Michael Wolff's Real Estate & Finance Blog

Weekly Update! I apologize in advance for not having a post next week. I am getting married this weekend and will be on my Honeymoon! As much as I would love to keep my blog current, I think my wife may have a problem with it!

This week there were 125 new residential listings in the San Fernando Valley*. Looking pretty stable to me! Listings range from entry-level condos to lavish estates.

The highest priced listing is a single-family home in Encino listed at $5,975,000 by Kenneth Margolis and Angel Sheppard of Sotheby's International Realty. Property is a comfortable 8,600 square feet over 3 stories which includes 7 bedrooms and 9 bathrooms. Photos show a tennis court, pool, 3 car garage, wine cellar, half-pipe for you skaters and amazing views! Financing for this custom built home is readily available up to 90% of the sale price to the right buyer**.

Not too far away in Woodland Hills is a 1 bedroom, 1 bath co-op which is listed with Rachel Campbell of Pinnacle Estate Properties for $178,000.

In addition to a plethora of listings, this week has seen 70 newly closed sales. To give you an example of whats selling, sale prices ranged from a Tarzana REO Condo which sold at $254,900 up to a beautiful Mediterranean styled single family home in Encino that closed at $2,700,000. Everything from entry level up to lavish luxury, the perfect home is out there for you.

If you are looking to buy or sell a home, please don't hesitate to use me as a resource. Not ONLY can I assist you in financing, I can refer you to a top-notch Realtor in your area to help with listings or showings!

Michael Wolff

*Photos & information taken from the MLS and includes only the following cities: Van Nuys, Encino, Sherman Oaks, Studio City, Woodland Hills & Tarzana. Cities were chosen to show a good range of property types, prices and sizes. Proprty nformation not verified by Michael Wolff.

**Not a guarantee of financing. Super Jumbo, high LTV programs are available based on income, credit and asset qualifications.

*** Down payment could be a grant from an outside non-profit organization with Seller approved assistance. Ask me for help!

Sorry for the delay! It's been difficult to update this daily so I have decided to change this to a weekly thing.

This week there were 131 new residential listings in the San Fernando Valley*.

The highest priced listing is a single-family home in Sherman Oaks listed at $3,549,000 by Isidora Fridman of Ewing Sothebys.  Property is a comortable 7000 square feet over 2 stories which includes 6 bedrooms, 5 bathrooms, gourmet chef's kitchen, and family room with wet bar.  Financing for this Mediterranean home is readily available up to 90% of the sale price to the right buyer**.

Not too far away in Van Nuys is a 3 bedroom, 2 bath condo which is listed with Erik Reppe with Property Masters for $128,875.  This home is an Bank-Owned REO and priced perfectly for the First-Time Home Buyer.  Ideal property for FHA financing with minimal down payment of 3% required.***

In addition to a plethora of listings, this week has seen 60 newly closed sales.  To give you an example of whats selling, sale prices ranged from a Tarzana Condo which short-saled at $185k up to a brand new Spanish styled single family home in Sherman Oaks that closed at $3,595,000.  Everything from entry level up to lavish luxury, the perfect home is out there for you.

If you are looking to buy or sell a home, please don't hesitate to use me as a resource.  Not ONLY can I assist you in financing, I can refer you to a top-notch Realtor in your area to help with listings or showings!

Michael Wolff

*Photos & information taken from the MLS and includes only the following cities: Van Nuys, Encino, Sherman Oaks, Studio City, Woodland Hills & Tarzana.  Cities were chosen to show a good range of property types, prices and sizes.  Proprty nformation not verified by Michael Wolff.

**Not a guarantee of financing.  Super Jumbo, high LTV programs are available based on income, credit and asset qualifications.

*** Down payment could be a grant from an outside non-profit organization with Seller approved assistance.  Ask me for help!

Once you are satisfied that you are working with a top-quality professional mortgage advisor, here are the rules and secrets you must know to “shop” effectively.

First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS.

But you didn’t really need me to tell you that... Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR.

If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Best case, expect very little advice, experience and personal service. Worst case, expect that you may not close at all. All too often, you don’t know until it’s too late that cheapest isn’t BEST. But if you want the cheapest quote – head on out to the Internet, and I wish you the best of luck. Just remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount or internet lenders who may have a serious lack of experience. Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run. This is the largest financial transaction most people will make in their lifetime. That being said – I am not the cheapest. Of course my rates and costs are very competitive, but I have also invested in the systems and team needed to ensure the top quality experience that you deserve.

Third, MAKE CORRECT COMPARISONS.

When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND.

This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY.

This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.

Again, my advice to you is to be smart. Ask questions. Get answers. As you can imagine, I wouldn’t be encouraging you to shop around if I wasn’t pretty confident that I can give you a great value and serve you the very best.

Please post, call or email with any further questions you may have!

Michael Wolff

Home buyers that meet HUD's income, credit and asset requirements for an FHA insured loan can also qualify for a gift which can be used for their 3% down payment which is the minimum down payment required by HUD.  This gift comes from a non-profit 501(c)3 charitable foundation and never has to be repaid.  The only other requirements are Seller/Builder participation and a nominal processing fee ($300-$600) which can be paid by the Buyer, Seller or Lender.

