Author: msundermier

Got Inspiration?

Back in December, I posted about how accountability can help you keep and achieve your goals.  Now that we’re three months into 2011 and the adrenaline of goal-setting season is over, how are you faring with your goals?  If you are staying focused on and reaching them without any difficulty, then you’re better than most.  But, if you are floundering with some of your goals (as I am), consider another piece of the puzzle you may be missing…inspiration.

Inspiration is like a beaming spot light for your goal.  Without it, we easily lose sight of our goal when we inevitably become distracted and disheartened.  But with it, we are constantly “illuminated” on why our goal is so important.  For example, a goal to lose 20 pounds by July 1st is a fine measurable goal, but one that is easy to lose sight of.  It needs some oomph, some pizzazz, some inspiration.  Consider this alternative…

When stating a goal, try adding “because” after the statement.  Such as, “I will lose 20 pounds by July 1st BECAUSE I want to have a healthier body and more energy to play with my grandkids.”  Combine that with pictures of you playing with your grandkids posted on your refrigerator and pantry door and now you’ve got a goal with lasting power; with inspiration!

Any ambition can become a goal.  And accountability can remind you of a goal.  But it is inspiration that helps you ultimately achieve that goal.  If you need to breathe a little life back into your 2011 goals, go back to your list, write “because” after each written goal and fill in the blank.  This simple extra step could be the difference between writing off your goals or conquering them.

2011 Real Estate Market Forecast

Happy Valentine’s Day!  Now, I know today is a day devoted to love, but I figure it can’t hurt to sprinkle in some real estate chat too.  The two topics just might have more in common than you think.

Like love, our housing market can be impossible to understand, but that doesn’t stop us from trying to figure it out.  I think the mystic of the market (& love) captivates us to know what others think about it.  That’s probably why my annual market forecasts are the most widely read posts on this blog (read last year’s here).

So here it goes…my attempt to figure it out…Matt’s 2011 Market Forecast.  No love talk here, though; just economics.  As usual, my forecast focuses on three categories in the Sacramento real estate market: housing supply, housing demand, and mortgage interest rates.  I will recap 2010 and give you my best guess for what lies ahead in 2011!

Supply
’10 Projection: Inventory will be higher in 2010 (than 2009) as banks release more homes for sale and more short-sale listings are successfully sold.

’10 Result: Nearly 60% more homes are currently for sale compared to the end of 2009 (see chart above).  These increases were largely due to more homeowners looking to short-sale their properties and more banks releasing homes for sale.  Unfortunately, this increase in supply was not met by an increase in demand (more on that in a minute), and the amount of homes sitting on the market (known as inventory) is currently at an uncomfortably high 3.6 months.
’11 Projection: Short-sales and bank-owned properties will remain the primary sale types in Sacramento.  Additionally, an emerging sale type, the government-owned home, will become more prevalent this year.  The Department of Housing and Urban Development (HUD) has been forced to foreclose on an increasing number of FHA-held loans originated in recent years.  While the Making Home Affordable Foreclosure Alternative (HAFA) program was mostly unsuccessful in 2010, I am optimistic that improvements will be made this year that enable more short-sale listings to successfully close.

Demand
’10 Projection: Demand will still be high as buyers confidently (and rightfully) believe the bottom of the cycle is here.
’10 Result:  The bottom certainly seems to be here with respect to Sacramento county’s median home price.  In fact, it has increased 1.6% over the last two years.  First-time home buyers and real estate investors continue to make up the majority of current home buyers.  The overall pace of sales last year declined remarkably after the federal 1st-time home buyer tax credit expired in June 2010, indicating the market was propped up with artificial measures more than originally thought.
’11 Projection: Total home sales will be lower this year compared to 2010.  Although the bottom has arrived, it may be here to stay for some time.  Some potential home buyers may be reluctant to commit to a home purchase with looming job and other economic concerns and the absence of alluring tax credits.  Real estate investors, however, will be looking to purchase in abundance as rental rates are on the rise…11.6% nationally! (read this article for more details about these rising rental prices).

