South Orange County Blog from Bob Phillips

How To Improve Your Credit Score For Better Financing Terms

How To Improve Your Credit Score For Better Financing TermsImagine that you’ve found the perfect home and are ready to apply for financing. Your home loan approval amount comes back lower than you would have expected and at an interest rate significantly above what you have heard is available on the market.

This could be because you have an average to poor credit score.

Mortgage lenders base interest rates on many things, but your credit score plays a large part. Anything between 720 and 850 will typically qualify for better interest rates. A mediocre score is usually between 660 and 719, and a low score is 659 and under.

If you have a lower score than you’d like, below are a few traits for you to follow of people who possess higher credit scores and secure the best home financing.

They don’t max out their cards.

It’s better to keep a low revolving balance on a few cards than to spend every dime allotted on one. The ratio of credit card balance to your credit limit is called credit utilization. The higher your credit utilization, the larger affect it can have one your credit score.

They make payments on time.

This is very likely the most important tip for your credit health. If you miss a payment on a term loan, credit card account or monthly home bill, then you could be turned over to collections, which will affect your score negatively.  You will almost surely be reported as late to the credit bureaus, which will in turn drop your credit score precipitously. Absolutely make all of your payments before their due date.

They stay with one card.

Don’t close and open credit card accounts frequently. Each time you make a change to your line of credit, it affects your score. Even if you don’t want to be tempted to use a credit card, keep the account open and leave the card at home. According to the Fair Isaac Corporation (FICO), high credit achievers have accounts that are usually at least 11 years old.

Excellent credit could qualify you for a better interest rate, which might save you thousands of dollars over the life of the loan. So stay on top of your monthly credit bills and keep a low balance on just a few cards to watch your score steadily increase.

If you’re ready to learn more about your ability to purchase a home in South Orange County, call me,  text me, or shoot me an email.  Then, let’s go house shopping!

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5 Important Tips To Help Smooth Your Move When You Have Teens In The Home

Posted in Home Buyer Tips, Home buying, Home Selling, Home Selling Tips, Real estate, Real Estate Tips by southorangecounty on June 27, 2013

5 Important Tips To Help Smooth Your Move With TeensYou’ve got a new job offer across the country and you are planning to pack your things, buy a home and make the big move.

However, when you tell your 17 year old daughter your plans, she lets out a mournful wail and cries that it is not fair. How can you possibly take her away from all of her friends, her favorite hangout spots and the cute boy she just started seeing?

Moving is a difficult transition and it is often even more traumatic for teenagers. The teenage years are an important stage where young adults establish their individuality and independence and during this time their social circle is extremely important to them.

Being removed from that against their will can make any teen feel sad, confused, angry and resentful. Also, fitting into a new social scene in a different location can be a challenge for a teen that might be singled out as the “new kid”.

How can you help your teen during this transition so that the experience will be easier on them?

5 Tips To Help Your Teen Move More Smoothly

Here are some tips that will make the experience of moving a little bit easier on your teenager:

  • Give them as much notice as possible so that they have time to adjust to the idea of moving. They will feel like they have enough time to say goodbye to their friends and close a chapter of their lives.
  • Try to schedule the move around the school calendar, as moving in the summer is much less disruptive to your teen’s life than relocating in the middle of the school year.
  • Make sure that they have ample time to spend with their close friends before they leave and once you arrive, understand that they might go through a grieving process of missing their old pals.
  • When you get to your new home, make sure that your teen has plenty of ways to keep in touch with their old friends, such as an internet connection and a cell phone plan.
  • Encourage your teen to get involved in the community of your new hometown, like joining sports clubs or attending events. This can help them to make new friends.

Moving to a new city is always exciting but offers challenges like this one for families. For more advice on moving to ( Or moving from.)  a new South Orange County home, give me a call or text – 949-887-5305, or shoot me an email at

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Home Prices Record Highest Monthly Gains Since Case Shiller Index Inception

Home Prices Record Record Month To Month GainsThe S&P Case-Shiller Home Price Indices for April indicate that the housing recovery gained ground.

