A Little Something Extra

A Brief Window Opens

A little extra purchasing power, for a short while

After hearing that the Federal Reserve is not going to taper off on it’s purchase of mortgage backed securities and will continue it’s 85 billion dollar a month bond buying habit, I am relatively certain we will have a dip downward in mortgage interest rates, albeit briefly.  What this means is a slight but significant, short-term increase in buying power for buyers not afraid to act quickly.  For home buyers who have not taken a look at the residential real estate market post-Labor Day, take note of another advantageous position: a serious drop in active home seekers.

A little more power and a little less competition between buyers

If there is ever a real life example of the benefits of going ‘against the grain’ and seeking out homes to buy as we leave a very busy summer market and head into a more-than-expected slower fall market, we are looking at the personification of it right now.  It will take speed and decisiveness as a home must ideally be selected (even appraised) before a buyer should ‘lock’ an interest rate with a lender.  Put another way, if a buyer is willing to move quickly and decisively, they will have a shot at getting a better bang for the buck which might disappear in less than a month.

The tools and resources are there, so no hesitation please

As the economy improves, as the rule of thumb goes, mortgage interest rates climb higher and conversely buying power shrinks lower.  The ‘sweet spot’ is being in a reasonable financial and credit position just ahead of the recovery trend, enough that the buyer can capitalize on lower mortgage rates in the case rates currently artificially lowered by the Federal Reserve announcement reversing the earlier decision to reduce purchasing bonds (which spurred the early July rate spike). Not since the onset of the financial crisis have mortgage loans been easier to close and not since last winter have their been this few buyers, a sharp contrast to the summer frenzy. If you want to seize a moment of slightly increased buying power, there is no room for hesitation, let's get started quickly!

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com

Off The Fence and Into The Game

Getting Your Head in the Game
Recent mortgage rate spikes and retractions created inspiration

I've noticed more buyers are in the market, not just in my personal local experience, but nationally.  In what I see as an initial panic over sharp mortgage rate increases and an opportunity to regain some lost ground as the increase retracts a little, the fence is clearly no longer the place to be if you are considering home ownership.  While I will echo the sentiment of one of my previous blogs from July (when we first saw mortgage rates increase), DON'T PANIC, I will say buyers have been given a reprieve thanks to the relatively "soft" presentation of Fed Chairman Ben Bernanke on Wednesday, July 17th.  The assurance that the Fed won't be tapering off too much on the purchase of mortgage backed securities, differing slightly from what he hinted at earlier this quarter, created a welcome ans slightly calming effect on mortgage rates and thus preserving some of the buying power of those looking to buy a home.  Over two months after the initial rate spike we saw at the end of June and on July 5th in particular, has nonetheless added some real urgency and knocked real estate spectators off the fence and into the game.


So you want to buy a home before rates go up further, now what?


I'll say it a different way: don't be overly anxious just because you know your buying power has been hindered a little and is showing signs of future vulnerability.  The reason why people go to a real estate professional is to mitigate the anxiety (among many other reasons) over all the moving parts involved in looking for and finding a home and there is no point in trying to babysit every nuance in the mortgage or real estate markets; fearing potential outcomes.  First order of business is get a good 'ally' in your camp who meshes well with your personality and speaks your language.  Not only is home buying a huge financial commitment, it is a huge emotional commitment and you will want to work with someone who you can relate to, pure and simple.  A good real estate agent has not only the skill, knowledge, ethics and experience with all the mechanics of the transaction, they will help you cope with the added stress.


But wait, there's more... much more


I spoke in my last blog about the obvious concerns when buying a foreclosure property, but recognize that no house is ever perfect; you will need to prioritize and follow those priorities as they will be your subjective decision making guide.  Many buyers, including some of the ones I know personally who have recently been 'scared' off of the fence and are now contacting me, have a tendency to get caught up in the general characteristics of a home such as bed and bath count, square footage, lot size, etc.  While these may be important indicators for initial consideration as to whether or not a home meets your basic needs, do not forget equally crucial elements such as amenities, noise level and other factors which impact your long term enjoyment of the home.  Especially for first time buyers, factor in maintenance costs for after the home is officially yours (and your responsibility alone).  Even new homes will need some upkeep and care, sooner than you might think.  Some buyer's remorse is very understandable, even for people who have purchased before, so do your best to remember no home, like the humans who occupy them, is perfect.


Long term considerations about appreciation are fine, but a home purchase should be first and foremost about a warm and safe place to lay your head at night.

