What a year this has been!  Thanks to you, we are enjoying one of our best years, ever.  We've had the opportunity to represent longterm clients, their children (and in one case, grand-children), and even their parents.  Plus, we've met so many more people that we never knew before.

We've helped many folks realize a dream and helped others to get relief from a major burden in order to start fresh.  We feel very fortunate to be able to do what we do in Real Estate.

All the best to you and your family for this Holiday Season, and a Happy New Year from our family to yours.

The DiLauro Team

www.frankdilauro.com
e-mail frankdilauro@cox.net
949-707-4472

                These days, the savviest buyers are investors.  Why?  Prices are way down, interest rates historically low, and rents high and going still higher.  For the first time in my 33 years in real estate you can buy a rental property in Southern California with 25% down and positive cash flow.  Even if there is no appreciation in value, your tenant is paying off your mortgage, while providing you income.
                We know, however, from previous depressed markets, that appreciation can ultimately be expected.  Since the 70’s, Orange County has averaged close to 10% annual appreciation. 
                Would you like to know whether real estate investing is right for you?  Just contact us, and we’ll be glad to show you how to take advantage of this opportunity to “Buy when others need to sell.”

                We’re often asked, “What is the effect on my credit rating if my home is a short sale?”  The answer:  “It depends.”
                When a seller sells his home in a short sale, the only credit note regarding the loans would be something like:  “Paid in full, settled for less than the full amount.”  That typically has little to no effect on a credit score.  In most cases, however, the seller has missed payments on those loans.  They will show as “30 days . . . .120 days . . . late”, which will have a dramatic effect on a credit score.  We had one client who continued making payments until the completion of his short sale.  His credit score dropped fewer than 50 points.
                Of course most people doing a short sale do miss payments, and their credit scores dropped a substantial amount.  Even these sellers can quickly raise their scores to excellent levels in 2-3 years by careful use of their credit.
                One other important point.  After a short sale, a seller can typically repurchase with 20% down in 2 years, and with FHA financing (3.5% down) in 3 years with their improved credit.
                As you can see, a short sale should not be seen as an end, but as a tool for a new beginning.  Many of our clients have been able to purchase a better property for a much lower price and have lower payments 2-3 years after a short sale.

SHORT SALE OR MODIFICATION?
 
 
 
Loan modifications are changing, and lenders are more and more making that option available. In many cases, homeowners are changing their minds about doing a short sale and deciding instead to attempt a loan modification. That brings up a question “should a homeowner choose a loan modification over a short sale?” The answer-“That depends…”
 
First, there are some cases when a short sale always makes sense over a modification.
 
      1. When the homeowner cannot afford even a modified payment
      2. When the property is upside down to such a level that, at best, it would take years to break even and the lender is not offering principal reduction
 
By the same token, there are times when a loan modification always makes sense:
 
       1. The lender agrees to bring down the payment and principal to an acceptable level, and one the homeowner can afford.
 
However, for most of us, the answer isn’t so easy.
 
Consider the situation being considered under the new HAFA rules. The proposal is that a portion, approximately 20%, of the negative equity would be forgiven each year for 5 years. In effect, you would have “0” equity in 5 years. For many homeowners, that may not be preferable to a short sale. For example, the home may not be appropriate in 5 years, or you may be forced to move by job-related or personal reasons in under 5 years, or even later. In that case, a short sale might be better. Look at the difference. Do a short sale now, buy a replacement house in 2 years, or sooner. After 2 years in a loan mod, you still have 60% of your negative equity, and can’t buy. You are much better off in this case by getting the short sale done. You have many more options.
 
Take the same example above and assume the seller who did the short sale bought another property after 24 months using low down FHA or similar financing. At the end of the 5 years, he owns a house that may have appreciated in value. Remember, our average annual appreciation in Orange County over the last several years has been 8-10%. The person who did the HAFA loan modification has no equity.
 
Bottom line, each decision is an individual one. We have helped many homeowners make the evaluation, and would be happy to assist you.
 
 
Frank DiLauro , CRS                                  949-707-4472
Broker-Owner                                              frankdilauro@cox.net
Regency Real Estate Brokers                      www.frankdilauro.com
 

Have you been seeing what has happened to interest rates in the last few weeks? Well, rates are lower than they have been in 42 YEARS. For loan amounts up to $417,000.00 rates are 3.875% or less with “0” costs. Jumbo loans over that amount are within ¼ to 3/8% of those rates. For example if you have a $400,000.00 loan at 5%, by refinancing, you will reduce your payment by $375.00. That’s an incredible improvement, and worth the effort to apply, I would say.
.
What about those who bought in the last year or two with FHA financing? Well, you don’t even have to qualify. We can get you a substitute loan at the lower interest rate if the difference in rates is sufficient. Also, if you’d like to do some improvements to your home, you can get an FHA 1003 home improvement refinance for more than the value of your home. And with interest rates so low, the payment on the new loan may be LOWER than your current payment!
 
And by the way, are you, or someone you know waiting to buy until prices come down further? Well, let’s suppose in the next year, prices drop 5%, but interest rates rise 1%. Take that same $400,000.00 loan. It will now be 5% less, or $380,000.00. However, your payment will be much higher, $2,041.00/month vs. $1,880.00/month now. Or, taken another way,  that $2,041.00/month will by you a $428,000.00 mortgage today. You’d have to see a $28,000.00 drop in values to just be back where you are now.  It really doesn’t make much sense to wait, does it?
 
Want to know more about what you can do to save money, reduce your payments or take advantage of the current finance market, call us now. We can help you make the right decision. Our phone, 949-707-4472, or e-mail frankdilauro@cox.net.