Posted on January 24, 2012

One of the rarely touted advantages of people taking FHA mortgages today is the fact that they are assumable. What that means is, when a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable, or can be “taken over”.

Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. An assumable mortgage can help you attract buyers if you sell your home.

Most people believe that interest rates will return to a “normal” range (between 6.5% and 7%) in a couple of years. When you assume a mortgage, the terms remain the same. This means that a buyer five years from now can enjoy a 4 – 4.5% mortgage by assumption rather than the 6.5% – 7% mortgage they would get without it. Since most people buy homes based on how the monthly payment fits into their personal monthly budget, this is extremely impactful.

As an example, a $300,000 loan at 4% today carries with it a $1,432.25 principal and interest payment on a 30 year fixed mortgage. If offered for sale in five years, the purchaser could assume the $271,858.56 balance with the same $1,432.25 payment and remaining term of 25 years. The total payments over the 25 years would be $429,675.

Compare that to a new $272,000 loan at 6.5% for 25 years, which would carry a monthly payment of $1,836.56 (over $400 more a month than the assumption and more than $120,000 more over the 25 year term). At 6.5% for 25 years, to wind up with the same payment as the assumed mortgage, our borrowers would only be getting $212,000…$60,000 LESS!

The point here is that, when rates go up, homes with assumable mortgages will have more value and will sell at higher prices because they are more affordable. As an additional bonus, the closing costs on assumable mortgages are significantly less. The borrowers must be credit-worthy of course (have good credit, qualifying income, and necessary assets to close), but they would have to be credit-worthy to get a new mortgage too!

Besides the multiple other reasons to obtain an FHA mortgage (low down payment requirements, extended income ratios, lower credit scores, and easier sourcing of funds), there is another perk. In the future, there is a good chance that you may be able to sell your home for more money because of the FHA loan’s assumability.

So happy BUYING

Please contact us with any questions or lending needs. We have a phenomenal lender we LOVE to use!

Danielle Ervin
The Ervin Group
www.ErvinGroupRealEstate.com
danielle.ervin@yahoo.com

Now you know why we choose to work with Prudential! Call us for all your Real Estate needs!

All indications point towards a great year in Real Estate ahead in 2012! With prices still at record lows and mortgage rates as low as they’ve EVER been, we believe buyers are finally going to get off the fence and purchase! Maybe you, or some one you know!

We know how stressful moving can be, but having an agent on your side who knows the community and has contacts and resources that can help makes it considerably easier! Not only are we the experts in our local areas, but our network of qualified Real Estate professionals Spans North America! We are able to interview and refer you or your loved ones to local agents who will take as good care of you as we would! Make sure you call us before searching on your own!

If you have a friend or family member moving locally, and know that they would appreciate a high level of service and professionalism, send us their name and number and we will take excellent care of them!

Last but not least!

Wishing you an amazing 2012!

Danielle Ervin

danielle.ervin@yahoo.com

www.ErvinGroupRealEstate.com

Remember the 1980′s? When a gallon of gas cost about $1.30, a gallon of milk about $2.00, and a first-class stamp as low as $0.15? When the median home price in Orange County was only $129,000 (1980)? Well, what if I told you that a home today COSTS less than 1980? Would you believe me???

Well, it’s TRUE! With rates at the lowest level in decades, the COST of a home in Orange County is less than it was in 1980. Here’s an example:

December 1980′s average home price in Orange County – $129,000 December 1980′s prime interest rate – 21% Estimated payment on 30-year mortgage – $2,280/mo

December 2011′s average home price in Orange County – $405,000 December 2011′s prime interest rate – 3.25% Estimated payment on 30-year mortgage – $2,212/mo

Want MORE proof? Here’s a real life example, shared by a colleague;

“My parents bought their home in 1987 for $250,000 at 17.5% interest. There monthly payment was $3,265.99/month.

My parents sold the house in 2005 for $820,000 to a buyer who paid 6.5% interest for a monthly payment of: $5,239/month

There same model just sold for $595,000 at 3.94% interest rate. These buyers monthly payment will be: $3,049.39/month”

Now that is some crazy Math! Home prices are back to 2001 levels, but with interest rates as low as they are, the monthly payments are down to the 1980′s!

So buyers…What are you waiting for?? Now is the time, no more sitting on the fence! Sellers, YOU TOO! I believe that a record number of buyers will be out in 2012. A good home on the market will not only sell, but will most likely bring multiple offers. Helping YOU to sell at a higher price!

Whether you or someone you know is buying or selling, call The Ervin Group first! 714-747-HOME (4663)

I can tell you what I see day in and day out in residential real estate….. buyers are buying and sellers are selling. Plain and simple.. the market IS moving and moving pretty darn well here in Southern California. Investors are happy as clams because while most will be negative or believe the negative news on the real estate market they are buying homes at incredible prices.

This article recently came across my email and I just HAD to share I give him all the credit of writing an amazing piece and telling it like it is……..

