Wednesday, November 20, 2013

Nothing Available. Home Sales Drop 7%, Price Up 25%


Classroom Perfect Example of Supply Demand Curve is California Housing Market

According to

"In the West region there is a significant shortage of inventory, so you have buyers who are looking for the right home unable to find it and unwilling to commit," said Lawrence Yun, chief economist for the National Association of Realtors. "But because of the inventory shortage, one is still seeing strong price increases in the West."

Demand is moderate or the situation would be chaotic.  Kids can't afford to move out of their parent's home, those who'd like to be living alone have room mates.  There is little to no immigration, especially the extra legal type.  If the economy were to produce 250,000 jobs a month for six months or so, especially if those were full-time, there would be pent up demand that would start to turn loose. 

Also holding down sales is the tight mortgage market and the slight increases in interest rates.  While these increases don't really add much to the monthly payment, there is a psychological impact.  Generally, if demand is strong enough, that psychology can change to worry about grabbing current interest rates before they go higher. 

Bottom line on bubble speculation.  Probably not.  No place for the population to move.  No lower cost alternatives.  No more room at the inn.  Rents and prices are likely headed higher yet. 

Monday, November 11, 2013

Almost Half of Baby Boomers Carrying Mortgages into Retirement


Is it Smarter for Seniors to Hold Mortgages or Pay them Off?

AARP reports that 
  • 53.6 percent of households age 55-64 carried a mortgage in 2010, compared with 37 percent in 1989
  • 40.5 percent of households age 65-74 carried a mortgage in 2010, compared with 21.7 percent in 1989
  • The median value of mortgage debt among the 55-64 crowd soared to $97,000 in 2010, up from $33,800 in 1989. 
  • The median value of mortgage debt among the 65-74 crowd soared to $70,000 in 2010, up from $15,300 in 1989.  
And the Joint Center for Housing Studies of Harvard University reports that

The media loan-to-value ratio among homeowners age 50-59 jumped from 10 percent to 38 percent between 1989 and 2010.

Are seniors just haphazardly going into retirement years with much more debt?  Is the additional debt due to increased home values, increased wealth, or a carryover from the boom bust cycle in real estate?  All of the above?  Or could it just be smart?

Not All Debt Is Bad

The first is, not all debt is bad debt.  Considering that you might be borrowing potentially hundreds of thousands of dollars for ten, twenty or thirty years, and you can lock that interest rate in today at around 4% or even lower.  Plus, the interest on that money is very likely tax deductible.  Therefore, if you are in a 25% tax bracket which is close to the national average, a 4% interest rate means your effectively borrowing at 3%.  Where else can you get debt like that?  Certainly not from your credit cards. Even at age 65, you are likely to live to 85 or longer.  A 20 year mortgage is not a crazy idea.

How Might You Use the Funds You Have Rather Than Paying Off Your Mortgage?

The second reason to consider not paying off your mortgage is this; think about the use of the funds.  Paying down the principle, which is to say increasing your equity in the house, feels like a good thing and I respect that a really good reason to do it something is merely that it feels good.

From a strict financial point of view, however, your house is an asset.  When you put money into any asset you want to see that the asset appreciates in value... that it grows.  It sounds somewhat counter intuitive until you realize no matter how much you put in to your house in terms of the equity, but whether you put down 100%, or you borrow 100%, the price of your home is established by the market.  Therefore, paying money into your mortgage is technically a zero rate of return.

With that in mind, the issue that comes up is the big one.   If you don't put it into your home by paying down principle, what else could you do with it?  Right now, the investments in the market are very poor.  CDs are paying on average 1.6% in the country, but that’s today.  Looking further down the road, we’ve been accustomed to five, six, seven, eight percent returns on investments.  So if you can borrow from the bank at three, four, or five percent, you can put it in stocks or even just very secure treasury bonds and end up with a positive result.   You are doing what a bank does,  borrowing low, and you’re investing high at a secure rate.
Another reason for holding on to your cash is this.  You might have been dutifully paying down your mortgage over the years.  Now you are sick and need cash, or have other reasons why the cash would be very helpful.  But for a variety of reasons you can no longer refinance. You are now in a situation where you don’t have cash in the bank, but have a ton of cash in your home's equity.  If the money that went into paying down the mortgage had gone into a savings account, it would now be readily available.

Think in Terms of Net Worth.  Paying Off the Mortgage Is Old School

The key words that you should be thinking about are net worth.  When you add up your home and all your other liquid assets, less your liabilities, that’s what your worth is.  So whether you own a $100,000 home of which you owe $90,000 and therefore you have a net worth of $10,000; or you have a $100,000 home of which you owe $100,000 but you have $10,000 in the bank, you still have a net worth of $10,000.  They are the same, except from my own recent personal experience, I couldn’t count the number of people that would have been better off having the cash outside the house. 

Home Equity Is A Tempting Asset If You Should Lose a Lawsuit

A third reason to consider not paying off your mortgage is to recognize that the more you own of your home, the greater your equity share.   Arguably the more visible that asset is to a potential creditor the more likely they are going to be looking to claim it.

There is a wonderful story from the 1930s, where Walt Disney owed Bank of America $7 million dollars that he had borrowed to finance Snow White.  He and his brother laughed, because they realized that the last thing Bank of America was going to do was foreclose on them.  In fact, the bank wound up giving them more money because they couldn’t afford to take the studio from them.  Luckily for both Disney and Bank of America, Snow White was a hit and they were able to pay the loan.

For you, it is similar.  Just imagine if you own a home that is completely paid off versus your neighbor who has the exact same home but owes the bank 90% of the money.  You both have some kind of financial problem.  I can’t promise you, but hypothetically I’ll promise you, if the bank has to choose who to go after, they’re coming after you because your house they could put on the market and sell and get their money back.  The person who owes the bank a lot of money, that house isn’t worth anything and they are more likely to keep the house. 

If You Want to Make Those Extra Payment, Here Are the Best Methods

If you decide that you have plenty of cash on hand to deal with emergencies, don't really want to use your cash to invest in other places, and want to feel good by paying the mortgage off faster, you have choices of how to do that.

One is to make extra payments.  Some folk decide to pay an extra payment every quarter.  Or you can just add money to each payment.  You can also just send a check any time you feel like paying off some principle.

Whatever your needs are with regard to your mortgage, please know that we are available to help in any way possible.  Refinance to lower cost?  Use equity in one home to purchase a rental property?  You tell us what you need done.  We have the resources to get it done.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Friday, November 8, 2013

You Might Qualify for a 5% Down Home Loan

20% Down Might be a Good Idea, but if You Don't Have 20%, 5% Might Be an Option for You

According to, it is still possible to get a 5% home mortgage loan in Los Angeles in late 2013.

Good news for homebuyers who don't have a lot of cash on hand: Banks are offering loans with down payments of just 5%.

