Why I only refer clients to lenders I trust!

I won’t be pasting the entirety of Jay Vorhees of JVM Lending’s blog about this here. I’ll just hit the major points. But this is a perfect example of why I only refer clients to lenders I trust. Read on:

Last week, a borrower came to us to discuss her refinancing because she had lost trust with the lender she was working with (America’s largest non-bank lender). She was trying to refinance the house she lived in but it was owned by her Dad and she was not on the title, so a refinancing was impossible.

In any case, she was trying to refinance the house she lived in but it was owned by her Dad and she was not on title.  So a refi was impossible – something the other loan officer failed to comprehend – and it had to be structured as a purchase.

Further complicating things was a “gift of equity” down payment, the need for “cash out” for improvements, and the need to avoid capital gains taxes for the seller – all issues that the other loan officer had zero understanding of.

In any case, one of our Mortgage Analysts quickly figured out how to structure the loan and then re-locked the same borrower with the same lender via our correspondent relationship but at a 1/2 percent lower rate. 

I share this story not to make JVM the hero but to once again warn buyers away from the big call center mortgage companies. The call centers stuff bodies into cubicles to do nothing but sell.

Those “bodies” often do not have the skill to close transactions when there is even a small amount of complexity, and…their rates are way higher to boot.  

That’s Jay’s horror story about call centers. It does a great job of explaining why I prefer to refer specific lenders I know who will always get the job done. It creates a smoother process for everyone that way. Most banks or Quickens of the world don’t fully underwrite upfront; it requires a lot of paperwork initially, but it creates a very smooth process to closing. This way the buyers are aware of any potential issues before you ever write an offer. They also don’t tell you that once you are in contract, you are handed off to loan processor who you have never spoken with and many loan agents are on to the next approval and are no longer in the immediate loop. Communication often falls apart at this point. Your loan officer may be local, but the processor could be in a different state.

I currently have a new home buyer who is shopping three different lenders looking for the best rate. With two of them, I expect possible delays and a questionable overall experience for my buyers. One is fantastic, but a first-time home-buyer doesn’t understand those nuances far outweigh an eighth of a point difference in an interest rate. Hopefully whoever they choose will do right by them and it will be smooth sailing.

I just closed on a house (blog to come on Thursday). When we first met, they were talking to one of the largest non-bank lenders. I recommended they speak to JVM and just compare the experience and decide who they would like to work with. They closed with JVM and when I handed them the keys, they remarked at how smooth the overall process was for them and when compared to their friends who recently purchased and had a loan with one of the big banks, they said their lending experience was horrible.

The Fed lost control over interest rates – so now what?

My friend Jay Vorhees of JVM Lending had a great blog recently about The Fed and interest rates. Here is the article below, with my two cents included:

Image result for the fed

Rates are at an eight-month low right now – about 1/2 percent lower than they were at their peak in October. I should add though that they still remain about 1/2 percent higher than they were last year at this time. So, did the Fed finally achieve its stated goal of pushing up rates?

Not in the way anybody expected.

According to former Senate Banking Committee Chairman Phil Gramm, the Fed now has less control over interest rates than at any other time in its 105-year history. I won’t go into all the details, but it has to do with its massive bond holdings (almost $4 trillion) and the excess reserves in the banking system. You can read more about it here.

The Fed can influence rates in the short term with its actual policies and statements, but the markets now seem to have much more say in the matter than the Fed. We are watching this currently, as the Fed’s short-term rate increases are not resulting in long-term rate increases like we have seen in the past.

What this means is a repeat of what I have been saying repeatedly over the last several years – nobody really has any idea of what will happen with rates (or anything else for that matter – remember Mr. Trump’s election?). A slowing world economy could continue to bring rates down, or a resurgence in bank lending (according to the article referenced above) could spark an inflationary spiral that will send rates through the roof.

Suffice it to say that we will see a lot more volatility in both the stock and bond markets for a long time to come. What is really scary though is what will happen when everyone figures out that there is no way that the world can ever pay back the $250 trillion in worldwide debt that has built up over the last ten years. When that happens, today’s environment will seem like very calm sailing.

Bond Market

Lastly – despite the uncertainty, many pundits are now predicting low (and even declining) rates throughout 2019.

