Lenders Loosen as Prices Rise

Lenders Loosen as Prices Rise

Source: The Los Angeles Times via CAR.org

As prices rise, mortgage lenders are making it easier to buy a house

Some prices are rising across the country and mortgage rates, though still historically low, are up since the presidential election.

Simply put, buying a home isn’t easy, especially in high-cost metropolitan areas such as Los Angeles County, where the median price of a home hit $569,000 in June.

But changes in the mortgage industry are afoot, with the goal of loosening some of the strict standards established after the subprime crisis — rules some blame for impeding sales.

“The reality has sunk in that there are buyers out there who will be able to buy homes and make the mortgage payments,” said William E. Brown, the president of the National Assn. of Realtors. The industry is “trying to give them more options to buy a house.”

Government-controlled mortgage giants Fannie Mae and Freddie Mac are paving the way by rolling out new programs to encourage home ownership.

The companies, with their congressional mandate to promote home ownership, don’t originate loans, but purchase mortgages from lenders to keep the market moving. And any changes they make in the underwriting standards for the loans they buy can have a big effect.

Click here to read the FULL STORY on The Los Angeles Times

 

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Sebastopol Nabs Best Place to Live in Sonoma County

Sebastopol Nabs Best Place to Live in Sonoma County

The secret’s out! Sebastopol is the Best Place to Live in Sonoma County!

According to Niche.com, a Pittsburgh-based data analysis website that ranks places to live, schools and colleges. Petaluma, Healdsburg, Graton and Windsor round out the top five. Click here for the complete article

Whether it’s the well-respected schools, the fresh country air, the year-round Farmer’s Market, proximity to the coast, fabulous restaurants and wineries, or the unique culture… we can definitely agree, Sebastopol is more than a city, it’s a community. And it’s clear that many homebuyers feel the same. Sebastopol’s market has been OFF THE CHARTS. So this article really comes as no surprise to Terra Firma Global Partners’ President & Broker, Bill Facendini, who grew up in Sebastopol and currently resides here…

“It pays to live in the best place in Sonoma County or does it? Sebastopol was just given the “Best Places to Live in Sonoma County Award” but with that moniker comes limited inventory for sale and a high demand from people who want to move to a place I am fortunate to call home. Sebastopol has been one of Sonoma County’s best kept secrets for years — as other areas like Sonoma and Healdsburg blossomed with people moving from the Bay Area… but not anymore. As the pressures of the demand from people who also want to call Sebastopol their home continues prices will steadily move upward for years to come.”

 

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Prestwood Partnership Success

Prestwood Partnership Success

Just as parents are busy buying backpacks, school supplies and new outfits in preparation for “Back to School”… Terra Firma Global Partners is thrilled to announce we closed out the 2016-2017 school year with over $30,000 in donations to Prestwood Elementary as part of our Prestwood Direct partnership!

In their latest school newsletter “Prestwood Connection,” the PTO (Parent Teacher Organization) stated “we are beyond grateful for their continued commitment and contribution to our school and the tangible benefits the funds from this program have provided to our students and educators! If you or someone you know are considering moving or selling please give them a chance to show you just how much they step up to support the relationships they represent!”

In the Fall of 2015, Terra Firma Global Partners entered into the three-year, highly innovative agreement of financial support with Prestwood Elementary School in the City Sonoma. Terra Firma has pledged to donate 10% of every commission earned from a sale/closing in The Prestwood School “Sphere of Influence,” comprised of the Eastside, Carneros and Four Corners neighborhoods in Sonoma.  This partnership, “Prestwood Direct”, is the funding mechanism that generates funds to enable a host of school programs that Prestwood Elementary would otherwise be unable to afford.

Here are a few of the highlights that the Prestwood Direct fund paid for this past year…

  • Maker Lab
  • iPads to support the Coding Program
  • Classroom aides in every classroom for an hour each day
  • New headphones for the computer lab for new state testing
  • Teacher grants for grade level enrichment

Unlike individual Realtor donations and/or sporadic fund raising, this program provides a long- term horizon of funding to the school with the goal of increasing year-over-year donations based on the success of the program and the ability for Prestwood Elementary School and Terra Firma Global Partners to mutually benefit. In consideration for receiving funds from Terra Firma, Prestwood has made a commitment to actively support and promote the company within the Prestwood district and families to engage or refer Terra Firma in the sale or purchase of real estate in the school’s Sphere of Influence.

