December 7th 2018 Market Update

December 7, 2018

The year is quickly coming to a close. Don’t quite know where the time goes, but it certainly goes…The holiday season is in full swing with hanukah on-going and Christmas around the corner!! We wish everyone a happy, Healthy holiday season!!

Interest rates have retreated from their recent highs based on dovish comments from the Federal Reserve Chair Jay Powell and other Fed Officials. This is based upon some weaker than expected economic data and other attendant geo-political issues. The trade dispute with China has interrupted a relative peaceful economic co-existence. How this plays out, will have a large impact on where the economy is headed in 2019 and in particular the direction of interest rates…The pace of economic growth appears to be waning, so the first month or two of next year will set the tone for interest rates throughout 20190.

Rates have retraced somewhat and now might be an excellent time to review your overall financial position as we come to year end. If you have an adjustable rate mortgage, now might be an opportune time to switch out to a fixed rate or vice versa based upon on individual needs and plans for the future.

There are a number of new loan programs available in the market place that are based upon either one’s individual or business bank statements. the bank statements are utilized in lieu of the traditional tax return methodology. We have recently closed quite a few large cash out refinances in the $4-5m range and saved purchase transactions from clients whose banks rejected their applications from an income perspective…..These are excellent programs using non-traditional underwriting methodology.

The real estate market seems to have reached a plateau with pockets of increased inventory and price reductions. The adage that all real estate is local is very true for our markets. When we hear the national numbers, although a good overall barometer, our local market has a life of its own. This slight slow down in the real estate market, has the finger prints of the media all over it. As the CEO of Toll Brothers said last week, (and I paraphrase) this slowdown seems like a media inspired event….. Have conversations with your real estate agent to obtain a more specific understanding of your particular market area.

As always, please feel free to connect with us to review your financing situation and just to say hello!!

Regards & Happy Holidays!!

Gloria Shulman and Curtis Cohen

Update: Cautious Market

4 Myths about Mortgages for Millennials

MYTH #1: It is very difficult for Millennials to become homeowners

FACT: Despite the fact that Millennials face many hurdles, such as student loan debt, underemployment, and high rental prices, many creative finance structuring options exist. Today, it is possible to close a loan for up to $679,650 with only 3.5% down payment, which is a manageable course of action. As with any financing, reserves are required. However, they are not pledged in any way.

MYTH #2: My branch at (insert personal bank here) offers loans. I should go there.

FACT: Unlike direct lenders who only represent the bank, brokers work with a variety of wholesale banks and specialized lending institutions. Make sure to prepare your paperwork in advance. This cannot be stressed enough as there are many variable layers in the homebuying procedure. If any bank deposits are out of the ordinary, provide that information too. Mortgage brokers know what questions to ask and work with you to fill in gaps. Their technical experience allows them to package the loan to highlight your strengths and minimize any issues.

MYTH #3: I don’t need to start working on my mortgage until I find a house I want to make an offer on.

FACT: In order to prevail in today’s aggressive market, it is imperative that homebuyers are prepared to present an offer with minimal contingencies as soon as possible. A pre-approval letter makes a prospective buyer seem more attractive because it shows that the buyer does not have an issue in obtaining a loan. You should arm yourself with a pre-approval letter customized to your needs, which can subsequently be tweaked later in the process depending on the home’s selling price. Pre-approval and approval letters are taking on a new dimension, as well-regarded pre-approval letters are even able to compete with all cash offers.

MYTH #4: It is hard to improve my credit score

FACT: With proper support, there are many strategies for repositioning your credit score, which is subjective based upon your spending and payment history. Mortgage brokers run the 3 Bureau Credit Report, which better reflects your credit score than any report you can run online. With this scoring system, brokers can do an analysis of credit cards that can be strategically paid down to certain amounts to pump up your overall credit score. Additionally, it is not unusual for trivial things, such as minor medical collections, to impact the credit score.

If you are a Millennial First-Time Homebuyer, feel free to contact CenTek Capital Group at 310-275-3202 to take advantage of any of our gratis mortgage services. We are available on M-F from 7:00 AM- 7:00 PM to run what-if scenarios. We also return calls on the weekends.

