Manny Kagan

Mortgage Solutions For You!

Purchase Condo Special

Lately, condominiums are becoming hot! They used to be priced for less than single family homes, but now-a-days there are some in the SOMA area with views that are SOLD and paid with CASH for millions of dollars.

But those folks who need mortgage need to follow stricter underwriting rules to be qualified. There are restrictions on the Loan to Value (LTV), owner occupancy of the condo project, pre-sale requirements, and extra insurance and litigations. Many condo projects sue the developer before the end of the warranty period. This creates a lending problem until the lawsuit is over and these problems are fixed. But sometimes there are smaller claims by the individuals–like slipping and falling. Those are easier to deal with and some lenders will lend on those projects.

Whom Do You Know That Might Benefit From Our Tailored Mortgage Solutions?

Don’t Forget to Attend Our MeetUP Event!

Date: Thursday: July 10th, 2014
Address: 2345 24th Ave., San Francisco, CA 94116
Time: 6:30pm to 8:30pm
EVENT FLYER
RSVP on Meetup.com OR email [email protected]

How Soft Is Your Foundation?

“If you continue to keep your head in the sand, you will get a kick on your behind.”

On Friday, April 18^th some willing early risers, got together at the Lotta’s Fountain on Market and Kearney Street. At 5:12am, sirens blasted to commemorate 108 years since the earthquake of 1906 struck San Francisco. All of the survivors are no longer living today, but you have probably seen pictures of the devastation, which destroyed the city. Do you remember the Loma Prieta earthquake that struck the San Francisco bay area on Tuesday October 17, 1989 at 5:04pm? Either way, the name Loma Prieta (which means “dark hill” in Spanish) comes from the name of the mountain in Santa Cruz County, the epicenter of the 1989 earthquake. The results were devastating: 63 deaths, 3757 injuries and an estimated $6 Billion in property damage.

In the book, “Peace of Mind in Earthquake Country: How to Save Your Home, Business, and Life” by Peter I. Yanev and Andrew C.T. Thompson, they found that “there is a 62 percent probability that at least one earthquake of magnitude 6.7 or greater will occur on a known or unknown San Francisco region fault before 2032” (44).

They also wrote that “the estimated consequences of a major earthquake in this case (a repeat of the 1906 M7.9 quake) striking the bay area will result in 3,400 instantaneous deaths and direct economic losses (including business interruption) of $120 billion” (44).

Are you prepared?

There are many buildings in the Bay Area and particularly in San Francisco, which have an opening for the garages, or stores. This design is called a “soft story” and weakens the structure of the building. To prevent damage, the city of San Francisco created the Soft Story Retrofit Program, which resulted in the creation of ordinance NO66-13. The ordinance applies to wood frame buildings of three or more stories or two stories over a basement containing five or more residential dwelling units where a permit for construction was applied prior to January 1, 1978. In September 2013, the Department of Building Inspection sent notices to about 6,000 property owners.

Did you receive one?

Do you know what to do?

Do you know who can do the work and the steps involved?

Do you know where to find financing?

Do you know that your bank may not renew your mortgage and your insurance company may not insure you if you will not fix your building?

Three years ago, we started an educational campaign conducting seminars, in attempt to get building owners’ attention. Most just stuck their heads in the sand. But now there is no choice. Luckily this time, the cost can be passed through the tenants—but how?

We want to help protect your investment.

Our next MeetUP Event will bring professionals who will shed some light on the huge problem. Even if your building, home, or rental property is not on the list, the earthquakes will not discriminate. Do not wait.

(Click through for details)

P.S.

In Havana, I photographed a number of buildings, which would not have a chance to survive a 7.2 magnitude earthquake, like the one that recently hit Acapulco, Mexico and was centered on a long dormant fault line.

july

fireworks

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Mortgage Solutions For You

Pay Cash–Loose Money

A Client sold his home for $2,000,000. The balance on his mortgage was $1,000,000. After paying real estate commission, transfer tax, and giving $88,000 to Uncle Sam, the net was $800,000. He found a home in Sonoma and paid cash to avoid competition. He wanted to refinance after the close of escrow.

At that moment, he discovered:

Cash out is limited to $417,000 (Purchase loan can be at least $625,000 to get a 30 year fixed rate.)
Some lenders treat cash-out as a purchase within the first 60 days. (Cash-out can effect the LTV, especially on Condominiums)
IRS will limit interest deduction to $100,000 if refinancing is not closed 90 days after the sales transaction.

