Last month, FHA announced their new “Back-To-Work” program, allowing people to buy another home only 12 months after losing their prior home to short-sale, foreclosure, or bankruptcy. This program has the potential to help you or someone you know that lost their home in recent years due to economic hardship. In recent days some of our lenders have begun to implement the “Back-To-Work” program, so we are very excited to share it with you.
Prior rules required a 3-year waiting period, so this program will help get people on the track back to homeownership much faster than previously possible.
As with any loan program, there are fine-print details. Here are some of the highlights:
-Purchase loans only
-Borrower must have experienced an “economic event” that led to employment loss and/or income loss that reduced the household income by more than 20% for 6 or more consecutive months
-Housing Counseling certification program must be completed prior to applying for the new mortgage
-Satisfactory credit history in the past 12 months, thus showing the borrower has fully recovered from the economic event
Please get in touch with me directly or pass along this post to anyone else you know who may want to discuss the possibilities, benefits, and requirements of this new program.
We are so excited to share the latest news of our company’s growth. We have doubled our office size (without moving!) and have added an exceptional member to our team. Check out the video!
We are also running a Sweepstakes on Facebook through September 18th. You can win an iPad Mini and other great prizes just for “Liking” and “Sharing” our page. Go to www.Facebook.com/TheBlueWatersGroup for full details.
Its no secret…home values are skyrocketing everywhere! Sacramento Home Prices are up 31% in just the last year! Besides leading to increased home sale opportunities for those looking to move-up, this trend has also led to more and more refinances. In fact, most of my current refinance clients could not have refinanced just 6 months ago due to low or no equity. But now, they’re experiencing the benefits that come with thier fast-rising home value. If you’ve previously written off the possibility of refinancing, then its time to reconsider your options. Even with only 5% equity, homeowners with credit scores over 740 have options to refi to 30-year fixed rates around 4% with no mortgage insurance. And you don’t even need to be eligible for HARP to do it.
Speaking of HARP, the Home Affordable Refinance Program (HARP) has been extended through 2015. HARP offers refinance opportunities for homeowners with no equity (see if you’re eligible). It was set to expire at the end of this year but the government, in one of its rare recent occasions to agree on something, approved its continuance for two more years.
To make these opportunities even sweeter, mortgage rates remain super low. I’ve been finding 30-year fixed rates around 3.5% and 15-year rates under 3% for clients with 20%+ equity.*
Bottom line…now’s the time to consider refinancing. If you contact me this month to determine your refinance options, I will waive the initial credit report fee cost ($25 value). As I’m writing this post, I have several specific clients that come to mind that should take advantage of these low rates and rising home values. If I don’t hear from you, maybe you’ll hear from me in the coming days! 🙂 This is the perfect time to refi; I don’t want you to miss it.
*Rates shown are only meant as rough illustrations. For full rate and APR details, please contact me. I assure you; rates like these are currently available for qualified borrowers
My real estate market forecasts are the most widely read articles on MattsMemos.com. Their popularity is certainly not due to profound accuracy; in fact, I’m probably wrong more than I’m right. Nevertheless, it’s been fun for me to take my best-guess and, as it turns out, it’s been fun for my followers to read. You can read prior year’s forecasts here, here, and here. But, you’ll get more from reading the one below which also includes home refinancing, buying, and selling tips. If you like it, share it! If you disagree with my projections, make a comment…I’d love to hear your thoughts on our CRAZY real estate market.
Refinancing
Everyone (including me) predicted mortgage rates would rise slightly through 2012 as the economy slowly recovered and as the presidential election brought some clarity to the fiscal and political direction of our country. We were all wrong. 2012 saw lower rates than ever before, largely due to The Fed’s decision to buy mortgages. When the Fed’s announced they’d steadily purchase billions worth of mortgages until the unemployment rate hits 6.5% (its currently at 7.8%), mortgage rates fell dramatically. Presently, The Fed is buying $3.7 billion in mortgages every day, yet the industry only originates $2.5 billion daily, essentially meaning mortgages are “selling-out.” Simple economics dictate that regardless of if its a mortgage investment or a bunch of bananas, when a product sells out due to high demand, prices rise (just think of skyrocketing prices in New England right now as there isn’t enough supply to meet the demand of frantic buyers preparing for the blizzard!). When the prices of mortgages to investors rise, the rates to borrowers fall. As long as The Fed stays the course on buying every mortgage off the shelf, we will see these low rates remain throughout this year.Currently, 30-year fixed rates are around 3.75%. However, economic conditions around the globe are improving, and with brightening economic forecasts both at home (our real estate rebound will do wonders for America’s economic health) and abroad (many believe the worst of Europe’s fiscal woes are behind them), rates should increase from the record lows we saw last year.
