the mesh network | northern california real estate

Loan Changes Coming to FHA

There are a few changes coming early this year that will impact specific real estate markets or price points across the Bay Area.  Yesterday’s WSJ reported that the FHA (a type of government-backed loan program) is running short of their reserves so they intend to increase their loan placement fee to 2.25% (from the current 1.75%).

What does this mean?  If you get an FHA loan, you will need to pay a higher fee to “buy” the loan.  For a typical $500k house with only 10% down, your loan fee just went up to $10,125 from $7,875.  It is probably not enough to crash the housing market, but it will price some buyers out who will have to delay their purchase.

Recommendation: If you are likely to use an FHA loan -- meaning you have less than 20% for a down payment or you have credit issues that make a conventional loan rate very high, then I would say you should move quickly to find the right house and get an offer accepted before FHA fees go up.

-Mark

[Deal of the week] Home Business Opportunity

Here is an opportunity you need to see if you have (or are thinking of starting) your own home-based business.  It’s on Meridian Ave in Willow Glen San Jose, a pretty busy street and easy to advertise your business/service to thousands of cars that go by each day.  It was basically a single family home that was converted into a 1- bedroom home with the rest used for the home-business -- but it was completely remodeled!  New kitchen, floors, recessed lighting, stamped concrete walkway and driveway, landscaping with sprinklers -- it’s all brand new and ready to go.

Details:

1260 Meridian Ave, San Jose, CA 95125

MLS #80955769

1 Bedrooms, 2 Bathrooms

1688sf living space

7200 sf lot

List Price: $549,000

Why is it a good deal?

It was bought for $1.07M just 2 years ago, now it is a foreclosure.  It is an undiscovered listing because it is shows up as a 1 bedroom 2 bath home in almost 1700sf.  Most buyer and agent search patterns will overlook this kind of home.  It needs a special buyer willing to live on a busy street and if it fits your needs, you will get a great deal.

What is the risk?

It may be hard to resell in the future as it will need another special buyer.  However, maybe you can sell it with your business once a name is established.  If you can get it re-zoned for retail/commercial it may increase the value as well.

Who is the best buyer?

Daycare center would be perfect -- easy drop off and pickup right at the sidewalk, yoga instructor, dentist, chiropractor, insurance agent, healthcare professional working in connection to the Indian Wellness Center across the street.  What else can you think of?

Call me if you are looking for this kind of space to run or start your home-based business.

-Mark

No TV for December -- Part 2

This month seemed to just fly by so quickly, despite my commitment to not watch any TV for the entire month.  It was much easier than it sounds, trust me.  Your time will become filled with other things, hopefully things that are much more important and meaningful.

 

Observations:

1)   I don’t feel like I really missed anything.  I still read my Wall Street Journal to keep up with events.

2)   Surprisingly, I think I have a better or more positive daily attitude since I don’t watch any news.  I believe I’m already a pretty positive thinker, but I have to say that I surprised myself to see how much negative influence the little news that I used to watch was having on me.

3)   I’ve been reading more -- I finished 3 books: The Lost Symbol, Airframe, Rich Dad Poor Dad, and have made it partway through Smart Couples Finish Rich.

4)   We watched several DVDs for films that we really would not have had time to watch before giving up TV.

5)   The house was more quiet and peaceful in a way that made me notice how much noise was going into my head each day.

 

Should we keep going without TV?  Should we cancel our cable all together?  I’m seriously considering it.

 

-Mark

No TV for December

Yesterday went by very smoothly, despite my new “commitment” -- no TV for the month.  While Sabrina immersed herself in the Montana photography school she lived like a hermit by having no TV, pulling all-nighters to deliver a project, and focusing her energies into her passion -- photography.

So I started looking at myself and asked if I could give up my casual TV as well -- after all, how painful could it be?  I don’t really have time to watch that much TV, but I do turn it on as “background noise” sometimes or to relax a few moments to wind down at the end of the day.

To challenge myself and see if watching TV is a habit or an addiction, I have decided to go the entire month of December with no TV.  I may even realize that spending $700+ per year on casual entertainment is way too much and putting that money to work somewhere more productive would make me happier.  We can probably watch whatever entertainment we may need for free through Hulu or Fancast and I believe that’s the ultimate future of broadcast TV anyway.

If I start pulling out what’s left of my hair within a few days I’ll be sure to let you know.

-Mark

And now we have new Short-Sale rules

An interesting article in today’s WSJ regarding short-sales.  Right now in our Bay Area market, the short-sale success rate is at an all-time low and from my most recent short-sale experience I feel the acceptance/approval process has gotten much worse (read: slow) than just a year ago.

The article mentions a new “incentive” program to encourage borrowers AND lenders to make the short-sale work (hopefully more quickly).  The Feds will give a borrower $1,500 and give the mortgage servicing company $1,000 to complete the short-sale.  Nice.  Best of all, these guidelines specify that the borrow must be “fully released” from the debt liability -- basically the lender cannot chase the borrower for the bad-debt.

Maybe it’s just a phenomena of the Bay Area, but most of the short-sales I’ve seen are not happening from “poor” people where $1,500 makes a difference.  In most cases, I see flat-screen TVs and newer cars in the driveway no doubt bought through their equity line.

I’ll be curious to see what effect this new guideline has on the short-sale numbers.  My gut tells me it will have a minimal effect.  The process is the problem, not the incentive, but we’ll see.

-Mark