The Real Folsom Blog

Choose Your Mortgage Pro Carefully

Today guest blogger Barbara Van Duyn of First Priority Financial offers us some insights on why it's important to choose a mortgage lender you can trust. As you will see in the story she tells having the wrong mortgage product can hurt you down the line. If you have any questions you can reach Barbara at Barbara@VanDuynGroup.com.

As part of my weekly mortgage market update, I thought you might like to learn from the experience of others who have recently come to me for real estate financing advice. These clients purchased a property in August 2005. They put 20% down and were given an adjustable rate mortgage known as an Option ARM.  You’ve probable heard of them…  they have four payment options. This loan also had a three year pre-payment penalty associated with it. Thankfully the clients have been making the fully amortized principal and interest payment all along so NO deferred interest has been accumulating. But because the loan is not a fixed rate, they have experienced a fluctuation in the monthly payment so they are looking for payment stability with a fixed rate. Initially the clients went back to the lender that had put them in this loan and asked for help. The lender took their loan application, ran their credit, charged a $300 fee and had the property appraised. The bad news… there is no longer sufficient value (or equity) in the property to approve a new loan.  The bank wouldn’t tell them what the appraised value was nor did they share what the client’s credit scores were.  IT’S A BIG SECRET! They were referred to me for a second opinion and here’s the lesson to be learned. I’m going to be blunt: The loan officer put this borrower in a loan that paid the biggest commission.   

* The homeowner had no plans of moving for many years, if at all
* They had great credit and income to afford a fixed-rate loan product
* They trusted that the lender’s representative had their best interest at heart.

I could have saved the clients $300. I did confirm there was insufficient value to move forward with a refinance and also advised what their estimated property value is.  To complicate the matter, there is still one year left on the pre-payment penalty. We are in the process of reviewing the client’s note so they will fully understand how it works. In addition, we are managing their mortgage and will provide them with a property valuation every six months in order to keep them posted about changes in their neighborhood. We will let them know when it makes sense to change their financing based on their objectives. They will also receive a complimentary credit report with results from the three major credit bureaus and advice, if needed, about how to increase their scores. ALL COMPLIMENTARY. Please be careful who you go to for advice and consider getting a referral from someone you trust who was completely satisfied with the service provided by their mortgage professional. 

August Sales Numbers Are In for Folsom

Fresh from my e-mail "box" are the Folsom resale numbers for August. Every month the Sacramento Association of Realtors compiles numbers on single family home resales by zip code, based on multiple listing data from MetroList, our local multiple listing service. Here's how it looked for Folsom last month:

• There were 58 sales, down from 71 sales last month and down from 66 sales for the same period last month.
• The median sales price for August was $439,450--down dramatically from the July median of $475,000 and from August 2006's median price of $502,500.
• The monthly median listing price followed a similar pattern: at $473,950, the August median listing price was down from July ($525,000) and from August 2006's $535,000.
• The monthly listing inventory was up to 130, from last month's 109 and August 2006's 161.

Enjoy the rest of this beautiful day!

Latest Trends in Mortgage Financing

Today guest blogger Barbara Van Duyn of First Priority Financial offers us some insights on what the recent reduction in the Federal Funds rate means for homebuyers.

Last week I told you about the Federal Reserve reducing the Fed Funds Rate from 5.25 % to 4.75%.   Since then, the question I’m hearing most is “when will mortgage rates go down?” The fact is, mortgage rates are based on the supply and demand (or trading) of Mortgage-Backed Securities. When bonds are in demand, interest rates go down and when they are being sold off, interest rates go up.   Bonds don’t like inflation, so as long as the economy continues to grow at its present slow pace, don’t expect any significant changes from current mortgage rates. More GOOD NEWS…if you have a credit line or HELOC that is not fixed but rather tied to Prime, your interest rate will decrease .50% because of the recent decrease in the Fed Funds rate resulting in a lower mortgage payment.

Here are the latest trends in mortgage financing: Based on the current state of mortgage financing one thing is for sure, any of you who are considering a real estate transaction in the next six to 12 months, must to be prepared to meet the higher standards required by lenders in order to qualify.   

