Financing is available for International Vacation Home buyers in California!

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Join NAHREP San Diego (http://www.nahrepsandiego.org/) for their First Charity Golf Classic Friday June 24th, raising funds for their local high school scholarship!

Go to www.NAHREPsandiego.org to register!

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Rafael discusses a local radio promotion where the listeners all have multiple opportunities to win $500 by calling at specified times. One winner, reveals an insight as to market psychology when she wins $500. How does this relate to real estate and mortgages? Watch and find out! Rafael can be reached at rafael@thehomemap.com

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On September 1st HUD issued mortgagee letter 2010-28. What does this mean?

This letter stated that on August 12, 2010 President Obama signed into law public law 111-229 that gave flexibility to the HUD secretary to change the monthly and annual mortgage insurance premiums charged on FHA loans. On a typical 3.5% down payment FHA loan, the monthly MI premium is authorized up to 1.55% from the current .55%. Now it will not increase to this amount on October 4th 2010 when these changes take place.... it will be a gradual step to .9% which is still nearly double. One positive note is that the upfront mortgage insurance premium, currently at 2.25% will be reduced to 1%... giving the buyer 1% savings or equity, however the affordability will be decreased.

However HUD is authorized to charge up to 3% up front mortgage insurance fee and up to 1.55% monthly mortgage insurance fee!

What really maters most to most homeowners? The affordability of the payment in most cases. This change give the HUD secretary the power to make these changes.... and drastically affect what homeowners pay for a FHA loan. In just over a week, it's guaranteed that the monthly expense to finance a FHA loan will go up from .55% to .90%.

What will that do to consumers buying power?

Be informed, know your choices!

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Flip the House? Well not exactly, but similar opportunity for home buyers!

I once heard all the money in Real Estate is made when you buy it. At first I didn't understand this statement, as clearly people cash out when they sell real estate at a profit. As I learned more about real estate, it became clear to me that the moment of purchase is the most critical financial moment in the life span of owning real estate. If you overpay for a home or buy in a deteriorating neighborhood you could start day 1 as a home owner with negative equity and will have some recovery to do before there is one cent of capital gain. If this same home is in an area with low rental prospects (or low rent amounts) your financial options are limited should you ever need to relocate or downsize/upsize. As opposed to someone who buy's below market value, or in a neighborhood with high demand for rentals, not only do you have equity as a cushion, there are more options available when it comes to converting an existing home into a rental if selling doesn't make sense.

Over the last 5 years many people saw the shows about "flipping" homes and sat their dreaming at the end of each episode of the possibility of making $50-$400 thousand dollars in a month. Many amateurs went out looking for any fixer they could find and for many people the "Dream" ended in disaster. If you compare the episodes where the home flipper ended in the green (at a profit) and those where the investor ended in the red, the key distinction could be made at the moment of purchase and the basic math used (or lack of it.) Those that bought the home at enough of a discount to account for repairs + acquisition costs + finance costs + resale expenses and still had room for miscellaneous expenses with a good profit margin ended up doing great while those who bought based on the "potential" they saw in the home rather than the financial viability of the project ended up walking away without a profit (if not a major loss.)

Something can be learned from those shows, it pays to take a moment and run the numbers before getting emotionally invested into the idea of owning a home. Buying a home can be a very wise financial move, but getting a great deal, being careful and creating some equity, can exponentially multiply the chances of the purchase becoming a great financial move. Unfortunately, people aren't just giving away homes at a discount. The term "market rate" exists for a reason, that is the price the market is willing to pay for an average home in the area. So unless you are privy to some great information, the chances of walking into a home full of equity are very slim. This is true especially with the purchase of an average - above average home, someone else has already invested the resources to get "top dollar" for the home and it leaves little room for a buyer to make a profit at the point of purchase as well.

