The Tax Benefits of Selling Your Home

The tax benefits of selling your home can be quite great. The most notable tax break to selling your home is that you can exclude from taxes up to $250,000 in profit from the sale of your home (if you're a single owner) $500,000 (for couples filing jointly) and not owe any capital gains taxes. This exclusion also covers the sale of a parcel of land adjacent to your house - unless it's used for business.

• First, the property you're selling must be your principal residence, which simply means that you live in it.
• Second, you must have lived there for at least two of the previous five years, although this time does not need to be sequential. You are allowed to aggregate your time living in the house to meet the two-year residency requirement. What does this mean? It means that you can rent your house for two years, live in it for two, and rent it for another year and still be eligible since during those five years you owned and lived in the property for two years.
• Finally, while technically there's no limit on the number of homes you can sell and reap tax-free gain, each sale must be at least two years apart. That still leaves you room to make some money on several properties. You can sell your residence this year, pocket any gain within the tax limits and buy a new residence. Two years later, you can do the same thing, again and again every two years.

Please see your tax attorney for more information on tax benefits that are unique to your specific selling situation.

Making Sure Your Credit is in Tip-Top Shape!

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Ukraine and China

Tensions in Ukraine flared up again this week, causing investors to shift assets from stocks to the relative safety of bonds. Weaker than expected economic data in China also favored bonds over stocks, while the US economic data was roughly neutral. As a result, mortgage rates ended the week lower.

The most significant US economic report released this week, Retail Sales, contained some good news and some bad news. On the positive side, the results for February were stronger than expected. Unfortunately, the figures for January were revised lower. Overall, this left the data over the two-month period a little weaker than expected. Given the offsetting effects of the solid headline number and the downward revisions, combined with weather related distortions, the report caused no change in the economic outlook and had little impact on mortgage rates.

There was a lot of talk in the mortgage industry this week about a proposal out of the Senate Banking Committee that would replace Fannie Mae and Freddie Mac. Together Fannie and Freddie purchase or insure the majority of fixed-rate mortgages, so any changes to their structure would have enormous implications for mortgage lending. In the proposal, a new government entity would take over many of the functions of Fannie and Freddie, while some of the default risk would be shifted to private insurers. Both political parties support a reduction in the risk to taxpayers, but beyond that opinions vary widely about the appropriate role of government in the housing market. As a result, this proposal is viewed as a starting point for a long political debate, and the implementation of major reform of Fannie and Freddie is projected by most experts to be many years away.

Delayed Financing After a Cash Purchase!

   


If you’ve got a client who is doing a quick closing with cash but may want to consider doing delayed financing, we have an option for your client!  Help them conserve their cash and have them give us a call!

Your borrower might qualify as long as their cash out refi loan doesn’t exceed their initial investment in the property purchased and was an arm’s length transaction.  We must also be able to verify that no financing was acquired for the cash purchase and we must be able to source/trail all the funds used for the cash closing.  All other refi requirements must be met, but this is a great option for clients who are interested in conserving their cash.  (Note on jumbo delayed financing, the transaction must be completed within 90 days of the initial closing or cash out rules restricting the dollar amount of cash out will apply)

As you know, making a cash offer can be of great value in negotiations and getting delayed financing after closing helps refill your client’s bank account.  It’s a win win for everyone!

We look forward to hearing from you and your clients about all your mortgage needs.  Call us any time!

Strong Demand for US Bonds

The economic data released this week contained mixed results and had little impact on mortgage rates. Strong demand for US fixed income securities was the main influence this week, helping mortgage rates end the week a little lower.

There were strong indications this week that foreign investors, most likely in Japan and China, increased their purchases of US bonds, including mortgage-backed securities (MBS). The currencies of Japan and China have weakened recently versus the dollar, and the economic policies currently in place in both countries have caused investors to expect their currencies to weaken further. This makes US bonds more attractive to investors in those countries as the investor not only receives interest on the investment, but also expects appreciation in the value of the investment.

After a couple of months of weaker readings, the New Home Sales report released this week was a pleasant surprise. January New Home Sales jumped 10% from December to an annual rate of 468K units, far above the consensus of 400K. This was the highest level since July 2008. Also released this week, January Pending Home Sales posted a slight increase.

Asset Income Loans

Chinese Manufacturing Slows

The driving force for mortgage rates this week came from an unexpected source. Chinese manufacturing data fell short of expectations, causing sharp losses in global stock markets. Investors shifted to relatively safer assets, helping mortgage rates end the week lower.