“Terra Firma is excited to be participating in a very significant way to support our local public schools and community in Sonoma Valley. We look forward to looking for other opportunities to scale this kind of program into other market areas we serve. We are especially proud of our individual associates who have agreed and embraced such a generous commitment from their respective earnings as well. They give our company’s core value of donating “time, talent and treasure” real meaning.” said Heidi Rickerd-Rizzo.

 

 

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Move in Ready?

Move in Ready?

“Move in Ready” or “Move Right in” is a common headline on many listings (guilty as charged). But what does that really mean? It may indicate the home, although dated, doesn’t need any major repairs other than cosmetic upgrades. Or in some cases, it means the home has been decked out with new paint, maybe a kitchen/bath remodel, updated flooring, lighting, windows, etc. But in either case, the spending is by no means over once the sale is closed. The down payment and mortgage payments are just the beginning… Affectionately referred to as “the joys of home ownership”… the expenses that come along with furnishing and maintaining a home are worthy of thoughtful consideration when you are deciding on buying a home. This article offers great insight into what Buyers buy after moving in…

 

 

What Do Home Buyers Buy after Moving

Source: National Association of Home Builders via CAR.org

 

Furniture, appliances, and remodeling projects are among the biggest expenses for new homeowners, who spend an average of $10,600 in the first year of home ownership, according to a recent analysis by the National Association of Home Builders. New owners spend an average of $3,778 on furnishings alone, according to NAHB’s analysis. Here are a few common expenditures recent home buyers made:

Living room chairs and tables: $687
Dining room and kitchen furniture: $345
Window coverings: $215
Sofas: $700

Property alterations and repairs (particularly outdoor additions and alterations such as a new driveway, walkway, or fence): $3,729

Appliances (particularly washers and dryers, lawnmowers and other yard equipment, and computer hardware and systems): $3,094

A survey conducted by Home Innovation Research Labs shows that two-thirds of new homes built in 2015 came with no washer or dryer; 36 percent had no refrigerators. Most new homes, however, did come with cooking stoves, ranges, and ovens.

Click here for the complete article

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Is it Worth It?

Is it Worth It?

To upgrade or not to upgrade?

This is a question we face often from our seller clients. In our experience, fresh interior paint, landscaping, and system upgrades (furnace/AC, roof, water heater) are smart ways to spend your pre-list budget. The vast majority of buyers are really only considering turnkey homes, so anything you as the seller can do to minimize a  buyer’s move-in “To Do List” will benefit you greatly when you put your house on the market! Of course, some homeowners are interested in updating their home for their own enjoyment and use. Increasing your home’s functionality for your own use has its own inherent value above and beyond the increase in resale value. But at the end of the day, if you are wondering what projects to take on in consideration of increasing functionality AND re-sale, this article from AOL Finance may be helpful for you!

Source: AOL Finance via CAR.org

Not every improvement made to a house will ultimately raise its value. Homeowners who are looking for projects that will pay back at resale would be smart to consult a local real estate professional to determine whether the project they have planned would help boost their home’s value.

The key to successfully remodeling your home is knowing which projects are going to actually benefit you in the long-run and which ones are merely a waste of your time.

Among projects that may not pay as much back at resale as others include swimming pool installations, home office remodels, master bedroom upgrades, sunrooms, special-purpose room, kitchen remodels and bathroom upgrades.

Click here for the full story

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Source: Terra Firma

Fannie Mae to Loosen Mortgage Requirements

Fannie Mae to Loosen Mortgage Requirements

Good news for potential buyers! Some loans will soon allow for a little more wiggle room when it comes to qualifying ratios, allowing buyers to be more competitive in a bidding situation or qualify for a certain purchase price when they were previously not able to!

Need a referral to a trusted mortgage professional? Just email us at info@terrafirmaglobalpartners.com! Happy house shopping!