We know that breaking into the housing market alone can be rigorous and time-consuming for young professionals. With 30+ years of experience, CenTek Capital Group has funded every type of loan, issuing a detailed up-front loan approval for many programs and closing purchase transactions in about 25 days. CenTek acts as your partner throughout the financial process, guiding our millennial clients through mortgages and more. Our team maintains long standing relationships with a vast network of funding sources to gain unparalleled access to the most aggressive real estate financing options and solutions on the market. Ultimately, we utilize our technical knowledge in conjunction with our decades worth of professional connections to help clients and their agents prevail with their offer and close the deal.

Tips you need to know

  • Both the California economy & real estate market are strong
  • Despite the tightening standards since the Great Recession, there has been an easing of lending policies
  • Our goal for 2018 is to position clients into a mode where they can compete against the multiple offers and all-cash buyers that dominate the market

By: Shoshana R. Cohen | Business Development Manager, CenTek Capital Group Published: 01/03/2018

Steady job growth, an expanding economy, and a limited inventory of available homes will continue to drive up median home prices into the foreseeable future. As housing prices continue to climb across the state, lenders tend to view these homes as safe and sound investments. Over the course of 2017, lenders have responded very positively to increases in mortgage applications. Below is a list of CenTek’s latest tips to help buyers close in this competitive market.

Tip #1- Tell us your financial story

Whether you are a first-time homebuyer, making a lateral or vertical move, beginning to live off a fixed retirement income, or looking to diversify his/her financial portfolio with a residential investment property, we want to hear your story. Our innovative approach blends together our technical expertise with the human awareness of real life’s twists, turns, ages, and stages.

We specialize in an array of customized loan products and have tremendous flexibility regarding loan-to-value, cash-out concepts, mixed-use properties, etc. Whether your deal is based off a traditional loan program, utilizing the non-occupant co-borrower concept, or takes advantage of documented gifts, there’s nothing we haven’t seen.

Tip # 2: Maximize your credit score

Despite stricter lending regulation since the housing bubble burst, there has recently been an easing of guidelines, especially with regards to credit score. One of our most popular strategies is to preemptively work with clients, even before they find their dream house. If necessary, our team will work with each client to maximize their credit and financial profile to their fullest potential.

With a release, we can instantly run the Three Bureau Credit Report for clients who are seeking a loan or refinance (no charge). If requested, our team will holistically analyze each client’s credit profile using an in-house computer modeling system. This program proposes the various ways in which an individual can strategically pay down liabilities and/ or credit cards to maximize his or her credit score.

* Considering the recent Equifax data breach, it is very important that those interested in various financing options to un-freeze their credit. *

Tip #3- Expand your search zone

The mantra of buying in SoCal has historically been “Location, Location, Location”.  Whether it be Pasadena, south of Ventura Blvd, acreage in the 805, the view from Russian Hill in SF, or water rights in Cambria, our team at CenTek Capital Group has closed over 100,000 loans in almost every neighborhood in California.

In the 2018 real estate market, we encourage potential buyers to expand their search zone. Many neighborhoods on the periphery of your initial search zone are on the up and up due to thin inventory.

Tip #4: Utilize pre-approval & approval letters

We underwrite as one of the leading wholesalers of loans in the country and are experts in delivering packages that meet our clients’ needs. Once we are familiar with each client’s information, our in-house underwriters can write detailed pre-approval and approval letters customized towards the client’s financial profile and their desired property’s specifications. We can continuously update and customize these letters towards different offers as the search continues.

As we move into 2018, pre-approval and approval letters have shifted into a new dimension. Their weight is gaining more traction and our highly-regarded letters can oftentimes close against multiple bids and/or all-cash buyers. Many real estate agents across the state recognize our letters and know we can close per-escrow terms.

Tip #5:  Research comparables in the area

It is very important that you are familiar with comparables, particularly if they could impact the appraised value of your purchase. Selling and listing agents, in addition to sellers and buyers, should be aware of any comparables the appraiser would have access to.  As we all know, an appraisal can sometimes be unrealistically subjective based on the appraiser inspecting the property. The agents should document in writing various comparables in your submarket, in terms of region, price point, and overall design.

Compare and contrast the property with other properties in the area. Identify the similarities between your property and others around it. Recognize what sets your property apart from others, whether it be home improvements, extra bathrooms, or outdoor amenities. Even streets in the same neighborhood can be valued differently. Research recent transactions in the neighborhood. It is imperative that you are aware of neighborhood trends, in addition to all uncharacteristic sales (E.g.- sales between family members with different last names, short-sales, or all-cash offers that close for a lesser amount).