Home Buyers in Sacramento frequently ask me “What Type of Mortgage Should I Get?” Especially here in our Competitive Sacramento Real Estate Market, Choosing The Right Mortgage Program is an important part of the home buying process.
Before you Decide on a Home Loan. There are a few things you should be clear on as a home buyer.
First, just be ready to enter a competition: As a home buyer in today’s Sacramento Home Market, you are one of many, many, well informed and well educated price hunters. And you are all judges in a very complex beauty pageant! Price and value are so important and so critical to today’s Sacramento home buyers, that homes that are priced well and conditioned correctly are attracting multiple offers. And these Beauty Pageant and Price War winners are going for full or above full asking prices quickly. Buying a home in Sacramento has become very, very competitive over the last few years. Even with the recent increase in the number on homes for sale here, we are seeing many, many homes selling for asking or over asking price, within days of being placed on the market-
So, if you see a home and fall in love with the condition, location and price… in nearly every single case, many other buyers will find it and fall in love as well- and the sellers must pick through multiple offers to find the offer that meets their needs and also represents the strongest, most likely offer to be successful and close on time -The next step in for you home purchase is actually deciding who you want on your team. Having the right Lender, the right Agent and has become critical in this competitive real estate market.
No matter Which Home Loan You Decide to use, it’s best to be clear about certain points-
How long will I live in this house?
What are my five or ten years goals
Do I want to make home improvements?
Do I need cash on hand for other expenses or other investments?
Do I like to take financial risks?
Do I want to be debt-free?
Getting clear on these basic, fundamental goals. This always seems to make Choosing Your Home Loan much easier-
The next step in choosing a mortgage for you home purchase is actually deciding who you want on your team. Having the right Lender, the right Agent and choosing the right type of home loan has become critical in this competitive real estate market.
So as a home buyer in the , building a winning team of professionals, people who have a winning track record and a track record of success is the most critical thing you can do-
All of these scenarios and choices will need to be considered as you and your mortgage lender Discover Which Loan Program Works Best for you.
Once you choose a lender and provide the Documents Needed for a Home Loan, you will be asked to clarify your goals, your objectives in order to identify the different types of home loans you qualify for and that meet your needs and goals:
The conventional 30-year fixed loan may not be for you. Consider and compare all the options. There are hundreds of mortgage products out there, so be sure to find the right one for your needs. Before you approach any lenders, figure out your financial strategy.
Now that you have a reasonable picture of your financial philosophy, shop around and evaluate your options. Don’t rush into the first loan offer you get.
If you can afford to take financial risks and have the assets and credit score to back it up, you can get the best deals. Go for mortgage products that allow you to pay the least amount of cash while still satisfying your loan obligation. Consider these:
You can choose a longer loan term, such as 30 years or more. The longer your amortization period, the lower your monthly payments would be, but the more interest you’d pay. If you borrow $100,000 at 8 percent interest over 30 years, you would pay $164,000 in interest along with the principal by the end of the term. Your mortgage payment would be $733 a month. A 15-year mortgage, in contrast, would require a $955 monthly payment.
Skip the down payment and go for an “80-20” loan. A standard loan funds the first 80 percent and a second loan with higher interest rates finances a 20 percent down payment. This option also gets rid of private mortgage insurance, or PMI, which is typically required for homes bought without 20 percent down payments. PMI protects the lender in the event that a borrower defaults on a loan.
Consider an adjustable rate mortgage (ARM) if you want to keep some cash or take advantage of a low interest rate. The rate is fixed for the first few years, then begins floating. But be aware of market conditions – if rates rise, so do your payments. This option makes sense for serial relocators, who don’t plan to be in a home for more than five years. A three or five-year ARM lets you make low payments and gets you through the typical mortgage cycle. If rates drop, you can refinance. If rates rise, you can sell.