Source: California Association of REALTORS®

Fannie Mae will ease its loan qualification requirements, raising its debt-to-income ceiling from 45 percent to 50 percent on July 29. The move could make it easier for a larger number of new buyers to qualify for a mortgage, particularly millennials who may be burdened with student loan debt.

The debt-to-income ratio compares a person’s gross monthly income with his or her monthly payment on all debt accounts, including auto loans, credit cards, and student loans. It also factors in the projected payments on the new mortgage. Lenders see applicants with lower debt-to-income ratios as less at risk of defaulting.

 

Fannie Mae, Freddie Mac, and the Federal Housing Administration have exemptions that allow them to buy or insure loans with higher ratios than the federal rules, which are set at a maximum of 43 percent. The FHA allows debt-to-income ratios of more than 50 percent in some cases. In a recent study, Fannie Mae researchers looked at more than a decade and a half of data from borrowers with debt-to-income ratios in the 45 percent to 50 percent range. They found that a significant number of these borrowers had good credit and were not prone to default.

Not everyone with a debt-to-income ratio of below 50 percent will be approved. Borrowers will still be closely vetted by Fannie’s underwriting system to examine their complete application, including income, down payment, credit scores, and more.

 

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Source: Terra Firma

Artisan Group in Tahoe

Artisan Group in Tahoe

Last week the Terra Firma Global Partners team took a little “road trip” to join their fellow Artisan Group members at their annual real estate symposium in beautiful Lake Tahoe! Representatives from the six (now seven! Welcome Zephyr SF!) Artisan Group firms came together for the annual networking opportunity which included an exclusive estates property tour, luxury real estate symposium and networking event.  Hosted by Chase International, the event brought together some of the most successful and experienced agents in California and Northern Nevada.

The event kicked off with a Luxury Home Tour of 24 of the most prestigious properties currently listed for sale (by Chase International) throughout the entire circumference of the lake. Prices for these magnificent homes and estates range from $1 million to nearly $20 million. The crowd favorite was of course the $20M lakefront home located in Homewood, complete with six bedroom suites, a large game/media room with pewter-covered bar, sauna, and living room with folding glass doors that opens to a spacious deck, ideal for enjoying the gorgeous lake view!

Following the home tour, the group enjoyed the chance to mix and mingle, match faces with names, and enjoy each other’s company at the evening lakeside cocktail party located at “Twin Pines”, a rustic, yet elegant Julia Morgan-Designed Lakefront Estate. Built in 1928, the historic residence, featuring rolling lawns to the water’s edge, was the ideal venue for members of the Artisan Group to network and socialize with other members of this prestigious organization. The delightful evening reception was hosted by Clear Creek Tahoe, a private golf resort.

Lastly, the main event was a symposium on luxury real estate held at Edgewood Golf Course Clubhouse — also lakeside! (We were spoiled by the choice of venues this weekend, truly!) The keynote address was delivered by Mr. Jeff Culbertson, a highly respected 39-year veteran of the industry, who was named one of the “Most Influential Real Estate Executives” by Real Estate Executive Magazine. Following the keynote speaker, a panel consisting of leading luxury agents shared insights and best practices when working with the affluent market. Jaime Pera represented Terra Firma Global Partners on the panel of top agents, all members of Artisan luxury brokerage firms.

All in all, it was an awesome event in a fabulous location, networking with the best of the best! As Sonoma associate Tracy Reynes declared, “I’ve never handed out so many business cards at any networking event in my life!” … The hallmark of a successful networking event!

 

The Artisan Group is an alliance of premier independent luxury real estate firms throughout California and Northern Nevada who have joined forces to create a greater level of service for their clients and agents. For more about The Artisan Group and the areas we serve, please visit the website at ArtisanGroupRE.com.

 

 

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TFGP Named “Best of North Bay Business”

TFGP Named “Best of North Bay Business”

We are thrilled to announce that we have been recognized by NorthBay Biz for being a 2017 award winner in their 28th annual readers poll. They received more than 2,250 ballots containing 54,000+ votes in the 37 different categories. There were more than 1,000 companies and individuals who received votes, so it’s quite an honor to have emerged as a winner!

We have also been recognized by North Bay Biz for the 5th consecutive year as on of the “Top 500 Businesses in the North Bay”.

