Committed to excellence since 1992.
The Select Report Newsletter
Summer Issue 2007
INSIDE THIS ISSUE:
Will The Subprime Market Shakeout
Affect You?
By Julie K. Ware
Will The Subprime
Market Shakeout
Affect You?
1
Are You Getting The
Best Rate On Your
Home Loan?
1
Time To Move? Tips For 3
Moving Your Pet Safely
Property Owner vs.
2
Tenant: Who Is Responsible For Repairs?
Helping Hands: Join
KPL’s Habitat For
4
Kelly Lynch Rides in
AIDS/Lifecycle
4
Print and television journalists are having a feeding frenzy covering the subprime market
predicament of late. But what does all this really mean to you and your home?
First, some definitions: a subprime borrower is someone who has a patchy credit history.
This could mean late payments, bankruptcy, overextended credit. In addition to cloudy
credit, subprime borrowers frequently have minimal cash reserves at their disposal. The
combination of these two factors makes this type of borrower a much higher credit risk.
Second, some history: during the Clinton administration, President Clinton charged the
Department of Housing and Urban Development with developing strategies to increase
homeownership among all Americans. While this was a lofty and honorable goal; the
unexpected side effect was that it created an atmosphere among some lenders that all
borrowers should be able to get a mortgage regardless of credit score, employment
history or cash available for down payment.
Subprime borrowers were generally offered adjustable rate mortgages. In the best of all
possible worlds, the notion was that during the several years that the mortgage was at a
lower rate, borrowers would use that time to improve their credit, save more money and
also increase the amount of equity in their home. Now the rates for those adjustable
mortgages are starting to increase and borrowers are faced with the option of paying a
higher mortgage or refinancing. If the borrower did not use this time wisely to improve
his/her financial standing, or if the property did not appreciate, refinancing could be
difficult.
(Continued on Page 2)
Are You Getting The Best Interest Rate On Your Home Loan?
By Kelly Lynch
Consumers interested in purchasing or refinancing a home will pay an interest rate based on
current market conditions and their ability to pay back the loan. The borrower’s income and
debt ratios are taken into consideration by the lender, as well as the predictability factor provided by credit scoring.
Interest rates associated with various loan programs are broken down into schedules based
on credit score ratings. While each lender has its own guidelines, it’s safe to assume that as
the consumer’s credit score goes down, interest rates will go up.
A borrower with an outstanding credit rating will get what is called an A-paper loan. (Most
A-paper scores generally begin around 680, although this number may differ slightly among
lenders.) This type of borrower is rewarded with a lower interest rate because they have a
proven track record of using credit sensibly and paying their bills on time. Loans designed for consumers with less-thanperfect credit – “sub-prime” loans – can range anywhere from A-minus paper, B-paper, C-paper or D-paper loans.
If you have already taken out a mortgage loan with a higher interest rate because your credit score was a little under
par, you will really appreciate the value in doing a little work to improve your credit score. Refinancing from a D-paper
to a B-paper classification can save literally thousands of dollars in financing fees over time, even though the B-paper
loan is still considered sub-prime.
(Continued on Page 2)
Page 2
Summer 2007
Subprime Market
(continued from page 1)
What does this mean for you?
If you currently have a subprime loan and your lender goes out of business:
Keep paying your mortgage on-time! Your mortgage payments are considered an asset of the lender. If a lender declares bankruptcy, the assets will be sold to another lender and you will be advised where to send your payments.
If you currently have a subprime loan and you want to refinance:
Know your credit score! Do all that you can to improve your credit score: make your payments on time, keep your balances below 50% of your available credit on revolving charge accounts, pay off, but DO NOT CLOSE, accounts. Request
a free copy of your credit report each year to check for accuracy (www.annualcreditreport.com or 1-877-322-8228).
If you do not have a subprime loan:
Be informed! The real estate market is most definitely going through a period of change. But, mortgage rates continue
to hover close to historical lows.
Make certain you maintain your A+ credit: continue to make payments on time and keep your running balances low.
Request a free copy of your credit report each year to check for accuracy.
Lending guidelines are likely to continue to tighten over the next several months. If you are looking to purchase a home,
make certain you are saving money toward a downpayment. 100% financing loans are becoming increasingly more
difficult to find.
