Baghdad By The Bay

ATTENTION SF BAY Veterans - Are you using your up to $1.5M VA loan benefit?

Preliminary loan approval in 5 days! 

I'm helping a friend purchase a home just under $600K and he is using his VA Loan benefit.  VA loans are not something you hear much about these days.  However, with so many single family homes in San Francisco and the Bay Area under $700K, this is a good option for local veterans.  There is no minimum credit scored required for loans under $700K¹.  The loan benefit can go up to $1.5 Million.

Most people don't understand how to do it and whether they are eligible or not.  It takes a good loan agent who knows the process and a buyer that's willing to take an hour to get the paperwork done.  It's that simple.  We received preliminary approval within 5 days of submission.

There are over 30 million people eligible to get a VA loan.

Who qualifies?

• Active duty personal & personnel with previous qualifying military service
• Reservists, National Guard and Coast Guard personnel with qualifying service
• Unmarried surviving spouse of a veteran killed as a result of service-related activities
• Honorably discharged individuals… the list goes on.

 

Borrowers with limited funds for down payment or less-than-perfect credit can use their VA benefits as well.  Huh?  You’re kidding!  Nope!  There is NO MINIMUM credit score requirement for loans under $700,000.  VA loans can finance up to 100% loan-to-value.

Most 3-5% down buyers have to purchase Mortgage insurance

• No MORTGAGE INSURANCE required¹

What does it take?  2 Saavy agents. 

One Saavy Real Estate Agent (me of course!) and a Saavy Mortgage professional.  My colleague, Cesar Aravena is very knowledgeable and can walk a buyer through this painless process.  Whether you are considering a single family home or a 2-4 unit building; it is much the same process.  Maybe it’s time you dust off those VA benefits!

Many of our friends and neighbors have honored us by their service but don’t realize what’s available to them or they think, “I can’t buy anything in San Francisco with a VA loan.”  Not true!

If you know someone who has taken time to serve in the NAVY, NATIONAL GUARD, ARMY, AIR FORCE, MARINES or COAST GUARD and they don’t own a home; ask them if they know about their VA loan options.  In fact, invite them to dinner and ask them:

• “Did you know that your VA loan benefit amount can go up to $1.5M?”

If they say no, call me with their name and number, I will help them understand their options and put them in touch with the right person.

Footnote:

1. Final eligibility determination is made by the VA.

30 year mortgage rate hits LOWEST on record; 4.58% - HOLY COW!

Freddie Mac reported that average mortgage rates fell in the week through July 1st.  The 30 year fixed hit 4.58%; which is the lowest rate on record.  More JUMBO loans are becoming available and there are a lot of cities to buy a home under the California conforming loan limit of $729,750.  Which means there are lots of options for buyers in San Francisco and the SF Bay Area.

This week, my clients closed on their first home; a 3 bedroom, 2 bath condo.  They are paying a 4.75% interest rate on their new home loan.  Next week, Buyer clients of mine will be closing on a single family home that was listed for $459,000 (with a full in-law) in South San Francisco.  They too locked in at under 5.0%.  A 30 year fixed.

There are currently over 100 - 2  bedroom(minimum) single family homes under $730K from the north side of the City (i.e. The Richmond) all the way across to Sunnyside.  From the Inner Mission across Portola, Excelsior, Outer Mission to Bayview there are over 164.  What's that mean and what's are your options?

I just spoke to one of my favorite lenders, Cesar Aravena at Wells Fargo Bank.  He outlined a situation where a "qualified" buyer can put 15% down and owner occupy one of those homes for just about $3800.00/month (mortgage expenses), at an interest rate under 5.0%.  If you've got a bigger down payment, your interest rate and monthly expenses may be lower.  Believe me; it’s not as simple as what you read in the paper, the internet or see on TV.  A buyer has to qualify for the loan.  Feel free to contact Cesar at WFB he can quote you the APR and walk you through the complete loan and financing details.  Give me a call, I’ll find you, your home… call me at (415)341-8881.