Interest-only mortgages also let you keep more cash. They do not require principal payments during an initial period, typically three, five or 10 years. After the initial period, borrowers must begin repaying principal over the remaining life of the loan. By comparison, a traditional amortizing loan requires principal and interest payments from day one, with more of the monthly payment going to interest in the early years and to principal in the later years.
Homeowners can lower their monthly payment by 20 percent to 25 percent by skipping principal payments in the early years, but they must be prepared for a big jump in payments when the interest-only period ends. A lower initial monthly payment may also allow you to qualify for a bigger home loan. The downside? When housing prices fall, you could end up owing more on your home than it’s worth.
To qualify, you normally must have good credit or pay a slightly higher fee or interest rate. Balloon payment mortgages are short-term, fixed-rate loans that involve small payments for a certain time period and then one large payment (the balloon payment) for the remainder of the loan.
If you don’t like debt and risk, you may want to stick with conventional loans with fixed rates and shorter terms, making big down payments and extra principal payments whenever possible. If you go with a 30-year mortgage, you could refinance after 10 years. You could get a lower rate and dramatically reduce your principal balance in a shorter period.
Here are more tips for finding the right home loan:
- Use Mortgage Calculators and other tools that let you see exactly how much you’ll have to pay under various scenarios
- Build your Home Purchase Team! Having the right Lender, the right Agent and the right type of home loan becomes critical in this competitive real estate market. Team- find the a great lender, a great Agent and start learning- meet with working with a mortgage broker.
- Decide if you’re willing to pay for points to get a lower interest rate, or take a higher rate to keep closing costs down.
- Combine different loan features to create a loan that’s comfortable for you.
- Factor in costs like property taxes, insurance and homeowner’s association fees. Will your lender hold these in escrow?
- Ask about alternative loan terms, such as 20 years, 15 years. They exist though many lenders don’t advertise them.
- Consider refinancing your current home if you need cash for a second home.
Buying or selling a home in the Sacramento area is a huge project. Get educated and take your time- interview several professionals in each area where you will need a consultant and advisor- Real Estate Agents and Mortgage Lenders are not all created equal!
Before you interview us, listen to Listen to what our past clients and what you have to look forward to!
The Hoyt Group Testimonials
Then, give us a call, text, or email!
p.s. Do you know what your home is worth? Forth does!
CRS, CDPE, IMSD, A-REO, SFR, SRES,
e-PRO, RDCPro, PFC,Certified HAFA Specialist,
Master’s Club Life Member
The Hoyt Group Keller Williams Realty
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Buying a New Construction in Sacramento?
Why Use Sacramento New Homes Specialist When Buying New Construction?
Would you go to court and use the same attorney as the opposing side?
How about letting the opposing team pay the referees salary?
Of course not!
So why would you let the builders employee represent you?? Hurry! Find a Sacramento New Home Specialist Agent!
Isn’t is great to know that you have someone on your side who has been through hundreds of transactions? An Sacramento area agent with years of experience in new homes sales and knowledge to represent you? Better yet, isn’t if unbelievable to know this representation will cost you nothing? I’ll explain that in a moment, but isn’t it great to know that having us represent you does not cost you a penny!
This is your answer to “Why Use An Agent When Buying New Construction in Sacramento?”
People never know this, but when you “sign in” at a new construction home builder sales office without representation, you are actually waiving and relinquishing the right to ever be represented if you ever purchase a home from that community at any time in the future!
You see, when you buy a new construction home, you’ll be entering a business transaction with someone who has done thousands of new home sales before (advantage builder), the sales agents at the Sacramento area new homes community are employees of the builder (advantage builder), their salaries, fees and commissions come out of the construction budget, part of the profit and loss of the homes… See our fee is paid for by the Sacramento area New Homes builder’s marketing budget, so it does not effect the profit or loss of the home and will put you in a MUCH better position! doesn’t that just make sense? It is smart to have your own agent to buy a new construction home!
