When applying for a mortgage, the lender you have chosen will take many factors into account. These factors not only influence what type of loans you can qualify for at what interest rate,  but also what your monthly payments will be and how many years you will take to pay the loan off completely.

Knowing these factors and doing what you can to improve them all can make a tremendous difference when you go and see your lender and start the process that will get you your new property.

Some of the basic factors apply for just about any loan but are especially important if you are trying to get a mortgage. The big one is, yep, credit.

How good is your credit? Get copies of all of your credit reports from the 3 major consumer reporting companies and check each one for errors. Some companies will give you all three in one spot for one price. You want to be sure and get copies that include your “credit score“.

Many times they have errors that can be corrected in just a few weeks and that helps boost your score. If you have credit cards, pay them off as well as any other outstanding bills.

A nice large down payment will always improve your chances of being approved. If your credit isn’t completely top notch, the bigger the down payment, the more likely you may get approved. Now adays, what used to be a great credit score is only marginal, so it’s important to know what you are facing. If your credit is great, you can still put down as much as possible to lower the monthly payments or decrease the total loan time.

Above all else, don’t lie to your lender. If you tell them you are a supervisor of a power plant and they find out you are a UPS man who has only had the job for 6 months, you will be totally screwed. Be honest and your lender will do their best to work with you. Make sure you have w-2’s, tax returns, a list of your current bills and balances. All these go together in figuring out what the lender thinks you can afford.

For more information whether you are buying or selling a home, be sure and visit my website at http://www.SiliconValleyRealEstateOnline.com Feel free to leave any comments or questions you may have below.

It has actually been a law for years that if you apply for a real estate loan, you are supposed to get an estimate of what that credit will cost you within 3 days of the day the loan application was taken.  For the most part the mortgage industry did that, except the estimate was just that. Merely an estimate and it was rarely correct.  If you’ve ever bought a home you know exactly what I’m talking about. It’s that piece of paper that puts you into shock when you look and see the $100,000.00 you’re borrowing to buy that $120,000.00 house is actually going to cost you $300,300. to pay back, or something like that. They figure in the APR which is the amount of the fees, etc. you are paying and shows what your loan may adjust to if you have an adjustable rate.

In the past, you’ve gone through the escrow period, you’ve gotten loan approval, you’re at the title company to sign off on the house you’re buying and low and behold, these are not the costs the lender had told you about. This is not the interest rate you applied for.  Welcome to one of the most stealth real estate scams ever run. You are at the perfect point where if you don’t agree to what’s before you in escrow, you don’t get your house. This was the perfect spot to insert a little “emotional blackmail”. This was an industry standard for many years and I personally have never seen one person in escrow refuse to sign.

Finally there is a new law to protect home buyers from this type of thing in the future. Oh sure, where there’s a will, there’s always a way, but for now it will be a little tougher. There is a “uniform” form to be filled out, lender fees cannot change between when you get the statement and when you get to escrow. All fees for closing costs where the lender has provided the service provider have to be within 10% of actual costs (which to me is still too much leeway). They still have to give you the estimate within the allotted 3 day time period from when they take your application, but for the most part there will be no more drastic and last minute changes in escrow.

This is supposed to provide a lot more transparency into actual fees the new buyer is paying, and to avoid any more of one of the oldest real estate scams on the books.

To see the new law, actually made in 2008 to take effect Jan. 1, 2010, just visit the HUD website, and click on RESPA. The FAQ’S may be easier to understand, and you can find them here RESPA.

If you have any comments or questions, don’t hesitate to leave a comment. If you’re looking to buy or sell a home, or if you’re a homeowner in trouble, visit my website at SiliconValleyRealEstateOnline.com and get some free information.

There is so much concentration to keep people in their homes, which is a good thing, but people have a tendency to forget that the foreclosed on ex-homeowner has a new set of needs now.  For many this is just part of a downhill spiral, emotionally, financially. It’s important that these people don’t fall by the wayside, but learn where they too may get some help.

There are many community based programs for food, shelter, etc. One place to look is in your local yellow pages. In ours, looking right up front there is a section on community services available. Many are there to help with rental assistance, bills like PG &E, etc.

Another great place to go for help is your church. Many have funds for helping their congregation in need.

The local library. You can use the computers for free to find just about anything you need.

This isn’t a time to be “prideful”. It’s a time to take care of you and your family. If you’re in a depression you can’t seem to break out of, check with your local Mental Health Dept. You have to take action. No one can help if they don’t know you need it.

There is plenty of free help after foreclosure. You just need to dig a little sometimes.