After the housing bubble burst, buyers needed to come to the table with as much as 20% down or they had to turn to the Federal Housing Administration for a low down-payment loan.

But now banks like TD Bank, Bank of America (BAC, Fortune 500), and Wells Fargo (WFC, Fortune 500) are loosening the purse strings, offering loans with down payments that are as low as 5%.
TD Bank's "Right Step" mortgage, for example, allows borrowers to secure a loan with a 5% down payment. It also allows them to receive as much as 2% of the sale price as a gift from a relative or other third party, so they would really only need 3% down.

Why the change of heart? Market opportunity for one thing.

FHA dominated the market for low down payment loans during the housing bust. Taking on all those risky loans, however, depleted the agency's reserves and has forced it to increase costs.

Over the past couple of years, the FHA has been raising premiums. And this year, it started requiring borrowers to buy private mortgage insurance for the life of the loan -- an expensive proposition that has sent many prospective borrowers looking elsewhere.

While the loans were far too risky for private lenders to take on before, rising home prices have made them less of a gamble. Plus, the banks think they can offer a better deal than FHA.

'I live in a bank'
"As the FHA selectively reduced market share by increasing premiums, we introduced a substitute for FHA loans," said Malcom Hollensteiner, the director of retail lending sales for TD Bank.

While the private lenders that are offering the 5%-down loans are also requiring borrowers to buy private mortgage insurance, they are only requiring them to do so until they build up 20% equity in the home.

The difference can really add up. Paying an insurance premium over the life of a $200,000, 30-year fixed-rate loan from FHA that carries an effective mortgage rate of 4.4% (5.75% when you tack on the insurance premium), can add up to nearly $60,000 over the life of the loan.

Of course, homeowners can always refinance to end their FHA insurance, but rates are so low that by the time an FHA borrower is able to refinance to a lower rate, it may not be worth it. To top of page
We have been reporting this fact for months.  See our blog post back in April:

Buy A Home with 5% Down - Low Down Payment Loans on the Rise Says

Refinance Up to 95% and Lower Your Interest Rate 

In fact, a strong argument can be made that it is smarter in this interest rate market to put down the least amount possible.  You can achieve all the same long term benefits of appreciation, tax deductions, and reduced expenses for your habitation with the lower down payment.  You then maintain a larger cash reserve for other investments, opportunities, or just rainy day funds.

We can help you sort all that out.  We are not merely a source of great rates and overall costs for mortgages, we also serve you with our years of experience in this market.  Call today.

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025



Wednesday, November 6, 2013

The Great Home Ownership Rate Debate

What Is the "Right" Percent of the Population Who Should Own Their Own Home?

The Current Ownership Rate Is the Lowest in 18 Years.  Time to Panic?

Every president since FDR, at least, has attempted to stimulate home ownership in the US.  There can be little doubt that this emphasis on the positive aspects of owning a piece of America has benefited many individuals and families.  Note that there are those who think the huge emphasis is misplaced, and that families should not necessarily place such a huge percentage of their assets in one investment, most think property is a excellent hedge, providing good returns, and generating many side benefits. 

But after reaching historic highs of 69% in the first decade of the 21st Century, the bubble burst and we now find ownership rates to have returned to the norm of around 65% that has been in place of at least three decades.  The government is all in a tizzy at this point attempting to provide ways to turn around the falling rate of ownership, and not reinflate the bubble.  Most of the discussion turns around the issue of how tight or loose to make regulations around mortgage qualifications.  Ease the qualifications, and send ownership rates higher, but also create increased demand on limited supply, thus driving up prices. . . bubble.  Tighten regulations to reduce risks to mortgage holders and the banks and insurers, and you risk driving out potential solid buyers, thus lowering demand and hurting the housing market. 

One might ask the question, what would the market do if there was no government interference?  Is 65% about all we can expect.  There are entire segments of the population that probably shouldn't or don't want to own: 
  • Many seniors who don't want the responsibility any longer
  • Many singles (especially young singles)
  • Those with transient jobs
  • Unstable personalities inclined to risky behavior
  • Some who just prefer a simpler life
Interestingly the percent of white home ownership tends to be around 6% higher than the overall rate.  There could be an argument that the "right" rate would be the white rate.  If 70% ownership among whites was sustainable over that 30 years, at least a good goal might be to do that for the entire population.

Two excellent articles on the subject have recently appeared in Bloomberg and in US News.  These articles delve more deeply into the pros and cons of the overall social policy and the government's role in that policy. 

In California home ownership has been a remarkable vehicle to wealth for many.  There are few areas of the country that are more likely to maintain value and offer the opportunity for appreciation that Los Angeles and Orange County.  If you are interested in purchasing a home for your family or for investment and you need the services of a mortgage professional to help you find the best possible mortgage product to help you secure that dream, please give us a call.  We are now a part of Guaranteed Rate, and have resources that can help you find a perfect mortgage for your needs.

Call now:

Bill Rayman Home Mortgages
12121 Wilshire Boulevard, Suite 350
Los Angeles, CA 90025
Phone: (424) 354-5325 

Friday, November 1, 2013

Is There Still Time To Buy Residential Income Property?


Rents Predicted to Keep Going Up ... A Lot

This is not a great time to be a renter, and things do not seem likely to improve for those who can't afford to buy a house or condo.  One of the most under reported results of constraints on mortgage lending has been the resulting shortage in rental units and the upward pressure that shortage has put on the cost to rent.

According To MoneyTalksNews:

The price of renting is rising and competition is growing for apartments, condos and houses. Rents rose 7.6 percent nationally in the last five years, The Wall Street Journal says. In some cities they’re up 10 percent. Apartment rents (that’s the average rent, excluding perks and freebies) are expected to rise about 16 percent — from $1,049 in 2012 to roughly $1,215 by the end of 2017, Reis Inc. analyst Michael Steinberg tells Money Talks News.

“The country has been on a decades-long drought of large-apartment-building construction” because, until recent years, homeownership was growing, writes Slate economic writer Matthew Yglesias. Investors have been buying up foreclosed homes and renting them out, but even that’s not enough to satisfy the demand for rentals.

“Finding an apartment to rent got even harder in the third quarter, as the U.S. apartment vacancy rate fell to its lowest level in more than a decade,” says Reuters, citing statistics from Reis Inc., a provider of commercial real estate data and services. (See: “7 Tips for Finding a Rental in Today’s Tight Market.”)