FHA will insure loans up to 97% of the purchase price or appraised value, whichever is lower.  The max they will lend vary from county-to-county.  Look up your areas limits on HUD's website.

General FHA guidelines:

• No Minimum Credit
  • 620+ needed for new Jumbo FHA loans.
  • 500 or No FICO is possible, but subject to serious pricing hits and you may need some good compensating factors such as a DTI ratios and/or 6 months or more of housing payments in reserves.
    
• 31/43 DTI Limits.
  • 31% Back End Ratio which is your new monthly housing expenses divided by your GROSS monthly income.  Housing expenses include: Mortgage Payment, Property Taxes, Property Insurance, PMI and your Homeowners Association Dues if you live in a condo or other community that require it.
  • 43% Front End Ratio takes your new monthly housing expenses PLUS any other monthly expenses that may appear on your credit such as: Student Loan Payments (defered or not, consult your Loan Officer), Car Payments (unless you have 10 months or less left on your loan), Credit Card Minimum Payments and anything else that may be reporting such as Child Support, Alimony, etc.
  • DTI's in the 50's and even 60% ranges can possibly be approved with appropriate compensating factors such as High FICO scores, Low LTV (Loan-to-Value) and/or Significant Assets remaining after close.
• No Minimum Assets
  • There really isnt a minimum requirement for assets, just enough to close escrow and maybe $500.  As noted above, higher LTVs, higher DTI and lower FICO's may require more Assets.
• Owner Occupancy
  • Borrower must live in the property.  FHA allows non-owner occupied properties to be refinanced as long as the loan currently in place is an FHA and it is a Streamlined Refinance (i.e. no money is being taken out.)
    
• Property Types
  • Single Family and 2-4 Units are allowed as are Rural Properties and Double-Wide Manufactured homes.  Each property type has their own unique requirements, please contact your Loan Officer for more information.
• Loan to Value
  • FHA will insure a loan that is 97% the value of the home but will allow 100% or even 103% CLTV (Combined LTV) with a 3% or 6% outside 2nd mortgage.  These 2nd loans are hard to come by but are very popular when the Seller contributes closing costs by wants to get repaid at a later date or slowly over time.
• Non-Occupant Co-Borrowers
  • FHA will allow co-signers that do not intend to occupy the property.
  • The Non-Occupant's income will be added to the pot for DTI qualification but their liabilities will also be included.

Please feel free to drop me a line if you have any questions!

Today's Hot Sheet shows 24 NEW Residential Property Listings* in the San Fernando Valley were put on the market.  Prices ranged from a $159,000 Condo in Van Nuys to a $9,790,000 Single Family** home in Encino.  There is also a 12 unit apartment building listed in Van Nuys for $1.41m.

Additionally, there were 16 Closed Sales*.  Closed sales range from a Condo in Tarzana sold at $208,000 to a Single Family house in Sherman Oaks on Chandler that closed at $1,725,000.

I have only been posting stats from the last week or two, but the steadiness I am seeing shows that the market is still alive.

Southern California has been a market to watch. Home prices swelled earlier in the decade only to drop as much as 20-30%+ over the last 9 months alone. With the flood of foreclosures and short-sales prices may continue to decline which really hurts those in the market to sell.

However, it is a perfect time for First Time Home Buyers and Investors to pick up properties at huge discounts. If you find this information useful, please let me know. Local Realtors all have access to this information but without being a member or an affiliate member of the local Association you may not get all of the details.

*information taken from the MLS and includes only the following cities: Van Nuys, Encino, Sherman Oaks, Studio City, Woodland Hills & Tarzana

**Home previously owned by Al Jolson, Charlie Sheen, Katy Segal, Kirstie Alley and others... but not at the same time!

Checking the Hot Sheet today shows me that there were 20 NEW Residential Property Listings* in the San Fernando Valley. put on the market ranging from a $174,950 Condo in Tarzana to a $1,399,000 Single Family home in Sherman Oaks.

Additionally, there were 18 Closed Sales*. Closed sales range from a Co-op in Studio City sold at $280,000 to a Single Family house in Encino that closed at $1.2m.

These numbers are higher than they were a few days ago!

Southern California has been a market to watch. Home prices swelled earlier in the decade only to drop as much as 20-30%+ over the last 9 months alone. With the flood of foreclosures and short-sales prices may continue to decline which really hurts those in the market to sell. However, it is a perfect time for First Time Home Buyers and Investors to pick up properties at huge discounts.

If you find this information useful, please let me know.  Local Realtors all have access to this information but without being a member or an affiliate member of the local Association you may not get all of the details.

*information from MLS and includes only the following cities: Van Nuys, Encino, Sherman Oaks, Studio City, Woodland Hills & Tarzana

Studies indicate that over 80% of today's home buyers visit the Internet long before seeking the professional assistance of a REALTOR®. This means that, thanks to popular realty-themed websites that compete for your business, your clients are already armed with more information than ever before.

