Author Archives: Krista Magidson

A Second Chance at Home Ownership

The economic slowdown and mortgage meltdown were a shock to so many. But even more of a shock is how much the printing business was affected by the availability of low cost print options. That’s what my client was facing in 2008. The perfect storm.

 

Many businesses saw their volume shrink as internet buying picked up. As a business owner, you have to make choices, and many owners chose to meet payroll and not pay themselves as much. Especially if it’s a family owned business that has existed for 50 years.

 

The emotional commitment to the families who work for you and for the legacy of your own family is a big driver in staying open despite the dismal outlook and ever decreasing business volumes.

 

Mike and Sally chose their employees over themselves, and had a tough 4 years waiting for things to change. They cut their income to 25% of what it used to be. They tried to do a loan mod, and after 2 years got turned down. Meanwhile their credit was damaged.

 

They finally had to sell their home of 30 years because the payments were too much to handle on their much reduced income. They moved from their home to a rental, then downsized a bit, put stuff in storage, then downsized a bit more, overall going from a 4500 sq. ft. home and the top of their game to 1400 sq. ft. Sally did say the bright side of all this was having a much simpler life, though it was very high stress.

 

In 2012 the printing business started to redefine itself, especially around the quality of ink, green or safe chemicals etc. Now they are looking to own a home again. Sally had never used her VA benefit from being in the Army in 1975, so will be able to buy a cute condo and keep the payment UNDER or the same as their current rent of $2650 per month with ZERO DOWN.

 

Thank you for your service, Sally,and for being business owners who people above profit.

 

 

Economic News and Rates for 3.26.2017

This week was a fairly quiet week in economic news.

On Wednesday, March 22nd the existing home sales slipped 3.7% for the month of February.

Speculation is the lower inventory and the higher prices caused the number of sales to go down. Wait until we have rising interest rates combine with those factors…

On Thursday, initial weekly jobless claims were up 15,000.

New home sales (new construction) however were UP 6.1%, which was the strongest numbers in 7 months – Remember GOOD news is BAD news for mortgage rates.

Today Durable Goods orders were UP 1.7% – January’s figures were also revised up by a fraction, which layered on the bad news for mortgage interest rates.

So a little bad news, a little good news gave us a stalemate, and rates remain the same.

Don’t gamble: lock in your rate.

 

Your buyer’s interest rates can be locked in over the weekend, so if you have a client who is close to having an accepted offer and is nervous about rates we can lock that interest rate in. Remember, we also have the float down: if rates improve more than .25% after lock-in and after full approval, your client gets the lower rate. All rates are quoted at a 45 day lock in and assume a 720 credit score with 20% down, except for FHA and VA.

This rate sheet is intended for real estate professionals only and is not to be disseminated to the public as it does not meet federal disclosure law requirements.  All rates and programs subject to change without notice

Program Rate Cost
MULTI Family /apartment buildings 4.1%     7/1 arm 0 points
Conforming** 30 year fixed 3.99% (4.125% last week) 1 point
Conforming 15 year fixed 3.25% 1.0 point
Loan from $424,100 to $636000  30 year fixed 4.25% 1 point
FHA under 417k 30 yr 3.796% No cost
FHA over 417k 30 yr fixed 3.9% No cost
VA under $417,000 3.75% No points
Conforming 5 year fixed 3.0% 1 point
JUMBO over $625,500 5/1 fixed/ARM 3.75% 1  point

 

** conforming means loans under $424,100. Conventional means Fannie Mae and Freddie Mac.

1 point is 1% of the loan. Programs quoted as having 1 point also have the option of 0 points and the option of the 0 cost loan.

If you need someone qualified over the weekend give me a call on my cell.

Cheers and have a great weekend!

 

True or False: When you are self-employed it’s hard to get a loan

True or False:  When you are self-employed it’s hard to get a loan?

FALSE! If you’re self-employed you’re going to LOVE this Client Success Story.

This long time client watched her property go up in value in 2005, then, during the mortgage meltdown of 2008 her house wasn’t worth what she owed.

During that time, she took early retirement and started a business.

