Newest Monthly Housing Newsletter

Greg Kiely Operations Manager Brookline Office 191 Grove Street Brookline, MA 02467 Newton Centre Office 10 Langley Road Newton, MA 02459 Direct Line: 617.762.3512 Cell Phone: 617.217.8875 Toll Free: 888.731.8875 Email: greg@thebrooklineconnection.com View My Listings Mortgage Calculator View My Site My Bio Page Find a Home Mortgage Company Insurance Company

Hi Brookline Buyers & Sellers, Below are the links to the monthly housing newsletter for Brookline. Each link brings you to a printable snapshot of last month's real estate activity for our town and our town only. If you would like other towns, please post a comment below and I will gladly customize a newsletter for you. Brookline (Single-family residential) Brookline (Condominium) Brookline (Coop) Please feel free to contact me if we can be of any assistance. All information provided is deemed reliable but is not guaranteed and should be independently verified.

If you cannot refinance, why not recast?

With the wildly fluctuating mortgage market of late we've seen a boom in refinance applications. Rates change rapidly and the cost/benefit difference doesn't quite pay enough to jump fully into a refinance in a lot of cases for people who have bought in the last three years. One option that banks don't advertise a lot (because it actually costs them money in the long run) is the mortgage recast. In essence, if you have extra money (bonus or tax refund/rebate) and you are wary of the stock market, why not arrange to "pay down" your mortgage a little bit and then adjust your monthly payment off of the new mortgage amount.

For example:

$300,000 owed on a house - a 6% rate would have you paying roughly $1,800 a month. $1,500 of that would be interest to the bank.

Put $25,000 into a recast and the bank will adjust your principle and interest payment to $1650 a month.

You would turn your $25,000 in to a 30 year savings of $54,000. If you do this a few times over the life of the loan, or if you have a larger chunk to put down you can very quickly reduce your monthly payments.

Lending Issues with New Condo Conversions

On Wednesday I made reference to changes within the lending industry that will not get much national media play but will be critical to North Brookline buyers. New condo conversions are any apartments buildings that are being occupied by individual owners for the first time. Typically lenders would waive their owner occupancy ratio limits for new conversions because it would be impossible for a new conversion to have any owner occupancy. For any buyer who was paying less than 20% down at closing the lenders were required only to do a "limited review" of the condominium.

From 2003-2007 properties like Cypress Lofts, Longwood Towers, The Warwick and Washington on the Square became popular with many people who did not necessarily want or have the ability to put 20% down. The appreciation rate was so steep that it made sense to put down as little as possible (in some cases $0 down) to grow your investment. With these limited reviews the first owners of a condo building (whether 4 units or 400) would get by without the viability of the overall project being questioned by the lender.

What's happening today is almost all lenders are calling for an immediate "full review" of the condominiums for any buyer who puts down less than the "standard" 20%. This will mean that everyone who buys early into the project will need to put down more money than the last buyers will to get loan approval. This also means that in some of our neighboring markets like Allston and Brighton buildings which have a high number of rented units will also be subject to these reviews. The only buildings that will be exempt are buildings in which the sale in question would put the owner occupancy at 50% or higher.

Credit Crisis: The Sky is not Falling - Brookings Institution

Credit Crisis: The Sky is not Falling - Brookings Institution

This paper was published recently on the mortgage, credit and housing "crisis" we are all hearing about in the major U.S. media outlets. Coming from such a respected source, it is important that people who try to be informed about housing and financial issues read and have an understanding of what is being said here. In fact, I still need a few more reads through it before I can glean enough information to fully process what has been written.

Take a look and combine it with information that is starting to come out which indicates that 2008 could be a turn-around year in certain housing markets. At the end of the day, what matters is your comfort level in investing a minimum of a quarter of a million dollars (and that's the bare bare minimum here in Brookline). Like every "market" we can look at supply and demand figures. As far as I know there are very few if any "new" homes being built anywhere in Brookline. Therefore the available supply will always be capped. The demand (buyer pool) is pretty consistent as well. Medical Residents will always move in for short-term (2-5 year) stays and the academic community will always provide a constantly regenerating pool of consumers interested in living here. Therefore, while markets will ebb and flow, Brookline will be a more stable investment than almost any other community. These factors will not change which should be comforting to all who are currently invested here.

What do you think?

We're in the final week of October now and we're about to turn the corner into the Holiday Season. How have you found the fall market? Are there properties which have interested you? How has the mortgage crunch affected you? Why are you or aren't you involved in the market? Post your comments below.

5 Things You Should Expect in a Mortgage?

My TiVo Home Screen today had the Bank of America paid advertisement for "5 things you should expect in a mortgage." I would not be doing my job if I didn't check it out, so here goes:

You can go online and apply for this mortgage with no application fee. From there you can get pre-qualified in minutes. After that, you pay no PMI (private mortgage insurance), you pay no closing fees and then they have a "best value guarantee." Finally they offer a "close on time" guarantee.

Let's break this down:

1) No application fee, but is there a processing fee, a credit report fee, an appraisal fee, a title fee?

2) Pre-qualified in minutes through their website, but is your application going to someone who understands that yes, a condo might actually be worth $2,000,000 where you live?

3) No PMI. Sounds nice, but let's just look at the news recently. It seems to me that the stock market just dropped everyone carrying "risky" loans on their heads. PMI is insurance the lender takes out when less than the traditional 20% of the purchase price is being but down up front. How does the lack of PMI affect the rate?

4) You pay no closing fees. Sounds great, but what about closing costs? There is an underwriting fee, a document recording fee, there are title fees, and then each bank has a closing attorney they have to employ. These are just a very few of the things that you need to close EVERY loan, at least here in Massachusetts. So who pays them? I promise you Bank of America is not paying those costs themselves. Take a look at your APR or your rate as well as your "Good Faith Estimate of Closing Costs" that each and every lender must provide by law to every borrower prior to closing.

5) You will get the best "value." Now, that's a little subjective, isn't it? What determines value? Who dictates which part of it causes the best "value" return. Nowhere do they say you get the best rate or the lowest closing costs. Simply put, there are a TON of holes in this.

6) Close on time guarantee. Well, that means that within their window to turn things around, they will close on time. An airline can schedule 3 1/2 hours for a 2 3/4 hour flight. If they land at 3:05 they got you there "early" right? Can they close the loan from application to payment in less than 30 days? Can they adjust on the fly if something comes up in your purchase and sale and has to be dealt with?

My experience with large, non-community banks, is you're in a lot of trouble when it comes time to getting a loan approved for "high-value" real estate markets. The loan processor in Indiana does not know what they're looking at when the appraisal is submitted and thinks that our real estate values are completely out of whack. Also, is your loan origination team going to be able to sit down with you (or your agent) in person to talk through the speed-bumps that come up in the process? Are they going to have an attorney who you have access to available to help settle any issues? Finally, with no PMI, are they going to be able to guarantee a competitive rate?

My advice: find a local lender. They can work for a major national company (Countrywide, Wells Fargo, etc...) but make sure the team you are dealing with knows your town well and can go to bat for you when the going gets tough. Also, make sure you find someone who will give you an honest answer when things start to go wrong. I've seen good lenders swoop in and save a deal with 24 hours notice, and I saw one truly impressive one close a loan that another bank had messed up with literally hours to spare before Christmas Eve.

Bank of America is fine for your checking account or your debit card, but let's leave lending to the few people out there who are still going strong and know how to do it.