Adjustable Rate Mortgages – The Basics

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An adjustable rate mortgage (ARM) has an interest rate that fluctuates periodically. This is in contrast to a fixed rate mortgage, which always has the same interest rate.

Every ARM has basic components:

  1. An index
  2. A margin
  3. Adjustment Period
  4. An interest rate cap
  5. An initial interest rate

The Index

Image result for cost of funds indexAn ARM’s interest rate is tied to one of many economic indices, some examples of which are the 1-year constant maturity Treasury security, the Cost of Funds Index, or the London Interbank Offered Rate. Different indices move at different rates so know the characteristics of the index used for your ARM.

The Margin

The interest rate for your ARM will be calculated by adding a margin to the interest rate from the index. The margin is basically the markup charged by the lender that allows them to make a profit off of your loan, such as adding 2% to the index, where the 2% is the margin. The margin of your loan usually does not fluctuate.

The Adjustment Period

The Adjustment Period controls when and how often your interest rate changes. For example, if your ARM has an adjustment period of 1 year, your interest rate will be subject to change at the end of each year and your monthly mortgage payment will be recalculated to reflect this change.

The Interest Rate Cap

Interest rate caps are built into the loan to protect the borrower from drastic interest rate fluctuations. The caps limit how much the interest rate or monthly payment can change at the end of each adjustment period. An ARM can also have a cap for the life of the loan. For example, during the life of a loan, the interest rate can only be increased by 5%.

The Initial Interest Rate

The Initial Interest Rate is the interest rate that you start with at the beginning of your loan period. The length of time your loan stays at this rate is built into the loan. For example, you may stay at the initial interest rate for 1 year, 5 years, or another length of time depending on your specific mortgage. This type of ARM is generally referred to as a Hybrid ARM. The initial interest rate for an adjustable rate mortgage is generally lower than that of a fixed rate mortgage.

Image result for adjustable rate mortgage

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Just Sold: January 2019

Thank you for all your support, here are some of the houses Coastal Premier Properties has helped clients buy or sell throughout the county last month. If we can help you or someone you know with making a move, please contact us!

                                                                                                                                                                 

434 8th Street

(Del Mar)

SOLD

*Represented Seller

Prime location, Ocean view 1 level beach cottage on flat 8000 esf lot with alley access to separate 2 car garage with roof top deck. This charming property is upgraded and is perfect as is or it is prime for a redevelopment project to capture even more of the ocean views to the north and south.

Sold for $2,000,000.

                                                                                                                                                                 

10637 Gingerwood Cove

(Carmel Valley)

SOLD

*Represented Seller & Buyer

Rarely available Mint Condition Lexington Plan 2 home on a huge 12,913 sf canyon view lot & cul-de-sac street. Lush Landscaped Resort-like backyard with a pool and built in BBQ. Short walk to one of the best elementary schools in Southern California. Quick access to freeways. 1BR/1.5BA on the first floor. Newer Viking SS appliances, Slab Granite kitchen countertops, and crown moldings thru out.

Sold for $1,915,000.

                                                                                                                                                                 

12625 Sagecrest Drive

(Poway)

SOLD

*Represented Seller

Bright, spacious, single story home like no other. Large fully-fenced property with exclusive gated driveway. Diverse plant life and natural rock formations both enhance the backyard beauty and provide for a perfect resort-like feel, so you can enjoy the spectacular west-facing views, pool, hot tub, waterfalls, and 50ft waterslide in complete bliss and privacy. Fabulous San Diego climate lets you keep the French doors to the backyard open year-round.

Sold for $1,687,000.

                                                                                                                                                                 

4946 Smith Canyon Court
 

(Carmel Valley)

SOLD

*Represented Seller

Highly desirable Sonoma plan 4 with stunning modern feel, designer finishes thru-out, large rooms w/high ceilings, gourmet kitchen includes high-end Thermador appliances, designer light fixtures & 2 bedrooms on main floor. Lavish master suite w/balcony, remodeled bath & exercise/study area. Outside take in the lush professionally landscaped setting including “living green wall”, pool/spa and wonderful privacy. This incredible home is centrally located, has top rated schools, NO HOA fees & low Mello-Roos!