Now her house’s value is high enough to refi but her income tax records don’t show enough income to qualify. She also has $60,000 in credit card debt she needs to pay.

Her current mortgage is $3200 per month and credit cards are $1500 per month, plus a van payment for the business of $450 per month.

PROBLEM: Traditional banks will only lend on the income you show on your tax return.

Most business owners write off the expense of building the business, investing in new equipment, inventory, etc.

We have a program that lends on cash flow from your bank statements. Even business bank statements!

So we were able to pay off the 1st mortgage and give her $100k cash out to eliminate her bills.

Now the TOTAL payment is $2917.86! Yes! A savings of $2232.14 per month!

If you know anyone who is self-employed or a business owner and needs a mortgage please have them call me, I can probably HELP!

 

 

“Quote of the Week”

“Don’t Step over dollars to pick up pennies.”
~ Author unknown.

Sometimes we do activities in our day or life where there is a very low payout for the activity (emotional or monetary), missing the opportunities for the greater payout.

Do you find yourself going to 4 stores to get the best deals on groceries, which takes you an extra hour of driving around and being in more lines, meanwhile missing an opportunity to take your kids to the movies?  Or playing a game with them?

I once had a client who wanted to ask his girlfriend to marry him but was convinced by his friend that he could get a cheaper price on the ring in January than before the holidays because so many people get engaged or even just buy diamonds during the holidays and not as many during the January blues.

Well, he waited and got the ring in January.  Meanwhile, the girlfriend thought that he had decided that he didn’t want to ask since the holidays came and went, so she broke off their relationship.  My heart broke for him, especially when he told me he saved $500 on the ring.  Sometimes we try to save, but end up spending more or losing the opportunity.

Another case that comes to mind is the mileage credit cards. People try and build up miles points by charging on the credit card.  They carry the debt and pay interest and end up spending more in interest than the value of the plane ticket miles.

So think about where you might be stepping over dollars to get to the pennies.

Mortgage Late Payments – Not Their Fault! How I fixed it!

Client has 2 mortgage late payments and credit score goes down 100 points.

But Athena, I wasn’t late!

Imagine my client’s shock when they found out that 2 of their rental property loans were 30 days past due, yet they have the loan on auto-pay.  Yes, it’s true.

What they didn’t realize and didn’t see a notice in the mail for, was that their taxes and insurance had gone up, making the monthly payment higher.  They never saw the notice that they had changed, and therefore never adjusted the amount that they were sending.

Luckily it had only gone past due for 1 month.  Why were they past due? Because the amount of the payment they paid was $760 per month, yet the new payment to pay for the escrow impound shortfall was $938.  So instead of applying the payment, the “servicer” had put the payment in suspense.

I was able in a conference call to explain to the servicer what happened, and asked where in the documents that the client signed when they got the loan did it say that they cannot suspend a payment for that shortage.  24 hours later, the manager had to admit that they had to remove these late payments off my client’s record.

Their credit score went back up to 765 (it had dropped to 660).  Why does it matter?  Because ALL credit gets more expensive, especially the mortgage, when you have a 660 and not a 765 credit score.  Instead of 3.99% 30 year fixed, he was going to get 4.5%.  Yikes.  $80 more per month for 30 years. AND no home equity line of credit with that credit score.

Another great success and tons of savings for my client because they had an advocate on their side—ME.  🙂

Prime rate went UP, fixed rates went DOWN . . . What?

The biggest news this week was that the FOMC met on Tuesday and Wednesday.

Fed Chairperson Janet Yellen announced that they had voted to raise the Fed Funds rate by .25%.  We the public know that as the prime rate.  The markets felt great relief that they finally raised the rate, and that it was probable we would have at least 2 more rate increases.

Because the prime rate went UP, fixed rates went DOWN.

What??

That’s right this is the normal reaction, but it doesn’t always happen.  Here’s why.

The 30 year fixed rate moves with the 10 year Treasury bond.  By raising the prime rate, the fear of inflation, the probability of inflation decreases, which means the bond you buy today probably will still have value next year because interest rates have not changed.

