HONOR YOUR FATHER

I am writing this story on the third Sunday in June, which, according to my calendar—and a reminder from my wife—is Father’s Day.

The idea for this holiday began in 1910 when a woman named Sonora Smart Dodd decided to honor her father. After her mother died, he raised Sonora and her five siblings by himself. It took until 1972 for President Nixon to sign Father’s Day into law as a national holiday. But the idea of honoring fathers started much, much earlier.

More than 3,300 years ago, when the Torah was given to the former slaves, after they left Egypt, the Fifth Commandment instructed us: “Honor your father and your mother.” It comes immediately after the commandment to keep the Sabbath. This teaching is repeated again in the Torah.

So, what does it mean to honor your father and mother? Do we need to wait for one special day each year? Is it an obligation, a duty, or a feeling that comes from the heart? After all, your father and mother gave you life. Isn’t it natural to honor them?

My father passed away many years ago. During the later part of my parents’ lives, they lived in Israel while we were here in San Francisco. Every Sunday, I would call them and ask how they were doing. My father would tell me what happened during the week.

One day he told me he had gone to the doctor. I asked what the doctor had said. “The doctor told me I don’t have it,” my father replied. “Don’t have what?” I asked. Then, I heard him asking my mother: “What doctor said I don’t have? “Dementia,” she said.

It sounds almost like a joke, but I still smile when I remember that conversation. I miss those Sunday calls. When Sunday comes around, I often think about them.

You don’t have to wait for a special day once a year to honor your parents. If you are fortunate enough to still have your father around, think about him. Give him a call. Ask how he is doing. You will both feel better afterward.

By the time you read this, Father’s Day will already be over. But it is never too late to honor your father—and your mother.

Three images inside this story show you different fathers.

Happy Father’s Day, every day!

WHAT IS A DSCR LOAN?

DSCR stands for Debt Service Coverage Ratio. It is a type of mortgage that qualifies a borrower primarily based on the rental income generated by the property rather than the borrower’s personal income.

I recently closed a loan for a client whose mother had passed away. He and his brother inherited her home. One brother wanted to keep the property, so he needed a mortgage to buy out his sibling’s share. The challenge was that his personal income was not sufficient to qualify for a conventional mortgage.

The solution was a DSCR loan.

Since the inherited property was going to become a rental, the lender focused on the property’s income potential. The borrower provided a lease agreement showing the expected rent. In addition, the lender ordered an appraisal that included a Form 1007, which analyzes market rents for similar properties in the area.

The lender then compared the expected rental income to the property’s monthly expenses, including principal, interest, property taxes, and insurance. If the rental income is sufficient to cover these costs, the borrower may qualify regardless of personal income.

Some DSCR programs are even more flexible. In situations where the rent does not fully cover the payment, certain lenders may still approve the loan, although the interest rate is usually higher.

This can be especially useful when purchasing a multi-unit property where some units are vacant. Even though current rental income may be insufficient, the lender can use the market rent analysis from the appraisal to estimate future income.

DSCR loans can be used for:

• Purchasing rental properties
• Refinancing existing loans
• Cash-out refinancing
• Single-family homes
• Two-to-four-unit properties
• Multifamily properties with five or more units
• In some cases, second mortgages on investment properties

As I often tell my clients, there is usually a solution to every financing challenge. The key is finding the right loan program for your specific situation.

If you have a financing need involving rental property, inheritance, refinancing, or investment real estate, let me know. I will do my best to find the right solution for you.

Manny Kagan,
Your professional mortgage broker since 1983
(415) 225-7920; mannykagan@comcast.net

HOW TO SLOW DOWN?

This question was asked of me by an 87-year-young friend.

We first met because he became my client. One day he came into my office to discuss borrowing some money. He owns his home and a rental property. He used to be a doctor, but what is remarkable about him is that he is also a pilot. He owns two airplanes and still flies regularly. As we talked, I asked him about his life. He drives an electric car, and when he travels longer distances, he has to stop for about an hour to recharge it.

“So, what do you do while the car is charging?” I asked. He smiled and said he writes. In fact, he is writing a book.