In April 2013 average home prices tracked in the Case-Shiller 10 and 20-city Composites increased by 11.60 and 12.10 percent year-over-year. On a month-to-month basis, the Composites increased by 2.60 and 2.50 percent respectively.

According to David M. Blitzer, Chairman of the S&P Dow Jones Indices’ Index Committee, the 10-and 20- City Composites experienced their largest month- to- month gains since their inception: “Thirteen cities posted month- to-month gains of two percent or more, with San Francisco leading with a month-to-month gain of 4.90 percent.”

The 10-and-20 City Indices reported the highest year-over-year gains in home prices since 2006.  Cities where home prices gained more than 20 percent year-over-year included Atlanta, Las Vegas, Phoenix and San Francisco. Phoenix posted its 12th consecutive month of double-digit increases in home prices while San Francisco home prices increased year-over-year by an average of 23.90 percent. Home prices increased year-over-year in 19 the 20 cities included in the 10-and 20 City Composites, with home prices in Detroit remaining flat.

Mortgage Loan Requirements Showing Signs Of Loosening

Mr. Blitzer also noted that according to the most recent Fed Senior Loan Officer Opinion Survey, some lenders are beginning to relax credit requirements for mortgage loans. This good news, along with the availability of adjustable-rate mortgage loans is expected to help with maintaining affordability and providing access to homes for more buyers.

According to the S&P Case-Shiller 10-and-20 City Composites, home prices fell approximately 26 to 27 percent from their highest in June 2006 to their lowest in March 2012. As of April 2013, average home prices had recovered by 13.10 percent for the 10-City Composite and 13.60 percent for the 20-City Composite.

More Reports Show Ongoing Housing Recovery

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported that home prices increased an average of 7.40 percent year-over-year as of April 2013, and rose by 0.70 percent between March and April 2013. While this data fell short of an expected month-to-month increase of 1.10 percent, Average FHFA home prices were 11.70 percent below their peak in April 2007.

FHFA bases its report on sales of homes financed with mortgages owned or securitized by Fannie Mae and Freddie Mac.

The U.S. Commerce Department reported that sales of new homes reached a five-year high in May, the highest level since July 2008. May sales increased 2.10 percent between April and May 2013 to a seasonally-adjusted annual rate of 476,000 homes. This represents a year-over-year increase of 29 percent from May 2012.

While rising mortgage rates and home prices may slow demand for homes, economists don’t believe that either factor will halt the housing recovery. A good next step is to give me a call, or to shoot me an email, to talk about about current home values and loan options in and around South Orange County.

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Interest Rates Begin Their Ascent

Posted in Mortgage Rates, Real Estate Trends by southorangecounty on June 25, 2013

Interest Rates Begin Their Ascent

By Kevin Budde, of Prime Lending, June 25th, 2013 


On Wednesday, June 19th, the Federal Open Market Committee met and released to the markets their intentions to limit their $85 Billion a month subsidy of interest rates. Since that date mortgage backed securities have risen approximately one-percent causing a selloff in the stock market and disruption to buyers wanting to purchase or refinance. 

There is a big concern with real estate agents and homebuyers as to the overall effect and if the recent Case-Shiller Housing Report of a 12.1% increase April over April will be dampened. There is a saying that the best way to judge the future is to examine the past. 

The chart below is a 38 year history of the 30 year fixed rate mortgage average in the United States. Coincidently, I started my career in the mortgage business 38 years ago so I have personally experienced the effects of the ups and downs of the interest rates on this chart.  In 1981, I personally had a 15.25% mortgage and thought it was a good deal at the time. After all, rates were 17.5%


Look at 2003 to 2008 and you will see, during the boom years of the housing bubble, interest rates were in the 6% range. From 2009 to now you can see how rates declined due to the Federal Reserve Board easing to assist with the housing crisis. As the housing market continues to recover over 2014 and 2015 interest rates will return back to the 5% to 6% range as the subsidy is removed from the system. 

While we have experienced historical lows in interest rates over the last 3 years, it’s hard to say in a relative terms, interest rates are bad, when you review this chart“.

