NorCal Partners Real Estate

Rowland Fellows, Broker, CDPE, ePro, GREEN, CA BRE # 01435867

Have You Seen Your Refi and Mortgage Options Lately?

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Three good reasons to warm up to a refinance this spring.

Low interest rates and new loan programs abound this spring, so if you assumed yourrefinancing and mortgage options were dismal, you’ll be surprised by these three offerings.

1. Refinance with new FHA fees 

In a nutshell: FHA raised insurance premiums for new borrowers, while lowering fees for some existing customers who refinance, making comparison shopping with private mortgage insurance worthwhile. Mortgage insurance covers the lender against losses caused when borrowers stop making payments.

The details: FHA’s new insurance premium rates include a great deal for existing FHA borrowers — you can refinance by paying a miniscule .01% upfront fee and an annual premium of just .55% if you got your original loan on or before May 31, 2009.

The catch: The deal is only for home owners who got their FHA mortgage on or before May 31, 2009.

The latest FHA deal for new FHA customers buying homes isn’t nearly as sweet. You’ll pay a whopping 1.75% upfront fee and an annual premium of 1.35% — more if your loan is more than $625,500. For a $200,000 loan, that’s $3,500 for the upfront premium payment and $2,700 for the annual premium.

If you can meet the tougher underwriting and higher downpayment rules of private mortgage insurance companies, check to see what that would cost for your  specific loan and location using calculators from such sources as MGIC, Radian, or Genworth Financial. Use the calculators to check how your payment would change depending on how much equity you have in your home.

2. Refinance underwater mortgage

In a nutshell: If you owe more than your home is worth, you may finally be able to refinance into a lower rate thanks to the government’s HARP refinancing program.

The details: You can take advantage of historically low interest rates by using the latest version of the Home Affordable Refinance Program, which removed a previous cap on how far below your mortgage your home value can be.

The HARP program even works if you’ve been hit by the economic double-whammy of a falling family income and a falling home price. You qualify for a HARP refinance if:

  • You have income coming in.
  • You’ve made your mortgage payments on time every month for the past six months and have no more than one late payment in the past year.

The catch: Banks can layer their own tougher rules on top of the HARP requirements, and they’re not obligated to let you use the program to refinance your existing loan.

3. Refinance rental properties

In a nutshell: Some real estate investors have new loan options for the first time in years.

The details: In recent years, small landlords like me have had a tough time finding a bank to finance more rental property purchases. Once you had more than four rental property loans, Fannie Mae and Freddie Mac were no longer willing to guarantee your loans, even when your credit scores were top-notch and the property was able to turn a profit from day one of ownership.

Now, some banks participating in the HARP program are taking applications from landlords with multiple properties and lots of mortgages. HSBC recently agreed to look at a mortgage on a property I own in Baltimore. My current interest rate there is over 7% and if I get the HARP refinance it will fall to 4.6%.

It’s too soon to say whether the banks will actually fund me or any other landlord who wants to refinance.

The catches

  • Only Fannie Mae has made this change. (It’ll purchase up to 10 loans from any one investor.) Freddie Mac is still limiting single-family landlords to four loans.
  • Most banks discount your rental income by 25% when making investor loans, which adds up when you have multiple properties.

But, the fact that banks are accepting applications from rental property owners is a sign the credit spigot may be reopening for creditworthy real estate investors.

Are you shopping for a refinance or a mortgage to purchase a home? What’s your experience been like?

By: Dona DeZube

Published: April 8, 2013

6 Curb Appeal Ideas to Make You the Star of the Neighborhood

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A few hours of exterior home and yard work can add thousands to your home’s value.

April 20 and 21 marked Nationwide Open House weekend — the unofficial opening day of the spring real estate season. Since curb appeal strongly influences home values, it’s a great weekend to spruce up your own yard, especially if the neighbors are trying to sell their home.

How much value can neighborhood curb appeal add? Having nice landscaping adds $1,777 in home value when you’re selling your home, according to data collected in aHomeGain.com survey about how home improvements boost home value.