Sold for $1,640,000.

                                                                                                                                                                 

5092 Brookburn Drive

(Carmel Valley)

SOLD

*Represented Seller

Come fall in love with this remodeled and meticulously maintained home on a 8,000 sq. ft. lot in cul-de-sac. First time this home has been on the market. Stunning white kitchen with oversized island, quartz counter-tops, SS appliances & pantry. Guest bedroom & office/5th bedroom downstairs. Owners expanded kitchen & great room with permitted addition. All bathrooms have been updated and new carpet/paint. Fab built-ins. The private & oversized yard w/ large grass area & fire pit is great for entertaining!

Sold for $1,300,000.

                                                                                                                                                                 
16059 Newton Hill

(Rancho Bernardo)

SOLD

*Represented Seller

Stunning 4 bed (optional 5th), 3 bath home in the heart of Del Sur! Wonderful family friendly neighborhood with pool and park access! Walking distance to Del Sur Elementary and eligible for Poway Unified Schools! Open and bright floor plan with beautiful upgrades. Enjoy first floor living with guest room and home office on the first floor. Large and spacious loft upstairs, and a private and peaceful Master Retreat! Convenient location close to everything you could need!

Sold for $1,140,000.

                                                                                                                                                                 

11885 Candy Rose Way

(SCRIPPS RANCH)

SOLD

*Represented Seller

Welcome home to this beautifully updated Scripps Ranch view home nestled at the end of the cul de sac. This family friendly 4 bedroom and 2.5 bath home has a large dining room & living room, perfect for entertaining. The sleek modern eat in kitchen opens to the large family room. The entire back of the home has large windows that showcase the spectacular westerly views, creating the perfect backdrop for time with family. The oversized backyard has turf, drought tolerant landscape & a basketball court.

Sold for $925,000.

                                                                                                                                                                 

15125 La Plata Court

(Ramona)

SOLD

*Represented Buyer

This amazing custom Villa was inspired by a trip to Italy. It draws you from the busyness of life to your private retreat. As you walk the stone path surrounded by lush drought tolerant foliage into the walled courtyard you arrive at the entrance adorned with a gorgeous wood hammered door and arched entry. Looking out across the front yard enjoy the unobstructed views of the national forest.

Sold for $840,000.

                                                                                                                                                                 

18110 Smokesignal Drive

(Rancho Bernardo)

SOLD

*Represented Buyer

Updated home! Kitchen updates recently completed with new back splash, quartz counter tops & new cabinets as well as stainless steel appliances and a kitchen island. Adjacent to the kitchen is the cozy family room with a fireplace. All bathrooms completely updated with new cabinetry, and quartz counter tops. This home is especially light and bright with high, vaulted ceilings & many windows to provide natural light. Enjoy westerly views from the recently landscaped backyard.

Sold for $820,000.

                                                                                                                                                                 
4273 Laskey Lane

(La Mesa)

SOLD

*Represented Buyer

Fully upgraded Mt Helix DREAM HOME! Gourmet kitchen w/ stainless built-in appliances, granite counters & island breakfast-bar! Indoor/Outdoor living at its finest- complete w/ all BBQ equipment, spa, gorgeous views- Perfect for entertaining! MASTER RETREAT boasts custom bath w/ STEAM SHOWER & huge walk-in closet! Hardwood floors & crown moulding throughout! Energy efficient dual-pane windows & SOLAR SYSTEM! Irrigated mature landscape w/ many fruit trees! Easy Freeway Access- Enjoy all SD has to offer!

Sold for $692,500.