Later, we talked about getting together again. Friday would not work because he was going dancing. Saturday was impossible because he was singing together with his girlfriend in a group. Sunday he was going to church. Besides that, he flies his planes, works on maintaining his property, and keeps himself busy with countless other activities.

Then he asked me, “What’s your recommendation? How do I slow down?” I laughed and told him, “I don’t have a recommendation because I don’t slow down either. I keep moving and I keep doing things as long as I can.”

My belief is simple: as long as you are doing things, learning, creating, helping others, dancing, singing, flying, writing, or simply enjoying life, it means you are alive.

So, if you ask me how to slow down, I don’t have an answer. My answer is to keep going for as long as you can. Stay healthy. Stay active. Stay curious. If possible, stay wealthy. But most importantly, enjoy life.

This version emphasizes the contrast between my friend’s age and his active lifestyle, making the ending more impactful. He invited me to fly with him, but my wife didn’t think that this was a good idea.

Three of the aerial photographs you can see above were captured from commercial flights on which I was a passenger.

Enjoy and share. 

HOW TO BUILD THE STAIRS

Tuesday morning, I heard a lot of noise outside our breakfast room. When I looked out the window, I saw a huge cement truck trying to squeeze through the parked cars. We live in Monterey Heights, a hilly San Francisco neighborhood with narrow streets, so getting a large vehicle through can be quite a challenge. The truck made it through, and later, when I went for a walk with our labradoodle Max, I noticed not one but two cement trucks parked nearby. The sound of construction filled the air. Curious, I walked over to see what was happening. A neighbor was building a staircase down a steep hill as part of a property improvement project. Watching the activity made me realize how much effort goes into something as simple as a set of stairs.

First, someone has to decide they want the project. Then an engineer designs it. Plans must be submitted to the city, permits obtained, and a contractor hired. Materials and equipment must be delivered, and crews have to coordinate the work. Finally, after all the planning, effort, and expense, the stairs are built. When the project is finished, most people will simply see a staircase. Few will think about everything that happened behind the scenes to make it possible. As I watched the construction, I thought about our work in the mortgage business. When a loan closes successfully, it often looks simple. The client gets the money, the property is purchased or refinanced, and everyone moves on.

What people don’t see is all the work that took place beforehand. There are buyers, sellers, loan officers, processors, underwriters, appraisers, escrow officers, and lenders. Documents must be gathered, reviewed, and approved. Problems must be solved along the way. Recently, I closed a mortgage transaction in just 16 days, which is remarkable. To the client, it may have seemed straightforward, but it required the coordinated efforts of many people working together behind the scenes. Whether it is building a staircase, closing a mortgage, developing a property, or growing a business, significant accomplishments rarely happen by themselves. The visible result is often only a small part of the story. The real achievement lies in all the planning, teamwork, and persistence required to make it happen. Enjoy the results, but also appreciate the work that made them possible.

Three images illustrating this story are self-explanatory.

Manny Kagan
(415) 225-7920

 

ENCOUNTERS IN THE LAND OF ICE

I am writing this story on the plane as we fly home after two unforgettable weeks in Iceland. Before coming here, I knew only two things about this island: nature and friendly people. To be honest, I was not very enthusiastic about the trip. It was my wife’s idea, and I simply went along with it.

We arrived two weeks ago, and after recovering from jet lag, we boarded an HX Expeditions ship in Reykjavík. For the next eight days, it carried us around the coast of Iceland.

I would not call what we experienced sightseeing. We certainly saw many remarkable places, but what we had were experiences. How else can you describe walking through a landscape created by volcanic lava, covered with snow, while strong winds blew snowflakes into your face like tiny needles? Then, a short time later, sitting in the warmth of a bus, looking back at the same wild scenery on my phone and feeling nothing but joy from having lived through it.

It may sound crazy, but that is what adventure is all about. The beauty that surrounded us often left me without words. Some places cannot truly be described. They must be experienced.

After eight days at sea, we returned to Reykjavík for four more days. We attended a concert at the remarkable Harpa Concert Hall and enjoyed dinner there. My wife turned to me and said, “For this experience alone, we have to come back.”

