Hemet Home Loan Guy, Joey Aszterbaum

Jolynne is the best.

Yesterday was Valentine's Day, and we had plans to date at home (it's hard to find a babysitter on Valentine's Day). After returning to my office from some out of office appointments, I found on my desk a creative note from my wife. It's a huge 'to do' list with all sorts of crazy things on there. And tacked to the front of it is a note that says "Drop everything and go to Serenity Spa for a massage at 6pm."

The mortgage business has been crazy recently, with prices dropping, loan programs changing and interest rates going up and down like a roller coaster. Well, that adds to my job stress, as you can imagine. It's been a rough week in terms of returning calls and getting things done.

She knew exactly what I needed. What a fantastic gift.

Serenity Spa is in Hemet near the corner of State St. and Johnston. They offer massages, and also a whole range of holistic care including chiropractic, body and skin treatments, and more.

To give you an idea of how crazy things have been, I was nearly late for the appointment and making calls on my cell up until I walked through the room.

Sitting in that room, with the scented oil, perfect temperature and relaxing music was great, but by the time my massage therapist was done with me, my muscles were like jello. Like I said, the perfect gift.

Thanks, Jolynne. You're my lifetime love and the most beautiful, fun, thoughtful person I know.

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Here's a picture of Jolynne taken by her photography mentor, Jared Wilson:

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance your home in Hemet, Riverside County, or California visit http://www.hemethomeloans.com/ or call 951.571.5751

What's with the higher rates for jumbo loans?

I posted an article called No Mo' Jumbo? Higher Mortgage Loan Limits from Congress to President. Scott Wall was kind enough to pay me a visit and add his comment. Here's what he had to say:

"I think the whole concept of jumbo loans is silly. I know that their is potential more risk, but loaning $300k or $800k, lenders look at the basic same things. I think lenders are just trying to justify the ridculously higher rates."

Let's explore this a bit.

Let's say you owns a company that sells two thingamahoozits...one is red and the other is blue.

After a while, you notice that 1 out of 10 blue thingamahoozit customers don't make good on their monthly payments (it's common, in the Thingamahoozit industry, to have a finance plan).

But with the red thingamahoozit you notice a higher default rate...more like 3 out of 10.

In order to stay profitable, you might start asking for a bigger downpayment on the red thingamahoozit and charge a bit more on the price...to make up for whatever losses.

That's jumbo loans. Just like the red thingamahoozit, there are more defaults then with the conforming, conventional loans. (Conforming limits are presently $417,000) It's simply a riskier loan to hand out, and you gotta cover that risk somehow.

If lenders just wanted to justify the higher mortgage rates, then why were the rates on jumbo mortgages essentially the same with most loan products in the middle of the boom 3 years ago? The reason is that there was little difference between jumbo loan defaults and conforming loan defaults for years. People forgot there was such a thing as foreclosure. You could just sell or refinance.

Jumbo mortgage rates wer lower back then because the lenders miscalculated the risk. Or were they more affordable because of the greed of mortgage companies? That's the big question right now with all manner of the risky loans that were readily avaialable during the real estate market boom.

At any rate (get it?), the cost of mortgages can't really be called "ridiculously higher." I haven't seen jumbo rates over 7.5% even with all the foreclosures. 7.5% is a low interest rate, unless you're used to ridiculously low interest rates.

And let's face it: we got used to ridiculously low interest rates for thingamahoozits. I mean mortgages.

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance your home in Hemet, Riverside County, or California visit www.HemetHomeLoans.com or call 951.571.5751

On Thursday the Senate passed an economic stimulus package that included a provision to raise the mortgage loan limits for FHA and conventional mortgage loans. The House of Representatives passed the legistlation last week, and now it is headed toward the President, who is expected to sign it.

Presently, any loan over $417,00 is a jumbo loan (subject to higher mortgage rates) and ineligible for FHA for the Riverside County California (including Hemet, Murietta, Temecula and the surrounding areas).

The new loan limits would be 125% of the local median home price. This would be as high as $729,750 in high cost areas...and that is the number reported in the news. But what would it be in Riverside County?

In 2007 Riverside County's median home price dropped more than the other five counties of Southern California: 17.8% to $381,400. (Click HERE for median home prices)

125% of the median home price is currently $476,750.

In other words, FHA and conforming loan limits may increase from $417,000 to $476,750.

For those with slightly higher loan balances it's great news. For those buying luxury homes in Riverside, Murietta, Temecula, Palm Springs, Hemet, Banning or Beaumont, it's not much difference. It makes a bigger difference in Orange County, San Diego County or in Northern California, where less affordable housing is the norm.

According to my source at Freddie Mac, once the President signs the economic stimulus package, it's unclear whether the changes would take place within 30 days or by July 1st. Also unclear is how investors will price the loans differently. In other words, if the mortgage loan limits are higher, and there are higher level of defaults for larger mortgages, would they respond by increasing the cost of home loans (interest rates and/or loan fees) for conforming loans? Freddie Mac and Fannie Mae are GSE (Government Sponsored Enterprises) who provide a crucial role in mortgage liquidity.

For those in higher cost areas, this will make a bigger impact and could help people with higher cost loans improve their financial situation.

Be sure to thank your Realtor for the benefits of the legislation, which is partly a result of lobbying from the National Association of Realtors.

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance your home in Hemet, Riverside County, or California visit www.HemetHomeLoans.com or call 951.571.5751

The President's 2009 fiscal budget would require the Federal Housing Administration to raise its mortgage insurance premiums. The annual premium would raise from .50% to .52%, and the upfront premium would raise from 1.5% to 1.95%.

For example, on a $200,000 FHA loan, the annual fee would increase from $83 to $87 per month. The upfront mortgage insurance premium, which is financed (added to the loan balance) would increase from $3000 to $3960. The total effect on your house payment in this case adds up to about $10 per month.

Mortgage insurance protects the note-holder for mortgages so that if the buyer defaults or enters foreclosure, the investor (the mortgage company) will get their money back. For FHA loans, a common loan for those with credit problems or minimum down payments to buy homes, the insurance is provided by the Federal Housing Adminsitration.

The Federal Housing Administration is under pressure because of 'deteriorating market conditions, as well as adverse loan performance.' In other words, more people are not making their house payments so the insurance has a lot of claims.

Congress is considering reforming the FHA so that mortgages will have 'risk-based' pricing. In other words, for people with more money down or better credit, the insurance would cost less. One more reason for buyers in Hemet, Temecula, Murietta, Riverside County and California to focus on saving money and improving their credit to make it in today's shifting real estate market.

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance real estate in Hemet, Riverside County, California visit www.HemetHomeLoans.com or call 951.285.1012

Two days ago I reported that the Riverside County's First Time Home Buyers Program is Out of Funds!

I ended the article with this statement: "The Riverside County Economic Development Association's fiscal year ends in June. I haven't received word whether or not the funds will be available in July. Stay tuned."

I have word from Bernadette Cruz from the Riverside County EDA that the program should be funded at the beginning of their fiscal year (July or August).

This is good news for first time home buyers with lower-than-average incomes in Riverside County (Hemet, San Jacinto, Murietta, Temecula, Idyllwild and the surrounding areas).

The program offers up to 20% (maximum $75,000) down payment assistance. The buyers are not required to make any payments on the down payment assistance, and if they kept the home for 15 years the second mortgage is forgiven.

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. Patrion Mortgage is a direct lender and a division of Altura Credit Union (formerly Riverside County's Credit Union). To buy or refinance real estate in Hemet, Riverside County, California visit www.HemetHomeLoans.com or call 951.571.5751