Farrells $100.00 FREE Gift Card Drawing

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gift-card-500x500Farrells Ice Cream Parlour in Downtown Brea has become one of city’s best lunch and dinner establishments. Their fantastic food, ice cream, and friendly service has gained rapid notoriety and fans throughout North Orange county. As part of my “give back to the community” promotions, I’m having a June/July drawing for a FREE $100.00 Farrells gift card. Winner will be chosen July 17th, 2015. Complete the form below, and your entry will be confirmed via email. One entry per household. All participants will be notified of winner via email. Good luck!

$100.00 Farrells Gift Card Drawing

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Bidding Wars; Legacy of the housing bubble that won’t go away

Bidding warsThe housing bubble brought bidding wars — wars over $500,000 properties that ultimately sold for $600,000, wars over under-listed condos that drew dozens of would-be buyers, wars over starter homes that a few years earlier would have fetched a fraction of the price. This manic bidding was, in effect, a sign of the bubble, as well as a factor that helped inflate it.

But a curious thing has happened since the housing market has returned to something more rational: The bidding wars haven’t gone away.

A practice that was rare in the 1980s and 1990s now seems here to stay in markets like Washington, D.C., a permanent gift of the housing bubble (if you want to look at it that way). Lu Han and William Strange, economists at the University of Toronto’s Rotman School of Management, have concluded as much after looking at data from the National Association of Realtors dating back to the 1980s.

They find, in research published in the journal Real Estate Economics, that only around 3 to 4 percent of homes on the market across the country were selling in bidding wars for years prior to the bubble. Then at the bubble’s peak, nearly 30 percent of homes in metropolitan D.C. were selling this way, the highest share of any metro Han and Strange studied. The same was true of about 22 percent of home sales in Baltimore and Norfolk, 23 percent in Las Vegas and 26 percent in Los Angeles.

Since the housing collapse, these crazy numbers have declined, but not back to their earlier levels. As prices have fallen and the number of home sales has, too, bidding wars haven’t disappeared apace. That means that we’re probably seeing not just a lingering effect of the housing bubble, or even a pure product of high housing demand, but a new strategy for selling homes that was embraced during the bubble.

“The persistence of this suggests that people have decided that this is a good way to think about selling these kinds of goods,” Strange says, “selling housing in a more auction-like way.”

If a list price once meant the seller’s ceiling, for many homes it’s now the buyer’s floor — the number with which the auction can begin. Part of what’s going on here, Strange says, isn’t just that the small supply of homes for sale continues to push up their price in certain markets like D.C. (bidding wars still made up about 12 percent of sales here as of 2010). Real estate agents are also strategically listing homes below their value to createbidding wars.

“One way to see all of this is that housing is this incredibly important good, it’s easily the most important asset in a typical household’s portfolio. As a share of total wealth, housing is huge,” Strange says. “And yet, the way houses are getting marketed, very broadly speaking nowadays, is an awful lot like it was 50 years ago.”

If you’re a buyer or a seller, you sign a contract with a real-estate agent who understands what’s going on a lot better than you do. They negotiate on your behalf and split a commission, typically about 6 percent. The way information is traded — through home visits, negotiations and market comparisons — is more or less how it’s been done for decades. For most of this time, buyers would set an aspirational price, then negotiate down from there.

“With the rise of bidding wars, we shouldn’t think that the housing market — like other markets — is just going to keep doing things in the old traditional ways forever and ever,” Strange says. “There are going to be changes.”

Australians have long bought housing like Americans buy high-end art — at auction. So what’s to say more of us won’t buy housing like that in the U.S. too?

Whether or not that tactic is actually making sellers more money — it’s hard to know in this data — some agents must believe that it does. The result for the rest of us is that an opaque market becomes even more so. You may think a $300,000 home is in your budget, only to find that the sellers never intended to accept that little anyway. You may struggle to gauge the difference between a $400,000 home and a $500,000 one because you can’t tell which one — or both? — is intentionally under-listed.

Now add to the confusion of buying a home the sometimes irrational emotional of an auction. Other research suggests, for instance, that some people online are willing to pay more at auction than they will for the exact same item on a one-click purchase. It’s hard to believe similar behavior doesn’t seep into housing auctions as well.

