What's the difference between a jumbo loan and a conventional loan?

The major difference between a conventional loan and a jumbo loan is that conventional loans are limited to dollar amount set by Fannie Mae; Jumbo loans are loans of any amount above that limit. See below for more details...

Conventional Loans

Conventional loans are probably the most common type of mortgage loan. Conventional loan qualification is determined based on income, employment history, debt, and credit score. There are also conventional loan limits. In Oregon, it is currently $484,350 in most areas. Generally, conventional loans require at least a 3-5% down payment. Additionally, if your down payment is less than 20%, you will be required to pay private mortgage insurance (PMI) until you reach at least 20% equity. PMI insures the lender in case of default. Once you reach 80% equity, the PMI goes away.

Jumbo Loans

Jumbo loans are very similar to conventional loans but the criteria for qualifying is stricter because they don’t have the loan limits that conventional mortgages do. In Oregon, any loan over $484,350 is considered a “jumbo” loan. Qualification for a jumbo loan uses the same criteria as conventional loans, but usually requires a higher down payment, income, and credit score due to the higher amount of money being loaned.

Have more questions, or want a referral to a good lender? Contact us, and we’ll be happy to help you!

 

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Many real estate investors wonder if it’s worth the hassle of investing in property outside of the state that they reside. The short answer is yes… but you need to be aware of the different regulations other states may have for purchasing investment property.

For instance, loan limits can vary by area. One example is that Oregon’s conforming loan limit is about $484,350, while some areas of California are as high as $726,525. Additionally, the lender and real estate agent you plan on using will both need to be licensed in the state where you’re purchasing property (not where your home base is). Being able to find professionals you trust is of key importance, since you will primarily be dealing with them remotely. If you need recommendations for out-of-state resources, we can help!

(scroll down to find out more...)

It’s also a good idea to buy property in an area that you’re familiar with so you know what different neighborhoods are like, and can narrow down exactly where you’d like to purchase your investment property.

Another thing to consider when buying investment property in another state is how easily you can travel there. The upside of traveling for your out-of-state investment property is that it can be tax-deductible. Keeping this in mind may encourage you to purchase an investment property somewhere you actually enjoy visiting!

Have more questions, or want a referral to a professional in another state? Contact us, and we’ll be happy to help you!

 

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The statewide average of error on assessed property value is a whopping 11%! This means you may be paying more property taxes than necessary on your home.

Why is there such a high percentage of error? Multnomah, Clackamas, and Washington counties have dedicated staff that search through home listings looking for recently-improved properties in order to raise assessed values and collect more taxes. Typically, they are looking for “assumed remodels.” When they find an assumed remodel, they will look at the final occupancy permit (issued by the contractor once the remodel is complete and the home is move-in ready) for the increased value of the property. Unfortunately, remodeling contractors will often erroneously include costs on the final occupancy permit that are not associated with home value, such as dumpster rentals, porta-potty rentals, or remodeling materials. If you are remodeling your home, make sure to ask the contractor not to include these costs on the occupancy permit.

(scroll down for more information...)

When you get your tax bill in November, look over it carefully to make sure the numbers are accurate. Check to see if an increased assessed value is correct and not due to any sort of “maintenance improvement”. For example, new paint or carpet, a roof replacement, or new furnace should not count as added value. What should be included as added value are structural changes like a bedroom addition, a kitchen/bath remodel, or finishing a basement. If you find errors in your assessed value, you have one year to contest it, and can only argue one year’s worth of taxes (unless the increase is 20% over the market value, in which case you can contest the past two years of taxes).

How do you contest your home’s assessed value? The best way to appeal your assessed value is by using comparable (similar) properties in your neighborhood that are more representative of your property’s current value. Have this information prepared and outlined before your scheduled hearing because you will only have 10-15 minutes to make your case. Make sure your evidence is strong and to the point! In all cases, the property assessor is assumed correct unless you can prove otherwise. And, of course, reach out to us if you have questions! We have great professionals that can help you contest your property taxes.

 

For more information, check out our "Dear Claire" Facebook Live series.

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Tax season is upon us! If you're gathering all your documents together to file your taxes, you're not alone. We've compiled a list of documents you'll need for you or your tax preparer to file this year:

• Your W-2 or 1099 from your employer.
• A copy of your property tax bill for 2018.
• 1099s from all your mortgage holders (lenders). Remember, mortgage interest is deductible for up to $750,000 in mortgage loans. 
• A copy of your settlement statement for any property bought or sold in 2018. There may be other deductions here!

 

For more information, check out our "Dear Claire" Facebook Live series.

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According to the latest real estate statistics from RMLS,  the Portland metro area saw a decrease in average home sale price, down to $448,900. Median sale price in the Portland metro area also went down, to $391,400. The number of days homes are on the market increased by 4, now up to 57 days. This indicates that prices are slowly decreasing and inventory is slowly increasing. 

Wondering what this means for you? Contact us! 

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

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There are several differences between condos, townhouses, and co-ops, the largest being that co-ops are not considered “property”, whereas condos and townhouses are.