Great stuff from Jay, right? So, here are  my thoughts: The Fed came up with four rate hikes last year, and now the mortgage rates are lower than expected as stock market sways are leading people to bonds. What that means for the real estate market, especially locally is that more buyers maybe taking advantage of getting in now.  I am starting to see the market pick back up, but this year it didn’t happen on January 3rd, didn’t really see it until the weekend after January 7th when the kids returned to school from their holiday break.  January has been interesting the last few years, as buyers have been out, but sellers want to wait until March and they often loose that burst of lots of buyers and no inventory.   At any rate, nobody has a crystal ball and I believe we will be on a wild ride as the stock market will have more volatility (as it is suppose to).

Reasons to buy in the off-season!

Lizzie Weakley of RIS Media’s Housecall wrote a blog recently about why it’s okay to buy in the off-season. I want to piggy-back off of that here. First of all, yes, there is an “off-season” in real estate. For the most part, winter is the time of year that the industry slows down in markets around the country.

Image result for house in snow

However, there are a few good reasons why the off-season might actually be a great time to buy a home, especially in the Bay Area! As Weakley lists, there are fewer buyers crowding the markets. This decrease in competition is an excellent advantage for any prospective home-buyer. On that note, sellers seem to accept lower bids in the winter because of the low competition.  In our area, we also don’t have to worry about trudging through snow storms to see a listing (one of the major reason for a slow-down), in addition to the holidays when most people are entertaining or having family visit.

Everything can move a little bit faster in winter. Home inspections can get done quicker, and mortgage companies tend to finish paperwork faster, too, because – again – they don’t have as much traffic.  I should mention that in the Bay Area, with our warmer climate in Spring, the winter “off-season” tends to be much shorter than in other places, but still usually extends for a couple months at the end of the year and wraps around into January (we are nearing the end of the off-season now).  Often buyers are out in January, but the sellers have not yet readied their home for sale, so we often find a switch back to a seller’s market this time of year.  We will see what 2019 holds.

Image result for real estate sign

One more perk to buying homes in the winter? Us real estate agents have more time to dedicate to you! Sure, we love to give as much personalized attention as possible to each and every client, but the truth of the matter is that we get busy in peak seasons too. When I can focus all of my energy on one listing, it’s almost always smooth-sailing and everything gets finished at the speed of light!

Next time you are thinking of buying a home, and read that you should wait until the weather warms up again, give it a second thought. There are some big-time perks to buying in the off-season!

Home affordability at lowest point in a decade

I recently read a blog from my friend Bob Schwab, a certified mortgage consultant with Finance of America, that had me thinking. It’s about how the median home price in the fourth quarter of 2018 was the least affordable level since the third quarter of 2008, according to statistics from ATTOM Data Solutions.

Image result for real estate market

But, it’s not all doom-and-gloom on that front. Nationally, 58 percent of counties analyzed by the data report recorded an improved home affordability ranking on a quarter-over-quarter basis. According to Daren Blomquist, SVP at ATTOM and quoted in Bob’s blog, “home price appreciation falls more in line with wage growth,” and “high-priced areas such as San Diego, Brooklyn, and Seattle saw annual wage growth outpace annual home price appreciation.”

Here are my two cents on this, and about what it means in the local real estate market: You can’t time the market. Buying over renting is always a better long-term strategy.  I have had buyers looking this December and were able to quickly get into a home that had some healthy price reductions (really it finally just got priced right) and we have been able to negotiate on repairs.  They also found a home that was about $70k below their top end budget. They were motivated, they just had a baby, wanted a house, and were very methodical.  They will simply build equity just by paying their mortgage every month and doing some improvements.

Homeowners: Cash in on all-time high equity

I came across a CNBC story recently about homeowners and the $14.4 trillion in equity they’re about to be able to dig into. New research, according to the article, suggests that home equity is about $1 trillion higher than its peak in 2005 before the Great Recession.

