For mortgages, 620 is the new magic number

Near historic low mortgage rates, favorable home prices, and the federal tax credit for first-time home buyers have contributed to home purchases in the past year. However, the onset of the credit crisis, new regulations for home appraisals, and more stringent guidelines for purchases and refinances have resulted in confusion for some potential home buyers.

While using a mortgage broker to find the best loan may work for some buyers, it may not always be the best route. In the past, mortgage brokers could “shop” a loan to multiple lenders to help find the best deal. However, new practices and procedures under the Home Valuation Code of Conduct (HVCC) have hampered mortgage brokers’ abilities, namely that lenders may no longer accept home appraisals commissioned by brokers. As a result, consumers may have to pay for new appraisals with each lender, which costs time and money. However, consumers who are very busy or need guidance may find that working with a mortgage broker is the easiest solution.

Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past. Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs. Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage. However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income.

As for loan type, most real estate professionals agree that a fixed-rate mortgage is the best choice for buyers and refinancers.

To read the full story, please click here.

California's Median Prices Since 1970

This graph pretty much says it all. Everything was moving along fairly smoothly until we recovered from the last dip in the late 80's. From that point forward prices accelerated to unprecedented rates until the market just couldn't sustain it any longer. And you know what happened next.

What I get from this is that we're actually just below the expected median (around $300K) if you drew a line through the middle of the curve. That says we've probably over-adjusted and could begin seeing recovery and slow/moderate growth in the near future. Then again, I don't envy those who make their living by predicting this market...

CAR Releases Expectations for California's Housing Future

CAR's expectations are fairly positive for 2010 and beyond. It's been a rough three years for most of the market and although there are some predictions of a second dip, most analysts cautiously feel we're headed back toward positive territory.

From the California Association of Realtors:
“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to the forecast. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

You can read the entire article here.

Sonoma County's Energy Independence Program (AB811)

I recently attended a lecture on Sonoma County's Energy Independence Program (AB811) and found an interesting opportunity for anyone looking to improve the efficiency of their home.

Sonoma County has about $100M earmarked to finance home energy and water efficiency projects that get repaid through homeowner's property tax bills. You can start with a $395 home energy audit to help determine which projects would be best for your home and pay for those projects over a twenty year period through your property tax bill. The financing is actually a voluntary assessment or lien on the property so that when you sell the home, the assessment stays with the home - not the owner.

Projects can be up to 10% of the assessed value of the home and include solar panels, insulation, heating and cooling systems, waterless urinals, cool roofing and energy efficient windows - among others.

For an energy audit go to Sustainable Spaces
For details on the program, go to http://www.sonomacountyenergy.org/

I'm putting some resources together on my webpage so check back occasionally.

Market Summary for September 2009

Here's the market summary for September and we're still seeing some minor downward pressure on pricing as the REO's and short sales are snapped up. Although there "reports" that another wave of foreclosures are on the way, it doesn't appear that there are many on the horizon here on the Coast. But, as we've seen, things can change quickly and drastically.

The good news is that sales activity is up more than 20% over last year at this time and that could help stabilize prices.