If you are selling your house, speak with a real estate professional about pricing your house correctly and making your
house more attractive to potential buyers. If you do not have a real estate agent, feel free to call your KPL Select mortgage professional. We have many excellent agents we’d be happy to refer to you.
Know where you stand financially. Your KPL mortgage professional can provide you with a free mortgage analysis including a value check of your property.
Above all remember this – the only thing that is certain is CHANGE. The housing market has always experienced ebbs
and flows, and it can be a valuable tool for increased financial stability not to mention a source of great happiness for
you and your family.
Getting The Best Rate
(continued from page 1)
First, however, it is important to review the terms of your existing mortgage loan to determine if you have a pre-payment
penalty clause written into your contract before you refinance. In general terms, that means that if you sell the home or
try to refinance before the pre-payment penalty term expires and you have not already paid off 20 percent of the original loan amount, you will likely have to pay a three percent fee back to the lender to compensate for the high risk and
high costs the lender incurred to provide that financing.
Next, you should obtain free copies of your credit reports to determine your score (www.annualcreditreport.com or 877322-8228). The Fair Credit Reporting Act entitles consumers to receive one free credit report annually. Because there
are three major credit bureaus, Equifax, Experian and Transunion, be sure to request a copy from each bureau as entries
may differ.
There are five basic factors that make up the credit score: payment history (35%), amounts owed (30%), length of credit
history (15%), new credit (10%), types of credit used (10%). It's clear that the single most important factor is your record of
paying your bills on time. The number of delinquent accounts and the length of time the account went unpaid also factor into the calculation. Your payment history may also include financial problems that have ended up in court such as
bankruptcy or judgments entered against you.
If your score is less-than-perfect, your KPL mortgage professional can coach you through some basic strategies to improve your credit score. This may mean instituting very conservative use of credit cards, paying off debt as much as
possible and not applying for additional credit cards. You will want to verify that negative items you have paid off are
being removed from your credit report, and that good credit history is being reported to all three bureaus. You’ll also
want to dispute any errors that appear on your credit reports and seek to have those removed entirely.
Once your credit score improves, it’s time to refinance at a better interest rate. Ask your KPL mortgage professional to
help you create a good roadmap to follow and a strategy for success in building personal wealth.
4348 Van Nuys Boulevard, Suite 200 Ι Sherman Oaks, CA 91403 Ι Phone:(818) 907-5757 Ι Fax: (818) 907-5626
2583 N. Palm Canyon Drive, Suite 200 Ι Palm Springs, CA 92262 Ι Phone: (760) 327-9700 Ι Fax: (760) 327-9701
www.kplselect.com Ι [email protected]
The Select Report Newsletter
Time To Move? Tips For Moving Your Pet Safely
Plan ahead. Pack over a period of time, and try to maintain your
pet's normal routine.
Invest in a high-quality, sturdy pet carrier. Make sure to get a
carrier ahead of time and gradually accustom your pet to
spending time in it.
Purchase a new ID tag for your pet. As soon as you know your new address, get a pet ID
tag that includes your new address and telephone number.
Page 3
Speaking of
Pets...
Match the KPL staff member’s pet with its owner and
win a Starbucks Gift Card!
Email your answers to:
[email protected]
Keep your pet secure. On moving day, place your pet in a safe, quiet place, such as the
bathroom, so that he/she cannot escape. Make this room off-limits to visitors and movers.
Make your car trip safe. If you're traveling by car and your dog enjoys car travel, you may
want to accustom him/her to a restraining harness. Because most cats aren't comfortable
traveling in cars, it's best (for their safety as well as yours) to transport them in a securely
placed carrier.
Angel
Noelle
Talk to your veterinarian. Consult your veterinarian about behavior modification or medication that might lessen the stress of travel.
Prepare your new home. Take with you all the familiar and necessary things your pet will
need from day one in your new home: food, water, medications, bed and litter box. Also
have on hand a recent photo of your pet, for use if your pet becomes lost.
Governor
Diane
Property Owner vs. Tenant: Who Is
Responsible For Repairs?
