SAN FRANCISCO BAY AREA REAL ESTATE NEWS : October 2009

I have had real estate owners in San Mateo County ask me - what is a private money loan? A private money loan is a real estate loan funded by non-institutional sources.

Non-institutional sources of private money loans vary. The source could be an individual. Often it is a group of people who have pooled some funds together. 

There are companies that specialize in the placing and funding of private money loans. These companies serve at least two important functions.

The first function they serve is the marketing of the availability of private money loans. They often post ads on Craigslist, trade publications, and other marketing vehicles to let both the public and mortgage brokers know that they have funds to lend.

The second function they serve for the private money source is similar to a funnel. They receive loan scenarios and toss out the ones they know that the private money source will not be interested in. They package the files that fits the source's interests, present the file, and receive approval.

Why would someone become a private money lender? Generally speaking, a private money lender gets a generous percentage return that is secured by real estate. To the lending source, it is an investment of their money. It is an investment alternative, just like investing in the stock market is an investment alternative. 

Why would someone borrow private money funds? Well, that will be the subject of my next post that will tell the top ten reasons why someone would want or need a private money loan.

The terms of a private money loan are usually much different than the terms that banks offer. One major difference is the length of the term. Generally, private money loans are no longer than five years.

Another difference is the interest rate. Private money rates tend to be higher than the rates banks offer. Higher rates make sense because these loans are usually riskier.

The fees associated with a private money loan are usually higher than bank loans. It's not unusual to pay anywhere from three points to eight points to obtain a private money loan.

With the tightening of underwriting guidelines by banks, private money loans, I predict, will gain market share in the near future. 

If you need help with a private money loan in San Mateo county, or anywhere in California, you can contact me and I will try to help you.

Jumbo Loan Blog

Get Your Mortgage Phil

What's moving in the Baywood Neighborhood?  Here is a list of the active properties both single family homes and condos 

Update on the active properties in Baywood  neighborhood.  There has been some movement in the neighborhood. With properties priced right, they don't last long. If you or someone is looking in the Beresford Manor neighborhood please feel free to contact me.

Have a great day!

Jim Light

www.interorealestate.com/agent/jameslight

What's moving in the Beresford Manor Neighborhood?  Here is a list of the active properties both single family homes and condos 

Update on the active properties in Beresford Manor neighborhood.  There has been some movement in the neighborhood. With properties priced right, they don't last long. If you or someone is looking in the Beresford Manor neighborhood please feel free to contact me.

Have a great day!

Jim Light

www.interorealestate.com/agents/jameslight

What's moving in the Beresford Manor Neighborhood?  Here is a list of the active properties both single family homes and condos 

Update on the active properties in Beresford Manor neighborhood.  There has been some movement in the neighborhood. With properties priced right, they don't last long. If you or someone is looking in the Beresford Manor neighborhood please feel free to contact me.

Have a great day!

Jim Light

www.interorealestate.com/agents/jameslight

What's moving in the San Mateo Village Neighborhood?  Here is a list of the active properties both single family homes and condos 

 Update on the active properties in San Mateo Village neighborhood.  There has been some movement in the neighborhood. With properties priced right, they don't last long. If you or someone is looking in the Fiesta Gardens neighborhood please feel free to contact me.

Have a great day!

Jim Light

  www.interorealestate.com/agents/jameslight

Here is a list of the active homes for sale in the San Mateo Westwood Knolls neighborhood.

Update on the active properties of the San Mateo Knolls neighborhood.  There has been some movement in the neighborhood. With properties priced right, they don't last long. We had a recent house on Winway that our office sold in one week with multiple offers. If you or someone is looking in the San Mateo Westwood Knolls neighborhood please feel free to contact me.

Have a great day!

Jim Light

www.interorealestate.com/agents/jameslight

  Are you looking for a show/play?   Here's one that I think everyone would enjoy.

