Brittnee Koska

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  • Mortgage Rates Hit a 2014 Low

    Mortgage Rates Hit a 2014 Low

    Mortgage interest rates hit their lowest levels for 2014 this week.

    The average interest charged to borrowers for a 30-year, fixed rate loan fell to 4.21% from 4.29% last week, according to Freddie Mac’s weekly mortgage rate report.

    Rates have not been this low since the week of November 7, when they were at 4.16%. The 15-year, fixed rate mortgage, a popular loan for homeowners refinancing existing mortgages, hit 3.32%, down from 3.38% last week.

    Global unrest and a weak U.S. economic recovery have kept rates low on U.S. Treasury bonds, which is used as the benchmark to set most consumer interest rates.

    “Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” according to Freddie’s chief economist Frank Nothaft.

    World events was a key factor.

    “The effects of slower growth in China and the unstable situation in Ukraine are all contributing to the ongoing bid for Treasury debt, driving yields down and pulling mortgage rates down too,” said Keith Gumbinger, vice president of HSH.com, a mortgage information firm.

    It is, of course, good news for homebuyers. Payments on a $200,000 30-year, fixed-rate mortgage would be only $979 a month at a rate of 4.21%. Borrowers with rates closer to the historical norm of 6% would pay about $1,200 a month (principal only).

    But continuing strict lending standards has limited the positive impact of low rates on the housing market recovery, according to Lawrence Yun, chief economist for the National Association of Realtors.

    “The low rates are very good for people with high credit scores,” he said. “But credit is still very tight for borrowers with lower scores. Many people would like to buy, but can’t obtain financing.”

    These low rates are still significantly up off the record low set in May 2013, when the 30-year hit a rock-bottom 3.35%.

  • U.S. home prices remain on the upswing at the start of 2014

    U.S. home prices remain on the upswing at the start of 2014

    In the first three months, prices rose 10.3% on an annual basis, according to the S&P/Case-Shiller report. In March, an index of 20 large housing markets gained 12.4% year-over-year.

    The year-over-year gains are likely to moderate, according to Stan Humphries, chief economist for Zillow, because current prices are being compared with months when many markets were at or near their post-bust bottoms. Coming comparisons will be against less depressed prices.

    There are several other factors that continue to boost prices, however, including unusually low mortgage rates and the diminishing number of foreclosures and short sales on the market, which tend to sell for less. Those factors will take time to disappear.

    “We’re still several years away from a housing market driven purely by fundamentals like income growth and rising household formations,” said Humphries.

    Prices remain about 18% below their peak, which was reached in the summer of 2006.

    Trends in the housing market have been mixed, with a bounce back for housing starts in April and better new home sales. Buyers have been able to take advantage of very low mortgage interest rates, but tight loan underwriting still keeps many potential homebuyers out of the market.

    Even though price gains have moderated, all the cities in the 20-city index recorded gains year over year, led by Las Vegas at 21.2%. Prices in San Francisco, San Diego and Los Angeles also rose faster than average.

    On a monthly basis, New York was the only city with a decline in March.

    The price increases will have a positive impact on mortgage borrowers, according to Bill Banfield, Quicken Loans vice president.

    “While the increase in home prices is slowing, homeowners have still gained a significant amount of equity in the last year, ” he said.

    That will push some of the 9 million borrowers who are still underwater on their loans, owing more than their homes are worth, above water for the first time in years. That will make them less likely to lose their homes to foreclosure and help stabilize prices.

     

  • C.A.R. Reports First Quarter Housing Affordability Index

    C.A.R. Reports First Quarter Housing Affordability Index

    PITI, Minimum Annual Income Required to Purchase Median-Priced Home Rises More Than 50 percent in First Quarter.

    All counties in California realized a double-digit year-over-year decline in affordability

    A combination of continued price increases and relatively higher  interest rates during the first quarter of 2014 led to decreased housing affordability in all regions of the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

    While the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose slightly from 32 percent in the fourth quarter of 2013 to 33 percent in the first quarter of 2014, affordability declined sharply from the 44 percent rate reported in the first quarter of 2013, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

    C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.  C.A.R. also reports affordability indices for regions and select counties within the state.  The Index is considered the most fundamental measure of housing well-being for home buyers in the state.

