What are our biggest expenses? Our housing expense is usually the biggest. Then perhaps a car payment, utility bills, insurance, and credit payments. It is generally expected that our housing expense should not exceed 30% of our income. But if you live in high-cost areas like California, your housing expense can likely exceed 50% of your income! This is a scary situation to be in. Especially if you are living on “fixed” income, meaning you get the same amount each month no matter what. People who are retired fit into this category. So much so that any significant increase in their income is celebrated on the evening news! The COLA (cost of living adjustment) that occurs with Social Security benefits was 5.9% in 2022. At that time, it was the highest increase in 40 years! Only to be topped in 2023 by an 8.7% increase. The news was posted and discussed everywhere because there are so many baby boomers who are now collecting Social Security alone or in addition to a retirement pension. It was fantastic news as the increase enabled recipients to live better. That’s exactly what we are all about at Pacificwide Reverse: helping people live better now. To that end, helping people 55 and older figure out how to make their ends meet each month is our #1 goal. If your housing expense is more than 30% of your income and that expense includes a mortgage payment, it may be time for a free consultation with one of our specialists to discuss how to make that expense more affordable. Or how to eliminate it entirely. As you probably know, having a reverse mortgage does not affect your Social Security pension. The proceeds from a reverse mortgage are not considered ‘taxable income’ as they are proceeds from a loan. Nor will having one keep you from purchasing additional property. Getting rid of your mortgage payment could help make it possible for you to live a life free of financial worry. Right now. So, aren’t you curious? Let’s talk!
Executive Vice President, Pacificwide Lending
Director, Pacificwide Reverse
Direct Line: (510) 806 5327
If your financial life in retirement is not what you envisioned, let’s talk about it.
Most of us dream of the time in our lives when we can retire! A time when the hustle-and-bustle of life is over. When we don’t have to wake up early in the morning. We don’t have to wear business clothes or commute. We can take a lunch break, or for that matter any kind of break, anytime we want! Simpler. That’s the best word to describe life in retirement. Or at least the way it should be. Not working everyday also means not making the income you were accustomed to. If you were wise and started young, you likely have a healthy “nest egg” to supplement your retirement income. But if you’re like a lot of us, you aren’t as comfortable as you want to be with your financial condition. What are the options for increasing your income or savings without getting a job? One option that is often overlooked is gaining access to the home equity you have built up over the years. You can access that equity by selling your existing home and purchasing a smaller home for cash. Or you could choose the only other option that doesn’t involve making a monthly mortgage payment: a reverse mortgage. Now before you stop reading, have you ever looked into a reverse mortgage for you? Have you gotten a proposal from a reverse mortgage provider? Do you know of the different reverse mortgage products that exist today? I won’t get into all that right now. I just want to put on your mind that reverse mortgage is much more versatile and multi-faceted than you know. And you would be doing yourself a disservice if you don’t call us for a free consultation. Situations can change overnight. And the peace of mind that comes from knowing there is a “Plan B” just in case you need it is priceless. Give us a call today so we can set up your appointment.
Director, Pacificwide Reverse
Executives Vice President, Pacificwide Lending
Although there are some price adjustment, nevertheless, home prices seem to be holding even as the mortgage rate has gone much higher. Market couldn't figure which way the price is going: is it the bottom now? or perhaps there will be more room for adjustment?
Home price will drop when the unemployment rate raise. Yes, there will be some homeowners could not afford the payment anymore, and their homes went foreclosure. On the other hand, this time around, unlike 2008 housing crash, most of the borrowers are very solid, and many of them put down at least 20% or more downpayments in order to compete to win the bid. With the low rates that they have locked in, it is very unlikely that the borrowers would just walk away.
One big difference this time compare to the down circle: for the last few years, corporate America has bought ton of single family home, there were hedge funds, RIETs, Equity firms purchased about 1/3 of all home sold in US in 2021. Since the rents were high and still high, they have made a tons of money. However, when the unemployment rate gone up, many of the renters can no longer afford the high rental amount, and corporations will like to start to withdraw from the rental market, and put the homes on the market to sell. When that happens, the housing market will tank.
Some of my clients called, asking if I could lower their interest rates. Many of them said that they heard Federal reserve had lower interest rate to zero, therefore, they should be able to refinance to a rate such as 2% fixed rate etc.
