Get Your Mortgage Phil: California: Burlingame

Are you looking at condos for sale in Burlingame? Here is a recently listed condo for sale by Mary Ann Teixeira of McGuire Real Estate in Burlingame. A 16% down payment will qualify this property for conforming financing up to $417,000.

Have you seen this new statue in downtown Burlingame? I was walking down to the convenience store to get a Diet Coke (I'm addicted), and I saw this statue in front of the former Coldwell Banker office. This office is currently vacant, so it was strange to see this statue implanted right in front of this building.

As I was taking a picture of this statue, one of the downtown Burlingame businessmen yelled at me from the building behind "Hey, what are you taking a picture of that for?"

I said, "I think it looks pretty strange in front of this building, what do you think?" 

He said, "Well I do to, and so do a lot of the other business owners. If you don't mind, send your picture to City Hall with some thoughts on what you think of it."

Downtown Burlingame stirs the passions of the city's citizens. It has taken roughly ten years from beginning to an affirmative vote to get a new Safeway built. It took so long for several reasons, but mainly because of the differences of a couple of groups who feel very passionate about the appearance of downtown Burlingame.

I have a feeling that the future of this statue is going to debated in a public forum. It's never boring in downtown Burlingame!

If you own one of the homes in Burlingame, you may want to read this article about details in the proposed budget. The mortgage interest deduction is on the chopping block! Owners of Homes in Burlingame would be effected because many of the homeowners' income exceeds the level that would be effected by this proposal.

Trade-up home buying has a different set of issues to conquer than the first-time home buying process. The first-time home buying process is about education. The first-time home buyer is figuratively diving into the water for the first time. Whether they make a beautiful swan dive or belly flop depends a lot on how well they were educated before they entered escrow by their real estate agent and mortgage originator.

The trade-up home buying process has an element of education, but it is more about coordination. How does the trade-up buyer coordinate the sale of their existing home with the purchase of their new home? Here are nine points that the trade-up buyer and their real estate agent  need to know about in terms of financing to successfully coordinate the disposition of their current home along with the purchase of the new home:

1. Loan approval does not necessarily mean that you should release loan contingency. A loan approval always has conditions. If you are selling your current home, one condition lenders usually have is a copy of the closing statement from the sale of the current home. What happens if your buyer backs out? How comfortable are you with the ability of your buyer to buy your house? You need to find out all of the conditions from your lender so that you know exactly what has to happen in order to get your loan. Do not release loan contingency until you are aware of the conditions and are confident that you can satisfy these conditions.
   
   
2. Your mortgage originator needs your tax returns, even if the loan approval does not require it. Here is why: some of us try to minimize the amount of income tax we pay. Some of us use form 2106, which allows us to report unreimbursed business expenses on schedule A of our tax return. Lenders deduct this amount from your income for qualifying. Sometimes the lenders will not ask for tax returns, but they almost always ask for form 4506-T. Form 4506-T is a summary of the tax return you have filed with the IRS. If you have unreimbursed business expenses claimed, the lender most likely will re-underwrite the file and may even deny the file because your income is not as much as originally presented! Give your tax returns to your mortgage originator to prevent this problem upfront!
   
   
3. If you plan on renting your current home, you may not be allowed to use the rental income to qualify. I recently wrote a post about this subject - Before You Advise Your Client Rent Their Current Home And Buy Another, You Need To Know This!.
   
   
4. If you plan to sell stocks, bonds, and/or mutual funds for the down payment, you are best served selling prior to having your file underwritten. Here is why: If you do not provide proof of liquidation, many lenders will value the worth of your holdings at 70% of the verified amount. Without proof of liquidation, the lender my determine that you are short on cash to close escrow, even if in reality you are not. Prove it now to save headaches later!
   
   
5. Are you trading-up because of a job transfer? Here is what you need: an employment offer letter, clear of any conditions (drug test is an example), and an affidavit signed by you stating that you will provide a paystub within 30 days of closing.
   
   
6. Try your best to nail down your loan amount and your interest rate up front! Here is why: If you increase your loan amount and/or change your interest rate after your lender has sent their initial disclosures, they may require re-disclosure and a new seven day waiting period before they can close escrow! Set it and forget it!
   