However, it is possible in today's marketto get a great deal with room for some equity building right away. With a little bit of vision, some critical knowledge, patience and a vigilant eye great deals can be created in today's market. In addition to "all the money in real estate is made when you buy it," I have also heard "it's smart to want the lowest priced home in a nice neighborhood, not the nicest home in a low priced neighborhood." Another phrase is "location, location, location." One may ask where these low priced homes, in great neighborhoods or locations can be found? The answer, in fixer upper homes. I know that many people don't want to lift a finger with painting a home nor do they want to spend a day ripping out orange carpet. It is not commonly known that there are loan programs available that allow you to finance the repairs made by a contractor (or yourself) into the purchase price of a home.

An example of this is the FHA 203k rehab loan. You could purchase a home that needs a little help for below market value and finance the repairs. If the comparable sales are more than the acquisition amount (purchase price + repairs) then you could be setting yourself up to walk into some equity, as well as giving yourself the opportunity to select things like paint, carpet, cabinets and more. In essence, it's like buying a "used" house with the "new" home experience of choosing flooring, colors, cabinets, etc.

This strategy does require patience and a good Realtor. It is not easy to actually get an accepted offer when you are competing against the same investors who are out there looking to flip the homes and make a quick profit (who happen to have large downpayments and cash.) However, with perserverance, preparation (being pre-approved in advance) and knowing what you want (and pulling the trigger when you find it) there are great deals to be had.

For more information on the FHA 203k loan in California please contact me at Rafael@theHomeMap.com or I can be reached at (619)928-0128.

Standard FHA guidelines do apply, 620 FICO minimum, 3.5% down payment of acquisition cost (purchase price + repairs.) Subject to underwriting approval of qualified buyers. Certain restrictions apply. Rafael Perez is a licnesed loan originator with imortgage, licensed by the California Department of Corporations 4130969 .

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"Going Green" seems to be a term we are hearing more often as the level of
awareness towards our impact on the environment is constantly increasing.
Cities are requiring recycling and utility companies are providing
incentives for improving the efficiency of your home. There could also be
financial benefits in being aware of the energy consumed by your home. When
buying a new home, there are loan programs that exist that allow you to
finance energy efficient improvements to you home (some without additional
income qualifications!) This is a relatively simple process that begins
with the new home intended to be purchased getting an energy efficiency
rating by an approved rater. This will identify the deficiencies in the
energy efficiency of the home and will prioritize them. Sometimes it doesn't
take putting an expensive solar system to cut down energy usage (although
in many cases that can be financed too,) many times it is as simple as
properly insulating/sealing the home and ducts. As energy costs go up in the future, investing into the energy efficiency of
your home at the point of purchase, may turn out to be one of the best
financial AND environmental decisions you ever make. For more information on
California energy efficient mortgages please contact Rafael Perez with
imortgage, Rafael.Perez@imortgage.com (619)928-0128 direct.

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With the Canadian dollar virtually at par with the US dollar and a still depressed real estate market looming in the southwest, purchasing a vacation home for next winter is looking a lot more attractive to many Canadians. Although next winter is far from many peoples minds there are still Canadian buyer’s searching for next winters new vacation home and areas like Palm Springs and San Diego are prime targets. In addition, with interest rates still being historically low, the risk of investing in a US vacation home is a lot lower than it was 5 years ago. Conventional financing is available with as little as 30% down and mortgage rates are still near historical lows.

More information about Canadian Vacation home financing is available at: http://thehomemap.com/canadian-2nd-home/

-Rafael Perez
Rafael@TheHomeMap.com

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Mortgage Interest Rates Rise Significantly for Second Straight Day

It seems as if for the last 60 days all the financial experts have been
predicting an increase in interest rates as the Fed continues to exit the
market as a buyer of the Nation's mortgage backed securities. After
sustaining record low interest rates for the majority of the month of March
in 2010, for the last two days interest rates have seen extreme volatility
and as the market goes down, the rates are on the rise... and their moving
fast.

