If you are a real estate agent, I would imagine you would want to have as much information as possible about the property your client wants to either sell or buy. One bit of information you should know is the number of the census tract the property is located in. This number can be found on the Geocoding Website published by the Federal Financial Institutions Examination Council.

Why is the census tract number of the property important? Well I am glad you asked! Some lenders will offer special financing programs for properties in specific census tracts. These special financing programs are usually offered to comply with the Community Reinvestment Act , or CRA as it is more commonly known.

For example, I am able to offer a loan program that only requires a 5% down payment and does not require mortgage insurance, as long as the property is in a targeted census tract! This program has become more attractive because of the recent rise in both the upfront and monthly FHA insurance premiums.

How do you use this information? As a listing agent, you might want to add this information to your property description. For example, "5% down with no mortgage insurance available for this home - contact (insert your lender's name) for details".

As a selling agent, you might show your clients property in a targeted census tract if the special financing available will help them qualify.

Another possibility is to show your clients a single family home instead of a condominium. For example, if 5% down was available with no mortgage insurance, and the client did not have to pay homeowner association fees, then the client would be able to borrow more because these expenses would not be added to their debt-to-income ratio.

It is very important to work closely with your lender with this type of financing because the program can change. The list of approved census tracts can change. The qualifications for the program can change. The terms of the program can change. Just because you had a transaction close recently with this type of financing does not mean it will be available for your next transaction. Get on the phone, call your lender, and make sure the property is in a targeted census tract!

Having the census tract information can help you add more value to your client! Adding more value will make your client happier, and happier clients means more business!

If you live in San Mateo County and own or want to buy a home, there is a good chance that you will need a jumbo mortgage rate quote when shopping for a loan. There are many variables that go into a jumbo mortgage rate quote. knowing what these variables are can help you ask the right questions to get the most attractive jumbo mortgage rate for your needs.

Here are seven questions to ask to get the best jumbo mortgage rate quote in San Mateo County:

1. Does it make a difference in the rate if I am purchasing or refinancing? Some lenders differentiate their jumbo mortgage rates based on the type of transaction. For example, some lenders prefer purchase transactions and will discount the rate for this type.

2. Are the rates differentiated based on the loan-to-value (LTV) percentage? Lenders love it when borrowers have equity! They will often discount their jumbo mortgage rates based on the equity percentage. As a borrower, you may want to choose to borrow less to take advantage of the lower rate! These discounts are usually based on 5% increments in the loan-to-value percentage. For example, a lender may offer a lower jumbo mortgage rate for a 65% LTV than a 70% LTV.

3. Are your jumbo mortgage rates based on the credit score? Lenders also love high credit scores! They often reward borrowers with high credit scores with a lower jumbo mortgage rate. It is also important to ask which credit score is used to determine the rate. Some lenders will use the lowest middle score of all the borrowers (most credit reports have three credit scores). Other lenders will use the middle score of the primary wage earner (the borrower who makes the most money).

4. Does the amount of money I would like to borrow have an impact on the rate? The answer to this question widely varies from lender. Some lenders will offer better jumbo mortgage rates for lower loan amounts. Others will offer better rates for higher loan amounts. It's important to ask where the cut-offs are, meaning at what loan amount does the rate change? Finding out this information will help you structure how much of a loan to apply for?

5. Do you offer a discount for an impound account? An impound account is an account with the lender, funded by the borrower, that pays the property taxes and homeowners insurance when they become due. Some lenders will offer a lower jumbo mortgage rate to borrowers that agree to an impound account.

6. Do you offer a discount to the rate if I accept a pre-payment penalty? A pre-payment penalty is a percentage of the loan amount that must be paid to the lender if the loan is paid off before the pre-payment penalty period expires. Some lenders will offer a discount to their jumbo mortgage rate if the borrower accepts a pre-payment penalty. It is very important to note that all pre-payment penalties are not alike. They can differ in the length of the pre-payment penalty period. The dollar amount of the penalty can differ. The penalty can differ based on how the loan is paid off. For example, the pre-payment penalty may be waived if the house is sold, but enforced if the loan is refinanced. Make sure to understand all the varaibles of a pre-payment penalty!

7. Does the rate differ based on where the property is located? For example, does the rate change based on being in San Mateo County? This is a very important question to ask!

Having the knowledge to ask these questions will help you get the most attractive jumbo mortgage rate from a jumbo mortgage lender!

Home Renovation Financing

Abe the Agent had a great eye for value. One day while on tour he spotted a home that obviously needed work.