Kevin Budde, of Prime Lending has been one of my preferred lenders for more than 25 years.  I wholeheartedly recommend his team, here in South Orange County.

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The Real Reason People Leave California For Texas

Posted in home affordability, Home Values, Household Finances, Real estate, Real Estate Trends by southorangecounty on June 25, 2013

From Jed Kolko, of Business Insider

Texas Governor Rick Perry has been touring the country, urging companies to move to Texas for low taxes and business-friendly regulation.

u-haul van

Perry’s right that Texas has been growing like crazy, adding jobs and population even at a time when the national economy has written.

But he’s not exactly right about why.

I sat down with Jed Kolko, Chief Economist at Trulia, to discuss the biggest reason people move from California to Texas: Cheap housing.

Click below for the video, from

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3 Clever But Simple Ways To Get Your Home Mortgage Paid Faster

3 Clever But Simple Ways to Get Your Home Mortgage Paid FasterPaying off the mortgage on your home faster means that you will not only have the satisfaction of owning your own home sooner, you will also have the benefit of paying much less in interest over the years.

The faster you pay off your mortgage, the more money you can save, so here are some tips to accelerate your payment schedule.

Pay Your Mortgage Every Other Week (Bi-Weekly)

Did you know that if you take your monthly mortgage payment and divide it in half and then pay it every two weeks that you will end up making a full extra month of payments every year? This is called a bi-weekly payment program which has been around for a long time, and it’s still a good idea today!

You likely won’t notice the difference since the extra half payments occur in long months with bigger paychecks, but over the years this will end up saving you thousands of dollars in interest payments.

Make a Bigger Monthly Payment

Similar to the bi-weekly payment plan above, you can accomplish the goal by dividing your principal and interest portion of your payment by 12 and then adding that amount to your regular monthly payment.  You will be paying that extra payment every year, but spacing it out over each monthly payment.

Most homeowners using this tactic can shorten their term by up to seven years.

Put Any Windfall Toward the Mortgage

Was your tax rebate larger than you expected? Have you received an inheritance from your great aunt Thelma? Have you won a cash prize in a contest?

Put any unexpected chunks of cash straight toward your mortgage instead of spending them. This won’t affect your budget at all, because you were never expecting or counting on that money in the first place. But once again, it can make a huge difference in the overall amount of interest that you pay on your mortgage loan.

However, keep in mind your particular situation. Spending every last penny paying off your mortgage as quickly as possible might not be the best option for you if you have no emergency savings fund or if you have a credit card languishing with high interest debt.

It is usually more important to deal with these pressing financial issues before attempting to save money on your mortgage.

One great way to start your research on how to pay your South Orange County home off faster is to talk with your trusted mortgage professional.  ( If you don’t have such a person, I have a couple who I can wholeheartedly recommend.)  They can answer your questions and point you in the best direction for your situation.

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What’s Ahead For Mortgage Rates This Week – June 24, 2013

Posted in Housing Analysis by southorangecounty on June 24, 2013

What's Ahead For Mortgage Rates This Week - June 24, 2013Comments by Fed chairman Ben Bernanke after Wednesday’s FOMC meeting caused havoc in financial markets as investors anticipated the potential effects of any rollback of the Fed’s policy of quantitative easing (QE). Chairman Bernanke said that the Fed may begin reducing its $85 billion monthly purchase of Treasury securities and MBS toward the end of this year.

The chairman made it clear that any decision concerning QE would be based on careful review of current and developing economic conditions. QE is intended to keep long-term interest rates low; any reduction of the QE securities purchases could cause mortgage rates to rise.

Economic News Bodes Well For Housing

The week’s other economic news included more good news for housing. The NAHB/WF Housing Market Index for June came in ahead of expectations at 52, which surpassed the expected reading of 45 and May’s reading of 44. Any reading over 50 indicates that more builders surveyed believe that housing market conditions are positive.

Tuesday was busy for economic news. The Consumer Price Index for May rose from April’s reading of –0.40 percent to +0.10 percent in May, which was below expectations of +0.20 percent.

