Top 10 Tips for Buying a Home in the San Francisco Bay Area

August 1, 2019 ~ Rob Spinosa ~ Leave a comment

Buying a home in the highly competitive San Francisco Bay Area real estate market is a daunting task for nearly everyone. Tales of heartache abound — “everything goes for over asking price,” “we don’t stand a chance against all-cash offers,” “everything we want is out of our price range,” etc. If you only listened to the naysayers, you might not even set foot in the arena. As a lender who has observed the home purchase market, specifically over the last decade (2009 to 2019), I wanted to share my Top 10 tips for succeeding with your goal of home ownership. No doubt about it, it’s a worthy one despite all the challenges. I’m confident this advice will help you too:

Get financially prepared. Before entering the housing market, establish a household budget and some fiscal boundaries. These will get tested but go through this exercise anyway. Then spend the few hours necessary to organize all of your financial documents amassed over the last two years. You’ll need some of them but reviewing all of them will provide firm financial footing for the next steps.
Choose a lender but avoid the high-cost options that abound. I’m not going to name names, but as a veteran of this industry I can and will tell you which lenders will NOT be competitive for the type of loan you may need. The reason I’m aligned with Guaranteed Rate is because we have many options and we deliver these at competitive pricing. You should not have to settle for either service or rates. You can get both.
Get pre-underwritten. First get your pre-approval with the lender of your choice, but then escalate this to an underwriting approval. It will help your offer when the day comes and it will help you close quickly once in contract. This is competitive leverage you may need.
Choose your real estate agent wisely. If I could give advice to my younger, home-buying self, it would be to always align with a Realtor that knows your target market in a dominating manner. If you understand your finances and the geography in which you want to live, finding a real estate professional who masters that market will put your offers in the best light. A great agent will have a sixth sense about any specific market inside (properties not yet listed) and out (properties on the market, and for how many days and why). Need a referral? Ask me.
Kiss a few frogs. Buying a home is a process and not an event. If you find a property that fits but you’re not 100% sure you’ll get it, I encourage you to take that shot. The process will educate you and the results, assuming you don’t get it, will prepare you for the emotional roller coaster that may come ahead.
Don’t be deterred by the competition. Still, nearly every desirable home we see come on the market will elicit multiple offers. You will need to swim with other, bigger fishes, so be prepared to do so. We see some buyers decide to not even make an offer simply because the listing agent might say there are 12 disclosure packages out on a home. So what? Kiss the frog anyway.
Be the strongest buyer you can be. Take enough shots and you will run up against all-cash buyers, higher offers, faster closes and generally, competition that is the proverbial “bigger, faster, stronger.” All you can do is control what you can control. Be the strongest buyer you can be. That doesn’t mean you can or will be the strongest buyer, period. But you don’t control that last part.
Be flexible. As the Brits might say, you may find a spanner thrown in your works at some point. Perhaps the price point will force you to consider a different mortgage option. Perhaps you’ll have to consider buying before you sell your current home. Whatever the case, don’t let the perfect be the enemy of the good. If you can successfully buy in a tough market, you may be able to improve your loan terms later, if indeed you had to make a sacrifice in order to get in.
Warm socks and shoes will help. Cold feet are a killer. Buying a home in the Bay Area is for grown-ups. Once you’ve had your offer accepted and are in process, take a one-way train to your destination. Cold feet, buyer’s remorse, or whatever you call them are all normal human emotions but keep them in rightful check. Like Napoleon said, “If you start to take Vienna, take Vienna.”
Expect to win. Sellers, or at least good sellers’ agents, can read your mind. They can tell how many offers you’ve made, how many open houses you’ve visited and whether you are serious about buying their home. Even if you’re in the “fake it till you make it phase” of your search, a great way to convey conviction is to expect to win. An attitude of “this is the place we want and we will get it,” is electric and it transmits directly to the other party.

My wife and I bought our current home in 2016. The market then, as now, was fast, tough and unforgiving. We did not win on our first try, or second, or third. We could not sell our existing home in time to buy the new, so we had to be flexible on the loan program we chose, opting for 15% down instead of a 20% down payment, for example. Even though I am in the mortgage industry, I had to collect and organize all of our financial data, just as my clients do. We were not immune from underwriting scrutiny and requests for more information. We chose a Realtor who was an expert in our target neck of the woods and we learned from our heartbreaks. When an ideal match finally came along, we placed the best offer we could, informed by the experience we’d gained over previous attempts. We were prepared to lose, but we expected to win.

We love the place — one of the best decisions we’ve ever made — and we are not the only ones who’ve had this experience. Far from it. Are you next?

Sittin’ by the dock,

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

I Got Another Rate Quote. Can You Beat It?

March 7, 2019 ~ Rob Spinosa ~ Leave a comment

Talk may be cheap, but money is not. And you can bet your bottom dollar that most consumers seeking to get a mortgage will shop for the best rate quotes through any number of ways; their local bank, the internet, etc. We will often get requests to match or beat rate quotes as a result. Instead of publishing rates and promising that we’re the cheapest and best source for all rate shoppers, which is something that is frowned upon by the regulators of our industry, I instead want to shed some light on some of the governing principles that guide rate quotes from any and all lending sources. Below are three constants that apply in each case and to all shoppers for all programs.

[Too lazy to read the rest? Watch the rockin’ video below for all the information covered in this blog!]