“People are making these million-dollar trades,” Strange says of homebuyers. “But we really don’t know that much about the housing market, where it’s going, what demand and supply are. It’s an amateur market where people are making these huge, huge decisions.”

At the very least, here is a free piece of information for your frantic search if you’re buying a first home to haven’t bought a new one in 15 years: Bidding wars are now a thing.

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Good News for Buyers; Lending Standards Easing

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Earlier this year, we saw the return of the 3% down payment – a major step towards the easing of lending standards nationwide after years of progressively tighter rules. While many of these guidelines were established in an effort to prevent another collapse, in many cases they are over cautious, preventing would-be homeowners who fell short of the qualifications from buying a home. Now, the standards are easing again – good news for both buyers and the real estate community in whole.

According to the latest credit availability index from the Mortgage Bankers Association, January saw improvements in all four of the reports loan categories. The changes reflected a positive response from lenders towards government efforts to improve affordability through easing regulations.

One major factor playing into this change was the return of conventional mortgage with a 3% down payment – a policy which Fannie Mae adopted earlier in the year but has been gaining traction with other lenders as well. Freddie Mac, for example, plans to begin a similar 3% down loan on mortgages which closed on or after March 23.

While Fannie and Freddie are two of the bigger players in lending, the 3% down program doesn’t end here. According to index, nearly 40% of investors have already adopted a similar 3% down policy.

The Federal Housing Administration has also played a hand in improving affordability with their reduction of upfront mortgage insurance premiums. It’s estimated that this change could move thousands of potential buyers into eligibility, as virtually every lender working with the FHA program has reduced these costs.

With all the recent changes, many lenders are gaining confidence in lending to a wider range of borrowers, many of whom are below previously set limitations such as credit scores and cash for a large down payment. Wells Fargo, for example, previously had a minimum FICO score of 660, but now no longer has a hard limit set. Instead, the lender is willing to give you a chance if Fannie Mae or Freddie Mac’s automated underwriting systems accepts your application.

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Mortgage Lenders Set to Relax Standards

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Agreement With Fannie, Freddie Potentially Paves Way for More Applicants to Qualify for Loans

Lenders also are expected to widen the scope of the types of borrowers they will accept by reducing credit-score requirements and giving greater leeway to consumers whose credit history suffered because of one-time events, such as a job loss or big medical bill.

Economists have long maintained that tight credit could be holding back the housing recovery and damping economic growth. On Tuesday, the S&P/Case-Shiller Index showed that U.S. home prices grew 4.8% in the 12 months ending in September, their slowest pace in two years.

After the financial crisis, Fannie and Freddie made banks repurchase tens of billions of dollars in loans that the companies said didn’t meet their standards. In turn, many lenders stopped making loans to all but the most pristine of borrowers.

In many cases, they required borrowers to have substantially higher credit scores and put in place other measures—so-called credit overlays—that were more stringent than what Fannie and Freddie required.

With the new agreement, “I’ve been told with absolute confidence that some lenders are lifting almost all of their overlays,” said David Stevens, president of the Mortgage Bankers Association.

Wells Fargo, the nation’s largest mortgage lender, lifted its credit-score overlay earlier this year, which the bank said was in anticipation of the agreement with Fannie and Freddie. Now it says borrowers can expect a smoother process of getting a loan with less “excessive” paperwork.

“It’s providing greater certainty for all the parties so that you can lend more confidently and make the whole judgment process much easier and more clear cut,” said Mike Heid, president of Wells Fargo Home Mortgage.

For example, under the previous system, Mr. Heid said a borrower who had a late payment on an auto loan might have been asked to write a memo describing what happened, even if such a mistake wasn’t critical to the decision to make a loan or not. That was because Wells couldn’t be certain what would trigger a repurchase demand from Fannie or Freddie, he said.

Now, they are less likely to be required to ask for such documentation, he said, which should speed the process of securing a loan.

Jerome Lienhard, CEO of SunTrust Mortgage, said the new guidelines likely would allow the company to lift its overlays by “a pretty meaningful amount.” He said the bank is still analyzing which overlays to remove, but he is confident many will be eliminated. “This is real. This is substantive,” he said.

Before the new rules were put in place, Mason-McDuffie Mortgage Corp. in San Ramon, Calif., typically wouldn’t make a loan to a borrower with a credit score below 660, said Bill Godfrey, the company’s executive vice president of capital markets. Now, he said he believes the company will lend down to 620, the limit for loans backed by Fannie and Freddie.