It is never guaranteed that they will ever go back down and historically the
interest rates are still really low. This may be the last chance buyers and
those is a position to refinance have to take advantage of the historically
low mortgage rates before we leave the "low 5's," possibly forever. (Remember the reason they got so low was because the Fed was absorbing the
bulk of the market ,with them out.... Whose going to do the same for such
low interest rates?)

Want to see what today looks like compared to the last three months?

-Rafael Perez, Rafael@thehomemap.com

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Reverse Mortgage vs. Downsize?

Deciding whether to take out a reverse mortgage or to downsize your home may
not be an easiest choice. Many people will be put in a position to make this
decision over the next few years. A once certain retirement may not seem so
certain these days with the decline in real estate values and other assets.
We have recently seen an increase in marketing promoting reverse mortgages
to those of retirement age, urging them to take out a reverse mortgage.

An option that often is left out is downsizing to more suitable housing to
have an easier retirement. A large home may no longer be necessary for a
family whose kids have moved out. Maintaining such a large home may also be
a burden or luxury for many retired families. Rather than eroding at the
equity through a reverse mortgage, downsizing may be a better option for
some. For some people, a reverse mortgage may not even be within reach if they
have little equity. For those who can at least break even or walk away with
a significant amount of equity, downsizing is a good way to lower expenses
and create a more manageable household for those in or nearing retirement. Of course many people love their home and only wish to be able to spend the
rest of their life in their home. For those people who have equity and
cannot afford to maintain their home, a reverse mortgage may be the best
option. For many others who are not strongly attached to their home, there
may be more logical strategies that take just a little more planning and
willingness to make a change.

-Rafael Perez, Rafael@thehomemap.com www.thehomemap.com

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In the past this was an opportunity for a professional lender to "save the
deal," review the file and qualify the borrower within the guidelines...
while closing quickly enough to save the escrow. This isn't the case
anymore. First of all, with the new 2010 Good Faith Estimate laws, there are
several points in the loan process that now require certain steps that have
been causing additional delays. More importantly, FHA has begun to say they
will NOT insure mortgages that were previously declined by another lender.
Every FHA loan that is submitted and appraised is registered in what is
called "FHA connection." They are assigned a unique case # and the property
address is matched with their social security number. If an underwriter
makes a note in the file that "credit was denied" then that borrower is now
essentially blocked from being able to get an FHA loan on that property,
EVEN IF they really did qualify and just had a unprofessional loan officer
prepare the file.

If you or a buyer you know is not feeling confident in their lenders ability
to do a good job, do everyone a favor and make sure they find a legitimate
lender who knows what they are doing and CANCEL before the other lender does
any permanent damage on their ability to get an FHA loan!

The solution is for buyers and agents to make sure that the right lender is
financing the purchase from day 1. As a buyer, make sure that you are
working with a reputable lender and ask for proof of success on previous
loans. As an agent, it is the same idea. Are you trusting your buyer's
ability to finance the biggest purchase of their life with their friends
cousins sisters boyfriend? Make sure that now more then ever you have a "go
to" relationship established with a good lender at a good company. Agents,
in this real estate environment you can't afford to take risks with your
buyers (and the buyers of your seller's homes!)

-Rafael Perez
Questions? I can be reached at Rafael@thehomemap.com

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You don’t have to look far to see how far interest rates have climbed, dropped, climbed, dropped and everything in between over the past decade.  More recently, we have been faced with a time of government stimulation of interest rate through their investments into mortgage backed securities. Politics aside, this activity cannot sustain itself forever and at the end of the day… interest rates are still market driven.

For the purpose of illustration I have included some charts tracking the FNMA 30 year 4.5% coupon. Keep in mind when this goes “up” rates get lower and when this goes “down” rates increase. So up is good for rates and down is not (think climb vs. crash!)

