Low Housing Inventory and High Interest Rates – If Your a Buyer, What Does this all Mean?

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Housing inventory remains very low in the Bay Area.  Even though interest rates remain high due to inflationary fears from the Fed’s, the higher cost of financing isn’t slowing the market down. 

In Santa Clara County, there are approximately 930 properties for sale (consisting of homes, town house and condos (as of July 2023)) with a median days on the market of 10 days.

In Santa Cruz County, there are approximately 305 properties for sale with a median days on the market of 22 days per Charles Holcomb with Compass Real Estate with the Dawn Thomas Team.  Its still very much a seller’s market with sellers demanding and getting prices well over list prices.

Last year I sold my home in Saratoga to downsize, thinking prices would go lower due to higher rates allowing to scoop up a great deal…Was I wrong!  In searching for property, I have seen multiple offers and listings going well above the list price.  In fact, I have seen accepted offers well above what comps support.  It feels a little like 2018 again.  Jen Beehler with the Elevate Group states as inventory remains lows, expect more of this.  She then went on to explain that when making an offer where financing is involved, its very important to be fully preapproved with the ability to close quickly.

At 101 Loan, we take pride in that, our preapprovals are fully underwritten (with DU run) allowing our buyers the ability to make offers without a loan contingency and close in a timely manner, sometimes in 3 weeks or less.  This helps our buyers make the strongest offer possible often times resulting in accepted offer.

For more on what we do for our buyers, please see below:

  • We get the buyer completely pre-approved before they make an offer, so they won’t need a loan contingency (unless we recommend having one), something seller’s require.
  • We strategize with the buyer and Realtor, to close in the quickest amount of time with the least amount of contingencies while keeping the buyers risk as low as possible.
  • At the time of an offer, we call the listing agent on behalf of the buyer and their Realtor to differentiate the offer over someone else’s. (This makes a huge difference in the eyes of the listing agent and seller and conveys strength in the preapproval)
  • We can close purchases in 21 to 25 days (as needed) depending on the loan program the buyer chooses. Faster is better in the eyes of the seller!
  • We provide a timeline to the buyer, the listing agent and the buyers agent, once the loan is locked; detailing each step of the transaction to ensure a smooth closing.  We ensure the buyer knows exactly what the loan will cost once locked and then update them immediately if there are any changes to the loan structure, as a result due to a change of circumstance.  We then re-summarize the costs before the buyer signs the loan docs.
  • We coordinate the buyer’s signoff with escrow and their Realtor, to ensure the purchase closes on time, as scheduled.

We basically “micro-manage” the purchase from start to finish to ensure everything goes as smoothly as possible, something crucial in this market, to ensure all parties have a smooth and stress-free closing.

If you’d like to get preapproved or determine your purchase power, please contact us.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

650-465-8957 c  408-377-4123 o  408-608-1921 f

CA DRE – License # 01205444  NMLS #326829

6090 Hellyer Ave #100, San Jose, CA 95138

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 300 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

 

New Loan Program – 10% Down up to $2.2m in Price with No MI!

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Yes…You heard right! 

We now have a program that will allow a buyer with a mid fico score of 740 or higher to purchase a home up at $2.2m in price at just 10% down with no MI.   In addition, we can underwrite these loans in-house at our office with a complete credit package to fully preapprove a client before they make an offer.  This would allow them, to make an offer, not contingent upon the loan approval (not including appraisal and inspection).  With a complete credit package this can be done within 2 to 3 business days (sometimes sooner).

This is a game changer for those that have always been told they need 20% down or more to purchase at this price point and to avoid mortgage insurance (also known at MI or PMI).  In addition, for the client that has 20% down, now they only need to put 10% down invest the other 10% into the stock market or keep available for another property purchase or remodel.

(In some cases, the lender will also allow 15% down up to $3.52m in price or $3m in loan, but this approval over $2m in loan amount, would need to go to the investor taking us 1 week or more to obtain the loan approval for a no loan contingent offer.  This is why getting preapproved is so important, especially as the market changes/demand increases on home purchases.

About Rates…

Currently the rate on the 10% down program is at 6.5% (APR 6.71) at 1 Point on a 30 year fixed or 6.25% at 1 point on the 7/1 ARM (fixed for 7 years but amortized over 30 years).

If you would like to get preapproved for the above, please let us know.

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

650-465-8957 c  408-377-4123 o  408-608-1921 f

101 Loan – 14435 C Big Basin Way, Saratoga, CA 95070

101 Loan LLC – CA DRE #01165697  NMLS #121019

101 Loan is an Associate of General Mortgage Capital Corporation

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 300 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

Rob’s Report – Covering the Market, Why a Heloc May Not Make Sense and How a Concurrent Closing May be A Great Solution in Buying in Today’s Market…

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It’s been some time since I sent out a newsletter on rates, the market and food for thought in the world of real estate…

What’s prompted me to send a report now has a lot to do with rising home inventory, rising interest rates and the Dow Jones, down by 11.32% year to date currently resting at 32,654 down from 36,799 back on January 4th.

About RATES…

First a foremost as we have seen rates increase from 2.75% in December of 2021 to 4.75 (and higher) to date with only a .75 increase in rates by the Federal Reserve, the Federal Reserve is expected to increase rates 4 more times pushing Prime from a current 4% to 6% in the future and who knows how much higher residential, commercial, and reverse rates will go.