So take back some of these advantages! A New Home Specialist Agent Will Save You Money On A New Home! That’s right! Get a Sacramento New Homes Agent! I’ll explain in a moment how and why a Sacramento New Home Specialist Agent will cost you nothing and will undoubtedly get you in a much stronger negotiating position! Buying a home is a business transaction first and foremost and you should have someone on your side! An agent to represent you in the new home transaction, you and only you.
The builder has agents that work directly for them (the seller). Your New Home Specialist Agent will represent you and your best interest as the new home buyer. Look for an agent or team of agents with years of experience in new home sales, new homes construction, with the experience of hundreds of transactions and references from happy past clients.
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Setting the right price from the start is probably the most important thing when it comes to successfully selling your home. This requires taking a close look at what other houses are selling for that are similar to your home. No matter how priceless your remodeled kitchen or updated bathrooms are, the market sets a value—the price a ready buyer is willing to pay.
One of the key ways to compare your house to others on the market is to look at a comparative market analysis, or “CMA.”
A comparative market analysis is a report, usually done by a real estate professional. A CMA gives you information about houses similar to yours (in size, amenities, and location) that are either on the market, have sold, or are currently in contract (pending sale). A good CMA can tell you:
- What homes like yours are actually selling for
- How long it’s taking for them to sell, and
- What their sale prices are in relation to their list prices (the difference between what people actually got for their house and what they asked for).
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October 11th, 2013 Categories: Uncategorized
It’s that time of year again, there’s a slight chill in the air, the leaves are turning vibrant colors, and its pumpkin spice everything. Autumn is upon us. It’s time for the seasons to change, and if you are a homebuyer, many real estate experts say it is also time to change your home-buying strategies.
Although, the fall real estate market sees less activity than the summer selling season, there are still numerous ways for buyers to get a great home for a great price.
Let’s take a look at the benefits of fall buying, and discover a few ways to minimize the drawbacks.
1: Mortgage rates are at a historical low
This fall, the home buying market is unique because current mortgage rates are still sitting at historic lows.
Therefore, don’t be discouraged from making a move in the fall because interest rates have increased, they’re still at a historic low. Plus, there’s always a chance that next year they won’t stay this low.
2: Less choice BUT less competition
One of the top reasons that real estate activity slows down in the fall is due to the beginning of the school year. Buyers with young children stop looking for new homes because they don’t want to force their children to switch schools.
But, this can actually turn out to be an advantage. You now have a significantly smaller amount of competition! This creates more wiggle room for the buyer and gives the opportunity to buy the home of your dreams for a price that you can afford.
3: Buyers and sellers make sacrifices
Unfortunately, the amount of houses for sale does decrease. This means that if you make an offer, but can’t come to terms with the seller and the deal falls through, there won’t be a bunch of other houses that have exactly what you want. Therefore, you may have to loosen your requirements or wait until another suitable house goes up for sale.
Nevertheless, sellers will most likely be more flexible in terms of price reductions. So grasp this opportunity and take a serious look at the homes that are available, because sellers are l more motivated to make a deal in the fall. They might even be willing to pay some of the buyer’s closing costs or strongly consider lower offers.
4: Stray away from being greedy
A seller may accept a lower offer, but try not to be greedy. Even though the fall market is smaller, it’s important to remember that there are still serious buyers out there. Just as sellers become more motivated at this time of year, buyers who are seeing their options reduced, are also becoming more serious. Not only that, looming cold weather and busy holiday schedules also contribute to the general buyer motivation, to close before winter’s arrival.
Fall can be a great time of year to buy a home for a good deal. Since no one can predict future mortgage rates, hurry to lock in a historically low mortgage rate this fall!
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October 9th, 2013 Categories: Uncategorized
If you think you don’t qualify for a mortgage, don’t give up! There may be hope—if you know what to ask your lender.
Currently, there are a variety of programs that were created in order to help people refinance an existing mortgage or purchase a home. In addition, there are policy changes that have begun opening doors for some borrowers.