If you have any questions, or if there is anything I can do to help, please feel free to leave a comment or contact me. If you’re a buyer or seller, there is a ton of free information on my website at http://www.SiliconValleyRealEstateOnline.com

I felt very fortunate today to be in on a conference call with a fellow Realtor, Jeff Schrager in Fresno, whom I have never met, but obviously has a good heart. He is willing to teach any Realtor whose interested how he put together a network of everything the homeowner going through foreclosure could need. He is in a what used to be very small and rural part of California and he’s been able to make it work. It seems we in the Bay Area with so many resources should be able to do a really bang up job, if everyone would just work together.

Have you ever seen that demonstration with a strand of hair? You take one strand of hair and try to break it. It’s pretty easily done. You put 3 strands together, it’s almost impossible. That’s how I feel about this program. None of the resources anyone has is enough to save all of the homeowners in trouble, but if we combine together and have a huge network, while we can’t save everyone, we can save more than we could alone. On top of all this is, these services are free! You should not be paying anyone to help you if you’re in trouble in the state of California. It is illegal for anyone to charge you any kind of upfront fee, whether it be for loan modifications, or anything else to do with your home once you’ve gone into default.

One of the things that’s so great about trying to put something like this together, is that no one wants to help you until you’re in trouble. I would like to see people getting help when they ask for it. Most people know they’re headed down a bad path, and they can’t keep it up much longer. Why do the banks not pay attention to your warnings? Why don’t they help you before the foreclosure process begins, saving them money as well as you? I don’t know. I think it’s shear stupidity and too big a business. I would like to see what we can do to help change some of that. For some of you the help comes too late, as it did for me.  If you’re in trouble or about to be, seek help now. It’s free. You don’t have to 1)sign over your house 2)pay someone up front fees 3) pay someone monthly fees to help you. There are so many agencies that only came into existance for this disaster. Take advantage of it and get assistance.

If I may be of service in anyway, don’t hesitate to contact me. All my contact info is here on this site. I would be honored to help. There is a lot of help out there for homeowners in foreclosure needing help.

One of the things that I thought was a little ironic, is that someone called my phone from my blog here and needed to talk about being in foreclosure. He had a group of Realtors he said, that said they would help him for $1900. downpayment and $700 a month for each month he received help. They told him even though he would pay the $1900 up front, that they would hold his check in escrow until they performed the services they said they would provide.

Listen up, People! In the state of California it is illegal for anyone that is licensed by the Calif. Dept of Real Estate, or anyone working under someone who is licensed by the Calif. Dept. of Real Estate to take any money from you up front what so ever to help with loan modifications, etc. The Dept. even revoked the permissions of the companies who had at one time received approval from them. It is uniform now.  I can’t say for attorneys, as I am not one, but for anyone else, real estate agents, mortgage brokers, anyone else licensed in California, it is not legal any longer.

I thought it ironic also that at a time when people need our help more than ever to work with their lenders, to get approved for short-sales, etc., the DRE revoked a record number of licenses belonging to real estate sales people last year. There were 800, which really isn’t that many considering how many real estate professionals there are, but I’m hoping they are adding to the number all the time. It means they have caught more unscrupulous people who give all of us that are truly trying to help, a bad name.

If you get approached by anyone trying to charge you an up front fee for their services instead of writing a contract to get paid after the services have been performed, you should report them to the Calif. Department of Real Estate right away. You may have been lucky enough to escape a scam, but there are a lot of people in trouble that wouldn’t be so lucky. It’s everyone’s job to help stop these people.

If you have any questions regarding California Real estate or foreclosure, please feel free to contact me either through email or call. If you have anything to share about this kind of thing happening to you, please do so in the comments section so everyone can benefit from your experience.

Evidently the banks have rules based on the “2001 Patriot Act” to use due diligence to find out where the money comes from before it gets deposited. Due to the Patriot Act, if you’ve tried to open a bank account lately, they want to know everything down to the size of your underwear almost.  So foreign dignitaries, etc. have found a way to launder money through our American system, because really, when it comes to buying and selling something, what American doesn’t like “green”?

Tens of millions of dollars pass through our system. Foreigners buy million dollar mansions here, jets there, etc. Due to an exemption given to real estate and escrow agents by the Treasury Dept. in 2002, it makes the real estate market very easy to manipulate with “ill-begotten” funds.

What cracks me up is here we are again, where the rights of others come before those of our own. When I have a buyer for a house, I have to be able to show a complete “paper trail” for where those funds have come from. From this investigation, if you’re a foreign dignitary, etc. all you have to do is have the funds. Nobody seems to care where they come from. Of course if you’re doing a multi-million dollar transaction and most of it is cash, guess what? Yes, cash is still “king”.