Curb appeal works in the other direction, too. If a for-sale house down the block is sporting some bad curb appeal, it could sell for less than it might otherwise. And that comparable sale drives down the value of your home.

We couldn’t find any data on how much the average buyer discounts his offer when the neighbors haven’t painted their house since 1979, but we do know nobody pays top dollar to buy next door to a house that looks like the “before” picture in a siding ad.

Here are 6 quick exterior projects you can do in a day or two to add to your home’s value and neighborhood appeal.

  • Landscape for curb appeal by re-sodding bare spots, trimming shrubs, and adding colorful spring flowers to your front yard.
  • Add some outdoor lighting for curb appeal to highlight your beautified yard after dark.
  • Pitch in with the neighbors to rent a power washer for a day to give your sidewalks anddeck a little care and maintenance. Be gentle and careful if you decide to use the power washer to clean your home’s exterior; you can easily blast things off your house, like the paint, or get water into siding seams.
  • Clean your siding, whether it’s brick, wood, or vinyl, by using a long-handled, soft-bristled brush, soap (trisodium phosphate), and water.
  • Create a little cool curb appeal with house numbers — that is, dress up your address.
  • Freshen up the look of winter-ravished patio furniture with new pillows, a bright umbrella, or a colorful tablecloth to give the impression to anyone at the open house that the neighbors have fun parties.

Are your neighbors’ yards boosting or detracting from home values on your block?

By: Dona DeZube

Published: April 17, 2013

Should We Get Rid of Our Lawns?

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To some, a lawn is their yard’s crowning glory. To others, it’s a big hit on the pocketbook and the environment. Where do you stand?

When I grew up, a lush, green lawn was every suburbanite’s dream, a sign they’d achieved the American dream of homeownership and a weed-free front yard.

Today, I still love a lawn. I love the look, feel, and smell of grass. And I’m willing to pay almost $700 a year to the people — mowers, weeders, aerators, chemical treaters — who keep my turf looking great.

But suddenly, grass lawns are public enemy No. 1. Some drought-stricken places are banning new lawns because they are, basically, unquenchable. The anti-turf people say get rid of lawns.

  • Mowers are loud and polluting.
  • Fertilizers contaminate the watershed.
  • Lawns gulp tens of thousands of gallons of water every time you irrigate them.

I live in Virginia, where we’ve got enough water — for now. Still, in the heat of summer, I water at sunup. Not only because it’s best for the lawn, but because I don’t relish the fish eye I get from neighbors who don’t share my love of fescue.

Why I Love Lawns

I believe lawns are a friend to man and beast. And so does the EPA, which says a healthy lawn:

  • Provides feeding grounds for birds, who munch on the insects and worms found beneath grass.
  • Prevents soil erosion.
  • Filters contaminants from rainwater runoff.
  • Absorbs airborne pollutants like dust and soot.
  • Converts carbon dioxide to oxygen, which helps clean the air.

Granted, plants and trees perform many of the same services. And many homeowners are replacing lawns with native species plants and even vegetable gardens.

One of my neighbors, who has solar panels on her roof and a Chevy Volt in her driveway, has turned her front yard into a tomato and pumpkin patch. She’s a lovely person. But her yard is a mess, with vines snaking every which way, leaf mulch and wood chips rotting in smoking mounds, wire cages dotting the landscape.

Good luck trying to sell that house.

In fact, studies show that well-kept landscaping can add 15% to the price of a home. The studies don’t parse the value of lawns alone, but a flawless, emerald lawn obviously makes a property look better and more saleable.

I realize not everyone has a love affair with lawns. In fact, my HouseLogic colleagues have different views.

She Hates Grass

One HouseLogic contributor, Lara Edge, hates her lawn in Tennessee, which “serves no purpose except to sprout weeds,” she says.

Instead of mowing “outdoor carpeting,” she’d rather grow vegetables in her front yard — the only sunny, level spot on her property. Alas, her HOA prohibits veggies in the front yard, saying it hurts curb appeal.

“The notion that you’re sacrificing curb appeal and beauty if you plant vegetables in your front yard is just plain wrong,” Edge says. “A little nurturing goes a long way in creating edible beauty.”

