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.

New Contact Information for Bill Rayman

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.