“We will be able to be looser and open up the net wider,” said Mr. Godfrey.

Not all lenders are poised to relax their underwriting rules. On an earnings call a few days after the agreement was announced, U.S. Bank Chief Executive Richard Davis called it “a good sound bite” and indicated that his bank wasn’t prepared to make changes.

“Unless we are convinced that the rules are going to be permanent and there is not going to be a look back or a reach back in future times…we are simply going to stay on the sidelines in the concerns of both compliance risks and other uncertainties,” said Mr. Davis.

“You won’t see us start to expand our criteria much past what we’ve done,” said Bank of America Chief Executive Brian Moynihan at an investor conference this month.

Isaac Boltansky, an analyst at Compass Point Research & Trading, said some lenders are still too “shellshocked due to litigation and the shifting regulatory environment” to ease credit conditions soon.

Still, overall, Fannie Mae CEO Timothy J. Mayopoulos this month said lenders were “reacting positively to those developments. I do think that lenders are nonetheless concerned about other factors in the environment that we do not control.”

By JOE LIGHT, WSJ

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Home Prices Now Just 6.4% Below All-Time High

prices 6.4% off all time high

The pace at which U.S. home prices are rising has slowed down, but a new report Tuesday shows that home prices have retraced much of the ground they lost after the 2008 crash.

Prices rose 0.1% in July after adjusting for seasonal factors, according to an index maintained by the Federal Housing Finance Agency. The index is calculated using prices on mortgages backed by Fannie Mae and Freddie Mac. That was down from increases of 0.3% in June and 0.2% in May, but it represents the eighth straight monthly gain.

With the latest increase, home prices are now up 4.4% over the past year. What’s more surprising is that the index shows U.S. prices now standing just 6.4% below their previous peak in April 2007.

The S&P/Case-Shiller index is a separate tool used to measure home prices. It showed a bigger home price boom—and a bigger accompanying bust—in part because it included more expensive homes with loans that weren’t eligible for purchase by Fannie and Freddie. It also didn’t include loans financed by subprime mortgage lenders that weren’t selling loans to Fannie and Freddie.

Also, the FHFA index is unit-weighted, meaning all sales count equally. The Case-Shiller index is value-weighted, which means price changes in more expensive properties receive greater emphasis.

The Case-Shiller national index, which is set to report its own measure of July home prices next Tuesday, showed that home prices in June were 9.9% below their 2006 peak.

How to shop for the best mortgage rate

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Mortgage rates haven’t moved much this year, and the good news is they’ve been stuck at historically low levels. But the bad news is that may be about to change.

Both home prices and mortgage rates are expected to move higher as we head through the fall, and that makes shopping for the right mortgage all the more critical. While various groups report national mortgage rate averages each week, the rates you get can vary dramatically from that average, depending on what product you choose and how you shop. So how do you get the best rate? We asked some of the top mortgage professionals across the nation for their top tips:

Craig Strent, CEO of Maryland-based Apex Home Loans:

“Don’t overpay for your mortgage. One of the biggest mistakes home buyers make is to take a 30-year, fixed-rate mortgage when they don’t need it.”

The 30-year fixed is the most expensive of all mortgage products because the rate is the highest and you’re paying for the longest time. Choose a product that matches how long you expect to be in your home. If it’s just five years or less, then a 5/1 adjustable rate mortgage (ARM) which is fixed for five years will be a much cheaper option. If you’re conservative, try a 7/1 or 10/1 ARM. The rates on all of these are lower than the 30-year fixed and can save you thousands of dollars over the life of the loan.

“Don’t be fooled by points”

Points are an upfront payment of interest in exchange for a lower rate. This boosts your closing costs and makes the rate appear to be artificially low. This can make sense if you’re going to be in your home for a very long time. If you’re not, then the savings you’re getting in the lower rate over time is never going to make up for that higher cost upfront.

“Don’t fight the documentation requests”

A great rate can turn into a bad one if your rate lock expires or you have to pay for an extension. Get your financial house in order before you even apply for a loan. Documentation requirements can be arduous these days, but fighting them will get you nowhere as most are institutional and are not going to be waived.

