Mortgage APR (Annual Percentage Rate) is one of the most misinterpreted numbers that you come across while searching for a mortgage loan. Since mortgages and consumer loans have especially become more complex, it is essential to control the manner in which lenders publicize their loan products and inform the prospective borrowers about the interest rates. The endeavor is to assist people in comparing same types of loans from various lenders and to clarify the true cost of credit. The APR is delineated as the true cost of credit for the borrower with respect to the borrowed amount and it is expressed as an annual rate. This is necessitated by Regulation Z under the Federal Truth in Lending Act.
When you request for a mortgage loan, the Federal Truth in Lending Disclosure form is also sent. There you would find plenty of numbers. Two of them are the Note Rate (the original rate applied to work out your monthly payments) and the APR or Annual Percentage Rate. Most of the times, the Annual Percentage Rate would be somewhat higher than the Note Rate since the APR incorporates other elements related to securing a mortgage.
Did you require an interest rate to obtain a mortgage? Obviously. However, you also required some other fees. Points, loan origination fees, mortgage insurance premiums, prepaid interest, inspection fees and other fees might also be necessary to receive a mortgage. If this is the condition, these elements have to be incorporated while estimating the APR. Why is the APR helpful? It helps you compare between same types of loans offered by different mortgage lenders.
The Fees That Are Incorporated For Calculating The APR
There are some fees that are left out while calculating the APR. Following are the fees that are usually incorporated while determining the APR:
Points
Loan origination fees
Buydown funds from the borrower
Mortgage insurance premiums
Prepaid mortgage interest
Other lender fees (underwriting fees, application fees, tax service fees and so on)
Other fees like appraisal fees, title insurance fees and credit are not incorporated in working out the APR. The logic here is those fees are not charged by the lender and would have to be paid in any event. However, in reality, this is not a fact at all times. In a number of states, there are supplementary regulations that necessitate the lender or broker to mention the APR in their ads outside the prerequisites of the Truth in Lending Act. While comparing APRs, question the lender which extra fees are involved while their APR is calculated. If they can’t answer your question, you should get a lender who can. APRs are a helpful tool to assist the consumer to find out the most suitable loan.
I just attended a Marin based real estate networking meeting where a local realtor asked, “ is this a buyer’s, or seller’s market? When someone responded that it was a “Lender’s Market” ,more than a few local realtors shared some stories that would give anyone pause applying for a mortgage.
The moral, or point to this post is how important it is to work with a reputable LOCAL lender in today’s real estate market. Mortgage Broker’s and Lender’s are famous for telling you at the front end that they can make it happen. Unfortunately, that’s not proving to be the reality. Recently I sold a house in Northern Marin. The day before closing, the lender who was in Southern California decided to do a last second desk review appraisal for the purchase ,and dramatically lowered the value of the house? From the time of the original appraisal, done by a local appraiser, there were new comparables/comps to suggest the original appraisal had undervalued the property. None the less, the underwriter in Southern California required that the buyer put in another $60,000 towards the purchase, or they would not fund. The lender had the buyer over a barrel. The lender knew the buyer’s finances, and knew they had the where with all. The lender also knew the buyer had removed their contingency for loan approval, and was legally obligated to close this purchase, or the buyer would lose the 3% deposit they’d already put into escrow. The buyer was not happy.
In the beginning I had recommended a local lender to the buyer. The buyer decided to go with an old friend that was a mortgage broker in Southern California. If we had gone with my recommendation we could have avoided all kinds of problems. Most importantly, we could have worked with a lender that understood Marin County Real Estate, and Marin Real Estate property values.
To be redundant, choose a local Mortgage Company, Mortgage Broker, Lender, Bank, or Credit Union. Expect problems if you choose someone out of Marin, including online lenders with little or no experience here locally.
