The Home Buying University Series by Kevin Fritz with Iron Point Mortgage is designed to be informational and educational for the home buyer as well as Real Estate Agents. This series will cover everything from researching neighborhoods to understanding what it means to source the cash in your bank account in the loan process. If you have a question that is not covered in this series, please feel free to leave a comment and we will try to answer any and all questions. Thank you for watching this series and feel free to share with friends, family and clients.

5 Things the Seller Should Never Say

5 Things the Seller Should Never Say

Are you selling your house to move up into that dream home with more space and all the wonderful upgrades? It can be an anxious feeling, an unsettling feeling, not knowing how soon it will sell or where you will be next. It’s imperative that we put our home’s best face forward so its decluttered and looks perfect. Well, it’s also imperative to be smart about what we say and how we present our home’s condition.

Don’t Spill the Beans

When selling your home, there are certain things you should never say to you potential buyers! The last thing you want to do, is to alarm a buyer as to problems with the home, or to put expensive fixes into their head. Plus, you don’t want to create a potential liability by unknowingly give misleading or false information. This is one area where your Real Estate Agent is a great asset. Most folks that hire an agent never see or talk to the potential buyers, the agent does that! And your agent will advise you on what you must disclose per the law, and what you should disclose that may be found in the home inspection anyway.

What Not to Say

So, let’s talk about 5 things you should never say to people who come over to view the home:

  1. “We’ve always wanted to renovate that…” stop right there! Don’t indicate you are leaving because it’s cheaper than doing the renovations or moving a wall. This can make a buyer think there will be significant costs involved in making the home theirs.
  2. “This home is in perfect condition.” In your eyes, it may seem perfect, but the home inspection could reveal otherwise, so be careful about making claims that may not be true.
  3. “We’ve never had a problem with that…” You could set yourself up for potential liability on a problem you may not even be aware of, and it could translate into more than just an embarrassing moment upon inspection. So be truthful about what you know and admit what you don’t know.
  4. “We just need to sell, as it’s been on the market for X” No, no, no… This info is available on the home’s information sheet, and bringing it up can give sellers the wrong message. Either it’s a white elephant no one wants, or they may think they can get it dirt cheap.
  5. “We spent a ton of money on that…” The buyer doesn’t really care whether you spent $10,000 or $100,000 on upgrading your kitchen, they will only offer what they feel the home is worth. It may sound like you are trying too hard or are desperate to sell.

It’s No Longer Your Home

When you make the decision to sell, for whatever reason, your home is no longer YOUR home, it’s an asset you are selling. And, I’m sure you want top dollar. We all get it! Before selling, you go through the process of getting your home ready by decluttering, removing personal pictures and all the extras that make it your home. This helps take the emotion out of the transaction. So, this is the time to be realistic and open to offers within a reasonable range. Before you sell, be sure to get preapproved if you plan to purchase another home. Give us a call to get the process started so you are prepared with a strong offer when the time comes. Remember, the market in Sacramento, Placer and El Dorado Counties is hot right now, so be ready to go all in when you find that home you love.

FHA 203K Home Loan

FHA 203K Home Loan Folsom & Sacramento, CA

The FHA rehab loan program, otherwise known as the 203(K), has been requested more and more by our clients, so I think it’s a good time to talk about it here. The 203(K) is broken into two programs, the Streamline and the Full. This loan program can work with FHA or Conventional home loans. The streamline permits work up to approximately $35,000 including the contingency holdback, and the Full permits more extensive work over $35,000. One thing to note is that this programs is not for any work the FHA deems as a luxury item, such as a pool.

203(K) Streamline Loan

Let’s just talk about the 203(K) Streamline. The Streamline permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade the home they want to purchase or refinance. The Full 203(K) can go much higher than the streamline. Now, this includes work such as a roof, carpet, kitchen, bathroom, paint, downspouts etc. It’s a pretty extensive list of repairs and upgrades, and you can really improve the value of the home. The actual loan amount is based on the projected value of the home with the repairs and upgrades. Which may mean you walk in with more equity than if you bought a move in ready home. This program may not be used to do major structural work such as adding a room, moving a load-bearing wall or for projects that that will take over 6 months to complete.

