Danny Salas

Archive for the 'Chico Home Loans' Category

Real Estate Today RADIO – December 1

 
 
 

Check out Danny Salas on Real Estate Today RADIO, December 1, 2010 speaking about upcoming Fannie Mae changes.

Valuable for Homebuyers AND Real Estate Agents!

 

 

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Chico, CA Interest Rates Market Report – Economic Influences – November 18, 2010

Why Are Rates Skyrocketing?

There are a couple of things occurring.  QEII is taking effect on the market, and deflating the value of the dollar, worldwide.  The U.S. is doing the exact same thing, it has ridiculed other countries of doing, in the past.  Quatitative Easing II is the government’s stimulus program to actually cause inflation (interest rates’ worst nemesis), in order to spur economic life, into an increasingly dead economy.

The second main issue is, again, Europe.  This time, it is Ireland.  Ireland’s financial banking system is at the brink of complete collapse.  Therefore, as we’ve seen in the past with other European Countries, the European Central Bank (ECU) and the International Monetary Fund (IMF), have stepped in and offered a deal to Ireland, that they may not be able to refuse.

Why would Ireland Refuse Help?

Pride!  Simply, put…Pride, Austerity, and higher taxes.  Ireland has the lowest tax rate of any European country.  And the concern is, that if they accept this assistance, they’ll have to raise taxes and perhaps cause the unrest that Greece had to endure, through their financial fiasco.  In economics, austerity is when a government reduces its spending and/or increases user fees to pay back creditors.  Austerity is usually required when a government’s fiscal deficit spending is felt to be unsustainable.

Safe-Haven Treasuries, Not As Safe

Investors Moving Money

During the uncertainty in Europe, investors tend to move their money into the safe-haven of U.S. Bonds, Treasuries, and Mortgage-Backed Securities.  However, with a plan on the table to revitalize Ireland’s financial stability, that safe haven is less attractive, and therefore, money pours out of these places, and into Stocks, Bonds, Gold, Oil, etc.  This causes rates to increase.

Hold Your Horses

Europe is still not out of trouble.  Greece, Portugal, Spain, and Italy, are all beginning to show signs, again, of financial trouble.  Their banking systems may need more bailout help, as they already have experienced.  If this rears its ugly head again, we could see these same investors shuffle money back into the safe-haven of U.S. Bonds and Mortgage-Backed Securities…causing rates to move downwardly again.

Watch Europe Carefully…Rates Could Benefit

Locking In

If you haven’t done so, already.  You’re not working with the right mortgage banker.  However, if you or your client, just had your application taken…I’d hold out and watch what happens with Greece, Portugal, Spain, and Italy.  We may have a small rebound, after suffering HUGE losses, this past two weeks.

Related Must Reads

Past European Troubles
Greece’s 1st Financial Rescue Program
Portugal’s Past Troubles

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Unpermitted Room Additions, Garage or Porch Conversions

Conforming & FHA Allowed

In the past, if you had an unpermitted addition on your property we would have to remove the unpermitted area from the GLA (gross living area) square footage and also price the loan on a Standard 30 Year Fixed Rate Loan, or a government sponsored FHA Loan, with a significant additional cost.  Well, now, Access Real Estate Lending, through one of our wholesale partners, is able to leave the square footage in the GLA and also keep our best interest rate pricing!!

 Single Family Properties with unpermitted room additions are acceptable as described below.

All of the following must apply:

• The appraiser must comment that the addition or conversion was completed in a workmanlike manner and that there is not any impairment to the soundness, structural integrity or livability of the property.
• The room addition must conform to the rest of the property.
• The addition or garage conversion cannot cause the subject property to be in violation of zoning.  The appraisal must indicate that the zoning is legal and may not include any comments that the zoning of the property has been jeopardized. 

• The square footage of the addition may be included in the appraised value.  A garage or porch conversion may be appraised as originally intended or as currently used, depending on the comparable sales.  Example:  If garage conversions are typical for the area as evidenced by comps, the conversion may be appraised as it is currently used.  If garage conversions are not typical for the area the conversion should be appraised as a garage.
• The hazard insurance policy must clearly show that the entire square footage of the subject property, including the unpermitted addition, is included in the policy. 

Examples

Room Addition Example:  If the property was a 3 bedroom property and another bedroom has been added and the property is being appraised as a 4 bedroom property, the hazard insurance policy must clearly insure the total square footage of all living space, including the addition.

Garage Conversion Examples:  If the property is being appraised with the garage conversion being valued as a bedroom, the hazard insurance policy must clearly insure the total square footage of all living space. 

If the garage conversion is being valued as a garage, then the hazard insurance policy need only insure the area as a garage.

NOTE:  The hazard insurance policy does not need to indicate that there is an unpermitted addition or garage conversion, but the square footage that we are lending on must be covered by the policy.

 NOTES FOR GARAGE CONVERSIONS: 

Zoning:  Local ordinances and/or municipality requirements may obligate a property to have covered garage storage.  This is more common in PUDs and gated communities.  It is the responsibility of the appraiser to check for this type of requirement; however, it is the underwriter’s responsibility to thoroughly review the appraisal to ensure the property’s zoning is compliant. 

 Ineligible Scenarios

The following scenarios are not eligible under any circumstance:

• Room additions are not eligible on 2-4 unit properties.  All properties must be single family properties and the addition may not result in the property converting to a multi-unit property, etc.
• Additions that result in extra living units, also known as accessory units or granny flats, etc. are not eligible.   

Related Must Reads

FHA-Why It’s King

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MI Moving Maximum LTV to 97%

A Good Sign 

Beginning October 8, 2010 PMI Home Insurance raised their maximum LTV (Loan To Value) to 97%.  For most in the industry, it will be a good thing. With a 3% down payment, more potential homebuyers will qualify for loans.

Criteria Outline

Minimum 720 credit score Non-distressed markets only Owner-occupied 1 unit, attached and detached,     PUDS and condominiums Purchase only Conforming loan amounts Retail only Fully amortizing fixed-rate and     Hybrid ARMs (5/1, 7/1, 10/1)

To See All of PMI’s Criteria and Rate Changes, Check Out:

www.pmi-us.com

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