South Bay Homes and Real Estate

Mortgage Tips for First Time Home Buyers in the Torrance Real Estate Market

Most people have the dream of one day starting a family and living in their Torrance dream home. If you have made smart financial decisions throughout the years, you are most likely very close to reaching your goal. However, there are some tough steps that lay ahead before your dream is a reality. You will need to do tons of research and evaluation to be sure you receive everything you want and can handle.

Read Also: Better for Torrance Citizens: Conventional Home Loans or FHA Loans?

If you are close to making the decision to enter the Torrance Real Estate Market, study these tips on mortgages before searching all Torrance Homes for Sale:

Pay off debt.

Before focusing on the home, take care of other debts. This is the smart approach, rather than accumulating a large sum of money in the bank, as large debts will severely affect your ability to save.

Read Also: 9 Steps to Pay off Debt

Analyze your own finances and figure out what is affordable for you. Before making a purchase you must know how large of a down payment you are willing to make and how large of a loan you will borrow. Your loan should not reach 30% of your gross annual income, if averaged out.

Understand Different Types of Loans

The government sponsors certain lenders, such as Fannie Mae and Freddie Mac, so they are able to offer excellent rates. Private companies can also provide competitive rates for a first-time buyer. You should also check at your local bank for options.

Read Also: Credit Rating and The FCRA: How They Affect Torrance Real Estate Mortgages

Real estate shopping

If finances are no longer an issue, begin looking for your Torrance home. Call a trustworthy Realtor who can aid you in the process. There are many factors to consider, such as neighborhood and schools. Make a priority list and check all properties against this. Never buy a home without touring it first.

If you already know which home you want, talk to your agent and make your offer. Negotiate the price and terms with the seller, and be sure to get all details in writing. Study all contracts carefully before signing for anything.

Tips on How to Avoid FHA Home Foreclosure of Your South Bay Area Home

FHA home foreclosures are foreclosed homes that were previously financed by individuals, either by homeowners or investors in the South Bay area. Various situations cause foreclosures: financial difficulties due to unemployment or death in the family, debts from credit card use and others.

What to Do When You’re Faced with an FHA Home Foreclosure

The foreclosure of a South Bay area home can be shocking and demoralizing to any homeowner. However, it can still be forestalled by certain simple measures and proper education. If you own a home in the Palos Verdes Peninsula area (Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills and Rolling Hills Estates), the Beach Cities area (Manhattan Beach, Hermosa Beach and Redondo Beach),or another other area in South Bay (Lomita, San Pedro and Torrance) there are some alternatives available to you so you can avoid FHA home foreclosure:

• Acknowledge the problem and face it squarely. Ignoring the situation and continuously falling behind on your payments will make it difficult for you to regain your credibility with the lending institution. Maintain communications with your South Bay area lender and do not evade their letters. Better yet, review your correspondence as your lender may have included information on how to avoid foreclosure of your South Bay area home.

• FHA home foreclosure is a growing issue with lenders. In fact, it is rare for lenders to want to foreclose properties. Lenders find that foreclosing property is both expensive and bothersome. In general, options are still available for you to keep your home. Therefore, respond to your lender and find out what your alternatives are. Documents of legal proceedings may also be given to you. Being conscious of the situation and preparing for it will then be good for you.

        Read Also: Torrance California Short Sales - Is it right for you?

• Know your rights as a borrower by examining and understanding your loan agreement. Much important information can be gleaned from the loan agreement. These include the process of the FHA home foreclosure, and length of the processing time for your particular state, among others. The processes and time frame differ for every state. If these data are not mentioned in your loan agreement, contact California’s Government Housing Office.
• Determine your available options. To avoid an FHA home foreclosure, know your alternatives and applicable laws. Online resources can also provide you with helpful information. You may also get in touch with the United States Department of Housing and Urban Development (HUD). This department offers housing counseling. Seek to have all your questions answered as these services are usually free or minimally charged.
• Some of the most probable causes of your failure to pay for your mortgage monthly payments are lack of management and organization of your finances. If this is the case, professional advice may be very helpful. HUD can be of support in these matters. The HUD housing counselors can help you to determine your options and to understand the real estate laws for California. HUD counselors can also help you in your financial management and organization. Because your lender wants to ensure that you are financially stable and capable of the monthly payments, HUD counselors can also help you negotiate with your lender to have your loan reinstated. Because of all these, the assistance of the HUD can be very valuable to you in avoiding foreclosure of your South Bay area home.

