Monthly Archives: April 2014

Middle class losing lower mortgage rates perk

An interesting story from the April 26th Boston Globe…
For three decades, the American middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates.

Imran and Aniqa Jaswal, with daughters Jayda and Arissa, bought their first house in La Jolla, Calif., where, they say, you can’t find a house below jumbo mortgage prices.
mortgage-rates-2-year-highNow, even that perk is fading away.

Most ordinary home buyers are paying the same or higher rates than the fortunate few who can afford much more.

Rates for a conventional 30year fixed mortgage are averaging 4.48 percent, according to Bankrate. For ‘‘jumbo’’ mortgages, those above $417,000 in much of the country, the average is 4.47 percent.
This trend reflects the widening wealth gap between the richest Americans and everyone else. Bankers now view jumbo borrowers as safer and shrewder bets even though conventional borrowers put less capital at risk.

Even as the overall housing recovery has slowed, sales of homes above $1 million have surged in the past year. Price gains have been so great in some areas that middle-class buyers are straining to afford even modest homes. They are also facing tighter lending rules, larger down payment requirements, and a shortage of houses for sale.

It used to be that rates for conventional mortgages would be 0.2 to 0.3 of a point below rates on jumbo mortgages. A decade ago, a conventional rate averaged 5.68 percent, a jumbo 5.97 percent. The advantage for middle-class borrowers was possible in part because government-chartered firms guarantee that lenders will be paid on a conventional mortgage even if a borrower defaults. No such guarantee exists for jumbos.

Two factors have caused the spread between conventional and jumbo rates to vanish:

The government in 2012 began raising the fees it charges lenders for guaranteeing payments on conventional mortgages. Lenders passed along that increase to borrowers in the form of higher rates. The fees are meant to stop home buyers from once again borrowing more than they can afford, a trend that fueled the 2007 housing bust.

Bankers say they have begun using mortgage rates to woo high net worth clients: Attractive rates on jumbos have become a way to secure additional business from those clients, from managing their investments to supplying a broad suite of financial services. Also, those borrowers tend to be clustered in neighborhoods that lenders consider more stable.

‘‘Jumbo borrowers represent the holy grail of what financial institutions are pursuing: that much-desired, mass affluent consumer,’’ said Greg McBride, a senior analyst at Bankrate.
In the first three months of 2014, 37 percent of the money Bank of America lent for mortgages went to jumbos, compared with 22 percent at the same point last year.
The lower rates are geared for affluent borrowers living in ‘‘sweet spots’’ with strong employment and stable home prices — areas like metro New York City, Boston, and sections of California, said Matt Vernon, who leads consumer mortgage lending at Bank of America.

‘‘We’re lending where we believe home ownership is sustainable,’’ Vernon said.

Wells Fargo offers jumbos starting at 4.25 percent, about 0.25 point lower than for conventional mortgages. This month, Wells trumpeted the spillover benefits of increased jumbo lending: A 14 percent year-over-year increase in loans from its separate ‘‘wealth, brokerage, and retirement’’ division.

Sales of homes exceeding $1 million leapt 7.8 percent over the past 12 months. That contrasted with a 7.5 percent drop in overall home-buying in that period, according to the National Association of Realtors.

Prices have appreciated in areas such as San Francisco, New York, and Washington, which have higher thresholds for jumbo mortgages than the national average. Jumbos in these cities are for loans above $625,500, about $200,000 more than the national average.

Jumbos are a necessity for nearly everyone in communities such as La Jolla, Calif. That is where in February, Aniqa Jaswal and her husband, Imran, bought a four-bedroom house near the beach.

‘‘There are no homes below jumbo mortgage prices here,’’ Jaswal said.

Not even jumbo borrowers feel completely safe. Some are borrowing in anticipation of setbacks in an economy where bills can multiply even when incomes barely budge.

One is Stephanie Kellen, who in December refinanced her home in Marin County, Calif., with a jumbo. The lower than-usual jumbo rate helped replace a line of credit for her husband’s auto repair business.

Invest In Real Estate Like A Pro With These Quick Tips

Real estate investments are still going strong and will probably continue to be a popular method of financial gain into the future.

Real estate is solid. It is a tangible product that is attractive to both beginning investors and experienced pros. The most important part of getting started in real estate investing is knowing what you’re getting into and what to watch out for.
Here are 4 top tips from real estate investment professionals:

Understand The Realities
Real estate investment, like any form of investment, is risky. Do not use money you cannot afford to lose. Careful study, understanding the market, and practice help alleviate a lot of the risks but things happen in the best of situations so don’t play with what you can’t afford to lose.

Research Is A Constant
Research in real estate investment isn’t something you do once. Research is constant. It is a daily part of your efforts and should always be at the forefront of your mind. From changing banking methods to market changes, researching and learning must be ongoing to be a successful real estate investor.

Know The Property
Research isn’t limited to financing and the real estate market. You need to thoroughly investigate each property before you buy. Fill out an investment worksheet to see if all the costs associated with the purchase will allow a satisfying profit.

Learn About Personal Protection
Taking risks with the money you have set aside for investment is one thing. Taking risks with your family’s savings, property, and other assets is another. Consider starting an LLC. You can choose from a single LLC to cover all of your real estate holdings, or having a separate LLC for each property purchased.

And most importantly, hire an experienced real estate attorney.

Fitzgerald Law Offices Launches New Webiste

Computer_EasterBunny-A3_037_thPlease take a minute to view our new website and client reviews. If your website needs to be refreshed I would highly recommend DeBlasio New Media Marketing ( or give Dave a call at 508-944-6579.

The Spring Market is in full swing. If you or someone you know is buying or selling have them give me a call.

Happy Easter!

-Fitzgerald Law Offices

Ten Reasons Why You Should Hire a Real Estate Attorney

For most people, buying a home is the largest and most significant purchase they’ll ever make.

Whether you’re buying or selling, hiring a real estate attorney early in the process will protect you against the unexpected, and ensure a smooth and low-stress closing.

1. A real estate lawyer will protect your rights and interests in the transaction…they are the only party truly “on your side.”

2. A real estate lawyer has the experience and training to handle the unique issues regarding real property, and the problems most people can’t anticipate. They see a lot of contracts and know the local customs, and can help cut through roadblocks.

3. Your attorney will review, amend and modify the brokerage contract during the attorney review period. Most “boilerplate” agreements don’t offer buyers and/or sellers the protection they deserve.

4. Your lawyer will review the purchase agreement. Suppose there’s an illegal structure on the property, or termites, radon, lead paint, asbestos, or other potentially hazardous waste? Inspection contingencies need to be clearly defined. At this point in the process, if you back out of the deal, what happens to your deposit?

5. Your attorney works with your mortgage loan officer, the other party’s attorney and agents to make sure that dates are set for attorney approval, home inspection, title search, mortgage commitment and other contingencies.

6. Your attorney will also review important documents, including legal descriptions, mortgage loan documents, the property survey, and the title and the title insurance policy.

7. Your attorney will review the deed, to ensure there are no errors in the legal description. Even simple mistakes – a name misspelled, for example – can create big title issues.

8. Your attorney attends the closing, to ensure the process moves along efficiently and effectively. In the case of problems/issues, the attorney will counsel and represent you.

9. Your attorney has no direct emotional involvement in the transaction, and no conflict of interest. You’ll appreciate a level-headed counselor by your side if the situation becomes difficult.

10. You’ll receive something of great value: peace of mind!