With low interest rates, refinancing has become a very attractive option for many home owners who could save thousands of dollars on their mortgage interest repayments.

Unfortunately, the savings from refinancing to a lower interest rate are out of grasps for millions of Americans because they do not qualify.  While the more stringent criteria has become prudent in preventing future loans being made to irresponsible borrowers, the banking industry has gone to the opposite extreme by making refinancing available to so very few.

However, Obama’s new $75B ‘Homeowner Affordability & Stability Plan” may provide the refinancing relief many responsible home owners are looking for.  Here are the Main provisions for refinancing under the plan:

1. Have a conforming loan backed by Fannie Mae or Freddie Mac. Approximately 60% of single-family “conforming” loans are backed by these Government controlled mortgage giants. These are the companies that buy the loans from your bank/servicer and then sell them to Wall Street. A conforming loan is one under $417,000 in many areas — or up to $729,500 in certain high-cost areas like the San Francisco Bay Area. Most home owners will have no idea if their loan is “backed” by Fannie or Freddie, but your lender does. So call them and then ask about qualifying under Obama’s housing plan.

2. Your Loan to Value ratio (LTV) can now be as high as 105%. Under the Obama housing plan, the LTV has been raised to 105%, which means you qualify even if you owe between 80-105% of your mortgage. However it you are severely “underwater” and owe more than 105% of their home’s value you will NOT qualify and may have to wait for mortgage relief via other lender driven provisions in the housing plan.

3. Allows borrowers with less than 20% equity in their homes to refinance to the current prevailing rate. However they must meet the above LTV criteria.

4. Timeframe Eligibility. Only Loans that originated on or before January 1, 2009 are eligible for this program. The modification program will be in effect until the end of 2012, but loans can only be adjusted once.

5. Bonus Payments. Borrowers who keep up with their new payments will receive up to $1,000 a year in principal reduction, for up to five years.

6. Modification Threshold. Servicers will follow a specified sequence of steps in order to reduce the monthly payment (with government subsidies) to no more than 31% of gross monthly income (DTI).

If you think you will qualify you should start getting ready to start the refinancing process as soon as possible because there will be a mad rush of applicants. Borrowers should contact their loan servicers to see whether they are eligible for assistance. There is additional information for borrowers to determine their eligibility at http://www.hud.com

To prepare, start gathering the information that you will need to provide to your lender which includes:

- Documentation for income sources, two most recent pay stubs, and most recent tax return, and a signed affidavit of financial hardship.

- Information about any 2nd mortgage on the house. 

- Payments on each of your credit cards if you are carrying balances from month to month

- Payments on other loans such as student loans and car loans

reading the main provisions for refinancing under Obama’s “Homeowner Affordability and Stability Plan”

It’s that time of year again — one less hour of sleep. Don’t forget to move your clocks forward 1 hour Saturday night.  While you are at it, change the batteries in your smoke detectors.

I have been asked by some clients this week whether they should be pre-approved or pre-qualified for a loan.  Furthermore, they are confused about the difference between the two.  So, I have got to believe that if the few people in my sphere are questioning the meaning of these terms, it must be a nation-wide phenomenon, and there are a lot of folks out there that wonder the same. 

As a first step, it is always a good idea to be ‘pre-qualified’ with an experienced lender before you embark upon the tedious mission of house hunting.  It is frustrating to start working with a client that has no idea what they qualify for and then they start looking at those $1M homes, just to find out later that they can only afford a $500K house.  It is a waste to look at real estate without knowing the amount that can brought to the table. 

Pre-qualification is when the lender takes your basic asset, income and debt information and determines how much of a loan you may qualify for.  This is a simple calculation and the amount you qualify for is essentially based on your DTI (or Debt to income ratio).  At this stage of the game, your full credit may (or may not) be pulled.  Even if your full credit is pulled, there is no commitment from the lender that you are ‘pre-approved’ for a loan.

