Real Estate Information

According to the Commerce Department, New single-family homes sales in the US fell to a 13 year low in January. The homes sales fell 2.8 percent in January to an annual rate of $588,000, which is the lowest since Feb. of 1995. It had been expected to be $600,000 from economists. Also, the median sales price dropped a record 15.1 percent from its level a year-ago. "If any more evidence of weakness in the (housing) sector was needed, you have it in the 15.1 percent drop in the median price," Goldman Sachs economists wrote to clients.

It may be unwise or difficult to refinance if ...
Your interest rate on a fixed loan is below 6 percent or you plan to move soon. Many lenders say closing costs related to a refinance aren’t worth it if you’re shaving less than 50 basis points (0.5 percent) off your current interest rate, or 25 basis points with no closing fees. Planning to move? That makes refinancing a tough call. Even if you lower monthly payments, those savings may not offset by the closing costs required for a new loan. Your lender may offer a rate modification—a lowering of interest rate without a full refinancing. Borrowers with mortgages at ING Direct, for instance, can pursue a rate modification to ING’s lowest available rate for free or a maximum $500 fee (depending on timing of your refinance) says Bill Higgins, chief lending officer at the Delaware-based online bank.

Your credit score is below 650 or your credit report has blemishes. Unless you’re eligible for an FHA loan, a low credit score means you may not get a favorable rate without substantial equity or other offsets. Refinancing options exist for borrowers with lower credit scores, but they come with price penalties that may not be worth it, such as a requirement to buy mortgage insurance, says Quicken’s Walters.

You have less than 10 percent equity in your home. Whether you used a low down payment to purchase or live in a market where home prices have fallen (taking some of your home equity), chances are you’ll have a tough time finding a refinancing situation that makes sense—or where you don’t have to bring extra cash to closing to create the equity required for the deal. FHA loans are an option, but eligibility depends on your home’s value relative to median market values.

You live in a “declining market.” Lenders have designated many areas of the country “declining markets” for risk purposes, meaning if you choose to buy in such an area (think Florida or California) your refinanced mortgage will require a down payment that’s higher than the lender’s normal minimum requirement—for instance, 15 percent vs. the usual 10 percent. When refinancing in a declining market, your may need to bring prohibitively large sums of cash to closing to “buy up” a minimum level of equity in your home and get your new loan approved.

You’re self-employed or want to pursue a “stated income” or “no-doc” loan. So-called “stated income” or “no-doc” loans grew popular with self-employed folks during the housing boom. It’s possible to refinance out of a stated-income loan to a regular product now, but forget securing a new stated-income loan. Self-employed workers now must provide extensive documentation.

You’re facing foreclosure. If you’re over 30 days late on mortgage payments, you’ve kick-started the foreclosure process and are technically in pre-foreclosure; if you’re more than 90 days late, you’re definitely in foreclosure. Late payments rob you of the power to refinance, but you may be able to get a “workout” with your lender in which you amend loan terms temporarily or permanently so you can get (and stay) current on your mortgage.

Is it a good time to refinance? Here are some things to consider when thinking about refinancing:

You can consider refinancing if ...
You have a fixed or adjustable mortgage with an interest rate over 6 percent. With rates on 30-year fixed loans below 6 percent, many homeowners want to lower monthly payments or move from an adjustable to a fixed mortgage. You'll need to run numbers to see if closing costs justify the new rate's monthly payment savings, but many lenders say that if you can save 50 basis points (0.5 percent), or even 25 basis points with no closing costs, it might be worthwhile.

Your credit score is over 650. To get a good rate on a non-government loan, your score needs to be at least 650 - maybe 680, depending on the lender and market. It's worth pulling scores before approaching lenders, as scores help determine your rates.

You live in an expensive urban market and have a mortgage over $417,000. Government-set maximum limits on conforming mortgages, previously capped at $417,000 in most markets, will rise starting in March to $729,750 in California and other pricier markets. If your loan exceeds $417,000, you could refinance from a "non-conforming" to a more desirable "confirming" loan. Dick Lepre, senior loan officer at Residential Pacific Mortgage in San Francisco, says he expects more than 50 percent of mortgage loans in California have balances that fall in the new, higher  range, and thus his state will see what he called "a massive refinancing boom." Dave Zitting, chief executive of Primary Residential Mortgage in Salt Lake City, agrees, saying: "It's going to fend off a recession."

You're eligible to refinance to an FHA loan. Loans offered by Federal Housing Administration, typically targeted at first-time or smaller-budgeted buyers, are usually offered to people buying a property priced below a local market's median price. New rules going into effect in March are lifting FHA lending limits to 125 percent of median prices in a local market (up to $729,750 in some markets) and will help many borrowers, says Bob Walters, chief economist for Quicken Loans. Bill Glavin, special assistant to the FHA commissioner, says FHA refinance loans don't have strict credit score criteria and those who use them can qualify with as little as 3 percent equity in their property -even in a so-called "declining market" where other lenders demand more equity.

You have at least 10 percent equity in your home and aren't FHA-eligible. To get good rates, you'll need to have equity in the home. In most markets, 10 percent equity is a minimum. In more volatile markets like California, lenders want to see as much as 30 percent equity, says David Zugheri, president of First Houston Mortgage, which lends in Texas, Florida and California. If you have minimal equity but have poured work into your home, an appraisal may reveal that remodeling has increased your home value sufficiently to create the equity you need. 