The Department of Commerce released its Housing Starts Report for May; the reading for May missed expectations of 953,000 housing starts and came in at 914,000 which exceeded April’s 856,000 housing starts. Increasing the number of available homes could help steady recently increasing home prices, but existing homes remain in short supply in many areas.

Fed Expects Moderate Improvement Continuing For Economy

Wednesday’s news involved the Fed’s FOMC meeting and press conference. The Fed stated after the meeting that it expects moderate improvement in economic condition and noted that housing, which was a primary cause of the economic downturn, is now leading the economy’s recovery.

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell from 3.98 percent with 0.7 percent discount points to 3.93 percent with borrowers paying 0.8 percent in discount points.  The average rate for a 15-year fixed rate mortgage fell from 3.10 percent to 3.04 percent with 0.7 percent in discount points for both weeks. Investor response to the Fed’s mention of possibly reducing its QE program is likely to send mortgage rates up next week.

The National Association of REALTORS® released its Existing Home Sales report for May. Existing home sales came in at 5.18 million and beat projections of 5.00 million and April’s sales of 4.97 million existing homes.

Increasing sales of existing homes is good news as demand has exceeded supplies of existing homes in recent months. High demand drives up home prices and impacts affordability along with rising mortgage rates.

What’s Ahead For This Week

Next week’s scheduled news includes a number of housing related reports, FHFA Home Prices, the Case-Shiller Home Prices Report and New Home Sales are set for release Tuesday.

The Gross Domestic Product Report comes out on Wednesday. On Thursday, data for weekly jobless claims, consumer spending and pending home sales will be released.

Friday brings the Chicago Purchasing Managers Index and the Consumer Sentiment Index.

The data released in these reports will continue to inform the Fed’s decision-making with regard to bond purchasing and interest rate policy. It’s possible though, following the aggressive market sell-off activity from last week, that we may see a softening in long-term rates over the course of this week.

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Selling a House? 5 Reasons You Should Do It Now

Posted in Existing Home Sales, Home Selling, Mortgage Rates, Pending Home Sales, Real estate, Real Estate Tips by southorangecounty on June 21, 2013

five fingers


Selling a House? 5 Reasons You Should Do It Now

by THE KCM CREW on JUNE 17, 2013

Many are talking about why now is a great time to buy a home. Today, we want to look at why it might also be an opportune time to sell your house. Here are the Top 5 Reasons we believe now may be a perfect time to put your house on the market.

1.) Demand Is High

Homes are selling at the fastest pace since November 2009 when the market spiked in response to the home buyer tax credit. The most recent Existing Home Sales Report by the National Association of Realtors (NAR) showed that monthly sales increased 9.7% over the same month last year. Total sales have been above year-ago levels for 22 consecutive months. There are buyers out there right now (buyer traffic is 31 percent stronger than a year ago) and they are serious about purchasing.

2.) Supply Is Beginning to Increase

Total housing inventory last month rose 11.9% to 2.16 million homes for sale. This represents a 5.2-month supply at the current sales pace, compared with 4.3 months in January. Many expect inventory to continue to rise as more sellers escape the shackles of negative equity. Selling now while demand is high and before supply increases may garner you your best price.

3.) New Construction Is Coming Back

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. These ‘shiny’ new homes will again become competition as they are an attractive alternative for many purchasers.

4.) Interest Rates Are Rising

According to Freddie Mac’s Primary Mortgage Market Survey, interest rates for a 30-year mortgage have shot up to 3.98% which represents a jump of more than ½ point since the beginning of the year. Even those trying to be the voice of reason on this issue are projecting higher rates. For example, Polyana da Costa, senior mortgage analyst said:

“Rates are unlikely to keep going up so quickly and should remain below 5%.”

Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

5.) It’s Time to Move On with Your Life

Look at the reason you are thinking about selling and decide whether it is worth waiting. Is the possibility of a few extra dollars more important than being with family; more important than your health; more important than having the freedom to go on with your life the way you think you should?