The next day we immersed ourselves in the warm waters of Sky Lagoon. Two hours later she said, “We have to come back for this experience too.” Along the way, we met and befriended a local couple who spoke Russian. The following day, Viktor took us to Þingvellir National Park, where the North American and Eurasian tectonic plates are slowly separating. We actually walked between two continents. What an experience that was!

Then, during our final hours before leaving Iceland, we met a woman President of Iceland Halla Tomasdotir, who proudly described Iceland as a country with a wonderful sense of community. Our conversation reminded me once again that Iceland is not only about breathtaking landscapes. It is also about the people who call this island home. After all these experiences, I realized that I need more encounters, more stories, and more images before I can write one of my next books.

The working title is: “42 Encounters in the Land of Ice.” And for these, I need to come back. So, stay tuned. And if you have not yet visited Iceland, put it on your list.

Meanwhile, for this story I have chosen three photographs featuring Iceland’s amazing skies.

Enjoy and share.

THREE REVERSE MORTGAGE CALLS FROM ICELAND

While on vacation in Iceland, I still found time to work for a few hours each day. Because Iceland is seven hours ahead of California, I was able to handle business between 4:00 p.m. and 6:00 p.m., before heading to dinner.

During those two hours, I spoke with existing clients, a new client, and received several calls. Three of those calls involved reverse mortgages, and each demonstrated how this financial tool can help people facing very different life situations.

The first call involved an inheritance issue. My client needed enough money to buy out the interests of relatives who had inherited property. A reverse mortgage provided the funds needed to complete the transaction. Without it, there was no practical way to obtain the required cash.

The second call came from a former client who wanted to sell his home in Oakland and purchase another property in San Francisco. Because of his age and health situation, he could no longer work full-time, and his income was not sufficient to qualify for a conventional mortgage. After reviewing the numbers, we determined that a reverse mortgage could provide approximately $300,000 in financing. By combining the proceeds from the sale of his Oakland home with the reverse mortgage, he could purchase an $800,000 property and have no required monthly mortgage payments for the rest of his life.

The third call came from another former client on behalf of his ex-wife. She lived in a manufactured home, had health problems, and needed additional funds to pay for her care. Since she was no longer working, qualifying for a traditional mortgage was not an option. A reverse mortgage offered a solution that could help her access the equity in her home and cover her healthcare expenses.

These were three completely different situations, yet in each case a reverse mortgage provided a practical solution. One lesson I have learned over the years is that it is often better to prepare before a financial need arises. Establishing a reverse mortgage line of credit while you qualify can provide a valuable source of funds later in life. If obtaining a conventional line of credit becomes difficult because of retirement or reduced income, your home equity may still be available to help meet future needs.

If you have questions about reverse mortgages or would like to discuss whether one might be appropriate for your situation, please give me a call.

Manny Kagan
(415) 225-7920

 

GREETINGS FROM ICELAND

It was my wife’s idea to take a cruise around Iceland. At the beginning, I wasn’t very enthusiastic. However, after seven days cruising around this remarkable island, I have to admit—as is often the case—my wife was right.

This was not a typical cruise. The company we sailed with, HX Expeditions, operates a small ship carrying only about 400 passengers. There are no casinos and very little traditional entertainment. Instead, the focus is on exploration and learning. Scientists and expedition leaders give lectures about wildlife, marine life, birds, and the natural environment, and much of our time is spent outdoors experiencing Iceland firsthand.

The weather during our trip was far from favorable. It was unusually cold, and as they say in Iceland, the weather can change several times a day. We dressed warmly and were provided with waterproof jackets. We were also advised to bring waterproof pants and special boots because many of our excursions involved inflatable rubber boats.

During the week, we experienced rain, snow, strong winds, and icy conditions—sometimes all on the same day. Surprisingly, those challenging weather conditions made the trip even more memorable and special.

It’s impossible to fully describe the experience. You really need to come and see Iceland for yourself. We met people who had visited Iceland before by car and traveled around the island independently. While that certainly has its appeal, I found exploring from a ship like this incredibly convenient. No matter where you go during the day, you return to a comfortable cabin, a good meal, and wake up the next morning in a completely new destination.

Will I come back to Iceland? For me, one visit was probably enough. But if you have never been here, I strongly recommend it.

