Wednesday, May 13, 2015

Five Reasons to Refinance Your Home Mortgage Loan Soon

 

Mortgage loan rates are creeping up in Los Angeles


The Mortgage Banking Association (MBA) has just released its April 2015 statistics, concluding that credit availability for home mortgages has inched upward again. This is a continuation of a trend that has been ticking ever higher since January of 2015.

On the other hand, mortgage interest rates have followed bonds (which the invariably do) with increase in early May. While this may also reflect mortgage demand which is usually stronger in the go-go home sales months of May - August, it may also be telling us something about the direction of interest rates due to the competition for low interest bonds worldwide. Too many bonds chasing not enough cash will drive up rates.

The question you might ask yourself is this: "Should I refinance my home mortgage now?" Here are five solid reasons to do so.

1.  Lock in historically low interest rates - Even if mortgage rates have moved up .3 over the last couple of weeks, current rates of 3.8 on 30 year fixed loans is not normal, and will likely never happen again soon, if ever, once the Fed decided to tighten credit and increase base rates.

2. To realize optimal cash out - This may be the optimum value on your home for now. While the supply demand curve for residential real estate appears to favor owners for the next few years, there is likely to be at least a short term dip in home prices if interest rates rise by a point or two, back to normal levels. Moreover, prices usually peak in mid summer and drop of in the fall. If you want to get cash out, now may be the best time.

3. To eliminate your mortgage insurance - Whether through FHA or through a private insurance company, you may be paying as much as 1% or more per year to cover premium mortgage insurance. Most private insurance can be eliminated if you reach 80% equity in the home. Some FHA plans don't have this option. But you may be able to refinance the loan to get rid of the FHA premium.

4. To get rid of higher priced debt like credit cards of finance companies - Why would you want to pay 8%, 12.5% or even 23% for borrowed money, when your local mortgage lender will be happy to provide you that money for $3.8%.  If you have even $10,000 in credit card debt at 14%, you are shelling out $1400 per year for that credit line.  Save $1000 a year with a refinance.

5.  Prepare for a time of less or no income - Are you getting ready to retire? You won't likely be able to borrow against your home after your income stops. While for many homeowners, it is wiser to sell the home for cash or downsize to take out cash, for many the best approach is to to refinance the existing home to reduce the interest rate and/or take out cash. With such low rates today, you can generally invest the money at a better return, maybe even much better.

If you are thinking about refinancing your home mortgage, you

The Future of Los Angeles Residential Real Estate - Part 1

 

Who knew housing would crash in 2007? What's next?


Applaud who you will for the exploding cost of housing from 2000 to 2007, and then blame the same folks for the disaster that followed said explosion. Unscrupulous bankers, brokers, government workers and agencies, and consumers all had a hand in the mess. But none of the excesses would have been possible but for the BIG MYTH of that time: home prices will continue up forever.

The truth about any market is that there is no permanent truth other than change. Whether gold, steal, copper, coffee, stocks, bonds, or real estate, you can count on the reality that at some point the amateurs and pros will both get blindsided. Over the next several weeks, this blog will make the case that Los Angeles, and to a great extent the rest of the US and World, is entering into a period where the most brilliant among us haven't a clue of what to expect. They might pound their chest with bravado about their scientific theories of what the future holds, but the ones who turn out to be right will have done so by blind, or at least almost blind, luck.

Here is a short list of why the future is so unknowable regarding economic trends of any kind.
  1. Population growth in Los Angeles is coming from an aging population. People are living a lot longer. This trend is very likely to increase, not decrease.
  2. Young adults are getting married much later in life, if at all.
  3. We are not replacing the population through childbirth.
  4. Homes built in last 50 years were designed for a family of 5, not 3.
  5. A possible future where a majority work at home.
  6. A shrinking middle class, and increasing upper middle class.
  7. Not enough jobs for two wage earners in many homes.
  8. Possible shrinking population with no low wage jobs for immigrants.
  9. Second industrial revolution completely changing manufacturing and the service sector
  10. Self driving cars making commuting more bearable.
  11. Likely large increase in mortgage rates from historic lows today.
  12. Student loans keeping many out of the housing market.
  13. AirBnB and other similar companies eating up prime residential real estate
  14. Cost of basic goods and services will continue to decrease, creating a rising % of income that will be available to compete for housing. 
  15. The largest wealth transfer in history as baby boomers leave the stage
  16. The middle class moving out of Los Angeles, or even California, in search of cheaper housing and lower taxes in places like Texas or the Carolinas. 
If you'd like to do your own analysis. Go back through the list and see how many of these changes are likely to push prices up, and how many will be pushing prices down. 

