CalHFA Drops Rates and More!! SoCal Mortgage Market News – September 2019

California’s most Trusted Mortgage Broker.

My name is Teresa Tims, I am President of TDR Mortgage and Real Estate Group in Upland, California.

Where are we at in the real estate and mortgage market in Southern California and Why should you listen to me?  Well, I’ve been in mortgage and real estate since 1998 and I’m a big believer in the Broker Channel and have been for many, many years, as I believe it serves my customers the best.

I have the ability to shop around with wholesale lenders and deliver the exact right product to my client for their particular situation. I’m also a licensed real estate broker. I don’t do real estate that often. If I do, it’s for a very close friend or family member.  That’s who I am and that’s why you should listen to me.  I have been fearlessly and flawlessly guiding my clients down the right path, since 1998.

Many times I’ve told people to take a certain action and they’ve had success so they keep coming back to me. Remember to comment below, especially if you’re in real estate. I’d like to get a take, real estate or mortgages. And I’d love to get your take on what you’re seeing out there in the market. I think that will be interesting to everybody. Let’s see. Robert, Mike, Henry, hey guys. Steve. Hey, Brad. All right.

The current market is mostly stable. It’s not quite a buyer’s market, not quite a seller’s market. I think it really goes off of the price, that sweet spot where people want their payment to be $1500. The 250-450 range is on fire, and if it’s priced right and it’s in great shape, you’re still against multiple offers, agents really paying too much in closing costs. At that price range, I don’t see declines. We’re seeing things move upward, but only slowly.  If you’re not in agreement with that and you’re in real estate or mortgages.

I suggest you get out there and look at some of the local market data. If you go to a Bruce Norris event, or look at the stuff that Steven Thomas is putting out, you can’t deny the market that we’re in and where we’re headed right now.

I think that if people make prudent decisions, we’ll go more into that later. Some areas are declining. Do you know that in that higher end market, and unique properties, we are seeing price declines, price reductions? I’ve actually had a lot of low appraisals lately, a lot. In my refinance transactions, I’m doing extra diligence to arm my clients with the best sales comparable that I can provide them, so that they’re able to give those to the appraisers, to sustain those values.

Now, some areas are stable. I feel like several areas in the Inland Empire, again, it goes back to that, the price, so and some areas are still going up slightly, ever so slightly. When I’ve polled listing agent friends and my real estate friends, and I work with a lot of, tons of buyers agents, we have a lot of active purchase transactions, and it’s not easy to get your offer accepted still. Especially in that sweet spot price range.

Purchase opportunities

There’s a lot of really, really great purchase opportunities out there and when people say, “Gosh, should I wait and buy, or is it a good time to buy?” I think it just really all depends. If the rents, go back to that old question, if the rents match the mortgage payment, or they’re a little bit higher, buy that house, buy 10, buy 20.

Eventually the rents will go up, eventually you’re going to be sitting pretty. Not too mention the great tax write-offs. If you are buying right now, though, you just want to take great care to make sure you’re not overextending yourself and putting yourself in a bad situation. We will, people forget, it goes up and then it goes down. People just seem to forget that.

I talk to a lot of people and they’re just like, “Oh yeah, we’re fine. Nothing’s going to happen, don’t worry.” Well, yeah, in the short term, but you always want to think about now and in the future. So, when we’re guiding you, whether you’re selling a house, buying a house, refinancing, we’re looking at where you are right now, and where you’re going to be, where you want to be, how can we position you? How can we put you in the best position possible?

Okay, so I’ve been seeing, looking at prices, to me Orange County is just ridiculously expensive. There’s a lot of areas in LA County and Eastern San Bernardino County that are very pricey, and I don’t know, with a low down payment, kind of for me don’t pencil. Areas in, there’s a lot of really great properties in Riverside and Jurupa Valley that are priced great, and work, commuter friendly.

Also the Big Bear Lake area, Lake Arrowhead, and Las Vegas area. I’ve been visiting a lot of family in Henderson and I’ve been going to open houses and stuff out there, and gosh, the prices out there are ridiculous.

California Housing and Finance Authority (CALHFA)

 CalHFA, It’s my favorite first time buyer program in that it’s super, super reliable. We can close those loans in like I don’t know, 30, 35, 40 days.

