Archive for the ‘Real Estate related’ Category

Jul 2

Interest rates hit historic lows — Where to from here?

Friday, July 2, 2010 | 1 comment

Rates have been relatively low over the last month. This week, they are in the news by falling to a new all time historical low.

The 30 year rate fell from 4.75 to 4.69 this week. Two weeks ago the 30 year rate was sitting at 4.72. What’s interesting is that over the last month, when a lot of people have been talking about how rates are about to start rising, we are instead breaking records with mortgage rate lows.
We mostly concentrate on the 30 year rate because it is the most widely used mortgage product. But in addition to the 30 year rate hitting an all time low the 3 other major mortgage products all reached new all time lows as well. The 15 year dropped from 4.20 to 4.13. The 5 and 1 year arms dropped from 3.89 to 3.84 (5 year arm) and 3.82 to 3.77 (1 year arm). Below are rates from the weeks from May 27, 2010 to Jun 24, 2010

Jun 24, 2010
30-fixed 4.69 15-fixed 4.13 5 ARM 3.84 1 ARM 3.77

Jun 17, 2010
30-fixed 4.75 15-fixed 4.20 5 ARM 3.89 1 ARM 3.82

Jun 10, 2010
30-fixed 4.72 15-fixed 4.17 5 ARM 3.92 1 ARM 3.91

Jun 03, 2010
30-fixed 4.79 15-fixed 4.20 5 ARM 3.94 1 ARM 3.95

May 13, 2010
30-fixed 4.93 15-fixed 4.30 5 ARM 3.95 1 ARM 4.02

So in addition to looking at mortgage rates it’s also helpful to look at mortgage payments. We took today’s rates and translated them into a mortgage payment for a 200k loan. We also did the same things with rates from May 13th.

Jun 24
30-year $1036.07
15-year $1492.43
5-year ARM $936.47
1-year ARM $928.5

May 13
30-year $1065.1
15-year $1509.62
5-year ARM $949.07
1-year ARM $957.13

So although rates were already pretty low on May 13th today a payment on a 200k loan is about $30 less a month for a drop of a little less than 3 percent.

So what is going to happen over the next few months? Its certainly possible rates could fall a little more and we could break some new records with mortgage rates. I would be surprised if rates fell below 4.25 unless the economy went into a significant tailspin. On the other hand once the economy recovers rates should increase rapidly. And in inflation spirals out of control I could see rates jumping into the double digits.

Published on Saturday, June 26, 2010, 6:25 PM Last Update: 2 day(s) ago by Kimbrough Gray

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Jun 8

Lease Option to Purchase

Tuesday, June 8, 2010 | Comments Off

Many people who are struggling to get mortgages are finding comfort in a growing trend: lease-options. This is a contract that allows renters to lease the property and, at the end of their lease, they have the option to buy the home.
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Hopeful buyers with poor credit are finding the rent-to-own option creates an opportunity to repair their credit while positioning them for homeownership. It’s a win-win situation. Sellers find that properties that once sat vacant now offer cash flow.
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The concept, while not new, is gaining momentum. There are a number of reasons buyers are finding this option appealing and it’s not just because of bad credit. Some buyers are not sure if they’re ready to own a home and take on all the responsibilities and extra costs that go with homeownership; the lease-purchase contract gives the buyers a chance to give homeownership a test drive.
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Individual sellers in the housing resale market are considering this method to help get their homes sold and so, too, are developers who have found they’re loaded up on properties they can’t sell.
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Understanding the lease-option is very important. There are various differences in the way this type of contract can be drafted, so it is critical to hire experts to help negotiate the process to make sure you understand the terms and are protected. Here is some basic information about leasing with the option to buy a property.
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Typically, in return for the landlord/seller extending the offer to buy the property after a period of time (usually one to three years) at a predetermined price, the tenant/buyer has to pay an upfront option (fee). That fee is generally non-refundable. A portion of the monthly rent may be applied toward the down payment to purchase the home.
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Advantages for the buyer/tenant:
  • Under this type of lease-option contract, for the period stated, you are the only one who has the option to buy the property.
  • Typically a portion of your rent goes toward building equity and, when you purchase the home, is applied toward the down payment.
  • You have a contract to buy the home when the lease is up.
  • Usually you can buy the home at any time during the contract.
  • You can see if homeownership is right for you by testing it out.
  • In an appreciating market, you may get a good deal if the home goes up in value and you have already locked in a specific sale price for the home that is less than how much it appreciates. However, the reverse is true too. You could end up paying more for the home later on if it depreciates and a set price was locked in for a higher amount than what the home is worth when your lease-option is up.
  • You have a chance to clean up your credit and build equity.
Advantages for the seller/landlord:
  • Immediate cash flow from the tenant and the opportunity to sell your property later on.
  • If the tenant/buyer doesn’t buy your property, you keep the upfront fee (option money).
  • You may have a larger pool to market your home to because you are marketing to traditional buyers and also renters and investors.
  • You will likely get higher-quality tenants who take better care of the home since the tenants may want to buy it in the future.
  • Since you own the home, you retain tax-shelter benefits while you have tenants in the home.
  • You may get some peace of mind knowing that you have tenants in your home who are working toward buying the home.
Things to consider when utilizing a lease-option:
  • Do a home inspection and document necessary repairs. Take photos to document the condition of the home.
  • Make sure all payments are kept up such as mortgage, taxes, and insurance for the property.
  • Verify if there are any liens against the property.
  • Spell out the terms if the tenant/buyer does not exercise the option to buy the home at the end of the lease.
  • Specify everything in writing; option contracts must have all the specific information that a sales contract would have in order to be enforceable.
  • Prepare a draft of an undated and unsigned purchase agreement.

Written by Phoebe Chongchua

Contact me today to sit down with you to explain this process in detail.

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May 28

2009 last quarter stats for solds in Millbrae

Friday, May 28, 2010 | Comments Off

Greetings!

Click on the following link to view the last quarters’ statistics on all the neighborhoods in Millbrae that sold within that time period. The 2010 results will be coming out soon…..stay tuned in for more…..
REILStats

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