On Thursday, China's PMI manufacturing index dropped to 49.6, below the consensus of 50.3. Readings below 50.0 indicate a contraction in the sector. China has been an important engine of growth for the world economy, so a slowdown would have significant implications for global markets. In fact, the news from China completely overwhelmed the strong results in Europe, which showed that manufacturing in the euro zone reached the highest level since the summer of 2011. The Chinese data caused concerns about the pace of global economic growth, and investors sold stocks. This resulted in an increase in demand for bonds, including mortgage-backed securities (MBS).

This week's Existing Home Sales data showed that, despite a slowdown in the fourth quarter, 2013 reflected a year of solid gains. Over five million existing homes were sold in 2013, an increase of 9% from 2012, and the highest level since 2006. While the gains may be more modest, most analysts expect the improvement to continue in 2014 as well. The National Association of Realtors (NAR) projects a very small increase in home sales next year, but both Freddie Mac and the Mortgage Bankers Association (MBA) forecast home sales to increase about 5% in 2014.

Inflation Remains Tame

Mortgage rates began the week with downward momentum following last Friday's big miss on the Employment report. That, combined with low inflation, more than offset this week's slightly stronger than expected economic growth data, and mortgage rates ended the week a little lower.

With the Fed's recent decision to reduce its bond purchases, investors were left evaluating what they believed to be the appropriate level of mortgage rates for the current economic environment. In short, moderate economic growth and low inflation represent relatively favorable conditions for mortgage rates. This week, the December Retail Sales report revealed gains consistent with moderate growth. Since Retail Sales account for about 70% of economic activity, investors pay close attention to this data. Two of the more significant monthly inflation reports also were released this week, the Consumer Price Index (CPI) and the Producer Price Index (PPI), and both confirmed that inflation remains tame. Core CPI was just 1.7% higher than one year ago, well below the Fed's target level of 2.0%, while Core PPI was even lower at 1.4% on an annual basis.

JOLTS, another report released this week, is quickly gaining prominence with investors because it is considered to be a favorite of incoming Fed Chair Janet Yellen. The JOLTS survey measures Job Openings and Labor Turnover levels, providing another level of insight into labor market conditions. Since the Unemployment Rate has been heavily influenced recently by people leaving the labor force rather than by job gains, investors and Fed officials are eager for additional details to judge the strength of the labor market. The November JOLTS data showed that Job Openings unexpectedly rose to the highest level since March 2008. The percentage of people quitting their jobs was nearly unchanged.

What Separates Us from Other Lenders

We have some fabulous niche products! 

Since every loan is done here LOCALLY at the office, our turn-around times are the BEST!!! 25 day closings NO PROBLEM! Rescues- no problem!

We can do the following loans:

• 1 day out of Short Sale purchase Loan 
• Condo’s with litigation
• No owner occupancy requirements on condos
• Foreign Nationals
• No maximum number of financed properties
• Bank statements to qualify loans (may require additional time for processing)
• No income on tax returns but assets – we can do!
• FHA,VA, Conventional, Jumbo
• 10% down to $750,000 with NO PMI
• 15% down to $1,275,000 loan amounts
• 20% down to $2,000,000 & 30% to $3,000,000 loan amounts  (may require additional processing time)
• Condos- 5% down with PMI with less than 51% owner occupancy-- (even 2% will work!)
• VA - Jumbo’s to $1,500,000 loan amounts (may require additional processing time)
• Non Occupant co borrowers on refinances if they do not qualify 
• Non Occupant co borrowers with 10% down conventional
• Cross Collaterization loans
• Title in LLC, Corporation, Trusts and Partnerships
• Very Competitive Jumbo Pricing 
• And many more!

 Don’t hesitate to contact our team with any questions about the above products or about any of your lending questions.

 We look forward to assisting you and your clients with their new home purchase and refinance needs.  

Updated County Loan Limits for San Diego - 2014

Quiet Holiday Week

The mortgage market was quiet during Christmas week. The few economic reports released this week, including Durable Orders, Jobless Claims, and New Home Sales, were mostly stronger than expected. As a result, mortgage rates ended the week a little higher.

