Matt Freeman; Broker- California Mortgages

Congratulations! You have decided to take the steps to become a homeowner in today's market. This is no small task and it can be overwhelming. Many new buyers start there search online on their own. In fact 82% of buyers start their search online. I understand that you do not want to be sold or bound to a Real Estate agent. I get it but you have to do your due diligence and hire a professional. Here are 10 benefites a great Realtor will add to your purchase experience:

1) Professional Advice - Real Estate agents are trained in the very thing you are looking to accomplish, Finding the right home. They can offer professional advice on Style, Location, and Price. They also have knowledge or professional contacts to make sure the structure, floor plan, area are all up to your standards. There is no substitute to Professional Advice.

2) No Cost to You - As a buyer you do not pay the commission of your selling agent. They are paid by the seller for finding you and selling the sellers home to you. It does not cost you anything. Their time they spend with you, the advice they give you, and all the additional benefits come at no expense to you until they find you the right home and you agree to buy it.

3) Negotiation - Realtors are skilled negotiators. A large portion of the job that they do is negotiating the right price and terms of your purchase. This can be the difference and to me very well could be the number one benefit.

4) Expanded Search - Agents not only have access to the local MLS but they also have access to a network of other agents that have inside knowledge on upcoming properties. This extends in most cases above and beyond their own company. Overtime Real Estate agents build strong relationships with colleagues. It is like water cooler talk. In the end you may be the beneficiary.

5) Knowledge of the Area - You may be familiar with the area that you are buying in and you may not. Agents are generally connected with the chamber of commerce, local churches, school associations and restaurants through their farm. Many agents concentrate on specific areas and know everything there is to know about that area.

6) Determine overall value to insure appropriate price - Agents have knowledge of values and sale prices that are accurate in your market. It is their job to stay current with market values and sales in today's market. There are two markets going on today: The normal market and the distressed REO market. Realtors can help you navigate the two markets and help you to determine the appropriate value or price you may offer.

7) Limit Liability - An agent can limit your liability and make sure that you are protected as a buyer. There are time frames, contingency periods that a buyer must meet and there are contractual obligations to meet. Your agent will guide you through this process and help you to make educated decisions regarding your liability.

Emotion Manager - The market today can be very stressful for a buyer. It is essential to control your emotions. You cannot get attached to a property. If you write an offer on a short sale it is essential to understand that you may be waiting for a long period of time and your agent will help set that expectation keeping your emotions in check.

9) Simple Explanations to Complex Issues - Your agent will break down complex situations so that you can understand them fully. It can be very overwhelming upfront but your agent will break down a complex process and help you to understand the little pieces. This will be a major life-changing event and the Real Estate agent will help simplify it.

10) Experience only time and transactions can provide - Your agent has seen nearly all the situations that you may encounter during your purchase. From uncovering a hidden defect, loan issues, property not appraising, title defects, zoning, septic, well, inappropriate disclosure, and many more. They are there to help you understand the concerns that may arise and help work through any situation they may not have experienced.

If you are in the Sacramento Area or Sonoma County Area I recommend the following Real Estate Agents. I have worked with each and everyone of them at some point. In my opinion each of them comprises everyone of these benefits described above. Please contact me for their contact information as out of respect for them I will not post it.

Sacramento Area - Dayna Neuse Remax Gold Roseville , Peter Bond Remax GoldRoseville, Karen Wallace Lyon Real EstateRoseville, Robert Wallace Lyon Real EstateRoseville, Kevin Nakano Nakano Realty Elk Grove, Bryan Hill Pacific Coast RealtyRoseville, Nathan Novelo Connect Realty Antelope, George Snyder Lyon Real Estate Roseville and many others. I am sorry if I missed you here are there are too many of you too mention.

Sonoma County - Brook Terhune Platinum Real Estate Santa Rosa, Delia Nieto Coldwell Banker Santa Rosa, Larry Mitchell CPS Real Estate Santa Rosa.

In summary, it is imperative that you use the services of a qualified Real Estate agent. It is up to you to interview each and every Real Estate agent that you may want to work with. Determine who is a good fit for you. Communication is the key to every relationship and it is a two way street. Qualified Real Estate agents will help you have a successful buying experience.