With interest rates rising on consumer debt, the article states, home equity loans or lines of credit could be an appealing option for consumers looking to borrow money at a lower cost. Homeowners no longer need to refinance just to take out equity. This is the aspect of the story I really want to focus on. First, a graph from the story:

Why consumers tap their home equity

Use
Description
Percent using*
Major expense Take cash out, often for a large expense like home remodeling 91 percent
Debt consolidation Consolidate balances from other accounts 41 percent
Refinance Refinance to get a better rate or term 23 percent
Piggyback Concurrent with a mortgage origination, often used for down payment 4 percent
Undrawn Not used immediately (i.e., a rainy day fund) 2 percent
[Source: TransUnion, CNBC story]
(*Based on 2.4 million home equity loans originated between July 2016 and June 2017)
During the meltdown, people were using their homes like they were ATMs; as interest rates dropped they kept refinancing and taking out money to buy a boat, a big trip, etc., but when equity dropped, or they lost their job, they were in trouble. Use a HELOC (Home Equity Line of Credit) wisely. If it helps you get into a home or remodel a home to add value, it will be a smart decision. And always remember as rates go up, so does the interest on a line of credit.

5 reasons why this winter is the best time to buy

Jay Vorhees at JVM Lending put together an interesting blog post recently, and I want to share that with you below. Essentially, he finds five reasons why this current winter season is the best time to take advantage of the real estate market and buy a house! Enjoy:

Most of our agent-readers well know why winter can be a great time to buy from a real estate perspective. I am nonetheless repeating a few of the obvious reasons while also illuminating a few less-obvious mortgage-related reasons.

Image result for real estate agent in snow

1. Rates Hit Six Week Low! While rates have been climbing for most of the year, they hit a six week low last week in response to the oil glut and signs of a softer economy. Given that the Fed will likely continue to push rates up next year, this brief rate-reduction gives buyers a short-term opportunity to lock in a relatively low rate.

2. Lender Incentives. 
Many lenders are offering extra incentives to borrowers right now simply to maximize loan volume during a slower time of the year. This includes JVM of course, as we are offering a $500 closing cost credit to any buyer who gets into contract from now until January 31st. This does not apply to borrowers who are already in contract and locked.

3. Motivated Sellers. If someone is willing to go to the trouble to sell their home during the holidays/winter, they are usually more motivated to sell and willing to negotiate.

4. Fewer Buyers/Less Competition. There are fewer buyers and a lot less competition for homes. Many buyers pull out of the market in the winter b/c they don’t want to take the time to house-hunt during the holiday season or they don’t want to buy in the middle of the school year (if they have kids).

5. Seeing Properties at Their Worst. 
My neighbor has drop-dead gorgeous crape myrtle and Japanese maple trees all over his yard. In the spring and summer, his yard is an oasis of color. In the winter, however, his yard looks like a war zone. Buyers get to see homes at their worst in the winter, avoiding unpleasant surprises and knowing that their dream home will only look that much better, come spring.

The internet conveniently has numerous articles backing up my points above, in case any readers don’t want to take my word for it. Here are two: The Best Time of the Year to Buy Property from Financial Samurai; and Mortgage Rates Pull Back from Freddie Mac’s website.   

Two more successful closings!

I’ve had a streak of closings recently, including a long-time client who I’ve worked with seven different times now. She moved to Southern California a few years ago, so this investment property in Antioch will likely be my final transaction with her. She had become a friend and a wonderful client.  Thank you, Lori, for your ongoing support and friendship.
The other closing was 1944 Eagle Peak in Clayton and it was referred to me by a past client. Thank you, Jeff!
The pictures below are of a beautiful home that was my client’s respite. They remodeled it to their tastes and, in addition, it was an end unit overlooking Oakhurst golf course; a very peaceful setting.
Check out my client’s review:
My clients David and Nancy are getting ready to retire and move closer to their kids. The couple from Dublin wanted to live closer to their grandchildren in Clayton. They had a condo to sell in Dublin, thus it was a contingent offer that went smoothly and quickly. All parties were happy! As you can see from these pictures, they purchased a beautiful home with rolling hills beyond their back fences. The hardwood floors and sleepy gray/clean white theme throughout complement the peaceful backyard and the cozy bedrooms. I love a happy end to a real estate experience and connecting with wonderful people who I truly like. Give me a call to see what your real estate story could become.

The first-time buyer’s guide to real estate

Jim McKinley wrote a blog that I’ve made slight edits to below. Let me know what you think!