More renters in the market Here’s why the population of renters is growing:
  • Foreclosures. The share of Americans who rent a home is at a record high, in large part because of the millions of foreclosures that followed the real estate crash. Since 2006, the first year the U.S. saw more than a million foreclosures, an estimated 21.57 million homes have been foreclosed on, according to this chart at StatisticBrain. 
  • Recovery. By 2012, 45 percent of 18- to 30-year-olds were living with older family members, says the Atlanta Federal Reserve. Compare that with 39 percent in 1990 and 35 percent in 1980. As the economy recovers, economists expect more workers to find jobs and start entering the competition for rentals. 
  •  Tighter lending standards. Homeownership has dropped to an all-time low after the crash as lenders grew very fussy about whom they’d offer a mortgage. Homeownership rates in the U.S. fell to 65 percent in June, after climbing to a record high of 69 percent in 2005, according to the Census Bureau (see Table 14). 
  • Rising home prices. Lenders are loosening up their standards a little (but not a lot). But just as it started getting easier to finance a home, prices began rising – skyrocketing in some areas. That’s also pushing more people to rent, The Wall Street Journal says. 
  •  Busted boomers. A growing population of downsizing retirees and empty nesters who’ve lost retirement savings and need to rent is contributing to the demand. 
Does all of this mean you might want to buy a house, duplex, condo, or even an apartment building to take advantage of the rising rent prices?  Are there still residential properties available for sale or sitting in foreclosure that make sense?

Maybe so.  Just last week another fund was created for the purpose of buying up such properties.  While there are already several very large investors buying as many residential homes as they can find at reasonable prices, the super bargains have been scooped up.

If you decide that this would be a great place to leverage both increasing rental prices and increases valuations, just move cautiously, and take your time to buy a property that will make you money and not cause you grief.  You may also want to read one of the most popular posts ever on this blog:

If you need help with a mortgage to purchase a home for your own use or to rent, please give us a call:

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Tuesday, October 29, 2013

"1 tip could save $50,000 on your next mortgage," Says MSN's Money Talk News

From Money Talk News Article

This simple step is essential for getting you the best possible interest rate on your home loan.

This post comes from Marilyn Lewis at partner site Money Talks News.

Ready to apply for a home loan? Here's the one piece of advice that can save you 10s of thousands of dollars on your mortgage, plus six more tips to help you get the best mortgage deal you possibly can.

Before you apply for a mortgage, pull your credit history and get your credit score. Why? Cleaning up your credit history and raising your score can make you eligible for the best interest rates on a mortgage.

You'll want to do this as soon as possible -- giving yourself a year to improve your credit.

Borrowers with scores above 720 get the best mortgage rates. They are welcomed with open arms by lenders. If your score is below 720 you can still get a mortgage. But it's more difficult. And it'll cost you more.

The chart below shows you why. You can use your own numbers at MyFICO's Loan Savings Calculator

Lower credit score? Pay more interest
Credit score* APR** Monthly payment Total interest paid
760-850 4.018 $959 $144,848
700-759 4.242 $985 $154,244
680-699 4.421 $1,007 $161,845
660-679 4.636 $1,032 $171.08
640-659 5.07 $1,085 $190,072
620-639 5.62 $1,154 $214,781
*Source: MyFICO; **Annual percentage rate
In this chart, you'd pay $195 a month less with a 760 credit score than with a 639 credit score. That's a difference of nearly $70,000 over the total life of your mortgage.
We couldn't agree more, and we will work with you to get the best possible rate through our new association with Guaranteed Rate Inc.  

Bill Rayman Home Mortgages - mortgage broker for home loans and mortgage banker
12121 Wilshire Boulevard, Suite 350
Los Angeles, CA 90025
Phone: (424) 354-5325

Monday, October 28, 2013

Are Mortgages Harder to Get if You Are Self Employed?


A Good Mortgage Broker Can Help You Navigate the Approval Process

2013 will long be remembered as the year the federal government slowed up the housing recovery by making mortgages much more difficult to obtain.  Only history will tell us if the stiff medicine was good in the long term.  But if getting a mortgage got harder for those with a pay stub, it certainly also became even more difficult for the self employed.

Assuming that you are filling out a schedule C, your tax return will be the primary method of establishing your income.  Generally, the lender will average the last two years of net income.  However, if the most recent year shows a decline, they may only use the second year. 

If you know well in advance that you are planning to get a mortgage, you may wish to change some of your accounting practices.  We all know that there are many ways to count various aspects of revenues and expenses, and that the normal inclination is to keep net income low, and thus pay lower taxes.  However, you may want to show more income leading up to the mortgage application, even if this results in higher taxes. 

If it is too late to bulk up your earnings, you might consider doing an amended income tax return.  In addition, a skilled mortgage broker may be able to help you with notes to your return that would include adding back certain expenses, such as depreciation or one time charges, without doing an amendment.

Some lenders have more stomach than others for the self employed, and/or a greater understanding of the nature of schedule C income.  Since mortgage brokers have multiple lenders to turn to for your mortgage, they have a better chance of finding a favorable loan environment. 

Stated income loans are another possibility.  While these fell out of favor after the crash, there are times when they can be used in today's mortgage market. 

Our capabilities in all of these matters has increased over the past week, in that we have changed our primary broker and lender relationship to Guaranteed Rates, Inc.  As one of the largest lenders in the US, Guaranteed Rate has the ability to place loans at great rates, and to do so quickly and with the least possible headaches.  Guaranteed Rate has a proven track record of making the process incredibly smooth for borrowers.  Please note my new contact information below. 

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Thursday, October 24, 2013

California, Los Angeles, Mortgage Rates Fall To Almost 4% Again -

 Another Historic Opportunity for Getting a Very Low Interest Rate on a Home Mortgage

The Federal Reserve has decided that due to the sluggish job picture in the US, they will continue to buy Mortgage backed securities at the same rate as they have been doing over the last couple of years.  This reverses their earlier signal that they would start to reduce these purchases based on thinking the economy was improving.  Where interest rates had hovered well under 4% for much of 2013, they shot up to 4.5% during the time when the Fed signaled a possible tapering.  Now that the Fed has clearly indicated no tapering at this time, the rates are heading back to their historic lows.  

What does that mean for you:

Purchase:  The market in and around Los Angeles has stabilized as commonly happens in the Fall.  Homes are staying on the market longer, and the bidding wars are over.  You can buy a home right now before the Zillow projection of another steep increase in prices next year.  Your low interest rates will help to keep the overall cost of ownership low.  Call now to get an estimate of how much home you can afford under current federal rules.

Refinance to save money:  If you currently have a mortgage above 4.5% and plan to stay in the home for a few years, you could save $1000's by refinancing your current mortgage.  A quick phone call to our office will give you some idea of the potential savings in your specific case.

Refinance for home improvement:  Even if you already have a low interest mortgage, this would be one last chance to borrow for that new kitchen, room addition, or remodel at these rates.

Buy investment property:  Whether you are interested in buying commercial, residential, or even a duplex or larger property to live in one unit and rent the rest, keeping your interest rate low is a critical ingredient in creating a profitable or at least cash positive business.  Some of these even qualify for FHA financing.  We'll help you figure out what is best for your situation.