I disagree…

Here in the U.S. at least, the housing bubble is completely over. It drives me nuts when I hear commentators say, “We’re halfway through,” and, “We have more pain to come.”

Here’s the FACT: Right now, houses in America are the best value they’ve been in many generations. It’s not hard to understand…
The Economist showed a chart of home prices relative to incomes in that article. Instead of showing that home prices are expensive, the chart shows that U.S. houses are the best deal in history (going back four decades), relative to U.S. incomes.

Now, how can The Economist have an article about the continuing global housing bust… and then show a chart showing U.S. homes are the cheapest in four decades?

To attempt to explain this, The Economist says, “Prices [in America] may have reached a floor, but this is no guarantee of an imminent bounce.” Yes, that’s correct. We can’t know the future. We can’t know if another 5% dip is in the cards. But c’mon…
We CAN know that extraordinary value exists right now in U.S. housing. You have the chance to buy fantastic properties at possibly once-in-a-lifetime prices.

So what if there’s “no guarantee of an imminent bounce”? When do you get a guarantee like that in investing anyway?

Another gripe I have is that the housing price-to-income ratio – The Economist‘s measure of value – is actually understating the opportunity. People don’t buy homes based on the price of the house relative to their income. People buy homes based on the mortgage payment of that house, relative to their incomes.
And right now, mortgage rates are off-the-charts low…
In 1980, mortgage rates were 15%. In 1990, they were 10%. In 2000, they were 8%. Today, they are BELOW 4%. It is the greatest deal in U.S. history.

Anyone who’s ever bought a house knows that a 15% interest rate in 1980 is dramatically different than today’s rates below 4%. Any measure of housing affordability over time that doesn’t consider the mortgage payment is simply not that useful.
Housing prices are the best value in history, according to The Economist‘s own chart… And if you include mortgage payments in your calculation instead of house prices, U.S. houses are actually a dramatically better deal.

In short, now is the time to buy a house in America.
Look, I get it… Times are tough. Most people either can’t or won’t take my advice to buy a house. But it is the right advice…
I am trying to follow it myself… My right-hand man Brett Eversole has been forced to step away from his computers over and over again to go look at local properties with me.
And Porter Stansberry (the founder of Stansberry & Associates and the publisher of DailyWealth) is doing the same thing I am… investing in beaten-down real estate.
The reasons to buy now are incredibly simple:

• U.S. home prices are more affordable than ever – by far. (Here in my home state of Florida, prices in many cases are down by half.)
• Mortgage rates are down to record-low levels, below 4%.
• You can often pay below-market prices (as banks try to unload properties, for example).

Of course, as The Economist says, there is “no guarantee of an imminent bounce.” But with prices this low and with very few other great places to put your money in our zero-percent world… if you can swing it, you need to consider buying a house. If you can buy right, and hang on for a couple years, it could be the lowest-risk, highest-reward investment you ever make…
In America, the bursting of the housing bubble isn’t halfway over. It’s COMPLETELY over.

Stop procrastinating. If you can do it, get on it, now.
Good investing,
Steve

The fight continues on here in Chino Hills to get Edison to remove/move these 200 foot iron giants from our backyards. From the great work of Hope for the Hills we have made great strides. I’m supporting this effort with the earnest of beliefs that these towers will effect our entire city. The newest issue this towers bring is in the resale of the homes that are close or within “fall distance”.

One of my preferred lenders has pointed out that FHA will NOT finance homes within the “fall distance” of this towers.

Here is the specific appraisal guideline verbiage;

FHA has specific verbiage in their appraiser handbook pertaining to the designed “fall distance” of power lines. Since appraisers are not engineers, they are instructed that “for field analysis, the appraiser may use tower height as the fall distance.” Eastvale is a newer area though, so I’d imagine that was taken into consideration upon building by Lennar. They probably have documentation regarding the engineering aspects of the wires.

Hope for the Hills sent out the following call to action………..

We have the support of Mayor Ed Graham, Assemblyman Curt Hagman, and State Senator Bob Huff…. However certain elected officials are ignoring our cause.

YOU CAN HELP BY CALLING THEM AND ASKING WHY THEY ARE NOT HELPING THEIR CONSTITUENTS.

Gloria McLeod – 909-621-2783 or 916-651-4032

Norma Torres – 909-620-2082 or 916-319-2016

Ed Royce – 714-744-4130 or 202-225-4111

Gary Ovitt – 909-387-4866 or 909-465-1895

Joe Baca – 909-885-2222 or 202-225-6161

Gary Miller – 714-254-1142 or 202-225-3201

Our message is simple: Bury the lines or reroute the lines through Chino Hills State Park.

Our team works in this beautiful city so if you or
anyone you know needs real estate help or advice please don’t hesitate to ask!

Helping you build your dreams

Danielle Ervin
The Ervin Group
danielle.ervin@yahoo.com