203(K) For Homeowners

Are you not sure if you should Move or Improve? If you own a home that needs updating or repairs, you may be able to use a 203(K) Refinance to either make property repairs and improvements, or prepare your home for sale. It’s a great way to make your home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet. Plus, you have a better chance of getting top dollar for your home when you go to sell, as well as, potentially, a quicker sale when its move in ready! This type of loan product can also help you increase your equity faster. You won’t know unless you check it out.

203(K) History

The mortgage must be a first lien on a one-to-four unit owner-occupied dwelling. Over the years, lenders have successfully used the FHA 203(K) loan program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. This program was critical to municipalities that needed to revitalize neighborhoods and reclaim them as desirable areas to live. This revitalization is also good for the homeowners in the area, that felt helpless as their neighborhoods fell into disrepair, taking their home values down with them.

Everything Good Takes Time

As a loan product, it takes a little extra time and work for all, but this program can be very useful for homebuyers that are interested in a property that needs a little TLC. Buying a property that needs work means you may often get it at a lower price so you aren’t paying for someone else to do the renovations. As a result…instant equity!

The Real Truth About Rent vs Buy

The Real Truth About Rent vs Buying in Sacramento, CA

In the United States, there is somewhere around $13.1 trillion in total value of the equity held by over 75 million U.S. homeowners, according to the latest estimates from the Federal Reserve Board. And that works out to almost $175,000 per owning household. This is undeniable proof that homeownership is a crucial part of household wealth. In large part, because purchasers were able to put a good chunk of money down on a house, and to qualify for a mortgage. Paying for a mortgage actually helps produce more wealth, by freezing payment amounts and building equity through forced savings over the life of the loan.

A Mortgage is a Beautiful Thing

Having an option for a 30-year amortized, fixed-rate mortgage is a beautiful thing, providing an affordable route to purchasing a home while locking in today’s cost of that home for the life of the loan. The traditional rent versus buy argument compares the total monthly costs of buying a home with a mortgage with the corresponding rent. Although, that doesn’t take into account the equity that is built over time with a 15-year or 30-year Fixed Rate Mortgage. That simplistic  look at the dollar for dollar expenditure on a monthly basis, hides the fact that a mortgage is unlike a rent check. It’s really comparing apples and oranges, as they say!

A percentage of every monthly mortgage payment, after the interest is paid, goes toward the owner’s home equity. And over time, less of the mortgage payments go toward interest and more go toward equity, so the savings power is enhanced over the life of the loan. Whereas, if you continued to pay rent over the same 30 years, you end up with no asset and no equity at the end.  Even if the house only keeps pace with inflation over 30 years, which is a very conservative assumption, the forced savings built into a mortgage guarantees a homeowner is building wealth.

Building Equity in Your Sacramento Home

So it’s not just about the equalization of the monthly outlay of funds, it’s also the tax benefits, the principal paydown, and building equity. Just owning a home in the right neighborhood, that increases in value can build equity. Next, it’s what you can do with that equity… the smartest uses of equity are to put money back into your asset, your home, by keeping it maintained and upgraded, or to keep your debt at a low interest rate such as using it to pay for a kid’s college.

Now, that is the real truth about the power of homeownership over renting.

The Sacramento area, including Placer County, El Dorado County, and Yolo County is number 4 in the top Hottest Housing Markets in the nation, so now is a great time to buy or sell. So, check out the Home Buying University on the Resource Page to help you get started building wealth! Have a great week.

Why Attend Open Houses in Sacramento

Why Attend Open Houses in Your Neighborhood?

Is your neighbor’s home for sale? I bet you are curious and want to go look as soon as they have their first open house, right? It’s a good idea, even if you aren’t buying or thinking of selling because it can be a wealth of information you may need to gauge your own interest.