The home was in a good neighborhood. Interest rates were low, and rents were increasing.

After he was done with his tour, he decided to call his old client, Ivana the Investor. Abe had helped her buy rental property in the past.

"Hi Ivana, it's Abe. I know we haven't spoken for a while, but I spotted a home on tour today that I think you should take a look at."

Ivana, always interested in a good deal, hopped in her car and met Abe at the property.

"Abe, this is horrible, why are you wasting my time?"

"Hold on Ivana, let's go through the property first and let me explain what I see and why this home is a good investment."

Abe took Ivana through the property. Ivana really liked the layout. Abe pointed out, however, many items that needed upgrading. The kitchens and bathrooms were old and needed to be updated. The interior and exterior needed to be painted. And, most importantly, the roof needed to be replaced.

"Abe, I love the location and the layout, but I don't want to deplete my savings to fix this place up."

"Ivana, I had a feeling you would say that. How would you like to buy this home and finance the upgrades?"

"Abe, I am familiar with the FHA 203K loan - that will not work. I am not going to live here The FHA 203K requires owner-occupancy."

Abe replied, "Ivana, I have done my homework - have you heard of the Fannie Mae Homestyle loan?"

"No I have not, does it apply to someone like me, an investor?"

"Yes it does Ivana. This loan will allow an investor to add the costs of upgrades into the loan amount, using the after-improved value!"

"OK Abe, what's the catch?" "There is no catch. Instead of making a 25% down payment and paying for 100% of the  renovation costs out-of-pocket, you borrow 75% of the after-improved value to finance the upgrades!"

"For example, suppose there was a property that cost $400,000 that needed $100,000 of improvements. The cash-out of pocket would be $100,000 for the down payment and $100,000 for the upgrades, totaling $200,00."

"With the Fannie May Homestyle renovation loan, 25% of the after-improved value is $125,000, so you would have to come up with $75,000 less!"

"Sounds pretty good so far. The yards need landscaping and the fences are broken. Can I use the money to fix these up?" "Sure, as a matter-of-fact, you could even finance building a pool. As long as the repairs are permanently affixed to the property and add value, the Fannie Mae Homestyle loan will allow you do it!"

"Abe, this all sounds great, I am 99% there, anything else I should know about the Fannie Mae Homestyle loan?"

"What if I told you that the seller is allowed to credit 2% of the purchase price toward your closing costs?"

"I would say Abe, thank you, let's write the offer!"

 FHA Streamline San Mateo

If you obtained a FHA loan in San Mateo County prior to May 31,2009, you may be able to benefit from the news announced yesterday. FHA streamline loans may become more affordable.

FHA mortgage insurance premiums have increased in the last several years. These increased premiums have made it less attractive to apply for a FHA streamline refinance. Although interest rates have decreased, the decrease in rates have been offset by the increased insurance premiums.

Stay tuned: the FHA streamline refinance may get real attractive shortly for homeowners in San Mateo County!

 Jumbo Loan For First-time Buyer

Everyone likes free, right? And we're in luck. This Thursday, November 11, 2010, entrance fees are being waived at our country's national parks. That's right, you can visit your favorite national park at no charge on Veterans' Day.

Some of the parks here in California include Yosemite National Park, Sequoia-Kings Canyon National Park and Joshua Tree National Park.

Closer to San Mateo County and the Silicon Valley are Muir Woods National Monument and Pinnacles National Monument.

This is a great opportunity to enjoy a day exploring some of nature's grandeur, and save on entrance fees to boot.

For more information, go to the National Park Service's web site.

Home Maintenance Reminders for Homeowners

Whether you've just bought that first house, or have been a homeowner for many years, there are some  household tasks that shouldn't be overlooked just because they aren't urgent.

We've seen squirrels actively preparing for winter, and now that we've had our first chilly days here in San Mateo County and the Silicon Valley, it's time for us to do to same.

Here's a list of some important tasks that shouldn't be overlooked:

• change batteries in all smoke detectors
  
• put fresh batteries in your flashlights
• change/wash all filters -- aerators on faucets, kitchen fan filters,
  furnace filters (check furnace filters monthly during heating season)
• inspect your household emergency kit (you do have one, right?) and refresh the supplies -- don't forget pet and baby supplies, too, as well as medicine)
  
• inspect your garage door -- tighten nuts that might have worked loose, make certain the automatic sensors are positioned and work properly
  
• clear leaves and debris from gutters
• check downspouts to be certain they aren't clogged, and water can flow freely away from the house
• inspect your fireplace and have your chimney cleaned if you use a wood-burning stove
• check for needed touch ups to caulking on exterior siding and around bathtubs inside
• have your furnace checked and serviced
• walk around your home, checking for and removing overgrown shrubs, tree limbs touching the roof, etc.

