July 2011

Found 17 blog entries for July 2011.

You won't want to miss out on this beautiful Yorba Linda home. Boasting nearly 3,100 sq ft of living space on almost a 14,000 sq ft lot, giving you plenty of room to roam.  The open floor plan has a wonderful flow making entertaining a breeze. Whether you are hosting an intimate dinner party with the fireplace in the background and the wet bar to serve from, or a formal event in the bright and airy great room. Upstairs is a spacious master retreat with sitting area, master bath with separate tub and shower, and plenty of closet space!  Outside is a large private yard with a built-in BBQ, in-ground heated spa, basketball court, playhouse, and swing set.   Don't miss the opportunity to own an exceptional property located within the acclaimed Yorba Linda

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money-lock_693Should you lock in the interest rate on your mortgage? A couple of things to consider:

1. While I am confident that the Debt Ceiling Debate will be settled (whether it’s for six months or a year), my greater concern is the growing belief that the ratings agencies are looking at downgrading our government’s bonds from our AAA status. By lowering the credit rating of the bonds being presented to the market, the confidence of those who buy our bonds will be shaken. In order to overcome the risk of lower rated bonds, we will need to offer greater rates of returns on our bonds. THAT will result in a rise in mortgage rates because mortgages are what make up the bonds. This will affect virtually every conforming loan limit home buyer, whether they have

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house-and-gold_800We hope that headline grabbed you. The reason we used it was to bring some perspective to the debate as to whether or not homeownership is a wise investment in today’s troubled market. A family should never look at the purchase of a home simply as a financial investment. It is so much more than that. But, even if we look at it as only an investment, we must look at it in the long term. Let’s use gold as an example.

Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People were so glad they hadn’t bought at $400 an ounce.

Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said:

“No investment has been so thoroughly exploded as gold; most people think that

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fighter_848There has been much written about the falling inventories of distressed properties in many market places. Some have looked at the decreasing percentage of distressed property sales reported by the National Association of Realtors over the last four months as a sign that we are finally cleaning out the last remnants of the foreclosures. If you look at the numbers, it could seem that way:

  • March: 40% of all sales were distressed properties
  • April: 37% of all sales were distressed properties
  • May: 31% of all sales were distressed properties
  • June: 30% of all sales were distressed properties

However, in reality the falling percentage of distressed property sales is not an accurate indicator. The reason the percentages are falling is because

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scream_1024We have written on the long term impact that the new mortgage guidelines known as ‘Qualified Residential Mortgage’ (QRM) will have on the cost of financing a home. However, it seems that these expenses are already beginning to creep into lending. The QRM guidelines are much more rigid than those used in the last year. Though the new guidelines (if accepted as proposed) will not be mandated until some future date, it seems many lending institutions have already begun to put in place some of these more stringent qualifications.

The Result?

A new cottage industry of ‘hard money’ lenders has appeared to fill the void created by the more onerous guidelines. The Wall Street Journal reported:

“Dallas attorney Joey Messina has a side business

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Beautifully remodeled custom home on private cul-de-sac street. Property has spacious 3-stall horse barn backing up to the Yorba Linda horse trails. Completely remodeled kitchen with custom maple cabinets, granite countertops, copper ceiling tiles, and vent hood, recessed lighting, all major KitchenAid appliances, and Sub-Zero refrigerator and freezer, each with matching maple panels. Great room has wet bar with wine cooler. New double-pane windows, custom crown molding and insta-hot water. All four bathrooms have been completely redone with granite countertops, custom cabinets and Jacuzzi tub and steam shower in first-floor master suite. In addition, huge second floor master suite has been added. Backyard boasts complete outdoor kitchen, including

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A proposal to federal regulators involving new regulations governing qualified residential mortgages (QRMs) that would mandate a 20 percent down payment for consumers wishing to qualify for a conventional, non-government- backed residential mortgage, has prompted action among the real estate industry. Realtors say if allowed to take effect, the new QRM rules would exacerbate the ongoing housing and lending crisis in America.

20% down payment

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money_reserverWhen lenders evaluate mortgage borrowers, they look at four things:income (the ability to repay), credit (the willingness to repay), collateral (appraised value and property condition) and assets (cash in the deal and cash reserves after closing, mostly). Of the “four legs of the table”, assets are the least discussed, and yet may be the most important.

What do we mean when we talk about assets?

  • Monies needed for the down payment (the difference between the purchase price and the loan amount which may or may not be the same as the money deposit at contract signing)
  • Monies needed for closing costs (fees to the lender and third parties for things like appraisals, title insurance, settlement services, and so on)
  • Monies needed for Pre-Paids

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price-cut_800The Research 

Are there any negative effects from changing the listing price of a property?  This question haunts Brokers/Agents as well as sellers of property every day.  At present, there does not seem to be a consensus answer to this question within the professional real estate community.  Fortunately, this question was scientifically investigated by John R. Knight. Unfortunately, few know the results of Professor Knight’s research.

In Knight (2002), the impact of changing a property’s listing price is investigated.  Additionally, the types of property that are most likely to experience a price change are also estimated.  The findings from this research indicate that, on average, properties which experience a listing price change take

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homeownership_848It seems that every time we talk about real estate today the conversation immediately goes to the financial aspects of buying a home. Where are prices headed? Where are interest rates headed? Should I wait to try and get a ‘better buy’? Should I wait until I can get a ‘steal’?

The odd thing about all these questions is that survey after survey keeps telling us that price is not the reason families actually buy a home. When money is considered at all, it is in light of not paying rent to a landlord. Let’s look at two recent surveys as examples:

National Housing Survey

The top five reasons given in the survey for buying a home, in order, are:

  • It means having a good place to raise children and provide them with a good education
  • You have a
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