Interest Rates
’10 Projection: Despite wide-spread concern of drastically rising rates, I believe rates will stay well below 6%.
’10 Result: What a wild ride for mortgage rates in 2010!  While many worried of rates rising in April after The Fed stopped purchasing mortgages, rates actually plummeted for the first six months after the Feds exit from the market.  Towards end of the year, rates steadily climbed out of record-low territory.  In September I coined the 4th quarter as “Crunch Time” (read September’s blog post here) and encouraged clients and readers to consider refinancing before rates rose.  Thankfully, many heard that message as I helped more folks refinance in the 4th quarter of 2010 compared to any other 3-month period in my career.  30-year fixed rates rounded out the year hovering just below 5%, which was close to where they started the year.
’11 Projection: Mortgage rates will continue to be influened by politics more than economics, but in a very different way.  While I predict the Feds will stop trying to manipulate the mortgage and bond rate markets at some point this year, legislation from Congress will drastically impact mortgage rates.  MASSIVE financial reform regulations are scheduled to start in April 2011 that change how borrower’s closing costs are disclosed and paid for.  While unintended, these reform changes will increase the cost of obtaining a loan.  Furthermore, Congress is currently considering largely downsizing Fannie Mae and Freddie Mac’s participation in the mortgage market.  If this is done, mortgage rates will likely increase as banks must shoulder the risk of holding more mortgage loans rather than selling them to Fannie or Freddie.

In summary, 2011 will not be a rebound year from recent market challenges, but rather a continuation on our road to recovery.  American job creation & stability, mortgage financing availability & affordabiliity, and unpredictable legislative action will direct the market this year.  A healthy real estate market is within our sights, but we likely have another 18 months before we see a balance between home supply and buyer demand.  Until then, it will remain a buyers market largely comprised of 1st-time home buyers and real estate investors.

Do you have different thoughts and forecasts for 2011 housing?  I’d love for you to share them here.  Please leave a comment with your opinions, and let the chatter begin.

Learn From Our Neighbors

I read an interesting article in the Sacramento Bee the other day about the health of Canada’s current banking and housing markets.  It was enlightening since most media has casted the recent economic collapse  as a global meltdown.  To the contrary, Canada avoided the housing depression that the United States is still wading through.  While more than 300 banks went belly up in the States in recent years, not a signle Canadian bank failed.  WOW!

Canadian banks were recently named the best in the World by the World Economic Forum. The U.S. should look north to learn from their achievements, and our mistakes.

I encourage you to read the artice (click here).  But, if you want the Cliff’s Notes, our neighbor’s economic stability in housing has been a result of their commitment to prudent, traditional underwriting.   A Canadian bank CEO was quoted saying “…we are in the business of making loans to people who will pay them back.”  How profound, right? 

Give it a read, and consider how we should always try to learn from our neighbors.  From fixing sprinklers to avoid economic crises, neighbors often face the same dilemmas with very different tactics.  When you don’t get it right, take notice and learn from the neighbor who did.

Want to Play Monopoly?

Ever since I have been old enough to count, I have loved the board game Monopoly™.  Whenever my buddies and I played I wanted to be both the banker and the property card-keeper; an ironic foreshadowing of my career as a combined mortgage broker and REALTOR.  As it turns out, I’ve been playing banker and property card-keeper my entire life!

To this day I still adore the game.  I’m currently biding my time for my girls to be old enough to play (recent attempts just led to slobbery battleship pieces, crumpled bills, and unfinished games).

In the meantime, I am enjoying working with more folks than ever before playing real-life Monopoly buying and financing investment properties.  Due to low prices, low interest rates, rising rental demand, and favorable tax benefits, “playing” Monopoly has become a very wise financial move.

Those with means and foresight should be running to buy homes right now

Consider these recent examples of clients I’ve helped:
1.) Mr & Mrs K. purchased a rental property for $158,000 in Fair Oaks.  They are renting it to their daughter who is covering the mortgage payment, which is actually lower than the rent she was paying at her previous apartment.  Talk about a win-win!

2.) Mr. G is purchasing a $200,000 4-bedroom home that already has tenants.  After making a 25% down payment, his TOTAL monthly payment is $1028.  The tenants want to remain in the home, and continue to pay their $1475/month rent…positive cash-flow of $5400/year (annual rate of return of 10.8%).

Examples like these are fairly common in today’s market.  It’s not about finding the “diamond-in-the-rough”; it’s about simple supply and demand.  The supply of houses at decade-low prices is up.  At the same time, the demand of renters is up as every homeowner that has lost their home to foreclosure or short-sale is now looking for a home to rent.  Tremendous investment opportunities are readily available for folks with great credit, document-able income, and at least a 25% down payment.

Ironically, the Monopoly™ board game became a popular game in the mid 1930s, in the midst of The Great Depression.  I can’t help but guess folks of the time became fascinated with a game aimed at buying property when their real life finances were so dire.  This time around, in what many are calling The Great Recession, I hope that instead of playing a board game you consider your real-life opportunities to attain financial health through real estate investing.  My experience can help you find the right loan and best property for your investment preferences.  As I said earlier, I’ve been practicing for this my whole life :-).