Follow the Regs

With the passage of the Dodd-Frank Wall Street Financial Reform Act, the mortgage industry became subjected to the ‘anti-steering provision’ which prevents a mortgage loan originator from earning any more or less in commission depending on the rate charged to the consumer. In short, whether we provide you with a 3%, a 4% or a 5% rate, our compensation is the same. We have no incentive to put you into a program with a higher rate. In fact, you could argue that we have an incentive not to do this. After all, lower rates give an edge in winning rate competition and they bestow more qualifying power on the borrower. But there is an ugly side to the anti-steering provision — the lender’s inability to leverage their compensation to be more competitive. For example, prior to Dodd-Frank, originators had flexibility with their commission. If they needed to cut it in order to win a deal, they could. But now, our regulators say that if we had the ability to charge less to Consumer A, who does a lot of homework and negotiates strongly, what would prevent us from raising our compensation on unsuspecting Consumer B? The ability for us to negotiate is largely a thing of the past. Sure, we can submit for price exceptions on occasion, but they are just that — the exception. And the rule severely limits a lender’s ability to match or beat.

Time Is of the Essence

In real estate, we write “time is of the essence” into our contracts and this philosophy holds true with rates too. Just like the stock and bond markets, rates fluctuate every day and sometimes even multiple times when the markets are especially volatile. So it is vitally important that consumers shop for rates on the same day. A common scenario we see will have a borrower apply for a home loan in, say, January. Maybe they will get all the way to the altar with a pre-approval but then not find a property. During that process, the lender likely quotes a specific rate. Now, fast forward a few months and the borrower is working with a different lender and gets a quote that is higher or lower. This does not necessarily mean that the second lender’s rates are organically any better or worse. It might simply mean that the market has changed during the interim. So, collect your rate quotes on the same day if you’re comparing multiple sources. It may be time-consuming but it’s the only way you can truly be accurate.

The WebMD Syndrome

Lastly, when pitting one source of rates against another, make sure they’re all on equal footing in terms of the depth of the quote. Look at it this way. If you wake up one morning with a rash, you can research your symptoms online and get an idea of your condition. Or you can actually visit your doctor who will do a physical exam, perhaps blood work and then give you a diagnosis. Now you have a choice, you can follow the instruction of the doctor or of the internet. You see where I’m going with this. So too in the field of rate quotes, if you have had a lender pull your credit, review your complete application and provide terms for your loan, placing this on equal footing with an online quote could be risky. Rate quotes for jumbo mortgages are most sensitive to the finer qualifying attributes of the applicant and for this reason, I highly advise those in the jumbo market to get a complete credit approval prior to comparing rates.

I have always believed that an educated and informed consumer is our best client. And this applies to rate shopping as well. I similarly feel we always have a very strong chance of earning business based on available rates so long as quotes are on a level playing field, and getting the shopping public up to speed on this is something I’m very happy to do. If we can help you with your next home mortgage, let me know!

No one wants to be defeated,

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

Can You Get a Mortgage with an ITIN?

January 31, 2019January 31, 2019 ~ Rob Spinosa ~ Leave a comment

The fact is, despite a very hotly contested immigration debate today in our nation, there are likely several million people in the United States who do not have a Social Security number (SSN), but pay billions in taxes every year. These individuals might be non-resident foreign nationals who receive taxable income from a US business. Or they may be dependents or spouses of citizens or permanent residents (green card holders) or foreign nationals on work visas. But if they earn income here, how would they file a tax return without an SSN, you might ask? The answer is the Individual Taxpayer Identification Number or “ITIN.”

Now again, we’re not going to takes sides in the immigration issue here. We are not going to report ITIN borrowers to Immigration and Customs. ITINs do not provide legal immigration status or work authorization — they are merely an IRS tool for permitting an individual to comply with tax laws and as a result when they do, some of them become eligible for a mortgage via specific programs that accommodate this type of identification. Many ITIN holders and real estate professionals are not aware of this and the aim of this post is to outline what is required to obtain a home loan with a combination of an ITIN, employment documentation, residency documentation, and, of course, a down payment. Let’s take a look at what’s possible.

On the purchase of a home, an ITIN buyer will typically need to put between 25% and 30% of the purchase price down, and these funds will need to be documented with bank statements and/or gift letters, just as for a US citizen. Money from abroad can be used, but must be sourceable. We’ll also look at income and employment with a combination of one year of tax returns and written and verbal verifications of employment. Our borrower must be working and able to repay the loan.

Since an ITIN borrower will not, by definition, have a Social Security number, our investor will pull a version of a credit report using the ITIN number. And herein lies an important caveat for the ITIN borrower. If his/her tax return contains a false SSN or otherwise invalid ITIN, the borrower would not be eligible. We are not interested in financing those who are working outside of the tax system and perhaps fraudulently using another’s ID forms. Our borrower must be legitimately filing with an ITIN for the last year. In order to calculate liabilities correctly a complete list of obligations will be used to determine debt-to-income (DTI). We will often reference the history on any credit cards, auto loans, etc., to verify satisfactory payment history.

We offer fixed rate loans to our ITIN customers and loan amounts can go from $100K all the way into jumbo territory. For details on programs, rates and terms, don’t hesitate to get in touch. But know that if you’ve been working in the US and paying into the system, yet don’t have a Social Security number, you are not, by definition out of luck.

Hey, teacher, leave those kids alone,

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960

Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283