That payment includes your principal and interest(P&I) payment of about $2878/mo.  It also includes your property tax payment, of about $729/mo(based on 1.25% of the purchase price).  It also includes an estimated home insurance payment of $125/mo.

What the $3,733 monthly payment does NOT include, is the tax savings you get for having a mortgage.  Since you’re able to write off the mortgage interest and property taxes, you’d “save” about $804/mo (if you’re in the 28% tax bracket), making your true monthly payment about $2,929.

If you bought that same house, but put 25% down, your total monthly payment would be about $3,553 and your adjusted monthly payment(after your tax savings) would be about $2,787.  As you can see, putting down an extra $35,000 only saves you about $220/mo.  so you may want to think about your options before committing to a loan.

If you have questions, or would like to get a free good faith estimate(GFE), please contact Denny Oh at 858-243-2092 or denny@sandiegoh.com.  I hate when people try and sell something to me, so I can assure you I will not try and “sell” you anything and I won’t spam you(I’m too busy to chase people who aren’t interested in my help).

• Conforming Loan – this is any loan amount that is $417,000 or less.  Depending on your credit, income, etc., you’re probably looking at an interest rate of 4.75% for a 30 year fixed loan
• Jumbo Conforming Loan, or High-Cost Area Conforming – this is any loan amount between $418,000-697,500.  For loans in this range, you’re probably looking at an interest rate of about 4.875%
• Jumbo Loan – this is any loan over $697,500.  Jumbo loans are typically the hardest to qualify for and they have the highest interest rates, currently sitting around 5.25%.

However, Fannie Mae might be getting rid of the temporary loan limits(the jumbo conforming loan) that were originally implemented by the Economic Stimulus Act of 2008. So for those what want to borrow anywhere from $418,000-697,500 right now, you’d be borrow at a rate of about 4.875%.  After September 30th, 2011, you might have to pay 5.25%, or more.  Based on these rates, let’s look at a few scenarios to put this into perspective:

Example 1* – Purchase Price $522,500; 20% Down; $418,000 Loan Amount

Before October 1st, 2011 – Monthly Payment(Principal, Interest and Property Tax) – $2,756.38

After September 30th, 2011 – Monthly Payment(Principal, Interest and Property Tax) - $2914.24 ($157.86 MORE per month, or $1,894,32 MORE per year, or $56,829.60 MORE over the life of the loan).

Example 2* – Purchase Price $930,000; 25% Down; $697,500 Loan Amount

Before October 1st, 2011 – Monthly Payment - $4660

After September 30th, 2011 – Monthly Payment – $4929.09($269.09 MORE per month, or $3,229.08 MORE per year, or $96,872.40 MORE over the life of the loan).

*Example monthly payments include Principal, Interest and Property Taxes(1.25% per year)

In addition to the higher interest rate, Jumbo loans are typically much harder to get.  Lenders have stricter guidelines for these loans and I doubt this will ever change.

If you’re looking to buy, or sell(because you need buyer’s who can get loans), do it now! There’s a shortage of inventory, low interest rates(for now) and a healthy demand.  What are you waiting for?

Contact Denny Oh for any of your real estate needs. 858-243-2092 denny@sandiegoh.com

Unlike the Federal $8000 tax credit, the California State tax credit must be filed within 14 days of closing escrow and NOT when you normally would file your taxes.  Additionally, those of you who want to take advantage of this must have closed escrow no sooner than May 1^st, 2010(but if you’re reading this, I assume you just closed, or are about to close…so keep reading).  The California Tax Credit is only good until the $100 million runs out…so hurry up(same with the New Home Buyer credit…it has a $100 M fund).