Got Accountability?

What do house cleaners and business coaches have in common?  For me, they both provide accountability, but in very different ways.  Let me share with you my thoughts on the matter, and how accountability will help you keep your goals in ‘11. 

Last night was our family’s ritual clean-up night.  We tidy up the house in preparation for our house cleaner’s bi-weekly Friday visits.  Seems crazy, right?  Clean up the house for the house cleaner?!?  Actually, it makes good sense.  While our house cleaner, Marcy, is a wonder and does more in hours than we can do in days, she can’t do it amongst clutter.  So, we get the house in order ahead of time so she can help keep our home cleaner than we ever could on our own.

In an indirect way, Marcy is a great accountability partner.  Before she comes, we clean the house so her time (and our money) is spent efficiently while she is there.  After she comes, the house is so sparkly that we want to keep it that way.  Marcy’s brief, hard work improves the cleanliness of our home even when she is not around because we want to stay accountable to her high-caliber work.

In a much more direct manner, I have an amazing business coach as a professional accountability partner.  Just like Marcy, I have an appointment with Brian every two weeks.  I know that in order to make the most of our time together I must have my “house in order” so we can spend time on the important tasks at hand.  For me, hiring help is not so much about having someone do it all for me, but rather help me achieve things at a greater level by keeping me accountable.

You don’t need to hire someone for accountability (although paying for help is a great accountability inducer).  A friend, co-worker, or spouse can be there for you, either directly calling you out (like my business coach) or indirectly inspiring you towards improvement (like a house cleaner).  Both approaches lead to effective accountability.

When you sit down to write (yes, write them down) your goals for 2011, think of who you can openly, honestly share them with and discuss them periodically through the year.  Anyone can make goals, but it takes accountability and inspiration to keep goals. 

Here’s to a happy rest of the holiday season and a wonderful New Year.  If you’d like to share your 2011 goals with me, I would love to receive them.  And don’t be surprised if I follow up with you every now and then and see how you’re coming along.  If you’re looking for that kind of accountability, then I look forward to hearing from you.

Pick Up The Pace (On Your Mortgage)

All of us dream of the day our home will be paid off.  For many, now is the ideal time to speed up your pay-off pace.  15 year rates are near record lows, meaning you may be able to refinance, keep your monthly payment nearly the same, and shave YEARS off the life of your mortgage.  Consider this example:

Mr. B. obtained a $300,000 mortgage at 6% in 2001.  His payment is $1798/month, and now his mortgage balance is $257,000 with 21 years left.  By refinancing to a 15 year fixed at 3.75%, his payment will be $70/higher and he will pay his mortgage off 6 years faster…avoiding $130,000 in monthly payments!!!  In short, Mr. B. will pay $70/month and save $130,000…talk about a wise investment!

Numbers don’t lie.  Give us a call so we can discuss your options of becoming mortgage-free faster than ever before.

4th Quarter is “Crunch Time”

I can’t believe we’re already heading into the final quarter of 2010.  It seems that Avery, my youngest daughter, was born just a few weeks ago, but now she’s walking around and Mary is sending out invites for her 1st birthday party next month!  What happened?   

Looking forward…the coming months typically are the slowest ones of the year for my business.  After all, it’s more enjoyable for a homeowner to plan a holiday party than to take time to sell, buy, or refinance their home! This year’s 4th quarter, however, homeowners have much more at stake with their finances. 

Mortgage rates have hit ROCK BOTTOM, enabling homeowners to save money, consolidate debt, or reposition home equity to other investments during these difficult economic times.  Unfortunately, many have not even inquired or pursued their refinance options.  Some hesitate upon hearing horror stories about other’s experiences; many wrongly assume they don’t qualify. 

If you have not yet assessed your refinance options, I urge you to look at the upcoming 4th quarter as “crunch time” and act now before rates go back up.  Crunch-time players don’t hesitate; they know what’s at stake and they take action.  Do you need to take action and save  money in this economy?  In other words…will you be a crunch-time player with your mortgage? 

To encourage you to step up your game, I am going to offer a FREE GIFT to those who contact me to review their refinance options.  There’s no pressure here; just an honest professional looking to honestly serve you before time runs out. 

Be Like Mike…step up and take the shot at refinancing before time runs out.