When federal reserve lowers its interest rate, it simply means that banks overnight borrowing rate from Fed is zero. How do the lenders decide their interest rates? It is all driven by the market: if the market is demanding the mortgage back security, lenders will lower their interest rate to attract more borrowers. On the other hand, if fewer investors were buying these securities. Lenders cannot get their money back; they would have to raise the interest to make their loans more attractive to the investors. That is why when Federal reserve raised interest rates early last year, but the mortgage instead dipped.
This is what is happening now: there are very few investors are on the market buying these mortgages backed security right now. Why? Investors anticipate that mortgage default rate may go higher over the next few months as more and more people lost their jobs
In fact, the private money market, the rates have already risen substantially: just 3 to 4 weeks ago, I had seen rates were as low as high 7s. Now, they start at 10s and could be as high as 15.
Going forward, even as we contain the Covid-19 from spreading and flatten the curve, I still do not see investors would rush back the market to purchase the notes, since it would take a while for unemployment to be recovered. We will probably see high interest rates for the rest of the year.
With Covid-19 being a black swan market event, investors are genuinely worried about their real rate of return from all markets. The ongoing oil price dip and the possibility of a moderate recession also looms large in the retail and the office markets. The natural question in this blog is: Is it still a good time to invest in the commercial real estate market overall? Our answer is in the affirmative based on the following facts.
1. Median Home Sales Price has softened all across the US
Source: FRED Database.
It appears from the above graph that while the median sales price for new houses sold in the U.S. has an increasing trend since September 2012, wage growth is also keeping up to this trend. Thus, for savvy investors, it may be worthwhile to exchange some of their home assets with other commercial assets, such as multifamily properties with greater purchase price than their home assets. With such 1031 exchange, these investors may be able to defer their tax bill.
2. Decline in the Mortgage Rate with Fed’s Current Policy
Source: Authors’ construction based on Freddie Mac’s Data.
Mortgage rates have declined by over 1% across various mortgage types since their highs in 2018. If interest rates remain low for the near future, many investors will refinance their properties resulting in either substantial cashback refinances or significantly improved cash-on-cash returns on their rental properties. Either way, it is a big win for investors.
3. Stock Markets are Still Performing Well Despite Recent Setbacks from the Covid-19 Virus
Source: Authors’ construction based on Yahoo Data.
Although the supply chain shock owing to the coronavirus spread is widespread in the travel, retail, and hospitality sectors, the S&P 500 index is still performing quite well. As S&P 500 index is an important indicator of the economy’s health, coupled with unemployment rate being historically low and wage growth continuing its upward trend, there may be no signs of an imminent recession to the broader economy. Of course, if the coronavirus spread affects a significant number of countries, we may experience an overall recession for the global economy. However, this is far from being a certain outcome.
4. National Average Rent Evolution continues its Upward Trend
Source: Authors’ construction based on Apartment Index Data
The value of a multifamily property is ultimately based on the rental income it generates. As evident from the above graph, the national average rental income has increased for studio apartments, 1bedroom apartments, 2 bedroom apartments, 3 bedroom apartments, and 4 bedroom apartments. This is good news for landlords and investors as this growth rate from rental income increases value to their portfolio.
5. Median Household Income has continued to increase
Source: Authors’ construction based on Census Bureau Data.
After a dismal performance in 2010 with median household income at $56,873, during 2018, the median household income stands at $63,179. With the current unemployment rate at 3.6% and wage growth rate on an increasing trend, there may be room for investors willing to put their money in the commercial real estate sector.
6. The Millennial Generation Sector may be buying more Commercial Properties
Source: 2019 NAR Home Buyer and Seller Generational Trends
The millennial generation are now in their 30s, which means they have at least 10 years to save for a down payment of their homes. As evident from the above chart, the older generation millennials are buying 26% homes compared to selling 18%. Compared to the older boomers, who are buying only 14% and selling their homes 22%, if some of these millennials can save their income from their home purchases, they may be able to sell these properties at a higher price and reinvest these cash into commercial properties in the future to generate even higher returns. Thus, there is good reason to believe that the higher rate of return from commercial real estate investment will continue over the next decade.