In order to qualify for the New Home and/or the First Time Home Buyer Tax Credit, the following must apply:

• Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
• Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit(*this only applies to the New Home credit).
• Be eligible for the California property tax homeowner’s exemption.
• Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

Again, you must file for either credit within 14 days upon closing escrow.  Buyers are also allowed to send in a tax credit reservation, during escrow if they want to have a better chance of getting some of the State’s money.  Please click here to read the State’s instructions and to make sure you file correctly.  Applicants must fill out Form 3459–A and fax it in to 916.855.5577, along the the buyer’s final HUD-1 statement.

If you have any other questions, please read the FAQ form, contact your realtor, or your accountant.  And if you need help buying or selling a house, please give me a call.

Denny Oh 858–243–2092 denny@sandiegoh.com

Clearly I’m not an attorney, nor am I a tax consultant, but from my interpretation of SB 401, it appears to relieve California State income tax consequences to people who successfully complete a short sale and meet specific criteria.  Compounded

with the Federal Mortgage and Debt Relief Act of 2007, my understanding is that if the home/loan was purchased as a primary residence and the indebtedness is less than $800K and the forgiven debt is less than $500K, you do no have to pay any income taxes on the forgiven amounts.  This includes first and second trust deeds, refinances that were applied to the previous criteria and for loans used to build, or improve a primary residence. 

Again, you should consult your accountant or real estate attorney, but this certainly sounds like good news!  If you have any questions about short sales, foreclosures, or anything real estate related, please contact me, Denny Oh, at 858–243–2092 or denny@sandiegoh.com. 

The real estate market is a crazy one right now and you need someone who knows what they’re doing on your side. 

The bad news is that it sounds like this loan option is going away. I’ve been told that “spot approvals” will no longer be an option for unapproved condo buildings. In the past, buyers have been able to get a spot approval on condo buidings that were not on the official FHA approved list. Once we get to October, this option will go away and only previously approved FHA buildings will qualify for those loans. So if you’re thinking about buying a home, you might want to get started ASAP!

Call me and we can go over your situation and see what makes the most sense for you.
Denny Oh 858-243-2092 denny@sandiegoh.com

California set aside $100 million towards this credit, but hurry up.  As of June 12th 2009, only $69,534,047 of the $100 million is left and there have been 9,145 applications submitted which would account for $88,252,190 of the fund.  If you’d like a list of homes that qualify for this tax credit, email me at denny@sandiegoh.com or call me at 858–243–2092. 

Additionally, if you qualify, you can still receive the $8000 first time home buyer tax credit. 

Please let me know if you have any questions.  Click here to see some great downtown San Diego condo deals.

With less than 300 sold, Vantage Pointe wasnt even close to making it.  As a result, the developer is working with the Department of Real Estate to sell the development in phases, allowing them to reach the higher occupancy restrictions.  Vantage Pointe is also going to be renting about 250 of its condos, lessening the amount of inventory it has to sell.

According to Russ Valone of MarketPointe Realty Advisors, theres an 11% vacancy rate in San Diego rentals.  Valone feels that Vantage Pointe rentals will give prospective downtown buyers a good feel for what true condo living feels like, opposed to less quality, apartment buildings.  My problem with this, is that Vantage Pointes location isnt that great and a huge part of downtown living is the convenience factor, which renters wont get there.

Regardless of what happens, Im sure that there are 71 very happy people out there who just got out of, what I think, is probably a terrible investment.  Buyers need to remember that location, views, price and uniqueness are key factors in a good investment “ none of which I think Vantage Point offers.  I guess well have to wait and see.

Click here to see some great downtown San Diego real estate deals.

Stimulus Package Impacts California Housing Market

With a new stimulus package of $787 billion to spend, the Obama administration is spreading the wealth over multiple economic
sectors in hopes that at least one will ignite a recovery.

Among the highlights of the Housing and Economic Recovery Act of 2009 (Public Law 110“289) are generous incentives offered to homeowners, lenders and home buyers.  They include:

The Home Buyer Tax Credit
An $8,000 tax credit available to first-time homestead home buyers who purchase after January 1, 2009, and before December 1, 2009. This credit does not have to be repaid, and is taken as a deduction at income tax time.