To be taken seriously you need to be ‘pre-approved’.  The borrower receives a pre-approval when the loan officer takes a full mortgage application, pulls credit and determines exact loan amounts and requirements.  At this point, the calculations that got you pre-qualified have been done, but more importantly the loan officer obtains a tentative approval for the loan subject to the borrower fulfilling certain conditions.  Conditions could involve verification of employment, income, assets … etc.  A pre-approval is really the utmost form of approval you can receive short of a full approval.  A major benefit to being pre-approved is that the seller will take you seriously.  Most sellers won’t even consider a buyer without a pre-approval letter. 

It is always smart to get pre-qualified when you begin your search for homes, but it is even better to get pre-approved.  It is the best tool and power that you have as a buyer to determine how much house you can afford.  Moreover, it will let your Realtor know how to help serve you better.

On Thursday, March 7, 2008 Federal officials took another step toward increasing the stability of the mortgage market in high-cost areas of the country like Santa Clara County by announcing new limits for the loans eligible for purchase by Fannie Mae and Freddie Mac.

The revised loan limits were among the goals of the economic stimulus package approved by President Bush last month.

The Office of Federal Housing Enterprise Oversight (OFHEO), which oversees Fannie and Freddie, said Thursday that the “conforming loan limit” will be increased from $417,000 to $729,750 in most Bay Area counties. They include Santa Clara, San Mateo, Alameda, Contra Costa, San Francisco, Marin and Napa counties. That new limit also applies in Santa Cruz, San Benito and Monterey counties.

The U.S. Department of Housing and Urban Development announced that the limit on loans backed by the Federal Housing Administration also would rise to $729,750 in those counties.

Both measures are intended to help increase home sales in high-cost parts of the country, where buyers typically use “jumbo” loans – those for more than $417,000, which are not guaranteed by Fannie Mae and Freddie Mac.

Local mortgage professionals say they still don’t know exactly when they will be able to fund loans at the new limits, and what the interest rates will be. Details are still being worked out among government agencies and lenders.

Fannie Mae and Freddie Mac buy bundles of mortgages from the lenders, then package them into securities that are sold to investors on Wall Street. Allowing Fannie and Freddie to securitize jumbo loans will bring down their rates, legislators hope.

2007 Santa Clara County Academic Performance Index (API)Scores are available to the public and it is a determining factor in a lot of cases as to where families are moving. These API scores are driving the Silicon Valley Real Estate prices up in the higher scoring schools. Cupertino Union School district is red hot with not a lot of inventory to choose from and the properties that are available, are priced really high. Los Altos, Palo Alto and Los Gatos school districts are seconds behind.

In this housing market, those areas with the highest ranking get higher offers on their homes, and even multiple offers.

http://api.cde.ca.gov

This is cool!!http://www.mercurynewsphoto.com/blog/2007/11/16/where-we-live-5/

Hi and welcome to my blog!  I started this Blog as a means to inform people about the communities within Santa Clara County, focusing on Willow Glen as it is my specialty area.  As a Realtor I thought that it would be fun and different to write about things to do in ‘the Glen’ rather than focus on the technicalities of the Real Estate Market. I am very involved in my community, and take great pride in my neighborhood.

I grew up in Willow Glen, went to college at Santa Clara University, and I am proud to say that I still live here in Willow Glen.   I am very friendly, caring and easy to work with.  I love to work with first time home buyers and I get very excited about working with people from out of the area that want to move to my town.  I am very knowledgeable about San Jose and the surrounding areas and I’m very good at finding homes for my clients that fit their personality and requirements.

So … now that I’ve tooted my own horn a few times, I would like you to know what you can get out of my site.  I will blog a considerable amount about Santa Clara County:  What to do, Where to go, Where to eat, community statistics, housing market, kid friendly spots, pet friendly spots, reviews of stores, restaurants and services, just to name a few.  I hope that you will find my information useful and continue to visit often to get great information about the Bay Area.  Sit back, relax, read and feel free to add your comments.

Oh … and one more thing … if you need a Realtor that you can trust and is great to work with, I would be delighted to work with you.