Intero Insider: Move-up Buyers Hungry for Bigger, More Expensive Homes

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Here’s a term we haven’t heard much of in the last few years: move-up buyer. But many markets are now seeing many more of these folks. Some are even showing signs of strength in luxury or the high-end of the market thanks to this type of buyer.

After the recession started to take hold in 2008, the market for large and expensive homes fell as more buyers looked for more affordable places to live that weren’t as much of a drain to heat, cool and keep lit up.

2014 - The Year to Buy

We been asked by several people what is coming for the real estate market in 2014. We pretty much agree with this video.

Change in FHA Guidelines Allows More People to Be Eligible

This article by Princeton Capital Admin is great news for many former homeowners in Gilroy and the surrounding area. Team Patereau works with Princeton Capital right in our office and will be happy to refer you to one of our expert loan officers to get you qualified.

If you lost a house to foreclosure or had to sell a home while in the foreclosure process, take a deep breath. You could be eligible to buy a home again sooner than you think.

The U.S. Department of Housing and Urban Development (HUD) released Mortgagee Letter 2013-26 which is the new guidelines allowing previous homeowners with a black mark on their credit history to qualify for a new mortgage as soon as 12 months after foreclosure or pre-foreclosure sale (typically a short sale), down from the 36-month minimum window set under previous guidelines.

Forbes magazine is reporting that there is a current surge in new eligibility from the homeowners who were foreclosed or had a short sale between September 2007 and August 2010 and became eligible under the old guidelines. This new guideline allows people who were foreclosed or had a short sale between September 2010 and August 2012 to also now become eligible again for a home loan.

Not all of these people will want to be homeowners again. Also from Forbes:

The ability and willingness of boomerang buyers to re-enter the market over the next year will be a key bellwether of the long-term health and direction of the U.S. housing market going forward for the next decade, and possibly beyond. The more who re-enter the market sooner rather than later — possibly spurred on by this new FHA rule enabling them to do so — the more likely we’ll see a return to a typical home ownership-dominated society and the more quickly institutional investors will pull out of the single family rental market and move on to other ways of making money.

So let’s talk about the new guidelines.

Guideline Particulars

Seasoning requirements on bankruptcies and foreclosures/short sales can be shortened if a borrower experiences and Economic Event. An Economic Event is defined as any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both which causes a 20% reduction in household income.

Borrower must meet the following guidelines:

• Verify good credit prior to event
• Verify month of loss of employment/income with written VOE or written termination notice or other publicly available documentation AND documentation of receipt of unemployment income.
• Document household income decreased by 20% during a period of more than 6 months (income from all individuals residing at the borrower’s primary residence at the time of the Economic Event and who was a co-borrower on the borrower’s previous mortgage). Need signed tax returns or W2 evidencing prior income
• Post Economic Event Income. Verify and document borrower’s income after the onset of the economic event.
• Re-establish satisfactory credit for the past 12 months. No lates on housing payment
• Complete Housing Counseling and obtain certificate at least 30 days prior to loan application and no more than 6 months prior. All borrowers, including non-occupant co-borrowers must be on certificate.

Preparing For Getting Pre-Approved

Your best bet when buying a home is to be pre-approved and not just pre-qualified. Gather up:

• Employers’ names, addresses and phone numbers from the last 2 years
• Consecutive pay stubs
• W2s or 1099s from the last 2 years
• Completed federal income tax returns
• Proof of income from other non-employment sources
• Government-issued identification
• Recent statements from all of your checking, savings, money market, stocks, bonds, mutual funds and retirement accounts.
• Outstanding loans and credit card statements
• Student loan statements
• Divorce decree if paying alimony or child support
• If you have filed for bankruptcy, have all of that documentation as well.

Talk to a reputable loan officer about your situation. They spend a lot of time on the new programs and guideline changes and will work diligently to help find a good solution for your situation.