The market is phenomenal and the opportunity to buy a home is now. Many of you are taking advantage of the opportunity and that is amazing. Warren Buffet said, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." Many of you are listening.

The time-line for an escrow to close is 30 days in most cases. In the thirty calendar day period we need to get our inspections done, appraisals done, have the loan underwritten, satisfy any conditions of the loan and be understanding of the turn-times of the third party services we employ. It is a cooperative group effort. I have given you below a few tips to help you survive the 30 day escrow and sneak out a winner.

Tip #1 - Be responsive to the requests from the professionals you hired- Before you began the process of buying a home you found a few professionals that you felt would best help you through the process. Many times these professionals (Real Estate Agent and Loan Officer) do not make the rules of the game. They are there to facilitate the process. If one of these professionals request documentation or a check for a service be quick to get them what they need. Your process will stop without it.

Tip #2 - Provide the documentation requested - It is imperative to provide all of the documentation requested. Do not try to find a way around it or think that something will be sufficient if that something is not what was requested. If you do not have what was requested get with your affiliate or loan officer and come up with an alternative. Holding back information from professionals that are on your team can cost you in the long run.

Tip #3 - Remember that we are on your side - All too often we forget that we are all on the same team. A victory is represented by a closed transaction. Communication is the key to that transaction. It stems from all parties who all have a lot riding on a transaction. Small details excluded can lead to a disaster that was avoidable upfront. Tell me the property is zoned service commercial and grandfathered in so I may come up with a solution prior to the problem.

Tip #4 - Be Prepared to fight for the home you want - It is not 2003, 04, 05 and obtaining a mortgage is a little more invasive than the past. If you could fog a mirror we gave you money in the past. Now we are asking for Birth Certificates to show the child support will continue for three years. The age on the application is no longer significant. This starts with the investors and trickles down to the buyer. Nothing good comes easy in life. It will pay off to be diligent and fight for the property.

Tip #5 - Everything is time sensitive - The purchase time-line is as follows. You go into contract and the clock starts. Your loan officer orders the appraisal, gets all the signed disclosures for the property, requests the preliminary title report and a copy of the fully executed purchase contract. Our wholesalers want a complete package to look at your file. The appraisal can be anywhere from 3-5 days, preliminary title report depends solely on the title company (I have dealt with companies in Philadelphia), Fully Executed Contract which can take time if the property is bank owned 3-15 days I have waited and all of this prior to submitting the loan to underwriting. Once we have all the documentation we can submit to underwriting which can be 3-9 days to underwrite. Business Days but the weekends count on the escrow. Once the file is approved there are generally a few conditions to meet and to be reviewed once they are obtained can be 2-4 days. When they are cleared and we are able to order your loan documents this is a 2-3 day job. Then we sign and the package is returned to be reviewed for funding. The funding process is 2-3 days. So if you add up the days on the short end a perfect process can take up to 12 business days with no hold up at all. This would include 2-3 weekends at 6days and we close the escrow in 20 calender days. On the long end 34 business days and 4 weekends would be a 42 day escrow.

In summary, it would require a group effort to survive your 30 day escrow. Note that we all have the same goal in mind. Home-ownership for you as the client is our goal and what we do best. I look forward to working with all of you in the years to come.

Buying your first home is such an exciting time. There are so many things that will take place in such a short period of time. Each and every step of the process is a function of the process.

The word Process can make the home-buying experience sound like such a difficult painful task. By definition the word Process means a systematic series of actions directed to some end or a continuous action, operation, or series of changes taking place in a definite manner. (information taken from dictionary.com) The first of the definitions is the one that I think best represents the home purchase roller coaster.

Here we go!

Obviously the end is the day that you as the consumer would get the keys to your new home. The systematic series of actions that precede the glorious day are described herin as the Roller Coaster.

Action 1 Boarding- Meet with your Loan Officer of choice and get Pre-approved for a home loan that will meet your budget. This is generally about a one hour meeting preferably face to face to discuss the payment that you feel is suitable, your three c's (see my post on fannie mae/ Freddie mac costs) and the type of financing based on down payment and qualifications that we will secure. (I say that this is the first action but I receive the majority of my business, 70% from my Real Estate partners, so many times you have looked at a home that sparked your interest or at least started some sort of search). You are now pre-approved strapped into the seat and ready to take off.

