Lower Mortgage Rates Leades To Increase In Loan Applications

After weeks of mortgage market weakness, loan applications finally rose last week, led by a surge in applications to purchase a home.

Total mortgage application volume rose 5.3 percent week-to-week on a seasonally-adjusted basis, according to the Mortgage Bankers Association. Refinance applications were up just 2 percent, but purchase applications jumped 9 percent to their highest level since January.

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“A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday’s employment report from the BLS (Bureau of Labor Statistics),” noted Mike Fratantoni, MBA’s Chief Economist. “Despite the strong increase in the purchase market last week, volume continues to run 16 percent behind last year’s pace.”

Purchase applications also moved into the lead for the first time since 2009, representing 51 percent of total mortgage applications. Refinances had been booming just a year ago, when mortgage rates were at record lows. They accounted for as much as 80 percent of total applications at one time, but since the jump in rates last June, the refinance market has come crashing down.

Mortgages
30 yr fixed 4.20% 4.28%
30 yr fixed jumbo 4.58% 4.66%
15 yr fixed 3.25% 3.42%
15 yr fixed jumbo 4.07% 4.29%
5/1 ARM 3.27% 5.26%
5/1 jumbo ARM 3.43% 5.88%
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Last week the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.43 percent, the lowest rates since November 2013, from 4.49 percent the previous week.

While the boost in purchase application volume is a positive sign, the numbers are still way below normal levels. Mortgage origination volumes have been so bad that some are predicting as many as 35 percent of all mortgage firms will either shut down, sell or merge in the next year, according to a recent report by Inside Mortgage Finance. That is potentially 2000 companies.

Mortgage applications to purchase a home are not picking up much of the refinance slack. While they were up last week, they are still struggling under a slow spring housing market, far slower than expected.

Big ‘for sale’ for the biggest houses on the market

Source: Realtor.com
“The challenges of low inventory at the first-time home buyer and move-up buyer levels are compounded by tough credit underwriting and the effects of a sluggish economy, which we believe has slowed demand,” said Richard Smith, CEO of Realogy, during the company’s quarterly earnings call Monday. Realogy’s brands include Coldwell Banker, Century 21 and Sotheby’s International.—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Prices of downtown condos continue to rise

With few properties on the market, prices of new downtown Los Angeles condominiums rose 15% in January compared with the same period a year ago.

The average price per foot in January was $607 per square foot for a new condo, according to a report by residential marketing and sales firm Mark Co. Prices were about the same in December.

“Inventory remains extremely low for new and resale condominiums,” said Erin Kennelly, senior director of research at Mark Co. “This is likely to result in higher prices as we move into the busy season for residential real estate sales.”

More properties are likely to go into escrow in the middle of this month followed by closings March, she said.

New available units include three residences at the Ritz-Carlton Residences at LA Live, five units at Evo on South Grand Avenue and 68 units at Barker Block Warehouse No. 1 on South Hewitt Street, which are the only condominiums under construction downtown.

The average price per square foot for resale condos in January was $455, up 11% from a year ago, Mark Co. said. There were 32 condo resales in January and 108 active condominium listings.

Source: LAT

How to Buy a Home With a Low or Zero Down Payment

For most first-time home buyers, coming up with funds for a down payment is the biggest obstacle to homeownership. It’s easy to see why: If you’re paying rent and have other expenses and are saving for an emergency fund, retirement and perhaps college tuition for your children, amassing thousands for a down payment can be tough.

Most financial planners recommend making a down payment of 20 percent, which comes to $39,600 on a $198,000 home, the national median price in December 2013, according to the National Association of REALTORS®. If you make a down payment of less than 20 percent, you will need to pay mortgage insurance.

However, before your lack of cash causes you to give up on your dream of homeownership, it’s important to look for options other than the standard conventional loan with a 20 percent down payment.

Prior to the housing crisis, many lenders offered mortgages without any down payment. Some even allowed consumers to borrow up to 105 percent of the home’s purchase price so they could finance their closing costs. The lack of equity in these homes became a crisis when home prices dropped and the owners owed more on their mortgage than the value of their home. Few lenders offer zero-down loans today, but there are some programs that allow consumers with good credit and a steady income to buy without making a down payment or with a minimal investment.

