Man’s Best Friend

They say that a dog is a man’s best friend and for many years I don’t think that I believed it. In fact, I wanted a dog so bad as a kid and we could never afford one so I think that I was scarred from those days. Naturally when my wife and kids asked for a dog I was absolutely against it. I was able to resist until the day………………

It was a Sunday and I received a phone call from my father. He asked are you guys going to be around for a while I want to come up. If you know my dad this would be extremely out of the ordinary. My dad is in Modesto so about 1 hour and a half later there was a knock at the door. My kids all three of them ran to the door in excitement. The funniest part is they had no clue nor did I or my wife what would be behind the door. We opened the door and my Dad was standing there with a three pound 8 week old pure breed Boston Terrier. That Sunday against all my better judgment and wishes KODA was born into the family.

So what has happened since then is that little tiny dog is now a one year and a half year puppy that my kids adore. My wife is his master (don’t even think about saying mine too). He sleeps in our bed every night. I had just gotten all the kids out of the bed but what the hay him or a fourth kid I will take him. I like him a lot when no one is looking and then I throw up the machismo when people are looking. Then it all happened……Last week on Friday we noticed that there was something wrong with his eye. We took him to the vet to discover that he had an eye ulcer. He was to have an ointment in his eye every two hours and I was selected to administer. My wife and kids left Sunday on a trip without me and it was just he and I. I have to say that we bonded and through all the ointment administering and talking to him because there was no one else I decided to publicly admit that I love the little guy. Monday I took him for the recheck and the Vet sent me to emergency eye care. She stated that his eye was REAL BAD! I went to the doctor and she stated that he needed to have surgery first thing this Morning. He was going to receive an eye graft and if that did not work he would lose his eye. Hundreds of emotions ran through me but the one that generally would have floored me: THE COST was of no concern.

Over the night I waqs worried sick but confident that the DOC would do her magic. The surgery was a success for KODA and for the doctor cha-ching! The most important thing is that I learned that a dog is truly A MANS BEST FRIEND. He would do anything for me and I will do the same for him.

WHAT DOES THIS HAVE TO DO WITH HOMES AND HOME MORTGAGES?

The answer is very simple. I think that are many times that we convince ourselves that we do not like something based on a past experience or trauma that we may have experienced. If we never want to look at a one story because we don’t feel that there will be enough privacy we limit our scope. Many times the very thing that we are adamant about can become the thing that we adore the most. I was so against a dog that for the first year that we have had the dog I have completely missed out on the joy that he brings to the table. Don’t let Stereotypes about FHA, Mortgage, certain neighborhoods or schools determine how you feel about something. Give yourself the shot of making your own decision as to whether or not something is for you. Also, give the person that is making the suggestion the chance to explain why before you knock it.

I have many clients that walk through the door saying NO FHA or NO Points and there are a lot of cases that they end up realizing that FHA with one point was mathematically the best choice for them. Go into everything with the same enthusiasm as a child. Approach it as though you know nothing and seek wisdom and wise counsel. Let the product or the numbers paint the picture for you. Seek the facts and the truth without limiting the windows that you are looking through and in the end you will be all the more wise and all the more satisfied.

JUST REMEMBER THAT I MISSED A YEAR OF MY DOGS LIFE BECAUSE I HAD A PRE-DETERMINED VIEW THAT WAS ABSOLUTELY INCORRECT! KODA you truly are a man’s best friend and thank you so much for the life lesson that you have taught me.

How is my Credit Rated Part 1?

Michelle Luker is back again at California Home Strategies to continue a series on understanding how our credit score is derived. This is Part one in a five part series that we will be rolling out. If you have any questions regarding your credit contact myself or Michelle Directly.

At Capital Credit Source, we feel that educating people on credit scoring is extremely important to their financial well-being. I wanted to take this opportunity to explain the credit scoring system to you since I feel credit scores are much more important than most people realize. On average, even a 10 point increase in your credit score will save you in excess of $100,000 over the life of a $250,000 30-year fixed loan.

Although seemingly complex and often confusing, your credit score is essentially based on five key factors, the first and most important being payment history.

35% of the score is based on how you handle your debt obligations

- Pay all bills on time and try to avoid getting a tax lien or a judgment entered against you because those also affect your payment history in a negative way.

