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Elizabeth Weintraub
How the New Mortgage Rules Affect Sacramento Home Buyers
At first blush, it was reasonable to figure that the QM (Qualified Mortgage) and ATR (Ability to Repay) new mortgage rules put into place on January 10th by the Consumer Financial Protection Bureau probably would not affect very many borrowers. That’s because lenders had already tightened their guidelines. But some of the new rules are difficult for some borrowers to meet, such as the 43% back-end debt ratio.
For those of you not in the real estate business, a back-end debt ratio is calculated by taking all of your revolving monthly debt, including your mortgage payment, taxes and insurance, and dividing that number by your gross monthly income. For example, if you earn $5,000 a month and all your debt payments plus mortgage obligation adds up to $2,200 per month, you most likely will not qualify to buy a home under the new mortgage rules because your back-end ratio is 44%.
I am a REALTOR in Sacramento, not a mortgage broker, so I won’t go into all the sticky details about how a borrower is qualified for a mortgage because that’s the job of people like Dan Tharp at Guild Mortgage. You can reach Dan at 916 257 1470. He’s a very patient person who will spend all the time it takes to explain mortgage options to you and help a borrower to pick the best loan. He also obtains great rates from major lenders (probably better than you can get directly), so if there’s a bank you particularly want to get a loan through, he’s your guy.
I can tell you that mortgage lenders are definitely more thorough lately. Just the other day, we had a lender run a nationwide check on a borrower. This was not my borrower but the seller is my client. Also, this would not have happened in the old days. This lender looked for lawsuits or any other kind of derogatory item filed against the borrower and sure enough, it found a lawsuit filed in Missouri.
The Social Security numbers matched, even though the borrower denied that he was one and the same person. After a bit, he finally backed down and admitted that the lawsuit was his. And you know what? He did not get the loan.
Websites that Match Top Ranked Agents in Sacramento
When potential sellers and / or first-time home buyers in Sacramento set out to find a good match in a Sacramento real estate agent, they often turn to the internet and try to find a top ranked agent online. But then there are all those google ads and distractions, and property sites vying for eyeballs, it can be confusing. In the midst of all this are websites that offer to match sellers and buyers with top ranking real estate agents, and this is why I get a lot of emails and phone calls from these websites.
They call me because they pull insider MLS reports, which are not available to the public, and see that I sell hundreds of homes. I am a top ranked agent in Sacramento because I rank in the top 1%, which probably doesn’t mean much to most people and, if you want to know the truth, kinda freaks me out when I think about it. But it’s a reason those websites hunt me down because they know for a fact that no grass grows under my feet. I’m out there doing business, and I’m plenty busy. You know the adage, if you want something done right, ask a busy person, er agent.
Other agents get upset when these websites contact them, I hear. The critics say what the hey? Why should I pay a referral fee to some stupid website for referring business to me that they just scraped off the internet, like gum off the bottom of a shoe. I guess because you didn’t scrape that business off the internet yourself, would be my reply. I don’t turn down business that lands in my lap.
However, yesterday a really weird thing happened. A certain Top Ranked Agent website sent me a buyer lead for a buyer I’m already in escrow with! Whoa. It seems the buyer found me faster than that website did. I mean, she’s been in escrow with us for a week. Of course, now we have to ask her why she signed up on a website to find a buyer’s agent when she’s already in escrow.
But at least the buyer knows she came to the right place.
VA Buyers in Sacramento Can Come Over Here and Sit By Me
It seems like lately I have been closing more homes in Sacramento by selling to VA buyers. I doubt it’s because there are more VA buyers. I suspect it’s because there is such a prejudice in Sacramento and neighboring counties. Sellers don’t want to sell to VA buyers, and that’s a big problem.
It’s a problem because sellers do not understand and some agents do not understand, either. They hear the word VA loan and freak out. They wrongly believe that sellers will have to jump through a bunch of hoops, make a bazillion repairs and pay a lot of extra money to sell to a VA buyer and that’s baloney.
VA buyers are gold mines who do not deserve the reputation they get. It’s extremely unfair to paint VA buyers with such a broad brush and say they are uncreditworthy or that their offer should fall to the bottom of the offer pile. It’s shameful, that’s what that attitude is, shameful.