One article stated “The report said Nagler worked with a colleague in the insurance industry to provide insurance coverage for Obiang’s 32 motorcycles and cars, which included seven Ferraris, five Bentleys, four Rolls-Royces and two Lamborghinis.” Must be rough, aye?

At least we’re not in it alone this time. Money laundering in real estate is happening with the help of not only real estate agents and escrow officers, but lobbyists, insurance agents, and real estate lawyers. The corruption and greed will never cease to amaze me.

On a different note, I’ll be holding an open house in Mountain View,

2/10/2010

California this Wednesday from 11:30 am to 2:30 pm. For information about this lovely home, visit http://www.whismanhomeforsale.weebly.com

If you have any questions regarding real estate in California, please feel free to contact me. I’d be happy to help.

Now that “they”, the powers that be have decided that all the government issued help hasn’t done what it was meant to do, and they’re afraid of FHA going the way of Fannie Mae and Freddie Mac, we can get ready for some new rules to play the real estate foreclosure game. Real Estate financing is still changing, trying to find another way to keep homeowners in their homes, and put new families into affordable housing.

We all have heard the rumors about FHA being the next entity to go under. On Jan. 20, 2010 FHA announced changes to strengthen and stabilize themselves, while working on several occasions with the National Assoc. of Realtors to keep it a viable resource for homeowners and home buyers. One thing NAR did score was keeping the down payment minimum requirement at the current 3.5 % and allowing the upfront mortgage insurance premium to be financed. What FHA did do was raise the premium from 1.75 to 2.25%.

The other change regarding financing that wasn’t in place before will be that borrowers with a credit score of 580 or below will be required to put down a minimum 10%, instead of the allowed 3.5% for prime borrowers. One thing they did that may open the door to more sellers co-operating with FHA financing, is reduce the seller concessions from 6% to 3%, making it a little more attractive. This would also open the market for home buyers.

FHA also says it’s going to crack down on lenders. In the past, they always say they have their rules, but cannot force the lenders to go by them. The lender may have their own requirements. Now they are planning on implementing a sort of “watch system” to see that their FHA endorsed lenders are actually lending. That is a big score for home buyers.

Tomorrow, Fannie Mae news regarding down payment assistance.

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Jan. 31, 2010

I’m holding an Open House today from 1-5 pm today. If you’re in the area you’ll have to stop by and say hello. The address is

526 N. Whisman Rd. Mountain View, Calif.

It’s a great house and Mountain View is an extremely popular area being the home of Google and so many other “techie” companies. This home is close to freeways and shopping, was completely remodeled just 5 short years ago, and is a true delight. To see pictures, etc. go to http://www.WhismanHomeForSale.weebly.com

The numbers are out for December and all of 2009 now. While they are saying the job market looks better, the numbers still aren’t good. Personally, I think they’re a lot worse than they show. The fact that they don’t even count the people still out of work, but whose unemployment benefits have run out and they are no longer on the rolls, to me is very deceiving. The economy shed 85,000 jobs last month and the Unemployment Rate failed to dip below 10%. The one bright spot is that because of these numbers, mortgage rates continue to decline slightly, or at least stay at current levels.

As far as seeing the end of the housing crisis, there were a total of 3,957,643 foreclosure filings, which includes default notices, scheduled foreclosure auctions and bank repossessions. A total of 632,573 California properties received a foreclosure filing in 2009, the nation’s largest state foreclosure activity total. This was an increase of nearly 21 percent from 2008 and was the most for any state in 2009. After four straight month-over-month declines, California foreclosure activity in December increased nearly 9 percent from the November total, while the state’s fourth quarter foreclosure activity was still down 17 percent from the previous quarter.

I don’t look for these numbers to drop much in 2010. We’re actually due for another mortgage adjustment that will send the numbers to a new high for this year, and it’s not just “bum” loans and “bum” people getting caught up in the housing crash any more. Prime borrowers with loans thought to be secure are defaulting now, and have been. No matter what the media tries to have us believe, one of the worst housing market crashes in history is not going to be over ‘tomorrow’.

What the heck?

It’s pretty scary times for real estate out there, and I don’t just mean because of foreclosures and big drops in value causing people to lose all their equity. It’s scary because on one side you have people who still think like it’s 2005, on the other side you have “real estate gurus” coming out of the woodwork teaching creative financing and doing deals like they did 30 yrs. ago, and then in the middle you have the government relaxing standards and doing the same kind of loans that got us here in the first place.