You already know the answers to the questions we just asked. You have the power to take back control of your situation by putting the house on the market today. The time may have come for you and your family to move on and start living the life you desire. That is what is truly important.

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The Federal Open Market Committee Holds Steady With Mortgage Backed Security Investments

Posted in Federal Reserve by southorangecounty on June 21, 2013

The Federal Open Market Committee Holds Steady With Mortgage Backed Security InvestmentsThe Federal Open Market Committee (FOMC) of the Federal Reserve decided to continue its current policy of quantitative easing (QE) based on current economic conditions. The Fed currently purchases $40 billion in mortgage-backed securities (MBS) and $45 billion in Treasury securities monthly.

Objectives for the QE program include:

  • Keeping long term interest rates, including mortgage rates, low
  • Supporting mortgage markets
  • Easing broader financial conditions

FOMC repeated its position of evaluating QE policy based on inflation, the unemployment rate and economic developments.

Members of the FOMC determined that keeping the federal funds rate between 0.00 and 0.25 percent until the following conditions are met:

  • National unemployment rate reaches 6.50 percent
  • Inflation is expected not to exceed 2.50 percent within the next one to two years
  • Longer term inflation expectations are “well-anchored.”

Committee members agreed to consistently review labor market conditions, inflationary pressures and expected rates of inflation and other financial developments for determining their course of action on QE.

In its post-meeting statement, FOMC asserted that any changes to current QE policy would be taken in consideration of longer range goals for maximum employment and an inflation rate of 2.00 percent.

Fed Chairman Gives Press Conference

After the FOMC statement, Fed Chairman Ben Bernanke held a press conference which provided details about the future of QE and how the Fed will “normalize” its monetary policy. Chairman Bernanke noted that as QE is reduced and eventually stopped, the Fed will not be selling its MBS holdings.

This is important, as demand for MBS is connected to how mortgage rates perform. If the market is flooded with MBS, demand would slow, and prices would fall. When MBS prices fall, mortgage rates typically rise.

According to Chairman Bernanke, the FOMC does not see any immediate reason for changing its purchase of Treasury securities and MBS in the near term, but will continue to monitor conditions. Using the analogy of driving a car, the chairman indicated that the Fed’s intent regarding QE and the federal funds rate would be better compared to easing up on the accelerator rather than putting on the brakes.

Chairman Bernanke also characterized benchmarks cited in connection with increasing the federal funds rate as “thresholds, and not triggers.” This suggests that even if national unemployment and inflation reach Fed targets, that other economic conditions occurring at that time could cause the Fed to alter its plan for raising the federal funds rate.

The Fed chairman said that during Wednesday’s FOMC meeting, 14 of 19 participants did not expect changes to the federal funds rate until 2015, and one member didn’t expect a change until 2016.

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Five Reasons Housing Inventory Will Begin to Rise

Five Reasons Housing Inventory Will Begin to Rise

Five Reasons Housing Inventory Will Begin to Rise

By    of        June 19, 2013

Before you rush out to buy a home, consider the fact that inventory levels are beyond dismal at the moment, though there’s a good chance that could all change rather quickly.

If you’ve already begun your property search, you probably already know inventory is virtually non-existent in your desired neighborhood. If you haven’t, prepare to be shocked.

There’s even concern that the shortage of inventory could be further exacerbated by the recent surge in mortgage rates, as would-be buyers jump off the fence and rush to buy before affordability gets any worse.

But I don’t believe things will go that way – in fact, I think it’s going to be quite the opposite.

And there are already signs that housing inventory is rising. A recent report from Redfin revealed that active listings increased 6.4% between March and April, and 4.2% between April and May.

Compare that to last year, when inventory peaked in January and drifted lower much of the year.

Assuming more homes keep hitting the market, year-over-year levels of inventory may actually be positive at some point this year.

So why is inventory slated to rise? Well, allow me to highlight five reasons:

Homeowners Gaining Equity and Getting Out

Inventory Comeback

Here’s an oldie but goodie. As home prices continue to increase, more and more homeowners will get back in the black.