         Read Also: Torrance California VA Home Foreclosures

It is possible that you are a Torrance consumer who is facing money issues and looking for a quick fix to the problems. Loans are commonly utilized as a way to deal with the situation. Currently, there are a great deal of loan options, such as pawning possessions, asking organizations for some temporary money, loans from commercial lenders, etc.

Home loans

One option, specifically for people with high debt in Torrance, is a mortgage. A mortgage is just giving up the property title to a company as collateral for a substantial loan. Before receiving the loan, certain terms are set, such as payment amount and dates, and violating the agreement could cause you to lose your property.

Unfortunately, some people cannot qualify for loans, especially from commercial lenders and large banks. As everyone is somewhat uneasy lending money to a stranger, lenders are going to try and find people that they believe will completely repay their investment.

Read Also: Home Ownership Options in the South Bay Area

Credit Rating

With credit ratings, the score is calculated from credit reports, which chronicle debt, payments, borrowing, etc. Essentially, the rating number gives an estimate of how large of a loan a person can receive and fully repay the lender. A higher credit rating means you can receive a larger loan.

In order to have a high credit rating, which will greatly affect the odds of you receiving a mortgage, pay loans and bills on time, and follow other financial restrictions. A high rating is much better than a low number, as a low credit score greatly limits financial options and can cause many issues.

Watch the Video: Credit Score Blues

Credit Reports

What exactly are credit reports? They are lists of all credit histories, such as unpaid loans, debts, and balances, in addition to some background facts on the consumer. Credit bureaus are responsible for compiling these reports.

You may question why these agencies exist. These bureaus were created with the purpose of creating a more stable financial market. Legality is not an issue, as the government is aware of their practices. A law called the FCRA or Fair Credit Reporting Act has been passed.

Read Also: Torrance California Mortgage for those that are credit challenged!

Fair Credit Reporting Act

This federal law controls the credit information of consumers. By regulating the information, credit reports can be more accurate, as they include all of a consumer’s credit history. Agencies must follow specific guidelines, which are defined in the law.

The law aids Torrance consumers, lenders, and credit bureaus. The law tries to stop possible issues between a consumer and their credit rating from arising. As part of the law, consumers must be able to view one free credit report per year.

It is very possible that in the future you will want to take a home mortgage loan. When the time comes, it would be very beneficial to have an excellent credit score. As credit reports are heavily considered, a strong record will definitely improve your chances.

Search all Torrance Homes For Sale

An Analysis of the FHA for Torrance Citizens

Has the idea of purchasing a Torrance home ever struck you? Does it seem within reach and affordable? With FHA home loans, many people are able receive the money necessary for home ownership.

What is the FHA?

An FHA loan gives the ability for a consumer to buy a property with a tiny down-payment of 3%, in contrast to many other types of loans which require a higher percentage.

With this loan program, first-time buyers without much extra money will also see benefits when searching Torrance homes for sale.

Realize that the FHA does not actually grant these loans; they insure them. If a buyer defaults on his loan, the lender will receive payment covered by the FHA. To receive an FHA loan, one must have a decent credit history, along with income comparable to the loan amount requested.

Read Also: Torrance California Mortgage for those that are credit challenged!

Can you Afford an FHA Loan?

To qualify for a loan through FHA, the cost of monthly payments cannot exceed 30% of the average total monthly household income.

Total costs also encompass property taxes, insurance, principal mortgage, and interest. These terms are grouped and referred to as PITI.

The following formula is used as an illustration of the concept. Monthly income times .29 is the maximum PITI.

If one’s income is $5,000, the max PITI is $1,450. The monthly payment, along with PITI and debt cannot reach 42% of gross monthly income.

Car loans and credit card balances are included in these terms.

Receiving a Loan Through FHA

To receive a loan, you must be able to make all monthly payments on time. You must also have the funds to place a down-payment on the property.

Additionally, you are responsible for closing costs. This will be around two to three percent of the home value. This down-payment covers: attorney fees, title search fee, homeowner’s insurance, and a Private Insurance Mortgage (if regular payments are 20% lower than the down-payment).

Basically, the FHA exists to assist those without a ton of resources or great credit histories in acquiring their own home.

Ways Torrance Residents can find Poor Credit Lenders

What options are available for someone with terrible credit but dreams of purchasing their own home? There are choices available for people in that situation. Though bad credit makes home ownership tough in Torrance, it is not impossible.

