For homeowners: If you raise the deductible on your insurance from $500 to $2500, it could save you $200 a year if you have a high value home. Plus, you won’t be tempted to make minor claims that could lead to a rate increase.

For renters: Did you know that your landlord does not cover any losses of personal property that might occur as the result of fire, roof leaks, pipe breaks or theft? You can cover these with renter’s insurance. Most couples have about $50,000 worth of personal property. This can be covered with a policy that costs about $250 a year. It also provides up to $500,000 of liability insurance in case someone injures themself in your property. (You would have to get additional coverage for any jewelry or coins.) Give me a call you have questions or interest and I can refer you to insurance agents that can help.

Do you know anyone looking to purchase a home, or needing cash for a home remodel or to pay off debts? Referrals are very much appreciated. I will take very good care of anyone you send my way.

Most people reading this newsletter are not qualified for a reverse mortgage (you have to be 62 or older), but you might know someone who could benefit. Briefly, the borrower gets cash out of their home, does not pay for the loan, and still owns their home. It’s a great way for seniors to use the appreciation of their home for living expenses, medical payments, or paying off other debt. It can also be used to purchase a home and have no mortgage payments.

If you know a senior who could use some funds, I’d be happy to help them understand the details and if it is the right option for them.

Are you tired of getting a continuous stream of credit card, insurance and other offers via email or postal mail? There is a site that allows you to opt out from receiving these offers.

The site is maintained by the Consumer Credit Reporting Industry association and is free to use. To find out more go to their website at:

www.optoutprescreen.com.

Prices went up 6.4% in the City of Los Angeles (according to Zillow). This is pretty much the same for all Southern California metro areas. Are home prices finally peaking? It’s hard to say. Zillow still predicts another 5.8% increase in the next year.

With rising rates, and reported falling home sales, this prediction might be a bit optimistic. Still, with rising employment attracting many people into the area, the demand for homes should keep prices from falling. So, if you are thinking of buying a home or investment property, it will only get more expensive if you wait. I’ll be happy to see how much home you can qualify for, it’s a free service and there is no obligation.

Rising home values have prompted a number of homeowners to call me to find how they could get some of that appreciation out of their home. A cash-out refinance is the cheapest loan available and may have some tax advantages over other types of loans.

Yes, refinance rates will probably be higher than the current rate on your home, but they are still historically low. The prediction is for rates to eventually get near 6% for fixed-rate home loans, and even higher for variable-rate equity lines of credit. Today, it is still possible to get a fixed-rate home loan in the mid to high 4% range. Call me and we can work through some numbers to see what option is best for you.

Note: Free appraisals are available for some loans. Contact me for details and for any other real estate or mortgage questions you might have.

These improvements that almost pay for themselves in resale value:

• New paint in neutral tones (gray, beige, or a mix of the two) can add actually add thousands to sale value.
• Hardwood floors, though more expensive than carpeting, look more elegant and are less likely to show dirt and wear. Again, a value booster.
• Replacement, energy-efficient, windows can save in heat/AC costs and do a lot to update your home’s appearance.
• A new garage door can boost your home’s value by nearly the entire cost. A steel door that replaces your outdated door boosts your home’s curb appeal.

For both buyers and those seeking cash, mortgage rates are important.

• Mortgage rates have gone up and expected to continue to rise over the next year.
• As the economy improves, the Federal Reserve (Fed) raises short-term rates from their unusually low level to get back to a “normal” rate of interest.
• The Fed just raised those rates a quarter percent at their June meeting. The Fed chairman said he expected these rates to go up another 1% over the next year or so.
• When Fed rates go up, so do Home Equity Lines of Credit. If you have one of these, you might think about moving it to a fixed-rate loan.
• Longer term, 30-yr mortgage rates have gone up about one-half percent since the start of the year. The rate stands at about about 4.6% (for many loans), but is still historically low.
• For reference, in 2008, these rates were in the 6% range. So getting a rate below 5% for a loan you can afford is still a good deal.
• If the economy keeps strong, expect rates for 30-yr mortgages to be in the mid-5% range next year.
• For homebuyers there are many traditional and new loan programs that can help you afford the home of your own.
• And for homeowners, taking cash out of your home is often the cheapest financing for home improvement or paying off higher-interest debt. It is a good time to lock in low rates.