7. Over a longer time horizon, compounded return on real estate assets is vastly better than Equities
A comprehensive study by Jorda et al. (2017) have clearly demonstrated that residential real estate, not equity has been the best long-run investment over the course of modern history. Although the returns on housing and equities are similar (around 7%), the standard deviation of housing returns in significantly smaller than that of equities (10% for housing versus 22% for equities. Thus, with thinner tails, the geometric average is vastly better for housing than for equities — 6.6% for housing versus 4.6% for equities. This finding contradicts one of the basic assumptions of modern valuation models that higher risks should come with higher rewards.
How does this result translate to the commercial real estate market?
Many commercial real estate projects have NNN rent structure in which the tenant is required to pay the landlord’s cost in addition to the monthly rent. NNN properties gained popularity because they require less management (“zero-landlord responsibility”), provide good returns, and have long term leases in place. Unlike other investment properties, the value of NNN assets is mainly composed of mostly 2 factors:
The returns on NNN properties are higher as well – around 6.5% industry wide, compared to 5.6% in multifamily nationwide, and require significantly less management. Thus, there may be significant potential for investors entering into this market with the current bear S&P 500 index through significant diversification of their portfolio holdings.
With Covid-19 being declared as a pandemic by the World Health Organization (WHO) recently, investors are genuinely panicked owing to the S&P 500 index entering into the bear zone. Coupled with the fact that there is an oil price dip with a potential for Saudi Arabia and Russia entering into price wars on oil prices, we suggest that commercial real estate investment may be a good avenue to diversify the portfolio for investors.
First, investors may be able to exchange some of their home assets with commercial assets, such as multifamily and office properties. This will allow them to defer their tax bill.
Second, with mortgage rates declining from their previous highs in 2018, investors may be able to refinance or significantly improve their cash-on-cash returns on their rental investment properties.
Third, with an increase in average rental income nationwide, landlords and investors may be able to improve the value of their portfolios.
Fourth, with the current unemployment rate at record lows being at 3.6% with wage growth registering an increasing trend, there may be room for investors willing to put their money in the commercial real estate sector.
Fifth over a longer time period, on the demographic side, with millennials saving their income from their home purchases, they may be able to sell these properties at higher prices and reinvest their cash into commercial real estate with potential for higher returns.
Finally, the returns on NNN properties are 6.5% industry wide, compared to 5.6% in multifamily nationwide. These properties also require significantly less management. Thus, there may be significant potential of diversification of institutional investors’ portfolios.
Census Bureau, Table H-6: Regions by Median and Mean Income, Available at: https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html
FRED, Median Sales Price for New Houses Sold in the United States, Dollars, Monthly, Not Seasonally Adjusted, Available at: https://fred.stlouisfed.org/series/MSPNHSUS
Freddie Mac (2020), Current Mortgage rate data since 1971, Available at: http://www.freddiemac.com/pmms/
Jorda, O., K. Knoll, D. Kuvshinov, M. Schularick, A.M. Taylor. (2017), “The Rate of Return on Everything, 1870-2015”, Federal Reserve Bank of San Francisco Working Paper 2017-25, Available at: https://www.frbsf.org/economic-research/files/wp2017-25.pdf
National Association of Realtors Research Group (2019), 2019 Home Buyers and Sellers Generational Trends Report, Available at: https://www.nar.realtor/sites/default/files/documents/2019-home-buyers-and-sellers-generational-trends-report-08-16-2019.pdf
Salviati, C. (2020), Apartment List National Rent Report, Available at: https://www.apartmentlist.com/rentonomics/rental-price-data/
Yahoo Finance, S&P 500 Historical Prices, Available at: https://finance.yahoo.com/quote/%5EGSPC/history/
According to Wall Street Journal, last December, among all the real estate sales, fix & flip transactions counted about 10% of the total transactions nationwide. That was about the same level as when it was in 2006.
Seems that softening of real estate market price of late last year, helped to make this trend.
As of this year, this trend would most likely to continue. There are certainly more inventories are on the market right now( https://www.redfin.com/blog/data-center/). As of February of 2019, real estate inventory has increased about 3% compared to February of 2018. Homeowners have been holding on their homes and not to move for quite sometimes. Why? They have refinanced their mortgages repeatedly in the past years, ended up with very low 30 years fixed rates. If they move, they would find themselves getting into a lot higher interest rates and monthly payments.