New FHA, Fannie Mae and Freddie Mac Loan Limits
The bill increases loan limits to an amount equal to 125% of the 2008 local area median home price, or $271,050 for FHA, and $417,000 for Fannie Mae and Freddie Mac.  Conforming and FHA new existing loan limits have been raised to $729,750 in most areas of Southern California as a result of the new stimulus plan.

Neighborhood Stabilization

Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program(NSP). The NSP helps provide grants through the Community Development Block Grant program (CDBG) to aid local neighborhoods decimated by foreclosures.

Relief for Homeowners

An estimated one-third of homeowners are underwater in their mortgages, according
to the Pew Research Center for the People & the Press. The stimulus includes a loan
modification program to slow the rate of foreclosures and help troubled homeowners
get their loans reset by their current lenders.

Are you really underwater?
First, underwater is a relative term. Even in the healthiest of markets, equity is built over time.
Second, the description doesnt take into consideration the extremely generous tax benefits already in place for homeowners.  The Tax Relief Act of 1997 puts most homeowners well into the plus column, even in declining markets.  Third, most homeowners are underwater if theyve recently purchased a home, regardless of the rise or fall of their local housing markets. Amortization schedules suggest that it takes approximately four years of house payments to cover the closing costs of buying and selling and begin producing a capital gains profit.

A work in progress
The stimulus program could be modified because homeowners who are paying their
mortgages in full and on time dislike seeing taxpayer money used to bail out others.  Steve Cook, editor of the Reecon Advisory
Report, points out that the devils in the details.  The plan is a broad outline, says Steve Cook. What qualifies responsible homeowners to refinance through Fannie or Freddie? Who determines if homeowners are at risk of imminent default when they havent missed a payment? What happens to the Hope for Homeowners program? Until these questions and more are answered, its difficult to predict who will ultimately benefit from the stimulus package.

Incentives for lenders
Banks such as Bank of America, JP Morgan Chase & Co, Citigroup and Wells Fargo have voluntarily put a temporary moratorium on
foreclosures through the first weeks of March, in anticipation of government assistance in modifying troubled mortgages.  To keep banks engaged, the new stimulus loan modification program targets troubled loans owned or guaranteed by Fannie Mae or Freddie Mac.  Loan servicers will receive $1000 per loan for eligible loans and monthly fees as long as the borrowers remain current on the new modified schedule designed to bring their payments within affordable income-to-debt ranges. Banks will also receive incentives for allowing borrowers to sell short (less than their current mortgages are worth) and for taking deeds in lieu of foreclosure.  A new $10 billion fund will also provide participating lenders with insurance on modified loans linked to declines in the home price index, Cook says.  All these incentives are designed to keep homestead owners in their homes. The program is not for speculators, investors or owners of vacation or second homes.  To aid the secondary mortgage market, President Obamas plan also includes $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae and Freddie Mac.  The effect for home buyers should be sustained low interest rates.

State Tax Credits for Home Buyers
In addition to the federal stimulus package, California lawmakers have approved a $10,000 tax credit on the purchase of unsold and new construction for any home buyer, not just first-timers, who purchases a home after March 1, 2009.  California buyers are benefiting from unprecedented price reductions, and that has fueled an unprecedented gain in housing sales. A new report by MDA Dataquick shows California housing sales in January 2009 are up 53.9 % to 29,458 over the lackluster 19,145 sales in January 2008.  Affordability is high. The median home price now hovers at about $224,000, down 10% over December 2008 and down 41.5% from January 2008, when the median price was $383,000.  Home buyers now enjoy the buyers trifecta: low housing prices, high inventories, and low mortgage interest rates. Prices are rolled back to 2003. Inventories are as high as they were during the recession of the 1990s. And home mortgage interest rates are at an alltime low of 5.0% for benchmark 30-yearfixed“ rate conforming loans.