He Hates Weeds

John Riha, another HouseLogic contributor, loves his lawn; but the weeds love it more.

“It’s disappeared under a crazy quilt of every known type of common weed — dandelions, crabgrass, nutsedge, purslane — you name it, and I’ve got it,” Riha says.

So, instead of waging a weed battle he won’t win, he gradually replaces each weed he digs up with bulbs and plants indigenous to southern Oregon. Indigenous plants are much more likely to survive drought or cold snaps than plants imported from far-flung places. Plus, they’re pretty.

Alternatives to Lawns

If no lawn, then what? Check out these ideas:

  • Why Fake Grass is Gaining Popularity
  • Green Up Your Lawn in a Hurry with Lawn Paint
  • Low-Maintenance Lawn Alternatives: Turf Grasses
  • Low-Maintenance Lawn Alternatives: Ground Cover

So, what’s your opinion about grass lawns? Love ‘em or leave ‘em? Let us know in the comments section below. And feel free to upload a picture of your yard whether its grassy or grass-free.

By: Lisa Kaplan Gordon

Published: May 8, 2013

The State of California!

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We all know California is a very large place! A population of almost 38 million. A land mass of 158,000 square miles. 3,400 miles of coastline on the Pacific Ocean. The Sacramento Association of Realtors, in it’s recent monthly publication sent to it’s members, published an number of facts about California from a recent State Legislative Analysts Office report.  I thought it would be interesting to present them some of them here!

The Economy

California’s gross domestic product, at $2 trillion, ranks 9th in the world. That’s 50% more than the gross domestic product of Texas. California accounts for about 13% of the nation’s total gross domestic product.

Housing

When the “housing bubble” burst, median single family home prices DECLINED by $250,000. In 2011 there were 155,000 foreclosures in California, down 25% from the peak. However there were still 250,000 delinquency notices filed in 2011.

Education

Most of the funding for K-16 education in California comes from the State.  Local funding comes from property taxes. Small amounts come from the State Lottery, parcel taxes and local direct levy’s. Federal funding provides for specific programs, such as low income students and students with disabilities.

 Taxes

California’s income tax burden is $11.30 per $100 of personal income. This is the 10th highest in the US. The top 1% of earners contribute about 40% of the total income tax revenue. Prop 13, which was passed in 1978, limits property taxes to 1% of the property’s assessed value.

Water

Seventy five percent of the State’s precipitation occurs in Northern California while 75% of the State’s population lives in Southern California.  Water delivered from north to south through the State Water Project and the Federal Central Valley Project provides drinking water to most Southern Californians.  Some rely on imported water from the Colorado River.

Employment

Unemployment in California for Inland Counties averages 12.2%, while Coastal Counties average 8.8%.  The counties of Marin, Napa, Orange, Santa Barbara, San Francisco, San Luis Obispo, San Mateo and Sonoma have unemployment rates below the national average.

Demographics

California’s non-Hispanic whites make up 40% of the State’s population per the 2010 Census. this down from 67% in 1980. Hispanics now make up 38% of the population, up from 19%.

/s

Rowland

 

FICO reveals behaviors behind sterling credit scores

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Tight mortgage lending standards have dashed the hopes of many would-be home buyers, but the developers of the most-popular credit risk score has revealed some habits and behaviors of “high achievers” with FICO scores above 785.

More than 50 million people — about a quarter of all people with credit scores — are considered high achievers and tend to have “strikingly similar” credit habits regardless of background or life experience, San Jose, Calif.-based Fair Isaac Corp. said.

Some of these habits are fairly predictable: They keep low revolving balances relative to their available credit, don’t max out their credit cards, and consistently make payments on time.

But high achievers are not debt-free. They have an average of seven credit cards, including open and closed accounts, and carry balances on an average of four credit cards or loans. One-third have balances of more $8,500 on nonmortgage accounts.

Nevertheless, almost none — less than 1 percent — have an account past due. The overwhelming majority, 96 percent, have no missed payments on their credit report. Those who do have long since mended their ways — their last missed payment happened an average of four years ago.

