property types are showing grim results for 2008, with an equally grim forecast for 2009, according to the Commercial Real Estate Outlook of the National Association of Realtors (NAR).
"If anything, multifamily is the bright spot," George Ratiu, economist at NAR Research, tells MHN. "This is in large part due to a high number of foreclosures, and the fact that people still need housing, no matter what is going on in the economy."
Demand for this sector, Ratiu says, "is healthy with rent growth being positive, if not stellar." NAR forecasts multifamily vacancy rates for the third quarter of 2009 at 5.8 percent, unchanged from the third quarter of this year, which is still low compared with other sectors. Markets with the tightest vacancies include San Diego, northern New Jersey and Boston, with vacancy rates of 4.2 percent or less. Areas with the highest vacancies include Jacksonville, Fla.; Phoenix; and Orlando, Fla., with vacancies of 8.5 percent or higher.
The outlook also shows that with the exception of cash transactions, investment activity in commercial real estate sectors is nearly at a standstill because commercial lending has essentially halted, while job losses are curtailing the demand for space.
"To a large extent, this is true for the multifamily sector as well," says Ratiu. According to NAR's research, multifamily lending stood at $9.7 billion in the third quarter of 2008 but is expected to drop to $1.5 billion in the fourth quarter, according to estimates made by NAR. "This is a significant drop because financing has pretty much come to a standstill. This is mainly because of a lack of financing. Also, there is a wave of refinancing across the country but very little capital going around," says Ratiu.
Lawrence Yun, NAR chief economist, says there are serious structural problems in commercial lending. "Although access to residential mortgages has improved, the opposite is true for commercial loans," he says. "We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space."
Yun added that default rates on commercial real estate loans are very low by historical standards. "However, commercial defaults could deteriorate significantly without a properly structured stimulus that addresses liquidity for commercial mortgages," he said.
The year 2009 is expected to fare better, according to Raiu, with demand going further up. "This is partly because single-family construction has pretty much halted, and with mortgage being extremely difficult to get, people are turning toward multifamily housing. In addition, with the economy being where it is, and home prices falling, consumer confidence is down and people are wary of buying, not knowing when the bottom will be reached."
All this is having a modest impact on rent increases. "On an average, rent is expected to increase 2.8 percent in 2009 as opposed to 2.9 percent in 2008, 3.1 percent in 2007 and 4.1 percent in 2006," says Ratiu.
Multifamily net absorption is expected to be 24,400 units in 59 tracked metro areas this year and 142,000 in 2009, according to the NAR Outlook.
Local up-to-date Real Estate news and activity for Buyers and Sellers in the Los Angeles California areas of Santa Monica, Pacific Palisades and the Westside.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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