Freddie Mac’s weekly mortgage rate survey reveals that the average interest rate on a 30-year fixed rate mortgage was 3.84%, down from 3.88% the previous week.  Last year at this time, the rate was 4.71%.

So, you may ask yourself, when is it time to refinance again?  How do I determine exactly what the refinancing costs will be and how long will it take me to recover those costs?

Much depends on the individual borrower’s situation.  Naturally, you must have the income to qualify for a new loan and you must be able to verify that income to the lender’s satisfaction.  You must also have sufficient equity in your home to meet the lender’s guidelines.  Most conventional loans limit the loan amount to 75% of the home’s present market value. 

Note one exception is the HARP-2 loan program that will allow specific homeowners to borrow up to 125% of the current market value of their home.  The guidelines limit those who may qualify to a small number of homeowners.

One important question to ask is, exactly how long do I plan on living in my present home?  If you plan to sell in a year or two, a refinance is not likely to pencil out.  It will take some time to recover the costs associated with a refinance.

Another factor in the equation will be your present interest rate.  Those paying six or seven percent will have greater financial motivation than those who just refinanced last year at less than five percent.  The delta (difference) between your present monthly payment and the proposed refinance payment will determine how much or how little you may save and how long it will take to recover refinance costs.

The formula is simple.  Determine the proposed monthly payment on your new loan see how much lower it will be than your present payment.  Divide that number into the cost of your refinance and you will have the payback period.  Therefore, if your current payment is $ 1700 per month and the proposed payment will be $ 1600, the delta is $100.

If the refinance will cost you $ 3000, your payback period will be 30 months, or five years.  The savings after that five- year period are your gain for the refinance.

It will probably be more difficult to learn what your refinance costs will be than anything else in this exercise.  Find a local loan consultant with whom you feel comfortable dealing and enlist their assistance.  They will have to know about your financial situation in order to give you accurate information.

It may be time to refinance your El Dorado Hills real estate!

This is one in a series of brief videos designed to provide buyers and sellers information about the sale and purchase of real estate.  The data provided helps people better understand the market place and the process of buying or selling.  The tips are offered so that you can leverage your position in that purchase process.  Knowledge is power, or at least a tool with which to increase your chances of success.

 If you are thinking of buying or selling in our area, we will be happy to assist. Just call (916) 337-0658, text or e-mail us at Mike@BuyYourVilla.com.

This is the latest monthly report of our more than four-year study of bank owned (foreclosure/REO) home sales in El Dorado Hills, CA.  This report covers March 2012.

There were 14 bank owned (foreclosure/REO) homes sold in El Dorado Hills in March, up from eight the previous month. 

The average days on market increased from 42 in February to 47 in March.  Three of the homes had been on the market for over 100 days. In addition, 43% of the homes that sold had been on the market for two weeks or less, confirming that well priced homes in good condition sell quickly.

The 14 bank owned (Foreclosure/REO) homes that sold represent only 20% of ALL homes sold in El Dorado Hills this month.  The lower inventory level of bank owned homes is the reason.  

The available inventory of bank owned homes in El Dorado Hills dropped to a 1.1-month supply in March, down from a 1.6-month supply in February.  There have been two spikes in bank owned home inventory in the past fifteen months.  The inventory level exceeded a two-month supply in February of 2011 and January of 2012. The inventory for ALL homes available dropped to a 2.2-month supply in March, down from a 3.2-month supply the previous month.  Pundits advise us that a 6-month supply is a neutral market, so we are still looking at a strong seller’s market for ALL homes in El Dorado Hills, both bank owned and non-bank owned. 

The average cost-per-square-foot for Bank Owned homes jumped to $ 139 in March, up from $ 124 the previous month. The average cost-per-square-foot for ALL homes sold in El Dorado Hills in March was $ 153, up three dollars from February.   

The overall sales price for bank owned homes was 100.4% of the final asking price and 96.1% of the original asking price.  Sixty-Five Percent of the buyers paid the full asking price or more in March for their bank owned home, a slightly larger segment than normal. 

When based on the cost-per-square-foot for ALL homes sold, bank owned homebuyers paid 9% less in March.  That is a $ 14 pre-square-foot savings.  When applied to a 2500 square foot home, that represents a savings of $ 35,000, a substantial sum. 