After attending to tasks like these,  you can sit back and enjoy the chilly evenings and our occasional rain storm, knowing your home is, indeed, a haven.

A client asked me the other day, "How does a stock loan work?" A stock loan works differently than a mortgage loan, but can serve the same purpose of financing real estate.

Instead of real estate as collateral for the loan, the stock portfolio (bonds and other marketable securities can work also) serves as the collateral. Generally speaking, the amount you can borrow depends on the quality of the portfolio.

For example, a portfolio of highly liquid stocks, such as those listed on the S&P 500, will allow for a higher loan-to-value percentage, than a portfolio of thinly traded penny stocks. Loan-to-value percentages can be as high as 80%.

One of the most important details of how a stock loan works is that the lender will usually require that you move the portfolio of stock that you are borrowing against to their institution. You don't have to move your entire portfolio - just the portion of the portfolio you are using as collateral.

Now that you know how a stock loan works, you may be wondering why someone would get a stock loan instead of a mortgage loan. Stock loans have many benefits.

Qualifying for a stock loan is based solely on the value and quality of the portfolio. Income, credit history, and property value play no role!

Is a stock loan an alternative to a stated income loan? Yes!

Is a stock loan an alternative to the old sub-prime loans? Yes!

Is a stock loan an alternative for someone who can't refinance their mortgage because of a lack of equity? Yes!

Another benefit of how a stock loan works is speed. If you pretend that a stock loan and a mortgage loan were horses, you would bet on the stock loan winning the race 99 times out of 100! The reasons the stock loan horse wins is because there is no property appraisal and no credit underwriting of the borrower.

Another benefit of a stock loan is its flexibility. There are no loan amount limits. It can be used to finance any type of real estate, so it can be used for residential and commercial loans. It can be used to finance those properties that mortgage lenders won't touch with a ten foot pole!

A huge benefit of how stock loans work is that they can be written as non-recourse. Non-recourse means that if the borrower stops making payments, the lender cannot recover other assets from the borrower if they fail to make the payments. They keep the securities, but that is it!

The payments on a stock loan are generally interest-only. An interest-only payment makes the payment lower than if it is amortized to be paid off in a certain amount of time.

Another benefit is that you are able to keep your portfolio the same. You may have been contemplating liquidating part or all of your portfolio to buy a piece of real estate. If you use a stock loan instead, you are able to continue to participate in the gains and losses, and you do not incur a capital gains tax that you may have to pay if you liquidate your stocks and/or bonds for the purchase.

Now that you know how a stock loan works, do you see any scenarios where it might work for you or your clients?

A Script For Your Clients

FHA loans are becoming more important in San Mateo County. The maximum loan amount is $729,750. There are many homes that can be marketed with FHA financing being available, or purchased utilizing FHA financing.

There are some changes being implemented for FHA loans beginning in October. This article is an excellent summary of the changes and what the impact will be on transactions utilizing FHA financing in San Mateo County.

Are you looking at condos for sale in Burlingame that are FHA approved? There is a condo for sale that is FHA approved located at 107 El Camino Real Unit 103.

FHA financing offers many benefits:

• The down payment can be as low as 3.5%
• The entire down payment can be a gift
• Co-signers that do not occupy the property are allowed
• The maximum loan amount in San Mateo County is $729,750
• Fixed rates are available
• Adjustable rates are available that have an initial fixed rate term
• Credit history requirements are typically more flexible than what is required with a conventional loan 

Burlingame real estate agent Dave Tapper describes this condo for sale - "It is in a great location, just two blocks from Burlingame Avenue." People love being this close to downtown!"

"This one level unit has three bedrooms and three baths. In addition, it has two master bedroom suites, a marble entry way, and gorgeous hardwood floors."

"There is a fireplace, and a washer and dryer in the unit. There is  two car parking in this secured building with tons of extra storage."

"This condo is one of only a few that offer earthquake insurance. This is an upscale, classy building that is 10 years young."

In order to use FHA financing for a condo, the complex must be FHA approved. In Burlingame, there are only two condo complexes that are FHA approved as of the date of this post.

If you plan on using FHA financing to purchase a condo for sale, it's probably a good idea to contact an FHA lender to find out what complexes are FHA approved in the area that you are interested in. And it also makes sense to get pre-approved prior to making an offer. It will make your offer look stronger!

FHA Approved Condos in Burlingame