A huge THANK YOU to our team of associates and support staff. We wouldn’t be where we are today without them. Read more about our story and team here!

 

 

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Source: Terra Firma

Tips For Getting the Best Deal on a Mortgage

Tips For Getting the Best Deal on a Mortgage

SOURCE: The Fiscal Times, via C.A.R.

With the spring housing market in full swing, prospective buyers are battling rising prices and tight inventory. Still, it’s not all bad news for today’s buyers. While lending standards are far stricter than they were during the height of the housing boom, it is nevertheless possible for most qualified borrowers to get a loan these days. Here are a few tips. You can read the full story here. 

Start the process early. If you’re serious about buying a house this year, you need to meet with a mortgage lender now. That will give you a better idea of how much you can realistically borrow to purchase a house. You’ll also be able to get a pre-approval letter, required by most sellers these days before they’ll consider your offer.

Shop around. Get quotes from at least three lenders, including a national bank, a local bank or credit union and an online lender. Having multiple offers may help you negotiate with the lender you ultimately end up using for your mortgage.

Understand private mortgage insurance. While putting down 20 percent will typically get you the lowest monthly payment, a growing number of lenders now also offer low down payment loan programs in which you can put down as little as 0 percent on the loan.

Ask about all your loan options. In addition to figuring out how much you’ll put into a down payment, make sure you’re considering all available loan options, including fixed and adjustable-rate mortgages, and shorter-term loans like 15-year mortgages. Consider locking in your rate since mortgage rates can fluctuate.

Remember you don’t need to borrow the max. If you’re in a competitive market where bidding wars are common, it can be tempting to find a home or make an offer for the maximum amount for which your lender has approved you. Before you do, consider the short and long-term impact of those mortgage payments on your budget and lifestyle.

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Source: Terra Firma

Marin Market Update

Marin Market Update

Marin Associate Jaime Pera offers keen insight into the Marin real estate market as well as strategies for sellers… a must read for those buying and selling in Marin!

The 2017 Marin real estate market continues to move forward at a brisk pace and remains strong even though inventory is lacking. Buyers are definitely engaged as between February 1st and May 31st single family dwellings sold on average 3% over asking. Of the 645 properties that were listed and sold through the MLS during this period a whopping 345 or 53.5% sold over asking, with the highest over asking sale being 2360 Paradise Drive in Tiburon which was listed at $2,250,000 and sold for $3,300,500, or 47% over asking. Additionally, there were also 66 off market sales during this period with 24 homes (36%) selling over asking. Open house activity has been strong, property showings are up, and property viewings on the internet are up.

When you dig deeper into the numbers however the most startling statistic is that between January and May 2017, when ten fewer homes sold than the same period last year (695 vs 705) there were 109 fewer new listings that came on the market when compared to last year (1,008 vs 1,117), a 10% decrease (and 16.8% decrease when compared to same period in 2015). So in other words, the market managed to keep pace with last year with fewer listings! In May 2017 alone we had 61 fewer listings come on the market than May of last year (207 vs 268). If this trend continues I expect we will have at least 10% fewer closed sales in 2017 than 2016, and possibly more (1,870 single family dwellings sold in 2016)!

This leads me to the conversation of rising home values. Yes, they have continued to rise and given the trend of declining new listings I expect prices to continue to rise through 2017. I have calculated that prices for single family dwellings have risen 7% on average through May 2017 (1.4% per month). If this trend continues I expect home values to rise at least 10% in 2017. This means that a home with a market value $1,000,000 on 12/31/16 will have a market value of $1,100,000 on 12/31/17. This is great news for homeowners but not so good news for home buyers.

Anecdotally, I can tell you that Marin is very coveted and I am seeing an increase in out-of-area buyers. As a general rule these buyers are educated, financially well-off, have a plan, and are in perfect position to purchase homes in Marin. Many are coming from San Francisco and the Peninsula where prices are generally higher than Marin prices. It is this group of buyers that often times present all cash offers.