Fed has indicated that it would be most likely be done with the rate increase 2019, and the bond prices have come back down. Mortgage interest rate has been come back down since early this year, and most likely would stay low for the rest of the year.
Therefore, the current market condition is ideal for fix & flips.
We have gotten a lot of inquires about our fix and flip loan programs: we are offering a program that would let the investor borrow up to 85% of the purchase price (properties that cannot qualified for conventional loans), plus up to 100% of the repair cost. Investors love this program, why? They all understand that it is the smartest way to use other people’s money to make money themselves.
As the mortgage interest rate has gone higher, potential borrowers are increasingly choosing adjustable mortgage rather than locking into 30 years fixed rate.
Adjustable rate typically would be fixed for about 5 or 7 years, then it becomes adjustable once or twice a year. Its rate would usually 1 – 2 percent lower than the fixed rate. A mortgage of $400,000 would save the borrower about $200 a month or $2400 a year. For 5 years, the potential borrower can save up to about $17,000.
The adjustable is would be especially attractive, if the potential buyer plan to sell property in the next 5 to 7 years.
Nevertheless, according to value Penguin, a research firm, average home owners is American today would stay in the same homes for average 12 years ( 2018 data) verse 6 years( 2008 data). There are reasons that people no longer would have to move to where the companies are located. Many of the jobs can be performed remotely. The technology and artificial intelligence advance, there will be even less chances that you would have to move to the job site.
Moreover, if the plan to move does not materialize, it would be costly to refinance or paying higher interest rate as the fixed period expires
As rates are still historically low, a fixed into 30 years interest might just be a good thing to do.
Conventional wisdom concludes that real estate market is very cyclical , the typical cycle for a real estate market is about 7 years. If we start to count the year of 2012 as the year price started to increase, 2019 will be the year 7. According to Wall street Journal, real estate price in the west started to decline in June.
As I spoke to realtors, they have indicated that price reduction seems to be widespread cross the San Francisco bay area. Usually, the sales would take place when the prices were reduced.
Signs are pointing the downward trend in the coming months.
However, would a crash come?
Before the last real estate market crash of 2017, a lot of the borrowers bought properties with very low-down payments or even with 100% financing. Moreover, borrowers were even given options to make payment only on 1% interest rate( actual rate was much higher). Therefore, when the downturn came, many homeowners and investors simply abandoned their properties.
This time around, however, nearly all of the buyers put down some downpayments and large portion of them put up 20 – 50% down. Even in the year 2017, there were 21% of all buyers paid cash for properties (down from highest of 36% in the year 2009 December 2017 REALTORS® Confidence Index Survey.) the percentage of property owners who own good amount of equity is high, and are less likely to just walk away when imminent slow down comes, and likely create a crash.
We offer commercial loans,
that make it easy for you
to make smart investments!
25 YR Fixed Rates %5.25 with 1-point:
(owner user or investment only)
(acquisition & refinance)
(from 5 units & up)
(lots, raw & subdivision)
Churches, temples, synagogues
(manufacture, distribution center)
(hospitals, rehabilitation center, clinics, assisted living)
Mixed use properties
Mobile/manufactured home parks
Retail (malls, strip malls, shops)
(spec homes, investment properties)
Invest in Trust Deeds in 2018
economists have predicted that the economy will continue to do well this year,
real estate value would most likely continue to rise. As the stock market starts
to become volatile (Dow Jones swung 1000 points in one recent trading section).
Many investors have tried to invest in real estate. However, because of the low
inventory, they have often lost out to higher bidders. It also becomes
questionable, whether it would be wise to over bid on properties. Money in the
bank provides literally no returns.
great alternative is to invest in Trust Deeds.
notes would provide you with a yield rate of 5% to 10% depending upon the risk
level you are willing to undertaken. A typical borrower, that you would lend
money to, would put down a minimum of 30% or more. Therefore, the investors risk
has been minimized to only 70% or lower of the market value. Interest will be
paid to you monthly, and once the loan is paid off (typically between 6 months
to a year), you will get your principal back.
have been working with many borrowers, who are developers or contractors that
flip properties, sometimes they need fast money to acquire or renovate
example, we just did a loan for a borrower who owns a triplex in San Francisco
valued at $1.2 million, free and clear. The borrower needed about $200,000 (loan
to value ratio at 16%) to complete a renovation project on the property, one of
our investors funded the loan, closing it in just two weeks.
you would like to receive more information about our Trust Deed Investment
us a call at: (925) 461-0500 or visit our website www.pacificwidelending.com
Are you interested in purchasing your very own building?