Generally every weekend, I do an open house.  What I see in this market is that buyers are being way too picky in the hopes to find the "perfect" house.  Some may miss out on this opportunity to take advantage of this market and these low rates.  At least 75% of all homes in San Francisco were built before 1950 giving a buyer lots of opportunity to personalize a home and put their imprint on it.  Many have already been remodeled but often times an opportunity to upgrade the bathroom or kitchen within a year or so instills great pride of ownership.

The buyer's of the condo said to me, "Herb, our mortgage is less than many of our friend's pay in rent."

If you’re ready to make that move or inquire about what are your options, give me a call at (415)341-8881 and lets plan your moving day!

OMG - RATES ARE UP!!! Don't panic... it's just the "Discount Rate."

The "Discount Rate" is the rate that the crooks... (ooops)I mean, the banks pay to borrow directly from the Fed.  The Feds did surprise the market a bit with the move to 0.75% Thursday but it does not affect Credit Card or Mortgage rates.

The Federal Reserve made it clear Thursday that the hike in its emergency lending rate won't mean a thing for the interest rates paid by consumers and businesses any time soon.  If I'm a business and I believe the economy is growing, the fact that the fed funds rate is 0% or 1% won't impact my decision to hire people or restock inventory.

A Fed Funds rate hike in the near future would be quite disruptive to the economic recovery.  All major markets were up today, so this move didn't seem to rattle the markets, that's good.  Keeping the fed funds rate, low is one of the tools used by the central bank to try to spur economic activity.

Oh yeah, what about the CPI (Consumer Price Index) number?  All things considered, strip out energy and food prices and Consumer Prices were actually down .1% in January.  That is the first time that has happened since 1982.  There is no real inflation pressure in the US so if team Obama focuses on jobs we could see things start to turn up.

There is a lot of discounting in the restaurant industry.  The Jack in the Boxes and McDonald's of the world could see some challenges ahead.  In my personal opinion, I think that's a good thing.  Families will stop feeding their children fast food and maybe they will spend more time across the dinner table with each other.  Companies like Crate and Barrel and Williams Sonom(+7.6%) see higher earnings and they say it is because families are spending more on their homes, their kitchens specifically and eating at home.

It's a good time to go buy a new cookbook and try out that cookware that you have in those cupboards.  Experiment with a few friends and invite them over to taste your cooking.  I guarantee you'll have a fun evening and deeper friendships by experimenting in your own kitchen.  Your friends, family, children will be talking about the great meal they had at your house and know that those house warming gifts they gave you are getting good use.

BTW:  If you don't have your own kitchen yet, pop me an email or give me a call and lets see if we can go find one for you to buy!

Concerns about the Commercial Loans & the next shoe to drop.

Lately a handful of my buyers/seller's have talked about what's going on in the Commercial area.  Supposedly the next shoe to drop.  Many experts seem to think that a Commercial loan catastrophe would make the residential losses look like a walk in Golden Gate Park.

Yesterday, Simon Properties Group Inc., the nation's largest shopping-mall owner, made a $10 billion bid to acquire rival General Growth Properties Inc., which is seeking to emerge from bankruptcy. 

I think as time goes by, we will see many more deals like this come out of the woodwork.  As many of you know, my experience is both Residential and Commercial and I watch both markets.  My financial securities licenses and the periodicals I receive daily keep me up to date on what's going on in the broader markets.  Buying a single family home or condomium and making that good long term decision is healthy for your portfolio.

The cost of money is still very cheap. Don't let the distractions on the side of the road postpone your goal.  The 24 hour news cycle fosters stress and indecision. Whay may happen in the commercial markets should not affect your personal decision to provide a good home for you and your family.

Look at the long term advantages of buying versus renting.  Lets say you bought a 3 bedroom/2 bath home in San Francisco for $800K.  You put down 20%.  Now you have a $640,000 loan.  Your mortgage and taxes are roughly $3400/month with an average $9500 in annual tax savings.  Okay, I've simplified it greatly and I have based that on a 10 year hold but it's not as complicated as you may imagine.  Renting the identical home in San Francisco would probably be between $3200-3400/month and NO tax savings.

The HUD website has a great tool for you to use to calculate buying vs renting.  Check it out. 

My numbers tend to be conservative and my outlook is optimistic.  Give me a call or pop me an email and I can get into this much deeper based on your individual needs. 