Therefore, there are several options to consider, depending on what your situation is.
1. If you are retired:
In the past, a lender would have told a pension-less retiree that they needed to show they were taking regular distributions of a certain amount in order to cover their mortgage payments. But now, balances in retirement accounts can be used to determine mortgage eligibility—without touching the funds. This is because of a recent rule change at Fannie Mae.
2. If you are a cash-strapped homeowner:
The Home Affordable Refinance Program (HARP) is a government-issued program that allows people whose home value has declined to refinance so they can have lower, more affordable rates. Homeowners can sometimes owe more on their mortgage than the home is currently worth!
Although this program has been in effect for years, there are many who still could qualify. Some of the people who currently qualify, may have applied for a HARP refinance in the past and had been denied. Since then, the rules have changed and now the program doesn’t require an appraisal. They also have removed the cap on how much a homeowner could be “underwater” on their current mortgage.
In addition, those with a current mortgage backed by the Federal Housing Administration may be eligible for the FHA Streamline program, which has no income requirement.
3. If you are a fixer-upper:
Lenders market FHA203(k) mortgages more heavily in urban areas, but properties that qualify for these “mini construction” loans can be located anywhere. Essentially, these loans allow people to purchase a home and finance improvements in one mortgage. The mortgage amount is based on the estimated value of the property once the improvement work is completed, while factoring in the cost of the work.
While the program is a benefit for homes like abandoned foreclosure properties, it can also be used for more less dramatic upgrades, such as modernizing the restrooms, or carpeting throughout the house. The main point that you have to remember is that the upgrade must increase the value of the home.
(More information about this program can be accessed at the U.S. Department of Housing and Urban Development website)
4. If you don’t have a down payment:
Coming up with the funds for a down payment can be the biggest struggle for first-time home buyers. But there are several ways to seek help. State and local governments, employers and lenders offer assistance funds for home buyers who are expected to be successful as homeowners. In this case, buyers are often asked to complete a homeownership course in return.
Moreover, there is at least one avenue for 100% financing still available for buyers in the more rural areas of the country. That’s the U.S. Department of Agriculture loan program, and you would be surprised who makes the cut.
Therefore, don’t lose hope. When you think all the doors are closed, a window will most surely open. Buckle down and do research
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October 4th, 2013 Categories: Uncategorized
Over the course of the past few months, Sacramento home prices have started rising twice as fast as the national average! They are rising even faster than the pace set during much of the last housing boom.
The median home price in Sacramento County grew by 22.4 percent, in the time period between January 2012 and January 2013. That’s the second-largest January-to-January Sacramento County home price increase in the last two decades. The last time this happened, it was the 2005 peak of the housing boom.
For the last few decades, Sacramento County has endured successive real estate booms and busts, each one larger every time. It seems as though another boom is upon us. Nevertheless, certain real estate experts have argued previously that another boom isn’t likely for awhile, given tight lending and a very slow economic recovery. They may still be proven right; only time will tell.
Despite the fast growth in prices, most homes in the Sacramento County still sell for 50 percent cheaper than they did during the highest point of the last housing boom.
But, if home prices increase at this pace for much longer, what does this mean for Sacramento homeowners? It means that it’s a good time to sell! While prices are high, it is the best time to sell your home and upgrade to a better one.
So there you have it: short and sweet. Happy Friday!
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October 2nd, 2013 Categories: Uncategorized
Have you heard? Real estate in Northern California is booming! Especially in the Sacramento housing market, which was actually among the hardest hit of any in the country during the collapse of the housing bubble.
Over the past year, the Sacramento area has actually had the largest gains of any metro region. Data suggests that sagging housing prices, are beginning to rebound with incredible strength.
Five of the top 10 cities with the fastest national growth are located in Northern California and two more are in the Southern California.