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com

Short Sale Stigmas (Still Surfacing)

Short Sales Are A Little Less Frequent
But after six years, you'd think we'd understand them a little better

For those of you who have ever tried to do a short sale on your home, or conversely, tried to purchase a short sale, you already know the term "Short Sale" has quickly become one of the most oxymoronic phrases of all time.  Especially during the onset of the economic crisis and the ensuing chaos which engulfed residential real estate, one could barely determine the difference between a short sale, a foreclosure, a deed-in-lieu or what impact a bankruptcy proceeding had on one's real estate.  Even cash investors, who had been waiting for the real estate bubble to burst, were often met with a banking bureaucracy overlaid with a rapidly emerging regulatory bureaucracy and none of the fingers on the same hand (let alone the right and left hands) knowing what the other was doing.  Distressed real estate has since become an institution unto itself, and while there are signs of the 'stress' in 'distressed' subsiding, there are still plenty of distressed real estate properties on the market and plenty of confusion surrounding them.


Who represents who, exactly?


Many people still believe that the real estate agent selling a short sale home represents the lender on the home who is 'taking the loss' of the short sale.  This simply is not the case for a short sale, though it is true on homes that have already been taken back by the lender and are in the hands of an asset manager of some sort.  While the distressed homeowner is not the ultimate decision maker (the bank has final say in offer acceptance), they retain the right to choose a real estate professional to represent their interests in the sale of the home.  When a homeowner has obtained the agreement from the bank to do the short sale, the homeowner does submit to their servicing mortgage lender's final decision making, but it is not the lender's choice as to who the real estate agent will be.


What does this mean to buyers interested in a short sale property?


There may be a 'better deal' to be found in a short sale than a foreclosed property, but it's important to know who the players are and whose interests they are serving. Similarly, I'd add new legislation as yet another 'party' to the transaction on top of up to two lenders, the servicing lender who is currently 'holding' the mortgage note (performing service and collection of payment) and the investor lender who holds the financial interest of the note.  All these interested parties lead us back to the oxymoron potential of the term "short sale" but doesn't diminish the potential benefit from a short sale as a purchase.  Cash investors have lost interest with home prices stabilizing and "real buyers" can still get a good amount of bang for their purchase money buck from a short sale, provided they have the patience and wherewithal to see the transaction through given the inevitable multiple hands in the short sale cookie jar.


When the bank owns the property


Differing from the short sale, when a bank-owned (or "real estate owned" or "REO") property hits the market, the real estate agent selling the property represents the bank.  The bank is essentially, the seller, and the listing (selling) agent is representing the seller's (bank's) interest.  The plus side, for those of you who are thinking about purchasing an REO property now that cash investors have lost interest, there is one less party in the transaction and ideally a slightly smoother sale.  The minus side, it's still a foreclosure property.  If you haven't seen one up close, an REO property is generally not in that good of shape, no matter how "marketable" a bank has tried to make it look (or more specifically, required it's chosen real estate agent to make it look).  Just know your home inspection dollars as a buyer of an REO property will be money extremely well spent!


Buyers, it's your turn!


The exciting news overall is that buyers, not mass investors, are having their best chance at distressed real estate purchases since distressed real estate came to dominate the residential real estate market.  I have a lot more important information on short sales to share with you, the buyer or potential buyer, as we head into the fall and we see the market gear itself more to you, so stay tuned or reach out to me so we can collaborate!

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com

Hope for "Boomerang Buyers"

The Federal Housing Administration Provides Some Hope


"Boomerang Buyers" take heart!

In mid-August, the FHA gave some hope to the many (I'd say a solid majority) of Americans who have been adversely affected by the debilitating economic downturn of the last six years.   In recognition of the overwhelming forces outside any one household's control which the prolonged economic crisis has caused, a special provision was put in place to observe an "Economic Event" when considering mortgage applicants who otherwise would be disqualified due to a recent bankruptcy, short sale, deed-in-lieu or foreclosure.  While I certainly believe even more flexible (though I'll be happy to never see negatively amortizing loans ever again) mortgage lending options should be accessible for today's buyers, the FHA is providing "boomerang buyers" a fighting chance.

How to tell if you are a "Boomerang Buyer"

Put simply, if you lost your home in the last six years, and want to get back into owning a home, you are what is commonly being referred to as a "boomerang buyer" implying your intention to "return" to home ownership.  Having since stabilized your income and eventually your recent credit to go with it, you may have regained some financial strength after having lost your home in any number of ways when the financial crisis of 2008 found it's way to your door.  Traditional mortgage lending (the only kind one can find today, apart from "private money"), meaning conventional (Fannie Mae, Freddie Mac) or government (FHA, VA) guidelines have until August required various and often extensive 'waiting periods' after a bankruptcy, short sale, deed-in-lieu or foreclosure which excluded many individuals and households who apart from the unavoidable effects of the economic decline, had solid credit history prior to and after the crisis hit.  Now, FHA at least is providing a true alternative.

