How Do You Not Be Blockbuster?

I received a lot of feedback yesterday in response to my blog “Netflix vs. Blockbuster.” Some asked what I meant, and some asked how to find the next Netflix. What I meant is that we all need to make sure we don’t wake up one day to find that our industry has changed so much […]Read More

Blockbuster Video vs. Netflix – Lesson for All of Us

There are some business stories that surface over and over in the many business books I read. Here are a few great examples. Steve Jobs “borrows” the GUI and mouse from Xerox. Jobs famously visited Xerox and immediately saw the potential of the mouse and (Graphical User Interface) GUI, and the rest is history. Here […]Read More

No Lender Fees & Lender Credits = Higher Rates; No Free Lunches

We recently had a Texas borrower almost leave us for a competitor that was offering “no lender fees, no appraisal fee and a small credit for closing costs.” Fortunately though, the borrower sent us the “Loan Estimate” from the competitor and we were able to see that the competitor was charging a higher rate. In […]Read More

Only 21% Think “Now” Is A Good Time to Buy; Demographics Say Otherwise

CONFIDENCE IN BUYING DROPS Only 21% of Americans think now is a good time to buy a home, according to October’s Fannie Mae Housing Survey. This is down from 28% in September, and it shows that low rates do not drive purchase volume as much as many of us might suspect. In response to this, […]Read More

FHA Spot Approvals for Condos; We Are Getting Them Already

I mentioned a few times now how HUD is now granting “Spot Approvals” for FHA financing for single condo units within condo complexes that are not FHA approved. We have already made several requests for spot approvals and have received answers in about a week each time. To obtain a Spot Approval we need the […]Read More

People Staying In Homes Much Longer – Creates Inventory Shortage

“Fewer homes for sale is a big reason why even ultralow mortgage rates, record levels of home equity and a strong job market haven’t jump-started the sluggish housing market.” The above quote is from this recent WSJ article – People Are Staying In Their Homes Longer – A Big Reason for Slower Sales (we can […]Read More

Rate Buydowns Instead of Price Reductions; BETTER for Everyone!

We are starting to see a lot of stale listings at the higher end of the market. This is b/c “slow season” is starting and b/c the high-end market seems to be slowing in general due to affordability issues and anxieties about the market overall. As a result, we are seeing frequent price reductions that […]Read More

Airbnb/Vacation Rentals – Can Lenders Use Income? Are They Allowed?

When buyers purchase multiple unit properties or single family rentals, they can use future rents to help qualify for the purchase, as I mentioned in Friday’s blog. Multiple unit buyers can use the market rents from units to qualify even if the units are vacant. Similarly, investors, purchasing a single family residence, can also use […]Read More

Using Rental Income From Units to Qualify; Vacant Units; Illegal Units

I blogged recently about “House Hacking” (here and here) or buying multiple-unit properties in order to use the rental income to subsidize one’s mortgage payment. We received numerous questions in response that made for some great blog fodder, discussed below. How much rental income can we use? For all units that will not be occupied […]Read More

HELOC vs. Cash Out; Fed Cuts Fed Funds Rate

Borrowers in need of cash often wonder if they should get a Home Equity Line of Credit (HELOC) or if they should just refinance into a larger first mortgage with “cash out.” The answer is “it depends.” HELOCs are usually tied to Prime Rate, which has been at 5% for several months and will likely […]Read More

Why Interest Rate Might Be Higher at Contract Time Than at Pre-Approval Time; Not a “Bait & Switch” :)

We pre-approved a borrower in August and sent him numerous estimated payment scenarios, based exactly on the interest rates available at that time. When he went into contract in mid-September, we locked him at a 1/4% higher rate than what we estimated in August. The borrower was upset b/c he thought we pulled a “bait […]Read More

House Hacking Part II: Co-Buying; Sufficiency Test; Fourplexes

I received a lot of feedback in response to Friday’s blog about “House Hacking,” or the strategy of buying two to four unit properties in order to use the rental income to subsidize a mortgage payment. One successful Bay Area Agent sent me the following message: “… This is the gospel I’m always preaching to […]Read More

House Hacking: Using Rent from Units to Offset Mortgage Payments

We cohosted a “House Hacking” seminar earlier in the year where we illuminated the many advantages of buying multiple units with rental income, as opposed to buying a single family residence. I was one speaker along with a seasoned agent, a property manager, a tax planner, and a financial planner. The advantages of buying units […]Read More

Correlating to the Worst Credit on a Loan Application When There Is More Than One Borrower

When discussing credit with our borrowers, we often hear something like this: “My credit score is only 670, but don’t worry; my wife’s score is over 800!” Unfortunately though, lenders correlate to the worst credit on the loan application when there is more than one borrower. LOWER MIDDLE SCORE Most mortgage lenders check credit with […]Read More

VA Loans – Explained Once Again; We’re VA Experts!