                                                                                                                                                                 

821 Applewilde Drive

(San Marcos)

SOLD

*Represented Buyer

Discovery Hills Charmer! Quality home in the best of areas! Pride of ownership in maintaining this lovely home. Owners just invested in new roof, new energy rated heater, water heater, and air conditioning! Like a brand new home BUT in a highly desirable established neighborhood. 4 bedrooms, 1 is on the first floor right next to a full bathroom. Perfect for guests who cannot climb stairs! Sexy Master bedroom with fireplace for ambiance and luxurious soaking tub and separate shower.
Sold for $682,000.

                                                                                                                                                                 

21674 Saddle Bred Lane

(Escondido)

SOLD

*Represented Seller

This wonderful residence on Saddle Bred Ln. is in the desirable and family oriented community of Harmony Grove. The breathtaking features include, corner lot, solar, bedroom w/ full bath downstairs, gorgeous tile floor and upgraded granite counter top, SS appliances, oversized master suite with soaker tub and large walk-in closet, loft, laundry upstairs. The Grove recreation area has a swimming pool, spa, wading pool and splash pad plus BBQ areas, shade structures and playground. Right off I-15 and Hwy 78.

Sold for $635,000.

                                                                                                                                                                 

981 N Vulcan Ave 7

(Encinitas)

SOLD

*Represented Buyer

Walk to the beach & all the best Bistros, Shops and Bars in this trendy 101 corridor of Encinitas. This hidden gem and unique townhome complex, offers well maintained grounds in an intimate 12 unit setting. The units in this complex rarely come on the market which is a testament to satisfied owners. There are no comparable condos in Encinitas West of I-5. This end unit has been completely remodeled with hard surface flooring downstairs, new carpet upstairs, granite counters and stainless appliances.

Sold for $600,000.

                                                                                                                                                                 

8485 Mono Lake Drive

(San Diego)

SOLD

*Represented Buyer

Stunning Remodel w/ Open Concept layout! The kitchen is magnificent w/ an enormous island, slab granite counters & SS appliances. Other updates include two beautiful baths, dual pane windows, popcorn removed, recessed lighting, electrical rewired, tankless water heater & more! This is not a flip, owners took Kit/Bath down to studs & designed to their taste. All that’s left for you to complete is the backyard when you are ready. Large Corner Lot w/ room for RV/Boat parking. Great Schools & Hiking close by!

Sold for $570,000.

                                                                                                                                                                 

749 S Tulip

(Escondido)

SOLD

*Represented Seller

Quaint single-family detached home nestled on a private street, conveniently located near I-15, & is perfect for the first time buyer looking for a spacious back yard! Imagine your pets running around the fully fenced yard or taking a nap in the shade of the trees while you relax on your covered patio. A carport has been added that would make the perfect workshop or RV/boat parking plus additional sheds for storage! It features 2 beds/1 bath plus bonus room that was converted from a previous 1-car garage.

Sold for $330,000.

                                                                                                                                                                 

8617 Mission San Carlos Dr. 73

(Santee)

SOLD

*Represented Seller

Prime West end Santee Cottage, 2BR 2 Bath, 1 level unit (with no one above), 1100esf, 1 Car attached Garage, Big Private Patio, Vaulted Ceilings, AC, Fireplace, Open Floor Plan, Highland Trails Complex with pool & spa, Walk to Mission Trails Park, Basic Cable & Water/Trash included in HOA Fee. VA & FHA Approved.

Sold for $355,000.

                                                                                                                                                               

13263 Rancho Penasquitos Blvd. K201

(Rancho Penasquitos)

SOLD

*Represented Buyer

Great opportunity! Upstairs corner end unit. Get greeted by a warm fire and entertain your guest in the open living/dining room. Your kitchen has granite counters and all s/s appliances. Your laundry is right there for you. Spacious walk in closet in the master bedroom and a good size second bedroom. Additional storage on the lanai. Great amenities: Pool, Clubhouse, Fitness room, Tennis/sand volleyball ct, dog run, playground, lots of unassigned parking and street parking, Poway School Distr.

Sold for $315,000.