Add your voice. What other major factors are likely to shape real estate prices in the future?

Saturday, April 18, 2015

7 Surprising Reasons to Refinance Your Los Angeles Mortgage Now

 

There are obvious potential benefits to a mortgage refinance in 2015... and not so obvious reasons.


Let's quickly touch on the obvious reasons to refinance:
  • If you can save 1/2% point and plan to stay in the home 3 years, you'll save money
  • To take out cash for another investment, college funds, home improvement, etc.
  • To shorten the term of the loan
  • To reduce your payment
Now, here is the way less obvious list:
  1.  To get rid of mortgage insurance (FHA, PMI). If your home has increased in value since your purchased it, and you now have 20% equity, a refinance can save you the cost of mortgage insurance. In many cases this saves you over $100 a month.
  2. To increase the term of the loan so that you get low interest financing for longer. This will include either cash out and or lower payments, but your goal is to to "borrow" at these crazy rates for longer. 
  3. This may be your last chance to refinance while you have income. If you are close to retirement, you can use the refinance to set up your retirement plan, keeping in mind that you may not be able to refinance in future years regardless of your assets or the equity in the home. 
  4. Getting rid of a "bad" loan. Possibly your current loan is an adjustable with a balloon, or was the result of a loan modification where the benefits are going to run out soon. 
  5. Pre divorce planning. You are considering a divorce. Currently both names are on the loan. Refinance now with only the name of the spouse who will continue with the payments. Easier now than it will be after the divorce.
  6. An old reason that is back in style - Pay of higher interest debt including credit cards, home equity loans, and finance companies.
  7. A combination of the above. No one of these reasons may be enough to move you to action, but consider this list of benefits we found one family received in a single refinance.
  • Go from a 30yr (with 18yrs left) to a 15yr mortgage
  • Drop my interest rate over 2%
  • Lower my monthly payment by $20
  • Get cash back at closing
It costs nothing to discuss your options and potential benefits of a refinance with Bill Rayman. He can advise you as to whether your circumstances, including reasons to refinance, equity in the home, income, and credit score provide you with a potential advantage.  Call Bill at 424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025
bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman

Friday, March 27, 2015

Spring 2015 Los Angeles Real Estate Market is RED HOT!!

 

Spring has sprung and there are still no sellers


As we continue to review the Los Angeles and West Los Angeles real estate market, the unmistakable data points one way...no inventory. 56 single family dwellings for sale in Santa Monica, 25 in Culver City, and 5 in Ladera Heights. Virtually all of these are over $1,000,000.  Super hot bedroom communities, Westchester and El Segundo have more listings and some 3 bedroom units in the $700,000 and up range.

As always, as you go inland, you will see better prices, but not necessarily many more total great opportunities for value. One home I am aware of just listed at $100,000 over the highest market estimate for that home.

The good news is that mortgage rates continue to be super low - under 4% for 30 year fixed depending on the qualifications of the buyer. One pundit mentioned the other day that this is good news now, but might cause some reduction in the home value when rates go up in the future. This might be true, but in the West Los Angeles Market there is not going to be increasing supply of single family dwellings. If anything that supply will decrease as some homes are being converted to multi-unit dwellings.

If you are contemplating purchasing a home in West LA, and would like to have a conversation about your options, call Bill Rayman at  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman

Thursday, March 19, 2015

The Fed's March Move Not Moving the Mortgage Market Much

 

The Washington Post provides the latest housing statistics. What do they mean?

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.78 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.86 percent a week ago and 4.32 percent a year ago.

The 15-year fixed-rate average dropped to 3.06 percent with an average 0.6 point. It was 3.1 percent a week ago and 3.32 percent a year ago.

Hybrid adjustable rate mortgages were mixed. The five-year ARM average slid to 2.97 percent with an average 0.5 point. It was 3.01 percent a week ago and 3.02 percent a year ago.

The one-year ARM average held steady at 2.46 percent with an average 0.4 point.

“Housing starts dropped 17 percent to a seasonally adjusted pace of 897,000 units, below market expectations,” Len Kiefer, Freddie Mac deputy chief economist, said in a statement. “However, housing permits increased 3 percent in February. As we head into spring, home builders remain positive about home sales in the near future although the NAHB Housing Market Index dropped another [two] points to 53 in March.”