Wars don't really happen on Christmas day. It takes a holiday.

Did you know that on Christmas day war basically stops?

I recently learned that the only day in which a cease fire happens is Christmas day.  For one day people at war stop killing each other but the next day, it starts up again.  What makes December 26th any different than December 25th?  After spending the day with family I came home and watched TAKING CHANCE.  The HBO production in which Lieutenant Colonel Michael Strobl, USMC escorts home the body of 19 year old Lanch Corporal Chance Phelps who had been killed in hostile fire in Al Anbar Province, Iraq.  Ironic, isn't it?  For one day... people at war with each other just decide.. "Lets take a day off...' hmmm  If any of you know me, I wouldn't exactly be hoping for Christmas day every day... maybe we can find a compromise.

It's a good movie.

Here is a reading I thought I would share:

Be creative and use powerful actions in line with what you want.  If you want to attract the perfect partner, then make room in your closet.  If you want to attract a new house, then tidy up your current house so it is ready for easy packing.  if you want to take a trip, then get out your suitcases, surround yourself with pictures of the location, and put yourself in the pictures.

Think about what you would do if you had your desire, and then take creative actions that make it clear you are receiving it now.

Have a great weekend

Why is blogging so hard & Insalata Restaurant in San Anselmo gets 5 HERBS

It's always been so difficult to blog.  I'm not going to blog about the $10K price reduction at 123 Main Street.  Who cares... everyone talks about that.  I want to share real info.  For example last Monday the banks lowered the ceiling for buyers on their debt to income ratio to 45% from 55% and pushed thousands of buyers out of the market.  What's that mean?  I'll get into that in another blog.  Oh and lets not forget the new requirement if you're buying a condominium that you now have to buy an HO-6 Contents Policy(later).  I always feel that I need to say something profound about the real estate market.  I've decided not to be bound that.  I'm gonna blog about whatever I want.

Recently I had dinner at Insalata in San Anselmo.  After selling the Lion house on 21st Street the sellers and I finally had an opportunity to celebrate.  OMG!!!  The food and the service was amazing! 

The menu is a cornocopia of sinful delights.  I am so not an anchovie person... However the Anchovy Stuffed Spanish Olives were to die for.  We shared a Cataplana which was great.  I had the Grilled Skirt Steak, they had the Fettucini and the Lamb.  We shared. 

Here's what made dinner.  I went to the counter to compliment the chef who happened to be the owner, Heidi Insalata Krahling.  She was very kind and came over to our table pulled up a chair and sat for a few minutes.  After dinner we had to have dessert; try the Pigs in the Mud (oh yeah, did I mention that Hiedi sent over a plate of the heavenly Housemade Pecan Toffee?).  YUM!

To top the night off, my clients treated me to one of Heidi's cookbooks.  They purchased two books.  Heidi came over and signed both books.  Good food, good service and a graceful chef to boot!

My rating for INSALATA is "5 HERBS."

I'll talk about some Real Estate soon.

Home sales up again.

Five months in a row home sales are up.  Today, we have learned that existing home sales are up 7.2%.  That is the largest increase in over ten years.  June was up 3.6%.  The market's seem to be liking this news as the markets are holding steady over 9400.  Are we heading to 10,000? 

All real estate markets are local.  What’s happening in the City?  In San Francisco supply of inventory is dropping as buyer's swoop up the deals. 

Yesterday, I spoke to Shirley Hamilton, formerly of North American Title.  Shirley has been doing some independent work and many private closings.  "Herb, I am busier than ever and more than half of my closings are all cash deals."  Most title companies are seeing an increase in escrows and majorities are closing under asking and not one has been smooth from the lenders.  “There's always something,” Charles Richard recently said but as long as everyone is patient, "it will close." 

As the economy creeps out of the recession expect rates to increase and buyers should start seriously making the deal.  Recently I closed a home in the Lone Mountain section of town however it took 5 counter offers and another 5 addendum's to get the deal done! 

Me, nor my buyer's cared how many pieces of paper it took to get into contract, they cared about negotiating the most reasonable deal.  They closed with a 30 year fixed rate under 6%. 

