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(760) 434-5000

Carmel Valley
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Most recent articles

Mortgage Qualifying for Retirees

Seniors can have trouble qualifying for a mortgage, in spite of having ample assets.  Here are some tips, from the wsj.com (their comments are good too):

http://online.wsj.com/articles/jumbo-loan-challenges-for-retirees-1416413430

High-net-worth individuals often will argue that they clearly have enough money in assets to pay off a loan at any time, says Bill Banfield, vice president at Quicken Loans. “They may be thinking that they have a big IRA and they could use that to take a distribution to make the loan payments,” he adds. “That’s all good and fine, but we’d like to see that all set up before they apply for the loan.”

The key to qualifying is to demonstrate that a retiree’s assets translate into income via tax returns, bank statements and other documents, he adds. “The lender is going to want to make sure you have receipts for distributions and a schedule for receiving them,” he adds.

Retirees also need to show proof that the payments will continue in the same amounts for at least three years into the future, Mr. Banfield says. If a borrower is an early retiree under 59½ years old, the threshold for taking withdrawals from IRAs without tax penalties, the lender will adjust income estimates accordingly, he adds.

For retirees who don’t want to increase their distributions, another possible option is a nonqualified jumbo mortgage, which offers flexibility on the federal DTI rule, Mr. Wind says. Lenders have to waive liability protection to issue nonqualified mortgages, but some lenders will take that risk with retirees who have substantial invested assets they don’t want to liquidate, he adds.

To calculate an income estimate in such cases, EverBank will assign a conservative earnings rate to the total dollar amount of the assets and amortize the amount to the loan’s term length, Mr. Wind says. Wells Fargo uses a similar method to calculate DTI for nonqualified mortgages for borrowers with multimillions of dollars in assets, Mr. Blackwell says.

The first step for any retiree or person approaching retirement is a financial adviser, Mr. Blackwell says. An adviser can look at a retiree’s overall financial picture and advise whether to pay cash or borrow when buying as home. The adviser can also calculate retirement-account distributions that will help the borrower qualify for a loan, he adds.

http://online.wsj.com/articles/jumbo-loan-challenges-for-retirees-1416413430

Posted by on Nov 21, 2014 in Mortgage Qualifying | 6 comments

“Successful U-Turn”

http://www.reuters.com/article/2014/11/20/us-usa-economy-housing-idUSKCN0J41P620141120

U.S. home resales jumped to their highest level in more than a year in October and outpaced the sales level a year ago for the first time in 2014, further evidence the housing market is on a recovery path.

The National Association of Realtors (NAR) on Thursday said existing home sales rose 1.5 percent to an annual rate of 5.26 million units, the highest rate since September of last year. Sales rose 2.5 percent compared to a year ago, the first time since October 2013 that nesales have risen above the prior-year levels.

Economists polled by Reuters had forecast sales falling to a 5.16 million-unit pace, from an upwardly revised rate of 5.18 million units in September.

“This is the first time in the year where we have seen a year over year annual gain, which means that existing home sales have made that successful U-turn,” Lawrence Yun, NAR’s chief economist, told reporters.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I thought things were going pretty good nationally, and if we could get looser credit then everything would be fine.  Now I guess a ’successful U-turn’ means….good or bad? :lol:

Yunnie deserves a break; he has done a much better job than David Lereah.  In July, Yun did say that he expected a slight uptick in sales during the second half of the year:

http://www.realtor.org/news-releases/2014/07/pending-home-sales-slip-in-june

Locally this year we haven’t beat any of last year’s monthly sales counts.  Here are the NSDCC Detached-Home Sales for 2013 and 2014:

graph (52)

Last year was so hot due to low rates and prices that it’s doubtful we will see those numbers anytime soon.  But we have been close enough!

Posted by on Nov 20, 2014 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Did She Say Lower Prices?

sean

From PropertyRadar (ForeclosureRadar):

“Earlier this year we accurately predicted that 2014 would be a year of lower sales volume and flat prices because home prices rose too far too fast,” said Madeline Schnapp, Director of Economic Research for PropertyRadar.

“That’s exactly what’s happened and hopefully by next spring, prices will be more in line with what prospective homebuyers can afford.”

Read full report here:

https://www.propertyradar.com/reports/real-property-report-california-october-2014

Posted by on Nov 19, 2014 in Market Conditions, Thinking of Buying?, Thinking of Selling? | 3 comments

Precision Pricing

precision

Jim, when you say “be within 5% of the last comp”, you’re saying to add 4.999% to the last sold price nearby to determine a list price for my house?

That’s how most sellers and agents will do it.  But motivated buyers will compare it closely to other sales - homes they have probably seen.

When prices are rising quickly, pricing accuracy isn’t that important – the market will catch up shortly.  But when the market is flat with a potential to stay flat or worse, listing your home for the right price is much more critical.  Buyers don’t mind waiting – it is very comfortable on the fence!

The values between similar houses can differ by approximately 10%, based on location, view and condition.

To price within 5% of the last comp means +/- 5%.

If the last sale was superior to yours and you add the 5% to their price, you could be 10% too high from the beginning.  If yours is king of the hill, it is still smarter to list at only +5% to look very attractive, and push for multiple offers.  But you have to have an agent skilled at causing effective bidding wars!

Could you fool someone?  Not the highly motivated buyers – they are the people willing to pay top dollar because they are the most comfortable knowing how it compares to the rest.  In a flat market, the casual or uninformed buyers aren’t as comfortable, and want to pay less.

The frenzy appealed to the casual and uninformed who just jumped at a house and paid whatever it took, regardless of comps. But those days are over, and the motivated, informed buyers are making the market.

As a result, sellers are smart to price their home to sell in the first week or two on the market.  Once you agree that you want to use the initial urgency to help push the sales price to top dollar, then carefully analyze the comps – like buyers do - to arrive at an attractive list price, instead of automatically adding 5% or more to the last comp.

It boils down to this:

When you catch yourself wanting to ‘tack on a little extra, just in case’ – resist that urge, and instead price it to sell, not sit.

Posted by on Nov 19, 2014 in Jim's Take on the Market, Why You Should List With Jim | 3 comments