Home Acquisition Debt

Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). It also must be secured by that home.

If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. The additional debt may qualify as home equity debt (discussed later).

Home acquisition debt limit.

The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). Debt over this limit may qualify as home equity debt (also discussed later).

Mortgage treated as used to buy, build, or improve home.

A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. This applies in the following situations.

You buy your home within 90 days before or after the date you take out the mortgage. The home acquisition debt is limited to the home’s cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). (See Example 1 later.)

Home Equity Debt

If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt.

Home equity debt is a mortgage you took out after October 13, 1987, that:

Does not qualify as home acquisition debt or as grandfathered debt, and
Is secured by your qualified home.

Example.

You bought your home for cash 10 years ago. You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter’s college tuition and your father’s medical bills. This loan is home equity debt.

Home equity debt limit.

There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:

$100,000 ($50,000 if married filing separately), or
The total of each home’s fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.

Whom do you know that might benefit from our tailored mortgage solutions?

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What Is Ramadan And Why We Should Care To Know?

“The best way to connect with others is by learning who they are.”

On the dawn of June 28^th, Muslims, 23% of the world’s population, will celebrate Ramadan. For one month during the day, they will refrain from eating, drinking, smoking, and copulating until after sunset. The story about Ramadan is the last one in my series that unites us, despite the division manifested by different religions.

Much of the Western knowledge of the Muslim religion may be based on the limited and negative press about militant Islamist groups, who are known to behave violently toward one another and the rest of the world. The observance of Ramadan is considered one of the five pillars of Islam, as commanded in the Holy Quran by Muhammad, who was born in about 570 CE in the Arabian city of Mecca. Muhammad received his first revelation from God at the age of 40 on the month of Ramadan. Three years later, he began to preach and publicly proclaim that God is One. The Islamic religion then spread very quickly in the Arabian world.

There are about 1.4 billion Muslims who live all over the world. I recently learned that there are more Muslims (344 million) in India and Pakistan combined, than in the entire Middle East (317 million).

I do not think any of us can comprehend what influences other people’s beliefs and actions, but at least I’ve tried. For intellectual curiosity, I have read the Quran, albeit in English, as well as some books about Islam. (I have read about other religions as well.) My conclusion: unless you are Muslim, or adhere to any other religion, you cannot truly understand why people do what they do.

ramadan5

But then I found something in common with other traditions. After Ramadan ends, there is a huge feast for three days. Muslims in each country have their own traditional meals. But no one has yet said no to a good cheesecake, especially one produced by the company Sara Lee with the stamp of approval for Halal (similar dietary restrictions to Kosher rules for the Jewish religion). For instance, those cakes do not contain pork or alcohol. Thank God—I would not eat those either.

P.S.

We usually recognize representatives of various religious groups by their specific attire. Women who practice Islam wear a head scarf (Hijab), which covers their hair. In the Jerusalem market, I photographed a display of brightly colored hijabs. In some countries, women also cover their regular clothing when in public with a long cloak called Abaya. My images that you see here were taken in Jerusalem and San Francisco. Despite the difference in practice, we all belong to the same group—humans. Let’s behave and treat each other as such. Let’s share cheesecake together!

It is still not too late to get a FREE one! Just share your excitement about our services with your friends and contact me.

If you want to have your cake and eat it, just give this card to get it.

(click flyer for details)*

*Limit one cheesecake per family for successful referrals

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Mortgage Solutions For You

Commercial Loans

After a client sold her rental building in San Francisco, she needed to buy another property to avoid paying taxes, while using 1031 Tax Deferred Exchange. When we met, I explained to her that after we will find a lender with the best option, we would have to charge an extra 1% from the loan amount for our services in addition to the bank fees. She hesitated and later on informed me that she is keeping her money at CHASE bank and can apply with them directly since this can save her $30,000.

Fortunately for her and for us, her real estate agent with whom we have a working relationship, convinced her to give us a chance.

We submitted her loan request to 5 different banks–including CHASE. After all of them gave us different quotes, we narrowed it down to CHASE and Wells Fargo. After negotiating back and forth, where each bank wanted to receive the business, Wells Fargo agreed to lower their interest rate to 3.75% and CHASE (as well as other banks) informed us that they cannot lend on the subject property.

If the client would have applied for the loan with her bank, she would have lost the transaction and have to pay taxes.

Whom do you know that might benefit from our tailored mortgage solutions?

Don’t forget to participate in this month’s Cheesecake Special.

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Can We Adjust?