Did you have an "Economic Event"?

The FHA has long been the bastion of old-school, common-sense and often "manual" underwriting practices, born in 1934 out of that other huge economic downturn known as the Great Depression.  The FHA, by way of the Department of Housing and Urban Development (HUD) now considers an "Economic Event" as an "extenuating circumstance" allowing borrowers to bypass waiting periods greater than twelve months otherwise required in the event of a bankruptcy, short sale, deed-in-lieu or foreclosure.  An Economic Event is defined by HUD as "any occurrence beyond the borrower's control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower's Household Income of 20 percent or more for a period of at least 6 months," which may sound like someone you know if not yourself.  

You still need evidence of a minimum 12 months on-time payments

Common sense underwriting demands a clear documentation of events, showing not only steady credit history prior to the Economic Event, documentation showing the effects of the event itself and most importantly, twelve months of steady credit history after the Economic Event showing the recovery.   I should note this also promising information for first time home buyers who have been hit with a recent bankruptcy due to an Economic Event as defined by HUD and documentable as I described.  If anything I am describing in this blog entry pertains to you, and perhaps you felt like you would be forced to wait on the sidelines while mortgage rates ticked upward and your real estate purchasing power conversely ticked downward, I hope I have provided you some "real-time, real-life" encouragement concerning buying a home.  Contact me if this applies to you, let's try to make the most out of this opportunity while can!

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com

Mortgage Rates Rise, But Keep Calm!

Mortgage Rates Rise Again
But don't panic, don't hide, and don't give up!

Would-be buyers, in case you hadn't noticed, your buying power just went on a diet.  Again.  But before you throw up your hands in frustration, kick yourself for whatever excuses you may have given for not entering the real estate market and go pouting off into a corner, remember you can still mitigate the loss and capture the remains of the day.  Yes you will need some expertise and strong plays in your playbook, but the game isn't over yet.  There is still enough of an economic window to seize the moment and capture an amazing home purchase.  On the flip side, don't be lulled into thinking mortgage interest rates will come back down in any significant way, what with the Federal Reserve not backing down and being highly unlikely to reverse the announcement that it would begin tapering off on the purchase of mortgage backed securities toward the end of the year.  This is a game changer which was bound to have the effect of well, what rates have done over the last three weeks and in particular the day after Independence Day last week.

Sellers, this means you, too

Yes, your buyer pool may have shrank.  A little.  But you are still an advantageous position, no need for you to throw in the towel, either.  Inventory is still lower today than it will be a year from now (when rates will likely be somewhat, if not significantly, higher), and multiple qualified offers are still the norm provided you have an experienced professional marketing and networking your home.  Keep at it, from your vantage point, ultimately, the mortgage interest rate increase means very little to you.

A little less home may be a good thing

As we lumber our way into some semblance of a historically "normal" real estate market, with normal levels of inventory, normal price appreciation and yes, normal interest rates, smaller homes increase in appeal as "starter" homes.  Add to this (again, historically normal) market phenomenon is the more unique phenomenon of the "boomerang buyer" in various stages of individual recovery.  The boomerang buyer, as I've mentioned in previous blogs, is shaking off the economic and financial downturn dust and re-entering the real estate game for which they were knocked out of years ago.  These boomerang buyers will be on the return swing for many years to come, and, you guessed, may need to take your smaller-than-you-had-originally-hoped home off of your hands at a stable price allowing you just enough equity to take the home size step you may have missed from the recent mortgage rate jump.

The worst of real estate market correction seems to be behind us; not too late to move forward!

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com

Mortgage Basics Often Overlooked

What Every Buyer Should Know About Mortgage
But (especially with panic over rate hikes) may be too distracted to ask


The dire warnings of myself and most real estate and mortgage professionals have come to pass, but that's no excuse to allow the natural panic and change of strategy from an interest rate spike to distract a buyer from their due diligence.   Sure, residential mortgage interest rates have ratcheted rather quickly upward, enough to significantly change one's buying strategy.  Not only are buyers looking at roughly 10% less home buying power from a roughly 1% jump in rates (meaning a 10% lower home price), the buyer may have been  "shocked" suddenly into the market having hoped in vain for rates to remain in the mid 3% for 30 year fixed loans long enough for the summer market to cool.  The feeling of being unprepared as well as disappointed can be overwhelming and discouraging; I understand.  But there is no excuse for cutting corners on the now even more important fundamental questions a buyer must ask a lender when considering mortgage loan options.

