It was time to take a small break from Real Estate...And Madrid was the place to go.It was splendid! I loved the architecture, style and definitely fell in love with the advanced transportation system. Amongst some of special places that we visited during our brief stay was the Kings Palace, the most preserved Medieval castle in all of Europe, an aqueduct that was constructed over 1900 years ago, and the Presidents Cathedral to name a few.

In the town of Segovia we went to the castle that was the summer home to Queen Isabella she was the Queen that funded Christopher Columbus to set sail and find the Americas. Unbelievable! Here are a few photos from photographer Jared Alvarez who accompanied us on our trip. Thanks Jared, Great Photos...

Can I afford to wait?

Prepared by: Scott D. Kliewer, Broker/Owner, Windermere Silicon Valley Properties, (408) 239-5800
9/17/08

Here are two scenarios for your review:

Scenario #1:

Assuming a buyer purchases in 2008 with conforming jumbo loan amount not to exceed $729,750:
$900,000 Price
20% Down - $180,000
$720,000 Loan Amount
5.875% @ 1 discount point
Payment: $4,259.07

Assuming a buyer purchases after 1/1/09 with conforming jumbo loan amount not to exceed $625,500:
$900,000 Price
20% Down - $180,000
$720,000 Loan Amount
6.625% @ 1 discount point
Payment: $4,610.24

This represents a significant difference that amounts to an additional $351/month, $4,212/year, or $126,360 over 30 years. This assumes that rates remain the same; however this cost differential shows why there should be a sense of urgency because there is a current bias towards believing the rates will increase over the short term, not decrease.

Scenario #2:

A home buyer looking to purchase a home in the $810,000 range:

There are major differences from the conforming jumbo to the non-conforming regular jumbo loan programs that include more stringent guidelines and lower loan to value limits.

For example:
Conforming jumbo loans – currently up to $729,750 and reducing to $625,500 on 1/1/09 carry maximum loan to value of 90%.

Non-conforming regular jumbo loans – anything over $625,500 as of 1/1/09 carry a maximum loan to value of 80%.

This means that through 2008 a qualified buyer could buy a home for $810,000 and only be required to put 10% down. After 1/1/09, this buyer would face the new conforming jumbo loan amount of $625,500 and that would require a down payment of $184,500 (nearly 23% down) to obtain the same loan program. The other option would be a non-conforming regular jumbo program at a higher rate and requiring 20% down payment for a cost of money differential similar to that shown in scenario #1.


Note: The affordability differential because of the down payment requirements changing is quite large. A qualified buyer that has only 10% down can currently purchase in the $810,000 range. (90% of $810,000 is $729,000.) As of 1/1/09 this same buyer could purchase only up to the $695,000 range to obtain similar financing terms. (90% of $695,000 is $625,500.)