The FICO score ranges from 300 to 850, and is used by virtually all lenders to gauge credit risk and the likelihood a borrower will repay a loan. The credit score can affect how much money a lender will offer and at what terms; higher credit scores mean borrowers can potentially save thousands of dollars over the life of a loan, FICO said.

Ellie Mae Inc., which provides mortgage origination software to lenders, reports that the average FICO score for mortgages approved in September was 750, with borrowers making down payments averaging 22 percent, having front-end debt-to-income ratios of 23 percent and back-end DTIs of 34 percent.

Those whose applications were denied had an average FICO score of 704, with borrowers willing to make down payments averaging 12 percent. The average front-end debt-to-income ratio was 27 percent; the average back-end DTI was 44 percent.

The average FICO scores for purchase mortgages eligible for purchase and guaranteed by Fannie Mae and Freddie Mac was 762 (compared with 729 for denied applications), while FICO scores on FHA-backed purchase loans averaged 701 (compared with 665 for denied applications).

Because payment history makes up the biggest chunk of how a person’s FICO score is calculated — 35 percent — managing credit responsibly over time plays a large part towards improving one’s credit score, FICO said. This includes paying at least the minimum amount on all credit cards every month, the company added.

“Missing payments will lower a person’s FICO score, but if that happens, establishing or re-establishing a good track record of making payments on time will generally improve a person’s score,” said Anthony Sprauve, credit score adviser for myFICO, the company’s consumer division, in a statement.

By law, most negative information, including missed payments, is removed from credit reports after seven years. This does not apply to tax liens or Chapter 7 bankruptcy. About 1 in 100 high achievers had a collection on their credit report, and about 1 in 9,000 had a tax lien or bankruptcy.

“While people with a high FICO score are not perfect, their consistently responsible financial behavior usually pays off over time,” Sprauve said. “In a challenging economic period, the fact that we all have a chance to be high achievers is very good news. The lesson from these high achievers is that it’s never too late to rebuild and score high.”

FICO high achievers typically have long, well-established credit histories and rarely open new accounts, FICO said. They opened their oldest credit account 25 years ago, on average, and their most recent credit account more than two years (28 months) ago. In general, their average credit account is 11 years old.

Their balances are often low and they use only an average of 7 percent of their available revolving credit, i.e., $70 on a credit card with a $1,000 maximum.

FICO considers both positive and negative credit report information within five general categories, the company said: payment history, amounts owed, length of credit history, new credit, and types of credit used.

The FICO score does not take into account attributes such as race, gender, age, marital status, salary, employment history or address, the company said. FICO’s consumer website, myFICO.com, offers tips and tools to help people make decisions about their credit.

“Because a high FICO score is typically achieved over time and takes into account dozens of variables, there are no ‘quick fixes’ for rapidly improving scores or repairing bad credit,” Sprauve said.

“Practicing good credit behavior consistently over time and regularly checking your credit report for errors can be instrumental for achieving a high credit score, which can lead to better loan terms and lower interest rates. Achieving good credit health is a long-distance event, not a sprint.”

Four tips for a smarter home purchase

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The fields of behavioral economics and behavioral finance are a couple of 21st-century mashups, academia-style, blending observations about the often-irrational financial decisions people make with insights from the behavioral sciences, from anthropology to psychology, and beyond.

Though these disciplines originated in the ivory tower, they have, in turn, given birth to a number of findings, insights and even mandates for every home buyer who wants to optimize the dozens, maybe even hundreds, of decisions they’ll face at every point on the path to purchasing a home, from when to buy to how much to offer to what type of mortgage to take.

Here are the four most powerful behavioral econ and finance insights with real estate implications, and how you can apply them to level up your own homebuying decision-making:

1. Observing willpower basics can help you avoid overspending. In real estate, overspending can mean any of several things, but there is one definition that is particularly insidious, and it’s the simplest: spending more than you can truly, sustainably afford.

This happens because, over the years, buyers have grown to conflate their lender’s decision on how much they can spend with their own decision to make about how much they can afford to spend.

It’s like confusing your credit card limit with what is responsible to spend.

