Dennis' Mortgage Blog

Question of the week:  Why do I have to pay my taxes now when they are not due until December?  Answer:  Property tax bills for California have been mailed out with the first half installment due on or before December 10^th.   Everyone now in escrow, be it on a refinance or a purchase, will have to have the first half installment paid prior to closing.  Every year starting in October and then again starting in February or March, lenders and title companies are requiring the tax installments be paid to ensure there is no lien placed on the property.  This is usually more of an issue on a refinance transaction than a purchase transaction—although with short-pay and bank owned transactions it can become a major issue as to who is going to pay.  If you are in escrow and having the taxes paid is part of the approval from the lender or underwriter my very strong advice is do not mail your taxes into the county.  Communicate with the escrow company and title company and pay your taxes through them so title knows they have been paid and do not have to wait for the payment to post on the county website and/or your cancelled check. 

If you have a question you would like me to answer send it to me!

Coming soon on DennisCSmith.com:  Podcasting!  I am working on recording and uploading interviews with various professionals from CPAs to home inspectors and brief podcasts on subjects such as credit reports, debt management and asset building.  If you have an individual or topic you would like covered let me know.  Click here and let me know!

Given the last month or so this past week has seemed down right leisurely, well with the exception of the stock market having a couple of days of huge drops and jumps in the same day, or just drops, or just jumps.  Our rates have behaved the same way.  Early in the week we were soaring through the day; later in the week we have seen a slow drift back down.  Working on another financing matter wearing my community/volunteer hat a commercial broker said, “Once the markets stabilize…” and I just laughed when I read it.  Laughed, because as I mentioned given this week compared to the recent past this almost was a stable market.

Not a lot to report except the number of homes sold in California is up, but the median price dropped—not a surprise because of the mathematics.  What may surprise you is this:  despite the drop in the median price I feel our local market is beginning to stabilize from the bottom, and there is no movement at the top so this is good news for the middle of the market.  If all the activity in a market is at the lower/lowest prices then naturally the median price of the entire market will drop.  If two apples sell for $3 (they are really good organic square specially grown from seeds imported from Japan); and four apples sell at $2 and 10 apples sell for $1; the median price for the market is $1; the average price is $1.50—a big difference.  That is what we are experiencing in our current market.  Plenty of  one dollar apples are selling, believe it or not some with multiple offers, and because of that the median price is at the bottom of the market.  The average prices are down are well, but not at far as the median which is what is reported in the media.

Keep in mind a 45 day escrow opened after today closes in 2009—when the new lower loan limits take effect.  If you are considering a transaction with the loan amount above the new limit of $625,500 you need to close before December 31, 2008; and per my update last week potentially before 12/1/08 if the limits are not temporarily extended to the end of the year from their expiration of the end of November.  We are inquiring as to what the situation is and no one knows at this time—apparently we are the only ones to see this potential funding gap as an issue.

A pat on the back for Stratis Financial Corporation if I might be a bit braggadocio; we were visited this week by one of the Executive Vice Presidents and the National Sales Manager of Flagstar Bank, one of our primary lending sources.  The purpose for the visit was similar to the visit we have from Fannie Mae several weeks ago, to speak to us about our origination model and who we conduct our business and processes.  We are targeted for these visits because of the outstanding performance of our funded mortgage portfolios and they are coming to see what our business model is so they can try to encourage other brokers to follow our model. 

Our business model is pretty easy to follow.  Be honest with clients.  If they cannot afford to purchase a home let them know that and also what they need to do in order to afford a home.  When and where possible use 30 year fixed rate financing, not much of an option these days but still our first choice even during the height of ARM-mania.  Rarely, very rarely, use Option ARM financing—negative amortizing mortgages.   With an honest and conservative approach to mortgage origination we have set up our clients for successful homeownership, as a result the Big Boys want to know why are we different.  A lot of brokers and lenders also use this model—and I feel safe in saying they are still in business.

A special thanks to all our clients who have worked with over the years to fulfill their mortgage needs—your commitment to homeownership has made us the premier mortgage broker that we are.  

Rates flat and a bit down this week thanks to a late rally.

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 740 AND ABOVE (change from last Friday):

30 year conventional at 1 point 6.25%              ó Flat

30 year conforming-jumbo at 1 point 6.375%            ê 0.125%

30 year FHA at 1 point 6.25%                                    ê 0.125%

30 year jumbo at         NO PRICE CALL FOR INFORMATION              

After last week’s jump nice to see a bit of a flattening.

Have a great weekend, enjoy your family and friends.  I you are buying a house or need assistance I am available for you.

Dennis