Whatever choice you make, I recommend that you include in your loan contingency removal the following language: “Buyer hereby removes the loan contingency subject to the following: Seller and Buyer agree that if after the removal of the Buyer’s Loan Contingency a loan commitment or approval is not honored by Buyer’s Lender, or the appraisal is lowered without fault of the Buyer, the Buyer may terminate this Agreement and shall be entitled to the return of the Buyer’s deposit.” Navigating the Mortgage Maze has never been more difficult. If you’d like to be refered to a reputable local lender please feel free to email me, or give me a call. MDLomas@gmail.com *** 415-789-7777
On June 15, 2009 Phillip Bruce Raful, 21 year resident of Marin and state-certified appraiser, wrote in the Marin Independent Journal: Tip O’Neill, the late House speaker, once famously said,” All politics is local.” The same is true for real estate. To understand Marin’s real estate values, you need to understand that there is no such thing as a national real estate market. I’m a long-time real estate appraiser in Marin County, so it surprises me when people ask how much the value of their home has fallen, as oftentimes, the answer is zero, because it depends on the market segment that their home is in. The value of your home depends on what it is, where it is, what it’s condition is, and what the amenities are compared to other homes in your market segment. For most of Marin, the market is steady and stable. Click here to read the whole article: Marin Real Estate - Myth vs. Realty
This listing is “en fuego!”…Red Hot! And, will be open this Sunday June 21, 2009 from 1-4 pm. For more information about this NEW Sausalito listing call the listing agent, Kirsten Wolfe, at: 415-328-5431 If you’re looking for a wonderful home in Southern Marin prepare to fall in love!
Luxury Housing Sector in Marin County Looks Up The real estate slump experienced last year looks like it’s about to take a turn for the better, especially in places like California which bore the brunt of the downturn. Marin County for one is looking up in terms of its luxury home sector, according to a report from real estate service provider Coldwell Banker Residential Brokerage. According to the report:
There has been an increase in the sale of luxury apartments and houses over the past six months
Homes that are more than a million dollars are being taken off the market faster now than in the last two years.
Homes are now closing faster, in under 100 days rather than in under 150 days a few months ago.
The perception that the housing market cannot get any lower than this and that prices are only going to rise upwards has brought about this renewed interest in home ownership.
People are realizing that low interest rates are soon going to be a thing of the past and that the buyer’s market may not last much longer; so they’re using the low prices to snap up good homes.
More and more people are coming to open houses as serious buyers and more sales are being closed than ever before.
The housing sector is looking up in all cities of Marin County
Homes are selling for as much as 90 percent of their asking rates, a significant improvement from the 83 percent that was registered a few months ago.
And if you thought these signs of prosperity were being exhibited only by the rich and famous, the overall housing sector in the area is also showing signs of having reached rock bottom. Prices are set to go up again, and now is the time to buy if you’re a first time homeowner.
By-line:
This article is written by Kat Sanders, who regularly post at her blog The Fixer Upper Blog. She welcomes your comments and questions at her email address: katsanders25@gmail.com
GM declared bankruptcy this week. After months of foreshadowing almost an anticlimax except to those directly affected— dealers, employees, suppliers, automobile owners and buyers and a list of others. It used to be said that what is good for GM is good for the country. And what is not good for GM———-. Theoretically, after shedding substantial debt and unprofitable divisions the company will emerge leaner and more competitive. Remains to be seen. We wish them luck for the sake of all concerned. At the start of business on Monday, June 8, GM as well as Citigroup will be dropped from the Dow Jones Industrial Average. They will be replaced by Cisco Systems and Travelers insurance. Just goes to show that no company is too big to be subject to the basic rules of business and markets.
Dow Jones closed out the week today (6/5/2009) at 8763, up about 12 points and holding up pretty well but people watching all this are still wary, skittish, waiting for another shoe to drop, wondering if the Marin County housing market has hit bottom or still has further to go. Crystal ball says “answer hazy, ask again later”, but previous cycles have shown that although it is difficult to exactly time the bottom of the market it is still beneficial to buy near the market lows, and easier to do on the way down than on the way back up.
Perception, it’s how you look at things!
City-by-City Report for June 1 shows Novato and San Rafael still with very strong sales at 46% and 35% of listings in contract, respectively, followed closely by Corte Madera at 36% and San Anselmo at 33%. On the other end of the scale, Tiburon in the basement with only 5 of 111 listings in contract, or 4.5%. Kentfield next at 11%, and Sausalito at 14%. Mill Valley at only 19.7% or 39 out of 198 listings in contract, but this a steady and consistent improvement from 14% on May 5 and 10% on March 31.