Jake's Women is a play by Neil Simon. It centers on Jake, a writer with a struggling marriage. Jake talks to many of the women he knows, both in real life and in his imagination, as he works to save his marriage. Jake, suffering with psychosis and seeing representations of his daughter at age 12, his late wife Julie and recently divorced wife Maggie, is dealing with the inability to write productively and must resolve these issues before he does so.

This fantastic show will be held at St. Ignatius College Prep High School located in the Sunset District of San Francisco.  Tickets are $10 at the door or online at 

http://www.siprep.org/performingarts/fallPlay/FallPlay1.cfm

Come out and support the High School and enjoy a wonderful show.   Showtime is 7 pm Oct 27th through Oct 30.  Don' t miss out!

Stop by a say hello. I'll be running the concession stand.

Have a great day!

Jim Light

Many homeowners and home buyers in California have probably heard of a bridge loan but do not know what it is or who should obtain one.

A bridge loan is usually a short-term loan (usually written for three months to three years) that provides funds to buy real estate from a piece of real property that an owner has an intention of selling, but will not close before escrow closes on the new property. 

This transaction is called a bridge loan because these funds "bridge the gap" between the closing of two transactions. 

Let's look at an example of a bridge loan. Bill and Betty Buyer would like to purchase their California dream home for $800,000. The down payment required is 20%. They have enough money saved for the closing costs and cash reserves, but little else saved.

Their current home is worth $500,000. The existing balance on their mortgage is $50,000. They have $450,000 in equity.

Bill and Betty would like to make an offer on the new home non-contingent on the sale of their current home. How, they wonder, can they make this offer?

Enter Bob the Bridge Loan Guy. He tells Bob and Betty that he can help them obtain a $210,000 loan on their current home ($160,000 for the down payment plus $50,000 to pay off their current mortgage). Bob the Bridge Loan Guy has figured out that the Buyers can qualify for both the bridge loan and the purchase loan because their debts on both the current home with the bridge loan and the new purchase loan are less than the maximum amount of debts to qualify.

The Buyers successfully make their offer and close escrow 30 days later. Another 30 days later they close escrow on the home they listed for $500,000. They use $210,000 from the proceeds of the sale to pay off the bridge loan, and use the other $290,000 in proceeds to pay down the new mortgage.

A few important tips you should know if you are considering a bridge loan:

• You must be able to qualify for the bridge loan and the loan to purchase the new home.
• There is no guarantee that your current home will sell quickly. How long can you afford to pay mortgages on two homes?
• A bridge loan is usually more expensive than other types of loans. Consider other types of financing (do you have an equity line of credit available, for example?)
• A bridge loan may be available with stated income under the new Reg Z guidelines as of October 1, 2009.

Stated income loans are still available in Lake Tahoe. As of October 1, the rules have been changed regarding stated income loans. However, Lake Tahoe has many homes that are either second homes or rental properties. Second homes and rental properties are exempt from the new laws regarding stated income loans.

If you own or want to buy a second home or rental property in the Lake Tahoe area, there are stated income loans available for:

• up to $10 million
• unlimited cash-out
• flexible credit scores 
• up to 75 percent of the property value
• bridge financing

In San Bruno on Wednesday October 21st from 6:30 to 8:00, Sylvan Learning Center will be hosting a free seminar about the stress of college test prep. The seminar is called "Test Stress: A Parent's Real Guide to College Test Prep".

Is your teenager about to take the SAT/ACT/PSAT/NMSQT or starting to think about college? If yes, then you should attend the session. This FREE, fun, interactive seminar will provide tips on helping your child deal with the stress and anxiety of taking the test. This fact-filled seminar delivers advice and pointers from leading college admissions experts to help navigate through the test-taking season and develop a high school action plan to be college ready.

The San Bruno Sylvan Learning Center is located at 751-A Camino Plaza. To register for this free college test prep seminar you can call or e-mail Jennifer Huckins. Her phone number is 650-636-1200, and her e-mail address is jhuckins@bayareasylvans.com

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Phil's Home Finance