Change Can Be Good

 

Change is often viewed with trepidation and pessimism. The same is often said about our government; but, every once in a while, change is good.  And, when it is initiated by our government, it is shocking!

 

Today, the FHA, a governmental entity, announced that, effective January 26^th of this year, they will be lowering the monthly fee for Private Mortgage Insurance (PMI). http://20somethingfinance.com/what-is-private-mortgage-insurance-pmi/

 

When the banking crisis hit, part of the government response was to raise the fees associated with providing this loan. An FHA loan is characterized by a lower rate down payment than a conventional loan.  But, as with all things, you have to give a little to get a little. The government gives these loans, but their fees are a higher than most loans that require PMI. 

 

A typical FHA loan has a 1.75% upfront fee, paid at the time of close, on its loan (it can be wrapped into the loan).  In addition, this loan has PMI. When the banking crisis hit, the default rate on FHA loans rose dramatically and losses had to be recouped. The monthly PMI rate rose to 1.35% of your monthly payment, deemed necessary to insure the risk involved in lending on this program. 

 

But, here comes the good news:  Beginning January 26^th, the monthly rate is dropping from 1.35% to 0.85%. That can add up to significant savings over the life of the loan!! The reason?  Actuarial tables show that borrowers are defaulting less, making the need to collect insurance less expensive, simply put. The tables are reexamined on a regular basis, but today’s announcement is welcome news. http://www.housingwire.com/articles/32533-its-official-obama-to-direct-fha-to-cut-mortgage-insurance-premiums

 

Here is a tool to roughly help you understand a payment for a loan financed by an FHA loan: http://www.fha.com/calculator_payments  Of course, everyone’s situation, rates, and process to qualify will vary depending on individual circumstances, but this can be a starting point. 

 

Not only does this make qualifying less expensive, it also allows more borrowers to qualify.  In addition, interest rates still remain at historic lows.  An FHA loan might be as low as 3.75%, depending on your individual situation.  Seek information from an experienced FHA lender.  I work with Camille DuPuis: 

Camille DuPuis Princeton Capital 1096 Blossom Hill Road Suite 200 San Jose, CA 95123 408-445-5179 camilledupuis@princetoncap.com

 

I am experienced in, and enjoy, working with first time buyers, whether you are financing with an FHA, or conventional loan.  I am in the field every day, viewing properties as they come on the market.   I speak to listing agents and sellers, gathering information to help my clients gain an advantage in this current competitive market.  If you feel you would benefit from my services, give me a call!

Something Old, Something New...Opportunity and Favorite of the Week

Happy New Year!

While in pursuit of my goal to view new listings as they come on the market in Almaden, Cambrian and Willow Glen, I decided it would be appropriate to share what are, in my opinion, the "Opportunity" and "Favorite" properties of the week. 

1660 Campbell
 

The "Opportunity" is 1660 Campbell Avenue in San Jose.  This is a very wide street in an equally prestigious neighborhood.  This home sits among homes, most of which are well over 2 million, some 3.  At $1,699,000., it is a bargain (I know...not in my budget, either).  The buyer will do a major remodel and create a beautiful home fitting for the neighborhood.

My "Favorite" is 1523 Hicks.  I love new construction.  New, clean, umblemished.  This has lots of space, very quiet inside  Lots of natural light and an open floor plan.  Walk to Lincoln Avenue. 

As my intro mentioned, I am out in the field on a daily basis, looking at new listings as they come on the market ~ everything in Almaden, Cambrian and Willow Glen (well, I did skip 14551 Bercaw in Cambrian just before Christmas.  The listing indicated the home was in bad shape and 'smelled worse'.)

I talk to the listing agent, the owner, maybe even the neighbors to understand the property and seller motivation better.  I communicate this information to my best, most motivated buyers.  Information is power.  Power will give us the advantage over other, less prepared buyers and agents. 

Talking to agents also helps me build relationships.  If one of my buyers is really interested in a pending property, I will keep in contact with the listing agent in case it falls out of contract.  We may be able to make a compelling offer without dealing with the rest of the competition because the listing agent knows a qualified buyer is ready, willing and able.  Able to buy, able to save the seller some heartache.

I also find out about 'not yet on the market' properties through other agents...some sellers, for personal or professional reasons, may prefer to not put their property on the MLS which does lessen the aggravation of competition.

Knowing many of my colleagues also lets me campaign my upcoming listings in advance of the market date on the MLS.  Creates additional interest in the property, which drives viewings, offers and a successful sale...

If you are a serious, committed buyer who wants to enjoy the competitive advantages I have talked about, please let me know.  I would love to meet and talk to you, determine how we can best work together.  Maybe you will want to look at one of my "Opportunity" or "Favorite" properties.