If you are a business owner, who’s looking to purchase your own building. Great news! You can purchase your own property with only 10% down. On top of that, I might be able to provide a great interest rate in the high 4% to low 5%s. Better yet, you can even choose a fixed rate (fixed for 25 years); never having to worry about refinancing it after 3 or 5 years.
In fact, I recently used this program to purchase my own office.
Please call me with your scenario
Most economists have predicted that economy will continue to do well next year, real estate value would mostly like to continue to rise as the inventory is still very low specially in the San Francisco bay (According to Santa Clara Association of Realtors, areas that the association covers including San Jose, Sunnyvale, Mountain view, Palo Alto, San Mateo etc that is almost half of the San Francisco bay area, there are only 8 houses for sale that are listed price below $500,000)
Many investors have tried to invest in real estate. However, because of the low inventory, they have often lost out to higher bids. It also become questionable whether it would be wise of over bidding on properties.
However, money in the bank provides literate no returns. A great alternative is to invest in trust deeds.
These notes would provide you with yield rate of 5% to 10% depending upon the risk level you are willing to undertaken. A typically borrower, that you would lend money to, would put down minimum 30% or more. Therefore, the investors risk has been minimized to only 70% or lower of the purchase price. What if the borrower does not pay the monthly mortgage? Since the trust deed is tired up with the property, the property can be foreclosed to get investor’s money back.
California has nation’s largest economy by far, its GDP is almost twice as much as the second largest economy in the nation. No wonder, many Californians love to invest in real estate: Most of them would invest in California, however large number of people would invest in the rest part of the United States.
One challenge is find a lender who would lend in other states. Banks are typically the worst places for such lending inquires, bankers simply do not know how to go about it. And most of the private lenders in California would shy away from lending in areas where they are not familiar with.
That was a challenge that I faced recently: A client of mine purchased an investment property in another state through auction, and at the time, he used a high interest rate loan to help him to acquire the property. He thought he could refinance out of it after the purchase. After trying endless times unsuccessfully, only then did he realize that it wasn’t an easy task.
Using my network of lenders, I found a lender in that state and helped him to finally refinance out of the high interest rate loan into a much more reasonable rate loan.
Many small business owners do not have a very keen idea of how to manage their personal credit profile and a lousy credit profile creates a challenge for the business owners when they need to apply for business loans as banks usually scrutinize applicants’ credit history very closely.
A client of mine owns a high-end Italian restaurant in the Bay Area, recently, he needed money to renovate his restaurant. Because of his credit issue, every single one of the banks that he made inquiries to had turned him down.
Through a referral, he came to talk to me. He was asked about doing a cash-out refinance on his home. However, his current mortgage rate was very low, if I refinanced it, I wouldn’t be able to match the rate he has now due to his much lower FICO score. Moreover, he planned to pay the debt off in about 2 to 3 years, a much larger first loan on his home probably wouldn’t make a lot of sense.
I recommended that he take out a second loan: It would allow him to keep his current low first mortgage rate, and let him pay the second off in 2 to 3 years. He finally had the money to renovate his restaurant and now his customers love his newly decorated Tuscany-style dining hall.
Case Study 06.12.17
Many people who live in the Bay Area are tired of the
traffic congestion and a long daily commute which seems to be getting worse every
single day. Their homes are not much of a
sanctuary either, the developers have built homes that are so close to each other,
they can literally open a window and shake their neighbor’s hands.
To avoid such stressful living, many people have chosen to
move away from the Bay Area and live on the outskirt of the big city so they
can have their peace and tranquility back.
Recently, a client of mine visited a home with 40 acres of
land, and he fell in love with the home immediately! He decided he can see himself hiking on his
own property without running into anyone. He said he can picture himself
sitting under the mature giant oak tree, reading a book, and enjoying the
gentle breeze during the hot summer months.