A Good Agent Welcomes Visitors

Real Estate Agents know that not everyone who attends open houses are looking to buy. Having the neighbors come check out the house can be a great advantage for the agents, as it gets everyone invested in selling the home next door. In addition, many times the neighbors provide a lot of insight as to what they love about the area.

4 Reasons to Check Out Open Houses

Here are 4 opportunities that open houses present if you put on the brakes when you see an open house sign and stop in.

  1. Get the listing agent’s perspective. You check out the open house to not only see what is for sale and the price of comparable homes but also to learn about the local housing market. Talk to the listing agent. Pick their brain about the inventory available, affordability, and home values in the area.
  2. Check out design current trends. Getting your home ready to sell isn’t always a quick task. Sellers generally want to have their house perfect so they can demand the highest price possible. So, they may do a few upgrades to make it more desirable and therefore, sellable. Even if you aren’t considering selling at the moment, you might get design inspirations to make your home feel like new again, and keep it current. There is a point when you have to make a decision to Move or Improve.
  3. Get referrals. If they did upgrades or staging, you can check out the quality of the work. Although getting referrals from friends and family is always a great idea, seeing the finished product at an open house can provide you with a sneak peak as to the quality of work they would do for you. If you are impressed, you can ask the listing agent to get the contractor’s information from the Sellers.
  4. Food for thought. For those of us that are dedicated house hunters, always browsing the listing sites, attending open houses may just fuel that need. Plus, keeping abreast of the market in your area and the home values just might give you the information you need to pull the trigger on getting into homeownership or reselling your home to move up.

Most realtors won’t mind you coming through the open house, even if you aren’t looking to buy. You just never know when you may get inspiration to do some upgrades, redecorate, or even to list your home. Well that’s my tip for this week. Give me a call if I can help with a consultation for a preapproval or refinance to use the equity for those upgrades. Have a great day.

Flipping is on the rise in Sacramento

House Flipping is on the rise in Sacramento

Do you watch the TV shows like Fixer Upper Starring Chip and Joanna Gaines? Or Flip or Flop? What about House Hunters Renovation? These TV shows make it look easy, but they also come across a lot of “unknown” issues that can be costly. I know a local real estate agent that actually is like having our own Property Brothers type transactions here in Folsom, CA.

Flipping is Making a Comeback!

The trend of buying a fixer-upper is making a return to real estate markets. More than 6% of home sales last year were “flips”, according to a new report from Trulia. That’s the highest number in 10 years, before the real estate bubble burst and the financial crisis of 2008. When the economists see flipping reach ten-year highs, they start to get a bit concerned about another bubble and crash.

Although, this time is different more flips are value-added improvements that investors are making to the home, rather than speculative flips. Plus, home prices are steadily rising. The price increases in 2016 were the quickest in about 3 to 4 years which gives flippers a possible layer of protection. Flips of lower priced homes can contribute to the first-time home buyer inventory, alleviating some of that availability while managing affordability.

Flipping High-End Homes

Although, most of the flipping reported is among luxury properties that have aged out of style, but if brought current, can demand higher prices. Many of these properties were foreclosed on during the housing crash as folks were in over their head with properties they couldn’t afford. Bringing these properties up to date to be put back on the market is a higher risk than the median price range home. The luxury market has a higher inventory level, therefore the potential for the home to sit on the market for longer is likely. If you are flipping luxury homes, you have to be prepared for the time it may take to sell.

Flipping Has Risks

Flipping can be a risky business. If you are getting into flipping homes, do your due diligence. Get a thorough home inspection, pest inspection, and perhaps, even a constructional engineer to investigate the property. The big ticket items you may not see nor show up in an inspection, can take all of the profits out of that flip. Foundation issues, electrical problems, mold, plumbing, roof leaks, etc… all could potentially eat up your expected profits. The whole idea of flipping real estate is to make a quick profit. It’s called speculation, but in this environment of low housing inventory, the flippers are contributing to the demand.

