Tahoe Real-tor Talk: No time like the present to buy a Tahoe home
May 8, 2017
Simply put — this is a great time to purchase a house in beautiful Lake Tahoe!
The rising cost of housing is a constant battle here, with rents seeming to rise continually. We live in one of the most beautiful places in the country, if not the world, which as we all know attracts visitors from across the globe. Competition for housing is so fierce that throughout California the media sites a "housing shortage."
My prediction: We will see more inventory come on the market this summer. Historically we see this annually, but after such a huge snow year, some homeowners may think enough is enough. For those of us committed to the Tahoe lifestyle and with a certain amount of perseverance, we will make it work.
Can you buy now, or do you need a short-term plan in place to do so? Ideally you could be paying your own mortgage and not your landlord's, all the while receiving some great tax deductions. Because there are so many loan programs available, it is an optimal time to purchase. I recently closed a house on an FHA (Federal Housing Administration) loan for a local family whom I am happy to say will no longer will have to rent.
"The entire family loves Tahoe! There are so many fun things to do during any season. The best thing about being a home owner in Tahoe is that we are investing in our future and in a place where we vacationed previously. The children are elated because there are so many adventures close to home — I highly recommend buying now. The monthly cost associated with a mortgage is very close to rental prices — it only made sense to buy and put our money back into our pockets instead of paying someone else's mortgage," says Bridgit Brockett.
Ryan Loeb, a lender for Luxury Mortgage Corp., closed the FHA loan for the Brocketts and has been in business for over 20 years. His advice is to get pre-approved rather than pre-qualified. This is so you definitively know the loan amount for which you will be approved. Once Pre-approved, make sure you consider the following:
Avoid cash deposits of any kind into your bank account. Cash is difficult to source for lenders so it has to be deducted from the ending balance on your statement.
Do not allow your credit report to be pulled for any reason. Inquiries can come back to haunt you as they can adversely impact your credit score. Some investors will not accept borrowers that have excess inquiries on their credit. These inquiries can be interpreted as your having been denied by other lenders.
Limit the use of your credit cards. Any time balances increase and are reported to credit bureaus, your score will likely be impacted adversely. While shopping for a new home, the expectation is that you will be in a "pay-down" mode.
Anything from the moment of pre-approval forward should be paid via a check or debit card from the same account provided to your lender. If at all possible, limit transfers. Your lender will have to provide bank statements showing where those transfers originated from.
Respond to all email and phone requests regarding your loan immediately. This will ensure that your loan closes on time.
Don't be late on any of your payments. Late payments on credit will affect your scores. Being late on rent or mortgage will affect your approval. More than one late in the last 12 months will prevent you from being approved.
Do not change jobs or fields of work. If you plan on doing this, please call your loan specialist before doing so. Your loan specialist will have to make sure the income from your new job will work for your loan amount.
No large purchases. Large credit purchases can affect your debt ratios. So if you buy things after a lender pre-approves you, it will significantly impact your pre-approval amount.
"You will be surprised how many areas in California are eligible for no money down with a USDA loan. Also we just partnered with USDAloaninfo.com. This is by far the best home loan product on the market and their site does a great job explaining how the loan works and to address any false information people have heard about the program. My company hired … two of the five people that started this loan program for lenders (called 502 Guaranteed USDA loan) and helped us get this partnership with them," commented Loeb.
FHA loan 101
Another great option for a first time home buyer is an FHA loan. The basic eligibility requirements for an FHA loan include:
3.5 percent down payment required with own funds or a gift from a relative.
620 credit scores or above (exceptions can be made down to 550).
Debt to income ratios cannot exceed 55 percent.
Must not exceed the FHA county loan limit.
Primary residence. This loan cannot be used to purchase a vacation home or second home. However, FHA financing can be used to buy a primary home for a family member.
Does not have to be a first time home buyer.
Negatives of FHA
FHA has a very low down-payment (3.5 percent), you will end up paying more interest than if you had a conventional loan with a 20 percent down-payment.
The annual mortgage insurance (monthly PMI) is the highest of any loan product offered currently.
The up-front mortgage insurance is 1.75 percent of the purchase price, which is higher than USDA loans that have 1 percent.
Once you buy a home, you cannot use it for another home purchase down in the future, unless you meet very specific criteria or sell/refinance the current home.
Another great lender, and he is local, is Ron Shaw from Guild Mortgage. He said regarding interest rates have risen slightly but are still low since the latest presidential election. For most owner-occupied and second-home transactions, assuming good credit rates, are in the low 4 percent range and even the high 3 percent range for 30 year fixed rates. I asked him what his prediction is for 2017.
"It will be full of surprises. Right now affecting rates positively is the unrest in Syria and [North] Korea … should these settle down you most likely will see investors moving out of safe haven bonds and back into the equities markets, i.e. stock markets. That said we could see tensions escalate and thus drive rates lower. … Of course the economy plays a major role … should we begin to stall out, rates will stay lower and if we heat up rates should follow suit," Shaw said.
I know it is all a lot to absorb, but locals there are many great options out there to purchase a home and truly become a local and settle down here in Tahoe. If you would like these lenders contact information, please contact me. Also when you are ready to buy I am a local Realtor who would love to guide you through the process and get you your own Tahoe home.
Jennifer Fortune is a Realtor for Chase International South Tahoe Realty. Fellow Realtors, if you have ideas for stories or would like to share a story, please contact Fortune at firstname.lastname@example.org.