Action 2 The Departure and Ascent- You are now pre-approved and you are out with your Real Estate agent looking at homes. You have found a couple that you like and have decided to write some offers. You sit down with your Real Estate agent and strategize on the offer you want to write. Many times after you write that offer you are already mentally moving in the house. "This is where we will put the blue couch" etc. At the same time you are processing the payment in your mind and saying what have we done right as you begin to peer straight down the initial drop.

Action 3 The first drop- You are peering right over the top of the drop waiting for your Realtor to call you back with the news. You have told everybody about the home that you made an offer on and how you don't have your hopes up but you do and that is natural. You are no different than the rest. The phone rings and the stomach drops, You are on your way down. Your Realtor says I am sorry they have countered and the bank say do not even respond if you do not at least offer 15K more. This is out of your limit and you know it. The rush and the thrill of the ascent and the short drop are over. You are about to begin another ascent.

Action 4 The second ascent- After a little frustration you are on your way up again and have found a few houses that you want to write on. You write offers much quicker this time because it is not so foreign and your expectation is less and you realize it was not that bad. You can do this. You submit two offers this time hoping that you will get one of them. Again you are starting to peer over the next sequence of the roller coaster.

Action 5 The Tight Turn and The Corkscrew- You begin to descend into the tight turn. This is when the Real Estate agent calls you and lets you know that one of the properties has made a small counter and they would like to talk to you about it. You meet with them and while you are meeting you come out of the tight turn and you are turned upside down briefly when they answer their phone and the other home has countered. Which do we like better? What is the better investment? What one will we get we don't want to be disappointed? This is is a lot to handle. You choose the one that you like the most and submit the counter. You have made it through the corkscrew and are being thrown into another tight turn. Then your offer is accepted right as you look down another huge drop.

Action 6 The big drop- Now that you are in contract it seems like things are moving fast. The nerves set in as your agent sends in the earnest money deposit, the loan officer asking for the appraisal check, the checks for home inspection and pest if you want it. Money is pouring out and you are saying what did we get ourselves into for real this time. A million different payment scenarios, excitement, fear, second guessing, excitement, nerves you get the picture are all shooting through you as you are speeding down the face of the coaster.

Action 7 another ascent or straight track- Things calm down for minute. The rate is locked the inspections are done and you are waiting for final underwriting approval. The loan is being Processed. That process is gather all pertinent info and updated financial statements if it has been greater than a month, submit the loan to underwriting and wait(average underwriting 5 days right now)., the approval is in 5 days later and there are conditions that we must meet. Many times the conditions are simple but other times the wholesaler asks for things like birth certificates now a days.

Action 8 The loop da loop- This is the point that you are asked to gather some documentation that may seem hard to obtain. Sometimes the giftor does not want to give a bank statement, you are asked to release financial contingencies and have your deposit at risk and you are not certain you can provide exactly what the underwriter has asked for. This is the time that you must remember that both your Real Estate agent and I are on this coaster with you. We want to get to the end safely and successfully as well. We made it through both the loops. Awesome.

Action 9 the last death drop- This would be the signing of the loan documents. You are prepared and you know what is coming but it is a large commitment. No time to turn back now. You sit in front of the notary and begin to sign your life over to the new mortgage payment. This is a long drop but it goes by very quickly. We have made it to the bottom. Yes we are done! Not Quite.

Action 10 The final turn and the end- We still have to fund the loan and based on how well a Loan Officer has done their job there is nothing you should have to do but wait out the steps. You take that last turn and they ask for something else to fund your loan. You are throuwn for a second but we are through it before you know it. We have made it to the end and the Roller coaster comes to a stop. You realize that it was not that bad at all as you get out but you are clearly trying to get your bearings on why you just put yourself through it.

Action 11 The conclusion- You went through it because it is the cornerstone to an amusement park and the reason that you go. We all dream of home-ownership and none of us are quite prepared for the Process. The reason that you go on the Roller coaster with friends is that it makes it that much easier. We as professionals are trained to warn you of the layout of the coaster so that it is manageable and in the end you say Let's do it again!

That will come in due time. For now I say go get something to eat and re-energize as it is time to get on another ride..............The Move!

Who is buying the drinks and pizza we bought the house:)

Disclaimer: For Illustrative purposes not all transactions go the same way. This is not meant to be an exact guide to buying.

