Industry Reacts: Is Trump's Suspension of FHA Mortgage Insurance Premium Cut Good or Bad?

Source: HousingWire

The Department of Housing and Urban Development’s decision to suspend the reduction of Federal Housing Administration mortgage insurance premiums didn’t come as a shocker.

FHA mortgage insurance premiums have been under heightened scrutiny ever since the FHA’s flagship fund, the Mutual Mortgage Insurance Fund, reached its Congressionally mandated threshold of 2 percent ahead of schedule in November 2015.
The cut will have an impact on future borrowers, said National Association of Realtors President William Brown.

“According to our estimates, roughly 750,000 to 850,000 homebuyers will face higher costs and 30,000 to 40,000 new homebuyers will be left on the sidelines in 2017 without the cut,” Brown said. “We’re disappointed in the decision but will continue making the case to reinstate the cut in the months ahead.”

“We hope HUD and the Trump administration will make it a priority to quickly review the reduction in the FHA mortgage insurance premium,” said CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) President Geoff McIntosh. “Homebuyers in California, who would have saved an average of $860 a year, will be negatively impacted more than any other state by the decision to not reduce the FHA premium.”

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State’s Pending Home Sales Trends in December


Led by the Southern California region, California pending home sales registered gains on a month-to-month and year-to-year basis, portending a moderate increase in sales in the near term, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said. 

The modest sales growth is unlikely to be sustained, however, given the severe shortage of homes for sale and affordability concerns, as indicated in C.A.R.’s December Market Pulse Survey**, which saw fewer listing appointments and less open house traffic. 

Based on signed contracts, statewide pending home sales increased in December on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* rising 1.9 percent from 115.8 from December 2015 to 118.1 in December 2016 – even with new mortgage rules that pushed sales higher December a year ago. 

On a monthly basis, California pending home sales were up 3.3 percent from the November index of 114.4.  

  • Southern California saw the largest increase in pending sales last month, rising 7.8 percent on an annual basis and decreasing 16.1 percent on a monthly basis.
  • On the flip side, in the San Francisco Bay Area as a whole, tight housing supplies and low affordability contributed to a fall in pending sales of 14.2 percent compared to December 2015 and 32.5 percent from November.
  • Overall pending sales in the Central Valley improved 0.9 percent from December 2015 and were down 18.4 percent from November.
  • The share of homes selling below asking price fell from 57 percent a year ago to 43 percent in December. Conversely, the share of properties selling above asking price increased to 23 percent from 18 percent in December 2015. The remaining 34 percent sold at asking price, up from 25 percent in December 2015.
  • For homes that sold above asking price, the premium paid over asking price rose to 11 percent, up from 8.4 percent in November and 9.2 percent a year ago.
  • The 43 percent of homes that sold below asking price sold for an average of 22 percent below asking price in December, double the November figure of 11 percent, and was up from 13 percent from a year ago. 

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Dealing with an empty nest

“We’re not getting any younger honey!”

Have you heard this one before? You may be getting to that age now where the kids are either close to finishing college, finding full time jobs and picking up a sweet rental, or finally tying the knot. There may still be one 20 something year old lingering around for longer than expected, and you haven’t fully achieved “empty nest” syndrome yet, but the time is coming soon.

So what do you intend on doing with all this new found time, space and energy? Chances are you don’t plan on just staring at each other longer than you have in decades, so there must be another solution. It’s time to get back to living on the edge and taking a few calculated risks. Maybe what you need is a little adventure! Is there something that you have been aiming to do forever, but with the kids, mortgage and other heaping responsibilities, these goals turned more into faded dreams than a reality?

Perhaps we can help offer some insight and direction. Believe us, we have worked with many clients in the past who have faced the same choices that you may be dealing with now. Whether that involves taking a 3 month long European vacation, visiting family across the country, buying that boat and spending your time out at sea, or investing your time serving orphans in Africa, one thing that may be crossing your mind is what you plan to do with your oversized house for two.

For most reading this, we would presume that you either have a majority of your mortgage paid off or at least some retirement savings stashed up that will provide you the flexibility to sell and downsize into a more modest living space. With that extra income, you will now be able to finally experience those long anticipated dreams. Maybe this looks like taking a leap and moving into a high-rise condominium in the big city. Or perhaps you would rather pick up something a little more tranquil out in the country. Others may be interested in building up a small rental portfolio and not being tied down to any one location.