There is just one challenge, his bank won’t lend him money
for the purchase, because nearly all loan programs will only allow for maximum
lot size of 5 acres. Over that amount it becomes an agriculture loan which
would have entirely different qualification criteria. However, my client has no
intention of doing any agriculture business beside planting few grape trees and
setting up a vegetable garden.
Lucky, I found him a “hobby farm loan” which tailors
exactly to his situation. He was able to
finish his purchase and move in right before the summer.
Case Study 05.31.17
Often a borrower does
not have enough of an income to qualify for a loan amount that they need to
purchase a home. Under most of
situation: They would have to either put
down more of a down payment or purchase a less pricey home.
However, that would be a
tall order since home prices in the San Francisco Bay Area seem to be going one
way only which is UP!
We recently helped a
client of ours with this type of income issue.
Incomes, from the husband and wife, were a bit shy of debt ratio which
was required to qualify them. However,
we realized that he has an aunt who was willing to them help by adding her name
as a co-borrower on the loan application.
By adding her income, we
successfully qualified the borrowers and they finally, the first time in their
lives, they were able to purchase a house that they can call home.
As the Bay Area home
values continue to raise, the values of homes in the surrounding areas have
risen, as well. For example, home values
in San Joaquin area used to be around middle teens and high-end homes would be
around $300k to $400k. Some of these
homes have even gone up to $500ks.
However, Fannie Mae or
Freddie Mac loan limits have not gone up accordingly, which have created
hurdles for the potential buyers who need to purchase homes $500k and above
yet, cannot put down more money for down payments to make up the difference.
We just helped somebody
who tried to purchase a home in Mountain House for about $580,000 yet could not
come up additional funds needed on top of the agencies loan limits. We helped him find a portfolio lender who has
a program which does not have county limits.
Best of all, he only needed to put down just 1% of the purchase loan!
Our client was
Many home owners have had dilemmas when selling their homes and downsizing to smaller homes:
They will need to get the proceeds from the sale to put down as the down payment for the new purchase. However, this will leave them with no place to live for that period of time. Worse, should they find a house they really like before their own house is sold, they will have to put contingencies on the offers subject to the completion of their house being sold. In today’s seller’s market, with such contingencies in place, their offers are often not even going to be looked at, much less considered.
A client of mine ran into exactly this situation: She was downsizing and selling her home. Somehow, she found a new dream home before her house was sold. She came to me through a referral, I helped her to get a bridge loan which takes out equity from her current home as down payment, then lend her money to purchase that dream home she fell in love with. The loan she received covered 100% of the new purchase price, she ended up only paying a few thousand dollars for closing cost.
After a while, she sold her home, she immediately paid off large portion of the bridge loan, and refinanced the remaining balance of the loan into a 30 years fix low cost loan.
By taking the bridge loan, not only did she purchased her dream home, but also avoided moving twice, which would have been huge headache for her.
A few months
ago, Mrs. Smith and her new husband came to my office to refinance their loan. (Mrs. Smith was happily married for the second
time.) In speaking with the Smiths, it
was brought to my attention, that the interest rate they had on their current
mortgage was already quite low, for me to get it any lower (in this
rate-raising market) was not going to be easy.
In fact, it was going to be quite a challenge! Nevertheless, I agreed to try my best to
look for a lower rate for the Smiths.
I started my
search right away, however, during the time my office was processing the loan,
I realized that somebody had put a lien against the Smiths’ property. I immediately contacted Mrs. Smith and she
recognized the name to be that of her ex-husband! He had put a lien on the house- yet she was
not even on the title! Mrs. Smith did
not know what to do. I assured her that I would work with the title company to
get this resolved.
short, after a month of paperwork, I successfully helped her get the lien
removed from the deed. The title of her
house was again clear!
Back to the
original purpose of her visit, which was to lower her interest rate on her
current home loan, which I did not see that as a possibility at this time. You see, the interest rate had continued to
rise during the time it took to clear the title. I proposed that we check into this matter
again in the future.
never made a penny out of this entire process, it was truly a success story. I was happy to help Mrs. Smith resolve an
issue that was negatively impacting her and her husband in the loan process. (Or even worse, if her ex-husband had passed
away, or could not be contacted, the lien on the title would create a delay on
anything Mrs. Smith would want to do with the house and there would be an even
bigger hurdle to overcome in getting the title cleared! It is much better, for the Smiths, that I was
able to take care of the issue at this time.)