If we can help you with any of these situations, we stand prepared to offer you a guaranteed rate.  That's right.  We have just joined with Guaranteed rate to provide you even better mortgage products and service that in the past.  Please note our new contact information:

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Thursday, September 12, 2013

CNBC Says Rich Are Borrowing Using Mortgages

Santa Monica Home Needs Jumbo Mortgage
$1.9M for this Santa Monica Beauty

There should be no surprise in the following article from CNBC.  The wealthy are wealthy because they know how to manage their assets and liabilities.  Even with mortgage up over a point since the Fed started hinting loudly about winding down their asset purchases, the reality is that we may not see mortgages under 6% again in this century.

So the rich are getting their mortgages while the getting is good.  Next year when mortgage rates are 6% and going higher, the rest of the population will panic and start buying, refinancing, and using leverage to increase their portfolios.  Here is the article in its entirety.  There was too much of value here to edit.  There are some video and other notes of interest where this post appears on CNBC.

Jumbo mortgage rush: Why the rich are buying

By: | CNBC Reporter and Editor

Even as the rest of America pulls back on mortgages, the wealthy are going on a borrowing binge.
New data from Realtytrac show that wealthy homebuyers are ramping up their use of mortgages to buy homes. In July, 46 percent of buyers purchasing homes ranging from $2 million to $5 million used mortgages—up dramatically from 27 percent in 2012. With purchases of $1 million to $2 million, the use of mortgages jumped to 63 percent from 49 percent a year ago.
The mortgage spree by the wealthy stands in stark contrast to the rest of the country, which has seen mortgage activity decline with rising rates. Nationwide, 40 percent of the homes sold in July were purchased with cash, up from 31 percent a year ago, according to Realtytrac.
Housing economists and luxury real estate brokers say the mortgage economics for the wealthy are different than for the rest of the country. While rising rates make borrowing and buying less affordable for everyday homebuyers, looming rate hikes act an incentive for wealthy borrowers, who use loans as financial tools.
As rates start to rise, housing experts say, the wealthy who were waiting on the sidelines to buy or borrow decide to jump in. They are scooping up the cheap capital before it gets more expensive.
"With mortgage rates picking up, some of these folks decided to get off the fence and take advantage of the low rates," said Daren Blomquist of RealtyTrac. "With the wealthy it's more of a financial decision."

Mortgage market & what's next 

CNBC's Diana Olick reports on the leading proposal in Congress to do away with Fannie Mae and Freddie Mac. 
The borrowing spree by the wealthy reflects a growing divide in the mortgage market between the wealthy and the rest of America. Interest rates on jumbo mortgages—loans over $417,000 in most areas and over $625,500 in higher-priced areas—are now lower than the rates for so-called conforming loans below those levels. It's highly unusual for jumbo loans to be cheaper than conforming loans, since conforming loans are traditionally backed by government agencies. Banks are cutting their mortgage staffs amid a big fall in applications and refinancing.
But uncertainty over the government's role in the mortgage market has added to the upward pressure on conforming rates. What's more, many banks see wealthy borrowers are more attractive borrowers. And many banks use mortgages to wealthy clients as a way to win their wealth-management and investment business.

Of course, cash remains king at the very top of the real estate market. More than three quarters of buyers of homes priced at $5 million or more used cash for their purchases in July—up from 56 percent last year.
Olivia Hsu Decker, a top luxury real estate broker in San Francisco, said the super-wealthy today have plenty of excess cash and some don't like to bother with the complicated and time-consuming mortgage process. And buyers can often get a better sale price if they pay in quick cash rather than waiting on a loan.
"Mortgages are not easy, even for the wealthy," she said. "They'd rather just write a check."
She added, however, that many of the wealthy get mortgages after they purchase, to take advantage of the cheap money.
Other brokers, however, add that the surge in mortgage rates and activity among the wealthy has driven a corresponding jump in sales—especially for second homes. Sales in the Hamptons were the highest ever in the second quarter, totaling $1.15 billion. Sales in Palm Beach, Fla., Aspen, Colo., and other high-end locales have also remained strong.
But some housing economists wonder if the high-end borrowing binge is temporary.
"The first half of the year was about pent-up demand and rising rates," said Jonathan Miller of Miller Samuel, the appraisal firm. "A lot of that has played out so I think you could see some decline in mortgages. But that will be determined by how fast rates rise."

The Jumbo mortgage market is certainly alive and well in Santa Monica, Beverly Hills, West Los Angeles and Bel Air.  If you are looking for a jumbo loan, we can help.  Call Bill Rayman at  310-424-8635

Tuesday, September 10, 2013

9 Facts About Getting a Mortgage after Bankruptcy


Using a Mortgage Broker Is Recommendation Number One for Those with a Recent Bankruptcy

 If you or a friend have recently gone through bankruptcy and are now thinking about getting a mortgage for a purchase or refinance, you have probably heard the routine answer that you must wait two to three years to get a mortgage loan.  While this is a good rule of thumb, it isn't necessarily true.

Here are the facts about mortgages and bankruptcy:

1.  It is possible to get a mortgage the day after you file for bankruptcy and/or the day after your final adjudication and dismissal in bankruptcy.  It all depends on the circumstances and your financials.  In order to even be considered for a mortgage so soon after filing or a final judgement, you would need to be able to show that the bankruptcy was due to extraordinary circumstances and unlikely to be repeated.  The down payment would need to be much higher than normal, the income proof requirements would need to be air tight, and the interest rate would undoubtedly be higher than market.

2.  The longer you wait to apply, the fewer the hurdles.  Your credit score will play heavily into any mortgage process.  Immediately after a bankruptcy, your credit score is likely to be less than 600.  If you are able to get credit cards or car loans quickly, you can begin to build up your rating.  As with mortgages, there are car loans available if you have good income and put a large percent down.

3.  Some banks or other lenders will not accept an application earlier than two or three years after the final adjudication.  However, there are plenty of lenders who will.

4.  It may seem obvious, but you will need to pay very close attention to your credit rating.  Any bounced checks, missed payments, late rents, or even evidence of building up massive amounts of credit will hurt your credit rating.  Keep track of what is showing up on your credit reports.  Immediately deal with any negatives. 

5.  Income verification will be scrutinized much more carefully.  Many lenders want to see that you have been at the same employment for at least two years, even without a major credit issue like a bankruptcy.  Be prepared to provide additional evidence of future income stability if you have changed jobs within two years of applying.

6.  Various programs available to borrowers have their own rules which might impact your ability to get a loan, the interest rate, and other terms of the loan.

FHA and the VA have strict policies regarding Chapter 7 bankruptcy.  You must wait two years from the date your Chapter 7 is discharged.  If you are in a Chapter 13 bankruptcy the FHA will require12 months of Chapter 13 plan payments and the approval of the bankruptcy court for you to be approved.  Both agencies will also want to see that the bankruptcy is unlikely to be repeated and/or due to circumstances largely outside the borrowers control.