If you were not sure that rates would be the same you would lock up your money in a bond at 3.5% today if you thought next year’s (or event this fall’s) interest rate was going to be 4%.  You wait to get PAID the higher rate.

So by raising the prime rate, they took the wind out of the sails of inflationary increases.  To make sure they keep it in check, they will probably raise rates 2 more times depending on the economic indicators in the next couple of months.

What economic indicators?

Well, how about jobs.  If there are more people working, more people can buy stuff, sending prices higher.  What about the personal income and personal spending data?  If those numbers are up , if we are making more money per hour on average, then it’s likely we are going to spend more, pushing prices of goods higher. Those are just 2 examples of data that influence our economy and could push rates higher.

For now the sigh of relief that they finally raised the prime rate cause interest rates to slide down .125 to .25%, depending on the program.

 

 

 

Saved from a $40k mistake . . .

While this is not a mortgage, I am glad to say I saved one of my long- time clients about $40,000.

This client came in to find out about buying an apartment building in Lomita that was a house with 4 units in the back.  We had determined that to retire in the South Bay, this would be the best way to live for free AND have room for both their elderly mothers.

So in discussing this, the client said as a “Oh, by the way,” I’m going to feed myself onto my mom’s property to protect her equity from fraud and manage her affairs.

STOP the PRESSES.  

What?  You have 3 siblings and they are ok with this?  And by the way, were you planning to sell this home when she passes?  Well, guess what?  If you inherit her property, her sole asset, it’s tax free.

If you are on title and have rented it out, guess what?  You owe capitals gains and will pay Uncle Sam $40,000+ in tax.  Oops.

Best to create a trust for her, be her trustee, and put another sibling on to minimize the blame game when she passes.

I love when people tell me their plans before they make huge, costly mistakes so I can help them avoid them.  Yes, he was grateful to avoid a $40,000 tax hit and have a plan for a financially healthy retirement.

If you are interested in getting set up for your retirement with property, give me a call on my cell before jumping in.

Powerful Economic News this Week

Mortgage rates rise .125% to .25% on the expectation of the Fed raising the prime rate, and on the stronger than expected payroll numbers…

The economic news this week was thin but powerful.

ADP (the payroll processing company) employment report on Wednesday stated a private payroll jump to 298,000 jobs created , much higher than expected. That  sent investors in a tizzy; rates jumped up a bit, and investors started white-knuckling for a blowup jobs report on  Friday.

The Friday jobs report from the government said that jobs created were 239,000, and the jobless rate dropped from 4.8% to 4.7%. Much softer, and much more in line with expectations.

With the Federal Reserve hinting even more that they feel a rate increase seems now warranted for March, the markets are still on pins and needles. Will the Fed Funds Rate (and the prime rate to us the borrowers) go up .25% or .5% ?

Why wait to find out? Lock in your mortgage rate this weekend or by Monday before emotions run wild on Wednesday when the Fed announces their decision.

If you are wondering when to be on pins and needles, we are with the major monthly indicators, but then especially on the dates below.

Dates of FOMC meetings (taken from Federal Reserve website) https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

 

 

 

 

 

Don’t gamble: lock in your rate.

Need to lock in for 60, 90 even 180 days? Yes, we can do that on a purchase!

Your buyer’s interest rates can be locked in, so if you have a client who is close to having an accepted offer and is nervous about rates we can lock that interest rate in.

Remember, we also have the float down: if rates improve more than .25% after lock-in and after full approval, your client gets the lower rate.  All rates are quoted at a 45 day lock in and assume a 720 credit score with 20% down, except for FHA and VA.

Have a great week, and call me if you need anyone qualified.

Paying the Mortgage But Not Getting the Tax Write Off?

If you know someone who owns a home but has not transferred the property into their name, or doesn’t know how, and is frustrated because they’re not getting the tax write off, then this success story will brighten their day.

Success story: Client has been living in her home for 10 years, inherited from her mother, (but property is not in her name).

She was making payments, but no tax write off since the mortgage loan is not in her name.

We were able to put the property in her name, keep the low, low property tax bill, and get the loan so she can now write off the property.

Getting the property out of the mother’s (who is still alive) name also helped the mother qualify for more benefits.