More importantly, accessible programs (like the Home Affordable Refinance Program – HARP) and rising home values (much more on this below) are allowing more folks to refinance as we march through 2013. According to statisticians much smarter than me, 4 million more Americans are eligible to refinance today compared to last year simply because their home is worth more now. If you’ve tried to refinance in the past but hit hurdles due to your home’s value, be sure to check back again.
After 6 years of having the negotiating advantage, home buyers last year suddenly found themselves competing over a short-supply of homes for sale. I foresee this feeding-frenzy dynamic to continue well into 2013…possibly beyond.
The Red Line shows how Sacramento home prices have steadily and dramatically increased
Sacramento County home prices rose 20% in 2012, so many sellers are less inclined to put their homes up for sale if they believe their home will continue to be worth more in the near future. Furthermore, there’s much pent-up demand from home buyers, including ones who are now eligible to purchase after a short-sale or foreclosure. Real estate investors also make up a big portion of the home buyer pool as they see big profits in real estate from both a strong rental market and swiftly rising home prices. In conclusion, the imbalance between strong demand and weak supply should continue this year, leading to further steady price increases for sellers and challenging times for buyers.
Home sellers are finally back in the driver’s seat, and likely will remain there through 2013. Due to rising home values, many once upside-down homeowners are discovering they can now sell and break-even. “Traditional” sales by sellers with equity now comprise over 60% of home sales, compared to only 34% from just two years ago. Furthermore, bank-owned sales are down nearly 90% from 2010, thus showing signs banks are foreclosing on and, more importantly, re-selling significantly fewer homes.
These figures show the number of bank-owned REO homes that have hit the market in Sacramento county.
In my opinion, the fear of banks’ “shadow inventory” is grossly exaggerated as many banks are trending to renting out their foreclosed homes or selling homes in bulk to investors who also turn many of the homes to rental properties (this recent Bloomberg article discusses this trend in detail). Bottom line, 2013 will afford many home owners to sell after years of riding out the market, and to command higher prices than the last neighborhood home sale before them.
To wrap up, 2013 will see rising home prices, stingy levels of inventory, and slightly elevated interest rates. It should be a very healthy year for real estate, and likely be the catalyst for economic growth in many other sectors. The Blue Waters Group is honored to stand alongside you in your home buying, selling, and refinance transactions in the year ahead and beyond.
Now is the Time to Move-Up – If you’ve been hanging on to that smaller house a little longer than planned, now is the time to sell and move-up to the bigger house. Entry-level homes are in tremendous demand from investors and 1st-timers, while mid-range homes are not moving quite as quickly. Homes under 1600 square feet went up 23% in Sacramento County last year, compared to 15% for larger homes 1600-2600 square feet. This allows you to command the highest price possible for your old home, and better chances of scoring a deal on your next house.
Make Demands – This isn’t about greed or bullying, but today’s market enables sellers to be very firm on what terms they accept. Don’t be bashful about waiving appraisal contingencies, demanding higher deposit amounts, and listing at aggressive prices.
Know the Code (tax code, that is) – The tax rules on short-sales are constantly changing. Due to the fiscal-cliff negotiations at the beginning of 2013, short-sales are still exempt from federal income tax. However, state legislation made so such extension. Before you look to short-sale your home, get in touch with a trusted CPA and real estate attorney to know your options and outcomes.
Know What You’re Looking For – You have to shop for a home with laser-focus, and act decisively when you see what you want. Don’t window shop for too long; homes are often selling within days to above-asking-price offers. Make a list of features and amenities you’re looking for, and when you see the right house get in there and make a strong offer.
Be Prepared to Pay Market Value (if not more!) – The days of simply looking for a good deal are over. Sellers have the luxury of being picky in today’s market (more on this later), so “low-ball” offers are easily ignored. In 2012, Sacramento area home prices rose an average of nearly 2% per month (WOW!), so even if you end up paying a few thousand dollars above-asking price its likely these rising values will aid you to recoup that in no-time.