7.  In the current tight credit market, every aspect of your transaction will be scrutinized.  Make sure you are not trying to buy too much house for your income, that you have a the down payment from approved sources, and that the property will appraise at levels needed to make the deal work.

8.  When you have spotless credit, plenty of down payment, and documentation on income that is easily enough for qualifying, an argument could be made that direct borrowing from a bank may not be a lot different than using a mortgage broker.  The right mortgage broker could still generally get you a better deal when considering all costs.  Moreover, a quality broker is more like a consultant who will provide you with services well beyond merely finding you the best possible deal.

When you have a difficult loan, however, and a bankruptcy certainly qualifies as one of the most difficult issues to overcome, then it would be hard to argue that a direct relationship with a bank is the best road to getting a mortgage or getting a good deal.  Mortgage brokers can search the market among various lenders to find out who has the stomach for bankrupt borrowers. A broker can also help you to assemble the documentation that is most likely to get the deal done.

9.  You will likely need patience.  That will likely be true at year two and three after you've received your judgement, but it will be a good emotional state to acquire if you are under those general requirements.  We hope that you will give us a call to discuss the potential for getting you set up in a new mortgage.   Call Bill at 310-424-8635

New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Saturday, September 7, 2013

Did We Learn Anything from the Mortgage Debacle?


Some Are Raising Alarm Bells Again as Mortgage Rules Soften

The Charlotte Observer claims to be one of the first to raise a yellow flag regarding the housing meltdown in 2008.  In an article titled "Remember the Reason for the Mortgage Rules,"  associate editor, Peter St. Onge, cites an article he participated in for the Observer in 2005:

Back then, in 2005, we were among the first newspapers in the country to report on the depth of foreclosures. We knew why it was happening - for years, homebuyers were putting their signatures on loans that shouldn’t have happened. Many were victims of predatory builders and real estate companies taking advantage of a reckless lending environment. Regulators were clueless, intentionally so or not.
We also knew the root of it all. Both the Clinton and Bush administrations had made increased homeownership a policy goal. To that end, the feds loosened requirements for FHA loans. Homeowners no longer needed a down payment, and they could borrow more against their income. And because the FHA guaranteed repayment of those loans, lenders could take more chances, too.
The inevitable result: More bad loans, which banks packaged into toxic investments, and we all know the rest. 
 He goes on to sound an alarm about recent softening of Dodd Frank rules regarding zero down loans:

Last month, federal regulators announced that a key part of the Dodd-Frank financial reform law was getting a severe watering down. Two years ago, regulators had proposed a 20 percent down payment to qualify for home loans. The reasoning was simple: Home loan defaulters tended to be people who didn’t have a lot of equity to begin with. But now, a revised rule requires no down payment at all.
This retreat came after relentless pressure from housing industry lobbyists, as well as supporters of low-income housing, who argued that a 20 percent threshold would eliminate homebuyers and snuff out the housing recovery. They also argued that other new rules did enough by placing tough debt-to-income thresholds on loans and discouraging dangerous loan gimmicks that fooled consumers into thinking they could afford a home.
On that, the lobbyists are right. The new rules will stop the worst of the loans. But the loss of a down payment requirement – even 5 to 10 percent – opens a door for lenders to work the edges and homebuyers to take risks they shouldn’t. 

While Onge is evenhanded in this piece regarding who was at fault, including politicians, regulators, financial industry, lenders, brokers, and consumers as all taking advantage of the situation in order to meet their goals, he fails to address the reality of the but for argument.  Greedy lenders and borrowers alone could not create this horrific result.  But for pressure from the government to make bad loans, and regulators completely missing on valuations, the crisis would have merely been a normal swing.

Dodd Frank assumes that the government can make rules to keep things in check.  But it was government who provided the but for in 2008.  While it is unlikely that we will ever again see the perfect storm that created the collapse of the real estate bubble, we can certainly expect that government will overstep, mismanage, and act precipitously based on the current mood of constituents. 

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


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Thursday, September 5, 2013

Santa Monica Real Estate Snapshot September 1, 2013

Local Real Estate Agent, Kate Bransfield, Gives Her Views on Current Real Estate Market in Santa Monica

As reported in

Santa Monica, an affluent and highly desirable community has seen a slight drop in the last several years. This has resulted in a Buyers market.

There are more Buyers looking and the inventory is starting to increase.

Santa Monica stats as of Friday, August 30th, 2013

active Single Family Home listings =48
ranging from $859,000 to $34,995,000
average list price = $4,981,500
average square footage = 4,141.30
average price-per-square-foot = $1,281.23
average days-on-the-market = 53

active Condo / Townhome listings = 42
ranging from $299,000 to $4,488,000
average list price = $1,164,756
average square footage = 1,353.68
average price-per-square-foot = $804.04
average days-on-the-market = 57
The opportunities for Buyers are better now than they were in the past several years....and will continue to improve as the inventory increases.

We have seen the inventory continue increase in the last months. And the average "Days on the Market" has increased dramatically.

The rising interest rates are a factor as well. The anticipation of higher rates is prompting many Sellers to sell now, and is prompting many Buyers to buy now. It is even better news because the interest rates seem to have stabilized. It is important to remember that rates are still historically low and therefore a good time for Real Estate.

ZIP Codes: 90402, 90403, 90404, 90405

Location Characteristics: Wonderful, sea-side community with a vibrant real estate market

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View Market Conditions of other areas served by Kate Bransfield

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Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Monday, September 2, 2013

Warren Buffet's Top Ten Investment Tips Applied to Real Estate


Buffet's Birthday Present to the World: His Top Ten Investment Tips

One of the richest men in the world, and arguably the best investor in a generation or two, Warren Buffet loves to give tips to his followers and to others who will listen.  Last week CNBC and other posted a top ten list.  I thought it would be fun to apply these to real estate instead of businesses or stocks. 

1.'It's far better to buy a wonderful home at a fair price than a fair home at a wonderful price.' 
Source: 1989 Letter to shareholders  insert company for home

2.'Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1'
Source: "The Tao of Warren Buffett" (2006)  No change necessary

3.'Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it's the lack of change that appeals to me. I don't think it is going to be hurt by the Internet. That's the kind of business I like.'   Just add: A 4 bedroom 3 bath home in a good neighborhood is always going to be a good bet.
Source: Businessweek (1999)

4.'I try to buy homes that are so wonderful that an idiot can make money from them. Because sooner or later, one will.'
Source: At a panel discussion after the premier of the documentary "I.O.U.S.A" (2008)  Substituted Homes for companies and make money for run.