“Personality is an unbroken series of successful gestures.“–F. Scott Fitzgerald

According to Psychologist Sigmund Freud, a person’s personality is shaped by the age of 5. Other studies have demonstrated that personalities can be shaped as early as the age of 3, while others studies have shown one’s personality is set by the first grade. The point is, we become who we are quite early in life. Therefore, it is quite difficult to change, regardless of the outer appearance. But men and women can adjust their way of thinking at any time, as the information presented to them changes. This also relates to the information of the type of mortgage to choose. A recent article in the Wall Street Journal—“A New Wave of Adjustable Mortgages” is what prompted me to write about this topic. These mortgages have a fixed period of time for 1,3,5,7 or 10 years and become adjustable after the fixed period.

Most borrowers get a mortgage fixed for 30 years. It is done with the assumption that you are going to have the same mortgage until it is completely paid off in 30 years. When the interest rate comes down (and it does all the time, despite the concern of the skeptics), those who are qualified, refinance their mortgage again into a 30 years fixed rate. This can be good insurance to protect from the possible increase of interest rates in the future. When I moved to the United States in 1980, the interest rates were about 15%. After I started working in the mortgage business in 1983, we hoped that the rate would drop below 10%. And it did!

When we bought our first home in 1984, our first mortgage was anadjustable loan “with negative amortization” from the World Savings and Loans Bank. To this day, we still have an adjustable mortgage with the rate of 2.80% on our personal residence which can adjust monthly (it has not in the last 5 years), as well as 2.875% on our rental properties. Even if the rates will go up, the benefit of the lower interest rate outweighs the risk, and besides an adjustable rate is historically always lower.

My recommendations for those who want to pay off their mortgage sooner, is instead of taking a loan fixed for 30 years, to take a loan fixed for 5 years with the rate as low as 3.375% (depending on the program) and to pay the full payment as it would be fixed for 30 years at say, 4.25% or higher. This will significantly reduce the principal by the end of the 5 years of the loan. At that time (or sooner), one can refinance again with no out of pocket closing costs (no cost) into another 5 years fixed rate—always with the rate lower than the fixed rate. I believe that the balance of your mortgage is going to be paid off much faster.

Some of my financially savvy clients do just that. Of course, there is a risk. The interest rates might be higher in the future. But do you not take risks every day? Anyone who invests money in stocks or other financial “opportunities” has a much higher risk.

If this sounds confusing or frightening, give me a call. I am always available to help you find tailored mortgage solutions.

P.S.

When we traveled in Cuba, we noticed Cubans are making adjustments all the time. Just take a look at the way they learned how to fix their cars. You can see more of my images from Cuba in my book Soy Cubano.

As far as my personal adjustment, I present to you today black and white images. My camera is the same, as are my eyes, and the finger which pressed the button. But I made an adjustment in my interpretation. You be the judge.

P.P.S.

Don’t forget about the June Special! If you want to have your cake and eat it, just give this card to get it.

(click flyer for details)*

*Limit one cheesecake per family for successful referrals

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Mortgage Solutions For You

PURCHASE–Renovation Home Style Highlights

One Loan Does It All!

Those who buy properties which need IMPROVEMENTS–including landscaping and even pools, can benefit from this program.

The difference and advantage of the HomeStyle program vesus the FHA 203K is lower Mortgage Insurance (MI).

If the Loan to Value (LTV) is 80% or less, no MI is needed. Please feel free to call me for clarification.

Don’t forget to participate in this month’s Cheesecake Special.

Whom do you know that might benefit from our tailored mortgage solutions?

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Father’s Honor

“We often forget (or do not know) how a tradition began, but have no problem following them.”

This year, Father’s day falls on Sunday, June 15^th. In June 1910, a woman named Sonora Smart Dodd prompted this holiday when she wanted to honor her father. However, it wasn’t until 1972 when President Nixon made it a permanent national holiday.

The intention was to honor men’s roles as fathers and their influence in society, which was promoted and cemented by economic considerations. By the mid-1980’s, the Father’s council wrote that “…Father’s Day has become a second Christmas for all the men’s gift-orientated industries”.

There is a joke told about a Jewish woman giving her husband two ties as a present on Father’s Day. He wore one of them at the next family gathering. Seeing this, his wife remarked, “You do not like the other one?”

But I am sure you will agree with me that there are many other ways and reasons to celebrate a father’s role in our society, and this can be done any day.

For many, a child’s first teacher is their father. In the old Jewish traditions, a father is obligated to teach the Torah to his sons, as well as an occupation, as well as how to swim.