- Please note that paying a past due balance on a collection or charged-off account does NOT increase your credit score and may even have the opposite effect more times than not. I do no suggest paying these types of accounts when you are planning to apply for a home loan in the next six (6) months. Please let me clarify that I am not suggesting that you not pay these accounts, but that you consider waiting until after the loan closes to pay them since it can reduce your score and hurt your chances of getting loan approval. However, since not paying them can lead to a lawsuit being filed or the debt being sold to several collection agencies in the future – both of which will damage your credit even more in the long run – one excellent solution would be to negotiate to pay or settle these account either concurrent with the loan closing or shortly after. An alternative would be to settle these types of accounts for deletion with payment if you are able to get the creditor to agree to do so.

Michelle Luker

Office: 916-652-9637

Cell: 916-316-0247

Fax: 916-644-6626

Capital Credit Source, Inc.

4804 Granite Drive, Suite F-3261

Rocklin, CA 95677

http://www.capitalcreditsource.com

Caught in the Bubble by Mari Medina; Realtor Extraordinaire!

I wanted to take a quick moment to tell all my readers of another blog by a local Real Estate agent. Mari Medina of Remax is an awesome Real Estate agent here in our local Sacramento market. Aside from being an amazing agent in the field she has created a blog that I recommend everyone  read and subscribe too.

Please do yourself a huge favor and make sure you are in the know of Real Estate by visiting Caught in the Bubble and subscribing to her blog. Mari and I will be teaming up in the future to make sure that you do not miss out on Real Estate and Mortgage Information that we all can understand.

How to Avoid 3 Pitfalls on your Home Purchase

Shopping for a home can be a long term process and commitment in today’s market. Here are three things to remember to do while you are shopping:

CalHFA Regains it’s Composure!

*IMPORTANT UPDATE* – Radian the last Mortgage Insurance company going to 95% LTV has announced that they are pulling out of the California Market. That means that we will be capped at 90% LTV on this product and the standard Mortgage Insurance guidelines will apply. You will need a 720 FICO and a debt to income not to exceed 41%.

CalHFA is back in the market with a few new products. These products include but are not limited to the Cal 30 Conventional loan, the reinstatement of CHDAP and the Schools Facility Fee down payment assistance is back. As with many of the programs that we as brokers have access to I expect to see a few overlays mainly regarding credit scores.Here are a few notes about each:

Cal 30 Conventional Loan has many great qualities but special attention should be paid to a few of the requirements:

• Up to 95% financing available with a Combined loan to value of 102% utilizing a combination of DPA programs.
  
• First Time Home-buyer only
• Primary Residence Only
• Income Limits – 2 person household in Placer and Sacramento can make $69,900 or lower and $87,350 for 4 persons
• Sale Price limits not to exceed $506,795 in both Sacramento and Placer
  
• Home-buyer Education Required
  

CHDAP – is a down-payment assistance junior lien with the following requirements:

• First Time Home-buyer
  
• Income Restrictions same as Cal30
• Home-buyer education
  
• Primary residence
  
• Up to 3% for closing costs or down payment
  
• other restrictions may apply. consult your loan officer
  

SFF or School’s Facility Fee  – conditional grant that can be used on new home construction and can be layered with othe programs like CHDAP:

• There are two different program’s
  
• Go directly to CalHFA homepage for more Info.

More information to follow so make sure that you subscribe to continue to get the latest industry news.

Buyer’s Market? Think Twice and Consider the Facts!

The last few years of the market have caused many buyers to get in the mind frame that it is a buyer’s market. That the market needs them and that they are in control. I have had many buyers that do not want to acknowledge the shifts in the market. Traditionally, we would say it is a buyer’s market if there is greater than a 6 month supply in inventory. This is definitely specific to the area that you live in but here in the Sacramento area we are short of six months inventory. What does this mean? It means that we are in a seller’s market people.

Few Things to Consider:

1. Sale to List Price Ratio – This represents the average list price of a home compared to the final sale price. In a buyer’s market we would generally see the sale price well below or below the list price. This would signify saturation of inventory and sellers that have to adjust the expectation based on interest and demand. Currently in certain price points in Sacramento, especially those under 300K we are seeing the final sale price above list price. Why? Banks are listing the properties at prices that are extremely attractive and many buyers are battling for the home. Some homes have as many as 20 offers on the property. This creates an emotional bidding war and the home goes to the highest bidder (with the best financing or apparent financing). The price is then pushed up and the Sale to list price is effected.
2. Days on the Market – Just like Sale to List Price the average time on the market is a good indicator of who is controlling the market. The majority of the sales are selling with less than 90 days on the market. In a buyer’s market the sale time is extended and we see up to 180+ days on the market. The homes that are coming on the market are selling and there would be no reason they would not. Interest Rates are low and with the Tax Credit one would be foolish not to consider buying.
3. Months of Inventory – Late 2007 and early in 2008 we had as much as 11 months of inventory on the market. This is not the case right now. With less than six months of inventory on the market the seller’s are in control. With their ridiculous per diem charges for extended escrows to their choices of southern California Title and Escrow companies. The seller is setting the terms and the standard and with multiple bids they can sort through and pick the cream of the crop. That being said there are a ton of homes that are owned by the banks that they are not releasing to the market. There is enough inventory in the wings, in my humble opinion, to turn the market right back to months of inventory. The banks are holding it back so that they do not drive prices down by over saturation.