Build Long Term Wealth Through Real Estate

Real estate is a good way to build long term wealth. Flipping can bring immediate payoffs but it is a much larger risk for those that don’t know what they are doing. There are local folks here in Sacramento, Folsom and the local area, that can be used as a resource, so if you need a referral for advice, give us a call.

Kids Born in 2017 Will Never Know

12 Things Kids Born in 2017 Will Never Know

On my Facebook news feed, I often see friends welcoming the new baby into the family. A monthly profile picture of the growing baby bump the mom’s like to post. Grandparents beaming with great pictures of new little ones they get to spoil, with probably more zest than when they had their kids!

Our Lives Are So Transparent Today

In this social media age, we get a glance as we scroll through our news feed, into so many peoples’ lives as they navigate adulthood. Many of my friends in Folsom and Roseville, CA, have kids graduating college that I knew when they were welcomed into this fast-paced world! Two of my three boys are already taller than I am, in high school and already pretty independent. I know it is trite to say, they grow up so fast, but it is true. I always get a kick out of them when I talk about something from the past and they have no clue. They call me “old school” for having a land line on my desk at work! Oh boy, so many things have changed and so many more will change!

The Top 12 Things They Will Never Know

Well, this all got me smiling inside this morning. Watching a new generation being born made me think of all the things kids born this year will never know. So I compiled a fun, tongue-in-cheek, list for thought…

  1. Landline phones
  2. How to spell and write in cursive
  3. What a fax machine is
  4. Dial up connections
  5. TV with rabbit ears and dial
  6. How to read a map
  7. Circus elephants
  8. Reading a newspaper in the morning (or the newspaper funnies)
  9. How to write a paper check
  10. The # (hashtag) is really the pound sign
  11. Talking to the people you are sitting with at dinner
  12. David Bowie, Prince and George Michael

More Thoughts to Ponder…

  • If they don’t teach cursive writing in elementary any more, how will they learn to sign their name?
  • What ever happened to Saturday morning cartoons?
  • Now they have 24/7 cartoon networks but do they still have Bugs Bunny or the Roadrunner?
  • What about singing 100 bottles of beer on the wall in the car to pass time (and drive your parents crazy)?

Past, Present, and Future…

  • What other things will be distant memories when the babies of today start coming of age?
  • What memories has your parents shared that are long gone?
  • What would you like to see come back?
  • What gadget to you foresee replacing a common tool of today?

Is the American Dream still alive?

According to the experts out there, this new Generation Z, 8-18 now, will have a strong sense of the American Dream and will aggressively go after it. That is great news, as the generations ahead of the, like Gen Y and Millennials, have suffered from debt, preventing them from building wealth through real estate. They are just now getting into the game, with the FHA low down payment options. Owning a home is our single biggest asset for most of us. Before you buy, check out my tips on 8 Things to do Before You Purchase. The Sacramento Housing Market is still an affordable area to purchase and an awesome market to sell to move up into that forever home!

Share your memories and predictions in comments below or on our Facebook page. Well that’s my deep thought for this week. Give me a call if I can help with a consultation for a preapproval or refinance to use the equity for those upgrades. Have a great day.

Redfin’s 2017 Housing Predictions

Redfin’s 2017 Housing Predictions with New Administration

The Redfin leaders predict what the 2017 housing market will look like, under a new president, administration, and policies.  The Trump administration touts three major policies that could significantly the U.S. real estate market: infrastructure spending, tax cuts and changes to immigration policy.

Recently, action was taken to deregulate the CFPB, or mortgage industry. But, as these policies take shape, they will primarily affect new construction and mortgage rates. They still see strong buyer interest, with more access to credit and a slight increase in inventory, yet home prices will continue to rise at a steady, controlled pace.

