After a year of working out the kinks, we’ve just released the Home Remodel Loan Division, here at Citywide. This division will finance properties that NO ONE else will touch. We’re doing the standard 203k, and Energy Efficient Mortgage (better than anyone with this new division) but we are also doing some ESCROW HOLDBACKS that can be done post-closing and YES, they can be SELLER PAID…. BOTTOM LINE, we can finance homes that need remodel on FHA and Conventional loans due to our ability to self- fund these loans and hold the paper until the repairs are completed. Watch the video or call me to learn more. Phone: 801-747-1210 Email: josh@joshmettle.com
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Archive for the ‘Mortgage’ Category
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Tuesday, March 29th, 2011• • •
If Prices Are Falling, Why Are the Rich Buying?
Monday, March 14th, 2011There is an interesting phenomenon taking place in the real estate market. While house prices 
are falling, the rich are starting to purchase. DataQuick Information Systems reported last week that sales on homes $1 million or more rose 18.6% last year after four consecutive years of decline. This is at the same time that sales outside of this price point actually fell 2.8%.
And even more amazing is that homes over $5 million have also increased substantially. Housing Wire reported that:
In 2010, 975 homes sold in this bracket, up nearly 14% from the year prior.
Why would the wealthy be starting to purchase especially when everyone is predicting that prices will soften? The people of wealth understand finances. They realize that the COST of real estate is a much more important than its PRICE. With the government attempting to make massive changes to the residential lending business, the wealthy know financing a home may never be better. They realize it is time to buy. They can purchase a million dollar+ home for a rate lower than at almost any time in history.
Rates are at historic lows and the spread for jumbo loans has shrunk dramatically. As CNN Money explained:
Normally buyers have to take out a jumbo loan to finance any mortgage beyond the $417,000 threshold ($729,000 in high-cost cities such as New York). These loans have higher interest rates because they are considered non-conforming — or higher risk — and are not backed Fannie Mae or Freddie Mac.
In 2009 buyers of high-end homes paid 1.8 percentage points more in interest than the average buyer. But in 2010, that spread had shrunk to just 0.6 points more.
They can also fix that rate for 30 years. The 30-year-fixed-rate-mortgage may be a victim of the new lending reforms. Mark Zandi, chief economist of Moody’s Economics addressing the administration’s recent report on reform:
“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages.”
Bottom Line
Let’s assume the rich aren’t just lucky. Let’s assume they built their wealth by making good financial decisions. What have they decided about real estate? It’s time to buy.
Thanks to our friends at KCM blog for this great post.
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Daily Exercises in Increasing Your Personal Power
Monday, March 7th, 2011Is it possible to increase your own personal power? Are there exercises or systems that can be applied daily to help you become a more powerful person? And maybe even more interesting is the question: can you decrease your personal power? Can you actually get less able, less powerful over time by not pushing yourself and exercising your personal power?
I believe you can do both! Why would your personal power be any different than let’s say your ability to bench press or squat heavy weights, or your ability to think under duress or your ability to compute complicated math equations for that mater? The more you practice and focus your mind and energy on it, the better, faster, stronger you become.
So here’s my point, I’ve been setting a lot of goals for myself lately and actually holding myself to them. It starts in the morning with being super productive early, then hitting a set number of miles on the treadmill or number of reps or pounds pressed at the gym. Then later in the day it’s setting a goal to time block and finish a project or to contact a certain number of clients, then when at home being “present” for my family. At the end of the day, if I’m really focused I can hit virtually all of those little goals. What I’ve found is after a few days of hitting all those micro goals they seem easier and easier to accomplish.
The real challenge is to set little challenges and then hit them. Naturally you’re going to set a goal and something is going to come up, a side ache, an emergency, something trying to distract you from your goal. You must push through, you must hit your little personal challenges. By doing so, you will become incrementally more powerful.
This does not mean I don’t have tough days when things don’t go as planned, this is planet Earth after all. But, I’ve found if I can set little goals and make myself hit those goals, my personal power or ability to accomplish tasks seems to grow.
Try it out, set a few micro goals throughout the day, make sure you hit them and then build on that everyday. Watch what happens, you get on a roll and things just seem to happen a little easier after a while.
P.S. Everyday is easier after a 5 or 6 mile run in the morning!
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For Buyers:The Financial Opportunity of a Lifetime?
Wednesday, March 2nd, 2011
We often point out that a buyer should be more concerned about the COST of a home rather than the PRICE. Price obviously is a component of cost. However, unless you buy all-cash, you must also be concerned about the financing of the purchase. The price and the financing together determine the cost of a home. Today, we want to look at only the financing piece.
An opportunity exists today because of recent government involvement; an opportunity that may never again be available in our lifetimes. There has been much discussion about what role the federal government should have in supporting homeownership. We will leave our opinions on the debate for another time. However, we want to alert you to two advantages available to a purchaser today that may disappear in the future:
- Historically low interest rates
- The ability to lock in these rates for thirty years
Interest Rates
Because of the financial crisis, the government stepped in and instituted a series of programs which pushed mortgage interest rates to historic lows. If we look at 30 year mortgage interest rates before and after government intervention we see the impact these programs had (see chart below).
According to Freddie Mac, from 2006 to the start of the financial crisis (the fall of 2008), the average rate was 6.29%. Since then, the average rate has been 4.92%.
A purchaser can still get a 30 year-fixed-rate-mortgage at approximately 5%. However, interest rates this low may soon disappear. The government has questioned its role in supporting homeownership. In the administration’s REFORMING AMERICA’S HOUSING FINANCE MARKET: A REPORT TO CONGRESS, they are very strong in voicing their thoughts on this issue:
…our plan also dramatically transforms the role of government in the housing market. In the past, the government’s financial and tax policies encouraged housing purchases and real estate investment over other sectors of our economy, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.
Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters, and carefully designed support for market stability and crisis response…
Under our plan, private markets … will be the primary source of mortgage credit and bear the burden for losses.
What are the probable results of this decision?
“The (government) currently provides 95% of housing finance in the U.S.; any reductions of their involvement in supporting mortgages mean interest rates will have to go up to induce private lending.”
AnnaMaria Andriotis, writer for SmartMoney:
“In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.”
The day of a 5% rate seem to be coming to an end.
Locking in a rate for thirty years
We must also realize that having the ability to lock-in a rate for 30 years may soon be a thing of the past.
There are a growing number of people who think that our mortgage industry should imitate those of other industrial countries around the world. If we do start limiting government support for the mortgage process, the 30-year-fixed-rate mortgage may disappear. Other countries, like Canada, only allow a purchaser to lock in a rate for a five year term. After that, the borrower must renegotiate a new mortgage at current rates. Could that happen here?
Mark Zandi, Chief Economist of Moody’s Economics.com addressing the administration’s recent report:
“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages. Based on the experience overseas, the fixed-rate share in the U.S. would decline to an average of between 10% and 20% of the mortgage market compared with a historical average of closer to 75%.”
Bottom Line
The COST of a home is dramatically impacted by the mortgage component. Today, we can get a 5% mortgage and lock it in at 5% for the next thirty years!! Both of these opportunities may disappear in the future. You should take this into consideration if you’re looking to purchase a home
We would like to thank our friends at KCM Blog for this great article.
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