Questions I hear from Buyers:

1. The property is listed for 140K. Do you think that I can offer 135K and ask for 5% seller credit? – No! That property will at least go for 140K and many times more. The things that you must take into consideration are the days on the market, whether or not it is seller owned, bank owned or a short sale. This will make a difference and this will change the strategy. Short Sales tend to have less interest because of the time they take but they also have little flexibility in price and credit. Traditional sellers have a number they want and it comes down to a meeting of the minds and the banks are the game that I described above.
2. Can I write offers on several properties and take the one that gets accepted? – This is where I defer to the Real Estate agent. Agents are effective because they build a reputation with other agents. The better the reputation the better the odds that your offer would be accepted. If you are writing offers on properties that you really do not want you are wasting a lot of people’s time.
3. I am approved for 150K and I really like this property. It is listed at 155K do you think I can qualify? In today’s market climate I suggest that if you are qualified for 150K that you start your search in the 130K – 140K range so that you have room to be consider if you are asked for Highest and best. If you are pushing your approval amount you are putting yourself at risk. With the Volatility of the rates I would ask your Loan Officer to make sure that they have padded the rate on the approval to cover any swings. If your approval is a best case rate and your offer is accepted and rates have gone up you may not qualify or feel comfortable with the new cost.

In conclusion, if you are in the market to buy you must understand the climate that you are in and have reasonable expectations. My most recent closing searched for one year for the right home and my most recent contract wrote 40 offers before one was accepted. That does not sound like a buyer’s market to me. The good news is that you are going to buy at a Low Price with a Low Rate or so we hope!

* Much of the information provided is specific to certain price points and in certain geographic locations. Always consult your Real Estate Professional to determine your market conditions as they may vary.  Traditional Sellers may have a different experience and short sales have their own behaviors which we will examine in posts to come with a very Special guest. A local Short Sale Specialist. If the banks begin to dump the inventory that they are holding back we could see another swing. Stay Tuned.

If you enjoyed this article do not forget to subscribe to my feed for future articles to come.

Mortgage Definitions: Servicing

Many times there is confusion when buying a home of whom you will pay in the end. The use of a broker is very common and when we use a broker to help us obtain a mortgage our loan is sold. The broker may obtain the loan for you through Acme wholesale and Acme will promptly sell that debt to an investor. That investor may or may not service the loan. They may have someone else service the loan. So what is Servicing?

Servicing – The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

If you are like me that leaves me asking the question then what is a servicer?

Servicer – An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

So in the most layman’s term possible servicing and a servicer is the debt collector. This is where you will send your payment and all correspondence about that payment will be made directly through this company.

Getting Out to Get In!

Well, I think that many of you know that I just got back from a vacation. It was a very quick get away more than a vacation I would say. I left on Saturday afternoon and came back yesterday. The trip was a 5 hour drive to a small town called Cayucos near San Luis Obispo. Highway 1 runs directly through the small town. It is beautiful there. I am fortunate to have a Grandma that lives right on the water.

Why did I go down there you might ask. I went with my family to attend the graduation of my Brother-in-Law from Cal Polytechnic State University. The Graduation itself was awesome. There were some amazing speakers and so much promise right there on the football field. Children that are uncertain as to where their path may lead. What type of influence they may have on the world. Still worldly virgins that are eager to get out and experience what life will bring. Others sat in the seat thinking to themselves now what? What am I going to do. The market sucks, no one is hiring and I do not even know what I want to do in life?

What was the difference between the two parties? What things lead so many to be encouraged while the other half remained so discouraged? I could see it in the body language and I could see it in the eyes of the graduates. The parents also gave a view of the very same encouragement and discouragement. Some were filled with excitement. The kind that said my little one is all grown up and ready to tackle the world. So many great things are ahead and what a bright future they will have. Others were saying with their eyes, “Oh no, how is my little one going to navigate this uncertain and unpredictable world?”