When you own a townhouse, you own the interior of your unit, the exterior walls outside your unit and land that your unit occupies, but not the common areas. When you own a condo, you own the interior (walls in) of your unit, but not the exterior walls, land, or common areas.

With a co-op, you own “shares” of the building equal to the value of the unit you occupy, but not the unit itself or any part of the building, structure, land, or common areas.

Another difference is that townhouses and condos are often part of a homeowner’s association that manages the common areas, and may also manage the exterior maintenance of the structure, in exchange for HOA dues. HOAs are often run by property management companies, which are also paid for through the HOA.

Additionally, with townhouses and condos, you may sell your unit of your own accord, to whomever you choose, without approval from the HOA. In other words, you are not subject to any restrictions on who you sell to. Also, with townhouses and condos, you can often make interior improvements without approval from the HOA.

(keep scrolling to learn about co-ops!)

With co-ops, on the other hand, you usually pay a higher monthly “maintenance fee” to the co-op board (all of the share owners), that go towards maintenance, repairs, and taxes. Additionally, co-ops are subject to many restrictive rules when selling your shares (all new owners or renters must be approved by the board), and you must get board approval before making any changes to your unit.

Another significant difference between townhouses and condos verses co-ops are that the latter do not qualify for traditional home mortgages. A co-op would require a loan to purchase shares, rather than a mortgage to purchase property (such as a condo or townhouse).

It’s important to know the difference between these three types of housing, so you know what your individual responsibilities are, as well as what type of loan you may qualify for to purchase.

Purchasing a co-op is often a more complicated process than purchasing a townhouse or condo, so it’s important to plan accordingly if you plan on going that route. Note, however, that co-ops are not very common in Portland, and are found most frequently in New York city.

Have more questions? Contact us! We're always happy to answer any questions you may have about your different home purchase options.

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

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Defined, “leverage” is the “borrowed capital for (an investment), expecting the profits made to be greater than the interest payable”. So, what is leverage in real estate? Essentially, leverage in real estate is the loan used to buy property, and the amount of potential profit earned during ownership. The amount of leverage you have in real estate depends on several factors: how much cash you’ve invested in the property (think down payment or repair costs), the amount of the loan and interest rate, and the appreciation in property value (the more appreciation, the more your investment is worth and the more profit you will gain from selling it).

In other words, someone that invests a small amount of money in a property and has more liquid assets to invest in something else generally has more leverage than someone who invests a large amount of money and cannot invest in anything else (their entire investment would be in one place, in this case, the property they purchased). Additionally, if both people have equal amounts of liquid assets available for the purchase of real property, the person with the smaller cash investment would see a greater percentage return on that investment.

As an example, take a piece of real estate that will sell for $100,000. Investor A could pay all cash and investor B could put 20% down (or $20,000) and take out a loan for the remaining 80% (or $80,000). If we assume the house appreciates by 10%, investor A (the all cash buyer) would have made a profit on their initial investment of 10% ($10,000 profit divided by $100,000 initial investment). Conversely, investor B (the buyer who used leverage) would have had a 50% gain on their original investment ($10,000 profit divided by $20,000 initial investment). Additionally, investor A would now have $80,000 less cash to invest than investor B because he has $80,000 more cash tied up in this property.

(Scroll down for risks in using leverage)

Leverage works great in an up market, as in the example above; however, it can be risky in a down market. Taking the same example above, if there were a downturn in the housing market and a 10% decline in the home value, the all cash investor has lost 10% of their initial investment, while the leveraged buyer has lost 50% of their initial investment.

As such, it is wiser and more advantageous to use leverage in the real estate market over a sustained period of time (generally five or more years) because historically, real estate has been shown to increase in value over the long-term. It is much riskier to use leverage over a short-term period of time because the market is much less predictable from year to year, than from decade to decade.

Have more questions? Contact us! We're always happy to help you fully understand your options.

 

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Join us this weekend in Piedmont for an open house at this NEW LISTING: a beautiful and highly energy efficient home!

7418 N Williams Ave, Portland (map/directions)
Listed at $450k
Open House: Sunday, 11/11, 1 - 3p

A beautiful 3-bedroom, 2.1-bathroom home in NE Portland's Piedmont neighborhood, near parks, restaurants, and shops. This home lives bright and airy thanks to an open living room/dining area, warm fireplace, beautiful kitchen, & powder bathroom on the main floor. Upstairs there's plenty of room for visiting guests thanks to two well-sized bedrooms and a full guest bathroom. Create your own master bedroom sanctuary with its own bathroom including a dual vanity and walk-in closet. The deck and fully fenced backyard is a perfect spot to enjoy warmer mornings with a cup of coffee - or to build a snowman in the winter. Listed by: Claire Paris of PGR

Look forward to seeing you this weekend! Can't make it to an open house? Give us a call to schedule a viewing ASAP at 503-998-4878.

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

Join us on Tuesdays at 1p for our "Dear Claire" Facebook Live series. Subscribe to our YouTube channel today to help us reach our goal of 100 subscribers.

