We just got back from a busy weekend of showing condos and lofts downtown to clients from Seattle looking for a second home in San Diego.

At last week’s office meeting it was announced that The Lawhead Team was awarded Coldwell Banker’s Outstanding Performance Award for the month of January, and that we were 2 of the top 3 agents in our office of 65 agents.  We were the top 2 agents in November 2011 when we were awarded the Outstanding Performance Award.  2 out of 3 months as top producers – not too shabby!!  Because Two Lawheads Are Better Than One!

There are four individual qualification criteria for your mortgage rates – down payment, debt ratio, credit scores, and interest points.  Keep in mind, some of these factors can offset others.  For example, if you have excellent credit and a large down payment you may be offered the lenders best rate, even if your debt ratios are less than ideal.

Down Payment — Mortgage lenders price their loans largely based on the amount of risk they face. Your down payment is meant to offset some of that risk. By putting more money down, you are also reducing the lender’s investment and risk. This can help you obtain a more favorable interest rate. It seems many lenders offer their lowest mortgage rates to borrowers who put at least 25% down. Keep in mind this is for getting the best rate, not for getting approved. It’s a key distinction. Borrowers can get approved for a loan with a down payment as low as 3.5% (for FHA mortgages) or even 0% (for VA and USDA loans).

Debt Ratio — Lenders will also want to know how much of your gross monthly income you are paying toward your debts. This is referred to as your debt-to-income ratio, or DTI. You have two ratios. Your front-end ratio only includes your housing-related debt. Your back-end ratio considers all of your other debts as well, in addition to your mortgage debt. Borrowers can get approved for a home loan with a back-end DTI ratio of 45%, and sometimes higher. But if you want to qualify for the lowest mortgage rates available, you’ll need a combined debt ratio no higher than 30% (based on what lenders told us). Again, there are exceptions to every rule.

Credit Scores — Your credit score is computed based on the information found within your credit reports. There are several scoring models in use today. The FICO score is the one most commonly used by mortgage lenders. It’s a three-digit number between 300 and 850, and it’s meant to show the lender how much risk you bring the table. Most of the lenders we heard from said they reserve their best mortgage rates for borrowers with FICO scores of 740 or higher. A few set the bar even higher, at 760+. You can obtain your reports for free through AnnualCreditReport.com, and you can get your FICO scores for a small fee through MyFICO.com.

Interest Points — When you take out a loan to buy a house, you will have the option to pay “points” at closing to reduce your interest rate. These discounts points are a form of prepaid interest. One point equals one percent of the loan amount. It’s a trade-off that can work in your favor, if you keep the loan long enough. You pay more up front to secure the lowest possible mortgage rate, thereby reducing the size of your monthly payments. Each point you pay could shave down your interest rate by one-eighth to one-quarter of a percentage point. Most of the lenders we queried reserve their best rates for borrowers who pay at least one point at closing.

Of course there are always other many other variables on top of other variables that can change around your chances of getting the lowest mortgage rates a lender can offer.  This list above at least gives you a general idea of a well qualified borrower for 2012.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential home buyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

When you are looking at house listings as well, some of the lingo will be abbreviated and you may find yourself wondering what exactly DOM=67 may mean.

We’d like to share some of the lingo that is often used while searching for a house.