A positive outlook
The California assembly has allocated $100 million for the credit in the recently approved state budget, enough to trigger as many as 10,000 home purchases.  Some 711 California buyers applied for $6.9 million worth of credits in the programs first 11 days. Industry executives hope the credit will boost sales as much as 15%, says David Lereah, co-founder of Reecon Advisors. As buyers reenter the market to take advantage
of these new incentives, the window to buy at the bottom could close quickly.  According to the California Economic Forecast Projects director Mark Schniepp, a combination of factors is causing housing to tread water, including a weakening commercial market with retail closures, a drop in tourism, a sharp decline in manufacturing, and mounting layoffs.

Dont Believe Everything You Hear Mortgage Money is Out There

The rumor that mortgage money is unavailable couldnt be more false, according to Michael A. Reza, president of HomeServices Lending, California.  Qualification standards have tightened, he says, but money is available across a number of segments.  Rates are ranging from 4% to 7% depending on whether the loan is Variable or Fixed and Conforming or Jumbo. In general, qualification is easier if you have full documentation, good credit and good reserves.  In some cases, lenders may require a down payment of 25% or more on conforming or jumbo loans and 5% or more on FHA loans.  In a market front-loaded with 40% of homes for sale bank-owned, Reza suggests that home buyers consider the FHA 203k Rehab loan to help them make improvements.  In addition, he says that luxury market money is available through a variety of wholesale lenders products via banks like Wells Fargo.

San Diego County

Throughout 2008, housing softened in San Diego County, with new listings outpacing homes absorbed by the market.  The county was among the last in California to succumb to the housing recession which began in 2006, and it should be among the first to recover.

Home prices fell over 33% in 2008, but renewed affordability shot sales trends up over 60% for the year.

Throughout 2008, new listings and those sold in the marketplace were fairly balanced, suggesting that homeowners planned to hold tight through the downturn. But by January, 2009, new listings increased by approximately 25%, in anticipation of the stimulus, as well as a protracted period of consumer jitters.

Yet absorption also improved. With more homes on the market (4,847) in January, almost three-fourths of that number sold (3,042). The sales pace improved even more in February with new listings at 4,343 and an absorption rate of 3,388 units.

Like other coastal areas, San Diego inventories are heavier in homes requiring jumbo loans to purchase “ those priced $800K and above. There are over 14 months of inventory onhand for homes priced $900K and above.

However, homes that can be purchased with conforming loans, particularly those priced between $300K and $699 are selling briskly.

If you have any questions, please feel free to contact me anytime.  You may also see a copy of the newsletter by clicking here.

Denny Oh 858“243“2092 denny@sandiegoh.com

To qualify for this tax credit, you just have to buy a new home in the specified time frame.  There’s no income limit, nor do you have to be a first time home buyer.  The home does however, have to be your primary residence.  Additionally, it cannot be a duplex, or any other non-single family home.  The

home can be detached or attached(condo) – just as long as it’s a new home and no one else has ever lived in it. 

So for all you downtown people, buildings like Sapphire Tower, Electra, Aria, Solara Lofts, Bayside, etc., all qualify.  Even some of the resales will qualify, just as long as the current owner has never lived in it.  There is a catch however – California only has $100 million reserved for this tax credit.  Once it’s used up, it’s gone. 

Here’s a link that gives you some more info and it will also update you on how much of the $100 million is left.  I’m not sure how often it’s updated though, so act sooner than later.  And…if you’re a first time home buyer(someone who’s never owned a home, or someone who hasn’t owned a primary residence in the last 3 years), you can get an additional $8,000 tax break.

Want my advice?  Look for a home now.  If you need to sell your home to buy, list it now.  Otherwise you’ll miss out on deals and regret being so lazy.  Doesn’t it make sense to see what’s out there now?  Even if you think prices are going to drop, which I do think will happen, you might find a great deal today.  Not looking now is just you being lazy.  What’s the worst that could happen?  You find a home that you love???