Every week, I meet people at open houses who are still waiting on the dip.  Year to date condominium sales South of Market(SOMA) have sold at 96.4% of list price.  The lowest number is condos on over 120 days.  They have sold at 94.21% of listed price.  Not bad!  So go drop 5% off the price and make that offer! 

What's happening with single family homes in District 5 (Haight Ashbury south through Eureka Valley, Mission Dolores, Noe to Glen Park)? 

Area 5

•       66 Active homes on the market
•       33 Currently In contract
•       170 SF sold year to date 1/1/09 - 9/19/09  97% of list price
•       251 SF Sold 1/08 - 9/19/08  100.1% of list price

Sales volume is down 30% from the same period in 2008 however single family homes have sold an average of 97% of the listed price.  Read that sentence again!  Sales VOLUME is down.

Okay, so I'm a Realtor and those of you who know me.  The glass is always 3/4 full. The data is the data!  Happy Friday, go buy a house this weekend.

Should you lock your loan sooner than later?

Depends... when are you closing?

Before I get to your money heres a quick fact and something you should look at when evaluating whether to buy or not.

 

The gap between renting vs buying has shrunk dramatically over the last 3 years.  If you would actually like to do that evaluation give me a call and lets evaluate your personal situation.  In cities like Los Angeles, it’s actually about $134 less a month to buy than it is to rent.

 

Now to your money.

What about money?  It’s still cheap!  Not as cheap as it was 6 weeks ago however in the big scheme of things.  Cheap.

Tuesday's bond market has opened in negative territory despite early stock losses and weaker than expected economic data. The bond market is currently down 9/32, which will likely push this morning's mortgage rates higher by approximately 1/8th - 1/4th of a discount point.

The Conference Board gave us today's only relevant economic data when they posted June's Consumer Confidence Index (CCI) late this morning. They reported a reading of 49.3 that was well below forecasts of 55.1. This means that consumers were much less optimistic about their own financial situations than many had thought. This is actually supposed to be good news for the bond market and mortgage rates since it indicates consumers are less apt to make large purchases in the near future. Unfortunately for mortgage shoppers, bond traders seem to have forgotten that this morning.

It seems that the Institute of Supply Management (ISM) will release their manufacturing index for June late tomorrow morning and the reading may be below 50. Analysts are expecting a reading of 44.0. That would indicate that manufacturers felt business improved slightly from the previous month. Good news for bonds and mortgage rates would be a weaker than expected reading.

Thursday brings us the release of two monthly reports, Employment and May's Factory Order's data.

 

The beef!

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers. 

A personal note

I have got to say that the loss of Michael Jackson last week has been more difficult than I expected. I find myself hearing his music on various radio stations and turning the volume up.  Simultaneously, remembering the many good times I have shared with friends while enjoying his music.  I hope that we can all look at his artistry, his musical gift and appreciate the artist and have compassion for the man.

A Unique Kind of Showing

Saturday from 12:00 - 6:00pm, I am hosting a fundraiser for the Susan G Komen Breast Cancer Foundation.

The release of 3859 21st Street, also known as the Lion House on 21st Street is an 1893 Queen Anne Victorian consisting of 3 bedrooms, 4 baths (2 full baths & 2 half baths).  This property deserved a special entree' to the market and this Easter Weekend seemed like a good weekend to support a great organization.

Join me on Saturday as Tommy "Gun" Clayton, of the 49ers, will be on hand this afternoon in support of this great effort along with Ian Ross, local San Francisco artist who will be creating a “live art” piece at the event.  Peter Athanas, Owner of Kilowatt Bar and San Francisco Toyota are sponsoring.  The Lethal Weaponz Dancers will be serving drinks and finger food from Pasta Pomodoro, while DJ Twist of Supastar DJs will be spinning up some good music.  This event is being produced by: Anthony Scott/EM3 Productions, LLC

Come view this grand home, enjoy what should be great weather, some good food and raise money for the  Susan G Komen Breast Cancer Foundation.

Details regarding the event can be found at herbalston.com and http://3859.herbalston.com for details about the property.

Para"lies"ed buyers/sellers & is it time to REFI your home?

Lets first talk about the buyers.  Are buyer's telling themselves lies or believing lies?

Please forgive the short advertisement below but there is a point.