If you have any questions about purchasing any home in El Dorado Hills, an El Dorado Hills Bank Owned Home, or a Bank Owned Home anywhere in the area, feel free to give us a call (916) 337-0658.

The data Follows:

This is the latest monthly report of our more than four-year study of bank owned (Foreclosure/REO) home sales in Folsom, CA.  This report covers March of 2012.

There were 10 Bank Owned (Foreclosure/REO) homes sold in Folsom this month, two less than in the previous month.

The average days-on-market decreased from 42 the previous month to 36 in March. None of the homes had been on the market for over 100 days, and 50% of the homes that sold were on the market for two weeks or less.  Well prices homes in good condition are selling quickly.

The 10 Bank Owned (Foreclosure/REO) homes that sold represent only 14% of all homes sold in Folsom this month.  The very low bank owned home inventory is the reason this segment or market is so low.

The available inventory of bank owned homes in Folsom increased to a 1.2-month supply, up from a .8-month supply the previous month.  That inventory level has not exceeded a two-month supply for over a year. The inventory for bank owned homes in Folsom peaked at a 2.8-month supply in January 2011, and has not reached that level since. The available inventory for ALL homes available dropped to a 1.1-month supply, down from a 1.5-month supply the previous month.  We have not had an inventory of more than a three-month supply since February of 2011.  Pundits tell us that a 6-month supply is neutral market, so Folsom remains a strong seller’s market for both bank owned homes and all other homes on the market.  The Folsom market reflects what is happening in the rest of California and the western US.  Inventory levels are very low.  This factor is going to have an impact on housing prices in the very near future.

The average cost-per-square-foot for bank owned homes was $ 144 in March, down from $ 147 in February. The average cost-per-square-foot for ALL homes sold in Folsom in March was $ 154, up from $ 151 the previous month.  It has been moving within a narrow range for the past year.  

The overall sales price for REO homes was 99.6% of the final asking price and 98.8% of the original asking price.  In addition, 60% of the buyers paid the asking price, or more, for their Folsom bank owned Foreclosure/REO) home in March. 

Based on the cost-per-square-foot, bank owned homebuyers saved ten dollars per foot on their bank owned home compared to the cost for all homes sold in Folsom this month.  When applied to a 2,500 square foot home, that represents a savings of $ 25,000: a tidy sum

Given the overall data, it is obvious that homeowners who do not have to sell are keeping their homes, rather than accepting current market value offers.    

If you have any questions about purchasing a home in Folsom, a Folsom Foreclosure, or an REO anywhere in the area, feel free to give us a call  (916) 337-0658.

The data follows:

Although the number of California homes that sold in March declined, the median home price broke a 16-month trend of declining prices.  In fact, the median price of existing single-family detached homes JUMPED 9.2% to $ 291,080 from the February number of $ 266,660. It was also up 1.6% from the March 2011 figure.

Select this link to view the complete report from the California Association of Realtors:

http://www.car.org/newsstand/news/march2012sales

While information about national and statewide trends is interesting, local data is more important to local buyers and sellers. In this post, we will discuss that local housing market in El Dorado Hills, California.

EL DORADO HILLS, CA HOME SALES DATA – MAR 2012

The purpose of this post is to provide those interested in the El Dorado Hills, CA housing market data about that market.  This report covers March 2012, and the fourteen previous months. 

The first chart lists the cost-per-square-foot for all homes sold in El Dorado Hills by month.  Although there is a slight fluctuation from month to month, the viewer can see that there is no downward trend.  When we look at year-over-year prices, March of 2011, was only one-dollar higher than it was in March of this year. We submit that the market is bumping along at the much-touted “bottom.”  Those potential buyers who decided to remain on the fence, “until prices hit bottom” no longer have a reason to wait. In fact, they may have missed the boat completely.  The challenge now will be to find a home to buy.

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The second chart shows the level of inventory, (the number of homes for sale divided by the number of homes sold each month).  Pundits tell us that a six-month inventory is a neutral market. 

Therefore, we can see that the El Dorado Hills market is, and has been for some time, a seller’s market. We had a buyer’s market in January and February of 2011, but the current inventory is half what it was last year.  In fact, we have been bumping along in the two to four month range for the past year.