Buying your first home is exciting, but it can also be full of confusion, fear, and apprehension. After all, buying a home is a huge commitment, and if you’ve never done it before, there can be a lot of questions. However, by getting informed and preparing yourself appropriately, you can avoid many of the common pitfalls of buying your first home and step into this new stage of your life with confidence. To help everything go as smoothly as possible, follow these tips and tricks.

Get your Finances in Order

Many people might assume that it is time to become a homeowner based on their life situation, such as recently landing a well-paying job. However, no matter where you are at in your life, it takes quite a bit of financial preparation to correctly prepare for buying a house. First and foremost, you need to ensure that you have a solid budget. Some people might encourage you to put this off until after you buy your house, but your budget is an indispensable tool to figure out how much home you can afford. Secondly, save up a reasonable down payment. According to the Motley Fool, squeezing out enough money for a down payment might require a lot of expense cutting. We recommend using a savings calculator to help you figure out how much you’ll need to save each month.

Get Pre-Approved

Before you even begin to look at houses, go to some lenders to get pre-approved for a mortgage. This is not as scary as it might sound and can take a lot off your plate later. To be approved for a mortgage, the lender considers your credit score, how much you make, the amount you put down and your debt-to-income ratio, among other things. There are many different financing options available and a good lender will advise you accordingly.

Find a Great Agent

A good real estate agent can provide you with huge benefits when it comes to looking for your home. The housing market and lingo can be confusing. When you work with a real estate agent, they can advise you on how to write the best offer and discuss the current market so you can focus your energy on searching for a home. According to The Balance, an agent is a great asset; they can ask questions for you and obtain disclosures. Real estate agents are particularly helpful for first-time homebuyers who might not be aware of the home-buying process and a good referral source for reputable lenders.

View Houses in Your Area

Now that you have all the preliminary work squared away, it’s time to start looking at houses. Preferably, you’ll want your real estate agent to set up showings based on your criteria. Your agent can point things out that you might have missed and help gauge whether the home is listed for a good price.

Image result for house for saleNegotiate your Closing Costs

Once you find your perfect house, you need to close the deal. There are fees tacked on to buying a home called closing costs. Everything from lender fees, title insurance to title search fees. To the average person, these can begin to sound like a second language. You can shop a rate, but many lenders will quote you the lowest rate of the month, because until you lock in a rate, it is a moving target. Look to reviews and potentially how smooth your closing will go. Review your Loan Estimate closely and ask about all fees you do not understand. Once you understand everything, negotiate with your lender for lower fees.

Move

Give yourself more than enough time to pack and move to prevent yourself from rushing. If you hate packing, you might even want to consider hiring a moving agency. If you have children, you might drop them off at a family member’s house to give yourself a couple hours of uninterrupted packing.

Home buying is an exciting, nerve-wracking process. By following these steps (and hiring the right lender and agent), your can home-buying process will be a lot smoother.

Congrats to my clients who bought in Pleasant Hill!

I want to congratulate my recent client Vimi and her partner Liz for closing on their new home! They celebrated in a unique, cultural way that I found really interesting and was thankful to be included in such a personal experience. As you can see in some of the pictures below this was a house blessing which they called a puja. It’s always exciting to help a client find their home, get their offer accepted, and then close. This was definitely a first; they were not allowed to move in until the blessing occurred and they spent the night in the vacant home after the blessing!

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Vimi is of Indian (Hindu) descent and this is how it was explained to me:  A “puja” ritual, which is performed many times to mark lifetime events (birth, wedding, new home, etc.), is not required in their religion but many do it. Some Hindus do a daily puja ritual in the home, some do it at regular temple ceremonies or festivals, and some don’t do it at all! It was a very cool spectacle to witness. We started with an incense stick, flower petals, bananas, spilled rice, boiling milk, fire, and red and yellow powders (that, when mixed with water, allowed them to mark the Om symbol on the frame of the door). There were songs and hymns, and personal prayers.  A Ganesha statue was also part of the ceremony, who is the remover of obstacles. As the god of beginnings, he is honored at the start of rites and ceremonies. What a beautiful way to honor and celebrate a new home.

Everyone has their own way to celebrate buying a new home. I was honored to be a part of this ceremony, and am really happy that I was able to help Vimi and Liz find their home.