I’d be happy to work out the best approach for either a purchase or refinance. A pre-qualification takes just a few minutes. As always, there is no obligation or sales pitch. Just give me a call or send an email.

A HERO is a Home Energy Renovation Opportunity loan, sometimes known as PACE (Property Assessed Clean Energy) loan. These loans give homeowners access to 100% financing for energy-efficient, renewable energy, and water-conserving home improvements. It is a fixed-rate loan paid through an extra charge on the property taxes. While the HERO loan makes it easy to finance things like solar power, or even a more efficient heat and air system, there are some drawbacks.

For Homeowners:

The interest rate on these loans is much higher than conventional or home equity loans, and there is a large, one-time administration fee. Contractors will often sell these as an easy way to finance energy improvements.
Additionally, if as a homeowner, if you want to refinance your mortgage, the HERO loan would have to be paid off before the new loan could be funded. The reason for this is that the HERO loan is a tax lien against your home. Taxes have to be paid prior to a new loan being given. So, your new loan would have to include the payoff of the HERO loan, making your loan higher than you expected. Also, you would need to be qualified for that higher loan amount.

For Home Sellers with a HERO loan:

The HERO loan would have to be paid off with the proceeds from the sale. Normally, it cannot be transferred to the buyer. If you are not aware of that, it will come as an unpleasant surprise to find out you don’t have as much money from the sale as you planned. And, if you don’t have that much equity in your home, you might have to put money into the sale to make the numbers work.

For Home Buyers:

Some sellers and real estate agents don’t realize that, usually, the HERO loan cannot be transferred to the buyer as part of their tax bill. So as a buyer, your purchase transaction might get cancelled if the seller does not have enough funds from the sale to pay off the HERO loan. One of my clients just had such a situation occur after they had spent money on inspections and an appraisal. Be sure to have your real estate agent check on this prior to making an offer.

Hello, and Happy New Year. In this newsletter I’ve tried to give the best estimate for the housing and financial scene for 2018 and included some information on protecting your personal financial information.

With the economy and employment strong, the national housing market is expected to have a good year. However, in higher-priced cities the increase in home prices is expected to moderate compared to 2017. According to the National Association of Realtors, a price appreciation of about 3% is expected in the Los Angeles/Orange county market—a normal rate of growth. One of the reasons for the slowdown is the lack of affordable housing. (Riverside-San Bernardino, a more affordable area, is expected to appreciate 5.7%.)

Population growth in the area should support price levels. This would suggest that if you are looking for a home, waiting for prices to drop would not be a successful strategy. Additionally, the prediction is that mortgage rates will rise (hopefully, slowly) throughout the year – so buying sooner is better than waiting, if your finances would allow.

Similarly, if you are looking to refinance, it would be better to do this sooner rather than later.

I offer free analysis of your situation to see if a home purchase or refinance would make sense.

Protecting Your Credit Information

You probably heard that Equifax, one of the three major credit agencies in the country, announced a major security breach in their systems. The breach revealed the personal financing information of about 143 million Americans, putting them at risk for fraud and identity theft.

If you didn’t know, one option to protect your information is to use a “credit freeze.” A credit freeze is a tool that lets a consumer restrict access to their credit. A credit freeze can cost from$3-$10. Equifax will not charge for a freeze for those affected by the 2017 security breach. But, hurry, the deadline for a “free” freeze is January 31, 2018. Their phone number is: 800-349-9960, or visit them online at freeze.equifax.com.

Some things to know:

• Credit freezes will stop someone from opening a new account in your name, but not from making unauthorized charges on existing accounts.
• You can unfreeze your account if you want to open a new account, but freezing and unfreezing can incur a charge (unfortunately).
• Freezing your Equifax credit does not freeze the other two bureaus (Transunion and Experian). If you have concerns you need to contact these bureaus, also.
• You should monitor your charges to catch unauthorized charges and notify your credit card company immediately.
• You can get a free credit report from each bureau once a year at annualcreditreport.com. With these you can see if any new accounts were opened.
• An alternative to a freeze is a credit alert which will not lock your credit, but will tell anyone who runs your credit that they should check with you before opening a new account. These expire after 90 days, but can be renewed.