Government Zero-Down Programs

  • VA loans: Veteran’s Affairs mortgage loans are available to veterans, current members of the military and their spouses. These loans don’t require a down payment or mortgage insurance, although there is a funding fee that can be wrapped into the loan.
  • USDA Rural Development loans: Rural Development loans through the United States Department of Agriculture are available to buyers who meet credit and income requirements. You must be able to afford payments on the loan and yet have a low or moderate income. In addition, the property you are purchasing must be located within an area designated as eligible for these no-down-payment loans.
  • State and local homebuyer programs: Most states have programs to encourage homeownership. Generally these programs have income limitations and require you to take a home-buyer class. Find programs in your area on the National Council of State Housing Agencies website.

Low Down Payment Loans From Banks and Credit Unions

Some banks and credit unions offer mortgage loans with no down payment requirement or a limited down payment. Typically, these loans are only available to borrowers who meet limited income requirements, such as a maximum of 80 percent of the median area income. You’ll also need good credit and to be able to demonstrate your ability to repay the loan.

Down Payment Sources

If you’re lucky enough to have family members with the means and generosity to give you money towards your home purchase, you can use some or all of their gift depending on your loan program. The Federal Housing Administration allows all of the required 3.5 percent down payment to come from gift funds. For a $198,000 purchase, you would need $6,930 for your down payment.

Conventional lenders require a minimum of 5 percent for a down payment, or $9,900 for a median-priced home. None of that 5 percent can come from gift funds, although if you make a larger down payment of 20 percent, all of it can be from a gift.

You can also borrow from your retirement funds for a down payment, but be sure you follow the rules exactly so you don’t get hit with a tax penalty.

Saving for a down payment is an important step in becoming financially prepared for homeownership, but you should also arrange a free consultation with a lender to discuss your options and opportunities for financing a home purchase with a lower down payment.

5 Tips For Buying Your First Home

Buying a home can be thrilling and nerve-racking at the same time, especially for a first-time homebuyer. It’s difficult to know exactly what to expect. The learning curve can be steep, but most of the issues can be resolved by doing a little financial homework at the outset.

Take these five steps to help make the process a smooth one.

1. Check your credit

The credit score of the buyer may be the most important factor when it comes to qualifying for a loan these days.

“In addition, the standards are higher in terms of what score you need and how it affects the cost of the loan,” says Mike Winesburg, mortgage planner with McKinley Carter Wealth Services in Wheeling, W.Va.

To get a sense of where your credit stands, go to AnnualCreditReport.com to get your free credit report from each of the three credit bureaus. For an extra fee you can find out what your numerical score is, but just checking the reports should give you an idea of what lenders will see. Scour the reports for mistakes, unpaid accounts or collection accounts.

Just because you pay everything on time every month doesn’t mean your credit is stellar, however. The amount of credit you’re using relative to your available credit limit, or your credit utilization ratio, can sink a credit score.

“Lenders determine all of the available credit that you have on all of your cards added up and how much your balances are. So if you have $10,000 credit available to you and you have $5,000 on there, you have a 50 percent credit utilization rate,” says Winesburg.

The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used.

Repairing damaged credit takes time — and money if you owe more than lenders would prefer to see relative to your income. Begin the process at least six months before shopping for a home.

2. Evaluate assets and liabilities

So you don’t owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

“You should understand a little bit about monthly cash flow,” says Winesburg.

“If I were a first-time homebuyer and I wanted to do everything right, I would probably try to track my spending for a couple of months to see where my money was going,” he says.

Additionally, buyers should have an idea of how lenders will view their income, and that requires becoming familiar with the basics of mortgage lending.

For instance, some professionals, such as the self-employed or straight-commission sales person, may have a more difficult time getting a loan these days than others. Gone are the days of the no-doc loan, thanks to the abuses of a couple years ago.

A stated income loan was available to non-W-2 wage earners in previous years, but today’s standards are much more stringent.

According to Winesburg, the self-employed or independent contractor will need a solid two years’ earnings history to show.

In short, how you receive and report income as well as how you write off expenses can make a difference to lenders.

3. Organize documents

The documents homebuyers must produce to be considered for a home mortgage are those which authenticate their income and taxes.

Typically, mortgage lenders will request two recent paystubs, the previous two years’ W-2s, tax returns and the last two months of bank statements — every page, even the blank ones.

“Why it has to be every single last page, I don’t know. But that is what they want to see. I think they look for nonsufficient funds or odd money in or out,” says Floyd Walters, owner of BWA Mortgage in La Canada Flintridge, Calif.

Buying a home can take a long time, but knowing what you need and where to find it can save time when you’re ready.

4. Qualify yourself

Ideally, first-time homebuyers would know how much they can afford to spend before the mortgage lender tells them how much they qualify for.