                                                                                                                                                                

505 Calle Montecito 21

(Oceanside)

SOLD

*Represented Seller

Upgraded first floor end unit condo in a quiet community near Libby lake. Elevated corner unit overlooks lush green outside and enjoy ocean breeze in the family room. Custom cabinets and granite countertops. Stone tiles and Hard flooring. The large balcony w/ full-size washer/dryer closet. Close to schools, soccer fields, volleyball, fishing, movie theaters, shopping, beach and fwy access. Walking distance to Libby lake park, children’s playground and skate park. Enjoy California living at a great price!

Sold for $230,000.

                                                                                                                                                              

Just Sold: January 2019

Thank you for all your support, here are some of the houses Coastal Premier Properties has helped clients buy or sell throughout the county last month. If we can help you or someone you know with making a move, please contact us!

                                                                                                                                                                 

434 8th Street

(Del Mar)

SOLD

*Represented Seller

Prime location, Ocean view 1 level beach cottage on flat 8000 esf lot with alley access to separate 2 car garage with roof top deck. This charming property is upgraded and is perfect as is or it is prime for a redevelopment project to capture even more of the ocean views to the north and south.

Sold for $2,000,000.

                                                                                                                                                                 

10637 Gingerwood Cove

(Carmel Valley)

SOLD

*Represented Seller & Buyer

Rarely available Mint Condition Lexington Plan 2 home on a huge 12,913 sf canyon view lot & cul-de-sac street. Lush Landscaped Resort-like backyard with a pool and built in BBQ. Short walk to one of the best elementary schools in Southern California. Quick access to freeways. 1BR/1.5BA on the first floor. Newer Viking SS appliances, Slab Granite kitchen countertops, and crown moldings thru out.

Sold for $1,915,000.

                                                                                                                                                                 

12625 Sagecrest Drive

(Poway)

SOLD

*Represented Seller

Bright, spacious, single story home like no other. Large fully-fenced property with exclusive gated driveway. Diverse plant life and natural rock formations both enhance the backyard beauty and provide for a perfect resort-like feel, so you can enjoy the spectacular west-facing views, pool, hot tub, waterfalls, and 50ft waterslide in complete bliss and privacy. Fabulous San Diego climate lets you keep the French doors to the backyard open year-round.

Sold for $1,687,000.

                                                                                                                                                                 

4946 Smith Canyon Court
 

(Carmel Valley)

SOLD

*Represented Seller

Highly desirable Sonoma plan 4 with stunning modern feel, designer finishes thru-out, large rooms w/high ceilings, gourmet kitchen includes high-end Thermador appliances, designer light fixtures & 2 bedrooms on main floor. Lavish master suite w/balcony, remodeled bath & exercise/study area. Outside take in the lush professionally landscaped setting including “living green wall”, pool/spa and wonderful privacy. This incredible home is centrally located, has top rated schools, NO HOA fees & low Mello-Roos!

Sold for $1,640,000.

                                                                                                                                                                 

5092 Brookburn Drive

(Carmel Valley)

SOLD

*Represented Seller

Come fall in love with this remodeled and meticulously maintained home on a 8,000 sq. ft. lot in cul-de-sac. First time this home has been on the market. Stunning white kitchen with oversized island, quartz counter-tops, SS appliances & pantry. Guest bedroom & office/5th bedroom downstairs. Owners expanded kitchen & great room with permitted addition. All bathrooms have been updated and new carpet/paint. Fab built-ins. The private & oversized yard w/ large grass area & fire pit is great for entertaining!

Sold for $1,300,000.

                                                                                                                                                                 
16059 Newton Hill

(Rancho Bernardo)

SOLD

*Represented Seller

Stunning 4 bed (optional 5th), 3 bath home in the heart of Del Sur! Wonderful family friendly neighborhood with pool and park access! Walking distance to Del Sur Elementary and eligible for Poway Unified Schools! Open and bright floor plan with beautiful upgrades. Enjoy first floor living with guest room and home office on the first floor. Large and spacious loft upstairs, and a private and peaceful Master Retreat! Convenient location close to everything you could need!

Sold for $1,140,000.