Today, for example, we traveled by rubber boat to an area surrounded by magnificent snow-covered mountains. It was also a bird sanctuary, especially known for puffins. The puffin is a colorful and fascinating bird, and you’ll see photos of it among the images I share. Thousands of puffins nest here, and people travel from all over the world just to see them. But Iceland offers much more than puffins. We observed many other bird species and spent time immersed in the fresh, clean air. At times, I felt almost intoxicated by how pure and refreshing it was. The food was excellent, and we met many interesting people along the way.

I strongly recommend Iceland to anyone looking for a unique travel experience. Thank you, and enjoy the images.

YES, WE CAN DO IT

A few days ago, I received a phone call from a real estate agent I’ve worked with for many years. He asked a simple question: “Can we find financing for a 15-unit apartment building that was originally built as a condominium?”

Apparently, the potential buyer went to a different mortgage broker who told him that he could not finance it. After the call, I made a few phone calls, sent a few messages, and received an answer from one of our banks: yes, we can finance this project.

This is a typical situation. Many of the inquiries we receive are along the lines of, “Can you do that?” and, most likely, our answer is going to be yes.

I am currently working on a construction loan for a project that has already started building, and we secured a line of credit of half a million dollars to finish it. I’m also working on the acquisition of a commercial building in a different state. One of my clients, whom I am helping now, is refinancing her home to pay off her ex-spouse. Another client asked me if I could get her financing because she wants to buy a coffee shop—not the building, just the business—and my answer was yes, we can do it.

So, regardless of the project or its scope, there is a good chance I can help. Most financing needs to be secured by real estate, but we also arrange lines of credit for businesses.

So, give me a call at (415) 225-7920. You’re welcome to ask me if we can do it. There’s a good chance that I’ll tell you yes.

OUR TRIP TO ICELAND

When I mentioned to friends about our upcoming journey to Iceland, I heard many different reactions. Some said, “Oh, I’ve always wanted to go to Iceland,” while others who had already visited excitedly shared stories about their own experiences.

I am writing this on our second night in Reykjavík, the capital of Iceland. Iceland was officially settled in the 10th century, making it a relatively young European country. Throughout its history, it was under Norwegian and Danish rule, and during World War II it was occupied by American forces before becoming fully independent afterward.

After spending two days here, we find Reykjavík to be a charming city. With a population of about 140,000 people, it feels comfortable, welcoming, and easy to navigate. The people are friendly, most speak excellent English, and the restaurants have been wonderful. Downtown has several main shopping streets offering local gifts and Icelandic products.

We already visited two museums, and tomorrow we are planning to explore the photography museum, which should be especially interesting. For my wife and me, coming here also gave us a chance to overcome jet lag from our long trip from San Francisco before boarding our cruise ship tomorrow for the next stage of the journey.

Stay tuned for more of my stories from Iceland.

Meanwhile enjoy images of:

• people standing in line to buy hotdogs,
• young future famous painters practicing their graffiti skills,
• and your favorite writer and photographer having a good time.

FYI: The outside temperature is about 10° C (50° F)

Enjoy and share!

ADDING A LINE OF CREDIT BEHIND YOUR FIRST MORTGAGE: HOW IT WORKS

Sometimes I get calls from clients who need a line of credit behind their first mortgage. Instead of taking a traditional second loan, many clients prefer a line of credit because it offers flexibility. You can draw only the amount you need and pay interest only on that amount, unlike a second mortgage where you receive the full amount at once.

Recently, we had a presentation in our office by Suzie De Leon from Angel Oak Lending. She introduced an interesting option for qualifying for a line of credit using bank statements instead of traditional income documentation.

One advantage of this program is that borrowers may not need to show large taxable income to qualify. By using bank statements to calculate income, some self-employed borrowers and business owners may have more opportunities to qualify for a combination of a first mortgage and a line of credit.

This type of financing can sometimes be easier to obtain if you have enough equity in your property. However, it is important to understand that payments may be higher because of the way these programs are structured.

If you need any type of mortgage loan, including a line of credit, give me a call — I may be able to help.

Thank you,

Manny Kagan,
Your professional mortgage broker since 1983
(415) 225-7920; mannykagan@comcast.net