And there are plenty of luxurious 50+ retirement communities that offer mind-boggling amenities. The options could seem overwhelming, so we’re here to serve you along the way. We understand the hesitation and concerns that can arise when making such a big decision, after living in a residence for 20+ years. These feelings are normal.

Whether you would like to schedule an appointment to discuss possible options with your current home or need assistance in planning for your future move, we encourage you to contact us using the information provided above. Consider us to be your trusted advisors as you begin mapping out your next steps. We look forward to helping you achieve your dreams!

Shopping for a mortgage

Shopping for a mortgage is one of the most important steps involved in purchasing your next home. Since the terms and conditions that you agree to will impact your financial future for years to come, it is vital that you take the necessary time to research and compare the best packages available to you. Many buyers tend to primarily focus on obtaining the best interest rates; and though this is an extremely important piece, there are a host of other factors to consider. Therefore, let’s discuss some of the other criteria that should be reviewed before signing on the dotted line.

First of all, please be wary of only searching for rates and quotes online. Although there are very reputable companies that can be found using an internet based search, it is wise to also spend time working with local companies and banks that are familiar with the current market. This is a very detailed process, so you should not base your decision on simply one or two sources. As you have seen from the recent mortgage industry scare, it is typically best to invest in a fixed rate loan. With adjustable rate mortgages, you could be stuck paying higher amounts of interest and maybe even eventually owe more on the loan than the house is worth. Be sure to review this with your mortgage professional before making any final decisions.

Next, along with attractive interest rates may also come additional fees and terms. Be careful that you fully understand what you are signing up for before choosing your mortgage. Although the rates may look somewhat favorable, here is a list of some things to be aware of:

  • Processing Fees—Items such as processing and underwriting fees could be added to the cost of the loan as well. Although you typically will have to pay a few hundred dollars for the application fee, there are other extras that may be attached as an added expense.
  • Private Mortgage Insurance (PMI)—In order for lenders to protect their own interests, buyers will be required to pay for PMI on a loan until they have built up 20% equity in the home. These fees are calculated based on a person’s credit score.
  • Appraisals—It is becoming more common for lenders to charge this fee upfront before an appraisal is conducted. Unfortunately, you will end up paying for this regardless of whether or not it gives you the evaluation necessary to obtain the loan.
  • Points—Each point equals 1% of the actual loan amount. Many buyers can elect to choose a plan that charges points so that they can acquire a lower interest rate. Lenders will typically charge anywhere from 1-3 points (or even more), and these will be charged as a fee at closing. Whether or not you should choose a plan with points will be dependent on your available cash and how long you plan on staying in the home.

This is just a sampling of what may be included with your mortgage. It is best to find out up front exactly what you will be responsible for with all additional fees included. As long as you are working with a reputable company, you should get a good feel of what will be expected at closing. Be sure to avoid working with any parties that seem to make unfulfilled promises, suddenly change the terms at closing, ask for more information than is necessary to process the loan, or overall make this an uncomfortable process for you. There are more than enough resources available to you to obtain a loan that will suit your needs. Additionally, we would be happy to provide any additional referrals and feedback so that you can get set out on the right foot. Please contact us right away for more information on how to get started!

Tax advantages to owning a home

There are so many advantages to purchasing your own home. For instance, it offers the pride of ownership, provides an overall sense of accomplishment, and is a place where you and your family will build many lasting memories. Among others, real estate opens the door to many tax benefits as well. Let’s discover some of the following ways that owning a home/s can help to create a tax shelter.