By calculating their debt-to-income ratio and factoring in a down payment, buyers should have a good idea of what they can afford to invest, both upfront and on a monthly basis, when it comes to their home.

Though there’s not a fixed debt-to-income ratio that lenders require, the old standard dictates that no more than 28 percent of your gross monthly income be devoted to housing costs, called the front-end ratio.

Including all debts with housing costs is the back-end ratio, and lenders prefer it to be under 41 percent.

“I really ask buyers to qualify themselves because although we can use that 28/41 ratio as a guideline, each of us knows our finances best. If we’re used to paying $800 in rent but 28 percent of your income would be $2,000 then maybe 28 percent is too high,” says Winesburg.

“Find out what you can afford and then you can back into everything else. We know the money you have available to put down, we know the monthly payment and we can solve for the third variable — and that is the home price,” he says.

5. Figure out your down payment

Scraping up that initial down payment takes some effort. Though FHA loans require a less substantial down payment than conventional loans, it can still be a huge chunk of money for a young person or couple.

Uncle Sam is here to help, however, with the first-time homebuyer tax credit, at least until the end of April.

Some borrowers working with a state housing finance agency can use the tax credit for a down payment. However, not all state agencies are offering interest-free or low interest loans to be paid back with the tax credit funds.

Other programs can assist buyers with qualifying incomes and situations.

“I’ve helped arrange assistance loans for $10,000 which are interest and payment free, and forgivable after five years. Although considered a loan, they’re more like grants. Other programs can provide up to $40,000 interest free,” says Winesburg.

“Each state is different, but most of this money comes from the HOME Investment Partnership Program, which is a federal block grant to create affordable housing,” he says.

Finally, speak with mortgage lenders when you’re starting the process. Check with friends, co-workers and neighbors to find out which lenders they enjoyed working with and ask them questions about the process and what other steps first-time homebuyers should take.

Read more: Bankrate

6 Reasons Why You Should Be Investing Your Money In Real Estate

As entrepreneurs find success with their primary business ventures, many search for the proper investments for their profits.

Of course, we can and should all start traditional tax preferred vehicles like an IRA and 401k. These are the bedrock of good ‘benefit’ planning for ourselves and our employees. I’m also convinced more entrepreneurs should consider rental real estate as an important part of their portfolio.

I realize many business owners shrug off this concept after the recent downturn in real estate values, but let me list a few reasons that may change your mind:

1. Gain more leverage. Real estate is one of the few investment vehicles where using the bank’s money couldn’t be easier. The ability to make a down payment, leverage your capital, and thus increase your overall return on investment is incredible.

2. Grow, tax-free. Buying rental property based on speculation of its value is a dangerous tactic since cash flow is the key. However, appreciation over the long-run is certainly realistic and at the least you should be considering a tax-deferred strategy. In the future, you may even consider a 1031 exchange, charitable trust, or an installment sale to lesson your tax liability further.

3. Tax free cash flow. It’s no secret that because of depreciation and mortgage interest deductions (if you leverage your capital), your cash flow should be tax-free. That’s right! The far majority of the time an investor will never pay taxes on their cash flow and can wait for capital gains on the sale of the property in the future.

4. The tax write-offs against your other income. Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income. With that said, this is something you want to discuss with your tax professional before investing so your expectations are realistic.

5. Increased tax deduction strategies. Rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Don’t forget that rental real estate is a business. This means that travel expenses to check on your properties and payments to family members who manage your properties (such as students away at college) can be deductible and increase the tax benefits when it comes to cash flow and the future sale of the property.

6. Rental real estate is a forced retirement plan. Americans are terrible savers. We lack the self-discipline to put a monthly deposit into our IRA, SEP or 401k as small-business owners. However, buying a rental property is a significant commitment that you are required to commit to and maintain. You will always be grateful in the long-run when you don’t give up on it and build future cash flow and wealth.

I meet with a lot of successful entrepreneurs, and almost every one of them has taken profits from their businesses over the years to invest in rental property. Based on this fact and the list above, I have consistently urged my clients to buy one rental property a year and already have clients with rental properties earning them money they never imagined they’d have.

The far majority of us will never get rich overnight. It takes long-term investing and a diverse portfolio to build true wealth. Don’t forget real estate as an important part of the equation.
Entreprenuer

 

Dont Make These Pricing Mistakes in Real Estate

Pricing your home is one of the most important factors to think about before you list your home on the market. The first impression you make on a home might be the only one so you want to make sure you are pricing correctly. Below are 4 of the most common pricing mistakes in Real Estate. (Don’t make these Mistakes)

13 Real Estate Terms Every Investor Should Know

If you are planning to buy or sell a home you should probably familiarize yourself with some Real Estate lingo.