“Beware of hidden fees and loan level pricing adjustments”

Artificially low advertised rates may come with additional points or closing costs. Be sure to review a full breakdown of closing costs before committing to a lender. If your property is a condo, your loan is cash-out or you have a lower credit score, your rate will rise, so make sure you give all your information to the lender up front, so that lender can give you an accurate quote.

Dan Green, publisher of themortgagereports.com in Cincinnati:

“You can shop by rate or shop by fees, but you can’t shop for both at the same time.”

Decide your strategy first, what makes the most sense for you financially, and then stick to the plan.

“You don’t have to ‘save 1 percentage point’ for a refinance to make sense.”

That strategy is a relic from our grandparents’ generation, when loan sizes were much lower, less than $100,000, and when closing costs could run 10 percent of the loan size or more. Think in terms of monthly savings—not interest rate reduction. If your savings offsets the costs, then go for it.

“Always compare the zero-closing cost mortgage”

Zero-closing cost mortgages are sometimes available for as little as 12.5 basis points (0.125 percent) added to your mortgage rate. Your payment might rise $30-50 per month, but you’ll eliminate $4,000 in closing costs or more. Again, this depends on how long you intend to hold the loan.

Logan Mohtashami, senior loan officer of California-based AMC Lending Group:

“Don’t make the mistake of pricing out lenders on different days”

Get a few lenders in place and price them out all at the same time. Rates can vary even hour-to-hour, so you want to get the best comparison possible.

“Don’t let multiple lenders run your credit score”

This can actually damage your score. Get one credit report done, a three-merge score, where one lender pulls Experian, Transunion and Equifax all together and your loan is based on the middle FICO score.

Mortgages
30 yr fixed 4.19% 4.30%
30 yr fixed jumbo 4.64% 4.76%
15 yr fixed 3.27% 3.46%
15 yr fixed jumbo 3.86% 4.02%
5/1 ARM 3.38% 5.31%
5/1 jumbo ARM 4.01% 6.25%
Find personalized rates:

—By CNBC’s Diana Olick.

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How to Sell a Home in the Summer

 

10 Sizzling Summer Home Selling Tips

imagineHome selling in the summer is often a bit more tricky than home selling during other times of the year. For example, spring time selling is the most popular time to put your home on the market. The second best time of the year to sell a home is in the autumn. Summer ranks in meager third position.

Why is Summer Not the Optimum Time to Sell a Home?

 Summer is good for a lot of things, but home selling is not necessarily one of them. In fact, if you don’t have to sell in the summer, you might get more for your home if you wait until fall. Why? Because in the summer

  • People go on vacation
  • Kids get out of school and require attention
  • Summer activities distract

There’s just too much going on during the summer to pay close attention to home selling. Most sellers would rather wait until everything calms down in the fall.

If You Must Sell Your Home During the Summer

Not everybody can wait until fall, though. Sometimes people need to sell during the months of June, July and August. They might be transferred to a new job in another state or be experiencing other pressing “life” issues that could necessitate an immediate sale. Here are a few things you can do help attract a summertime buyer who might be leaning instead toward lying in a hammock and sipping lemonade.