Credit Wounds Heal Faster Than You Think – Most folks are eligible to re-purchase a home after just 3 years since a short-sale or foreclosure, or 4 years since a bankruptcy. All you need is a 3.5% down payment and a good credit history since your last mishap. If you’re considering getting back in the real estate game, obtain a copy of your credit report (we can help with this) to see how your credit past has been reported.
Be Patient & Have Faith – Most clients I work with don’t get the first house they write an offer on. Some don’t get the 10th house! But, in hindsight all of them ultimately bought the house they were meant for. Keep your head up, and have faith that things happen for a reason.
Since opening our doors in early April, The Blue Waters Group has met some major milestones! Thank you for all of your support, business and referrals that have quickly propelled us from a new start-up to thriving firm.
Our group is expanding, with the newest addition to our group, Donna Adams. We are elated to have her on board. Check out our latest video to meet her, as well as get info on my “expecting” news (what could I mean by that?), as well as details about an extra charity drive that we’re kicking off on Halloween (costumes included).
The Blue Waters Group is hosting a special & unique event on Wednesday July 25th, 2012. Check out the video for full details, but in short we’re going to give you great insight on real estate investing in today’s market and afterwards we’re heading out for an afternoon on the water! Should be a fantastic time.
It is with tremendous excitement I share with you the launch of my own mortgage and real estate firm, Blue Waters Mortgage and Real Estate Group. After 10 wonderful years at Bentley, it is now time to serve you from my own company. I will miss my colleagues at Bentley, and am grateful for their support, dedication, and friendship over the last decade.
Our new firm, as the name implies, will take a “Group” approach in helping you through your home buying, selling, and refinancing transactions. Lisa Parks Ferro, my business partner and fellow mortgage consultant, will support me during absences and also help set the vision for The Blue Waters Group. Sara Davis, our talented systems manager and loan processor, will be an invaluable asset to our team’s efficient work flow. Together we have nearly 40 years of industry experience, so you are in good hands. I’ll do a video blog post soon so you can get to know them a bit, see our new office (we’re in Folsom), and get a better sense of us as a team.
The Blue Waters Group
The opening of our new business comes at an opportune time as the mortgage and real estate markets are healthier than they’ve been in years. Low home prices and low interest rates are fueling a frenzy of investment property and home purchases. New refinance programs (such as the Home Affordable Refinance Program) are opening the door for millions of underwater homeowners to refinance and slash their monthly mortgage payments (see if you qualify by clicking here). And many folks who lost their homes to foreclosure or short-sale in recent years are becoming eligible to purchase homes again (call or email me to learn about the credit requirements of buying another home after losing one). The future looks bright for those looking to buy or refi…better wear your shades!
Throughout my entire career, my clients have fueled my business growth through their referrals and repeat business, for which I am eternally grateful. I am confident your advocacy and loyalty will be even greater towards my new business. I thank you for your support that has enabled me to reach this point in my career, and look forward to see how far you can propel The Blue Waters Group in the very near future.
Below is a sample of home prices, rent rates, and rate of returns in various areas of Sacramento County for an averaged-sized 3 bed, 2 bath home. As you can see, just the AVERAGE numbers are very attractive. And these return rates don’t even factor in loan balance reduction or home value appreciation! Tell me, are your other investments giving you this type of return? Are they as safe and tangible as real estate?
Avg. Sales Price (as of June ’11)
Avg. Rent Income
Estimated. Expenses*
Annual Rate of Return**
Folsom
$265,000
$1,719
$1,253.85
7.83%
Rancho Cordova
$153,000
$1,357
$766.19
16.39%
Natomas
$153,000
$1,432
$766.19
18.47%
Arden
$193,000
$1,409
940.35
10.56%
O-vale/
C. Heights
$173,000
$1,352
$853.27
12.40%
Carmichael/
Fair Oaks
$211,000
$1,469
$1,018.73
9.36%
*expenses include mortgage interest, property taxes, insurance & city/county utilities
**based on a 25% down payment and $5000 in immediate closing costs/repairs
Purchasing rental properties requires a much more analytical approach than traditional home buying. With my expertise in both the financial and sales aspects of real estate, I am well-prepared to help you become a successful real estate investor. And remember, using a Realtor to buy a home doesn’t cost you anything…the seller pays the commission. So don’t do it alone; ask me to be of service in this advantageous real estate market.
Matt Sundermier's Memos on Real Estate & on Life 