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Schedule

Schedule

Join us this weekend in Piedmont for an open house at this NEW LISTING: a beautiful and highly energy efficient home!

7418 N Williams Ave, Portland (map/directions)
Listed at $450k
Open House: Saturday, 11/3, 1 - 3p

A beautiful 3-bedroom, 2.1-bathroom home in NE Portland's Piedmont neighborhood, near parks, restaurants, and shops. This home lives bright and airy thanks to an open living room/dining area, warm fireplace, beautiful kitchen, & powder bathroom on the main floor. Upstairs there's plenty of room for visiting guests thanks to two well-sized bedrooms and a full guest bathroom. Create your own master bedroom sanctuary with its own bathroom including a dual vanity and walk-in closet. The deck and fully fenced backyard is a perfect spot to enjoy warmer mornings with a cup of coffee - or to build a snowman in the winter. Listed by: Claire Paris of PGR

Look forward to seeing you this weekend! Can't make it to an open house? Give us a call to schedule a viewing ASAP at 503-998-4878.

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

Join us on Tuesdays at 1p for our "Dear Claire" Facebook Live series. Subscribe to our YouTube channel today to help us reach our goal of 100 subscribers.

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Schedule

Schedule

Schedule

In our last blog post, we explained why you may want to refinance your home loan; which means paying off your current mortgage with a new mortgage. Homeowners often take advantage of this option to have a more desirable mortgage loan, usually at a lower interest rate or over a shorter period of time.

In today's post, we're explaining what to expect when refinancing a home.

Our big tip: Different lenders have different home refinancing loans to offer, so it’s good to shop around periodically to see if there’s a better mortgage loan available to you. Pay attention to all the fine print to make sure you are getting a better refinanced mortgage than the one you already have.                               

How to Refinance Your Home in 7 Simple Steps

1. Determine Your Financial Goals

• Estimate how long you plan to live in your home.
• Consider every debt and how much interest you are paying.
• Review your current mortgage terms.
• What do you expect to achieve by refinancing?                

2. Talk to More Than One Lender

• You don’t have to refinance your home with your current lender! This is something homeowners don’t always consider; or they assume the options will be the same with every lender.
• You should get 3-4 refinancing loan quotes from lenders to make sure you are getting the best deal.

3. Apply & Receive a Pre-Approval

• When you’ve found the best refinancing loan offer - and have reviewed for any unexpected fees and costs - submit your application to the lender! The mortgage company will review your current and past finances to see if you qualify for a good mortgage refinancing option. This review could include your income, credit, assets, and property type.

(Keep scrolling for knowing when the property review takes place and our tips for refinancing.)

4. Wait for the Appraisal & Property Review

• A title report will be requested and the homeowner’s insurance binder will be ordered.
• The lender will hire a licensed appraiser to make a complete assessment of the current value of the property. The appraiser is an impartial party who will visit your home to take notes and pictures before making a final assessment. The terms of the loan will be based on the appraiser’s property value.
• The appraiser could determine that your home is worth more or less than you and your lender expected, which would then change the terms of the refinanced loan.

5. Receive the Official Approval

• All of the information on your financial position and the property will be carefully evaluated by an underwriter. At this point, you may need to provide additional documentation so that the underwriter can make a properly informed decision.
• When the underwriter has made a final decision and approved the loan terms, you will receive an approval letter with all the terms of the new loan.
• Read through the terms carefully and look for any unexpected expenses that might cost you more money over time.

6. Submit Documents & Sign the Papers

• After the underwriter has cleared your documentation, the refinanced loan documents will be prepared and delivered to the title company.
• The escrow office will receive the loan documentation from the lender, prepare the new documents, and contact you to sign.

7. Start Fresh With Your New Mortgage Terms             

• The funds will be released for disbursement once the lender has reviewed everything and all the terms have been met.
• When all the funds have been disbursed, the title company will record your new lien at the county.
• Depending on your new loan terms, you can now enjoy a lower monthly payment, plan for a shorter loan term, or use the money you received to improve your household’s finances!

Helpful Tips for Refinancing
You can save yourself money and create opportunities by refinancing your home mortgage. To make sure your refinancing process is as successful as possible, save these tips:

• Be prepared financially and with proper documentation.
• Understand the mortgage process.
• Avoid high fees and credit issues.
• Read the terms of the new loan carefully.
• Compare the benefits of the new loan vs. your current loan.
• Ask your lender about anything you’re not sure of.

Knowing what to expect when refinancing your home will help the process go more smoothly. It’ll also make it easier to understand the terms of the new loan and the differences between your current loan and your new refinanced loan options. Remember the goal of any refinancing process is to put you in a better financial position now and in the future!

Have questions? Give us a call! We're always happy to help you fully understand your options.

 

Follow our Facebook events page, or visit our Instagram or Twitter feeds to see the most current open house updates and details.

Join us on Tuesdays at 1p for our "Dear Claire" Facebook Live series. Subscribe to our YouTube channel today to help us reach our goal of 100 subscribers.

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Schedule

Schedule