Getting Out to Get In came to my mind as I thought about the title. I was away from my business. I had gotten out and while I was out I was able to get in. I was able to analyze my business. I was able to take a look at what might be working and what may not be working. I was able to see what types of people I want to be around and others who I rather not. I was able to see who I was becoming and able to see how I may be perceived. I was able to take an outside perspective on the way that my industry is functioning and where the focus lies. I had to ask myself three very important questions?

1. What is my Motive when engaging in a business relationship?
2. Do I add Value to the relationship greater than simply getting the transaction from Point A to Point B?
3. How do I Respond to the circumstances that we face in today’s economy?

Motive – While reflecting on this question I think that I was taught to create relationships in business that are mutually beneficial. Relationships that help each other to rise to the top. Relationships that are fruitful for both parties. I never really stop to think about how I am to do that. I thought that if I give them business and they give me business and we both get to make money that is the goal. However, over time I have learned that I do not want to to just have a relationship to add to the business. I do not have to have 100’s of clients or hundreds of business associates. What I do want to have is fruitful strong relationships that add to the the quality of life of the other party. I rather have less clients and less Realtors that I am able to do more for than many. In addition, I have learned that each relationship is not always equal in depth. Some you will become very close to and others will be surface. I wanted all too be deep and many and I was spread thin. I wanted to make lots of Money and that was the motive. (don’t take the next statement incorrectly) My Motive has changed. The goal is not Money any longer. It is Impact and Influence. Yes, I have to make a living. I do that through the relationships but how they are created and maintained is now more important than the result of the relationship for business.

Value -Do I add value to the relationship? I started to evaluate if there was any added value that I bring to the consumer. What is it that I do differently than others? Don’t get me wrong there is a lot of value in getting the loan from point A to Point B. For the Business Partners that I work with why should they work with me and what makes me different than other affiliates. When I think about this I always end up thinking that I simply care and I simply deliver the news good or bad. In addition to the fact that I rarely take a day off. I am responsive and present. Is that enough? That is the conflict.You are only as good as your last deal. I am hoping that I can add enough value that one deal that goes wrong does not discount the ten that went right. That we are able to talk through the difficult ones. Open and honest. I hope that I am humble enough to accept criticism. I want to grow from the constructive feedback.

Response – How well do I respond when the pressure of the environment gets the best of us? I think that this is one of the most critical aspects of our industry and more importantly our lives. The way that we respond can be largely representative of how will will behave moving forward. If things get stressed or we face a difficult situation in the near future together it is insight to how I will deal with that. My Business Associates, clients, friends and family deserve to know how I respond to difficult situations more than what I do when things go right. I will admit that the industry has gotten the best of me at times. In the past I may not have handled the situation in the best manner possible but those are the situations that have developed my character. I am confident that I will face adversity on a transaction but I am more confident that I will handle it well moving forward. I know that I will seek the truth, find the answer and deliver it to the parties that need the information.

So, while I was Getting Out to Get in I realized that I needed to ad something to my business for the clients and partners that I work with. I needed to be clear in the Motive, Value and Response that I bring to the table. I also learned that I may need to shrink to grow. Pinpoint my servicing so that I can be more effective. From the graduates and their parents I realized that there are always two ways to perceive what is down the road. I also learned that I need to not worry so much about what is down that road so that I do not miss what is here right now. I can be eager and confident to walk in the world today and be comfortable with where I am at. The beauty of life is enjoying what we have not we are absent. As you see here I am blessed with a beautiful life partner and if you are reading this I have been blessed with Readers like you and clients, and associates that have touched my life greatly.

Thank you all.

All Aboard the Rate Train: Destination Unknown

Are you out there buying a home and your Mortgage Broker is telling you all different rates. Rates varying from 4.875% up to 6% and then back down. I would understand if this type of variation would cause you a little concern and may even cause you to say is this person trying to take me?  The answer is very simple: The market is unstable and has been a rate train without a distinct direction.

Items like oil prices rising 40 + days in a row and job losses appearing to slow down leading to expectations of consumer spending increasing. The largest overlooked factor is the rampant printing of money done by the government. Simple supply and demand here. Increase money supply decrease in the demand. This is especially true from the foreign investor market which is invested heavily in bonds. As the value of the dollar decreases and the other factors increase Inflation becomes a concern. Inflation by definition erodes the value of a fixed income investment ie: bonds.