Prudential California Realty announced it's top producers for 2007 in February and Zen Ziejewski, Laguna Niguel Realtor and Resident, finished in the top 5 for 2007 at Prudential's Laguna Niguel Design Center Office.  Zen attributes his success, in one of the most difficult real estate market in years,  to his 20 years experience, commitment to customer satisfaction, professionalism, integrity and going above and beyond his client's expectation and technology platform. 

Zen credits a portion of his success to his commitment to providing cutting edge technology that helps generate buyers and sellers while fulfilling the needs of his past, present and future clients.  He offers instant online market snapshots, podcasts, blogging, buyer tips, seller tips, advanced property searches, email market updates and more.  Zen's professional yet personable approach really sets him apart in the South County and Laguna Niguel real estate market.

For more great Orange County market insight and industry news visit Laguna Niguel Real Estate or view the Orange County Market Trends at Orange County Real Estate.

Listen to Zen's Laguna Niguel Real Estate Podcast available 24/7.

According to a recent survey of foreclosures by county, Riverside County has now become the second larget in the state of California. Currently, there are 3000 homes now going into foreclosure, that is up 475% from last year. Maybe some of those homes can be saved with the new plan Pres. Bush is proposing. Maybe that 30 days will certainly make all the difference in the world.

For more great Orange County market insight and industry news visit Laguna Niguel Real Estate or view the Orange County Market Trends at Orange County Real Estate.

Listen to Zen's Laguna Niguel Real Estate Podcast available 24/7.

Six of the largest U.S. lenders have agreed to halt foreclosures on some loans while they work with borrowers on repayment plans, reports Reuters.

Under a plan backed by the U.S. government dubbed "Project Lifeline," they will offer help to borrowers at least 90 days delinquent. But homeowners in bankruptcy or who face a foreclosure sale in under 30 days will not be covered, nor will owners of vacant homes and investment properties.

Washington Mutual, Bank of America, Wells Fargo, JP Morgan Chase & Co., Citigroup, and Countrywide Financial announced the plan Tuesday with U.S. Treasury Secretary Henry Paulson, reports Reuters. Here's more...

The effort would cover all types of home loans, unlike an earlier plan aimed at freezing interest rates for subprime mortgage holders who cannot afford rates that reset to higher levels.

Treasury Secretary Henry Paulson told a news conference that he was encouraging all mortgage servicers to adopt the program. It is the latest of several private-sector efforts backed by the Treasury to limit damage in the troubled housing sector by speeding the pace of refinancing and avoiding unnecessary foreclosures.

"Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes," Paulson said.

However, a report by The Associated Press on Monday said borrowers would get only a 30-day grace period to work out a deal.

A FRESH COAT OF PAINT!  The fastest way to brighten a room, sharpen decor, and make a room look like new is a fresh coat of paint.  Sometimes we attempt to do too many things when the obvious is the best and many times least expensive way to make a big difference.

In today's buyer's market it is important that homes look and show their best.  With the high inventory levels buyers are being very picky and are not settling for dirty, outdated and cluttered homes unless they come with a big discount.

For more homeowner tips, great Orange County market insight and industry news visit Laguna Niguel Real Estate, or view the Orange County Market Trends newsletter at Orange County Real Estate.

The Federal Reserve's January Senior Loan Officer Opinion Survey, finds the following:

- 55 percent of domestic respondents said they had tightened their lending standards on prime mortgages; that's up from 40 percent in the October survey.

- Of the 39 banks that do nontraditional residential loans (that's your ARMs and the like), 85 percent reported a tightening of their lending standards over the last 3 months compared with 60 percent in October.

- Five of the seven banks that originated subprime loans noted they had tightened standards, pretty much the same proportion to October.

So what does that say? The credit crunch continues to bleed further into the prime and non-traditional sectors of the mortgage market. For all the talk we do about refinancing loans and helping troubled borrowers and saving the housing market with lower interest rate, the bottom line is that tighter credit is the culprit.

Banks simply aren't willing to lend to the even slightly less than credit-worthy customers. I hear it from industry insiders and outsiders for that matter. It's one thing to offer all these bailout plans, to beg people to call their lenders to refi, to lower interest rates in order to lure buyers off the fence. But the bulk of those people everyone's trying to lure and help and bail out are inevitably being turned away by the very banks and lenders that created this problem in the first place.

More statistics showing that housing prices have taken a tumble.  Los Angeles/Orange County home prices dropped 11.9 percent in the year ended in November, according to S&P/Case-Shiller indexes. That depreciation rate is the worst in the database, which dates to 1987. The only good news may be that of the 20 major U.S. markets the indexes track, five have suffered deeper one-year losses than L.A./O.C. A 20-city composite index is off 7.7 percent in the same year. S&P/Case-Shiller uses a "paired sales" index that tracks individual losses or gains on homes sold vs. tracking movements in overall medians or averages of all homes sold.

LA & Orange County placed 6th on the list as hardest hit major housing markets in the US.  As pricing pressures continue in 2008 it will be interesting to see where we will be at the end of this year.

For more great Orange County market insight and industry news visit my website, my newsletter or my blog.