 In sports, the 4th quarter is the last chance to make a difference as the clock winds down and the pressure rises up.  The same is true for your mortgage as we enter the year’s 4th quarter.  Rates will likely be heading higher as we approach the November mid-term elections (politics play a bigger role in the mortgage market than ever before)…so time is running out. 

As a special offer only for only my blog readers, I will give a $10 iTunes gift card* for calling me in crunch-time and simply discussing your refinance options.  If we discover options, we’ll celebrate the wise play you made and the money I’ll help you save.  If not, you at least get to download some music & get to know me so you have a mortgage broker and REALTOR to trust down the road when you need to buy, sell, or finance real estate.

I look forward to hearing from you.

*To qualify for the $10 iTunes gift card, just give me a call and complete a loan application within the next 30 days.  That’s it!

The Fine Line Between Caution & Fear

In the last month we have taken a couple of trips up to my family’s houseboat.  My fondest childhood memories are from Instiable, and it is so fun to now watch my children begin to make their own memories there.

This last trip we witnessed Maddison perform a daring feat…she jumped off the top of the houseboat!  It’s about an 8 feet drop from the roof to the water, so for a little 4 year old that’s quite a leap.  My paternal instincts said to not let her do it.  She’s too little; she could slap the water too hard; she could not jump out far enough and hit the boat!…as a parent you always think of the worst.  But, I tuned all of that out and guided her out onto the ledge.  While it’s scary to let your kid take chances, being overly fearful for them can be even worse.

Kids are little sponges.  They observe our actions, our words, and especially our emotions.  A fearful parent will breed a fearful child, and a fearful child often grows up to be a fearful adult.  Too many of us, unfortunately & admittedly, let “fear take the wheel and steer” (a great line from the song Drive by Incubus) in our life, and it inhibits our ability to live life to the fullest.  As parents, we should try to avoid instilling a fearful outlook in our children by means of our own fearful behavior.

There’s nothing wrong with being cautious.  Caution can keep us safe and alive!  But too much caution, even towards our children’s welfare, turns to fear that is detrimental to their well-being.

Becoming overly fearful doesn’t just apply to parenting; it applies to everything.  In my mortgage and real estate practice, I often see clients, business owners, and myself make foolish, fear-driven decisions.  I’m sure you witness (and experience!) the same thing in your life too!  There’s a fine line between caution & fear, and it’s a tricky balancing act to pull off.  Parenting, more than anything, has taught me that.

As for Maddison, I’ll continue to show her how to make life’s risky “leaps” correctly, knowing the day will come where she will hurt her body or someone will hurt her heart (even worse L).  These risks, however, must be taken to keep her confident, fearless attitude intact.  If only all of us can be as fearless as Maddison!  The world would be a better place!

No-Cost (FREE) Refinances are Back!

One of my (and my clients’!) favorite refinance options is back…the no-cost refinance.   They were missing from the market for the last 18 months for a number of reasons, but now they’ve returned and I already have many clients taking advantage of them.  These refinance programs allow a homeowner to refinance to a lower rate and not pay a penny in closing costs.  Like everything, there are pros and cons to these creative options.  Let me explain further.

When a borrower considers the cost of a loan, they must factor two things: the rate and the closing costs.  Many focus on getting the lowest rate possible, but borrowers must realize that lower rates always have higher fees.  Conversely, higher rates have lower fees…sometimes no fees at all.  That’s where the no-cost option comes into play.

A no-cost refinance allows the borrower to pay a slightly higher rate than the standard rate offered by the bank and in return the bank pays the closing costs for them.  There truly are no closing costs paid or financed by the borrower.  These options come in handy for the following homeowners who want to reduce their monthly payment but:

1.) plan to sell their home in the near future, thus shouldn’t incur significant closing costs for short-term monthly savings
2.) can’t afford to pay or finance closing costs
3.) recently paid closing costs on a loan (either to buy their home or to do a previous refinance) and can’t stomach coughing up thousands more again to refinance
4.) prefer to “hedge their bets,” meaning they’d like to refinance for free now yet want to save their closing cost money for later as they believe interest rates may fall further in the near future.

Most of the no-cost refinances I’m quoting on 30-year fixed loans are currently at 5% (for loans over $250,000).  Would you like a 5% rate for free?  That’s not a bad deal.  If you’re interested, call me to discuss your options further.  Don’t assume you don’t qualify.  Also, if you are a reader and client who has taken advantage of a no-cost refinance in the past, please post a comment sharing your experience with and motivation for a no-cost refinance.