   
7. Take care of your credit score before you write an offer. Most lenders use the middle score of three credit repositories. In addition, the qualifying score most use is the middle score from the borrower with the lowest score among all the borrowers involved in the purchase. Credit scores can be changed if there are errors on the report. Work with your mortgage originator to make these changes now rather than while you are in escrow. 
   
   
8. If you want an impound account, set it up after the close of escrow. Here is why: cash to close is one of the issues that often causes a headache at closing. Impound accounts require more cash to close. Why complicate an already stressful situation? Close escrow, call your lender, and then set up the escrow account when there's not as many hoops to jump through!
   
   
9. Don't count on 100% of your retirement funds as cash reserves. Most lenders are now only counting 60% of the value of retirement funds as cash reserves. For example, if you have $20,000 in retirement funds, the lender will only value these funds as $12,000.  

Many homeowners and home buyers in California have probably heard of a bridge loan but do not know what it is or who should obtain one.

A bridge loan is usually a short-term loan (usually written for three months to three years) that provides funds to buy real estate from a piece of real property that an owner has an intention of selling, but will not close before escrow closes on the new property. 

This transaction is called a bridge loan because these funds "bridge the gap" between the closing of two transactions. 

Let's look at an example of a bridge loan. Bill and Betty Buyer would like to purchase their California dream home for $800,000. The down payment required is 20%. They have enough money saved for the closing costs and cash reserves, but little else saved.

Their current home is worth $500,000. The existing balance on their mortgage is $50,000. They have $450,000 in equity.

Bill and Betty would like to make an offer on the new home non-contingent on the sale of their current home. How, they wonder, can they make this offer?

Enter Bob the Bridge Loan Guy. He tells Bob and Betty that he can help them obtain a $210,000 loan on their current home ($160,000 for the down payment plus $50,000 to pay off their current mortgage). Bob the Bridge Loan Guy has figured out that the Buyers can qualify for both the bridge loan and the purchase loan because their debts on both the current home with the bridge loan and the new purchase loan are less than the maximum amount of debts to qualify.

The Buyers successfully make their offer and close escrow 30 days later. Another 30 days later they close escrow on the home they listed for $500,000. They use $210,000 from the proceeds of the sale to pay off the bridge loan, and use the other $290,000 in proceeds to pay down the new mortgage.

A few important tips you should know if you are considering a bridge loan:

• You must be able to qualify for the bridge loan and the loan to purchase the new home.
• There is no guarantee that your current home will sell quickly. How long can you afford to pay mortgages on two homes?
• A bridge loan is usually more expensive than other types of loans. Consider other types of financing (do you have an equity line of credit available, for example?)
• A bridge loan may be available with stated income under the new Reg Z guidelines as of October 1, 2009.

I have found that many people that many people do not understand how mortgage rates get locked here in Burlingame, California, and in many other areas.

As a mortgage broker, I receive mortgage rates from our lending partners every day (sometimes more than once, but that is a story for another post). Each lender has the mortgage rates for each of their programs (30 year fixed, 15 year fixed, etc.) published on a ratesheet. 

Most people realize that there are many mortgage rates for each loan program. What they do not realize is that the points charged for the mortgage rates offered vary by the rate lock period.

Many lenders base the points charged in 15 day increments. Let's look at an example of mortgage rates for a 30 year fixed rate (these rates are for illustration purposes only, not truly a reflection of current mortgage rates).

Rate        15 Day     30 Day     45 Day     60 Day

8.00%        1.00      1.25          1.50        1.75

In this example, the 8% mortgage rate would cost a borrower 1 point for a 15 day lock, 1.25 points for a 30 day lock, 1.50 points for a 45 day lock, and 1.75 points for a 60 day lock.

This example raises two questions about mortgage rates for a homeowner or homebuyer: first, why would I lock for any longer than 15 days since the 15 day lock is cheaper than any of the other lock periods? Second, what needs to happen in order to get the 15 day rate lock?