That's why today's savviest real estate agents must change their perspective and fight back. And the best way to do this is to visit and become familiar with these kinds of sites and the features they offer. This data will not only prepare you to answer any questions your clients might have, it will allow you to provide a more complete service that your clients will want to recommend to all of their friends and family members.

Property Listings & More

1) Redfin.com: In addition to listings, this site offers information such as how long a home has been for sale, its last sales price, and its current value. It also provides virtual tours to listed homes.

2) Trulia.com: Like Zillow.com, which offers satellite views and the estimated values of each home, Trulia's “heat maps” show how hot or cold an area is based on prices, sales, and popularity among its users. Trulia.com also has free tools real estate agents can easily add to their own websites to increase functionality and traffic.

3) Maps.Google.com and Maps.Live.com: For bird's-eye view, even 360 degrees in some cases, these amazing map sites offer a virtual perspective of available homes that's truly hard to beat.

4) Walkscore.com: interesting site that rates any address based on the walking distance of its nearby stores, restaurants, schools, parks, coffee shops etc.

5) SchoolMatters.com: A Standard & Poor's company, this site offers parents (and potential homebuyers) an objective rating of public schools and public school districts by region, including test scores and demographics. GreatSchools.net offers similar info and ratings on private schools based on region.

Government Websites

Government loan programs offer great opportunities for many consumers in many regions across the country, especially first-time buyers and veterans. The following websites are likely one of the first of many sites potential homebuyers visit during this process:

1) HUD.Gov is the official website for the U.S. Department of Housing and Urban Development (H.U.D.) This site lists HUD homes and provides information for home buyers, including financing options and home buying programs available through the Federal Housing Administration (FHA).

2) Homeloans.va.gov: This site houses information about government home loan programs specifically for veterans.

Give me a call if you think of any more sites I should add to my list. I look forward to developing ways that we can grow our business together.

Checking the Hot Sheet today shows me that there were 15 NEW Residential Property Listings* put on the marketranging from a $219,900 Condo in Woodland Hills to a $2.3m Single Family home in Studio City.

Additionally, there were 11 Closed Sales* as of this post (3:45pm).  Closed sales range from a condo in Encino sold at $205,000 to a Single Family house in Sherman Oaks that sold for $3.8m.

Southern California has been a market to watch.  Home prices swelled earlier in the decade only to drop as much as 20-30%+ over the last 9 months alone.  With the flood of foreclosures and short-sales prices may continue to decline which really hurts those in the market to sell. However, it is a perfect time for First Time Home Buyers and Investors to pick up properties at huge discounts.

*information from MLS and includes the following cities: Van Nuys, Encino, Sherman Oaks, Studio City, Woodland Hills & Tarzana

Taking the step into home ownership is one of the most important financial decisions a person will make in their lifetime. There are many factors to consider when embarking on this venture. Literally hundreds of loan programs are available, and it is important to find the one that best fits your personal long-term goals.

First and foremost, you must have a mortgage consultant in your corner that is willing to take the time to know what your long-term goals are. Communication is the key factor here.

Curious prospective home buyers sometimes turn to Internet-based services just to see what current interest rates are. But a faceless web site will not take the prospect’s future financial planning into consideration or guide the potential borrower through the many nuances of the loan process. When shopping for a home loan, be wary of web-based services that offer programs to reel prospects in with attractive rates that are based upon unrealistic time frames.

If a lender is offering a terrific rate based on a 10-day lock-in period, it is unlikely that the potential home owner would actually be able to find their dream home, get through the negotiation process and win approval from a lender within such a short period of time. This is called short-pricing, and when it comes time to close the transaction, the rate that was originally offered is simply no longer available. As a result, the unfortunate prospect is bulldozed into a loan program with a higher interest rate.

It is highly unlikely that a qualified loan originator whose business is based upon referrals will use unscrupulous tactics such as this to get new customers in the door!

Once you have found a mortgage consultant that you feel comfortable working with, lay your goals out on the table because it will have a tremendous impact on choosing a loan program that meets your specific needs. One of the most important factors to consider is how long you wish to borrow the money for. For example, if you know you will only be in the home for five years, it wouldn’t make sense to opt for a 30-year loan program or pay points up front to secure a lower interest rate. You would not be in the home long enough to benefit from such action.

Your mortgage consultant should be able to narrow down a selection of programs based on the information that you have provided, and present you with an easy-to-read spreadsheet that clearly defines viable options for your interest rate and amortization schedule, monthly payment and any potential savings you may realize by paying points up front.

Moreover, a reputable loan originator will not hesitate to share this information with your tax consultant or financial planner so they may offer additional feedback on your behalf.

Home ownership imparts a rewarding vehicle for building wealth and a strong financial future. The mortgage consultant that you choose should be there not only when your loan closes, but should also provide you with ongoing service to assist you in managing that debt over time.

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

A Qualified Mortgage Consultant Can Outline Your Options.

If you want more information, please do not hesitate to drop me a line!

Michael Wolff

michael@WolffFinancial.com

(818) 776-9272

(888) 989-6533