You can see that the beginning of 2008 things were getting ugly fast and right towards the end of the year in November of 2008 we saw the coupon take a leap and the market breathed a sigh of relief.

As you can see rates were literally lifted from the 90 bps to 98 bps range to the 97-103bps range within a matter of days. You can also see how we don’t have much room to gain for the better but plenty of room to fall. I will continue to say, the clock is ticking on these rates and we are standing near the edge of a cliff. Look at the image and imagine it is a picture of a roller coaster….. what would instinct tell you is next? The images speak for themselves… now is not the time to be “iffy” about buying or refinancing, if it is in your plans…take action and take advantage of the times we are living in. If not, make sure you share this information with those you like and care about.

For any specific questions, I can be reached at Rafael@thehomemap.com

Here is today’s up close look on the FNMA 4.5% coupon:

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They are both right...

First the Real Estate agent...

• Historically interest rates areas low as we may see in our lifetime. There are way more factors that will drive interest rates up than there isto support the artificially low rates we are seeing right now as a result of government spending on  mortgage backed securities.
• There is a significant tax credit that is about to expire in under 100 days for home buyers and move up buyers.
• Home prices are still a lot lower than they were in the past few years.
• The combination of low prices and interest rates, when combined with the tax benefits of homeownership, still make it very affordable for many people to afford a home and know they can keep it long term.
• It appears that we are going to see severe inflation at some point in the future, if this happens, real estate is a great hedge to protect yourself financially when this happens.
• The sooner you buy, the sooner it will be paid off (assuming that it's financed with a fully amortizing loan.)
• Banks are still lending money to qualified buyers, access is not limited to those who have shown financial responsibility.

• If you don't know what you want in life, you're probably not ready to buy a home.
• If you think you want to relocate, it might not be the best idea to buy(unless making the home an investment property is part of the plan.)
• If you are having a hard time financially getting by, it may not be the best time to buy (unless homeownership costs less than rent.)
• If you need a co borrower to qualify, make sure you can commit to being involved with this person for a very long time.
• If you plan on quitting your job to start a business yo9u may not be ready to buy (unless you have solid cash reserves.)

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What happens when the FED stops investing tons of money on mortgage backed securities? The spending spree begun over a year ago now and the ship appears to be losing steam. As part of the gigantic stimulus package intended to jump start our economy and markets, the spending on mortgage backed securities was intended to artificially influence mortgage rates to be lower. This would happen naturally with the increased demand on the market the FED’s spending has created. This impacts grounds zero for our economic meltdown, the housing market. The low rates have increased the buying power for the buyer’s of 2009. As we begin 2010, the pressures are on the market to sustain the gains in the market while the reality is that 2010 buyer’s are faced with a more limited buying power due to new guidelines.

What will happen as we move away from the historically low interest rates we’ve seen for months? In addition to the debt to income restrictions that have been implemented in the last month to increase the strength of borrower on conventional loans, increased interest rates will erode buying power. In some of the hardest hit markets, like many in California, the demand in some “bargain” neighborhoods has outpaced the supply leading to multiple offer scenarios. As the buyers lose their buying power, I would hope that the strongest buyers continue to support the market gains, as so much of our countries wealth depends on this thing called “equity” …a term that seemed to be the buzzword a few short years ago.

Regardless of the outcome, there will come a day when the FED decides they can not continue their spending and when that day comes, I guarantee interest rates will be affected (unless an act of congress freezes them…highly unlikely!) As soon as the FED is no longer the major player in the market the private investors will be in control and they will likely compensate the loss in demand with an increase in premium to attract more investors (= higher rates.)

Although I don’t have a crystal ball to tell us how and when things will happen, it’s always a good idea, in any market, to be familiar with everything you are financially invested in and like a game of chess, anticipate your next few moves. At the end of the day nobody cares more about your finances than YOU! Keep an “always learning” attitude and you will be better of than most of the population.

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See the full gallery on Posterous

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See the full gallery on Posterous

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