I like to write an offer at 35 days, just to give me a little bit of a cushion, but CalHFA, it just wasn’t   because let’s say the regular rate was 4.25% on FHA, and then CalHFA was like 5.75%. Well, nobody wants that ugly rate. Nobody wants that. It just didn’t seem to make sense for a lot of my clients and when you’re comparing and contrasting and recommending ways to purchase, that only made sense a couple of times for people that I put in those products, in the last 12-24 months.

Now, the rate is commensurate with a regular FHA rate, so we priced one up the other day and it was 3.75%.   So, now how sweet is that, that it’s a low rate and you can get like a $400,000 house, get in with like two or three grand? Now, granted it’s a first time buyer program so there’s lots of different restrictions, exclusions. You’ve got a first, a second, and a third, so it’s one of those things where hey, if you can’t come up with the 20 grand that you need to get into a house, why not, you know? What a great opportunity.

I’m going to be doing a separate video to educate people about that CalHFA program and the pros and cons. Oh, I just did it again, dang it. Okay. Be sure to comment below and say hello. Like, and if you’re watching this on YouTube, be sure to like and comment below. And subscribe to my channel, too. That’d be really super great. I’m really working hard on my YouTube channel right now.

CA Refinancing 3 TOP tips to look out for

By now, everyone’s heard the rates are down, rates are great, you should refinance. Refinances should still be done on a case by case basis. Not everyone will benefit. I am finding that almost everyone I talk to is benefiting right now. There’s a lot of misinformation out there, and people are okay, one thing that you can’t do, refinances go off of three things. They go off your credit score, your equity position, so if your house is worth $100,000 and you owe 80, you’re an 80% loan to value or (LTV)

So, when people are talking, “Oh, I’ve got this three and a half percent, and this lender’s doing this three and a half percent rate for me. It’s fantastic, it’s great.” Well, what maybe they didn’t tell you is that they have 30% equity in their home. So, a 30%, somebody that’s got a 70% loan to value, that’s going to price out way better than somebody who’s got like a 95% loan to value.

They also may not mention the term. So, the term is very important. 30 year loans price out higher than 15 year loans. We’ve been pricing some 15 year loans in the high 2s and low 3s. Again, it depends on if it’s FHA, if it’s conventional, if it’s high balance, meaning what’s the loan amount? Is it over that conforming limit of $484,350. I think that’s what it is. There’s so many variables. I saw on a chat, somebody had put that they got a 5% rate and they thought that was a great rate, and then someone else had said, “Oh no, that’s terrible, I’ve got three and a half.”

Yeah, but you have to remember, it’s apples to apples. You really have to get in there and shop around, get a second opinion, talk to your bank, credit union, whoever, and then mortgage brokers are the best value and one of the most underutilized choices for most people when seeking a refinance.  Because there’s such a high trust factor with the banks.

And what I see a lot is that even though they’ve made the disclosures easy to read, they’re still not that easy to read. I lose business because people do not know how to evaluate the disclosures they get from the lenders, and I am … What’s the word for it? I do my best to educate people, but sometimes that trust factor outweighs that, we’re saving somebody $5000 and giving a lower rate but they just don’t see it. And it gets convoluted with tax insurance. I wish I had something that I could show you.

But the three top tips to keep in mind, when you’re evaluating a refinance.

Old Loan Amount VS New Loan Amount.  The number one thing, the easiest way to look at how much something is costing you is what is your payoff? If your payoff is 250 and your new loan is 252, logic would dictate that that loan cost you $2000. Because it went from 250 to 252. So to me, that’s like the easiest, no brainer way to look at things.

Sometimes the taxes and insurance can really confuse things because maybe your taxes haven’t been updated with the county. And so, maybe the taxes are off, but if you look at just your pure principal and interest, so you look at your old principal and interest payment, take out your mortgage statement, look at that. And then look at the new lender’s principal and interest. Compare that apples to apples, apples to apples. That’s what you should be doing, and the other tip, okay my tips were look at the old loan amount and new loan amount. That’s number one.

The rate, what’s the rate and look at the principal and interest payment. Just look at the principal and interest payment, and then look at the lender charges. Pretend like the taxes and insurance don’t exist. You’re going to pay those anyway, so some lenders don’t know, like if we’re closing a loan in September, there’s nine months of taxes that will be impounded. Nine months. Not two, not four, not six, nine. So, if another lender is just showing two months, their APR is going to be lower, all kinds of things are going to be lower.  Look at the lender fees.