Another important development to note is the continued decline of single family dwellings that are priced under $1,000,000. As of May 31st only 65 single family dwelling listings or 19% of total listings were priced under $1,000,000 (75% of which were in Novato and San Rafael). Meanwhile, the percentage of listings between $1,000,000 and $2,000,000 increased to 37% from 33%, and percentage of listings over $2,000,000 declined from 47% to 44%.

Note to Sellers:

There is no doubt that this is a great time to sell! If you have been considering selling either to upsize, downsize, or relocate, I wouldn’t wait, I would do it now! Unemployment rates remain low (currently 3% in Marin and SF), and 30 year fixed rate loans are averaging 3.95% vs 3.64% last year. Furthermore, it is difficult to predict how long this strong real estate market will continue so if you have been thinking of selling this might be a good opportunity to review your options. The real estate market has historically run in 10-year cycles. The beginning of the last downturn began in 2006-2007. If this pattern repeats itself the next downturn will start in sometime in the next two years. Keep in mind that cycles vary by market and price range.

A big reason why inventory levels are declining is not only because buyer demand is strong but because sellers have anxiety about upsizing or

downsizing in a market where there just aren’t enough homes for sale, and are worried that they are going to sell their home and not find a suitable replacement. Sellers that have cash or can be approved for two mortgages control their own destiny. What I can honestly tell you is that with good planning and execution and by employing one or more of the following strategies it can be done!

Seller in possession after close – Seller rents back from buyer for 60, 90, or even 120 days after close of escrow to allow time to locate a replacement home. Often times we successfully negotiate all or a portion of the rent back period is at zero cost to the seller. Seller can now make an all cash offer on their replacement home, an enormous advantage in today’s market.

Sale subject to seller finding a suitable replacement property – The seller makes it known when the property is listed that they will move forward with the sale of their home on the condition that they locate, enter into contract, and remove contingencies on their replacement home.

Sell then move into temporary living quarters – Moving twice can be stressful but with this strategy sellers maintain strong leverage with buyers, have time to locate a replacement home, and are in position to make an all cash offer on their replacement home, an enormous advantage in today’s market.

Seller locates a replacement home and enters into a contract that states that seller will move forward with the purchase of the replacement home after close of escrow The success rate will be lower if the seller’s home is not on the market when this offer is made or if there is a lot of interest (multiple offers) on the targeted replacement home. This strategy is more likely to work when the targeted replacement home has been on the market for an extended period of time and that seller is running out of time and options.

Bridge Loans – Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer’s new mortgage in the event the seller’s home has not yet sold. The bridge loan is secured by the buyer’s existing home. Underwriting is based on “make sense” underwriting approach rather than FICO or debt to income approach. Some lenders who make conforming loans (needed to close the transaction on the target home) exclude the bridge loan payment for qualifying purposes.

Security backed line of credit (margin loan) – This arrangement with your brokerage firm allows you to borrow from 50 to 95 percent of the value of the assets in your investment account depending on the value of your overall holdings and types of assets in the account. A margin loan may also allow you to avoid potential capital gain taxes because you don’t have to liquidate securities for access to funds. Plus you might also be able to continue to receive benefits of your holdings, like dividends, interest and appreciation.

Borrow against your 401k account – There are two types of 401k accounts. Under an employer sponsored plan you may be able to borrow funds from your 401k account for a 5 year period at a moderate interest rate (your monthly payments are automatically deducted from your checking account and are credited back to your account). With a self-directed 401k account you can withdraw and use funds for up to 60 days and not be charged with a fund distribution or incur taxes and penalties for early the withdrawal of retirement funds as long as the money is redeposited into your account within the 60 day period.

Home Equity Line of Credit – Useful for down payments on your target replacement home. Works best if you already have a HELOC set up before you list your home for sale since most banks will not approve a HELOC if your home is on the market.


 

 

Jaime Pera is a client focused, relationship based Realtor who has extensive experience in guiding clients through the real estate transaction. He firmly believes that the home buying and home selling experience should be collaborative and fun and that clear-cut goals and consistent communication are keys to achieving this. Jaime devotes quality time to studying real estate market trends and locating opportunities whether for personal use or investment. Jaime works in our Marin County Office and can be reached at 415-505-7197. You can also visit his website at www.LifeinMarinCounty.com

 

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