Don't Panic, You Can Still Avoid Future Surprises

A mortgage is a potentially very long commitment with many subtle details, and so as to avoid any further "surprises" a buyer must know what to expect.  Buyers, do not succumb to the understandable panic and miss the details.  Stay on top of what is happening with your mortgage and avoid looking at the loan as merely a means to an end.  Pre qualification may be a critical first step before you can effectively "shop" but it is not even close to being actually prepared for what happens next in a lightning fast market like the one we currently have. Do yourself the courtesy of surprise avoidance.  Absolutely do not forget to ask your lender or potential lender most, if not all, of the following key questions:

Comprehensive Questions Which Keep You Out of the Dark

1.  Which type of mortgage loan best fits us, and why?

2.  Are your rates, terms, fees and closing costs negotiable?

3.  If I am required to have Private Mortgage Insurance added to the payment (usually the case when less than 20% of the sale price is available to use for a down payment), how much will it cost and how long will I be required to pay it?

4.  Who will service the loan, your institution or another company (mortgage servicer)?

5.  What escrow requirements (taxes and insurance set aside for part of the monthly payment) do you have?

6.  How long is the loan lock-in period (the time that the rate will be honored, a very critical question of late) and will I be able to obtain a lower rate if the market allows for it during the rate lock period?

7.  Knowing there are many different things which can effect the process, what is a good estimate for the time it will take to approve and subsequently close the loan?

8.  Are there any prepayment penalties on the loan (very unlikely these days but worth asking)?

Keep these questions "close to your chest" as the cliche goes, especially if you've just been rocked into the real estate game.  There is still enough time to get something very good out of this market, as long as you keep asking enough questions and pledge to yourself to stay informed.

1.       Sylvia Harsin

2.       714-612-5373

3.       Sylvia@sylviaharsin.com

The All American Beach City

The All American Beach City
Prepares for Independence Day

Thomas Jefferson composed the Declaration of Independence after the Continental Congress unanimously voted on July 2nd, 1776 to declare independence from Great Britain, with whom the colonies had been at war with already over a year.  Thomas Jefferson's document, designed to explain the reasons behind the decision for independence, was ratified on July 4th, 1776 by Congress and launched a celebration of American Independence which the now 50 United States enjoy 227 years later.  Independence Day celebrations erupt all over the United States in and around July 4th, and my town of Huntington Beach plays host to arguably the most amazing Independence Day celebration in Orange County.

Imagine all of the iconic images surrounding Independence Day, real-life Norman Rockwell paintings, mom-and-apple-pie personified, town squares and fireworks displays, sparklers and barbecue and now transport it to an already exciting and vibrant, international surf mecca, Southern California beach community.  This is the 4th of July in Huntington Beach, which saw the first Independence Day celebration in 1904 in conjunction with the first electric passenger train linking the city to Long Beach and Los Angeles, with 50,000 people in attendance.  The festivities have only increased in size and scope over the last 109 years, and have become ever more reflective of American personality.  The delicate balance between individual liberty and community safety, personified by the American experience itself, is revealed in Huntington Beach's Independence Day revelry: without having to maintain an ordinance-heavy "iron fist", Surf City has welcomed tens of thousands of guests who enjoy long hours of celebration without any significant damage to person or property.  In other words, residents and guests of all ages can expect to have an incredibly fun time without much worry over things getting out of hand; Huntington Beach has over time struck learned to this delicate balance to the benefit of all who enjoy a beach side Independence Day.  Events in Huntington Beach begin well before and continue after the actual calendar day of July 4th, and are cataloged here http://www.hb4thofjuly.org/ for your strategic holiday planning.

Huntington Beach residents (and their guests) take note, the American Legion Huntington Beach is selling city-approved "safe and sane" fireworks, look for them at the Wal Mart at Beach and Talbert from noon to 10 July 1st through July 3rd, and from 10 am to 8 pm on July 4th.  The American Legion has been a part of Huntington Beach Independence Day celebrations since the beginning, in 1904.  Buying fireworks from the Huntington Beach American Legion is a rich local tradition, one the whole family can enjoy, and pass on.

Join me at my open house TODAY at 12:30!  526 7th Street in Huntington Beach; I'd love to meet you in person and talk about the extra-fast-paced real estate market in full swing this summer.

Sylvia Harsin

714-612-5373

Sylvia@sylviaharsin.com