Mortgage 101 in a Confusing World!

Conforming, High Balance, Non-Conforming, FHA, VA? What is the best loan these days? What type of down payment is required in today's market?

The world of mortgage can seem a bit confusing, especially these days. Most people have heard a lot of the news from the recent Housing bill to the stimulus package and now the new $700 billion dollar "Wall Street Bailout" but what does it all mean for you!

There are a few different loan types to understand. Depending on your loan amount you will fall into one of three main categories.

1. Conforming 417k or less loan amount: If your loan amount is less than $417k you have access to the widest variety of loan options at the best rates available. For most people looking to purchase a home FHA is currently one of the most popular options and currently only requires a 3% down payment. If you are putting less than 10% down or have less than 10% equity in your home for a refinance this is currently the only option for most people. If you qualify for a VA loan you may be eligible for no down payment.
FHA: 3% Down (3.5% starting January 1st 2009) For owner occupied 1st time home buyer or refinances.
VA: $0 Down on purchases for qualifying active duty personnel or personnel with previous qualifying military service, reservists, national guard and coast guard personnel with qualifying service.
Conventional: 10% down in California

2. High Balance 417k to 729k loan amount until Dec 31 2008: This was put into effect with the economic stimulus package earlier this year and extends many of the conforming options up to 729k in most high cost areas including Pasadena and most of Los Angeles as well as other high cost areas. Rates are currently about the same as conforming and offer the best available rates.
FHA: 3% Down
VA: Loans over 417k will require some down payment
Conventional: 10% Down in California

3. Non-Conforming 729k+: Loans above $729k fall into this category. Rates are higher than conforming and the high balance loans. In markets labeled declining (all of California) a minimum 20% down payment is required. There are several ways to be creative and help avoid the non-conforming rates including taking a 1st mortgage of 729k under a high balance loan and putting the difference on a 2ND, a first trust deed equity line, etc.. etc. The best option will depend on several factors and each individuals situation. While rates are higher in this category the good news is the rates in this category are showing some signs of trending back down a little.
Conventional: 20% down

A few things to remember:
-If you put less than 20% down on any loan for any loan amount (or have less than 20% equity on a refinance), mortgage insurance will be factored into the payment.
-The high balance loan option will no longer exist as of Jan 1st 09. However the conforming limit will be raised to $625k in high cost areas including most of Los Angeles.
-The above loan scenarios apply to all loan types including bank owned properties (REO's), foreclosures etc..

Hopefully this simplifies the basics of the loan types. If you have further questions or specific scenarios feel free to post them here .

Regards,

New Granite Park Development of Luxury Condos in Pasadena

Granite Park Pasadena is a new development that is located just to the Northeast of South Lake Ave. and California Blvd. in Pasadena. This luxury condominium development will consist of 71 high end condos ranging in price from 1 million to 2.5 million dollars. The Granite Park condos will consist of:

• 1,400 s.f. terraces


• 24 hour security


• Viking Appliances


• Kohler Fixtures


• Underground parking


• Architecture inspired by Irving Gill


• Photo gallery in the lobby


• Beautiful landscaping, private walkways, gardens & meditation areas


• Pool and Spa


• BBQ area


• Putting green


• Incredible location (located next to shops & restaurants)

The Granite Park Pasadena condos are not yet listed on the Pasadena MLS. In order to have an opportunity to purchase one of these luxury condos, you need to schedule a viewing of the show room and put down a fully refundable deposit. In order to do this, visit our Granite Park Pasadena Luxury Condo site and schedule a time to see the sales gallery which has a model condo.

Time to Trade Up!

With so much negative media about real estate and the economy, it’s easy to think we should all just put our money in our mattresses and forget about buying or selling any time soon. But this real estate market actually presents a great opportunity for trading up to a better home. Here’s how:

If prices are down 20% in Pasadena, then that means that a home that was $400,000 would now be $320,000. And a home that was $800,000 is now $640,000. If you had a $400,000 home and wanted to move up, your first instinct is that it’s a bad time to sell because you’ll only get $320,000 for it and you don’t want a loss. But in fact, even if you lose $80,000 on the purchase of your current home, you’ll save $160,000 on your new home of $640,000. You actually save money by selling and buying something more expensive.

We’re finding that it’s a great time to trade up in Pasadena right now. There are REOs and short sales that have brought the price down even on Pasadena luxury homes. If you want to take a look at what kind of deals are available right now, you can sign up for a Hot List and let us know what you’re looking for, and we’ll send the information to your inbox. And when it’s time to start looking, you’ll want to get pre-approved for a loan so you can demonstrate to sellers that you can complete the deal.

Pasadena still flooded with foreclosures

The city of Pasadena is still flooded with foreclosures, Real Estate Owned (REO) and bank owned properties. Right now there are over twenty bank owned properties for sale in the market right now. These foreclosed homes can be picked up by first-time homebuyers, investors, or buyers looking to upgrade to a bigger house. Most of the homes range between $400,000 and $600,000, dependent on the size, location and condition. However, there are a few below that price range and a couple homes above that price range in Pasadena. Often these homes are priced below market value because the banks have no interest in holding on to them. It is in their best interest to get them sold.

What should we expect when looking at foreclosures? As a buyer looking to buy foreclosures, one thing we have noticed about several of the Pasadena properties is that they often need a little work or cleaning before moving in. The people leaving these homes were not worried about reselling them, so they often leave a little work behind. If you're okay with putting in a little work (or hiring someone to do it for you), you can often times save thousands of dollars.

BeautifulPasadenaHomes.com has Pasadena Real Estate Agents that are specializing in finding good foreclosures for buyers. If you would like a hot list of foreclosed homes in Pasadena, sign up for the REO - Foreclosure - Bank Owned List and be the first to get an email with pictures when a new bank owned property goes on the market.

This blog is going to be used to convey Pasadena California Real Estate information.