• MLS = Multiple Listing Service. An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn’t open to the general public, although selected MLS data may be sold to real estate listings Web sites. MLS’s are local or regional. There is no MLS covering the whole country.
• Lock box = locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent
• Listing = an agreement between a real estate broker and a home owner that allows the broker to market and arrange for the sale of the owner’s home. The word “listing” is also used to refer to the for-sale home itself. A home being sold by the owner without a real estate agent isn’t a “listing.”
• Frplc, Fplc, FP = fireplace
• HDW, HWF, Hdwd = hardwood floors
• Fixture = anything of value that is permanently attached to or a part of real property. (Real estate is legally called “real property,” while movables are called “personal property.”) Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings, landscaping and so on. Fixtures are a frequent subject of buyer and seller disputes. When in doubt, get it in writing.
• Contingency = a provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer’s contractual right to obtain a professional home inspection before purchasing the home.
• CMA = comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.
• Closing costs = the entire package of miscellaneous expenses paid by the buyer and the seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney’s settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs are generally paid through escrow.
• 4B/2B — four bedrooms and two bathrooms. “Bedroom” usually means a sleeping area with a window and a closet, but the definition varies in different places. A “full bathroom” is a room with a toilet, a sink and a bathtub. A “three-quarter bathroom” has a toilet, a sink and a shower. A “half bathroom” or powder room has only a toilet and a sink.

On Thursday, federal and state officials announced a $26 billion foreclosure settlement mortgage deal with five of the largest home lenders.

California is expected to receive approximately $12 billion in principal write-downs, including through short sales, over the next three years, according to the state attorney general’s office.

Making sense of the story

• The deal settles potential state charges about allegations of improper foreclosures based on robo-signing, seizures made without proper paperwork.
• The settlement sets up a federal monitor to oversee the process and try to prevent the challenges that tripped up many homeowners seeking help in earlier programs designed to address the housing crisis.
• Most of the relief will go to those who are underwater on their homes.  That relief will come over the course of the next three years, with banks having incentives to provide most of the relief in the next 12 months.
• At least $17 billion will go to reducing the principal owed by homeowners who are underwater and behind on their mortgages.
• Up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates.  They will not receive a reduction in principal, but with mortgage rates near record lows, they could receive substantial savings on their monthly payments.
• Approximately $1.5 billion will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria.  They will receive up to $2,000 each.
• The five mortgage servicers that are parties to the settlement include Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial (formerly GMAC)

Source: California Association of Realtors (C.A.R.).

Whether you are selling your house or trying to find a potential renter for your investment property, painting can make a dramatic improvement to the look of your house.

Painting is an easy and inexpensive way to spruce up your house.  Painting your house in appealing neutral colors, can attract buyers to your home.  If the paint is dull or a bright, dramatic color, sometimes potential buyers or renters might skip over your home, looking for a house with zero effort to be put into it.

A fresh coat of paint can make a home look as good as new.  If the paint in your home looks good, you might want to recover the trim with a semi gloss paint to brighten things up a bit.  Another tip is to paint kitchen and bathroom cabinets to give them a new and improved look.  Using a white semi gloss paint to cover up stained or extraordinary colored cabinets is less expensive than replacing the cabinets and it can really make them shine. If you want to take an extra step, you can even purchase new cabinet handles for cheap at any home improvement store.

Painting the front door can also add appeal to the outside of the house, especially if the door looks worn or scratched from daily use.  There are many ways to spruce up your home to make it more attractive to potential buyers or renters.  It is also a good idea to keep these painting tips in mind if you are buying a house.  A simple coat of paint can greatly increase the appearance of the inside of your home and attract potential buyers.

There are a lot of details you should know about and things to prepare for when buying a home – especially the various costs involved with the initial purchase and the monthly payments.

Buying a home is a big decision and there are many other factors other than just the monthly mortgage you will have to be responsible for.  When first buying a home, there are various items that cost money initially, along with recurring monthly costs.

Your realtor, The Lawhead Team, will help explain every detail of what these costs are and where exactly they are going.  The Lawhead Team can help you determine how much you can afford and what you can afford and what exactly you will need to set aside for any extras.

On top of a monthly mortgage, there are other fees such as insurance, taxes and sometimes legal fees.  Below is a list of some various costs you might come across as a home buyer and should keep in mind to prepare for.

–Application Fee – If your lending institution has to charge to process your mortgage application, you will encounter an “application fee”.  Most of the time if you are dealing with a bank you currently have other accounts with, they will waive the fee.