                                                                                                                                                                 

11885 Candy Rose Way

(SCRIPPS RANCH)

SOLD

*Represented Seller

Welcome home to this beautifully updated Scripps Ranch view home nestled at the end of the cul de sac. This family friendly 4 bedroom and 2.5 bath home has a large dining room & living room, perfect for entertaining. The sleek modern eat in kitchen opens to the large family room. The entire back of the home has large windows that showcase the spectacular westerly views, creating the perfect backdrop for time with family. The oversized backyard has turf, drought tolerant landscape & a basketball court.

Sold for $925,000.

                                                                                                                                                                 

15125 La Plata Court

(Ramona)

SOLD

*Represented Buyer

This amazing custom Villa was inspired by a trip to Italy. It draws you from the busyness of life to your private retreat. As you walk the stone path surrounded by lush drought tolerant foliage into the walled courtyard you arrive at the entrance adorned with a gorgeous wood hammered door and arched entry. Looking out across the front yard enjoy the unobstructed views of the national forest.

Sold for $840,000.

                                                                                                                                                                 

18110 Smokesignal Drive

(Rancho Bernardo)

SOLD

*Represented Buyer

Updated home! Kitchen updates recently completed with new back splash, quartz counter tops & new cabinets as well as stainless steel appliances and a kitchen island. Adjacent to the kitchen is the cozy family room with a fireplace. All bathrooms completely updated with new cabinetry, and quartz counter tops. This home is especially light and bright with high, vaulted ceilings & many windows to provide natural light. Enjoy westerly views from the recently landscaped backyard.

Sold for $820,000.

                                                                                                                                                                 
4273 Laskey Lane

(La Mesa)

SOLD

*Represented Buyer

Fully upgraded Mt Helix DREAM HOME! Gourmet kitchen w/ stainless built-in appliances, granite counters & island breakfast-bar! Indoor/Outdoor living at its finest- complete w/ all BBQ equipment, spa, gorgeous views- Perfect for entertaining! MASTER RETREAT boasts custom bath w/ STEAM SHOWER & huge walk-in closet! Hardwood floors & crown moulding throughout! Energy efficient dual-pane windows & SOLAR SYSTEM! Irrigated mature landscape w/ many fruit trees! Easy Freeway Access- Enjoy all SD has to offer!

Sold for $692,500.

                                                                                                                                                                 

821 Applewilde Drive

(San Marcos)

SOLD

*Represented Buyer

Discovery Hills Charmer! Quality home in the best of areas! Pride of ownership in maintaining this lovely home. Owners just invested in new roof, new energy rated heater, water heater, and air conditioning! Like a brand new home BUT in a highly desirable established neighborhood. 4 bedrooms, 1 is on the first floor right next to a full bathroom. Perfect for guests who cannot climb stairs! Sexy Master bedroom with fireplace for ambiance and luxurious soaking tub and separate shower.
Sold for $682,000.

                                                                                                                                                                 

21674 Saddle Bred Lane

(Escondido)

SOLD

*Represented Seller

This wonderful residence on Saddle Bred Ln. is in the desirable and family oriented community of Harmony Grove. The breathtaking features include, corner lot, solar, bedroom w/ full bath downstairs, gorgeous tile floor and upgraded granite counter top, SS appliances, oversized master suite with soaker tub and large walk-in closet, loft, laundry upstairs. The Grove recreation area has a swimming pool, spa, wading pool and splash pad plus BBQ areas, shade structures and playground. Right off I-15 and Hwy 78.

Sold for $635,000.

                                                                                                                                                                 

981 N Vulcan Ave 7

(Encinitas)

SOLD

*Represented Buyer

Walk to the beach & all the best Bistros, Shops and Bars in this trendy 101 corridor of Encinitas. This hidden gem and unique townhome complex, offers well maintained grounds in an intimate 12 unit setting. The units in this complex rarely come on the market which is a testament to satisfied owners. There are no comparable condos in Encinitas West of I-5. This end unit has been completely remodeled with hard surface flooring downstairs, new carpet upstairs, granite counters and stainless appliances.