5.'The real estate market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch.
Source: "The Tao of Warren Buffett" (2006)  Substituted real estate market for stock market

6.'Price is what you pay; value is what you get. Whether we're talking about socks or stocks or real estate, I like buying quality merchandise when it is marked down.'
Source: 2008 Letter to shareholders   I just added real estate
7.'Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.'
Source: "Buffett: The Making of an American Capitalist" (1995)  No change necessary

8.'If you understood the real estate market perfectly and the future of the business, you would need very little in the way of a margin of safety.'
Source: 1997 Berkshire Hathaway annual meeting  Substituted real estate market for a business

9.'We've long felt that the only value of home price forecasters is to make fortune tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.'
Source: 1992 letter to shareholders   Simply substituted home price for stock market

10.'We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely.'
Source: 1998 Berkshire Hathaway annual meeting   No change 

If you'd like to read the original list with commentary, go to

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Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Monday, August 19, 2013

When Should You Refinance Your Home Mortgage? Summer/Fall 2013 Update

Los Angeles Mortgage Broker, Bill Rayman, Offers Strategic Tips on Refinancing

Over the past few weeks, mortgage interest rates on 30 year fixed have jumped up around one percent (1% or), from 3.5% to 4.5%.  While 4.5% still represents an historic low for rates, some who may have been considering refinancing have pulled back.  While we have no data on the reasons some have chosen not to refinance at this time, we speculate that these reasons are most likely.
  1. Cost to refinance not worth the small reduction in interest rates
  2. Interest rates may go down again into low 4's or even back to 3.5%
  3. No rush.  Interest rates are likely to stay around 4.5% for at least all of 2013
  4. Belief that house doesn't have enough equity to qualify
  5. Belief that income or credit rating might get in the way of qualifying
These are all excellent issues to consider regarding moving forward on a decision to refinance.   This post will review each of these one-by-one.  However, the simple answer is this:  There is absolutely no cost, other than your time, to get a personal consultation on these issues that can help you determine if this might be the right time to revisit your mortgage.  You may be in a position to lower your monthly payment, make needed improvements on the property and keep payments roughly the same, or merely save thousands of dollars on interest over the next several years.

1.  Dropping even a half percentage point will save you $120 per month on a $400,000 loan or $1440 per year.  So the question of whether this is worth doing has more to do with how long you will be in the house that how much less of a rate you pay.  If you currently have a 5% loan and plan to be in the house for another 10 years, you should definitely consider refinancing.

If you think you will only be in the home for 5 years, you can refinance to a 3% ARM (adjustable rate mortgage) and save $360 per month on a $400,000 loan.  If you think you might stay for 10 years, a 3.25% ARM that is fixed for 7 years might be the right answer.  This is why a consultation can be so helpful.  Call Bill Rayman at 310-295-6213 for a no obligation consultation

2.  Interest rates might go back down or they might go up.  It is all in the hands of the Federal Reserve who is keeping rates artificially low.  If the Fed decides to remove some or all of its current asset purchase program, or even if the market believes they are going to, rates will go up.  Only if the economy collapses, is there much likelihood of the Fed increasing the stimulus in order to drive rates lower again.

3.  We don't make predictions on this blog, only offer the information from which you can draw your own conclusions.  The Fed is currently suggesting that they will begin to reduce their asset purchases this Fall of 2013.  This is exactly why the market moved interest rates up a full percentage point.  Therefore the market, as it most commonly does, has anticipated the Fed action.  This could mean that rates will stabilize for the balance of 2013.

4.  You may be quite surprise about the amount of equity your home has today.  Prices in Los Angeles are up 20% or more from this same time last year.  A consultation will help you to evaluate your chances of successfully refinancing your home or condo.  Call Bill Rayman at 310-295-6213 for a no obligation consultation

5.  You would be correct to assume that it is harder to qualify for a mortgage today than it was in the crazy 2000-2008 period.  However, some lenders are starting to loosen up their requirements again.  We know which lenders will fit your circumstances.  We also can help you determine which loan you are likely to qualify for.

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Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Tuesday, August 13, 2013

Beverly Hills Real Estate News 2013. Seller's Market

The First Lady of Beverly Hills Real Estate Reveals How Buyers Can Stand Out in a Multiple Offer Market

With an increasingly competitive housing market, Myra Nourmand recommends adding a buyer's profile to the listing offer

BEVERLY HILLS, Calif., July 31, 2013 /PRNewswire/ -- A Beverly Hills home listed at $2.5 million and sold within 10 days at $100,000 over asking price with multiple-offers. A bank real estate owned property listed at $4.9 million and received 21 offers—some were $250,000 over asking price. Far from exceptional, homes throughout Los Angeles' Westside regularly receive five to seven offers according to Myra Nourmand, a Realtor and author of From Homemaker to Breadwinner. With low inventory and high demand for premier properties, it's hard to believe real estate's near-death experience took place a mere five years ago.

"Even last year, would-be buyers were wondering whether the market had reached bottom. But with prices consistently rising, buyers worry if they don't act now, the price on the next home will be considerably higher three months down the line," says Myra, who specializes in high end homes in Beverly Hills, Bel Air, Holmby Hills, Brentwood, Pacific Palisades, and Malibu. According to Myra, listings between $2 to $10 million are selling fast.

So in this seller's market, how do buyers stand out from the competition? Myra, the First Lady of Beverly Hills Real Estate, and one of the nation's top producing Realtors, suggests composing a buyer's profile. The letter accompanies the buyer's offer and comprises the following three parts:

1.    Address Sellers' Fears
"A seller's biggest concern is whether the sale will close. The bottom line is that they want to be assured the transaction will be seamless and smooth," says Myra. Thus she recommends buyers demonstrate how they are best qualified to meet the seller's needs. Providing details about the buyer such as his or her occupation, length of employment, place of business, years of marriage, and children's ages reveal consistency and commitment. In addition, financial statements prove a buyer can afford the purchase.
2.     Explain Why the Home Is a Perfect Match
Buying a home is as much a personal decision as it is a financial one. Thus explaining the reasons a particular listing is a perfect fit for the buyer adds a face to the transaction. Myra describes how one of her buyers was an artist. "She saw the guesthouse at the end of the yard. She immediately knew it would be the ideal place to work. Having an art studio made the listing the home of her dreams. So we added that information to the letter," she says.
3.     Highlight the Community's Strengths  
As the saying goes, "Real estate is about location, location, location." Buyers should highlight the neighborhood's appeal. For example, if the home is located close to work, buyers can describe how they look forward to experiencing a higher quality of life due to shorter commutes. In addition, if they have children, the letter can state how they anticipate sending their kids to high quality local schools. Or, if buyers are empty nesters, they can explain how they look forward to walking to nearby restaurants and retail areas.

Myra recommends that agents compose the buyer's letter on behalf of their clients. So if you're planning to place an offer on a home, write down how the listing appeals to you. "Describe what works. Imagine you were the seller, what would you like to hear? Then discuss with your agent the role a letter will play in the offer," says Myra. With residential real estate in high-demand markets showing a strong comeback, you must stand apart from your competitors. The buyer's profile demonstrates your strong financial position and commitment to closing a deal as quickly and smoothly as possible.