Willpower researchers have found that not only does the elusive ability to exercise self-control in the face of temptation actually exist, it can be fostered in some relatively simple ways. This is good news for home buyers in today’s hot market, where multiple offers and a fear of missing out on good deals can create that auction atmosphere that causes otherwise sane and sober spenders to throw every cent they can at their target home.

The theory of ego depletion says that willpower is finite, and can be depleted by putting too many demands on it at once. So, rather than trying to diet, stop biting your nails and start a new cardio regimen all at the same time, most people do better making one willpower-sapping change at a time.

And the same goes with homebuying: If you’ve had a day where you went to great lengths to bite your tongue to avoid snapping at your kids, and you also had to turn down Girl Scout cookies and birthday cake carbs at work all day, it might not be the right night to decide how much to offer on your home. Instead, ask your agent to connect with the listing agent and let them know to expect an offer in the morning.

Similarly, avoid letting yourself get too hungry or binging on sugary treats during the stress of your house hunt; willpower requires brain glucose, so super-hungry house hunters or those on a sugar rush/crash cycle are liable to make poor decisions at offer-price decision time.

2. Ditch the herd. Everyone wants to buy low and sell high, especially when buying a home. The challenge is that we all have an innate fear of missing out on both bargains and profits. Our inclination to act on this fear is exacerbated when we hear stories of the steal that our cousin got on a foreclosed home at the bottom of the market, or the cash that is being thrown at our next-door neighbor at the top.

Think about it: When prices are cheapest, and on the decline, demand is low and is hard to drive upwards, because people are afraid to buy a home when they think the price might continue to decline. And the opposite is true: When home prices are rapidly ascending, demand is high, and tends to snowball even higher, as people afraid of missing out on value increases and others afraid of being priced out of the market frantically join the herd and buy, buy, buy!

This is precisely why it’s foolish as a home buyer to try to time the market just right. Best practice is to buy when the time is right for you, your family, and your finances, then to get educated about market dynamics and use them to inform your strategy on how you execute your purchase, like what price range and area to target, how much to offer and when to lock your interest rate.

3. Overconfidence and real estate are a deadly combination. Behavioral finance researchers and theorists have devoted a lot of attention to overconfidence: the tendency of some investors and financial professionals to overestimate their ability to pick stocks, trade profitably, or otherwise succeed at a given task. In the realm of traded assets, overconfidence cause all sorts of simple, yet potentially catastrophic, behaviors, like making excessive trades, which has been correlated to big time losses over time.

And overconfidence is just as deadly in real estate: Homebuyers who incorrectly gauge their own bargaining power, future finances or fix-it prowess can and often do end up in what my mom would call “a world of hurt.”

•Lowball offers or other negotiating strategery (no typo) can result in lost home after home, all while prices go up and your energy and enthusiasm go down.
•Making mortgage obligations with overly optimistic hopes for your future income or the home’s appreciation is exactly what got the last generation of homeowners in trouble.
•And buying a major fixer when you have no money to hire a contractor and you’ve never even had any interest in owning, much less swinging, a hammer? It’s a recipe for disaster. Didn’t you ever see “The Money Pit”?

4. Don’t let loss aversion make you forget what you can truly afford. There is an interesting imbalance in most of our brains, when it comes to our financial decisions: We are more afraid of losing money (and financial opportunities) than we are attached to acquiring gains. That is, our fear of loss is much, much greater than our emotional attachment to potential profits.

In homebuying, this most often manifests when house hunters lose their minds and cut the purse strings entirely to secure a hot home in a hot market. This is the same mindset that has kept homeowners stuck in homes in depressed markets: Some unemployed and underemployed homeowners have even forgone great job offers in other areas, committed to spending what might be dozens of years in the very worst local economic markets, all to avoid short-selling the place and taking a loss.

People do very, very scary things out of loss aversion, from simply (but devastatingly) overextending themselves to buy homes they can’t afford without endangering their financial well-being, to taking mortgages they knew would adjust problematically in 12 months. What’s even more dysfunctional, though, is avoiding the “loss” of a target property by taking gifts and loans from relatives who you know upfront will be less than cheerful givers and who you know upfront will never let you hear the end of it.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.