Have a great 2018 and be sure to contact me if you have any real estate financing questions.

David Kutner
The Friendly Lender

A borrower asked me whether or not they should get credit life insurance to pay off their you get a mortgage in case of their death. Many lenders offer this for an added amount to your monthly mortgage payment. I don’t offer insurance of any kind, but have some thoughts on this. Here are the pros and cons.

Pros:

Credit life insurance will pay off your mortgage completely. Your death does not cancel the debt. California is a community property state and if you hold title jointly with your spouse, then your spouse would still be liable for the mortgage payments upon your death. Insurance to pay the mortgage would relieve that debt. (If you are single, the insurance would pay the mortgage and would avoid the need for your heirs to sell the home to pay it.)

Credit life insurance has a feature called “guaranteed issue” which means you don’t need a medical exam to get it. This is good if you have health problems.

Cons:

Credit life insurance pays the lender directly for the mortgage. Your heirs get no funds.

For this type of policy, you pay the same amount each month, even though your mortgage balance is declining with each month’s principal payment.

Your insurance only covers your present home. If you sell it, there is no residual value or refund to you.

Alternative:

If you want insurance you would be better off with a term or whole life insurance policy. This type of policy is not on the home. It is on you and stays with you even if you leave your present home. It also provides a lump sum to your family to pay the mortgage (if needed) and additional funds settle the estate and provide funds to live on. Funds go directly to your heirs.

If you want more information on life insurance to protect your family or avoid leaving debts to your heirs, give me a call.

While it might seem that prices can’t go any higher, they still are rising. The California Association of Realtors reports that the median home sold in Los Angeles County was about $566,000 in July. That’s up over 10% from a year ago. Los Angeles County showed a higher increase than any of the other southern California counties.

Will prices keep rising? Home prices depend upon employment, and employment is growing in our area, and so is the population. So there will be a strong demand for homes. But, there is not enough supply to satisfy the demand. The result should be stable or increasing prices.

Mortgage rates which were expected to rise through the year, have defied expectations and actually decreased since the first of the year – to the lowest rate since last December. You can expect a rate in the high 3% to low 4% range (for a 30 yr loan), depending on your credit scores, loan amount, and the amount of equity you have. 15-yr. rates are in the low 3% range.

If you need a pre-approval for a purchase, want a lower mortgage payment, or need cash for paying off debts or renovations, please call me. I’d be happy to review your situation and give you the best options your situation. I offer free pre-approvals and consultations. And, referrals are always appreciated.

I’m always available to help you with this and other mortgage questions. I offer free pre-approvals and consultations on the best options for you.

If you bought a home with less than 20% down payment, or refinanced with less than 20% equity, you probably have mortgage insurance. Fortunately you can get rid of it. When, and how to do it, is a bit more complicated.

Here are the essentials on removing mortgage insurance:

Conventional Loans: The lender is required to remove the mortgage insurance automatically when you have paid your loan down to 78% of the home value at the time you got the loan. Other options:

• If your home has increased in value so that your loan is now 80% or less its current market value, you can ask the lender if they will remove the mortgage insurance. They will require a home appraisal that shows you have the required equity. Lenders often require you to use one of their approved appraisers. Make sure the lender will allow the removal, because an appraisal can cost $500 or more.
• If the lender insists on waiting to remove the mortgage insurance until you have reduced the loan to 78% of the original home value, you have another option – refinance. If you have 20% equity in your home based on the current market, you can refinance without mortgage insurance. You would have to do some calculations on whether the savings by eliminating your mortgage insurance would balance out the rate and closing costs of a new loan.
• You can also pay down your current loan faster to reduce your balance to 78% and eliminate the mortgage insurance sooner. This way you can keep your existing loan.