By Noelle P. Friesen
When a renter moves into a building, the property owner and the tenant share joint responsibility for the maintenance and repair of the unit. However, the majority of the responsibility for maintaining a rental unit, and the property in general, falls on the property owner.
Residential property owners are required to provide rental units that are “habitable.” In
other words, the units must meet basic structural, health and safety standards and owners
must maintain the premises and make repairs. The owner must also ensure there are no
defects in the premises that are hazardous to the life or safety of the tenant when the tenancy starts. This warranty of habitability applies to all residential rental units, whether under
a lease agreement or in a month-to-month tenancy. And, if these basic conditions are not
met, a tenant may have a legal defense for not paying the rent or for breaking a lease
agreement.
Thus, owners should examine their property thoroughly before each lease begins. It is also a
smart move to photograph all areas of the property, paying close attention to the condition of the flooring and appliances. These items are easily damaged and can be costly to
repair or replace. Documenting the condition of the unit when the tenant moves in is a
critical component of property management.
On the other hand, damage to the property beyond normal wear and tear is the tenant’s
responsibility and a tenant may be charged for the cost to repair such items. Photographs
and documentation can serve as proof if there is a discrepancy.
In addition to basic maintenance responsibilities, most state laws require tenants to inform
their property owner immediately of any repair or maintenance issue that needs attention
and may be the owner’s responsibility. Owners should make periodic visits to their rental
units to check on each tenant's general maintenance of their unit. It is also important for
owners to promptly respond to repair and maintenance requests. This will not only ensure
the upkeep of the property owner’s asset, but will keep reliable and responsible tenants
from moving out.
The property management team at KPL can help ensure that all these guidelines are precisely followed. To learn more about the services offered by KPL Select Property Management, visit www.kplselectpropertymanagement.com. Let us do the work so you can relax
and realize the full potential of your investment.
Nemo
Jennifer
Chloe
Jen
Duebber
Shannon
Remmie
Julie
Mia
Liz
Elliott & Emmitt
4348 Van Nuys Boulevard, Suite 200 Ι Sherman Oaks, CA 91403 Ι Phone: (818) 907-5757 Ι Fax: (818) 907-5626
2583 N. Palm Canyon Drive, Suite 200 Ι Palm Springs, CA 92262 Ι Phone: (760) 327-9700 Ι Fax: (760) 327-9701
www.kplselect.com Ι [email protected]
Jaye
2583 N. Palm Canyon Drive, Suite 200
Palm Springs, CA 92262
(760) 327-9700
4348 Van Nuys Boulevard, Suite 200
Sherman Oaks, CA 91403
(818) 907-5757
PRSRT STD
US POSTAGE
PAID
VAN NUYS CA
PERMIT #540
The Select Report
Newsletter
Kelly Lynch & Team Rides In AIDS/Lifecycle
From June 3rd-9th Kelly Lynch and her team cycled 545 miles from San Francisco to
Los Angeles to raise funds and HIV/AIDS awareness as part of the 2007 AIDS/
Lifecycle event.
This year’s ride raised $11million for much needed financial support for critical HIV/
AIDS related services and education. Sponsored by the San Francisco AIDS Foundation and the L.A. Gay & Lesbian Center, AIDS/Lifecycle provides an opportunity
for cyclists to face the physical and emotional challenge of riding for six days from
San Francisco to Los Angeles.
The event provides a reminder that the rate of HIV infection is increasing, particularly in communities of color and in individuals under the age of 25. In California
alone there are 60,000 people living with AIDS, and another estimated 91,000 living
with HIV, many unaware of their infection.
To learn more, or to make a donation, visit Kelly’s homepage at
www.aidslifecycle.org/3258.
Kelly in training
Helping Hands — Join KPL’s Habitat For Humanity Team!
This summer members of the KPL Team will work on a project with Habitat For Humanity. Join us
on Saturday, July 14th for a day of volunteer home construction work in Pacoima, California.
Habitat For Humanity is a non-profit organization dedicated to the goal of eliminating poverty
housing and making decent, affordable homes a reality for all families. For more information,
visit: www.habitatla.org. To volunteer with the KPL Team on July 14th, contact Diane Ramos at
(818) 907-5757 x249 or [email protected] by July 9th. All skill-levels are welcome.