The media is finally coming to the realization that the housing market has changed.  The housing shortage is the new line they use to grab viewers.

Over a year ago, we posted an article warning about the pending housing shortage.  Obviously, we were right.  All you have to do is ask those actively looking for a home.

It is going to get worse.  The demand will result in price increases and with those increases; more homeowners will put their homes on the market.  Unfortunately, without any new home construction in the past five years or more, we will still be short of inventory. 

If you would like to see this data for other cities and towns in our area, feel free to contact us at (916)337-0658 or e-mail Mike@BuyYourVilla.com.

To use the very best Internet property search tool go to www.BuyYourVilla.com.

Although the number of California homes that sold in March dropped from the February pace, the median home price broke a 16-month declining trend.  In fact, the median price of existing single-family detached homes JUMPED 9.2% to $ 291,080 from the February number of $ 266,660. It was also up 1.6% from March 2011.

Available inventory statewide remains extremely low.  The further we get into 2012, the more indications we see that the housing market in on the mend.

Select this link to view the complete report from the California Association of Realtors:  http://www.car.org/newsstand/news/march2012sales

While information about national and statewide trends is interesting, local data is more important to local buyers and sellers. In this post we will discuss that local housing market in Folsom, California.

FOLSOM, CA HOME SALES DATA – MAR 2012

The purpose of this post is to provide those interested in the Folsom, CA housing market data about that market.  The data presented covers March 2012, and the preceding fourteen months.

The first chart lists the cost-per-square-foot for all homes sold in Folsom by month. 

Although there is a slight fluctuation from month to month, the viewer can see that there is little change in the past eight months. We submit that the Folsom market is bumping along at the much-touted “bottom.”  Those potential buyers who decided to remain on the fence, “until prices hit bottom” no longer have a reason to wait.  In fact, they may have already missed the boat!  The challenge will be to find any home that they can buy.

 
The second chart shows the number of months of inventory available (the number of homes for sale divided by the number of homes sold each month).  Pundits tell us that a six-month inventory is a neutral market.  Therefore, we can see that the Folsom market has been a seller’s market for some time.  There has been a shortage if inventory for many months and the trend is for an even smaller number of homes to be available.

The media is finally starting to realize that the housing market has changed.

Over a year ago, we posted an article warning about the pending housing shortage.  Obviously, we were correct.  All you have to do is ask those actively looking for a home.

It is going to get worse.  The demand will result in price increases and with those increases; more homeowners may put their homes on the market.  Unfortunately, without any new home construction in the past five years or more, we will still be short of inventory. 

If you would like to see this data for other cities and towns in our area feel free to contact us at (916)337-0658 or e-mail Mike@BuyYourVilla.com.

To use the very best Internet property search tool go to www.BuyYourVilla.com.

Bank of America recently announced an innovative new program to deal with their “toxic assets.”  Since BofA is one of the largest mortgage loan servicers in the country they have been forced to deal with millions of “non-producing assets” (loans that were not being paid by distressed homeowners).  BofA was one of the five loan servicers that came to an agreement with government to pay $25 BILLION dollars because of the way that they were handling, or mishandling, foreclosures.

Through this new program, they will select a total of 1000 homeowners in Nevada, Arizona and New York who meet their program criteria.  BofA will work out a Deed in Lieu program with those homeowners (accept the deed to the property in exchange for forgiving the borrowers existing mortgage balance) and allow those homeowners to remain in the home as renters.  

They are trying to work out a win/win situation where they minimize investor’s losses and the distressed homeowner avoids foreclosure.  Of course, the program guidelines are very narrow. It will take considerable effort to identify 1000 homeowners who qualify and who are willing to participate.

The goal is to set the rental payment at market rates, which will be lower than the homeowner’s former loan payment.  The program will last for three years. During that time, the homeowner can work on repairing their credit so they could be eligible for a home purchase and mortgage loan.

The program will only accept homeowners who have no junior liens (second mortgages, liens for HOA dues in arrears, mechanics’ liens…etc.) eliminating a majority of distressed homeowners.  Borrowers can no apply for this program.  BofA will select the candidates who meet the criteria. 