  • Mortgage Interest & Points: If mortgage debt is $1,000,000 or less, married couples filing jointly can deduct the full amount of their interest. Otherwise, those filing separately can write off up to $500,000 worth. This also includes second homes or adjacent land to your main residence. Points on either a home purchase or refinance can also be deducted, but these must be amortized for the latter.
  • Property Tax Deductions: All state and local taxes regardless of how many properties you own can be deducted, up to the alternative minimum tax required by law. Funds that are held in escrow accounts can only be written off once the taxes are paid.
  • Private Mortgage Insurance (PMI): A portion of PMI can also be deducted if household income is less than $109,000 per year or $54,500 for those filing separately.
  • Interest On Home Equity Loans: As long as you have the necessary equity in your home to secure the required debt, you can write off the interest on a loan of up to $100,000 for those who are married filing jointly, or $50,000 when submitted separately.
  • Working From Home: That’s right! Even those who use a portion of their home for work purposes are able to deduct a percentage of the home’s depreciation, utility/maintenance costs and insurance. This is one you definitely want to review with your tax professional to make sure you are getting the maximum available to you.
  • Home Maintenance Interest: This is a tricky one, as you can write off the interest on any capital improvements made to your home, which will increase value and/or prolong the life of your home. This includes certain types of restorations or additions made to the home with no cap on the investment. However, you will not be able to deduct minor patching or cosmetics made to the home.
  • Capital Gains/Selling Costs: As long as you have lived in your primary residence for at least 2 of the last 5 years, you are permitted to sell your property for up to $500,000 of profit for married couples filing jointly, or $250,000 for singles with absolutely no tax penalties. However, if you end up selling for an amount above either threshold, you can subtract the amount of closing/selling costs that you incurred from your total gain. Those who fall outside of the 2 out of 5 year limitation may be granted an exception given certain unique circumstances such as health problems, relocating for work or other such occurrences.

Therefore, it pays to consider the benefits of homeownership and to discuss with your tax professional what you may qualify for. Especially for those who are entertaining the thought of buying instead of renting, it is very important to consider the long-term impact that owning real estate can have on your overall financial future. There are advantages whether you are buying for yourself or investing in properties for additional income. Contact us today using our information above to start exploring what options may be available for you!

You CAN sell your home fast

Selling your home fast doesn’t have to be an impossible endeavor.  In fact, even in today’s market you can still command a very reasonable price on your home within 90 days or less.  And if you follow some proven steps that we’ll outline below, your turn around time could be much faster than expected.

There may be various reasons that you want to get your home off the market as quickly as possible, but these principles we offer here can work in nearly every situation.  So let’s dive in on some basic strategies that you can implement today to gain the most favorable results:

Stage Your Home Properly

This is one area where it may make sense to hire professional help.  Regardless, do your homework and take the time to find out exactly what can be done to make your property more marketable.  For example, be sure to strip away any of that stuff on the walls or being used as decorations that is personal.  Also, place something of interest in each room that draws buyers in.

Additionally, people want to be able to picture themselves living in your space and visualizing where their own possessions will go.  So you need to clear out space and remove clutter, especially from public areas and closet spaces.  In fact, it is said that at least a 1/3 of your own items should be placed somewhere else other then the home you are trying to sell. 

Finally, maximize the use of lighting and make sure the house is spotless.  Most importantly, this goes for the kitchen and bathroom spaces which tend to endure a lot of wear and tear.  Patch any areas that need touch ups with some spackle, paint and caulk.  

Cut That Price

If you’re in a situation where you are moving for example, and want to be rid of your property ASAP, then consider starting your listing price at about 10% below its estimated value.  It’s better to start a little lower up front if you want to attract the attention of buyers and get quick offers.

This can also work much more effectively then dropping the price incrementally overtime.  In fact, the latter can even be harmful, because it may create the perception that nobody wants your property.  So make your listing competitive and be ready to entertain some early offers.

Do Your Research

People like things in writing.  Therefore, spend a little extra money to get an appraisal and inspection ahead of time, which you can offer at each showing.  This will build confidence with your buyers, since you will be providing the hard facts up front and you will show there is nothing to hide.

If you want to go the extra mile, you can even include receipts and/or documentation of repairs done on the home, as well as any new appliances that may have been purchased.  Your agent may also want to include information and statistics on the neighborhood as well.

Hire A Real Estate Agent With Proven Results

Did you know that about the top 10% of agents produce 90% of the results?  Therefore, why hire a Realtor that can’t follow through on their commitment to sell, especially when time matters most?  You need a team to work on your side that knows your market and can command the best price for your home in a short period.

Also, it is vital that your agent has expertise in marketing your home both with traditional methods and using online strategies for maximum exposure.  Because information travels so quickly on the internet, it is crucial that you have property tours, videos, listing information, etc. submitted to all the top traffic producing sites.  This will attract a high amount of responses and will help the word to travel quickly. 

Thus, allow us to prove our ability to help you sell within the next 90 days or less by calling us today.  During our private consultation, we will show you quantifiable results along with a comprehensive marketing process that has helped other homeowners just like you get the results they desired.  We look forward to earning your business! 

How do you get a fair price on a home?