While the headline results for this week's New Home Sales report revealed a decline from the prior month, this obscured the substantial improvement. New Home Sales dipped slightly in November, but this was from a level in October which was revised substantially higher. In fact, the revised October reading was the highest level since July 2008. November New Home Sales were 17% higher than one year ago. This was another in a string of recent housing market reports which provide reasons to be optimistic heading into 2014.

On December 18, the Fed announced that it will begin to scale back its bond purchases. The added demand from the Fed for mortgage-backed securities (MBS) has been a major factor helping to keep mortgage rates low, so a reduction in bond purchases is clearly negative for mortgage rates. Considering this, it is interesting to see that mortgage rates have moved only a little higher since the Fed announcement. In other words, the taper was almost completely priced in to mortgage rates ahead of the actual announcement. By contrast, the reaction in the stock market to the Fed statement was much larger. Investors were pleased that the Fed intends to hold the fed funds rate low until much greater labor market improvement is seen, and the Dow stock index has climbed roughly 600 points to a record high.

Favorable re-pricing took place this morning in the mortgage rate department

This morning, Janet Yellen testified at her confirmation hearing to be the next Federal Chief. She expressed strong support for the Fed's bond purchase program, which lifted MBS. Weak results for the 30-year auction caused MBS prices to move lower in the middle of the session, but MBS later climbed back to the highs. Today's economic data had little impact and the Dow is up 50 points. Tomorrow Industrial Production, Empire State, and Import Prices will all be released.

Stay Tuned – you never know which way the rates will go next!

 Michelle Morris
Senior Loan Officer
Michelle@SDFunding.com
Cell: 619-850-3600
Fax: 619-821-8908

San Diego Funding
2468 Historic Decatur Road #160
San Diego, CA 92106
NMLS 264030   CA BRE 01238196

Requirements for Non-Warrantable Condos

Non-Warrantable Condos

Occupancy	LTV/CLTV	FICO	DTI	Transaction Type
Owner Occupied	80%/80%	660 Minimum	45% Maximum	Purchase, R&T Cash-Out
2nd Home (Vacation Home)	75%/75%	660 Minimum	45% Maximum	Purchase, R&T Cash-Out

(Investment properties are entertained case by case; maximum LTV/CLTV 65% - Requires reviewing of all condominium project documents to grant exception)

Litigation OK!

High Investment Property Concentration OK!

High Delinquency HOA Default Ratio OK!

Non-occupying co-borrowers OK!

·      NO SHORT-TERM RENTALS

·      NO NEW PROJECTS (ESTABLISHED PROJECTS ONLY)

·      NO LOFTS

·      NO ENTITY MAY OWN MORE THAN 10% OF PROJECT

(Exceptions granted if project is large)

·      $417,000.00 MAXIMUM LOAN AMOUNT

(Exceptions granted case by case)

Contact me today for assistance on getting difficult condo projects funded.

Thank you very much for your business and have an amazing day.

Michelle Morris & Melissa Howell

Michelle: 619-850-3600 Email: Michelle@sdfunding.com

Melissa: 619-818-1263 Emails: MelissaH@sdfunding.com                           

NMLS 264030   CalBRE 01238196

NMLS 264026   CalBRE 01477506

Don't let a Forclosure or Short Sale get you down...

Did you know that even one day out of a Foreclosure, Deed in Lieu or Short Sale, we can help you or your buyers! It's no Problem as long as you can do the below guidelines:

• Min Fico score 660
• Cannot have multiple derogatory accounts (ie: bankruptcy and short sale)
• No gifts allowed - all funds for down payment must be seasoned 60 days·     
• 20-30% down is required
• Loan amounts up to 4 Million
• 43% Debt to income ratios
• 2 appraisals required
• Only 5/1 and 7/1 programs available, no 30 year fixed loans
• IRA distributions are acceptable, but one full month is needed
• Need a minimum of 45 day escrow to close

For more information, please call Michelle.

Michelle Morris
Senior Loan Officer
Michelle@SDFunding.com
Cell: 619-850-3600
Fax: 619-821-8908

San Diego Funding
2468 Historic Decatur Road #160
San Diego, CA 92106
NMLS 264030   CA BRE 01238196

TOP TEN THINGS A REAL ESTATE AGENT SHOULD REMEMBER

1. True Conforming loan limit is $417,000 Loan amounts and under.

2. Upper conforming before JUMBO loans go from 417 loan amounts to max 546,250 currently in San Diego County. Rates are typically a bit higher on Upper Conforming.