Here are 5 of their predictions:

  1. The housing market will continue to grow at a slower pace. Baby boomers will be less relevant as the largest generation of Americans, referred to as Millennials, will continue to become of home-buying age. It’s hard to believe they outnumber the Baby Boomers! The strength of sales by area, will depend on the inventory of starter homes, that will meet the demand from millennial homebuyers. In the Sacramento area housing market, construction is abundant on the South 50 corridors, along with areas of Roseville, Auburn, Elk Grove, Granite Bay, and Rancho Cordova.
  2. 2017 will be the fastest real estate market on record. In 2016, nationally, the typical home stayed on the market 52 days, which is the fastest market since they have been tracking this data. In the Sacramento Housing Market, the median time on the market in December was just 22 days, and in some areas like the Folsom Housing Market, a mere 17 days!
  3. Nationally, new-construction growth will slow due to the lack of workers. Nearly 1 in 4 construction workers are foreign-born, so stricter immigration policies can make the problem worse. This is the number one issue in the Sacramento home construction industry. Their workforce is only at 40% of the pre-housing crash construction boom. This also attributes to the lack of affordable starter homes for first-time buyers.
  4. Mortgage rates will increase slightly, but not too much or too fast. Redfin says no higher than 4.3 percent on the 30-year fixed rate, but we are almost there already. Many experts are predicting the mid to high 4s. Although, there are many factors that can move this needle higher or lower, so this one is truly a “wait and see.” Mortgage rates are tied to Bond Markets, which can heavily be affected domestically and internationally. The history of mortgage rates can be viewed here.
  5. More people will have access to home loans. The government-sponsored mortgage giants Fannie and Freddie will increase the loan limits to $424,100 from $417,000 in most regions of the U.S. Those loans are generally through FHA. You can view the FHA series here. Conventional loans also allow lower interest rates with Private Mortgage Insurance, see the conventional loan product here. With the current efforts to modify Dodd Frank and the CFPB, the qualification requirements could be relaxed. If the HUD effort to decrease the Mortgage Insurance percentage is back on the table, it could have an effect on affordable mortgages.

You can read the entire article on the Redfin website for more of their predictions. The bottom line is “wait and see” what this new administration holds for the mortgage and real estate industry as their policies take shape. Thanks for joining me, feel free to comment, and have a great week.

How to Pick a Mortgage Professional in Sacramento

How to Pick a Mortgage Professional

How to Pick a Mortgage Professional in Folsom, El Dorado Hills and Greater Sacramento

As you know, buying a home can be exciting and hopeful but it can also be emotional. The Mortgage Professional or Loan Officer you select to start the process can be critical. It’s advisable to team up with a Loan Officer in the very beginning, that is local to the greater Sacramento area, whether it is Folsom, Roseville, El Dorado Hills, and so on.

Getting Pre-Approved on a Home Loan in Greater Sacramento

Now, you have the advantage of getting preapproved and knowing just what you can afford. Sometimes, you may have to spend a little time getting your finances in order before you can be pre-approved, and a good Loan Officer can direct you on where to go or what your options are upfront.

Start Shopping for a Home Loan Expert in Sacramento

So, let’s say you are all set, you got preapproved and you know how much you can afford to spend. Great! Now, you can start shopping. You find the home of your dreams and are so excited to make that offer! How does your preapproval help in your home buying experience? Well, honestly, most real estate agents won’t spend a lot of time showing you homes until you are preapproved.

From the Realtor’s perspective, it can waste everyone’s time if you can’t qualify for a loan, or if they are showing you homes you find out later, you can’t afford. It’s also a huge benefit when you finally find that dream home and you go to make an offer.

Your Loan Officer will usually supply you with a preapproval letter for the amount of the offer you intend to make. This shows the seller you should qualify for the loan as long as nothing has changed financially for you. In today’s market, where sellers may be looking at multiple offers, having a strong preapproval can go a long way. A good Loan Officer may also call the listing agent and give them input as to how strong of a borrower you are. Now, you should have a very competitive advantage over other offers.

Now let’s talk about what to look for in a Loan Officer.