    Home buyers needed to earn a minimum annual income of $86,419 to qualify for the purchase of a $416,720 statewide median-priced, existing single-family home in the first quarter of 2014.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,160, assuming a 20 percent down payment and an effective composite interest rate of 4.46 percent.  The effective composite interest rate in fourth-quarter 2013 was 4.43 percent and 3.56 percent in the first quarter of 2013.

    The median home price was $431,540 in fourth quarter 2013, and an annual income of $89,247 was needed to purchase a home at that price.

    Highlights from the fourth quarter HAI include:

    • California’s housing affordability has dropped 23 percent since its peak in the first quarter of 2012, and has steadily declined since then as rising interest rates and increasing home prices contributed to the lack of affordability.
    • Approximately 77 percent of the counties reviewed by C.A.R. experienced a quarter-over-quarter decline in affordability, and all counties realized a double-digit decline in year-over-year comparisons.
    • The largest year-to-year declines in affordability were in Monterey County (-20 percent), Sonoma County (-14 percent), Ventura County (-13 percent), and Solano County (-13 percent).
    • During the first quarter of 2014, the three most affordable counties were Madera County (65 percent), San Bernardino County (63 percent), and Kings County (62 percent).
    • The least affordable counties in California included San Mateo County (12 percent), San Francisco County (14 percent), Santa Barbara County (16 percent), and Marin County (16 percent).
    • The Bay Area tops the list of least affordable markets while affordability in the Inland Empire still ranks relatively higher. Nevertheless, both regions saw a 22 percentage point drop in affordability since their peaks in first quarter 2012. By comparison, national affordability only declined by 12 percentage points since affordability peaked in first quarter 2012.
    • With home prices increasing by double-digits throughout 2013 and interest rates significantly higher than those observed in early 2013, both monthly PITI and the minimum annual income required to purchase a home rose by more than 50 percent at the state level since first quarter 2012.  The top three counties that increased the most in minimum income required to purchase a median-priced home were Santa Barbara, San Mateo, and Monterey.
    • Inland Empire and the Bay Area experienced even larger increases in PITI since the affordability peaked.
    • The three counties that increased the least in minimum income required to purchase a median-priced home were Contra Costa, Kings, and San Luis Obispo.

  • Rent Vs. Buy

    Many are contemplating on whether or not they should continue renting or take a leap and purchase their own home. In today’s market there a couple factors proving that right now is a great time to buy.  For instance:

    Cost: Buying a home is actually less expensive than renting! Here’s why…

    • Renting a home for $1,000/mo for 5 years is $1,000/mo x 5 years x 12 months/year = $60,000
    • But buying a home for the same $1,000/mo for 5 years is less than $60,000!

    When you buy a home the government gives you a tax deduction for the mortgage interest that you pay. While the exact amount may change let’s just assume that your tax deduction equals only $1,200/year or $100/mo. That means you get $100/mo x 5 years x 12 months/year=$6,000

    Right now, you also may qualify for a First Time Home Buyer Program. That means if you haven’t owned a home in the past 3 years you can get additional help when it comes to financing your home.

    Equity: The owner of the home is entitled to the equity in the home. Equity is the difference between how much the house is worth and how much you owe. (If a house is worth $200,000 and you owe $150,000 then the equity is $50,000.)

    When you buy a home you have a mortgage payment each month. Generally, each payment has a principle amount, an interest amount, property taxes and hazard insurance. The principle amount of the payment reduces the amount that you owe on the property. (If you pay your mortgage payments for 30 years you will not owe anything on the home because you will have paid off the mortgage.) If you buy a home then your monthly payment reduces how much you owe so it is like paying yourself. But if you rent, your monthly payment reduces how much your landlord owes and it’s making them richer!

    Timing: Right now is the best time to buy a home. The home values in the area have bottomed out and the interest rates on loans are at all time lows.

    We are seeing homes that used to be $300,000 that are now selling at $250,000 or less! The experts say that we are at the bottom of the housing cycle and prices for homes will never be this low again. Then, as the market cycles back up you will be able to capture the new equity in your home.

    With interest rates dropping at all time low, you could buy that $250,000 home for payments starting at only $1,600/month (principle and interest)!

    Requirements: The qualifications for buying a home are nearly the same qualifications for renting a home. You need to have okay credit, a deposit and a decent job.

