According to the National Association of Realtors’ latest Realtors Confidence Index, 61% of first-time homebuyers purchased their homes with down payments below 6% from October 2016 through November 2017.
Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.
Zillow Senior Economist Aaron Terrazas’ recent comments shed light on why buyer demand has remained strong,
“Looking into 2018, rent is expected to continue gaining. More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.
If you are one of the many first-time buyers who is not sure if you would qualify for a low-down payment mortgage, consult a local real estate professional who can set you on your path to homeownership!
Today a client called me and told me that he and his wife have been on the fence about refinancing for a while but they have been receiving so much mail about reducing their monthly payment that they finally started looking into it. They are afraid of making a move that will mess up the sweet situation they currently have with built up equity and a comfortable lifestyle! Here’s my email to my clients, hopefully it can help you too!
I was speaking with Joe earlier about how refinancing works.
It’s very simple and goes something like this:
How it works:
You get a new loan from a bank to pay off an existing loan.
The REASON people refinance is for many reasons but here are the most common:
1. Lower your monthly payment
2. Pull equity out of their home
3. Shorter time frame to pay back loan (15 years, 20 years, 30 years)
4. Attain different loan terms
You want to reduce your monthly payment.
You would replace your current loan (approximately $190,000) with a new loan with a lower rate. If your current rate is 4.75% then because of the state of interest rates in today’s market, you should be able to replace it with a loan that has a lower rate, therefore reducing your monthly mortgage payment.
There are different types of institutions that give out refinance loans.
1. Large Direct Lenders (Wells Fargo, Chase, Bank of America, Credit Unions)
2. Broker’s (they don’t give you the money directly, they find you a bank that will.)
3. Private Direct Lenders (they give you the money directly and only handle loans).
What type of institution is the best for you?
I would say in your scenario, where you’d like to reduce your payment, but don’t have any time frames to abide by (you’re not in a hurry), you should go with the lender that will give you the best rate (they are pretty similar) but most importantly has the least amount of fee’s since fee’s tend to kill profits, especially in refinances.
A Warning: When you refinance, you can chose how many years you have to payoff the entire balance. If you currently have a 30 year loan and you are 7 years into it, that means in 23 years, you’ll have the loan paid off.
If you replace your current loan with a new 30 year loan, it’s going to take you another 30 years to pay this loan off. However, you have the option to chose a loan with a shorter payoff term such as 15 years. Some of these shorter term loans even offer lower rates.
The best bet is to speak with the loan officer about the different options they have for refinancing.
Again, since I would say that your priority is getting a low rate and low fee’s, I recommend that you speak with a Large Direct Lender. They can provide a refinance with low fee’s.
Best of luck and let me know if you need anything else!
“It’s December 31st and we in Miami just meditating, you got your resolutions, we just got reservations.” This Drake line, in my mind was very clever but it didn’t resonate with me until years later.
I was like most people always quick to make New Year’s resolutions during the last days of December and like most people, I’d give up on them by mid January– or worse, forget what I had pledged to do that upcoming year! Looking back over the past few years it dawned on me that I haven’t committed to a New Year’s resolution as I used to try to do in years past. As I searched my mind to make sense as to why not, I quickly found the answer. (DON’T STOP reading, I promise I’ll help assuage the guilt you may carry from previous failed attempts at improving your life!)
Years ago I found my why. You may be asking yourself “what does he mean by that?”, my answer to that is summed up in the word purpose, but not in a specific manner but rather in a general sense. Years ago when I figured out my purpose in this crazy journey we call life, it allowed me to stifle all the noise that I used to have in my life and really have clarity that I’ve never experienced before. With this new found clarity it was no longer necessary to come up with yearly goals because I knew what my life‘s purpose was. Looking back, I’m assuming Drake knew his purpose when he wrote the above mentioned lyrics, therefore there was no reason to write a New Years resolution.
How do you find your why? That’s an animal in and of itself and maybe we can touch on it in a future letter, but I’ll share with you what it’s allowed me to do and how you can do the same, if your purpose is similar to mine. My purpose, plain and simple, is to help others. Whether that means helping just one person or a thousand people it doesn’t matter.
If I could, I’d prefer to help many people. I look around and most of the people that have or are touching the lives of others in a positive way are wealthy and many are setting up their bloodline to have generational wealth for generations to come. Many policymakers have inherited wealth that has trickled down generation after generation.
Lucky for me, I’m in a unique position that has allowed me the experience and exposure of witnessing how other people have created wealth–lots of it! This is the reason why I rhapsodize about real estate so often 🙂 How much is a lot? A couple of people I know have accumulated over $100 million in wealth through real estate! Sound amazing? Probably, because it is! One of these wealthy people in particular taught me a good lesson. At first I thought to myself “so what if this guy is Rich, what’s the big deal?!” But then I took a closer look and saw how he was helping others with his wealth.
This particular person has thousands of tenants. How is he fulfilling his WHY? Well he’s helping the world like this:
He’s providing affordable apartments to those who need it
He’s providing people with jobs they need, landscapers, property managers, handyman, contractors, book keepers, accountants, realtors, escrow officers, lenders, and the list goes on and on
With his clout he can now impact policies that affect other people
These are just a few examples on how he helps others. Now his children, grandchildren, great-great grandchildren don’t have to worry about money therefore they can focus on other things like educating themselves and helping others (if it is in their heart to do so.)
I think most people want to make moves and invest in real estate but something always holds them back: too expensive, payment too high, down payment too steep, I have a car payment, I have other priorities, a.k.a. noise!