Sold for $600,000.

                                                                                                                                                                 

8485 Mono Lake Drive

(San Diego)

SOLD

*Represented Buyer

Stunning Remodel w/ Open Concept layout! The kitchen is magnificent w/ an enormous island, slab granite counters & SS appliances. Other updates include two beautiful baths, dual pane windows, popcorn removed, recessed lighting, electrical rewired, tankless water heater & more! This is not a flip, owners took Kit/Bath down to studs & designed to their taste. All that’s left for you to complete is the backyard when you are ready. Large Corner Lot w/ room for RV/Boat parking. Great Schools & Hiking close by!

Sold for $570,000.

                                                                                                                                                                 

749 S Tulip

(Escondido)

SOLD

*Represented Seller

Quaint single-family detached home nestled on a private street, conveniently located near I-15, & is perfect for the first time buyer looking for a spacious back yard! Imagine your pets running around the fully fenced yard or taking a nap in the shade of the trees while you relax on your covered patio. A carport has been added that would make the perfect workshop or RV/boat parking plus additional sheds for storage! It features 2 beds/1 bath plus bonus room that was converted from a previous 1-car garage.

Sold for $330,000.

                                                                                                                                                                 

8617 Mission San Carlos Dr. 73

(Santee)

SOLD

*Represented Seller

Prime West end Santee Cottage, 2BR 2 Bath, 1 level unit (with no one above), 1100esf, 1 Car attached Garage, Big Private Patio, Vaulted Ceilings, AC, Fireplace, Open Floor Plan, Highland Trails Complex with pool & spa, Walk to Mission Trails Park, Basic Cable & Water/Trash included in HOA Fee. VA & FHA Approved.

Sold for $355,000.

                                                                                                                                                               

13263 Rancho Penasquitos Blvd. K201

(Rancho Penasquitos)

SOLD

*Represented Buyer

Great opportunity! Upstairs corner end unit. Get greeted by a warm fire and entertain your guest in the open living/dining room. Your kitchen has granite counters and all s/s appliances. Your laundry is right there for you. Spacious walk in closet in the master bedroom and a good size second bedroom. Additional storage on the lanai. Great amenities: Pool, Clubhouse, Fitness room, Tennis/sand volleyball ct, dog run, playground, lots of unassigned parking and street parking, Poway School Distr.

Sold for $315,000.

                                                                                                                                                                

505 Calle Montecito 21

(Oceanside)

SOLD

*Represented Seller

Upgraded first floor end unit condo in a quiet community near Libby lake. Elevated corner unit overlooks lush green outside and enjoy ocean breeze in the family room. Custom cabinets and granite countertops. Stone tiles and Hard flooring. The large balcony w/ full-size washer/dryer closet. Close to schools, soccer fields, volleyball, fishing, movie theaters, shopping, beach and fwy access. Walking distance to Libby lake park, children’s playground and skate park. Enjoy California living at a great price!

Sold for $230,000.

                                                                                                                                                              

Understanding Foreclosures

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It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Image result for foreclosure processUnder such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

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After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee.

A lender may “credit bid” up to the amount of the obligation being foreclosed upon. With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

Knowing Why You’re Selling

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If you know exactly why you are selling then it is easier for you to follow the right plan of action for getting what you want.

If you are a seller who needs to close a sale as quickly as possible, then you should know that getting the highest price possible is not one of your priorities. It does not mean that you won’t or cannot get the highest price, but it means that the price is not the deciding factor. A buyer who can give you a quick closing time will appeal much more to you than a buyer who can offer you more money but the negotiation and closing time drag on.

Image result for home offersIt’s always good to know how low you will go in terms of selling price. This will help to eliminate some of the offers that you find simply offensive or ridiculous. Even though you should consider all offers seriously and take into consideration the terms of each offer, sometimes, if you know the bottom line and are strict about it, you can save yourself time.