Let's answer the first question - there are two reasons why mortgage rates should be locked in longer than 15 days. The first reason is because mortgage transactions typically take longer than 15 days. Refinances are harder to close faster than purchases because of the requirement that the borrower has three business days after signing the final loan documents to rescind the transaction. Purchases do not have this requirement. 

The second reason why mortgage rates should be locked in longer than 15 days is because it is protection for the homeowner or home buyer in a rising interest rate environment. Most of my clients are happy to pay a little bit more by locking in for 30 days or 45 days to guarantee they will get the mortgage rates they have been offered, provided their application is approved.

Let's answer the second question - what needs to happen to get a 15 day rate lock? The answer to this question is to work as a team with your mortgage broker.

Mortgage rates are volatile - we often have our lenders update their mortgage rates two or three times per day. Your mortgage broker should use a rate alert service in order to stay on top of the daily activity in the mortgage market. If there is a rate change he should be alerting you about the change. 

The mortgage applicant needs to do his part also in order to get the 15 day rate lock. Documentation needs to be completed in full. Most of our lending partners will not lock mortgage rates until the loan application has been approved, and all conditions for closing have been signed off by the underwriter. As you can see, speed, cooperation and teamwork is required by the applicant and mortgage broker.

Here is a strategy I advocate to get the 15 day rate lock in a declining rate environment. Let your mortgage broker know what mortgage rate and point structure you would like to target. When the mortgage rates are within .25% of your target, get your documentation submitted to your mortgage broker and try to get it approved ASAP. With an approval you can just wait until the rate targeted hits. Again, this takes great cooperation and communication

with the client and the mortgage broker. I have used this strategy with my clients here in Burlingame, California, with excellent success. 

Contact Me

My Facebook Business Page

More From Me

Recently a friend of mine called me and said that he needed a construction loan to remodel his house in Burlingame, CA. I asked him if he had a construction contract and plans. He said not only did he have those items, he had already started construction!

I asked him why he was calling me now, didn't he already have a construction loan in place? He said no - he was approved for an equity line of credit, but when the lender found out that construction had already started, they could not fund the loan.

I told him I would do my best to find him a construction loan, but I could not guarantee anything. Lenders usually do not like to approve a construction loan application after the project has started. 

After making several phone calls, I found a bank that was interested in funding this construction loan. Luckily, my client was financially qualified, and very organized with his paperwork. We got the loan approved, and it recently closed escrow!

There are several lessons homeowners should know that my client learned from going through this process to obtain a construction loan.

Before starting construction, a homeowner should make sure he has the financing of the project approved. It could be a construction loan, a line of credit, a margin loan, etc. No matter what type of financing it is - have it nailed down. Having financing in place not only makes sure the homeowner can finance the project, but also will save the homeowner from a lot of paperwork headaches and stress!

Another tip when obtaining a construction loan is to alert your contractor that he will need to supply documentation to the lender. This documentation usually is made up of a resume, list of completed projects, insurance, and financial statements.

Regarding financial statements of the contractor, it is a good idea to find out the amount of working capital your contractor has. In many cases suppliers will ask to be paid prior to the bank supplying funds from the construction loan. If the contractor does not have enough working capital to fund the suppliers, they may place a mechanics lien on the project. A homeowner may want to consider writing into their construction contract the ability to pay a supplier or sub-contractor directly if the contractor is unable to. This ability can help avoid an issue with a mechanics lien.

If for some reason construction has commenced prior to obtaining a construction loan, make sure that you keep copies of all receipts and cancelled checks. The construction loan lender will want to see these.

Finally, make sure you understand all the terms of the construction loan. The key points to know are:

• the interest rate and how it can change
• the term of the loan
• how often funds are disbursed
• who the check for funds is made payable to (homeowner, contractor, or both)
• whether or not the bank will provide a permanent loan to take out the construction loan upon completion

Are you interested in mortgage refinancing in Burlingame CA?  I have great news! Mortgage refinancing can now be customized to closely match the term of your current mortgage. 

You may not want a mortgage refinancing because you are thinking "Oh great, I have been paying on my 30 year mortgage for three years, now I am going to start over with a new 30 year mortgage!" You don't want to start over. You don't want to turn back the clock.