One of the most important aspects to buying a home is to ensure that you purchase for a fair price.  Since there are certain key steps that you must follow in order to make a sound decision, it pays to have a knowledgeable Realtor on your side who will be able to help obtain the best and most realistic asking price for a property.

Determining Market Comparables
For example, one of the first ways that your agent will discover the price of a home is by researching local market comparables.  In most cases, they will be able to bring up a list of properties sold over the last 6 months within a 1 mile radius.  Properties should also not be bigger than 20% of the subject size.

Additional features to consider would be the neighborhood each home resides in, structural differences, bedrooms and bathrooms, overall condition and other amenities such as a pool, a/c, or garage.  Other factors, such as if a particular home sold for much lower due to foreclosure is something your agent can uncover as well.

Houses That Have Not Sold
Next, many homes could be on the MLS for 6 months or longer without ever selling.  Others that are comparable could have been taken off the market after not getting enough offers or being listed for too high.  This is valuable information, because you may be able to get a particular property for a substantial discount or it may not even be worth pursuing. 

Neighborhood Reputation & Appreciation
When it comes to buying a house, this is one of the most important reasons to work with a Realtor.  Since your agent will have a familiarity with various local market trends and statistics, you will be able to learn what makes a particular neighborhood desirable and also which areas to avoid.

A lot of things can affect a home’s value such as the school district, crime levels, or even other properties located nearby (such as those burnt in a fire or properties that were a bank sale).  In fact, sometimes these factors can even differ from block to block!

Your agent will also help you to assess the appreciation rates for various neighborhoods and future development plans that could affect home prices, so that you can get a decent indication of what to expect down the road.  This can be extremely valuable information dependent on how long you plan to live at the said property and the length of time the home may need to sit on the market.

Appraisals & Inspections
After you place an offer on a property, you will have the opportunity to get an appraisal and home inspection as further due diligence.  Even with an agent, there are sometimes issues that may arise with a property that could affect the home’s value that you were not even aware of.

Some of these problems could include structural issues, plumbing or electrical, termites or insects, mold or even water damage to name a few.  Obviously many of these things could impact the price significantly and would either have to be fixed by the seller or renegotiated to get a fair price.

In conclusion, there are a lot of areas to consider when choosing a home and getting a fair price on a property.  Since this is one of the biggest purchases you will ever make, it is crucial that you protect your interests and ensure that you are getting the best deal possible. 
In order to get started researching homes in our local area, contact us right away using the information located above.  We look forward to serving you as you search for your next future home!

California home sales kick off year higher in January, marking best start in three years

California existing home sales posted their best January performance in three years as year-over-year sales recovered from delayed escrow closings late last year caused by new loan disclosure rules, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R).


Making sense of the story


·       Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 383,670 units in January.



·       The January figure was down 5.4 percent from the revised 405,760 level in December and up 8.8 percent compared with home sales in January 2015 of a revised 352,640. The January 2016 sales level was the highest since January 2013, when an annualized 421,780 homes were sold.


·       The median price of an existing, single-family detached California home fell 4.3 percent in January to $468,330 from $489,310 in December. January’s median price was 9.2 percent higher than the revised $428,980 recorded in January 2015.



·       C.A.R. Vice President and Chief Economist Leslie Appleton-Young commented, “The fundamentals underlying the demand for housing fueled a healthy start to 2016. The volatility in the equity market in the last few weeks, coupled with increasing uncertainty about the impact on economic growth, however, may lead potential home buyers and sellers to take a ‘wait and see’ approach, which could erode housing market activity in the upcoming months.”



·       The number of active listings increased for the first time in five months, increasing 3.1 percent from December on a statewide basis. At the regional level, total active listings increased from the previous month in Southern California (5.3 percent), and the San Francisco Bay Area (8 percent), but declined slightly in the Central Valley (1.6 percent).



·       Year-over-year sales increased in the state’s major regions, including Southern California (6.5 percent), San Francisco Bay Area (6.8 percent), and with the Central Valley posting the largest annual gain of 11.8 percent.



·       C.A.R.’s Unsold Inventory Index rose to 4.3 months in January from 2.8 months in December, primarily due to slower sales and an increase in active listings. The index stood at 4.9 months in January 2015.


California pending home sales register annual increase in December


Pending home sales in California continued to improve from a year ago with solid gains, which will position the market for a modest increase in home sales in 2016, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).