Watch the Video: Credit Score Blues

The following is a list of factors one should consider when searching for a lender in Torrance California.

Ask Around

Inquire as to whether the seller is willing to take on the loan. If the seller still owes money for the home, a mortgage wraparound may be a possibility. Essentially, this mortgage allows for a consumer to pay on one mortgage every month, along with another payment for the remaining balance.

Read Also: Torrance Home Buyer / Owner Options in Today’s Market

Follow a Lease Option

By purchasing a lease option for the Torrance home, a person can set the current purchase price and apply some of each month’s rent toward a down payment. At the end of each lease term (usually between one to three years), the prices should increase, along with acquired equity.

Keep in mind that if this option is not used, the seller keeps all money received.

Read Also: Home Ownership Options in the South Bay Area

Increase Everything

It is perfectly fine to increase the price you will pay to the seller. Afterward, it is acceptable to request that the seller credit you for the money so that it may go toward the down payment.

Don’t Fear Borrowing

Receiving money from family and friends would assist with closing costs and the down payment. Additionally, taking money from your pension or savings plan can help you raise the down payment amount.

A Mortgage Broker Can Assist

Choosing the best possible mortgage for your own situation could be aided by using a broker’s services. This can be achieved by finding a list of local brokers and contacting a few. You could possibly query your real estate agent or friends for other contacts.

Basically, home purchasing is not hard if you can devote the required time necessary to explore all options and find the best deal.

Save my South Bay Home!

It’s been long couple of years in Southern California real estate, especially the last two. Although fears of a systemic crash have somewhat abated, we’re far from out of the woods. The Housing Rescue Bill (July 2008) must have generated at least some degree of guarded optimism. Already, National Association of Realtors reported pending home sales nationally rose 5.3 percent from May to June (Aug 7 2008, St. Louis Business Journal).

Riding on the momentum, Rolling Hills homeowners faced with foreclosure would do well to capitalize on the various options that have been put in place to help ease their mortgage woes. It’s easy to understand how South Bay Citizens could jump into real-estate during the housing boom and it’s such a shame that these same folks would be swallowed up by foreclosure at this point now that the odds are actually in their favor.

To be sure, there’s no outright answer on how to stop a foreclosure on your Rolling Hills home. That being said, the more common ones are quite straightforward, leading basically to two possible outcomes: with the subject property retained or with it relinquished. The available routes to the former are refinancing, forbearance, loan restructuring, further loan and write-off. The latter can be accomplished through deed-in-lieu and pre-foreclosure or short sale.

Foreclosure Prevention Plan

Whether it’s keeping or dropping the Rolling Hills home, the endeavor to stop foreclosure must be laid out with a sound game-plan. Once that’s done, Los Angeles county homeowner must set out in a highly expeditious fashion. A typical profile of execution would look something like this:

• Review the financial situation thoroughly
• Check out all options
• Spot and skip the scams
• Consult professionals or experts

Lenders and government are certain to be willing to work hand in hand with affected Rolling Hills homeowners to help stop foreclosure these days as they are actually in the bind too insofar as the bigger picture of the overall housing crisis is concerned. With foreclosure, houses turn from asset to burden for lenders overnight, their surplus weigh down on the economy and even dampen property value in the neighborhood.

Read Also: HUD Foreclosure Help Page

How to stop a California foreclosure has become a common topic, be it at online forums, radio talk shows, public discussions, office chat and just about any form of everyday conversation. There’s also no shortage of information and services to turn to. Government agencies, banks and lenders, lawyers and attorneys, investors and brokers are all increasingly coming onto the scene. Books, guides and all kinds of other materials have been written on the subject. Scams and cons have not failed to get in the mix either, so watch out!

Rolling Hills Real Estate Agent Rocky Rockwood covers all of the Palos Verdes Peninsula.

Additional Reading:

• Torrance Investor’s Secrets to Guard against $$ loss
• Why One Redondo Beach Homeowner DIDN’T Hire Me To Be Her Real Estate Agent
• Find the Best Real Estate Agent to Buy or Sell your Home
• The very best home value currently in Torrance, CA
• Torrance Homeowners Use Creativity to Aid in Property Sales During the Weak Market

Listen up Hermosa Beach CA!