  • Mow the Lawn Twice a WeekDon’t ask me why but grass grows faster in the summer. Don’t explain it to me, either, because I don’t want to think about photosynthesis or chlorophyll. Your hair grows faster in the summer, too. Every other lawn cutting, try mowing on the diagonal to add dimension and curb appeal.
  • Create Summer Curb Appeal Curb appeal is what makes fairy-tale land leap from the pages of a landscaping book and into your front yard. Curb appeal creates lust, happiness and contentment. Trim the bushes. Plant flowers. Scatter mulch. Paint your house number on the curb. Sweep the walk. Make your entrance welcoming and warm.
  • Decorate With Summer-Influenced Accents Look around your yard for color inspiration. White is a pure summer color. Vivid blues have a calming affect. You can sweep away the cobwebs of winter by replacing accent pillows or throw rugs with brighter, summer hues.
  • Bring the Light Inside If you have heavy drapes, remove them. They tend to make rooms look smaller anyway by encroaching on space. Pull all your blinds to the top and tape the strings underneath. Consider tie-backs if you don’t already have them for holding open lighter drapes / curtains. The only time you would leave blinds closed is if there was an undesirable element on the other side of the window, i.e. a neighbor’s trash can, and even then, open them slightly.
  • Go With the Flow of Summer Due to daylight savings in most states, it stays light outside longer. Some people like to skip out of work early on a Friday. You might find buyers are more interested in touring your home in twilight hours, just after the dinner hour.
  • Move the Home Outside Where I live, in Sacramento, it doesn’t rain in the summer. We can move perfectly good living room furniture to the back yard. Not only does moving out furniture free up more room inside the home, but it creates an outdoor living space with items you already own. It’s an illusion created for a buyer that says yes, you can own this lifestyle, too.
  • Deliver the Sparkle Gold or silver or brass or pewter? Doesn’t matter. Mix them, if you like. Old rules don’t apply. Metals are summery. Vases, picture frames, mirrors, utensils, goblets, hanging planters to garden gnomes.
  • Supply Summer Treats and Drinks For me, in California, summer means red-and-white checkered tablecloths, potato salad, hot dogs and mustard and roasted corn-on-the-cob.  Every part of the country has its own summer food traditions. In Maine, summer might mean juicy blueberries and clams. Fill the sink with ice cubes and chill bottled water for guests.
  • Utilize Natural Scent Sparingly Sometimes, people go hog wild with the air fresheners. Vanilla is a popular scent but it can overwhelm sensitive noses. Try filling the air with natural fragrances such as those from cut roses or honeysuckle vines.
  • Control the Air Temperature The only thing worse than a stuffy room on a hot day is a hot room. Circulate air. Even if you have to place floor fans about the home, keep the air moving. Turn down the AC to a notch below your comfort zone if the air outside is hotter than your comfort zone. Not so cold that your visitor’s arm hair stands up. But chilly enough that they don’t want to go back outside.                                                                                                                                                                                                                                                                                                        Compliments of Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

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Housing inventory jumps 11.8%. How does this affect you?

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Good news for buyers in the upper end of the buying spectrum. Properties are staying on the market longer and inventory is UP. Meanwhile, lower end buyers are having a tough go of it with smaller inventory and rising prices. 

 

After plunging throughout 2012 and for much of 2013, and rising only modestly through the beginning of this year, the inventory of all for-sale homes nationwide spiked in May, jumping 11.8% year-over-year according to Zillow (Z).

But most of those gains in inventory were made among homes priced in the middle and top one-third of home values, according to Zillow Real Estate Market Reports.

The number of homes available for sale in the most affordable price bracket, those homes most sought by first-time homebuyers, fell year-over-year in 28 of the nation’s largest metro areas analyzed by Zillow.

“It’s good to see overall inventory rising. It’s likely that many would-be sellers have decided to capitalize on recent home value gains, particularly as the pace slows, and list their home for sale now in order to move into a new home while mortgage interest rates remain low,” said Zillow chief economist Stan Humphries. “But persistent inventory constraints at the low end of the market continue to make it a tough environment for first-time and lower-income homebuyers. Low inventory and high demand can lead to rapid price spikes, which make homes even more difficult to afford for many buyers. Hopefully the inventory gains we’re seeing in the middle and upper tiers of the market will begin trickling down to the most affordable homes soon.”

The total number of homes listed for sale on Zillow in May was up 4.3% over April, and has risen month-over-month in each of the past three months on a seasonally adjusted basis.

Overall inventory of for-sale homes was up year-over-year in 506 (78%) of the more than 600 metro areas analyzed by Zillow. Large metros where inventory has increased the most include Las Vegas (up 51.5% year-over-year), Washington, DC (up 45.7% year-over-year) and Riverside, Calif. (up 42.7% year-over-year).

In addition to low numbers of affordable homes for sale, first-time and lower-income homebuyers armed with traditional financing are also competing with all-cash buyers at the lower end of the market. Zillow reported last week that in 27 of the top 30 metros analyzed by Zillow, more than one third of all sales of the lowest-priced homes were made with cash. In three of the top 30 metros – Tampa, Detroit and Miami – more than 80% of all sales in the lowest price bracket were cash deals.

National home values in May were up 0.1% from April to a Zillow Home Value Index of $172,300, and have now risen for 28 consecutive months.

Year-over-year, U.S. home values rose 5.4% in May, the slowest annual pace of appreciation in more than a year. For the 12-month period from May 2014 to May 2015, national home values are expected to rise another 2.9% to approximately $177,321, according to the Zillow Home Value Forecast.

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