Over the past couple of weeks, our blog has touched on the historically low interest rates available to buyers looking to purchase real estate with a home loan.  Not only are these low rates good for buyers, but current homeowners with mortgages have been coming out in droves looking to refinance their home loans down to the lower interest rates.  In an Orange County Register article from last week titled “Refi frenzy: Tips for borrowers,” a couple of mortgage brokers doled out some excellent advice to homeowners thinking about refinancing their current loans.  They touch on an array of topics, from what banks are currently looking for in refinance applications (great credit, equity in the home) to shopping around outside of the big lenders for better rates with low costs. 

Refinancing your loan may be as simple as getting on the phone with your current lender and asking if you can obtain a lower rate; however, take the time to look at your current situation to make sure that refinancing is a viable option for you.  The article uses a great example…if you are 10 years into paying off a 30-year loan, why would you want to start the 30 years over again just to drop your interest rate by a small fraction?  In this scenario, it may pay to refinance to a smaller loan term (15 or 20-year, whose rates are also historically low) rather than beginning the interest payment process all over again.  The mortgage brokers use more scenarios to convey their points, making this article a great read for anyone thinking about a refi on their loan.

Please click on the following links to read our recent blogs on falling interest rates and the rise in refinancing applications.  If you have any questions about purchasing or selling a San Clemente home or condo, please do not hesitate to contact us.

Last week we posted a blog, “Mortgage Rates Continue to Fall to Historic Lows,” which touted the historically low mortgage interest rates, both from the 30-year and 15-year fixed indexes.  As we stated, this is great news not only for buyers, but for current homeowners who could potentially refinance and gain a lower interest rate.  Today on CNNMoney.com, an article was published about mortgage refinancing applications: “Refinancing applications at 15-month high“.  Due to these incredibly low interest rates, mortgage refinancing applications hit a 15-month high last week according to the Mortgage Bankers Association.  The article shows an example of what can happen to your monthly mortgage payments when you refinance to a lower rate; in the example, a homeowner with a 6.5% interest rate on a $200,000 mortgage could save over $250 a month if they refinanced to the current average 30-year rate of 4.5%.

If you are a current homeowner, now may be the time to speak with a mortgage specialist to determine if you are eligible to refinance your mortgage to obtain a lower interest rate.  Buyers are not the only ones who can take advantage of these low rates, so don’t leave yourself open to regret if these low interest rates pass you by.  In these difficult economic times, saving a few hundred dollars per month is nothing to scoff at, and all it takes is a phone call to your lender to see what can be done with your current mortgage. 

According to the article “30-year mortgage at lowest rate since 1971” on CNNMoney.com, the 30-year mortgage rate fell Thursday to 4.44%.  This is the lowest the 30-year rate has fallen since Freddie Mac began tracking the rate in 1971.  The 15-year rate fell to 3.92%, also the lowest since Freddie Mac started tracking this rate in 1991.  This marks the fourth consecutive week that the 3o-year rate has fallen to record lows.

This is great news for buyers looking to purchase San Clemente real estate or for homeowners looking to lock in a low fixed rate on a refinance.  With mortgage rates staying at historical loans, money has never been cheaper to obtain. 

If you would like more information on purchasing a San Clemente home or condo, please do not hesitate to contact us.

An article on the Bloomberg BusinessWeek website illustrates that, according to Freddie Mac, 3o-year fixed mortgage rates fell to an average of 4.93% this week, the 3rd-lowest rate on record in the United States.  As has been the case for the past year or two, interest rates on a variety of mortgage types (fixed and adjustable) continue to hover around historic low points.  However, a key point to take from the article is found in a quote from Metrostudy chief economist Brad Hunter, who states that rates are expected to climb, maybe as early as April.  If you are still on the fence about jumping into the San Clemente real estate market, don’t wait to long as it is an absolute certainty that rates will rise.

To read the complete article, click here: “Mortgage Rates on 30-Year U.S. Loans Fall to 4.93%”

To find out more information about current listings in the San Clemente real estate market, please contact San Clemente Coastal Living’s residential consultants.

Are you a troubled borrower and want help, but don’t know where to turn?  Do you want to find out if you are eligible for the Obama’s Administration’s mortgage modification and refinancing program?  There are free solutions available to you.