Single Family Residences (SFR) in the County inventory actually down about 17 units from last report to 1230, of which 327 or 26% were in contract on June 2. Homes under $1million at 38% in contract (248 of 639), down just a bit from last report’s figure of 40.25%. Upper end of the market still stuck due to challenges in obtaining “jumbo” mortgages. The money is out there but it takes time and determination to get the loans through for qualified borrowers. Well worth doing to take advantage of fabulous (I almost want to say “once in a lifetime”) deals on purchase prices. YTD SFR sales at 479 units compared to 599 at this time last year, or down 20%. This shows continued progress from -21.5% at last report.
Condo’s in the County at 37.62% in contract overall and 39% for units under $1million (all but 14 units). 179 units sold YTD as of June 2 compares to 149 at the same time last year or up 20%. As we have discussed before, average sales price for YTD units sold $363,326 vs. last year’s $564,096 and days on market up from 95 last year to 114 now. Lower sales prices not an accurate representation of loss of market value because they also reflect to a considerable degree REO (bank-owned properties) “fire-sale” pricing and lower-end units on the market. Markets vary greatly by town, neighborhood, street, and specific complex and can be challenging to understand. Best bet is a local, experienced real estate agent who is familiar with current inventory and pricing and recent sales.
Fred Anlyan Broker Associate Coldwell Banker Greenbrae
Despite the struggling economy, every month more than 5000 people buy a house in the Bay Area. What do these people know that others may not? Are these people investing in a declining market? It appears that despite the economy there are plenty of people who’ve decided that it is time to buy. Many of these buyers are bargain hunters that are buying now because they perceive that they’re are good deals out there.
MDA Dataquick analyst Andrew LePage suggest, “that at least two thirds of the market is split between investors and first time buyers. And, that the balance is mainly people that have to buy because of a new job or other life events.”
Also, many homes here have returned to the realm of reasonable prices, with the median Bay Area home hovering below $300,000. The Bay Area median price peaked in the spring of 2007 at $720,000. This reflects a huge shift toward sales in more affordable neighborhoods.
People who buy homes without planning to live in them remain a steady and increasing force in the market. While it’s difficult to pin down exactly which buyers are investors, one sign is the address to which new property tax bills are sent. Two years ago, about 10 percent of home buyers had tax bills sent to an address other than the newly purchased house. By February of this year that was up to 18.7 percent.
In Marin County, in the last couple of weeks, sales have definitely picked up. It’s taking at least 10 days to get a reputable home inspection company out to a property for an inspection, when just a couple of weeks ago, there wasn’t any wait. Is this just a “seasonal” pick up, or have we stopped bouncing off the bottom?
Sign(s) of the times? A cluster of real estate signs heading onto Belvedere Island Sunday May 17, 2009
(resources for this article are the S.F.Chronicle and Dataquick Systems)
How to become popular in real estate by badmouthing your competition!
There’s an email circulating around Marin County real estate offices these days from the owners of a local real estate company’s owners pointing out the differences between their company and another real estate company here in Marin. What appears to be a comparison between the two companies turns out to be an unnecessary hit piece that not only attacks the company, but personally attacks the manager of one of their offices. One of the owners that’s circulating this email is an attorney. On the face of things one might think the email is just pointing out the differences between the two companies with information that may be factual. How clever. Because, when it’s said and done, it’s a company trying to build themselves up by putting their competition down, instead of promoting themselves based upon their own merits.
Has the market ,or this company sunk so low,that this company has to resort to these kind of tactics? Why would you even think of promoting yourself by demeaning your competitor? Is this their business model?
In my 25 years of working as a real estate professional in Marin, I have ever seen this kind of behavior. What are these people thinking?
For the life of me I cannot figure out why someone would Twitter? I don’t understand the appeal of virtual stalking unless you’re a celebrity desperate for attention? So far, I can’t think of anyone other than Hunter S. Thompson that would be interesting enough to be interested in what their doing. My problem is Hunter S. Thompson is dead. I’m confused, is Twitter for twits? Is this a viral experiment for lemmings?