Then I see a question posted in one of the Real Estate forums from someone wanting to know about hiring a Realtor or a real estate attorney to help with the paperwork on a piece of property she’s buying. One of the answers she got was from someone saying to let the other agent do the paperwork, and the title company handle everything. That’s how they bought theirs and there was never a problem. While I concede that there are many deals between people that didn’t use either a Realtor or an attorney that turned out OK, there are many that turned into nightmares. In a transaction described like the one above, who is looking out for her interest? What recourse is she going to have against the seller if she has the seller’s agent write up the contract? Do you think that agent is going to worry as much about taking care of her as he is the person that actually hired him and is paying him? I don’t think so. While we have a code of ethics that states we have to be “fair and honest” in all our dealings, do you think everyone really is?

Then we have the ads on Craig’s List where investors love to advertise to buy homes. One I read yesterday specifically said “No Realtors or attorneys”. Now why do you think that is? I understand they want to save on costs so they don’t want to pay commissions, or a lawyer a fee for looking over the paper work, but do you think it might be also because all their contracts, etc. may be geared their way with no concern for the seller, or buyer, whichever the case may be?

Remember the old saying “Desperate times call for desperate measures”? Don’t be so desperate you make your situation worse instead of better. If you’re in a situation where you need some help with a contract most Realtors will look it over for you for free (like me. LOL) in the hopes of either getting your business in the future or a recommendation to your friends on what a nice person they were. Take advantage of the service.

I have a buyer that has a friend whose a Realtor, but until I came along no one ever went through the contract with him and his wife to know what they were signing. It’s like hiring a stock broker. No one is going to watch out for your money with the same love and care that you are, and the same is true when it comes to getting involved with buying or selling real estate. It’s your job to make sure you are protected. No one is going to cry with you when you get yourself into a mess. All the courts care about is what you signed your name to. It’s up to you to make sure it’s something you can “live” with.

If I can help with any of your real estate needs, please feel free to contact me by phone, email, or leave a comment below. I’d be honored to help in any way I can. Like I said, it’s pretty scary times in real estate right now.

Investing in Foreclosures

Investing in real estate in Silicon Valley is a real possibility right now but there is not much of a margin for error. As prices have fallen and rates are low, it is possible to buy a “rental” property for specifically that reason, to rent it out. This is an opportunity for investors we haven’t seen for many years and they are coming out of the woodwork like crazy. I must get at least 5 e-mails a week from somebody with a new “system” for buying up property. Unfortunately, they’re not “new” and most of them are totally illegal for a licensed real estate professional here in California.

I’m sure most of you have heard that the FDIC is going broke. That FHA is in trouble. Fannie Mae and Freddie Mac have been in trouble. Besides what’s on the market (the MLS) these institutions are dumping properties as well.  It’s amazing some of the bargains you can pick up, although you do have to be careful and do your own due diligence. Make sure you crunch all the numbers. A condo that looks attractive numbers-wise when you figure the mortgage payment, may not be so attractive if you add in a hefty Homeowner’s Association Fee, along with insurance on the unit itself. Remember, the Homeowner’s Association only insures the outside of the unit, nothing inside the 4 walls.

What is amazing to me is that for as much as everyone is saying credit has dried up, etc. many of the same loans that got us where we are today are still out there. Oh sure, for now your credit score has to be a little higher than it used to be, but I’m not sure how long that’s going to last since now even people with A+ credit are going into foreclosure. FHA has laxed a lot of their standards so that their loans are more usable. Not only that but they have a loan program that will help you buy the property and give you “fix up” costs. It’s almost as if they will pay you to fix up your new property. VA still has a no money down adjustable rate mortgage. Some of the conventional lenders are willing to bend criteria a bit to get properties off their books.

The one thing FHA has tightened up on is “flipping”. They have a “no flipping rule” that says if you buy a property using an FHA loan, you may not sell it for at least 90 days. Now to me, if you move into a property you’ve bought, fix it up while you live in it, which is not at all unusual for investors, and you’re flipping houses every 91 days, you can still do quite well. You have to pay to live somewhere anyway. Why not the property you’re buying to fix up and sell? Not only that, but the lenders look much more kindly on properties that are going to be owner occupied.

I realize it’s pretty much a feeding frenzy out there, but if you’re going to invest, invest smart. The “gurus” of real estate don’t talk about the properties they get stuck with, or the holding costs, or the bad tenants. They talk about the upside without the downside. I’m all for investing in real estate to build your wealth, but be prepared. It’s not all the bed of money it’s cracked up to be. And if you think you can go negative cash flow on a house because it’s only $50 or so, think about how much that turns into per month if you do 10 of them, or 100.

If I can help you with any of your real estate needs, whether looking for a bargain on your first home, looking to invest in a rental property, or selling your home for the best price in a down market, feel free to contact me or leave a comment below.