You can apply for help in working with your mortgage servicer through a local Housing and Urban Development (HUD)-Approved Housing Counseling Agency.  Orange County approved HUD Agencies include:

• Fair Housing Council of Orange County
• Neighborhood Housing Services of Orange County
• Consumer Credit Counseling Services of Orange County

If you want to find out if you are eligible for a loan modification and refinance under Obama’s plan, you can apply online for help from your mortgage servicer through MakingHomeAffordable.org .

For a list of local housing counseling resources and the latest events, visit the Orange County Home Ownership Preservation Collaborative or the website for the United States Department of Housing and Urban Development.

For a complete list of current San Clemente Foreclosures and Short-Sales, please contact us via the link or call us directly at 949-281-5444 and we will gladly provide it. 

While getting pre-approved is a must in today’s market in order to purchase San Clemente real estate, buyers need to be particulary careful not to alter their credit until the purchase is final.  Making the wrong move after getting pre-approved could result in your entire purchase falling apart.  In order to ensure your loan gets funded during the purchase process, follow these tips:

• Do not change jobs.  One factor mortgage companies consider is the length of present employment as part of your risk profile and job stability is a key factor.  Even if the new job may be higher paying, try and wait if possible until you move into your new San Clemente home.
• Continue making your payments on time.  Do not be late on any payments and if you are, contact your creditor and ask if they can remove the late payment.  Often times creditors will grant this on a one-time basis.  Keeping your credit report clean during the process is crucial.
• Keep credit card balances low.  If you push your credit limits to their max during the process of funding your loan, this will seriously impact your credit score.  If you fail to keep your credit limits low, this may come up during the final review of your file before funding your loan.
• Do not take on new debt.  While it may be tempting to start taking on some of the big purchases for your new home, do not  do so until after you close your sale.  Taking on new debt during this time may drastically effect your debt-to-income ratio and result in a failure to obtain financing for your purchase.
• Communicate with your lender.  Always be available during the loan process as the processing staff may need to contact you for additional information, so be sure to inform your lender if you will be out of town or unavailable.
• Tell your financial story upfront.  Tell your lender about any past issues with finances, such as late payments and exactly what assets you have. Lenders understand that life events happen that can result in financial issues.  Not being honest up front will result in the lender finding out about issues down the road when your credit report and assets are reviewed.

For more information on financing for your San Clemente real estate purchase, please contact your exclusive San Clemente realtors today.

For the week ended December 3, interest rates on a 30 year fixed decreased to an average of 5.53% as compared to 5.97% the previous week and 5.96% a year ago.  On $700,000 financed for your San Clemente home or condo purchase, this represents a savings of almost $200 per month or over 4.5% from a year ago.  This represents an annual savings of almost $2,400 and over the life of the loan a savings close to $70,000. 

Rates on the decline is great news as more individuals will be priced into the market, which in turn means more sales, less inventory, and home prices eventually stabilizing given other economic conditions don’t take over.  This is great news for San Clemente real estate and Talega real estate.

Here is a summary of other rates reported by Freddie Mac for the week ended December 3:

• 15 year fixed mortgage - 5.33% as compared to 5.74% last week and 5.65% in the year earlier period
• Five-year hybrid ARMs - 5.77% as compared to 5.86% last week and 5.75% in the year earlier period
• Short-term (one year ARMs) - 5.02% as compared to 5.18% last week and 5.46% in the year earlier period

For more information on financing or San Clemente real estate, please contact us! 

While San Clemente real estate prices have come down from their highs, many individuals are struggling to afford a home due to higher downpayment requirements required by lenders and the recent legislation that is doing away with downpayment assistance programs.  Therefore, at San Clemente Coastal Living, we thought it would be appropriate to address creative ways to afford the San Clemente home or condo of your dreams.  The following are various strategies that we can structure for your purchase:

• In today’s market, many sellers (those who are not in a short-sale or foreclosure) may be willing to provide financing.  Some sellers may be willing to finance all or part of the purchase price and let you repay them gradually as you would with a mortgage.
• Consider doing a shared equity arrangement with friends, family or an outside investor.  Under this scenario, your co-investor will buy a portion of the house and share in appreciation when the house is sold.  This investor will benefit from all the tax write-offs of an investment property for their share of the ownership, which includes being able to depreciate the property.  In the meantime, you will be able to enjoy the write-offs of a primary residence for your share of the property.  Since you will occupy the house, you will pay the mortgage, property tax, and all related maintenance costs.  This can be a win-win situation for both parties.  If family or friends cannot invest, there are companies out there that could potentially provide an investor on your behalf.
• Perhaps your family will loan you money for a downpayment which you can payback as if it were a mortgage or whatever seems fit for both parties.  If you have little credit history, a lender may want a co-signer.  In this case, it may be worth structuring the deal to offer your family the upside of sharing in the long-term appreciation of the home as addressed in the previous point.
• Don’t forget about your 401K as a means for a downpayment if you are buying your first home.  If you are single, you can withdraw $10,000 from your 401K without being taxed for early withdrawal, or $20,000 if married.  Who cares how your 401K is performing as the money going into this account is all pre-tax.  So if your effective tax rate is 30%, then you are saving 30% quicker by using your 401K as a means for your downpayment versus using after tax money in your savings account.
• If there are no other options to come up with the downpayment this year, then consider leasing the property with an option to buy.  This will give you more time to save for your downpayment and test out the house for a year.  In addition,  many owners will apply some of your rent towards a downpayment.  Be sure, however, you would want to buy this home as you may have to pay a small nonrefundable option fee to the owner.
• An option once the real estate market settles and credit becomes more available would be trying to qualify for a short-term second mortgage to assist with a higher downpayment.  This may be possible if you have good income and little other debt.
• The government is currently offering a $7500 tax credit to first-time homebuyers, so you could borrow the money short-term from family or friends and return it once you receive this credit on your tax return.  This credit, however, will have to be repaid to the government as if it were a loan.

For more information on creative ways to afford San Clemente real estate and how to structure your transaction, please contact us! 

An article on CNN Money titled “9 Ways to Tough Out Tough Times” provides a number of ways to protect yourself during times of economic instability like our current situation.  While many of the talking points concern one’s financial portfolio and tips for trading in an unstable stock market, a couple of ideas deal directly with real estate buyers. 

The fifth item discussed in the article concerns raising and maintaining your credit score, one of the most important components analyzed by lenders when deciding whether or not to help finance your new home.  Not only does good credit make a lender feel more comfortable about lending money, but better credit may help you to get a lower interest rate.  The article states that the two most important factors with maintaining good credit are your payment history and account balances.  Paying bills on time should be a no-brainer (and accounts for 35% of your credit score), but keeping your account balances below 50% of your credit limit dramatically improves your overall credit score (this accounts for 30% of the total score).  The article also advises you to not open unnecessary accounts or make too many credit requests, as multiple credit inquiries could ding your score.   Credit history is important because it establishes your payment history, showing any potential lender that you have a good background with regards to paying off debt.  Even if buying a home is not in the foreseeable future, taking these steps now can make obtaining a loan for your first home that much easier.

The seventh talking point in the article concerns finding a great deal on a mortgage, something that is on everyone’s minds these days when thinking about a real estate purchase.  One of the reasons that the housing market is in trouble is due to unscrupulous lenders taking advantage of people with little money and substandard credit by offering them loans that looked good on the surface but turned out to be nightmares when the interest rates adjusted.  In these tough times, banks are much more careful when lending money, and securing a good interest rate might mean putting down at least a 20-25% down payment.  The article states that buyers can find good interest rates without having to deal with mortgage brokers, who may add upwards of 27% to a loan’s fees.  The article suggests going to a site like bankrate.com, where you can put in your desired location and loan amount to discover different lenders in the area and their loan terms.  Once you narrow down the list to a couple of potential lenders, contact each of them and ask for a good-faith estimate (usually free of charge).  The interest rates you receive from each may be in the same ballpark, but pay attention to the additional fees they charge for loan origination, document preparation, etc.  This takes a little work on your part, but it could end up saving you a nice chunk of change in the long run.

For more information on tips to help your purchase of San Clemente real estate become a reality, please do not hesitate to contact us. 

Mortgage rates have fallen below 6% for the first time since this past spring.  The 30 year fixed rate dropped from 6.35% to 5.93% last week making San Clemente real estate more affordable.  For example, a San Clemente home or condo financed at $700,000 based on a 6.35% rate would cost $4,355 per month.  The same amount financed with this past weeks rate of 5.93% would cost $4,165.  This would be a savings of $190 per month or 4.37%.  This would equate to a savings of $2,280 per year or $68,400 over the life of the loan if never refinanced.  The drop in rates is both good news for buyers and sellers.  Buyers can now afford more for their San Clemente real estate purchase and for sellers, this relieves some of the downward pressure on prices.

For more information on financing or San Clemente real estate, please contact us.