We all know scores of homeowners are stuck with underwater mortgages, but many of those who held on are now finding themselves with some sliver of home equity thanks to recent hefty home price gains.

Additionally, a lot of the mortgages on these properties were taken out in 2005-2006 or earlier, so for those who didn’t go with an interest-only loan, a decent chunk of the mortgage is already paid off.

As time goes on, this trend should become even more prevalent, and many of these homeowners just want out. They aren’t necessarily looking to turn a profit; they just want to avoid a short sale or foreclosure.

Sure, some will argue that they’ll need “X” amount of home equity so they can purchase another home after they sell, but plenty of owners may decide to downsize, or simply rent instead.

Not everyone is so bullish on housing, and with interest rates rising, existing homeowners know today is a great time to sell, especially with bidding wars forcing prices up to future levels.

After all, it will be a lot easier to sell at a premium now, and with far less scrutiny, when inventory is still low.

More Foreclosures Coming to Market


Another interesting trend of late is the rise in foreclosure activity, which was steadily falling up until last month, according to RealtyTrac.

After hitting a six-year low in April, foreclosure activity increased two percent in May, thanks to an 11% rise in bank repossessions.

Foreclosure starts increased four percent from April, and rose substantially in judicial states, where the process takes a lot longer.

Still, it looks like lenders are beginning to cut through the red tape, with foreclosure starts up 229% in Maryland, 122% in Connecticut, 108% in Hawaii, 84% in Arkansas, and 82% in New Jersey from a month earlier.

Foreclosure activity increased to a 33-month high in Maryland and a 20-month high in hard-hit Nevada, and Florida saw a 20% monthly rise in foreclosure activity, meaning there will be much more distressed inventory making its way to market.

The takeaway here is that as home prices rise, banks and lenders will actively pursue foreclosure because they know the demand is finally there to offload the properties.

Banks Will Take Advantage of Rising Prices Too

This has been a concern for years, with many pondering when the banks will dump their massive distressed inventory, which continues to grow.

Though they’ve held on for quite a while, it could soon be time for them to ditch their stable of homes and get back to what they do best, banking.

And they could begin to do it a lot more quickly, seeing that home prices have chalked some massive gains of late, especially if the housing rally doesn’t have the legs many think it does.

Banks aren’t typically in the business of acquiring and selling residential real estate, so if they can get out at a decent price, they probably will.

Unfortunately, if they all get the same idea at once, it could spell disaster for the recent home price gains.

Speculators Starting to Lose Interest

At the same time, many of those who purchased properties on the cheap lately were Wall St. investors and hedge funds, such as Blackstone and Colony American Homes.

As home prices rise, they will probably do two things that will hurt the residential real estate market.

For one, they will stop buying houses, seeing that they’re in it strictly to make a certain return in a relatively short period of time.

If the price point isn’t there anymore, they’ll stop buying, point blank. At the same time, they’ll begin dumping their properties for tidy profits to mom and pops that missed the housing bottom.

This could get nasty, seeing that these hedge funds purchased a ton of single-family homes over the past few years.

And we all know how Wall Street works – pump and dump, with no concern for collateral damage.

Home Builders Getting Back to Work

housing starts

While existing housing inventory increases, so too will the number of new homes built.

Yesterday, the Census Bureau revealed that single-family permits increased 1.3% to 622,000 units in May, the highest level in five years.

At the same time, builder confidence for newly-built single-family homes surged eight points to a reading of 52 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), the first time it has been over 50 since April 2006.

NAHB Chief Economist David Crowe said the report is in line with expectations for a 29% increase in total housing starts this year, which will see them top the one million mark for the first time since 2007.

In other words, home builders are gaining confidence and getting back to work. New developments will be sprouting up all over the place as demand for homes continues to increase.

Of course, it’s just a matter of time before they build too many homes and repeat history once again. But hopefully that’s a long way out.

By the way, mortgage rates are only expected to rise about a half a percentage point or so between now and the end of 2014, so why fight tooth and nail for a home today, especially with future home price gains already baked in?

Patience may be the play here if you want to land a property you actually like.

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