For me personally, I figured out my why several years ago so there is zero noise. My focus and the focus of agents at my office is to create generational wealth for others and ourselves. Knowing my WHY gets me out of bed early in the morning and energizes me on those dreaded Mondays! Knowing your WHY will energize and inspire you too!
So again 2018 is here, are you still making New Year’s resolutions or will you make reservations for you and your loved ones?
Problem – There’s a lot of buyers in San Diego right now and there is very little inventory. We’re at record lows as far as homes for sale which means “it’s hard out here for a buyer” (I took that line from Hustle & Flow)! What can you as a buyer do to increase your odds of getting your offer accepted over and above all other buyers?
Well lucky for you, I figured this answer out years ago after much experience in losing the perfect deal…I buckled down and got serious about figuring out the formula which would allow a buyer get the home, every single time! Remember, each one of these items is powerful alone but if you combine them, you will have a huge advantage over your competition! Enjoy!
1. Love Letter – Write a letter to the seller introducing who you are and why they should sell to you! This should have a nice photo of you and/or your family or whatever is important to you. This also emotionally involves the seller!
2. Put a high EMD! – Don’t go cheap on your deposit, put it at whatever you can stomach or afford. This tells the owner that you are one serious buyer! Use some Caution here, as you or your agent should know the contract like the back of your hand in order to avoid any situations where you would lose your deposit!
3. Shorten Your Time Frames – This includes shortening the time you need to conduct your home inspection, appraisal, figuring out your loan and of course closing (if preferred by seller). This is where you can win over the seller without paying top dollar.
4. Who Your Lender is Matters! – This is crucial! Make sure that your lender can fund quickly and that they completely “Underwrite” You! This will allow you to close quickly, accommodate the seller, remove contingencies early (#3) and give the seller the peace of mind that you are the right buyer for their place!
5. Guarantee! – What type of penalty or Guarantee are you attaching to your offer? Are you putting your money where your mouth is? If not, you should rethink this strategy! The more you can convince the seller that you won’t lolligag, the better off you’ll be!
6. How to present your offer? Online VS in Person – Let’s be real, 99.9% of all offers are either emailed or faxed to the seller. If you show up in person, rather then email your offer like everyone else, you have a HUGE advantage!!!
7. Sell Yourself! – When ever the chance presents itself, SELL, SELL, and SELL some more! Let them know you are the perfect buyer for this home and that you will perform! This goes a long way and some sellers chose re-assurance over price!
A real estate agent asks me “what’s an easement?” I thought to myself, that if someone that’s been in real estate for 1 year and doesn’t know, what’s the chance of a home owner or home buyer knowing? Well let’s discuss it…Simply put, an easement is the right someone has to someone else’s real property.
Picture 9 tiny squares inside of one big square…if you’re picturing it correctly, picture the lonely square in the middle. Let’s pretend each of those 9 squares has a home on it except for the middle square, let’s also pretend that the middle square is just a vacant piece of land. Now, stay with me because I’m going somewhere with this.
One day I got a call from an owner that owned a piece of land that was “landlocked” because like our example, there were 8 homes around his land. Why was he landlocked? Well because he didn’t have an “easement” to his property. When he asked me what I thought about his lands worth, I told him “I don’t think much”. Basically his land was worthless due to the fact that he could never build on it because he couldn’t access it.
So do all homeowners have easements? The blanket answer is yes, most properties have easements recorded on the title of the property. For example, a popular one is one favoring the utility companies. SDGE for example, they need a right to enter your property to check their meters and run their lines, that’s an easement.
Going back to my example with Bob the owner, what could he have done? He could have gone to one of his neighbors and begged to grant him an easement, if that failed then Bob should have tried negotiating with his neighbors by offering them some money in exchange for an easement.
BE AWARE!!! You can non-intentionally give someone an easement without wanting to. There’s something called an easement by prescription. This is when someone uses a piece of your land for a period of 5 years or more time and time again. If you allow your neighbor to walk through a piece of your yard to get to the alley, then by you not putting a stop to it over a 5 year period of time, your actually giving them whether you know it or not, an easement! Be careful out there and best of luck!
So this is the deal, I’ve received calls throughout the years from potential home buyers that want to buy a home because they heard of a juicy home buying and wealth building secret… A Seller Carry-Back AKA Seller Financing. The concept is simple… Most home buyers borrow money from their bank (loan) in order to buy a home, with that loan the seller is paid off and the bank becomes the “note holder” and places a lien against the property to secure their position. With a seller carry-back, the seller becomes the note holder and places a lien against the property. So the reason I’m writing this is because a few days ago, my client that is selling his condo called me and said, “Voltaire, I want to carry paper!”. This was music to my ears! Why? Well because there are many benefits to a seller carry back:
No Qualifying – no credit check, no job, nothing!
No Loan Fee’s – the sellers typically don’t charge the buyer like a bank would!
Quick Closing – The seller most times can close quickly since there is no waiting on 3rd parties!
Earn Interest on Your Equity – instead of cashing out now, you leave your money as a lien against the home and you earn interest!
Monthly Income – you have the income coming in monthly
Taxes – if you owe capital gains, you owe it over time and not all at once
Protection – You have a lien against the property and can foreclose if payments are missed
Seller finds a buyer
Buyer and seller agree to purchase price, length of term, interest rate, down payment.
Buyer and seller open escrow and fill out documents
Buyer conducts their inspections
Buyer brings in down payment and closes on deal
Buyer begins making monthly payments to seller.
Condo Price: $180,000
Down Payment: 20% = $36,000
Term: 30 Years
Checkout the YouTube Video I created that explains it in detail! Good Home Shopping!