The daily newscasters and “talking heads” feature regular stories of the tragedy of foreclosures in California. Indeed, the rate of foreclosures is continuing to increase, partially driven by the financially illogical variable rate mortgages. With that said, if you are a financially savvy Hermosa Beach Real Estate Investor with solid financials, this is a great time to capitalize upon these intriguing opportunities, especially in the form of REO properties.

California Banks are in the business of lending money, not owning, managing, or selling real estate. However, oftentimes a bank is forced to foreclose on an investment, and a property reverts from an investment to Real Estate Owned, or REO.

Hermosa Beach Real estate investors can purchase REO properties from banks for less than the full market value of the property, but in most cases, REO properties are sold by lenders at or just below market value. A smart Los Angeles investor will have a strong strategic plan for bidding on and financing a bank-owned property to get the best value.

Bidding on REO property

Even though banks do not want to hold and manage Hermosa Beach real estate properties, there is a wide misconception that banks want to ‘dump’ REO properties at far below the market value simply to get if off the books. Closer to the truth is the fact that a REO property is not considered a liability, and banks will want to get full or near market value for their asset.

If a Hermosa Beach Real Estate Investor makes an offer on a REO property lower than the bank’s calculated full market value, the bank will probably make a counter-offer closer to the market value at which they want to sell. An important thing for investors to remember is that banks do want to sell their REO properties as quickly as possible, so patience and persistent bidding is the key for a potential investor to get a good deal. But also remember that a bank is looking after their own best interests - not yours.

Understand that REO is “as is” property

Banks will usually sell their REO properties in “as is” condition, meaning if there are any renovations or repairs needed in order to qualify for traditional financing, a bank will not perform the repairs. They may, however, offer a credit on the sale price for the deferred maintenance of a property.

Los Angeles area Investors should analyze a South Bay property carefully and have thorough inspections performed by licensed inspection firms. A proper inspection will reveal items that an investor will need to consider improving before the property can be achieve full resale or rentable value.

If a Hermosa Beach property has numerous defects and does not qualify for a traditional mortgage from a bank or other lender, a real estate investor will need an alternate plan to finance the property. The Hermosa Beach investor should form a plan for repairs and renovations and could work with partners to invest money in the fix up project. Hard moneylenders may also be a source of short-term financing.

Enjoy favorable terms

A Los Angeles investor will often reap favorable sale terms from a bank REO property. The South Bay properties are usually clear of any prior liens. Additionally, a bank may offer financing to an investor will favorable terms, such as low down payment or low interest rate.

Swift closings can also be a great benefit since the title will be owned free and clear by the bank.

Benefits of buying REO

As previously mentioned, a REO home is generally free of all liens from prior lenders and contractors. Having a home for sale free and clear offers a safe investment and quicker closing times.

A REO property will also be vacant and ready for an investor to occupy or begin renovations immediately after the sale. Any owners or tenants will already have been evicted prior to the final foreclosure. Tip provided by Real estate expert Brice Sheppard.

REO properties can be a great investment - as long as an investor is savvy about purchase strategies. Knowing the condition of the property and bank REO selling procedures is an asset to the investor. With a little experience, a real estate investor can reap many financial rewards with a niche in REO properties.

Torrance Home report: The warning signs of a housing crash began to show in 2005.

In the year 2007, the South Bay market began rapidly falling and since then, thousands of bankers and brokers who made their money in the mortgage market have gone out of business. Though 2007 was a bad year, analysts predict that 2008 could be worse. Some believe that foreclosures will continue to grow, and the housing market will become even weaker before it rebounds.

Torrance Home owners take stock:

• The first step is to know your mortgage type and all restrictions and guidelines that accompany it. During the pinnacle of the real estate market, an adjustable rate mortgage was popular because people were eager to take advantage of low interest rates. However, in hindsight an adjustable rate was not rise, as a market crash will drive interest rates sky high. Explore the possibilities of a mortgage with a fixed rate.
• If your Torrance house has been on the market for a while and you have been unable to sell it, you
  may have to lower the price or make terms more flexible. Supply has flooded the market at the moment, while demand has wavered. As a result, buyers are being pickier and negotiating for better deals. If you really need to sell your house, a price reduction is in order, along with some extras to sweeten the deal. If a lower price is not an option, consider making the home available for rent until market conditions improve.
• The fall of our housing market here in Torrance has also affected those wishing to purchase a home. While prices have already fallen fairly far and there are many options available, it seems as though prices will continue to fall for the rest of 2008. Some areas may continue to see a dramatic reduction in price, which means buyers are willing to wait longer to try and receive the best deal.
• If looking to purchase a real estate in Torarnce (or elsewhere), be sure to consider the available mortgages and protect yourself against too much damage in the event of another crash. If in the market for your first house, consider a FHA mortgage if your credit ratings are not excellent. Also, VA mortgages are also strong options for veterans. In the current market, these mortgage packages offer decent rates and guidelines.
• While there are still many ‘no cost’ mortgages being offered by companies, there are almost certainly
  strings attached, so you should thoroughly explore the fine print before accepting. Often, a ‘no cost’ loan does no exist, and you end up paying back more than the actual mortgage is worth.