Today, I did an open house at Chelsea Park.  Chelsea Park is a new development at 3620 19th Street half a block from Dolores Park.  39 brand new condos, the remaining condos for sale range in size from 1200 - 1500 square feet.  The seller's actions show that they are ready to sell the remaining units.  In fact, last Monday they did hefty price reductions.  One 1501 square foot home with a HUGE and I do mean huge deck that overlooks the courtyard was reduced from $1,249,000 to $949,000($632/SqFt).  Holy cow!  Sometimes we see HUGE price reduction and it's $30,000 off a $1 Million price tag.  That's not HUGE.  24% off the marketing price is huge!  $300,000 reduction is huge!

For those of you who consider buying based on price per square foot.  Like properties in this area with similar square footage recently sold at $750/SqFt.  Even 1282 Church St. is a listed at $750/SqFt and it's a TIC.

I hear buyer's asking themselves lots of questions or believing the media's lies?  Will prices go down further?  No one has a crystal ball.  There are many seller's out there who will do a price reduction.  What a seller wants is for you and your agent to be smart and write them an offer.  They would prefer if you called me and said, "Herb, lets write an offer on "X" property listed for: $1,125,000."  We start at $1,027,018 and settle at $1,068,075.

The real question, is, "what is the cost of money?"  

Lets say we follow the above example and you're putting 20% down.  Your mortgage professional says, I have good news.  The rate on your 5 year fixed interest only loan is 5.125% (5 1/8th).

List Purchase Rate Loan Mortgage Annual Taxes

$1.125M $1,068,750 5.125% $855,000 $3651.56 $12176

$1M $960K 6.75% $768,000 $4320.00 $10944

The above information is an estimate only.

You decided, "lets wait, prices will go lower."  6 months go by, you continue to pay rent on your place at $1600/month.  Rates are now 6.75%.  Holy cow!  That's an extra $668.44/month.  Your purchase price was $1,068,075 (20% down payment).  Your monthly tax bill is $1014.67/month(1.14%).  Have you saved money?  Over 5 years you are spending an additional $40,106 in interest with the 6.75% interest rate.  You waited for the price reduction to $1,000,000 which was a great idea, however it cost you more on a monthly basis.

• You should pick up the phone and call me on my mobile (415)341-8881.  
  
• You say: "Herb, lets make an offer on this property today." 

We spend a few days countering back and forth and we settle somewhere in between $1M and $1.125M.  So what your annual taxes are over $1,200 more annually at the higher price.  You saved just about that in one month's mortgage payment.  If you got a 30 year fixed,ask yourself, am I going to stay there for the next 30 years?

Okay, so your price range is $1M, what about somewhere around $650-700K?  You and I negotiated a $655K purchase price on a property listed for $700,000. 

List Purchase Rate Loan Mortgage Annual Taxes

$700K $655K 5.125% $524,000 $2237.92 $7467

$625K $580K 6.75% $464,000 $2619.00 $6612

The above information is an estimate only.

In the red ink you waited 6 months for another property and you saved $75,000 in the purchase price.  Isn't the real cost your monthly expenses?  The higher interest rate is an additional $261/mo($15,660 over 5 years).  By waiting 6 months, how much did you really save?  Same question, are you going to live here for the next 30 years?

Of course, I have a vested interest in your buying real estate.  Duh!  But don't you?  Many times, I see some of the same buyers running from one end of the city to the other and they are still asking themselves the same question.  Is today the day?

Is it time to REFI?

Really quick.  Last week one of my past clients refinanced their 6.375% loan.  They locked in an interest rate of 4.75%.

Wow, so if you're waiting for rates to go lower, stop waiting.  There are some great rates out there and some good savings.

Do I have to give you an example?

• $500K today's payment: ~$2700/mo.
  
• The new payment is estimated at ~$2100/mo.
  
• Can you use an extra $500 per month? 

Give me a call at my office (415)447-8881 and I would be happy to refer you to someone to handle your refinance.

Have a great day.  

• MY NEXT TWO BLOGS 
• Loan Modifications 
  
• A very personal one on one of the nicest bar owners in the city.  Peter Athanas, the owner of Kilowatt Bar.