If BofA management considers the program successful there is no doubt that, they will expand it, possibly into California, Florida and other states with large numbers of pending foreclosures.  Other loan servicers will also be watching closely and we may see variations of this program offered by those servicers.

Select this link to see the complete story from UT San Diego:

http://www.utsandiego.com/news/2012/mar/30/will-bofas-foreclosure-rental-program-hit-calif/

If you know someone who is facing foreclosure and is a loss about what they should do, have them contact us at (916) 337-0658 or e-mail Mike@BuyYourVilla.com.  We are here to help.

The housing market, like all markets, is cyclical. Although there have been a few bumps in the road over the past few years, the cycles have climbed to red-hot levels and dropped the ice cold depths, we know that it will eventually return to neutral. The American dream is still alive and well and will be so into the foreseeable future. The epitome of that American dream is to buy parcel of raw land, select the exact spot on that parcel to place their home, choose the floor plan that best meets their desires and make the hundreds of decisions that will turn that dream into reality. Unfortunately, not everyone can live this dream.

For those who do pursue the dream, the first step is to select and purchase the parcel of land. Buying raw land is not the same as buying an existing home. A buyer should consider many more factors to ensure the desirable outcome. In this post, we will discuss five factors that any buyer considering a land purchase should know about. Forewarned is forearmed. Making an informed purchase decision will smooth the road to your goal and eliminate many headaches and expensive problems.

ACCESS

Many buyers may not be aware of the fact that a significant number of land parcels on the market today are land locked. Access to them is available only by trespassing on a neighbor’s property or by helicopter. Although it may be possible to obtain an easement from a neighbor, that neighbor is likely to charge for the privilege. Many neighbors have no wish to grant an easement and do not have to do so. Even if you obtain an easement, you will also have to incur the cost of putting in a road and meeting that property owner’s requirement, whatever they may be. Selecting a property to which access is easily available illuminates these headaches. Most of these roads are dirt and can be in poor condition. Some require four-wheel-drive for passage. Parcels with paved road access are rare and usually price a little higher. However, in the long run the real cost is much lower.

POTABLE WATER

Potable water is essential no matter the size of the home. Parcels with access to local utility water are rare and usually much smaller and closer to towns. The most practical alternative is a well. Some properties on the market have existing wells, most do not. Putting in a well can be a speculative process. When you start drilling, you never know for sure if you’re going to hit water. There is also the cost of drilling a well. The deeper you have to go to drill the higher the expense. It can easily cost $5,000-$10,000 to drill the well. In addition, when you do hit water there is no guarantee that well productivity will be sufficient. Obviously, the safest bet is to purchase a property with an existing tested well that produces an acceptable level of supply.

POWER

Electrical power is another essential ingredient in the equation. Although solar alternatives are becoming more viable, connection with the grid is the safest, tried and true, solution. PG&E, like any other utility, charges to bring in power to your building site from the closest access. The closer that access, the lower the costs. There is also a consideration about putting the power lines underground or on poles overhead. Finding a parcel with power at your desired building site is ideal. It is also extremely rare. Finding a parcel with power access at the property line is your second best choice. That is not the usual case with most parcels on the market but they do exist. It is far more common for most parcels to have power 200 to 500 feet, or more, from your desired building site. Bringing power in on those parcels can be very expensive.

SEPTIC – PERCOLATION TEST

No County will issue a building permit unless the applicant can produce a Perk Test report indicating that the soils at the selected location will absorb and filter waste materials. If the property passed a perk test, that assures the owner that the septic system they install will function properly. A good buyers agent will include a clause in the purchase offer document stipulating that the buyer can cancel the agreement of the property does not pass the perk test.

Land parcels with access to local sewer systems are rare indeed. A vast majority of properties will require a septic system and passing a perk test is essential.  A few properties on the market have already passed the perk test and the listing agents are usually happy to provide a copy of the test report.

YOUR FINANCING

Financing the purchase of raw land is very different from financing the purchase of an existing home. There is no such thing as a 30-year fixed-rate mortgage for land. The majority of land sellers will accept only cash offers. There are rare occasions where a seller will finance a portion of the purchase for short term (one to two years). Most will require 30% to 50% down. The third financing alternative is the hard moneylender. Some will finance the purchase with as little as 20% to 25% down for a period of two to three years. However, their rates and fees are much higher than you will find when financing an existing home.