Here is the new mortgage refinancing solution for this problem: customized loan terms. Let's look at an example.

Suppose you have paid on your 30 year mortgage for three years, as above. You notice that interest rates are less than what you are paying on your current mortgage, so you are contemplating a mortgage refinancing. Instead of obtaining a 30 year mortgage, you are now able to customize the terms to a 27 year mortgage!

By customizing the terms with your mortgage refinancing, you do not have to turn back the clock! You can stay on the same amortization schedule to get your mortgage paid off.

The rates for this type of mortgage refinancing are determined by rounding up to the nearest published amortization term. In this example, the rates for a 30 year mortgage would be used for a 27 year mortgage.

Suppose you are 53 years old, and you would like to retire at age 65. You could apply for a 12 year mortgage refinancing to have your home paid off at the time of retirement. In this example, rates for a 15 year mortgage would be used because this term is the closest higher amortization term.

Customized mortgage terms are available with amortizations from 10 years to 29 years. Conforming loans and agency jumbo loans (loan amounts up to $729,750 for single family residences in certain counties) are available for customized mortgage refinancing solutions. Properties can be located not only in Burlingame Ca, but also in all parts of California.

Would you like to calculate your customized mortgage payment? Look over to the right under my picture and figure out what your payment will be with a mortgage refinancing.

Do you want to find out the current rates? Contact Me

Visit My Facebook Business Page

The OLA Fun Faire takes place this weekend. The theme this year is Ireland By The Bay. The times are Friday September 18th from 6 to 10, and Saturday September 19th from 2 to 10.

There are all kinds of fun activities for all ages. For the kids, there are rides, rock climbing, and bunjee jumping. In addition, there are all kinds of game booths for the kids to enjoy.

For the parents, there will be a silent auction, a tasty Irish dinner, and plenty of beverages to keep you cool during what should be a very warm weekend.

I hope to see you at the OLA Fun Faire this weekend!

Here is a list of open houses in Burlingame Ca for the weekend of September 12th and 13th 2009.

• 150 Newton Drive, $3,249,000 - open Sunday 1:30 -4:30
• 110 Los Robles Drive $3,190,000 - open Sunday 2-4
• 106 Los Robles Drive $2,850,000 - open Sunday 2-4
• 8 La Strada Court $2,799,000 - open Sunday 1-4
• 310 Pepper Avenue $2,600,000 -open Sunday 1-4
• 1417 Cabrillo Avenue $2,398,000 - open Sunday 2-4
• 1316 Drake Avenue $2,395,000 - open Sunday 1:30 - 4:30
• 113 Los Montes Drive $2,295,000 - open Sunday 2-4
• 2305 Ray Drive $2,095,000 - open Sunday 2-4
• 2414 Hale Drive $2,095,000 - open Sunday 1:30-4
• 407 Occidental Avenue $1,699,000 - open Sunday 1:30-4
• 1820 Montecito $1,498,00 - open Sunday 2-4
• 1811 Sebastian Drive $1,460,00 - open Sunday 2-4
• 1301 Mills Avenue $1,400,000 - open Sunday 2-4
• 1262 Balboa Avenue $1,375,000 - open Sunday 1:30-4:30
• 2673 Martinez Drive $1,295,000 - open Sunday 2-4
• 2505 Hale Drive $1,250,000 - open Sunday 1:30-4:30
• 2835 Adeline Drive $1,198,000 - open Sunday 2-4
• 780 Willborough Drive $989,000 - open Sunday 2-4
• 1119 Eastmoor Drive $965,000 - open Sunday 1:30-4
• 1010 Park Avenue $929,868 - open Sunday 2-4
• 105 El Camino Real $899,000 - open Sunday 1-4
• 1213 Grove Avenue $888,000 - open Sunday 1-4
• 1317 Stanley Road $880,000 - open Sunday 2-4 (Pending Sale)
• 460 Bloomfield Road $822,000 - open Sunday 2-4
• 912 Morrell Avenue $799,000 - open Sunday 1:30-4:30
• 1429 California Drive $749,000 - open Sunday 1-4