As professional realtors we’re inundated with invitiations from social networking sites like Facebook, LinkedIn,Plaxo,Ning, Twitter,Merchant’s Circle and that’s just the tip of the iceburg. When is enough, enough?
To participate on any of these sites takes a lot of time. But, is it time well spent? These sites have been around for a couple of years now. Have they lived up to their promises of creating more opportunities for real estate professionals?
They are cash flow,capital,character,collateral, and credit score. For more about how “Common Sense” has returned to real estate financing, check out the link above.
Rates on 30 year mortgages fell slightly last week but remained just ahead of record lows posted this month according to Freddie Mac on Thursday. Average rates dipped to 4.8 percent from 4.82 the previous week. Last year at this time, the average rate on a 30 year mortgage was 6.03 percent. It has been below 5 percent for 6 straight weeks. (The floor is a painting)
What do Real Estate agents do to earn their commission ? Ever heard that question? Here’s a comprehensive and humorous take on that very question from a Home Inspector who’s worked closely with Real Estate practitioners.
”They don’t do @*!?&% thing! Why they just stick a sign in the yard and make easy money. I could do their job any day of the week.”
Well, maybe you could do their job. But it just won’t be any day of the week. And if you intend to be successful at it (which means satisfying a bunch of clients, mortgage lenders, appraisers, and countless other associates), it will probably be EVERY DAY of the week as well as most nights, weekends, holidays, anniversaries, special occasions, sick days, snow days, and unpaid vacation days.
Understood, there are Real Estate agents, and then there are good Real Estate agents. Just like Doctors, Lawyers, and Indian Chiefs. This article is about the good ones. The ones who go to work before,during, and after the times mentioned above.
To serve their clients and stay competitive in their profession, today’s Real Estate agent are expected, assumed, requested, required, and or demanded to perform, be knowledgeable of or have access to the following: Information Brokerage Services, Multiple Listing Services, tax rate adviser, appraiser, mortgage lender,financial planner, legal expert, credit counselor, city planner (fortune teller),building inspector, chauffeur, shuttle service, travel agent, tour guide, delivery boy, order taker, public relations expert, therapist,marriage counselor, family doctor, nurse, baby sitter, advertising executive, general contractor, construction estimator and superintendent, and multi-talented subcontractor (not excluding locksmith, yard man, maintenance man, garbage man, plumber, electrician, decoder scientist for alarm systems and programmable thermostats).
They’re often perceived as the bad guy when interest rates go up and the bad guy when your house doesn’t sell by 10am the next day.
It’s helpful if their talents include being a diplomat, a negotiator, a referee (similar to those used in Roller Derby and Monday Night Wrestling) and, in general, a walking bureau of information for everything about anything - including whose check is good and whose wife or husband isn’t.
They must know about schools, churches, governments, public utilities, crime rates, world affairs, this weeks jail term for this weeks Environmental Protection Agency violations, future developments that no one has ever dreamed up yet, transportation, shopping, day care, soccer, T-ball,how many termites it takes to eat a house, every homeowners association formed since 12 BC and what kind of fences they don’t allow, should you water and fertilize the Bermuda grass before, during, or after mowing, the best place in town to buy pizza, if you can buy beer on Sundays, and at least two dozen other skills and talents that I don’t have room to mention.
So, be nice to your broker/agent. Next time you start thinking. “They have it so easy”, go spend a day with them. You’ll soon realize that, like most of us, they work hard for their money, and your satisfaction really is important to them.
What is a Short Sale?A Short Sale is where the loan balance exceeds the market value of the home. Lenders, facing a surge in delinquencies, increasingly have been willing to accept short sales.
How Did this Happen?Homeowners faced with stalled appreciation, little or no equity, and sub-prime mortgages (ARMs) that are resetting to higher rates have combined into something of a “perfect storm.”
What You Should Know About Short Sales:Short Sales are not hugely different from a normal sale. There’s a higher volume of paperwork and lenders will impose aggressive schedules. The process for Short Sales differs depending on the lender, but here are some guidelines:For Homeowners: Examine your loan terms. Do you have second or third mortgages? Access your financial status to see if you qualify for relief. Some Lenders will accept job losses, illness, death, and divorce as hardships, buy typically won’t offer relief for someone who’s gambled away their assets. If financial problems are temporary, lenders may consider reworking loans to allow a homeowner to catch up and keep the house.