Meanwhile rising interest rates have put the brakes on mortgage applications, according to the latest data from the Mortgage Bankers Association.

The market composite index, a measure of total loan application volume, decreased 3.9 percent. The refinance index fell 5 percent, while the purchase index dropped 2 percent.

The refinance share of mortgage activity accounted for 59 percent of all applications.
The consensus seems to be that the Fed will raise rates later this year. This is likely to be a very modest increase in the Fed rate, and doesn't mean that mortgage rates will increase at all. Mortgage rates are only somewhat influenced by the Fed rate. Supply and demand for mortgage capital and the cost of bonds to underwrite mortgages are more critical to market rates for mortgages.

As noted by The Washington Post, mortgage rates have been moving up and down in a very small range for months, even years. There is no clear evidence that a boom in housing sales is anywhere on the horizon. While a shortage of available properties, and the increases in rental prices continue to drive up housing prices in many markets, it has not taken on boom proportions.

As noted in earlier posts on this blog, this is a good time for you to purchase a home if this is a good time for you to purchase a home. In other words, don't rush out and buy to beat a market trend, and don't stay out of the market to try and take advantage of some future pricing or mortgage interest rate advantage. At this time, it seems unlikely that interest rates will go much lower than these historically low rates, but they also don't seem headed higher. Home prices seem likely to trend higher.

As with all prognostications about any market, as soon as the prediction is made, it could be dead wrong. One things we can be certain of: if you are looking for a mortgage on a home for you and your family, or for investment, we can help you find the very best options for your situation.  Call Bill Rayman at Guaranteed Rate today.  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

bill.rayman@guaranteedrate.com
https://GuaranteedRate.com/BillRayman

Thursday, March 5, 2015

Visual DNA Suggests a New Way to Test Your Credit Worthiness

 

Banks won't give you credit based on your credit score. Maybe this test would be better.

A company called Visual DNA claims to have developed a very short test that will give lenders a better indicator of credit worthiness than the current use of Credit Scoring based on your historic use of credit, income, expenses, and such.

The test uses a series of questions like the one above to determine your impulsiveness, conscientiousness, response to crises, and other markers they have determined point to the likelihood you will pay off your debt.

You can take the test here. 

You can read a longer article on the subject here.  The article points out that while you may think it is silly to offer such a test for this purpose, think again. It is already being used in Russia and South Africa for those who have little credit history.

If you are looking for a mortgage, and have the ability to make the payments, but your credit scores aren't what you need, give Bill Rayman a call to discuss how you might potentially resolve that and be able to buy that dream home or condo.  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025
bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman

Tuesday, February 24, 2015

Would You Like to Buy a Home in Santa Monica?


Home values are skyrocketing in Santa Monica


There are just under 90,000 folks living in the city of Santa Monica. Depending on whose statistics you use, there are 25-30 houses for sale at this time. Over the course of the past year, around 15 - 20 sell each month. If you look up the definition of seller's market, you'll see a picture of the this little berg.

Condos and townhouses add a few more possible places to purchase. Zillow says that there are a total of 157 total residential dwellings for sale, so that suggests about 130 attached houses of one kind or another. Amazingly, you can still buy some well located condos for under $500,000. They are also under 700 square feet and feature one bedroom and one bath.

Renting might be an option for you, but unless you are blessed to have a rent controlled apartment (rent control practically started here), you will pay an average of $2800 for a one bedroom unit.

Your trusty reporter is old enough to have lived in a large 1 bedroom on 4th Street, North of Wilshire for just $95 a month.  That would have been 1970.  I looked at, and almost purchased, a 2 bedroom, one bath home in the 900 block of Georgina for $52,500.  But if you've lived on the Westside for any length of time, you have such stories.

The good news regarding Santa Monica real estate has to do with mortgages. Bill Rayman can get you a mortgage for one of these houses or condos at historically low rates. 30 year fixed rates are still under 4% for most loans, and right around 4% for jumbo loans. This means that your $1m mortgage will only set you back $3300 a month in interest, some of which will be tax deductible. You'll pay a total of $4774 on the mortgage plus property tax and insurance.

So if that sounds like a good deal to you, or if you need half that much or twice that much to buy your dream home, give Bill Rayman a call at 424-354-5325. He promises to help you find the very best mortgage product to fit your needs.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025
424-354-5325
bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman