Archive for August, 2010

“I am going to wait till prices drop more”

Interesting Perspective from my friend Bob Veldkamp

Good morning – I was speaking with a Realtor this morning and she was very frustrated with buyers saying they want to wait for prices to drop more. That got me thinking about the forecasts I am reading that say when interest rates start to rise, they will move fast. So…, I did some comparisons that took into account prices dropping but also show what higher interest rates will do as well. Bottom line is, the higher the loan amount, the better off they are to buy today and take advantage of the current low rates. I hope this will help you and your clients.

$200,000 loan at 4.00% interest:
Principal and Interest pymt = $955

What happens when prices drop but interest rates rise?

$150,000 loan:
RatePrincipal and Interest Pymt
5.50%$852
6.00%$899
6.50%$948
7.00%$998

$300,000 loan at 4.00%$ interest:
Principal and Interest pymt = $1432

What happens when prices drop but interest rates rise?

$250,000 loan:
RatePrincipal and Interest Pymt
5.50%$1,419
6.00%$1,498
6.50%$1,580
7.00%$1,663

Bob Veldkamp

“Your Premier Lender”

689 Tank Farm Rd Ste #230-B
San Luis Obispo, CA 93401
Cell: 805-801-8444
Office: 805-544-6133
Fax: 805-544-6149
bobveldkamp@gmail.com
CA DRE License # 01410661

Rules are Changing for FHA Mortgages

Starting in the summer of 2010, the FHA (Federal Housing Administration) plans to reduce the maximum seller concession (a contribution that a seller could make to pay for a variety of services and taxes connected with a transaction) from 6% of the home price to 3% of the home price.
Let’s look at an example where you are buying a $200,000 home. Under current rules, the contract could be structured such that the seller pays closing costs, repairs, etc. up to 6% of the price of home or $12,000 in this case. Under the new regulations, this will now change to 3% of the price of the home or only $6,000.
Why the change? The FHA says the 6% exposes them to excess risk by creating incentives to inflate appraised values after sellers have agreed to pay the 6%, but after these costs have been tacked onto the final sales price of the home. Using our example above, the final home sales price would be $212,000 not $200,000. This new rule will affect the funds a buyer needs to purchase a home and close the transaction. So, check with your real estate agent and loan broker to make sure you understand the implications. Since FHA is involved in 9 out of 10 mortgages issued today, this change will probably affect most of us.
Source: Carole Rodoni Bamboo Consulting 8-10 Thank You Carole!

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