We get so many questions about VA Loans and whether or not we offer them that I thought it was time to repeat some key VA info. In short – we are VA experts and we love helping veterans. What is a VA Loan? A VA Loan (Veterans Administration Loan) is a mortgage that is […]Read More

Rent vs. Buy Calculators – Surprising Results

WHEN RENTING MIGHT MAKE SENSE My young nephew pays $4,250 per month to rent a property in San Francisco’s Marina District. This is a bargain rate given the lifestyle that renting in one of America’s most desirable zip codes affords – short commute, stunning views, awesome nearby parks, perfect weather, best restaurants, etc. His financial […]Read More

Zillow and Other “Most Flawed Business Models … Ever”

ZILLOW’S PENDING DEMISE Steven Eisman is the investor who made billions by shorting mortgage-backed securities prior to the 2008 meltdown. He was also made famous in the movie “The Big Short.” Mr. Eisman is now shorting Zillow, claiming it is one of “the most flawed business models he has ever seen.” You can watch his […]Read More

Why Agents Need to Share Low Comps Too; When Cat Pee Matters :)

Agents often share relevant comparable sales data with appraisers to help support value. B/c of this we often share basic appraisal guidelines with agents to ensure they share comps that appraisers can actually use. Comparable Sales Appraisers Can and Can’t Use is just one example from a past blog. Comps can’t be too large, too […]Read More

“Biggest Housing Boom In History Has Just Begun” SFR Rentals = Future

The above subject line is the title of this Forbes.com article. The author focuses on the supply of houses, shifting demographics and massive pent up demand. From the 1950s through the early 2000s, an average of 1.5 million new homes were constructed every year in the U.S. But, over the last ten years, we have […]Read More

No Bubble Here; FHA Condo Spot Approvals

FHA CONDO SPOT APPROVALS ARE BACK STARTING TOMORROW Starting tomorrow, an entire condominium complex will no longer need to be “FHA Approved” for a buyer to use FHA financing to purchase a unit within the complex. Buyers can now obtain what is called a “Spot Approval” to get just get a single unit “FHA approved.” […]Read More

Charles Schwab No Longer Charges Commissions for Trades

Charles Schwab started to offer discount brokerage services (low commission trades) way back in 1975. Much of the financial industry paid little attention to the upstart firm but it nonetheless continued to grow and capture more and more market share. And then finally, 44 years later, Schwab announced that they would charge no commissions at […]Read More

3 Reasons to Make Smaller Down Payments

We recently had a borrower with ample income and about $70,000 of liquid assets try to squeeze into a $600,000 home with 10% down. She wanted to put as much down as possible to minimize her housing payment. We instead talked her into putting 3.5% down and using FHA financing for the three reasons discussed […]Read More

When 6.875% Is a “Low Rate” Online Notary Service Too

ONLINE NOTARY SERVICE We learned about an online Notary service today that can notarize documents for almost anyone at any time from anywhere. This is something we will take advantage of often, and you can check them out at Notarize.com. Sadly, this service will replace many mobile notaries and signing services. This is one more […]Read More

Why “Refi” Rates Are Higher Than “Purchase” Rates

Refinance borrowers sometimes see the rate quote in my daily blog and ask why their rate is higher than the “purchase money” rate quote in my blog. B/c this has been happening more often than not lately, I thought it warranted a brief explanation. ASSUMPTIONS FOR BLOG VS. FACTS FOR REFI The assumptions we use […]Read More

What Constitutes a “Bedroom?” Ceiling Height? Closet? County Records Wrong!

