Market Warms To Cheaper Jumbos

Much cheaper rates on new conforming jumbos is just what the market needed to encourage more buyers to buy and existing homeowners to refinance and save. See also: "California Cold To Jumbo Conforming Loans."

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Think about a mortgage do-over.

You could be out hundreds of dollars a month if you signed for a large home loan last month.

This month, qualified home buyers and those refinancing their mortgage, are getting jumbo conforming loans with an interest rate nearly a full one percentage point cheaper than it was just weeks ago.

On a $500,000 mortgage that's a savings of more than $300 a month. On a $730,000 mortgage a whopping $500 a month. That's a lot of gas money.

The Economic Stimulus Act of 2008, temporarily raised the maximum amount on conventional conforming loans from $417,000 to about $730,000, hoping that would prompt lenders to lower rates on the larger mortgages to levels for smaller mortgages. Initially, risk averse lenders, buried under foreclosures, were not convinced.

In recent weeks, however, Fannie Mae and Freddie Mac announced they would purchase the larger conforming loans with the same requirements they use to purchase loans at the old conforming loan level.

That opened the flood gates on lower rates for bigger mortgages. Whoo hoo!

Fannie Mae and Freddie Mac have also reduced down payment requirements on some loans to as little as 3 percent down. More whoo hoo!

That move, along with new FHA loan plans, also put more mortgage money on the market.

And with home prices falling in many regions, happy days are almost here again for some housing consumers who can now drive a hard bargain with both sellers and lenders.

So here's the burning question: If you got a mortgage a month or so ago with the higher rate, should you refinance already?

Yes. Especially if you can get a no-point, no-cost refinance, says Quincy Virgilio, broker owner of Realty World CA Property Network in Campbell, CA.

"It is definitely a viable option to look into," said Virgilio, who is also president-elect of the Santa Clara County Association of Realtors.

Eric Nelson with the Honte Group, also in Campbell, agrees.

"If you are going to save $400 a month and it costs $4,000 to do the deal and they can recoup that cost in a year, we would recommend that. If they are going to save $400 a month and it costs $8,000 and they will take two years to recoup the cost, we probably wouldn't recommend it," Nelson said.

"Look for a no-cost, no-points loan, but make the simple calculation on how much you are saving and how much it is costing," and how long you'll stay in the home, Nelson added.

Sit down with a mortgage broker, loan officer or financial planner and do the math.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Tips For Sellers Down On Their Luck

Consumer Reports, the trusted rater of consumer goods and services, also offers tips for consumers holding, buying and selling homes. It recently offered advice sellers can bank on.

by Broderick Perkins
© 2008 DeadlineNews.Com

Don't miss the

extended version.

Deadline Newsroom - In any market, there's nothing worse than a listing that languishes unsold for weeks or months.

And when the bidding wars end, the flipping flops and the easy mortgage money gets hard, sellers really have to pull out all the stops.

Having the means to move a home today is paramount, says Consumer Reports.

The trusted rater of products and goods also offers information for homeowners holding, buying or selling their home and recently offered homeowners tried and true ways to quickly sell homes.

• Get good representation. Seek local agents who are managing sales even when the market is slow. Have several of them give you a presentation to justify your home's value and explain their marketing technique. Attend open house events hosted by prospective brokers so you can check out their on the job performance.

• Get market smart. A good agent can clue you in about market conditions and the latest prices because she or he has access to closed sales data before they become public records. He'll also have knowledge about the details of the sales including concessions and other giveaways that may not show up in the final price.

• Get generous. Offer concessions on closing costs, promise to include tangible items like a big screen TV or new kitchen appliances or be prepared to dole out some cash all to reel in buyers. Consumer Reports reported sellers offering vacations, golf carts, a period of monthly condo assessment or maintenance fees, moving expenses and the first mortgage payment.

• Get a home warranty. A home warranty for the buyer will provide some protection against unexpected mechanical system breakdowns in the first year. Consumer Reports said, depending upon the coverage, costs range from $250 to $400 from companies like American Home Shield and First American Home Buyers Protection Corp. Be sure to read the small print.

• Get loose on the deposit. In addition to a down payment buyers frequently make a good faith deposit to the seller. The practice and the amount varies based on local market traditions, but sellers generally want as much as possible. Settle for less especially if the buyer is pre-approved, has good credit and is really interested in the property.

• Get some appeal. For buyers, curb appeal is their first impression of your home. It should arouse a gotta-have-it desire and persuade them to cross the threshold. Unkempt landscaping, litter and clutter are turn offs.

• Get some staging. Staging is to the inside of your home what curb appeal is to the outside. Lay out some cash for professional staging if you don't have home decor genes. The effort will make your home more visually appealing to a wider variety of buyers, according to Consumer Reports. Removing clutter and cleaning house until is sparkles is part of the effort. Odors are turn offs. Staging can cost from hundreds to thousands of dollars but the pros make it worth the price and some real estate agents include some staging as part of their service.

• Get ready to deal. When buyers know market conditions are in their favor, expect them to let you know that they know. And don't forget, anything in the real estate deal is negotiable so don't leave that deal breaking Warhol on the wall if you don't want it to become part of the negotiating process.

• Get your listing updated regularly. Consumer Reports says don't use out-of-season photos with your listing. It tells buyers you've got a white elephant that isn't moving. With browsing for housing now a common practice among buyers don't overlook virtual staging -- a Web site, Web page or blog dedicated to your listing. The possibilities are endless for putting your home in the best light with professional digital images, videos and virtual tours, effectively creating a 24-hour open house. You can also provide information about the neighborhood, market conditions, points of interest, schools, crime, commuting and jobs. Later, use your digital effort as an incentive. Gift it to the new owner.

© 2008 DeadlineNews.Com

Advertise on DeadlineNews.Com

Get news that really hits home for your Web site or blog from DeadlineNews.Com.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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