    If you have a credit score of 580 (or better) then you can qualify for a FHA loan. A 580 FICO score is not considered good credit and may even be low enough to prevent you from renting. But it is a good enough credit score to buy a small home. If you have better credit then you can qualify for better interest rates with other types of loans.

    The deposit for a house purchase with an FHA loan is 3 ½% of the purchase price. This amount is nearly the same as first & last month’s rent and a security deposit.

    Having a decent job is essential for qualifying for any type of housing. Generally you need to have been in the same line of work (preferably the same job) for the previous 2 years to show stability in employment.

     

  • Why You Should Use a Realtor

    Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®.

    Here are some reasons why using a Realtor can be beneficial:

    1.Your Realtor can help you determine your buying power: that is, you’re financial reserves plus your borrowing capacity. If you give me some basic information about your available savings, income and current debt, I can refer you to lenders best qualified to help you.

    2. Your Realtor has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by myself to find all available properties.

    3. Your Realtor can assist you in the selection process by providing objective information about each property. I can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

    4. Your Realtor can help you negotiate. There are countless negotiating factors, such as price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. I can advise you as to which investigations and inspections are recommended or required.

    5. Your Realtor provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, faulty structure, roof condition, septic, etc. I can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Either myself, the title company or an attorney can help you resolve issues that might cause problems at a later date.

    6. Your Realtor can guide you through the closing process and make sure everything flows together smoothly. I make sure that you understand each step that is occurring in escrow and that you are updated frequently.

    7. When selling your home, your Realtor can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

    8. Your Realtor markets your property to other real estate agents and the public. I can often recommend repairs or cosmetic work that will significantly enhance the salability of your property. I act as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc.

    9. Your Realtor will know when, where and how to advertise your property. The studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your agent, you do not have to allow strangers into your home because I will generally prescreen and accompany qualified prospects through your property.

    10. Your Realtor can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing, which can cause a lot of possible pitfalls. I can help you write a legally binding agreement that can be a win-win for both parties that will make sure the transaction stays smooth and closes on time.

    11. Your Realtor can help close the sale of your home. Between the initial sales agreement and closing, questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. I am the best person to objectively help you resolve these issues and move the transaction to closing.

     

  • FAQ about Real Estate

    When it comes to real estate many people might feel overwhelmed and confused. Here are some frequently asked questions that may help you understand real estate and your situation a little more:

    Why should I buy, instead of rent?

     Answer: A home is an investment. When you rent, you write a monthly check and that money is gone forever. However, when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. You can also deduct the property taxes you pay as a homeowner and the value of your home may go up over the years. Finally, you’ll enjoy having something that’s all yours – a place where you can call “your” home.

    Can I become a homebuyer even if I’ve had bad credit, and don’t have much for a down-payment?

     Answer: You may be a good candidate for one of the federal mortgage programs. Start by talking to a lender who can help you sort through your options. If they feel your financially not ready to buy, they will advise you on a plan that will get you ready to purchase later on.

    Should I use a real estate agent?

     Answer: Using a real estate agent is a very good idea. All the details involved in home buying can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. An agent will be well-acquainted with all the important things you’ll want to know about a neighborhood you may be considering…the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. I will help you figure the price range you can afford and search the classified ads and multiple listing services for homes you’ll want to see. With immediate access to homes as soon as they’re put on the market, I can save you hours of wasted driving-around time. When it’s time to make an offer on a home, I can point out ways to structure your deal to save you money. And the best part is you don’t have to pay the agent anything! 

    How much money will I have to come up with to buy a home?

     Answer: Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money – the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house. When you make an offer on a home, your real estate agent will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The more money you can put into your down payment, the lower your mortgage payments will be. 
Closing costs, which you will pay at settlement, average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won’t be caught by surprise.

    How do I know if I can get a loan?

    Answer: Talking to a lender will help you evaluate your loan potential. A lender will know what kinds of mortgages that are offered and can help you a program that’s right for you. Once you find a program you like, the lender will then pre-qualify you for a loan. It is a good idea to do this before you start looking for a home because then you know what you can afford to spend, and it will speed the process once you do find the home of your dreams.

    How do I find a lender?

     Answer: You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford.

    What do I need to take with me when I apply for a mortgage?