Here are 13 Terms to help get you started on your path to investing.

 

Adjustable Rate Mortgage (ARM)

When applying for a home loan, you can get an adjustable-rate mortgage (ARM) or a fixed-rate mortgage. An ARM usually has a specific interest rate for a set time and then the interest rate fluctuates. Most of these mortgages have a cap on how high the interest rate may increase.

Amortization Schedule

First off, amortize basically means to reduce a debt. An amortization schedule is a detailed breakdown that illustrates how much interest and principal of the mortgage has been paid off and how much remains with each payment.

Closing

The final step in a real estate transaction, a closing is the transfer of the title of the property for money or other considerations.

Down Payment

The down payment is the amount of money that a buyer pays upfront in order to purchase a property. This amount is typically between 5% and 25% of the value of the property.

Escrow

When a third party holds property, cash and the property title until all conditions of the property agreement have been satisfied. The third party, likely a lawyer, will then hand over the assets to the respective parties, as outlined in the agreement.

Fannie Mae/Freddie Mac

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are two government-sponsored enterprises that purchase mortgages from lending institutions. Their purpose is to promote stability and affordability in the housing market.

Good Faith Estimate

A good faith estimate is an approximation of the total cost of the purchase of property. It is provided before the mortgage loan is secured so the homebuyer can compare the offers of different lending institutions.

Lien

A lien occurs when a legal claim is put on a property in order to receive payment for debt or for services rendered. The holder of the lien can sell the property in order to recover the money owed. Points Mortgage points are upfront charges the lender may add to the overall price of the mortgage. One point is equal to 1% of the total amount of the loan.

Pre-Approval

Pre-approval from a bank locks in an interest rate for a specific amount of time. It is an in-depth process that requires a potential buyer to provide a lending institution with proof of income and debts. The lender will most likely check your credit report in this process.

If you’re considering getting pre-approved for a home loan, it’s smart to make sure your credit is in good shape before you apply. You can get a breakdown of your credit strengths and weaknesses using the free Credit Report Card, which also updates two of your credit scores for free every month.

Prequalification

When a potential buyer is screened by a lender or third party to see how much the buyer can borrow as well as the terms of the loan. This is purely informational and does not obligate the lender.

Prime Rate

This is the interest rate that commercial banks offer to their best customers. This generally means large corporations that are the most creditworthy.

Underwater

When a property’s market value is less than the balance of the money owed on the mortgage. This is usually associated with drastic falls in the market value of the property.

Underwriting

The process a lender undergoes in determining whether to extend credit. A lender makes its decision based on a variety of factors including the borrower’s credit scores, credit history, income, other debt obligations and property value.

West Hollywood Park is getting an $80MM Overhaul

CurbedLA Yesterday posted that West Hollywood Park will be getting an $80,000,000 overhaul by architects LPA Inc. You can read the full article below and see a few photos of what LPA Inc. has designed for the their concept.  If the concepts below are anything close to what the firm plans to design then West Hollywood is in for a treat.

 

Curbed LA

West Hollywood is moving fast on the second phase of its West Hollywood Parkredesign—now they’ve just decided to hire architects LPA Inc. of Irvine from a field of three candidates. No design is finalized; the pics here are just LPA’s concepts, which helped them win the contract. What is certain is that the firm will design green space plus a new gym with rooftop swimming pool for the current surface parking lot off of El Tovar Place. The old auditorium and swimming pool will be demolished and city officials hope LPA will find room for a new “multipurpose ball field,” since the city lacks any place for people to play games like baseball or soccer. Big-spender WeHo is prepared to drop $80 million on the park redesign, paying for it through bonds and possibly private donors. The first phase of the park redesign created more open space, added basketball courts and a parking garage with tennis courts on top, and better integrated the green space with the new library.

Estate in Prime Bel Air, Neighboring the Bel Air Country Club and the Renowned Hotel Bel Air Hits Market for $2,249,000

Dustin Cumming and Danelle Lavin of Hilton & Hyland Real Estate bring the immaculate traditional Bel Air estate at 10970 Verano Road to market.

Dustin Cumming and Danelle Lavin of Hilton & Hyland Real Estate bring to market the quintessential traditional Bel Air estate located at 10970 Verano Road.