To learn more about high end real estate sales trends and the book, From Homemaker to Breadwinner, visit Myra Nourmand's blog at

If you are an agent working in Southern California and you need an amazing mortgage broker to help with a transaction, Call Bill Rayman

New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Saturday, August 10, 2013

Obama Talks Up New Mortgage Plan. Is It the Answer

Can the US Have High Rates of Home Ownership without Creating Booms and Busts?

 Aug 10, 2013 - Los Angeles - During this past week President Obama has been criss crossing the US and using his Saturday morning radio address to promote reforms in the housing and mortgage industries.  He laid out several goals:
  • Wind down Freddy and Fannie
  • Create a new mortgage insurance market in the private sector
  • Congress to make sure that citizens have access to affordable mortgages
  • We need to find a way to make sure renters have access to affordable housing
These may all be laudable goals, but are they any different than the goals set out by President's Clinton and Bush?  Both were pushing for record percentages of Americans to grab their piece of the American dream that includes owning their own home.  Have we totally failed to learn the lesson that when government inserts itself into the market, the market will be changed, and generally for the worse?

Winding down Freddie and Fanny may be a fine idea.  These quasi governmental agencies are one of several governmental sectors that contributed to the 2007 bust.  There is also good reason to believe that the private mortgage insurance industry will be only too happy to take up the slack.  But there is a minor problem.  There is a real cost of this insurance.  And it must be born by the buyer.  The higher the risk, the higher the cost of the insurance.

So we get caught at cross purposes.  If we want more home ownership,  each successive percent of those who need a mortgage will be a riskier group.  These riskier groups will ultimately hit a soft patch in the economy, or a correction in the housing market, and their will be defaults.  With the defaults, there is an unwinding.  The unwinding effects the insurance companies, the mortgage companies, and the riskiest groups of consumers.

If the President or Congress has some way to provide home ownership for a larger percent of the population without that incremental portion being at greater risk of default, then neither has shown us how that works.  If the President or Congress has a method for eliminating boom bust cycles in a capitalist system, they have not shown it.

One thing for sure, the President can be credited with speaking truth on the subject of bailouts.  He was clear in his statement on Saturday morning that we no longer want to provide a system that allows for reckless behavior by businesses or governmental agencies, and then when they crash and burn, have the folks bail them out. 

Friday, August 2, 2013

Should You Get An Adustable Rate Mortgage in 2013?

Adjustable Rate Mortgages Make a Comeback w/ Mortgage Interest Rates Uptick

The young couple was besides themselves.  They had gone through the arduous process of applying for a mortgage refinance, had the appraisals, credit checks, and filled out all the paperwork.  Everything had seemed to be ready to go.

Then, the Fed spoke.  Bonds dropped.  Interest rates went up almost 1.5% overnight.  The couples mortgage payment to income ratio was no longer under 45%.  The loan was going to be denied.  Now what??

An ARM to the rescue.  With a 7 year ARM they were able to get a starting rate lower than the fixed rate had been only a week ago.  They satisfied themselves that the savings over 7 years would give them a hedge against the inevitable increase in payments that would come when the 7 years was up.

According to Business Week:

ARMs have a strong appeal for buyers who don’t plan to remain in their homes for long. Vivian Cohn of Hollister, Calif., lowered her monthly mortgage payments to about $940 from $1,400 in May when she took out a 5/1 ARM, meaning the rate is fixed for the first five years. After that, her 2.2 percent initial rate could adjust as much as 5 percentage points higher. A human resources manager at a Silicon Valley company, Cohn, 60, says she plans to retire in two years and move to Panama with her husband. If the couple can’t sell the house, she says, they’ll rent it for a while and then put it back on the market before the five-year rate lockup expires. “A fixed rate isn’t for everybody,” she says. “We know we’re moving, so there’s no point in paying for a guaranteed rate if we won’t use it.”

We have long stated that ARM's do better than Fixed Rate Loans over almost any period of time and most circumstances.  It could be argued that someone who can get a fixed rate mortgage at today's rates would have good prospects for beating the averages.  However, most folks don't stay in a home over 10 years, so the savings on an ARM over the early years could work out for anyone who sells within 5 - 10 years, even in this climate.

When you are faced with choices, sometimes they can seem overwhelming.  For most of us, any choice having to do with complex math is already causing dread.  We are able to help you with those decisions based on years of experience, a broad knowledge of the options, and hundreds of cases.  Give us a call, and we can help you through choose the right path. 

Tuesday, July 30, 2013 Offers Fantastic Gallery of Home Decorating and Remodeling Ideas

Zillow Is Much More than a Place to Get a Free Estimate on the Value of Your Home

I've been using for years.  In the crazy residential real estate market we've all endured for the last decade or so, it has offered at least a rough estimate of home values.  What I didn't know is that has branched out, and now offers real estate market reports, advice, and more.  Of these new offerings, the one that caught my eye, because this service is pure eye candy, was their data base of decorating and remodeling ideas.

As you can see in the picture above, the data base allows you to select from various spaces (actually 36 different spaces from bathrooms to mud rooms), 13 different styles, and 3 budget categories.  You can also choose to just browse at random.

So, in the case above, I selected patio, mediterranean, and budget.  And I was rewarded with three beautiful selections.  If you are interested in a kitchen remodel, and selected kitchen, contemporary, the page just scrolls down and down.  I'm not sure how many options are there.

If you are considering any type of renovation, custom home, or remodel, and will need a mortgage or mortgage refinance to get the job done visit our website at

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Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Thursday, July 18, 2013

Do We Have a Housing Bubble in Los Angeles or Not?

Mortgage Rates Are Part of the Equation, but Housing Prices Are Still under Levels in 2004

How does a sane person know that there is a bubble in any investment category?  You look at historical prices, inventories, dollar valuation, demand vs supply, barriers to purchase or sell, demographics of buyers, involvement of professional investors, potential of future increases in supply, and throw in "The great unknown and unknowable."

Clearly we could review all of those data points in detail, reach a very sober conclusion, and have any one of a number of unknown and unknowable things happen.  What effect would a bond implosion have on the stock market?  What effect would a breakthrough in natural gas storage have on oil prices.

So, we take the knowable items, and we do our best.  What do we know about housing?  We know that Los Angeles prices topped out at very high levels in 2007.  They then fell, depending on the neighborhood, anywhere from 30% to 50% off of those highs.  The prices began moving back up in early 2012 and have advanced about 20%, which would mean they are still off 15% to 40%.

We know that inventories are very low, and depending on the area, there is little likelihood of a quick ability to increase those inventories dramatically.  This is especially true for single family dwellings in LA proper.  We know that demand is fairly stable, with no great increase in population on the horizon.