     Answer: If you have everything with you when you visit your lender, you’ll save a good deal of time. You should have: 1) social security numbers for both you and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a credit report, which most lenders run for you when your there; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years’ income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information.

    When I find the home I want, how much should I offer?

    Answer: If we are working together I can help you here. When writing an offer I take several things into consideration: 1) Is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? 3) How long has the home been on the market? If it’s been for sale for awhile, the seller may be more eager to accept a lower offer. 4) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.

    So what will happen at closing?

    Answer: When your offer gets accepted, we then open escrow. This can be a bit overwhelming since you will be signing many disclosures from your agent, the seller’s agent, escrow and your lender. Most of the disclosures that you will be signing will be with your agent, who will be explaining each document in detail and making sure you understand what your signing. Through the whole process I send you an updated chart with things we need to do before closing and things that have been completed such as, a home inspection, termite clearance, buyers disclosures signed, etc. This makes things more clear and less stressful.

     

  • HAFA Program

    The HAFA short sale program, effective from April 5, 2010, through December 31, 2014, promises short sale approval within 10 days and gives the seller up to $3,000 in cash at closing. But because HAFA is a government-sponsored program, it’s a lot more complicated than that. Often homeowners feel confused because a step was missed, which can cancel the entire process. Here is some information to see how you can receive $3000 to relocate if you can no longer afford to stay in your home:

    First, it is important to discuss the HAMP (Home Affordable Modification Program). The goal of this program was to reduce the mortgage payments of homeowners down to 31% of their monthly wages, however not every person qualified for the program. This resulted in people simply not being able to afford their home, resulting in foreclosure.

    To try and help the people that did not fit in the HAMP program, the government created the Home Affordable Foreclosures Alternative (HAFA) program. Through HAFA, a homeowner can sell their house through a short sale, which is a system where an agent works with the client’s lender to sell the property for less than is owed.

    Below is the current steps required by HAFA that must be done in order:

    • The homeowner must have applied for HAMP, and either a) been denied or b) was approved, and failed to make the required trial payments
    • The homeowner/and or agent talks with the lender about applying for the HAFA program
    • If qualified the lender will issue an agreement in which the homeowner must return the agreement with in 14 days.
    • Lender will send the homeowner a Short Sale Agreement.
    • The Short Sale home must be filled out and sent to the lender to begin the HAFA program.
    • The agent will list the property and work toward receiving an offer.
    • After an offer is accepted, the homeowner fills out a request of approval of short sale form.
    • The lender will give a response with in 10 days.
    • If the lender approves the offer, the buyer has 45 days to close and purchase the home.
    • At the time of closing, the seller receives $3000 to relocate to a new home.

    The important part of the HAFA program is to get the preliminary steps complete and get the material back to the lender in the required amount of time. Not all people are qualified for the program, but I can help you with the necessary steps to be in the HAFA program.
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  • News on Selling Price

    A first-quarter survey of homebuyers and sellers done by HomeGain.com, a real estate services website, revealed that 76 percent of homeowners believe their home is worth more than the list price recommended by their real estate agent.

    Homebuyers usually have a better grasp of current market value in the area where they’re looking to buy than sellers who own and live there. Buyers look at a lot of new listings. They make offers, know what sells quickly and for how much, and what doesn’t and why. Your home is worth what a buyer will pay for it given current market conditions. This may not be the same as your opinion of what your home will sell for, or what you hope it’s worth. Relying on emotion rather than logic when selecting a list price can lead to disappointing results.

    The prime opportunity for selling a home is when it’s new on the market. This is when it is most marketable. Buyers wait for the new listings. Usually, listings receive the most showings and have the busiest open houses during the first couple of weeks they are on the market. This is the opportunity to show your house off to advantage with a list price that attracts buyers’ attention. Listings that sell today are priced right for the market. Buyers need to feel comfortable that they are getting a good deal.

    HOUSE HUNTING TIP: When selecting a list price, it helps to understand how real estate agents and appraisers establish an expected selling price or price range for your home. They research the recent listing inventory for homes similar to yours that sold. The most recent sales give the best indication of the direction of the market. They analyze these comparable sales giving more value to your home for attributes that it has that the comparables don’t, like a remodeled kitchen. Value is subtracted from your home for features it lacks when compared to the sold comparables, like an attached garage.
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