About HELOC’s…

With rising rates, why would a consumer choose a HELOC for cashout over a fixed rate 1st, when HELOC’s can only keep pushing up in rate as most of them are tied to Prime plus a 1 Margin or as of today, 5%.  If the Fed continues with what they said, then a HELOC’s future rate, will be closer to 7% in the near future based on what they are predicting.  In summary, why not lock into a fixed rate now?  In addition, there are some things to consider on why a HELOC may not make sense:

  • Were in a rising rate climate with prime now at 4% plus a margin of 1 (or higher) resulting in a rate of 5% or higher in rate
  • Due to changes in the tax code back in 2018, one cannot write off HELOC’s or 2nd’s, interest wise.
  • Due to their volatility…In the past if property values dropped, HELOC lenders would cut the “line” amount or freeze the account all together.

If you’d like to look at a 1st mortgage refinance, please complete the following…

https://101loan.com/refinancing/

REVERSE MORTGAGES’s…

With rates climbing, home values potentially leveling out and the Dow Jones down by 11% in 2022, much of what we have seen ever 10 years seems to be starting over again and consumer confidence is dropping.  If your over 55 years of age and have at the least 45% equity in your home, you might want to consider the benefits of a fixed rate reverse mortgage.  To determine your options without running credit, please go to https://101loan.com/reverse-mortgage-start/ and complete and we will research your options and provide them to you.

CONCURRENT CLOSING’s and Their Benefits…

If your thinking of buying a home and bridge options don’t work for you at https://101loan.com/blog/do-you-want-to-buy-first-and-then-sell-later-bridge-financing-may-be-the-answer/, you might consider a concurrent closing based on the following steps:

  1. Get pre-approved based on selling current home.
  2. Start looking at new homes and list your current home.
  3. Accept an Offer with a flexible long closing and with a flexible long rent back after you close.
  4. Make a contingent offer or no contingent offer depending on when your closing date is on selling.
  5. Close on the home you are selling and then close on new home or concurrently close at the same time.

Since the market is still strong and more inventory comes on each day, this is a solution you may want to consider as the incredible savings compared with any of the options in the above lin

If you would like to purchase or refinance a property or obtain a reverse mortgage and rid yourself of mortgage payments, 

BTW…To Learn More About Inflation and the Market, go to here.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c

101 Loan – 14435 C Big Basin Way, Saratoga, CA 95070

101 Loan LLC – CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

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Making a Strong Offer in Today’s Real Estate Market

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This is something I shared with another client making offers.  Just some advice to share with you?

With listing inventory this low in the bay area, you should ask your agent/Realtor what they think the property/listing will sell for vs what its worth.  Many agents list property below market to get multiple offers and higher prices.  Rarely do we run numbers based on list price, we tend to go a good $100k over the value to give a more realistic payment breakdown and sometimes that may still be too low.

For each offer you plan on making, asking your agent what they think the true value of the home is (also known as a CMA) and then how many offers will be made, is crucial to a successful offer in today’s real estate market.  Once you determine the true value, then add 1% to 2% for each offer.  Again, this may not result in the winning offer but it will get you close or at least afford the opportunity where the listing agent counters your offer, meaning your still in the running vs dead last on the offer.

For more info, contact us, your Real Estate agent and be sure to read the article below to see what’s happens when your not successful in ratifying the purchase contract.

See below:

https://101loan.com/blog/chasing-the-2021-housing-market/

Any questions, please contact me.  Thanks.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

How to Make a Strong Offer in Today’s Market

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Are you a Buyer that Keeps Getting Beat on Offers? 

Here is what we do to differentiate your offer over someone else’s, so the seller more often than not, accepts your offer:

  1. We pre-approve you, by running your credit, verifying your income via pay stubs and tax returns, confirm your assets with 2 months of bank statements and review your file to ensure there are no red flags so when you do make an offer, you make it with confidence knowing that 101 Loan has your back!
  2. We will strategize with you and your Realtor, to close in the quickest amount of time with the least amount of contingencies while keeping your risk as low as possible.
  3. At time of offer, we call the listing agent on behalf of you and your Realtor to differentiate your offer over someone else’s. (This makes the biggest difference in the eyes of the listing agent and seller)
  4. We close purchases in 30 days or less, depending on the loan program you choose.  Faster is better in the eyes of the seller!
  5. Our staff provides a timeline to you and your Realtor once you are locked; detailing each step of the transaction to ensure a smooth transaction.
  6. We ensure you know exactly what the loan will cost you once locked and then update you again on the amount needed to close, prior to signing the closing docs.
  7. Our staff will coordinate your sign-off with escrow and your agents to ensure your purchase closes on time as scheduled.
  8. We basically, “micro-manage” your purchase from start to finish to ensure everything goes as smoothly as possible.

Just watch the video, our buyer’s recently posted about their experience in working with us.  We were a team to get the job done in a timely manner while providing low rates, low fees and outstanding service.  See video at https://www.youtube.com/watch?v=vEhLPDd7sjA&feature=youtu.be.

In closing, if you are looking to purchase a property, contact the professionals at 101 Loan!

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.