1. Most lender have raised their minimum FICO score requirement to 620. 
2. You will have more loan options available AND at a lower interest rate if your FICO score is 720 or above.
3. 100% First Time Home Buyer programs are still available.  A person who was once a homeowner but has not been for the past three years is eligible for these programs. 
4. Unless you are self-employed, be prepared to qualify for a loan based on your actual income. 
5. Interest only loans do still exist but now you will have to qualify based on the fully amortized (principal + interest) payment. 
6. 10 year Fixed Rate “interest only” loan programs amortized over 30 years are available.
7. A full doc loan will generally require cash reserves equal to two months of principal and interest to qualify. If you qualify for a stated loan, you’ll need six months of reserves.   
8. Thinking of buying investment property… if you qualify, there are interest only loan programs that only require 10% down. Gone are the 100% loan programs for investments. 

This is just a sample of the latest financing news.  Although the secondary market has settled down in the past two weeks, lenders will continue to change their loans programs and guidelines to accommodate investors' appetite for buying these securities. So the above information is representative of today. 

Thanks, Barbara! If you have any questions you can reach Barbara at Barbara@VanDuynGroup.com.

What's New in Folsom Real Estate Market

You know me, I like to start the week by taking stock of where the Folsom real estate market is. The following data was collected from MetroList, our local multiple listing service.

Total number of Folsom single family homes currently on the market: 379.

The least expensive home is listed at $255,000.

The highest price home is at $1,579,500.

The median price: $499,000.

The average price: $573,459.

Average days on the market: 66.

And, finally, a quote for the week from Ann Diehl:

I think we're seeing in working mothers a change from "Thank God it's Friday" to "Thank God it's Monday." If any working mother has not experienced that feeling, her children are not adolescent.”

Housing Price Drop Is Looming

Label a home "bank owned" and buyers' eyes start-a-twinkling. A good deal they think. Bargain basement price. Unfortunately that hasn't necessarily been the case since we started experiencing a dramatic increase in homes going into foreclosure. But that may just be about to change. A recent article in the Sacramento Business Journal took a hard look at the impact of bank-owned homes flooding the market in the greater Sacramento area. One of the more interesting points is that the prices of bank-owned homes has been holding stable but that may change very soon. According to the article there were just over 6,000 bank-owned homes in Sac County at the end of August. And, there were just under 10,000 in foreclosure proceedings! You do the math. By the end of the year, we could be seeing a doubling of bank-owned homes on the market, which is expected to force lenders to lower their prices. Good news for buyers, not so good for sellers. Stay tuned, there'll be more to come on this one...

Recent Folsom Home Sales Sept 20

Here are some recent Folsom home sales, as recorded by our local multiple listing service. These properties were listed and sold by various multiple listing service brokers. If you don't see a sale you've been wondering about, drop me a line at annerhea@kw.com and I'll look it up for you.

• 304 Brightstone Cir (3 bedrooms/2.5 baths, 1439 sq feet) sold for $320K at 91.43% of list price.
• 316 Lone Spur Dr (3 bedrooms/2 baths, 1344 sq feet) sold for $370K at 98.67% of list price.
• 908 Rathbone Cir (3 bedrooms/2 baths, 1313 sq feet) sold for $380K at 98.70% of list price.
• 147 Big Valley Rd (4 bedrooms/2.5 baths, 2173 sq feet) sold for $416K at 100% of list price.
• 125 Ballast Way (3 bedrooms/2 baths, 1832 sq feet) sold for $429,9K at 100% of list price.
• 418 Slocum Dr (4 bedrooms/3 baths, 1924 sq feet) sold for $435K at 96.67% of list price.
• 1111 Fong Ct (3 bedrooms/2.5 baths, 1868 sq feet) sold for $449K at 97.82% of list price.
• 7307 Pine Grove Way (3 bedrooms/2 baths, 1644 sq feet) sold for $450K at 101.12% of list price.
• 1525 Thurman Way (3-4 bedrooms/2 baths, 1752 sq feet) sold for $458K at 99.03% of list price.
• 326 Randall Dr  (4 bedrooms/3 baths, 2419 sq feet) sold for $505K at 102.02% of list price.
• 120 Grey Canyon Dr (4 bedrooms/3 baths, 2802 sq feet) sold for $575K at 95.99% of list price.
• 109 Cascade Falls Dr (4 bedrooms/3 baths, 2773 sq feet) sold for $621K at 99.36% of list price.

Make it a great day!