For Realtors: When you list a property that fits these parameters ask for written permission to communicate with lenders on their behalf. Once Notice of Defaults are filed, there’s little time (approximately 111 days from Notice of Default to Trustee’s Sale) to sell properties before lenders take them back. So, the earlier you get started in the process, the better your chances of selling a property at market value. Most lenders won’t consider a short sale until homeowners are behind in payments, though some are starting to in order to avoid having a Real Estate Owned (REO) property.Realtors need to Develop a Lender Package: Experts recommend contacting lenders and asking for a “Workout Package”, which outlines a given lender’s modus operandi. The aim here is to make a plea on behalf of your clients by illustrating their hardships. You’ll find that the paperwork is similar to qualifying clients for a mortgage. You will be showing how financially distraught or insolvent clients are (using documentation like W-2s, tax returns, banks statements, expenses and so forth. If there are seconds and third mortgage holders, send the same package to them. Then come up with a BPO (Broker’s Price Opinion), an assessment of the property’s condition and worth, and outline current market conditions, including the number of sales vs. listings and the number of distressed properties on the market. You want to show lenders they’re financially better off today with a “Short Sale” then they are with a REO. When you prepare offers to lenders, be prepared for a “No” response. Here’s where negotiation skills are critical. You will have to arrive at price and timetable that is agreeable to all parties. And, you will probably have to haggle over the commission. In the end, you’ll most likely find that most lenders are fair, and pay accordingly. (Since publishing this post some have suggested that not all lenders play fair, and do not always pay accordingly… so, be careful)
For Buyers: Stay tuned, stay informed, and I will be happy to answer any other questions you might have in this regard.Becoming A Master At Listing and Selling Bank Owned Propertiescan be purchased at: Amazon other related articles can be found at: New York Times Home FinanceSome of the information for this post came from the California Association of Realtors California Real Estate Magazine
Frank Howard Allen Ranked Number One by North Bay Business Journal
The North Bay Business Journal published its list of top ranking Residential Real Estate Brokerages and once again Frank Howard Allen has ranked number one. The ranking is by sales volume and includes brokerages with offices in Sonoma, Napa and Marin counties.
It’s never been more critical when deciding what Real Estate company you should align yourself with. Times have changed. Discount brokers are disapearing. Small boutique real estate companies are having trouble keeping their doors open. A large company here in Marin recently had almost half their agents switch over to a new company here in Marin, that’s still trying to figure out how to make inroads into the Marin real estate marketplace.
Frank Howard Allen Realtors is locally owned since 1910, and continues to lead the way in Marin County Real Estate
If you’re thinking of buying or selling in today’s changing real estate market please feel free to give me a call. Over 20 years of local experience in this unique marketplace.
Marin County Real Estate Market TrendsIt appears that we’ve been “bouncing off the bottom” for a couple of months now. Investors and first time buyers have realized the opportunities out there. There appears to be a pick up in property sales in all price ranges over the last few weeks. The question is, as we bounce off the bottom, will this market get some lift? Are all the recent sales just seasonal? Or, does this reflect that we’ve hit the bottom, and are moving forward?
Recently I sold a house in Northern Marin. The day before closing, the lender who was in Southern California decided to do a last second desk review appraisal for the purchase ,and dramatically lowered the value of the house? From the time of the original appraisal, done by a local appraiser, there were new comparables/comps to suggest the original appraisal had undervalued the property. None the less, the underwriter in Southern California required that the buyer put in another $60,000 towards the purchase, or they would not fund. The lender had the buyer over a barrel. The lender knew the buyer’s finances, and knew they had the where with all. The lender also knew the buyer had removed their contingency for loan approval, and was legally obligated to close this purchase, or the buyer would lose the 3% deposit they’d already put into escrow. The buyer was not happy.
The real estate slump experienced last year looks like it’s about to take a turn for the better, especially in places like California which bore the brunt of the downturn. Marin County for one is looking up in terms of its luxury home sector, according to a report from real estate service provider Coldwell Banker Residential Brokerage. According to the report:
Frank Howard Allen Ranked Number One by North Bay Business Journal