FHA insured loan: Most borrowers with FHA loans have less than 10% equity or down payment at the time the loan is originated. If this is the case, FHA will not cancel the mortgage insurance. It persists for the life of the loan. The only way to eliminate the mortgage insurance is by refinancing. The best choice is a conventional loan, as an FHA loan will require new mortgage insurance, even with 20% equity. (If your FHA loan was done prior to June, 2013 different rules apply.)

If you have mortgage insurance and would like some advice on getting rid of it, please give me a call. I would be happy to show you some money-saving options.

The May statistics (the latest available) for LA County, shows a median sales price of $560,500 for a single-family residence. This is a 6.8% increase from May of 2016.

The rate of sales in the LA Metro area is up about 7% from the prior year. This means the real estate purchase market is still healthy.

Mortgage rates have bounced in a range from 4.25% to 4.83%. Right now 30-year fixed-rates are averaging 4.25% -- for a loan between $424,000 and $636,000 – assuming 20% equity/downpayment, and a good credit score.

Refinances: Rates have come down from their highs earlier in the year. While most homeowners have taken advantage of the lower rates in past years, there are still some sensible reasons to refinance:

• eliminate mortgage insurance
• take cash out of your property for renovations or to pay off higher rate credit cards
• lower your rate with a 15-yr loan

There are several options available depending on your circumstances. Give me a call and we can see what would work for your particular situation.

Quicken Loans has launched a new product call the Rocket Mortgage, which has been heavily advertised on TV. Is this product faster and easier than those of other lenders? Generally, no. But, it’s great advertising.

Quicken touts a system that can get your employment information and bank statements directly, without your having to provide pay stubs, W2s and bank statements – provided you give them permission to access these documents. This can make it faster and easier to get this information to them for a loan approval.

BUT, many other lenders have the same system. And, 50% of the time the system doesn’t automatically retrieve the information and you have to provide it in the normal way.

Quicken says you can get a loan approval in eight minutes (after you take the time to fill out their forms). That doesn’t mean the money is there ready for you. The process normally takes a few weeks. Ooops! Launch delayed.

By the way, Quicken doesn’t promise a low cost loan, just a quick approval. (In fact their rates are higher than many other lenders.)

Regardless of the lender, if you are self-employed or have a corporation or partnership, an automated approval system like Quicken's will not work for you. If you have rental income, the system doesn’t work for you, either. Get royalties, no dice. Alimony/child support, sorry kiddo. Foreign income, no luck.

Many times a person’s financials are not just a simple bank account and a fixed paycheck. Should that be the case, there is no rocket lift-off – with any lender. A good mortgage professional (here’s where I come in), can work out these situations and get you a great deal.

If you know someone who is looking for a loan approval, please have them check with me. I can provide a fast approval, plus they will get personal service and not feel like a test animal on a rocket shot into space.

Referrals are always appreciated and are always treated with 5-star service.

The government recently published a report saying that many borrowers are paying too much for their home loans (over $13 billion too much). Typically, borrowers turn to their bank for a loan. It’s familiar, convenient and trustworthy. But, generally banks have a high cost for their brick and mortar locations. More and more smart borrowers look to professional mortgage brokers who shop among lower cost lenders and provide fast, personal service to their clients.

If you are considering using a bank for a loan, give me a call and let’s compare costs.

We are well into the buying season for real estate. This usually starts in March and continues through September. Here in Southern California, with our warmer weather, we often see it last through November. I’m definitely seeing a pick-up in buyers looking for their first home. But, it’s a very tough market. There are too many buyers for too few homes, leading to a lot of frustration. Even so, persistence pays off. Many of my clients who stayed in the game have succeeded in getting an accepted offer. So, don't give up and insure that your loan approval stays current so that you can act quickly and win!

One good thing: mortgage rates have actually decreased a bit from the beginning of the year. This is good news for borrowers who thought they would have to pay much higher rates for purchase or refinance loans.

As I wrote last time, there are a number of low down payment programs, one as low as 1% down. You don’t have to have a large amount of money to get into a home.

Give me a call if you want to see what rate and down payment options are available to you.