California Home Prices Soaring

According to the California Association of Realtors (C.A.R), median home prices topped $400,000 in April for the first time in five years due to the high demand and tight inventories.

This makes for a very competitive purchase market, producing multiple bids - many over list price.  Consult  a Realtor in your area for expert advice or ask me for a professional referral.

It also allows homeowner who have been unable to refinance their existing home mortgage the past five years an opportunity to review their existing equity position.  Of course, many underwater homeowners were assisted with a loan through the HARP (learn more here) program.  However, many mortgages were ineligible for a variety of reasons.  So, now may be a great time to take advantage of a refinance if your mortgage note rate is over 4%.

Please feel free to contact Craig at Southwest Direct Mortgage, LLC with any mortgage questions in Arizona or California.  Craig has over 20 years of finance industry experience as a mortgage banker and entrepreneur.  

Craig Turley

NMLS 80917

480-385-1422

Source:  Mortgage Daily News

USDA Mortgages and Swimming Pools

Are you in the market for a rural property in Arizona or California? 

If so, you may be eligible for a mortgage through the USDA rural development program.  There are several restrictions and guidelines which need to be considered when shopping for a home in a rural area including income and address guidance.  You can find more about USDA mortgage loan eligibility here.  

Another tricky guideline, for residence of Arizona and California, is the swimming pool restrictions on USDA loans.

For years properties that included an in-ground swimming pool were deemed ineligible for a USDA Rural Development Loan. This guideline has recently changed over the last few years, however, there are specific guidelines and math which needs to be applied. 

For properties that include an in-ground pool the appraiser must determine the value of the property with and without a pool. The appraiser must justify their determinations of value. This may include the use of additional comparable homes of similar size but without a pool. Essentially the appraiser is providing the value of the home as-is with the pool and a value of the home based on the assumption that it didn't have a swimming pool.

(Image:  www.guy-sports.com)

If the purchase price of the house exceeds the value of the property without the swimming pool the difference must be paid for by the buyer. For example the following generic scenario:

Scenario example:

• Sales Price $100,000
• Property appraised value including pool:  $105,000
• Property appraised value excluding pool:  $95,000
• Value added with pool by appraiser:  $10,000
• Maximum base loan amount:  $95,000
• Down payment required by borrower at settlement:  $5,000
• The current up-front guarantee fee for purchase transactions is 2 percent, an amount which can be included in the loan. The maximum loan amount would be $95,000 plus the two percent guarantee fee.

So, for properties in sun states, such as Arizona and California where swimming pools are more common, the Buyers Agent should review comparable sales of similar houses without an in-ground swimming pool to ensure that purchase price of the house their Client is making an offer on can be supported by the appraisal report based on these guidelines.

(Source:  USDA RD AN 4701)

Until Next Time,

Craig Turley

Contact Craig today if you have a question about USDA mortgage eligibility or any other program questions which may benefit you as a Realtor or Borrower.  Allow Craig's 20 years of mortgage and finance experience benefit you!