It’s going to appear that they’re giving a better rate when really they just didn’t show what it really is. Do not look at the taxes and insurance when you’re compare and contrasting lender fees.

We’re pricing out some stuff that is just thrilling, that is just delicious, just delicious, sexy. I did a loan, was it yesterday? Or disclosed a loan, and it was 3.25. I mean, that just warms my heart. Adrian, hi, how are you? Julio. Okay. So, getting back to my 2019 September market, real estate market and mortgage market update. Be sure to subscribe if you’re watching on YouTube. Like and comment below, that will be just great.

The other thing to keep in mind, I get people all the time, “I want to get rid of my mortgage insurance, I want out of this terrible FHA loan, into a conventional loan.” FHA streamlines are so fire right now. I looked at one yesterday where I could have saved my client some money going from FHA to conventional. We would have had to do a full appraisal. Remember, appraisers on refinances aren’t, as if you’re selling the house, so refinance appraisals are a little bit different and they’re not as aggressive. Appraisers aren’t as aggressive on those, so when the LTV is tight, it just makes me nervous.

In looking at a rate and term refinance conventional versus FHA, on this particular one, I want to say it was like three and a half, or 3.6, and the APR, APRs are so done, but I know if I quote rate, I have to say the APRs. Let’s just say the APR is 20% or something, because APRs are stupid. Okay, No, it was three and a half percent. It was three and a half percent. Their loan balance was going up literally $2000. $2000. They were saving $300 a month.

Now, they could have gone conventional, too. Conventional was pricing out really good. I think it was like 3.8, 3.8 on the conventional. They had about 10% equity, so 90 LTV, but because I couldn’t, in FHA the streamlines, we’re giving pretty good credits, that’s why the loan balance only went up $2000. On the conventional, we were adding 7 or $8000 to their loan balance because the impounds alone were like five grand, and all the loan fees and everything were like 3 or 4000.

So, in this particular case, I’m telling them, “Don’t do the conventional. Do the FHA. Streamline. Add a couple thousand dollars” and the beauty about the streamlines, there’s no frickin appraisal. When the rates go lower in a year or year and a half, and that’s my next topic, how to refinance smart, when the rates go lower in like a year or year and a half, you’re going to be able to just streamline down without an appraisal. The value won’t even matter.

And you want to set yourself up for this positive experience in the future, set yourself up for the reality that’s going to happen, and prices will go down, because remember, what goes up. It’s what happens and it’s a real estate cycle. Okay, let’s see.

Refinance Smart

Okay, so last but not last, I want to just say a quick thing about refinancing smart. Refinancing smart, what does that mean? That means you do, when you’re refinancing right now, you want to make sure that you’re adding as little as possible. It’s not costing a lot. Because you will probably be refinancing in another 12-18 months. What you don’t want to do is spend, add $10,000 to your loan balance, and then refinance in a year and lose all the benefit of that investment.

You should really, really be thinking about. I had one today, we looked at it in the last couple of days. 4% was pretty much a true no cost. The 3.625, I think was costing like just a little bit, let’s say two or three grand. The amount that it was costing from the 4% to the 3.6, we were going to recoup that in one year. So, my recommendation was let’s do it, let’s do the lower one, at the 3.6, because we’ll recoup all the costs of that loan in one year, and if the rates go lower, guess what? You didn’t lose any money or waste any money, and you won’t feel bad refinancing and starting that loan over in a year.

Whereas, gosh, if you spent like 5 or 10 grand, you would feel a little bit of pain in doing something like that. All of your refinance moves need to really, really be calculated, and to be calculated, you should probably get the assistance of somebody who’s really knowledgeable in the art of mortgage and real estate. So, let’s see if we have. I said um again. You guys aren’t even helping me. “Yes, I need to refinance smart, that’s why I need you.” Oh, thanks miss Robyn.

Okay, in conclusion, thank you for tuning in and listening to me go over the 2019 California mortgage and real estate market update, so that I could let you know where we’re at, and where we’re headed, and what you can do to take advantage of the market opportunities that are before you. When you’re looking to buy, sell, or refinance in Southern California, I’d love it if you’d pick up the phone and give me a call at 909-920-3500.