3. Minimum down conventional SFR purchase 417K loan amount and under 3% - Condo 5%

4. There 5 different types of PMI for conventional—not just monthly.

5. FHA is min 3.5% down all can be gift and also NON Occupant co borrower allowed.

6. When taking a listing ask if paying off an FHA loan—if so has to fund at the end of the month to avoid seller paying interest all month.

7. When a buyer goes into escrow please make sure the Loan Officer gets a FULLY executed contract with all counters immediately to help expedite the appraisal process. Appraisers have to have to complete the appraisal. Please remove lock box so the agent will be there to meet and also make sure the CO2 monitors are on all levels of the home.

8. After a short sale the first loan a buyer can get is an FHA loan – 3 years after the final sale of the home.

9. If you have a change in COE or a credit from the seller we need the Addendum fully signed ASAP to update the file and the appraisal.

10. No personal property that is removable to be on the contract. Deal with outside of escrow, please.

Call Michelle Morris 619-850-3600 with any questions!

Progress in Congress

With government produced economic reports postponed by the shutdown, the budget and debt ceiling discussions in Congress dominated the economic news again this week. The gridlock in Washington and the signs of progress have caused large movements in the stock market, but the impact on mortgage rates has been much more limited, and mortgage rates ended the week just a little higher.

Of the two, the debt ceiling has much more serious potential consequences for the economy and financial markets than the government shutdown. With the debt limit rapidly approaching, on Thursday the two parties raised investors' hopes for a deal. It was reported that both sides might agree to a short-term deal which would extend US borrowing authority until November 22. Such a deal would remove the threat of a disruptive default in the short-term, and it would give Congress more time to reach a longer-term compromise. It is not known at this time whether the deal would end the government shutdown. On Thursday, stocks recovered all their losses from earlier in the week and turned positive for the week.

Investors almost universally misread the Fed's signals leading up to the September 18 Fed meeting, when the Fed decided not to taper its bond purchase program. As a result, investors were very eager to see the detailed Minutes from that meeting, which were released on Wednesday. The vote at the meeting was 9 to 1 in favor of maintaining the current level of bond purchases, but the Minutes revealed that Fed officials had very mixed feelings about whether to taper and that it was a "relatively close call". Overall, Fed officials wanted to wait for greater improvement in the labor market before reducing monetary stimulus. In addition, they expressed concern that the rise in interest rates that had been seen and the unresolved questions about fiscal policy could slow economic growth.


The Week Ahead

Investors will continue to follow the budget and debt ceiling discussions next week. If the shutdown is not resolved, most of the economic reports scheduled for next week will be postponed, including the Consumer Price Index, Industrial Production, and Housing Starts. Unaffected by the shutdown, the Fed's Beige Book will be released on Wednesday and the Philly Fed index will come out on Thursday.

Reasons Why You Should Consider Buying in 2013

Are you planning to buy in the next few month? Here are some reasons why you should consider making your new home purchase in 2013.

1.     Rates continue to be low and are still falling and it may be easier to get a mortgage.  Though rates are slightly higher than their all-time low at the end of 2012, they are still an attractive option for many home buyers.  

2.     The cost of renting is higher than the cost of owning a home.  Recent studies have shown and many experts agree that home purchase can be up to 44% cheaper than renting, making home purchase more and more attractive.

3.     Home prices are still relatively low.  Although market trends vary from neighborhood to neighborhood, on a whole, housing prices have increased by only about 1%, making 2013 a great year to purchase a home.

4.     The opportunity to invest your money and build equity is now.  Investing your money into a new home purchase enables you to put your monthly payment towards equity.  With rates as low as they are and home values holding steady, selling in 5 or 10 years at a profit may make sense for you.

Michelle Morris and Team Join San Diego Funding

Some exciting news to share via San Diego Funding

San Diego Funding is proud to announce that Michelle Morris and her team have joined the company. Michelle has more than 20 years of experience as a loan officer and has achieved numerous honors and awards. In her previous company she was in the President’s Club and ranked in the top 10 Nationally. “The decision to move to San Diego Funding was to ensure that we are always providing the most competitive pricing, best selections of products and most of all the best service and time frames possible for our borrowers and agents,” states Michelle. The team includes Melissa Howell, who has been Michelle’s partner for the past 10 years, and licensed assistant Brianna Deichstetter.

Learn more about San Diego Funding and all we have to offer HERE.