Feds catch us off guard

The Federal Reserve surprised many yesterday with its cut in the federal funds and discount rates. Guest blogger Barbara Van Duyn of First Priority Financial here in Folsom explains what it all means:

The long awaited Fed decision arrived with a bang yesterday!  The Federal Reserve surprised many economists and traders with a half percent cut in both the Fed Funds and Discount Rates. The stock market responded with its best performance in five years. Mortgage bonds enjoyed a sharp 41bp rally which doesn’t make a lot of sense because home loan rates are more closely tied to inflation and it’s not uncommon to see less of a reaction... or even an opposite reaction in mortgage rates. As of this posting, bonds have turn around and are now being pushed down (when bonds go down, mortgage interest rates go up). 

So what does all this mean to you?  Rates on consumer debt, car loans, and home equity lines will all benefit. The Fed cut also hurts rates of return on investments like CD and money market accounts and gives foreign investors
less incentive to invest in U.S. securities. This has sent the Dollar much lower against the currency of most foreign countries and makes foreign goods more expensive for us to buy, which adds to inflation pressures.  Overall, the Fed cut is good news for the economy but may nudge inflation a bit higher.

Traders also like what they heard in the accompanying policy statement.  The Fed provided the following statement as the rational for the cuts yesterday:  “Economic growth was moderate during the first half of the
year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.  Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote growth over time.” Traders took this to mean that the Fed will take whatever steps are necessary in terms of rate cuts to try and prevent a possible recession, so long as inflation remain in check.

Any questions? E-mail Barbara at Barbara@VanDuynGroup.com. Make it a great day!

 

To Condo or Not To Condo in Folsom

We're starting to have some really nice condo communities in Folsom. Whether you are looking to buy your first home or maybe downsizing, condos are worth a look. For buyers determined to buy in Folsom, condos offer an affordable option to single-family residences. Just make sure you consider these facts before you buy:

1. Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.

2. Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.

3. Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

4. Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.

5. Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.

6. Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.

7. Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.

8. Freedom. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

9. Proximity. You’re much closer to your neighbors in a condo or townhome. If possible, try to meet your closest prospective neighbors before making a decision.

Finding the Perfect Folsom Neighborhood

We are fortunate in Folsom because we have so many nice residential neighborhood, all close to good shopping, restaurants, and other services. This is important when you consider most people when they move do so so within a few miles of where they previously lived. So how do you go about finding the neighborhood that best fits your family? It's an important decision.

• Start by making a list of the activities—movies, health club, church—you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engaging in your most common activities.
• If you have kids, check out the schools in the Folsom Cordova School District. The district's web site, www.fcusd.k12.ca.us has plenty of information on scores, etc. Even if you don’t have children, a house in a good school district will be easier to sell in the future.
• Find out how safe the neighborhood is. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type—burglaries, armed robberies—and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?
• Ask a local Realtor or call the local Realtor association to get information about price appreciation trends in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good an investment your home will be. A Realtor or the Folsom planning dept. also may be able to tell you about planned developments or other changes in the neighborhood that might affect value.
• Finally, go see for yourself. Once you’ve narrowed your focus to two or three neighborhoods, go there, and walk around. Are homes tidy and well maintained? Are streets quiet? Pick a warm day if you can and chat with people working or playing outside. Are they friendly? Are their children to play with your family?

Hope this helps...

More Stores in Folsom's Future

Aaaahhh! It's good to be a Folsomite. A couple of weeks ago I talked about some of the news businesses coming to Folsom. One of the exciting new malls is Palladio--a 50-acre project on E. Bidwell at Broadstone Parkway. The mall, next to the future Kaiser Medical Center, will also feature a 16-screen cinema. Here is a list of some potential tenants (none are confirmed yet!):

• California Pizza Kitchen, Sharper Image, Coach, Tommy Bahama, Banana Republic, BCBG, Chico's Ruth's Chris, Victoria Secret, Barnes and Noble, Cache, Areopostale, Abercrombie, Tacone Wraps, The Body Shop, Planet Funk, Go Roma, Orvis, Coldwater Creek, Papyrus, Boudin, Lulu Lemon, Discovery Channel, Jos. A. Bank, Talbot's, Kate Spade, Smith & Hawken, Michael Stars, In Spa, French Bistro, Cole Hahn, Mikuni, Club Monaco, Armadillo Willy's, Yves de Lorne, Levi's, Izod ... and the list goes on.