If you are looking ot buy or sell call me immediately at 310-809-0203 for a no cost evaluation and consultation to determine if Torrance rental or residential property is right for you.

Additional Reading:

Torrance Investor’s Secrets to Guard against $$ loss
Why One Redondo Beach Homeowner DIDN’T Hire Me To Be Her Real
Estate Agent
Find the Best Real Estate Agent to Buy or Sell your Home
The very best home value currently in Torrance, CA
Torrance Homeowners Use Creativity to Aid in Property Sales During
the Weak Market

South Bay real estate investors and homeowners bracing for the real estate bubble burst.

Though many had predicted the Real Estate market collapse, some were blindsided, as the same market
that offered many profitable opportunities several years ago started a downward spiral.

One of the first scenarios that must be analyzed to understand the crash is the fall of the subprime mortgage
market. Due to the weakness of the market, companies were facing foreclosure and debt that reached the billions. While the collapse of the subprime industry has garnered much publicity and news attention and affected the majority of property owners, many people are still unsure why the market reversed so quickly.

What happened?

Several years ago, subprime mortgages were excellent opportunities for many looking to purchase homes in Torrance and across the South Bay The subprime mortgage had the most appeal for consumers without
excellent credit histories looking to get involved in the scorching hot California real estate market. The general rules and guidelines were mostly more relaxed than standard mortgages. As a result, even buyers with awful credit were able to secure a loan. In return for taking a chance on a consumer without great
credit, the lender charged a greater amount of interest. The underlying belief was that even if the buyer defaulted on the loan, the South Bay property could be foreclosed and sold at a profit.

The funding for these loans came from different locations. Low rates of interest made many lenders take loans, And then lend their own personal money to buyers. Other situations saw the money come from a more complex scenario. Governments, especially in the United States, are known to take loans from the central bank.

During the boom of subprime mortgages, the real estate market, especially that in South Bay was at its
highest peak in a long time. In addition, too many people investing in homes were saddling themselves with massive debts. Experts analyzing the market predicted growth that now appears to have been extremely unlikely.

During the final two years of the real estate peak in 2005 and 2006, lenders would hand money to essentially
anyone, overlooking credit history or the ability to pay back the loan. The loans given out were a huge opportunity for profit for the lenders. The problem with the strategy was that interest rates did not remain at their historically low numbers. History shows that rising interest rates have always had an adverse effect on the housing market. If interest rates are tiny, the demand for property is high. When the rates rise, it has a negative correlation on demand and eventually price. Leading up to the middle of 2006, construction companies could not keep up with the demand for new homes. However, around the middle of the year, demand was reduced. This time period also marked the beginning of a much higher percentage of defaulted loans.

In a short time, lenders had a much tougher time securing funds for buyers. Those wishing to purchase homes found it much tougher to secure the necessary capital, as money was much tighter. As a result of the vastly reduced potential rewards, lenders were no longer willing to take on such great risks associated with loose mortgage guidelines and buyers with poor credit. Consumers without a fixed rate mortgage began having greater difficulty coming up with the needed funds for their payment. Finally, homeowners could not make payments on loans that they really could not afford to begin with. Foreclosure number skyrocketed, and lenders could not sell the foreclosed properties for profit in the tumbling market. The cycle grew worse and worse, as potential buyers could not receive loans as a result of lenders having all their assets tied up in properties that consumers could not afford.

The entire South Bay home prices have been depressed but not nearly to the level of some other areas, such as the Inland Empire. Torrance home prices are generally remaining flat or slightly down from last year. Reasons for this levelling off include our proximity to Los Angeles and the power house of jobs provided by the entertainment industry. Aerospace and high-tech sectors also continue to grow and bring home buyers to the area.

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