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April 2006 Newsletter 1. Real Estate: The high-end is still strong. 2. Mortgage program for people with lousy credit. 3. "Sunil, I just got a call from a lender offering a new loan for 1.75%" 4. True or False: The Property Assessor's Office Never Makes Mistakes. 5. For-sale-by-owner Properties net 16% less 6. Your friends and acquaintances are seeking realtor referrals 7. Favorite South Indian Restaurant in the Bay Area ---------------------------------------------------------------------------------------- The buyers are back, and good properties sell fast. If you take a look at the inventory online, the only homes that are sitting either have an incurable defect (for example, next to a major power-line) or overpriced to its condition. The buyers are out there buying. You have to dress up your property to sell. I've put together resources for you to inexpensively take care of these needed repairs and upgrades prior to putting your home on the market. 2. Mortgage program for people with Lousy Credit. Do you know someone with a low FICO score looking to buy. There are some new programs that are great for purchases, that'll give A paper pricing to people with sub prime credit scores, the catch is that their income must be less than $113,680/yr if they reside in Alameda or Contra Costa counties, and the loan can't be more than $500,000. Today's rate for a 40 Year fixed rated, with the 1st 10 years interest only is about 1.25% less than what the sub prime market would offer these borrowers. This translates into savings of $900 to $1600 per month. If you or someone you know is looking to buy a home under $500K with zero down, and have the necessary income but poor credit, this is the program that'll save them $10,000 to almost $20,000 per year. 3. "Sunil, I just got a call from a lender offering a new loan for 1.75%" I get calls like this 3-5 per month. The interest rate you actually get will be based on an index + margin. When the index was low 18 months ago, these programs offered the lowest monthly payment. Today, the interest rates on these programs are between 6.25-6.90%, which makes them more expense today than many 5 year Fixed ARMS. During the last 5 years I have not sold a single one of these loans, because the 3 & 5 year ARMS were only slightly higher in the rate, but would give peace of mind in rising interest climate. The other day, I was picking up my shirts from the cleaners. As I was leaving, I overheard the conversation of someone selling one of these products. This is how his pitch went. "You know how when you have really good credit the bank will let you pay interest only. Well your credit is so good you don't even have to pay all the interest." tactics like this and the falsely stated "1.25% interest rate..." probably explain why the option ARM program represented 29% of the loans originated in 2005. However because rates have only been going in 1 direction - up, up, and up. Everyone on an option ARM has been looking at their monthly payments to cover their interest expense also only go in one direction. I've been helping these people refinance into fixed rate loans at no cost. If you know anyone in an option ARM program, have them call me for a free quote.
* Also called negative amortization FRIENDS DON'T LET FRIENDS BUY OPTIONS ARMS 4. True or False: The Property Assessor's Office Never Makes Mistakes. Hopefully you made your 2nd installment of property taxes on time. Now check online to confirm they got your payment. http://www.sunilsethi.com/taxes.htm 5. For-sale-by-owner Properties net 16% less A recent National Association of Realtors 2005 Profile of Home Buyers and Sellers study based on 7,800 responses found that For-sale-by-owner properties net 16 percent less than homes sold by sellers who use an agent. 6. Your friends and acquaintances are seeking realtor referrals The NAR study mentioned above also found that 44% of buyers worked with an agent that was referred to them. Please refer me to your clients, that's how I get 100% of my business. 7. Favorite South Indian Restaurant in the Bay Area Being from North India, I prefer to eat out at South Indian Restaurants, since I haven't found a North Indian restaurant as good as home. My favorite south Indian restaurant for Rava Masala Dosa is Saravana Bhavan at 1305 S. Mary Ave., Sunnyvale, CA 94087
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