The Cause: Massive pulling out of the bond market and major sell-off. This is what lead to the sudden hike in the interest rates. That hike scared many of our buyers right out of the market. This is a problem in itself. If buyers vacate the market we will end up with an entirely different problem. We have to have buyers and sales and the inventory is down now but there are many homes in the wing. The banks are releasing these slowly. If they continue to increase the inventory and buyers leave the market oversupply would become an issue. They will not allow this to happen or so I hope. We have already seen them come back down a bit from where they shot too.

Bottom Line: If you are riding the rate train or you are house shopping talk to you lender and ask them to give you a worst case payment. Base what you are shopping for off your worst case pricing. If they go back down get excited and if they stay there you are prepared. Keep in mind that the median home sale in Sacramento County is at 2002 levels. The rates in 2002 were in the high 6% all the way to the mid 7% range. Historically the average fixed rate last time I checked was in the 8% range. Rates have been as high as 18-19% in some cases and homes were still bought. The next time you hear yourself say that is a high rate I urge you to ask yourself  “Compared to What?”

Remember Field Day? What I learned while volunteering.

Today was field day for my daughter’s school. She asked that I be there to help with one of the stations. I can never resist the look in her eye when she asks. So I agreed not knowing what I might get myself into. The alarm goes off this morning at 5am and I am excited for what the day has in store. My daughter is woken up by her little brother so her excitement was definitely subdued. In fact she was super grumpy this morning. When the fog wore off and she caught fire she said to me Daddy, ” Are you ready to go?”

We jammed out to the car and we headed to the gas station to fill up on the way to school. My daughter being the worrier that she is says again, “Daddy can we talk about the rules for a minute?” “Sure,” I said ” What might the rules be?”

1. Don’t embarrass me?
2. Don’t embarrass yourself
3. Have Fun
4. Be silly but not to silly
5. Know who you are and who you represent

After I was firmly told what the rules would be and how I was to follow them I said to her that they sounded simple enough. I would do my best to follow them and if she notices anything I asked that she kindly let me know but not in front of everyone. We signed the pact just as we were arriving to the school.

The stage at the school was set. The parents had their coffee and the kids had a bag full of excitement.

Time to Check In: I was instructed to go to the cafeteria and check in to find out my assignment. The gossip and the chatter was amazing. All of the parents that I normally see volunteering and more. Many of them carried the look of worry all over their face, stress, excitement, inconvenience, contentment, sleep deprived, and all the other emotions we see on adults each day. As I stepped up to the table I said, “I am Matt Freeman where am I to be placed today?” Quickly I was told that I would be manning the bean bag toss. I was pointed to my materials and shown the map on where to go. I walked over and grabbed my materials and walked with confidence over to my site.

First Lesson of the Day: When we are provided direction and commands for something as simple as my job and my station we follow without hesitation. I walked with confidence. I then asked myself why it was so easy to follow the commands of a volunteer at the school and so difficult to follow the commands I have chosen to live by. Do I complicate things by getting in the way? Our own intellect is many times my own worst nightmare. I try to control the outcome and I am not in charge. The command was “follow me.”

Once I got to the site I set up the station. Clear direction: Divide the kids into two groups of ten and have them toss the bags into the holes. They can keep score by teams or they can keep their individual score. I was paired with two mothers from other children at the school. They were pleasure to be around and overall seemed to be happy to be there. The whistle blows and time for the first group.

My daughter was in the first group so I made sure to follow the rules that I was bound by. I might have embarrased her a little because I was acting silly but I know that later when her friends said that I was cool she had a smil;e in her eyes. The first group stepped up and nailed the tosses. Attempt after attempt. Many times they missed but that did not stop them from trying again. Each time that we stepped up the challenge they were game. They never backed away from the challenge and they approached each with a smile on their face.

Second Lesson of the Day: There are going to be many challenges in life that we are presented. Each one may be harder then the next. We cannot tire and we cannot be afraid to accept a perceived challenge. When we do not accomplish it on the first attempt we are to try again. They were Joyful about what field day had brought them. Opportunity to grow with each failure and to be humble in our success. There were many that never made a shot but they kept throwing. There were some that made every shot and they never were boastful. They high fived each other as brothers and sisters and supported each other until the end. At times their critiquing may have seemed harsh but it was honest and necessary.

Summary: I am so happy that I followed my heart and volunteered. Had I not went I would have been to busy buried in my work to notice the things that I have to learn and be reminded of. So next time that you are invited to go to a field day or similar event turn the phone off, roll up the sleeves and enjoy yourself. Just remember Rule #5 “Know who you are and who you represent.”

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