The big deal is that mortgage interest rates are artificially low and mortgages are hard to get compared to the '90's and first decade of 2000's.

What does all of that mean.  According to Corelogic, as reported by CNBC, there is no bubble:

"... said Mark Fleming, chief economist at CoreLogic.

Even in the fastest growing markets, where prices are up around 20 percent from a year ago, Fleming pointed to still near-record affordability. For housing price affordability to return to the average level that we saw in the years between 2000 and 2004, he said, either home prices would have to rise an additional 47 percent or interest rates rise to 6.75 percent. Only Washington, D.C., and Hawaii are "technically unaffordable," according to CoreLogic."
The interest rate panic of July 2013 has subsided now that Ben Bernanke has promised not to mess things up . . . yet.  At what price level might the Los Angeles prices start to seem more bubble like.  While this blog is not in the presuming-to-predict business, the logical extension of the known factors would say that the market should be able to move another 20 - 30% higher without too much excess.  Housing prices in LA will always test old limits, and affordability goes out the window even in the early stages of a bubble.

If the economy ever gets back to 5.5% unemployment or less, and assuming some of that gain is in management positions, which tends to be the case as the economy expands, then it is entirely possible that we could test the 2007 highs.

The short answer.  No bubble yet.

To check into whether you might be able to afford the home of your dreams.  Call Bill Rayman for a complimentary analysis of your plan.  

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Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Monday, July 8, 2013

9 Nutty Notions About Mortgages in Los Angeles

Are You Believing the Headlines, the Myths, or the Commercials about Mortgages? 

When you are in the market for a mortgage in Los Angeles, a refinance in Santa Monica, a construction loan in Beverly Hills, or an FHA mortgage in Culver City, you are likely to start paying attention to the nutty notions that make their way into the news, internet, commercials, and even advice from friends.  Here are nine such ideas that you should carefully evaluate.

Nutty Notion #1 - Mortgage interest rates are skyrocketing and are going to kill the home market.  Today, 30 year fixed mortgages are at about 4.6.  This is close to a 50% discount of the average 8.6% over the past 30 years.  Any mortgage interest rate under 6% is an amazing bargain

Nutty Notion #2 - You have to have 20% down to buy a home today.  You can use FHA or PMI (private mortgage insurance) which allow 3.5% and 5% down payments, respectively.

Nutty Notion #3 - You have to have a perfect credit score to get a mortgage.  While the government rules and banking regulations have made mortgages tougher in the past few years, the requirements are very much the same as they were in prior to 2000.

Nutty Notion #4 - Credit Repair companies can fix your credit.  Be very careful about employing credit repair companies.  Many are scams or even straight out cons.  You can repair your own credit.

Nutty Notion #5 - Banks are your friends.  Banks are in business to make a profit based on a review of the risk of any loan versus the amount of cash flow and interest they can earn.  Especially under the new rules from the US government, banks are looking at you as a bunch of numbers.

Nutty Notion #6 - Banks have lower interest rates than you can get through a mortgage broker.  Many times a mortgage broker will put your loan through a bank if that is the best overall deal for you. 

Nutty Notion #7 - When shopping for a mortgage, go for the one with the lowest interest rate.  There are at least 20 basic elements of any loan that may make that loan better or worse for your specific needs.  Even the total cost of the loan is not reflected in the interest rate alone.

Nutty Notion #8 - No cost loans are the smartest way to do your mortgageThere is no such thing as a no cost loan.  Many of the costs are dictated by federal or state law.  Other costs are necessary if the lender is to stay in business.  Someone is paying the cost.  It may be hidden.

Nutty Notion #9 - Adjustable rate loans are more expensive than fixed rate in the long runIn fact, it can be shown that adjustable rate loans are cheaper in the long run.  This is because the risk is shifted to you, and away from the bank.  Every situation will be different.  That's why it is always better to consider talking to a mortgage broker prior to making any decisions on your loan.  Mortgage brokers only make their commission when they have provided you with a great loan.  They work for you, not for the lenders. 

We will be happy to have a no obligation conversation with you about your specific needs, and can even help you with very specialized loans. 

New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Sunday, June 30, 2013

Pinterest Is An Amazing Kitchen, or Bath or Home Remodeling Resource

Remodeling Is More Fun than Ever With Pinterest

Yep, we have a Pinterest site and we hope you'll go check it out, follow us, and repin some of our content there.  We are going to turn our Pinterest site into the best place online to view all kinds of real estate related information such as:

As much fun as it is to window shop on Pinterest, when you get ready to break ground, break walls, or you about to break your nasty old cabinets and get something pretty and new, give us a call.  We can help you evaluate your plans to buy, tear down, build from scratch, remodel, or do anything else you might want to do with your real estate.  Our part of the job is to get you the mortgage or the refinance you need at the rates that will keep your costs in line.

New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025


Wednesday, June 26, 2013

Will $69 a Month Kill Home Sales? Interest Rates Are Still a HUGE Bargain

Home Sales and Prices Up Again on June 24.  Now Mortgage Interest Is Up.  What Will be the Effect?

The doomsdayers are at it again.  Mortgage interest rates shot up to 4.4% from 3.5% in just a week.  There goes the housing market.  Are they right?  What effect does rising interest rates have compared to rising home prices

The average sale price of a home in the US today is $150,000.  In 2008 that price was $250,000.  The effect on the down payment at 20% would be $20,000 less today than then.  The effect on the mortgage amount per month assuming a 5% interest rate would be $1074 then, and $644 now.  So today I can buy the average house with a monthly cost $430 per month lower than 2008, even at 5%.

The savings per month on the monthly mortgage payment today vs 2008 on the average US home is $430 per month

Let's look at the more luxurious home with a $700,000 price tag and a $560,000 mortgage after $140,000 down.  That same home in 2008 would have cost at least $850,000 and required $170,000 down.  The difference in monthly payment based on a 5% mortgage interest rate $1644.00 per month.

Now let's play the same game with an increase in mortgage interest from 3.5% to 4.5%.

On the $150,000 home, the monthly payment would go up $69 per month.  On the $700,000 home, the monthly would go up $389.00.  For the owner of each type of dwelling this probably represents two nice dinners out per month.

The effect of the mortgage interest rate increase from 3.5% to 4.5% is $69 a month on the average US home.

Therefore as a prudent buyer wanting to keep my out-of-pocket in my pocket and my monthly expenses as low as possible, I should be much more concerned about property values going up than I am about interest rates going up.  The impact is far higher on the former. 

If home prices and mortage rates both go back to 2008 levels, the combination would be pretty effective at killing the housing market.  However, there were folks lined up in 2007 to buy those homes at those prices with those interest rates.

Today is still the best time to buy a home in 30 years or longer based on your overall cost to own.  And it is highly unlikely that the future will provide better or even the same cost of ownership as today.

New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025