To qualify for a VA loan with no money down means that buyer has excellent credit, probably better than that 20% down conventional buyer who everybody seems to gravitate toward. If you’re trying to buy a home with a VA loan, give me a ring. I educate my sellers, and my sellers are eager to sell to you. You don’t have to write 12 offers to buy a home in Sacramento.
Come over here and sit by me, and we’ll get you into a home. Call Elizabeth Weintraub at 916 233 6759.
Appreciation vs. Market Recovery for Sacramento Real Estate
If a reporter at the Financial Times does not understand the mathematical calculations of our Sacramento real estate market, it stands to reason, I suppose, that the average consumer is confused as well. Or, maybe some of us just didn’t pay enough attention in math class, hard to say. Not everybody likes math or realizes in school how useful math is when we’re all grown up. If you’re struggling to understand what has happened in the Sacramento real estate market, I’ll lay it out for you in terms that are easy to understand.
From January of 2012 through January of 2014, our Sacramento real estate market median price has increased 50%. When I mentioned this over the weekend to a Financial Times reporter, she said, “But your market has fallen at least 50%, so that means you’re at breakeven now, right?” I might have rather stuck hot pokers in my eyes than be forced to learn that an isosceles triangle has 2 equal sides, but I do comprehend that one can’t solely pluck the median price range and decide our market is back to normal.
- For starters, that 50% price increase applies only to the median price. Our median price moved from $160,000 in January 2012 to $240,000 in January 2014.
- Second, averaged over those 2 years, that’s only 25%, and the market is fairly flat today.
- Third, homes priced above that price point and below that price point have not necessarily appreciated by 50%.
- Fourth, if you take a home that was originally valued at $500,000, apply a 50% fall in market value, that would drop the value of that home to $250,000. A 50% increase would make it worth $375,000, not $500,000.
All real estate is local to neighborhoods. Some areas of Sacramento fared better than others. Some areas of Sacramento were hit harder than others during the downturn, most notably the newer home subdivisions in Elk Grove, Natomas, Roseville and Lincoln. It’s amazing, our Sacramento real estate market, varies so much from one neighborhood to another!
I freely admit that I didn’t really fare so well in high school math. I think I took the class because I needed one more class to graduate. I took off so much time during my senior year by hitchhiking around the country, I probably earned a B- or a dreaded C. English was my strong suit, though, straight A’s. Yet, even I, a lowly Sacramento real estate agent, know how to run the numbers. My high school math teacher would be so proud. If you want to know more about the Sacramento real estate market, please call Elizabeth Weintraub at 916.233.6759. I’m never too busy to talk.
Robert Randolph and the 86th Academy Awards Show
This will be the first night in many decades that I will have to view the 86th Academy Awards show on some other day. The reason is that Robert Randolph and the Family Band is bringing funky soul tonight to the Crest Theatre in downtown Sacramento. Randolph is a guy who got his start in southern church music and was named about 10 years ago to the Rolling Stone’s list of 100 best guitar players ever. I just hope he doesn’t make us get up on stage and dance because I’ll be fighting the bedtime nod-off time. Hey, 9 PM, I want to go to sleep. I don’t care where I am.
Of course, the downside is I will get up tomorrow morning and read in the headlines who won the Oscars, and I won’t have watched the Academy Awards. I have decided that this is OK, worked through the rationalization. After all, it’s not like I don’t know who is in the running. It will be one of those movies, and one of those best actresses, and one of those best actors. And 12 Years a Slave, a favorite, with 9 nominations and which isn’t yet out on Netflix (darn), will probably steal the show with many Oscars. That movie, which I wish my husband would have agreed to see with me, has generated a lot of momentum and buzz.
My fingers are crossed for Bruce Dern in Nebraska.
Then I will get to watch at my leisure the very amusing Ellen DeGeneres and fast-forward through all of the commercials. I read in Parade today that one of DeGeneres’ favorite top 5 movies is Steven Martin’s and Carl Reiner’s The Jerk. What do you know! That’s one of my favorite all-time movies, too, primarily because it’s a movie that makes me laugh out loud every time I watch it. It never gets old. Unlike some of us.
Plus, that movie is responsible for the way I have long been filling out biographies about my background. Whenever a document directed me to write a little bit more about myself or share private information, I would write: I was born a poor black child.
I hope nobody thought that was racist and they got the reference. See, this is probably why I had to go into real estate in the 1970s and why nobody would hire me to do anything else. I make an excellent Sacramento real estate agent.