During much of the 2000s, loose financing had led to an oversupply of housing being built in the San Francisco Bay Area’s far outlying suburbs. Since the crash, there had been very little new construction, so when demand naturally increased due to the gradually improving economy, supply hadn’t been able to keep up and prices have jumped.
Not only did Sacramento have the biggest gain in home list prices over the course of the past year, but it also had the largest percentage of its listed houses go off the market, an inventory reduction of just over two-thirds. Nevertheless, Sacramento’s median listing price is still well below its mid-bubble 2006 peak.
Wracked by foreclosures and a flood of underwater mortgages, Housing price gains can’t come soon enough for many homeowners in the region.
Many of the other Northern California cities sitting atop the list owe their rapid price increases to a fairly different set of factors than those underlying Sacramento’s swift ascent. San Francisco, Santa Barbara and San Jose, have largely retained their value during the recession and owe the continued strength of their real estate markets to their booming economies where high-income people want to live.
While San Francisco only had the third-highest jump in housing prices over the past year, the report found that the City by the Bay had, far and away, the highest median home sale price in the country of $749,000 — about double the median price of buying a home in New York City.
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September 25th, 2013 Categories: Uncategorized
In the past year and a half, California homeowners have received more than $18 billion worth of help from a national mortgage settlement with major lenders.
The state’s share of the settlement was divided evenly between principal reductions and short sales, and it includes more than $2.8 billion to residents of Alameda, Contra Costa, Santa Clara and San Mateo.
The agreement penalized the lenders for something called “robo-signing” where bank employees fraudulently signed foreclosure paper work, as well as misconduct in loan servicing, and was limited to loans owned or serviced by those lenders.
The $25 billion national settlement was with the attorneys general of nearly every state, but California Attorney General Kamala Harris negotiated a separate version of this agreement with three different lenders. This increased the amount of help ,which went directly to homeowners. Under California’s agreement, only mortgage help that reduced what homeowners owed could be counted as credit in California’s share of the settlement.
As a result, 84,102 California families received first and second mortgage principal reductions. Bank of America delivered $11.16 billion and forgave second mortgages in full for over 36,000 California homeowners. JP Morgan Chase $4.07 billion and Wells Fargo $3.2 billion.
Good news or what?
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September 20th, 2013 Categories: Uncategorized
If you are thinking of buying a home, you will need a minimum down payment of about 3.5 percent of the purchase price. You might begin to panic if you don’t know where to begin. But there is no need because I have prepared five ways you can come up with a down payment to seal the deal.
1. Gift Money: yes you can use Gift Money for down payment. Money that was given as a gift from family or documented close relationship can be used towards a down payment. The giftor needs to provide a gift letter and a paper trail for amount they are gifting for the benefit of the buyer. In addition, they will have to provide a bank account showing that they had the ability to gift the money.
2. 401(k)/Retirement Loan for down payment: Typically, borrowed funds for a down payment are not acceptable, but isn’t there an exception to any rule? In this case it’s a 401(k) or an equivalent retirement account or event a current home equity line. All of these are accepted for obtaining a purchase mortgage loan.
3. Sale of a Good: Have you considered selling your recreational vehicle and using the net proceeds from the transaction as your down payment? For instance, let’s say that you decide to sell your motorcycle for $10,000. You’ll need to provide your mortgage lender with the full bill of sale, the bank statement depositing those funds and matching the bill of sale. As long as you can prove the sale from start to finish, you should have no problem using that money towards your down payment.
4. Trust Funds, Settlement Awards, etc.: If you happen to receive an inheritance, settlement, lottery winning, trust fund disbursement, family buyout, or even a gambling victory, all of these can be used for the down payment as long as the sourcing is fully documented from start to finish.
5. Line of Credit for down payment: Where a down payment lacks, strength in income can compensate. You can take out a personal loan or a line of credit and deposit the full funds into your bank account. After two months, the funds will be eligible for use in the transaction.
So if you don’t have a down payment for your dream house, you now know where to look!
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