The traditional home sits on a quiet, private cul-de-sac in prime Bel Air. Architecturally stunning, this four bedroom and three bathroom home features a chef’s kitchen, expansive master suite and beautifully appointed living spaces throughout. A beautiful lanai surrounded by ornate French doors open to the professionally designed and landscaped rear yard, which includes hiking trails, sitting areas and water features and was featured on HGTV’s Landscaper’s Challenge. The main rear yard features a solar heated pool, spa, built in barbeque, cabana and well-manicured hillside walking paths. Remarkably well maintained, this home is perfect for capturing the best of the Southern California indoor-outdoor lifestyle.

Thurston Boyd, a renowned interior design firm out of Laguna Beach, is responsible for the impeccable finish and aesthetic throughout. The light colors and French themed finishes combined with the old Bel Air appeal create a serene environment worthy of Cottages & Bungalows Magazine, which featured the 10970 Verano Road property on the cover of its May issue.

Bel Air is a small, affluent residential community in the hills of the Westside of the city of Los Angeles, California. Together with Beverly Hills and Holmby Hills it forms the Platinum Triangle of Los Angeles neighborhoods. It borders the north side of ULCA along Sunset Boulevard. At the heart of the community sits the world famous Bel Air Country Club, with a $150,000 initiation fee it is home to such Hollywood legends as Jack Nicholson, Roger Birnbaum, Luke Wilson, Leslie Moonves, WME’s Patrick Whitesell, Kelsey Grammer, Jack Wagner, Chuck Lorre, CBS’ Armando Nunez, Tom Rothman, Clint Eastwood and Tom Cruise. The equally renowned Hotel Bel Air houses Wolf Gang Puck’s famous eatery bearing his name as well as being known as one of the most quaint and upscale boutique luxury hotels in Los Angeles.

Bel Air is bordered by Brentwood on the west and southwest, Westwood on the South, Beverly Hills Post Office on the East with Sherman Oaks to the North. The Bel Air Association has been operational since 1942, dedicated to preserving the aesthetic appearance of the residential community. Residences in Bel Air tend to be hidden from the winding roads of the community. High density multi-family housing is not permitted and ordinances regarding architectural styles and lot sizes help to preserve the area.

For additional information on 10970 Verano Road, Bel Air, California please visit http://www.danellelavin.com.

Beverly Hills Residential Real Estate Investment and Development Opportunities Dwindling

Beverly Hills housing inventory has depleted to record lows in recent months and quality single-family investments such as 1635 Ferrari Drive in Beverly Hills, represented by Dustin Cumming and Danelle Lavin of Hilton & Hyland, are few and far between.

There’s no debating that the real estate market is on fire in Los Angeles, nowhere more so apparent than the famous communities Beverly Hills, Bel Air and Brentwood. Over the last few months Beverly Hills housing inventory has been depleted to record lows with an array of buyers jumping for an opportunity at quality single-family homes. Properties such as 1635 Ferrari Drive in Beverly Hills which is represented by Dustin Cumming and Danelle Lavin of Hilton & Hyland, are exactly what buyers have been waiting for.

Beverly Hills has long been the economic bellwether for the entire country, not just Los Angeles County, when gauging the strength of real estate investment, development and the general health of the market. According to Zillow.com, the price per square foot of homes in Los Angeles has increased by 32 percent compared to the same period last year, Los Angeles home prices also increased by 37.5 percent. The median home list price for Beverly Hills is currently $2,594,800 and expected to rise. Real Estate experts are calling for the Los Angles’ real estate market to improve by 5.9 percent in 2013.

With strengthening markets like Beverly Hills has seen in recent months, it’s no wonder that single family investment properties are in short supply. The property located at 1635 Ferrari Drive in Beverly Hills is situated on a quiet cul-de-sac on over a ½ acre lot in Beverly Hills. This 4 bedroom & 2.5 bath home features a great master suite with a classic fireplace and large attached decks. The bright home features vaulted ceilings, stone fireplace and custom wood finishes throughout, a sprawling second story wrap around deck with canyon, ocean and city light views. Surrounded by mature trees the landscaped grounds and patio are perfect for entertaining, capturing the best of Southern California’s indoor-outdoor lifestyle and enjoying the serene tranquility of your own private retreat. Located within the Warner School District this property is the perfect choice for a light update or a full remodel. All of these factors are the fundamentals for investment security, quality of life and limitless demand.

Beverly Hills has long been home to Los Angeles’ elite, quality properties like Ferrari are no different with it’s immediate neighborhood being home to such individuals as Trent Reznor from Nine Inch Nails, Joe Walsh of The Eagles fame and legendary rocker Alice Cooper.

For additional information, please visit http://www.danellelavin.com