Mr. Young was in a hurry to purchase a home.
His wife was about to give birth to their first child, and coincidently, the expiration date on lease to their rental home was also due very soon. He faced a dilemma: If he renewed his lease, he did not think he would move his family in the next few years, as with the new born it would be extremely difficulty to move.
However, he had the down payment saved and his wife was really wishing to settle into a home before the baby was born, so that they can raise their child without having to move again. The problem was, he did not qualify for a loan: He had just started his new job, he had barely been there a few months. Without a job history, no lender was willing to lend him money for a home, and take on that risk.
Mr. young came to see me. After the interview, I provided him with a solution: Take on a Bridge Loan to acquire the home first. Although, the bridge loan carried high interest rate, it nevertheless had no prepaid penalty, and could get him into a house right away without the job history documentation. Once Mr. Young built up his job history, I would help him to refinance out the bridge loan and into a conventional loan.
That is exactly what happened! A few months after taking a bridge loan and buying a home for his family, Mr. Young got out of this high interest rate loan, applied for and received a conventional loan and cut his monthly mortgage payment in half.
Mr. Young is absolutely a happy camper now!
March 27, 2017
Mr. and Mrs. Smith had worked very hard to pay
off the mortgage on their house. However,
by the time they both retried they still owed about $100,000.
As their regular income was gone, they had to
use Social Security benefits to pay for the current monthly mortgage payment on
the remaining $100,000. Which was not
easy, because their combined benefits were only about $4,000 per month. Their monthly mortgage payment was about $1,800,
and with the added expensive of property tax and home owner’s insurance, they
were struggling to make ends meet.
Mr. and Mrs. Smith contacted a realtor to sell
their home. With the precious family memories
and the invested money and energy on upgrades and improvements that they have
put into their home of 20 years, they realized that they really love the place
and were not ready to let it go. So, they
decided not to sell the house, and the realtor referred them to me.
After I had an interview with them, I realized
that a reverse mortgage would really help them!
They met the requirements: Both
were more than 62 years old and they had plenty of equity in their home.
A reverse mortgage would pay off their current
mortgage and set aside enough of reserve to pay property tax and home owner’s
insurance. Best of all, they would have no monthly payments to make until
they decide to sell their home, to possibly down size, or move into an assisted
living type community.
Smiles finally returned to their faces. Now they could really enjoy their lives: They were planning a trip to visit South
America. A trip they had been putting off for so many years that they
were overjoyed to know that it was now going to become a reality!
Mr. Torres has been running a successful auto shop for more than
He has never regretted owning a business, except that he has not
been able to obtain a home
loan because of being self-employment. He has applied for mortgages
through numerous banks and has been turned down every single time.
Finally, Mr. Torres came to me through a referral. I studied
his documents and realized that he had great cash flow each month from his auto
shop. The deposits he has been making through the years have been very strong
and the company has a very good Profit & Loss Statement.
Therefore, I used a Bank Statement Loan Program to qualify him. Today, not only does he have his dream home,
but he has also purchased investment properties using this same loan program.
Another happy customer of mine!
(not her real name to protect the privacy) has been a client of mine for many
years; I helped her to get her purchase loan when she first purchased a house
some 10 years ago.
the years, she got in financial trouble (as most of us have during the great
recession), and she started to pile up debt.
She took out a second loan on her house and charged up her credit
cards. Worse than that, she was not able
to make minimum payments on her credit cards or make payments on time, causing
her credit score to drop significantly.
Thus, the interest rates on her credit cards skyrocketed! She really struggled each and every month
just to get by. She was also never able
to refinance her two loans as her credit score were too low. Pretty much all of her and her husband’s
income was being used to catch up on payments.
She literally could not even afford to go out to have a nice lunch.
called me. At first I concentrated on
helping her to improve her credit score enough to refinance her two loans into
a FHA loan. Was this loan was secured,
her monthly mortgage payment was reduced dramatically, this extra money she
saved allowed her to catch up on the credit card payments. Six month later, her credit score improved
nicely, and I refinanced her FHA loan into a conventional loan with some cash-out
to pay off her credit debts. In the end, her total month payments were cut in
half! Now, she can afford to enjoy that
nice lunch she has been craving for years.