My wife Heejin spoke in front of a brokerage recently and an agent approached her afterward to complain about a transaction we closed over three years ago. The agent was still upset b/c the appraisal came in low. We researched the transaction and found out that the county records and the MLS had the bedroom […]Read More

Why It Is So Hard to “Roll Down” a Locked Interest Rate When Rates Fall

Every borrower of course wants the best of both worlds – they want to be fully protected by a “rate lock” if interest rates go up, but they also want to roll down their rate if rates fall. This puts all mortgage lenders in a very difficult situation. I am going to over-simplify this a […]Read More

What’s Up With Compass Real Estate? Hype vs. Reality?

NYU Professor, Scott Galloway, recently released a fascinating six-minute video about Compass Real Estate. Galloway was the one who recently illuminated WeWork’s glaring weaknesses, so he looked into other SoftBank investments to see if they had similar issues and he focused on Compass. B/c I have been utterly fascinated by Compass’ fast expansion and b/c […]Read More

Which Week Is the “Black Friday” For Homebuying?

  This was the title of a Housing Wire article I read last week. I am lifting this directly from the article: “Apparently, the best time to purchase a house is the first week of Fall. This time of year, buyers have less competition, more price reductions and greater inventory, according to realtor.com. Out of […]Read More

Only 12% of Clients Use Their Agent Again! How To Stem the Loss

I sat on a tech panel recently with the founder of First.io, and he shared some fascinating survey results. 88% of all homeowners surveyed said they would use their real estate agent again if they bought or sold a home. AND….. Only 12% of homeowners actually did. In other words, most agents are not tapping […]Read More

Don’t Fear the Onslaught of Big Tech in Real Estate and Mortgages

I know of three major fintech players that devoted tens of millions into building out mortgage lending operations over the last four years. And, all three are NO longer in business. I know those companies intimately b/c my wife Heejin and I visited all three, and two of them actually came to us asking how […]Read More

Rates Fell Again – Why? Unexpected, As Per Usual

Rates have moved steadily lower over the last week. And, as per usual, nobody saw it coming. The unexpected news that pushed rates down included the following: Nancy Pelosi’s Impeachment Inquiry. Major uncertainty in both political and economic arenas tends to push rates down. Waning Consumer Confidence. Traders watch these surveys closely and react sharply […]Read More

“PMI” or “Private Mortgage Insurance” Explained (Briefly)

PMI remains a great option for high-LTV financing in 2019, and all too many borrowers and agents do not fully understand how it works. First of all, PMI protects lenders (not borrowers) in the event of default. So borrowers with PMI will still be on the hook or liable for their mortgage debt even after […]Read More

The Super Importance of a Well Crafted Bio!!

NOTE: Despite the cut in the Fed Funds Rate on Wednesday by the Fed, mortgage rates still remain at least 1/4% higher than where they were a few weeks ago. We frequently assist our agent partners with the enhancement of their “Digital Footprint.” An agent’s digital footprint is basically what potential clients see when they […]Read More

The Fed Cut Rates by 1/4 Point And Mortgage Rates Fell Marginally

The Fed cut the Fed Funds Rate by 1/4 percent yesterday, and rates…actually fell after the announcement. I was almost disappointed to see that b/c it will again confuse people about the influence the Fed has on mortgage rates. Briefly and once again – the Fed cut “The Fed Funds Rate” which is a short […]Read More

“This Is the Biggest Predictor of Career Success”

My brother recently shared this article from Inc. Magazine that explains the biggest predictor of career success. It is NOT “talent, brains, grit, luck or connections.” The biggest predictor of success is being part of an open network. To explain what an open network is the author defines its opposite – a closed network. A […]Read More

Will Rates Fall Again? Yes, But Probably Not Soon

Barry Habib is a relatively famous mortgage industry pundit and a Broadway musical producer (l learned today) who was on The National Real Estate Post today discussing the future of interest rates. He has a lot of credibility in the industry as of late b/c he has become relatively skilled at predicting interest rate movements, […]Read More

“This was the worst week for mortgage rates in 3 years – and it may be just the beginning”

Rates fell sharply on Wednesday and everyone breathed a sigh of relief and started locking like crazy. But then rates shot up again yesterday and a friend of mine sent me this link to a short CNBC article with a title that I borrowed for the above subject line. Here are the article’s key points: […]Read More

More Condo Reminders – Non QM; Owner Occ Ratios; Condo vs. Townhome; 12 Considerations

Below are a few more reminders for condo buyers. Non-QM Loans for Condos There is a condo complex near our office that is still 25% owned by the developer. This is a deal-killer for Fannie, Freddie, FHA and Jumbo lenders. But, we have a Non-QM investor that has no issue with this. So, this is […]Read More