 

Real Estate Trifecta

5 NEW Rules for Home Buyers

A recent article written by Amanda Gengler, Money Magazine, is circulating. The gist of it is that there are NEW rules for home buyers. Here's what she has to say:

There's no telling how long the housing crisis will drag on. Here's what you need to know before you start shopping in a rocky market.

Rule 1: You can't time the bottom of the market
Face it: The house you buy today will more than likely be worth less next year. That could get you thinking about trying to time the bottom. Resist. It's harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low. Pace yourself, find the perfect place and drive a hard bargain: Ignore the seller's asking price and bid 10% below what comparable homes are selling for. If the seller balks, move on. Remember that if you're trading up, your home could sit. So sell before you buy.

Rule 2: One reason to buy now - mortgage rates
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don't directly follow the Fed. They reflect the bond market's expectations about inflation, which remains a concern. The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody's Economy.com. That means there could be a penalty for waiting to buy even if prices fall more. Today a $250,000 loan would set you back $1,500 a month. At 7%, a $1,500 payment gets you only a $225,000 mortgage. As for variable-rate loans, the spread between conforming ARMs and fixed loans is too narrow to do you much good.

Rule 3: Another reason to buy - rates on big mortgages
Mortgages in amounts greater than $417,000 - the limit for buying by federally sponsored mortgage agencies - usually run a fifth of a percentage point above conventional products. But investors are shunning jumbos, which now average 7.2% and are unlikely to drop much this year, according to HSH Associates. Certain jumbo borrowers could get relief, however. A new law allows Freddie Mac and Fannie Mae to buy loans as large as $729,750 in 71 high-priced areas. So far "jumbo conforming" loans average 6.6%. The program has gotten off to a slow start; you'll need to shop around. And unless Congress acts, this bargain will disappear at year-end.

Rule 4: Don't buy cheap; buy good schools
By now you've heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house, you're also buying into a neighborhood. And foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they subsequently found they couldn't afford. That's not a recipe for stability. Prices and quality of life could both decline further. Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity, says Mike Larson of Weiss Research. Instead, go for areas with highly rated schools. They generally fare better during downturns, and that pattern is holding today, according to a recent study by real estate site Trulia.com.

Rule 5: Choose an agent that has your best interest at heart
Do you understand dual agency? Basically, it means that the listing agent's primary fiduciary (monetary) responsibility is to the seller. Make sure you and your agent are clear about expectations communication, pre-qualifying for financing, showing property, writing offers, and overall assistance through the process. Does he/she focus on your priorities? A good
buyer's agent will save you time, money and peace of mind.

Team Patereau is ready to guide you through your buying tansaction in these volatile times. Give us a call!

Call Me

Friday is the day many people start to try to figure out how they are going to do all of the things they scheduled for the week-end. Let’s assume, because you are here, that you are not fully booked, and that your are, in fact, looking for real estate in Gilroy and trying to figure out what’s new on the market so you can take a look. There are two things you can do at this point:

1. Call me. I’ll talk to you about what you want and what you qualify for, and I’ll arrange a targeted, specific tour for you.


2. Check out the New Listings In Gilroy This Week Chart below. All of the newest listings in Gilroy for the last week are listed. There are 30-ish new listings! Your work is to eliminate the things you are not interested in, narrowing down the list. Once you have picked what you want, you need to go by and see the properties. Some of them will have Open House time either Saturday or Sunday. Which day are you going to drive around? Some won’t have Open House scheduled this week, but may have something in the future. If they are not going to be open you will need to make an appointment to see them. At this point you can call the listing agents and wait for their callbacks so that you can set an appointment for seeing that property, then move on to the next. OR, you could go back to Step 1 above.
   

Reminder: Buyers don’t pay for the services of a Real Estate Agent. The Seller pays the commission when the property sells.

As long as you don’t have to pay for the great service you receive from a Real Estate Agent, what’s keeping you from using one?