–Appraisal Fee – An appraisal is usually done by someone on the lender’s staff or by an outside professional hired by the lender.  Usually, the lender loans a percentage of the home’s purchase price or the market appraisal of the property, whichever is lower.  In most cases, the cost of the appraisal ends up being the responsibility of the home buyer.

-Home Inspection Fee – An inspection of the home is highly recommended before confirming your final offer on a home.  This will notify the buyer of any potentially large or small costs they will incur once the home is theirs.

–Home Insurance – If you are putting less than 25% down on your home, you will need to purchase mortgage insurance.  There are also other types of insurance that may be required when buying your home such as fire insurance, title insurance, life insurance and more.

–Land Survey Fee – A plot plan or survey of the property is required by lenders.  If your home is in a subdivision in an urban area, lenders will usually accept an existing survey.  However if there has never been a survey done on the land, prepare to pay a significant fee for a new survey.

–Legal Fees – You will need to have a lawyer arrange your mortgage as well as “disbursements” such as title search, drawing up the title deed and preparing and registering the mortgage.

There may be other costs you come across as well which we have not mentioned above.  Of course there are utilities, such as gas, electric, cable, etc along with the possible HOA fees depending on where you live.

We suggest putting away money each month for any necessary repairs or unseen maintenance that may come up.  Even with additional costs, buying a home is definitely affordable for many people.  As long as you know what to expect and budget your money wisely, you will be enjoying your new home in no time!

We are very thankful to work with such wonderful people and provide the best service possible to them.  Please check our other reviews on our website at: http://www.marilynlawhead.com/about-us/reviews/

“The level of service you provided was very professional and your knowledge level was excellent.  I enjoyed working with you two and appreciated the hand holding at times.  You answered my questions thoroughly and represented me fairly.”

Linda Shindler, La Costa

More Reviews at our website: http://www.marilynlawhead.com/about-us/reviews/

During a recent interview, The Lawhead team was asked about their recent production.

They replied  “Commencing New Year’s Day, we have had 10 real estate transactions in the past 33 days.  By definition, a real estate transaction is defined as a new listing, a listing sold or a buyer controlled transaction.”  They were then asked how they accomplished that level of production, and they replied  “We function as a team and we pride ourselves on our communication skills,  attention to every detail and to providing the highest level of professional service possible.”

If The Lawhead Team can assist you or someone you know with real estate needs, call 760-518-8700. “Because Two Lawheads Are Better Than One.”^TM

Why not surprise that special someone in your life with a day just for the both of you!  We have come up with some great Valentine’s Day ideas, from inexpensive and simple to over the top memory makers.  Check them out:

-Plan a Valentine’s Day Picnic – Get away from the everyday hustle bustle you are normally surrounded with and sneak out to the country.  Pick up some food, fruits and champagne.  Either a beautiful countryside meadow or garden is a great place to set up your picnic and cuddle with your partner.

-Book a Cruise – What a memorable way to spend your Valentine’s weekend.  Completely getting away from life’s everyday challenges and setting sail to a new destination is an enjoyable experience for two.

-Hot Air Balloon Ride – If you are both the adventurous type, surprise your Valentine with a hot air balloon ride.  There are many companies all over San Diego County that you can book a ride with.  What a wonderful view you and your love can enjoy together above the crazy world below.

-Make a Gift – Put a picture into a frame and spruce up the frame with different crafts found at craft supply stores.  Not only is it inexpensive to do, but it is a sentimental gift that no one can put a price on.

-Breakfast in Bed – Prepare breakfast for your Valentine before he or she gets up.  You can always add a personal touch by cutting the toast into a heart shape and adding a rose to the tray of food.

-Make Dinner Together – Going out to dinner on Valentine’s Day is not only expensive but over crowded.  Make dinner together while sipping on some wine.  It will give you both a chance to create something delicious together you can both enjoy.

-Propose again – Revisit the place you got engaged at and recall each other’s moments of joy you both felt during that exciting time.