Making sense of the story


  • Statewide pending home sales remained strong in December on an annual basis, with the Pending Home Sales Index (PHSI) increasing 8.3 percent from 71.9 in December 2014 to 77.9 in December 2015, based on signed contracts. The annual increase was the smallest since January 2015.
  • On a monthly basis, California pending home sales fell from November, primarily due to seasonal factors. The PHSI decreased 22.4 percent from an index of 100.4 in November to 77.9 in December.
  • At the regional level, pending sales were higher on a year-over-year basis in all areas, with the Central Valley and San Francisco Bay Area regions increasing at a double-digit rate, while Southern California edged up in the low single-digits. All regions experienced a sharp month-to- month decline in pending sales. 

  • San Francisco Bay Area pending sales fell 36.4 percent from November to reach an index of 81.7 in December, down from November’s 128.4 and up 12.4 percent from December 2014’s 72.7 index.
  • Pending home sales in Southern California decreased 19.3 percent from November to reach an index of 69 in December, down from November’s index of 85.5 and up 2.5 percent from an index of 67.4 a year ago.

  • The share of equity sales – or non-distressed property sales – edged up in December and remained at the highest levels since the fall of 2007. Equity sales now make up 93.6 percent of all sales, up from 90.1 percent a year ago.

  • The combined share of all distressed property sales (REOs and short sales) dipped in December to 6.4 percent of total sales and was down from 9.9 percent a year ago.

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Source: C.A.R.



Reduce the risk of home fires

(BPT) - While the number of home fires occurring in the U.S. each year has fallen by more than 50 percent since 1977, the ratio of people who die in home fires has remained virtually unchanged, based on data from the National Fire Protection Association (NFPA). In 1977, deaths occurred in .8 percent of home fires, and in 2013, that rate was .7 percent. One possible explanation for this discrepancy: home fires now burn hotter and faster than they did 40 years ago, meaning victims have less time to escape a burning house.

"In a series of experiments, UL demonstrated that the nature of residential fires has changed dramatically," says Eric Skare, a volunteer firefighter in Minnesota and product manager of fire safety systems for Uponor. "Flashover - the point when intense heat causes an entire room to become engulfed in flames - now occurs less than five minutes after a fire starts. It used to take 30 minutes or longer for flashover to occur. People now have less time to get out of a burning house, even if their smoke alarms have alerted them to the fire."

The UL study cites several factors as driving the changes in home residential fires, including:

* Modern home design is toward larger homes with more open floor plans, an arrangement that facilitates the spread of fire. Older homes were smaller overall and featured smaller room plans.

* Construction materials currently in use contribute to a faster burn time.

* Today's home furnishings are made from many synthetic materials that combust easily, meaning fires have more fuel.

* In UL testing, modern windows of all types failed faster than windows made from older - or "legacy" materials. In some cases, the time difference was significant. For example, legacy windows made of wood with a metal frame and nine single-glazed panes failed in about 12 to 16 minutes, while modern premium wooden frame windows with two panes of double-glazed glass failed in about four to six minutes. When windows fail, they admit more oxygen into a burning building to feed the fire.

Working smoke alarms in a home are proven to reduce the risk of injuries and fatalities. Virtually every construction code in the U.S. requires smoke alarms in new construction. Functioning smoke alarms reduce the risk of home fire fatalities by 50 percent, according to the NFPA. A residential sprinkler system slashes the risks even further - by 80 percent. The U.S. Fire Administration recommends that all homes should be equipped with both smoke alarms and sprinklers. And the International Residential Code also requires fire sprinklers for new-home construction.

A typical system represents about 1 to 1.5 percent of the total cost of new-home construction. For example, a $200,000 new home would require an investment of about $2,000 to install sprinklers - far less than the cost of other, less safety-oriented upgrades, such as premium appliances or flooring.

Multipurpose systems like Uponor's, which use durable, flexible PEX piping, reduce costs even further. Because the home's cold-water plumbing fixtures are fed from the sprinkler loop, less piping is required for the installation. And recent approvals now allow Uponor's PEX piping to be left exposed in unfinished basement applications, which simplifies installation requirements even more.

"If you're building a new home or undertaking a major renovation, there's life-saving value in asking your builder to install a fire sprinkler system," says Skare. "It doesn't have to cost a bundle to buy yourself and your family more time in case of a fire, and it's well worth the investment."

To learn more about residential fire sprinkler systems visit For more information about fire safety and building construction, visit or