Condo Spot Approvals (again), Reserves, Time-Frames; Rate Volatility

RATE VOLATILITY On Monday, a top producing loan officer/friend told me over dinner how much he loves the lack of volatility in the current rate environment. He explained that it allows him to float (not lock in rates) for many of his borrowers until he has the time and capacity to process their loans. But […]Read More

What Are iBuyers (Zillow/Opendoor) Really About? Lead Gen, Revenue Growth & Friction

Inman has a great video about iBuyers (companies that buy homes directly from consumers) called “Battle of the Behemoths” and it conveys a really interesting perspective. Zillow hopped into the iBuyer market for reasons many don’t understand. iBuying for Revenue Growth First of all, Zillow’s revenue growth from their “Premier Agent” program (selling Zillow leads) […]Read More

Will a Recession Tank Housing Prices? Probably Not…

I know numerous people who are anxiously waiting for the next recession b/c they expect housing prices to tank. They can’t wait to swoop in and find bargains like the many that were available after the 2008 meltdown. BUT, according to Appraisal-Blogger-Extraordinaire, Ryan Lundquist, housing prices don’t always “correct” or decrease during recessions. Prices often […]Read More

FHA: “Condo Complexes No Longer Have to Be FHA Approved” – Spot Approvals Return!

About ten years ago “FHA Spot Approvals” went the way of the dodo bird, in that they disappeared. This was devastating to a lot of FHA buyers b/c condos were all that they could afford in their markets and so many condo complexes are NOT FHA approved. Fortunately, however, HUD/FHA will again allow for “Spot […]Read More

Bankruptcies Up; How Long Do They Have to Season for Mortgage Financing?

In another indication that we are at the tail end of a business growth cycle, Bankruptcy (BK) filings are increasing even though the economy remains relatively strong. BK filings were up 3% year over year in July, with 64,000 filings nationwide. And, almost 800,000 people are expected to file for BK protection by year-end, as […]Read More

Luck vs. Talent; The Risk of Confusing the Two

One of my favorite podcasts is “How I Built This,” as I mention often. In the podcast, entrepreneurs tell their stories (often terrifying) of what it took to get their companies off the ground. There are usually two recurring themes: (1) the founders had to go through hell and back to achieve their success and […]Read More

Bridge Loans; Buying Before Selling – Best Financing Option

BUYING BEFORE SELLING Sellers often want to buy a new home before selling their current residence for a variety of reasons. They might want more time to move, more time to fix up their current house before selling, or more time to fix up the new house before moving in. They also sometimes want to […]Read More

Fannie & Freddie Breaking Off From Government Control?

INTEREST RATES COULD SHOOT UP AT ANYTIME We often remind both borrowers and agents that interest rates are generally expected to remain low for some time, but that does not mean they cannot shoot up unexpectedly. Our point is that both buyers and current mortgage holders should take advantage of today’s low rates now before […]Read More

Credit Inquiries – Way Too Much Concern

Over 500 borrowers come to JVM every month seeking mortgages. And way too many of them are far too concerned about credit inquiries. It is our strongest borrowers who are often the most concerned, which is ironic b/c they are the least affected by credit inquiries. This is b/c credit inquires only affect a strong […]Read More

No Appraisals For Loans Under $400,000; “New Home Premium;” Appraised Value’s Not Market Value

I want to share a few more interesting comments about appraisals today. On Wednesday I blogged about how appraisers can’t ignore comps that don’t support value. The agents wanted us to use dated comps and ignore more recent comps, but appraisers of course can’t do that b/c underwriters and reviewers will see the ignored comps […]Read More

WeWork’s Pending Crash; Expanding During Good Times?

Scott Galloway is an NYU business professor and entrepreneur whose commentary I love! Recently, he has been beating the heck out of WeWork and what he says is a ridiculous over-valuation. For those of you who don’t know, WeWork is a shared-office-space-provider that caters to entrepreneurs and small business people, and it is currently booming. […]Read More

Why Appraisers Can’t Ignore Comps That Hurt Value

The 1990s were good and bad for appraisers. They were bad b/c appraisers had to use analog sources (books and printouts) to find comparable sales; they were not online. They also had to take analog photos and glue them to old fashioned paper reports. The 1990s were good for appraisers b/c there were no appraisal […]Read More