Once you know what your limits and reasons are, discuss them with your agent so that they can help you set your goals realistically. If you decide to list your home on your own, make sure you do research on the current market, and you get the proper advice you need in terms of legal issues, etc. The key is to be realistic and know what your goals are so they can be met.

Where Does the Money Come From for Mortgage Loans?

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In the olden days, when someone wanted a home loan they walked downtown to the neighborhood bank or savings & loan. If the bank had extra funds lying around and considered you a good credit risk, they would lend you the money from their own funds.

It doesn’t generally work like that anymore. Most of the money for home loans comes from three major institutions:

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  • Fannie Mae (FNMA – Federal National Mortgage Association)
  • Freddie Mac (FHLMC – Federal Home Loan Mortgage Corporation)
  • Ginnie Mae (GNMA – Government National Mortgage Association)

This is how it works:

You talk to practically any lender and apply for a loan. They do all the processing and verifications and finally, you own the house with a home loan and regular mortgage payments. You might be making payments to the company who originated your loan, or your loan might have been transferred to another institution. The institution where you mail your payments is called the servicer, but most likely they do not own your loan. They are simply servicing your loan for the institution that does own it.

What happens behind the scenes is that your loan got packaged into a pool with a lot of other loans and sold off to one of the three institutions listed above. The servicer of your loan gets a monthly fee from the investor for servicing your loan. This fee is usually only 3/8ths of a percent or so, but the amount adds up. There are companies that service over a billion dollars of home loans and it is a tidy income.

At the same time, whichever institution packaged your loan into the pool for Fannie Mae, Freddie Mac, or Ginnie Mae, has received additional funds with which to make more loans to other borrowers. This is the cycle that allows institutions to lend you money.

What Freddie Mac, Ginnie Mae, and Fannie Mae may do after they purchase the pools is break them down into smaller increments of $1,000 or so, called mortgage-backed securities. They sell these mortgage-backed securities to individuals or institutions on Wall Street. If you have a 401K or mutual fund, you may even own some. Perhaps you have heard of Ginnie Mae bonds? Those are securities backed by the mortgages on FHA and VA loans.

These bonds are not ownership in your loan specifically, but a piece of ownership in the entire pool of loans, of which your loan is only one among many. By selling the bonds, Ginnie Mae, Freddie Mac, and Fannie Mae obtain new funds to buy new pools so lenders can get more money to lend to new borrowers.

And that is how the cycle works.

So when you make your payment, the servicer gets to keep their tiny part and the majority is passed on to the investor. Then the investor passes on the majority of it to the individual or institutional investor in the mortgage backed securities.

From time to time your loan may be transferred from the company where you have been making your payment to another company. They aren’t selling your loan again, just the right to service your loan.

There are exceptions.

Loans above $333,700 do not conform to Fannie Mae and Freddie Mac guidelines, which is why they are called non-conforming loans, or “jumbo” loans. These loans are packaged into different pools and sold to different investors, not Freddie Mac or Fannie Mae. Then  Image result for mortgage bankingthey are securitized and for the most part, sold as mortgage backed securities as well.

This buying and selling of mortgages and mortgage-backed securities is called mortgage banking, and it is the backbone of the mortgage business.

Design Trends: Pantone’s Color of the Year – Living Coral

Welcome to 2019! We are starting this year off bright and we wouldn’t want it any other way. Pantone released its color of the year and its a welcoming living coral! There are a variety of ways to incorporate this hue throughout your home and we’ve picked out a few that definitely stand out to us! Check out these spaces for more inspiration!

All images pulled via our Pinterest

Cream and Coral Living Room #CoastalcottagePantone living coral interior decor, coral living room decor ideas #livingcoral #pantoneDefinitely this coral paneled office that will turn you into a workaholic: | 12…Coral room: Zoning homes with an open plan layout is one of the best ways of making the most of your space. Oranges, particularly corals, inspire creativity so are ideal for a living and study area.  Featuring Coral Flair and Malt Chocolate by Dulux.love the coral especially the chair w/ fringe.coral living room. We need more plants.Love it - Pantone's color of the year 2012- Tangerine Tango.