Fannie MAE and Freddie Mac have gone to risk based pricing. This is not new news as loans have always been priced and approved based on levels of risk. When you as a consumer are looking to be financed the lender is evaluating three things. We refer to them as the three c's.

Credit - this is your history of repayment of other loans such as auto, note loans, installment, student loans and revolving debts such as credit cards. Your mid fico score is seen to be a fair reflection of your repayment history. Experian, transunion and equifax are the three bureaus who produce these snapshots in time that generate your scores.

Collateral - this refers to the property and the down payment or equity position you are in. Having 20% equity in a home is considered the breakeven point for a lender in the event they have to foreclose. Naturally the greater the equity the lower the risk. Someone with 40% plus is not likely to let a home slip away and has the ability to price to sell if they get into a dangerous position.

Capacity - this is your ability to repay the debt. Your income, more importantly claimed documentable income is what they are looking for. This is the arena that was most widely abused in recent years and as a result has become the most scrutinized and most important. Income is only part of capacity as length on the job, type of job and how you are paid are additional factors that are very important. Your debt to income ratio is your housing and other credit related minimums divided by your gross monthly income. The goal is to not have this exceed 43%. that means that the house and all the debt represent 43% of your GROSS income.

Traditionally, if you he a 620 fico score, 20% equity position and documented your income on a purchase you would qualify for the lowest wholesale rates we have to offer. However, this has changed drastically and it is undergoing another set of revisions.

Today you have to have a 740 fico to be in the top tier and from there it drops off fast. Those who want to refinance and take no cash out of their home with a 695 fico and 20-25% equity have to pay a 1.5% risk adjusment. This means that their par wholesale rate will be much higher than those with 740. Yield spread premiums are paid to brokers by wholesalers for selling higher rates or to absorb these costs. (another blog entirely) today the Ysps are not large enough to cover that 1.5% so the costs are passed on to the client making loans more expensive.

This one example is a cheaper example of the pricing adjustments that have been passed onto us all. So although rates are low it does not mean that you will get a low rate or if you do you may have to pay for it. Raising costs and adjustments is just one way for these companies to make up for losses.

The end result is that government loans such as FHA, VA and USDA do not impose such adjustments. Do not he suprised if your broker or loan officer tells you that FHA may be a more cost effective approach to financing your home. As always consult your professional and ask them to explain or show this to you in a manner that makes sense.

Good luck and until next time.

As many of you are highly aware of there is a little turmoil in the markets. As of today at 1133 am, I am doing 100% financing three different ways. They all have there own little pros and cons but they are a way to get the first time buyer into a home.

1) CalHFa with a Chdap silent second.This requires the borrower to have a 680 fico score but is a real strong candidate for consideration. This can be combined with an FHA first mortgage and you are on your way to 100%. CalHFA put a freeze on the CHAP and the Hicap as well as their 35yr IO and the 40 year products.

2) USDA rural housing program - This loan is awesome. It is a true 100% financing option with no Mortgage Insurance. It is available to first time home-buyers and requires a minimum 600 credit score. There is a 2% guarantee fee that can be financed and the seller can pay up to 6% in closing costs. The downside is that there are eligible area and income requirements. The income goes by the number in the household so if you have a large family the income limits are pretty reasonable.

3) VA 100% financing - The obvious downside is that you have to be a veteran to qualify. The upside is that this is a true 100% option for our Veterans. There is no Mortgage Insurance at all. There is a VA funding fee that can be waived if you are considered greater than 10% disabled by the military. VA will allow up to 4% in credits.

It is extremely important to get with your affiliates and find out the options that your buyers have in the market. With Fannie Mae's risk based pricing implementation I have found many cases that FHA pencils out better. Even for the client with a larger down payment this has been true. Fannie Mae has less of an add for the higher LTV (above 80%) because some of the risk is mitigated by the mortgage insurance. Now more than ever I think that it is important for the borrower to understand all of the options that might be available. They must be prepared to document anything that might present a question.

This is not an all inclusive guide to finance. It is simply to give you a quick idea of what is out there and the general pros and cons. There is a lot of business in the market and if any of you ever have a question I will make sure to answer it fast or find out the answer in the event I do not know.

To great success in the world of Real Estate.