Specifically, this teaching comes from the Talmud that was recorded about 1800 years ago. The study of the Torah represents the knowledge of life’s rules; in terms of how to live and behave in the world. The need to have an occupation and to earn a living for a family might sound obvious. When I was about 14, I worked on the Children’s Railway in Riga. My father encouraged me that working there may help me become an engineer. (I began my engineering studies three years later.) You can read more about my life journey in my book, The Mortgage Game: The 5 C’s and How to Connect Them.

But what’s the importance of teaching one’s children how to swim? Years ago, it was meant to save one’s life during the journey over a body of water, which today can certainly have a similar meaning. But it also can mean to learn how to swim, as in navigating through life.

My father died 18 years ago. He survived World War II and was an honorable and respectable man in Riga. I am proud to say that I am the son of Chaim Kagan.

If I can summarize, Father’s Day can be celebrated as an expression of love.

P.S.

Some of these images that I captured in Cuba demonstrate the relationship between fathers and their children. You can see more in my book, Soy Cubano.If you are looking for a special gift for Father’s Day, may I suggest Zanze’s cheesecake? You can have one for free by just referring a client to us in the month of June.

If you want to have your cake and eat it, just give this card to get it.

(click flyer for details)*

*Limit one cheesecake per family for successful referrals

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Mortgage Solutions For You

JUNE SPECIAL

*Interest rates are subject to change without notice and do not constitute a commitment to make any loan at any specific rate.

This is a special program offered by one of our lenders. The interest rate is tied to the credit score. If the FICO score is less than 760, there can be an increase in the rate or closing costs.

Recently, a client called after his purchase loan was declined by a major bank. He had only two weeks left to close the transaction. Since we received a complete file, we were able to submit the loan and close it in only 18 days after the Real Estate Agent received a contract extension for seven days!

Don’t forget to participate in this month’s Cheesecake Special.

Whom do you know that might benefit from our tailored mortgage solutions?

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What Is Pentecost And Why We Should Care To Know

“If you want to find God, just let God know about it.”

On Sunday, June 8^th—some Christians are going to celebrate Pentecost. Online, I found very interesting explanations of what this holiday means in the article written by Reverend Mark D. Roberts. The essence is that the believers commemorate the coming of the Holy Spirit on the earthly followers of Jesus to his followers, who came to Jerusalem to celebrate the Jewish holiday Shavuot. So, from the historical point of view, the Pentecost is the Christian Church’s birthday.

The holiday was celebrated for at least 1,000 years since the first temple was built by King Solomon at the time of Jesus’ crucifixion. The word “Pentecost”, meaning fifty, and is the Greek name for the “Feast of Weeks”. It is in conjunction to the Torah’s celebration of Shavuot, which takes place fifty days after the Passover holiday. It was a perfect backdrop for Jesus’ revelation and the birth of a new religion.

In this story, I see a direct correlation between what happened on Mount Sinai when the Torah was given and between what happened many hundreds of years later in Jerusalem. During those years, Judaism went through many transformations. Though the text in the Torah did not change—the interpretations did. During those years, many groups and sects believed that their way is the right way. In this sense, Jesus’ teachings were probably not much different. But, he was a natural healer and emphasized faith as critical to healing — both the faith of the one being healed as well as the faith of those around him or her. His healing attracted many followers and by using his unique abilities, he was able to bring his message to the impoverished masses. But as we’ve seen, future history created many interpretations of the meaning of his message.

Despite the disagreements, there is one element that unifies all of the beliefs. Regardless of what the belief or tradition is, everyone enjoys sharing a good meal, which ends wonderfully with dessert. So, what can be better than Divine Mercy Cheesecake? It does not matter what your beliefs are—Christian, or Jewish—sharing a good cheesecake will easily erase all the differences.

If you do not have time to make your own, I highly recommend getting your cheesecake at Zanze’s bakery. They make the best cheesecake in San Francisco. During our “June Cheesecake Special”, you can get one FOR FREE.

Read below to learn how.

If you want to have your cake and eat it, just give this card to get it.

(click flyer for details)*

*Limit one cheesecake per family for successful referrals

P.S.

In the article I mentioned at the beginning of this newsletter, I learned that “Churches that employ liturgical colors generally use red on Pentecost as a symbol of power and fire of the spirit”. What can more be beautiful than red tulips to decorate the festive event? I’ve photographed these beauties on our trip to Amsterdam last April 2007.

Happy Pentecost!

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