For those who qualify, there are construction loans available where the lender makes payments for each phase of construction. For example, they fund for the foundation, inspect the completed work and then fund for the framing. Inspections are made after each phase prior to founding the next. When construction is complete, the loan converts to a standard home mortgage loan. In almost all cases, construction must be completed within 12 months.

Finally, prudence dictates that prospective buyers consult the local County building Department to ascertain the costs for permits and fees. Much will depend on the location of the parcel selected in the size of the home you wish to build. It is always a good idea to have a ballpark estimate of your total costs before pursuing your dream.

Feel free to contact us, at 916-337-0658 or e-mail Mike@BuyYourVilla.com, if you have any questions or wish more information about a parcel in which you have an interest.  Our goal is to help buyers successfully navigate this process and make their dream a reality.

It is no secret that rents are increasing everywhere.  According to REIS Inc., a real estate research firm, rents nationally increased 2.7% last year and the vacancy rate dropped below 5 percent for the first time since 2001. 

 I the San Francisco Bay Area the increase was steeper. San Francisco saw increased of 5.9% and San Jose has a 4.9% rise.  Data for the Sacramento Area was not available at the time.

Historically, the cost to rent has been about ten percent of the after-tax cost of owning a home.  That started to change in 2010, as the price of housing declined.  By the end of 2011, a Deutsche Bank analyst found that the cost to rent an apartment was 15 percent higher and the cost to own a home.

Indications are that investors, buying reasonable priced homes and converting them into rentals, caused much of the recent home buying activity.  Tenant complaints about rising rents are increasing as property owners’ increase their return on investment.

Of course, it is not always easy for renters to qualify for the financing needed to complete a home purchase.  Loans for 100% of the purchase price are all but gone, with the notable exception of loans for rural housing and VA loans.  However, borrowers do have to have enough cash put aside to make the down payment and to cover closing costs.  FHA loans still only require a down payment of 3.5% of the purchase price.

Borrowers also have to have demonstrated job stability and good credit records to enter the home purchase arena.

Nonetheless, if these trends continue, more renters will be motivated to become homeowners.  That motivation will overshadow the concern that the housing market will take another dip.

Select this link for the Wall Street Journal article on this subject:   

http://online.wsj.com/article/SB10001424052702304750404577322011443831768.html?mod=WSJ_RealEstate_LeftTopNews

Feel free to contact us if you have questions about financing a home purchase, or if you would like to look at homes in the greater Sacramento area.  (916) 337-0658 or e-mail Mike@BuyYourVilla.com

Have you waited too long? 

We have been advising potential buyers for months that housing prices and interest rates are so low that it is time to take the plunge.  The present housing market is one that we are not likely to see again in our lifetime. Some have decided to follow our advice while others have not.

Some tell themselves that they are waiting for the bottom of the market.  The problem is that the only way to know when we hit the bottom is when we look back at the data for several months so that we can identify when it happened. Hindsight is always 20/20.     

We cracked our crystal, so we are not very good at predicting the future. What we can tell you is that mortgage interest rates are on the way up. The average rate for a 30-year fixed-rate mortgage is back above 4% now and the pundits tell us that they are destined to keep going up through 2012 and 2013. 

You may not be aware of the fact that a few decades ago people were paying as much as 17%!  The low 4% range is still EXCELLENT.

Fortunately, rates are not skyrocketing, so there is still time to act.  Of course, the longer you wait the higher rates are going to be. 

The current market conditions are also ideal for those with sufficient equity to refinance and lower their monthly mortgage payments.  The key factor is the amount of equity an owner has in their property.  Anyone with a 25% equity interest in his or her home that is paying 6% or above is just GIVING money to their lien holder.  How do you like making investors richer?

Granted, lenders are more particular about whom they loan money to in our current market.  The days of the fast and furious lending spree with “Liars Loans” and negative amortization loans have gone the way of the Klondike Gold Rush.  However, the award goes to the persistent. They will look back on these good old days, when you could get a mortgage loan for 4%!   

Select this link for a recent Wall Street Journal article on this subject:

http://online.wsj.com/article/SB10001424052702303812904577295762407392928.html?mod=WSJ_RealEstate_LeftTopNews