First, you want someone you feel like you can trust. Buying a home is a life-changing experience. Next, look for how they communicate…

  • Do you click with them?
  • Do they understand your needs?
  • Are they customer focused?
  • Are they knowledgeable about the Housing Market in your area?
  • Do they work alone or have a team?
  • Do they look for the loan scenario that fits your goals?
  • Do they have access to all of the loan products available?
  • Are they up to date on the guidelines?

Another question to ask yourself is, “If I need Down Payment Assistance, is this Loan Officer able to assist me through that process?”

Selecting a Loan Officer

Selecting a great Loan Officer isn’t like picking your BFF, its more about trust and competency, with a high sense of urgency to get the job done, right, and on time. Every Loan Officer isn’t right for every person. Here at Iron Point Mortgage, in Folsom CA, we have Loan Officers that work with a highly skilled team to get the job done, throughout the Sacramento area. One of them should be the right one for you! Remember, I’m here to help, so give us a call.  Get started right and have a great home buying experience.

HUD Announcement Reduction in Mortgage Insurance

NEWS ALERT: HUD ANNOUNCEMENT REDUCTION IN MORTGAGE INSURANCE

This is great news coming out of Washington! As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro, announced the FHA will reduce the annual premiums new borrowers will pay by half of a percent.  It is projected to save about 2 Million FHA homeowners an average of $900 annually and incite 250,000 new homebuyers to purchase their first home over the next three years.

In the aftermath of the nation’s housing crisis in 2008, the FHA had increased its premium prices in order to stabilize the health of its MI Fund.  Today’s reduction will significantly expand access to mortgage credit for these families and is expected to lower the cost of housing for the approximately 800,000 households who use FHA annually.

FHA’s new annual premium prices are expected to take effect towards the end of the month. FHA will publish a letter detailing its new pricing structure in the days to come.

With mortgage rates increasing slightly, this should help the FHA Home Loan borrower with their monthly payments. The rates are still hovering at half of the average mortgage rate of 8+% over the last 40 years. So, with that perspective, borrowing money to purchase a home continues to be affordable.

If you have any questions regarding this announcement, please feel free to call us. Thanks for watching, and have a great day.

6 Out of Top 10 Hottest Real Estate Markets are in the West

6 Out of Top 10 Hottest Real Estate Markets are in the West – Sacramento is #4!

Top 10 Metro Housing Markets

According to Realtor.com, who predicted a minor slowdown for the U.S. real estate market next year, most of the hottest metro markets are going to keep blazing in 2017. And where do they predict the heat to come from? Well, six out of the top ten hottest markets, are in the west! The western U.S. will continue to lead in prices and sales.

The top 10 in order are:

  1. Phoenix AZ
  2. Los Angeles CA
  3. Boston MA
  4. Sacramento CA
  5. Riverside / Ontario CA
  6. Jacksonville FL
  7. Orlando FL
  8. Raleigh NC
  9. Tucson AZ
  10. Portland OR

These top 10 markets have specific conditions in common

They all benefit from relatively affordable rental prices, low unemployment, and large populations of millennials and baby boomers. They are forecasted to see average price gains of 5.8% and sales growth of 6.3%, exceeding this year’s anticipated national growth of 3.9% and 1.9%, respectively. And while the limited availability of homes for sale continues to be a problem for home buyers, but an advantage to sellers, these markets are seeing growth in new construction that eases the supply shortage somewhat.

Here is the Sacramento valley, we have several areas experiencing high growth. The South 50 corridor from El Dorado Hills west, will start having homes on the market later this year. Rancho Cordova is growing in the Anatolia area and beyond. Elk Grove continues to expand south. Realtor.com actually expanded their list and western cities account for 11 of the top 25 metro markets on our list, including five in California. Again, this is just another source projecting our area to be a hot housing market this year. If you are considering buying or selling to move up, or even downsizing, get started today.

Give us a call, we can help. Thanks for reading my blog and I hope to hear from you soon.