Rent a Room to Help with the Mortgage Payment 

A growing trend in the San Francisco and East Bay Areas of California to cope with a high mortgage payment is renting out rooms. As ARM's reset and the monthly mortgage payment rises, more and more Bay Area homeowners are taking in renters.

If you're considering this route to help with a rising mortgage payment, keep the following in mind:

• Evicting a tenant requires 30 days notice (60 if they have rented more than a year)
• Tenants must give 30 days notice before moving out.
• Update your homeowners insurance
• Get a damage deposit
• Put it all in writing

Checking Craigslist, I found:

• Danville, CA - 36 entires from $675 to $1200
• San Ramon, CA - 40 entries from $400 to $1300
• Dublin, CA - 46 entires from $495 to $1000
• Walnut Creek, CA - 93 entires from $500 to $1000

Renting out rooms to cover expenses is nothing new, but the growing trend of renting rooms out in upscale neighborhoods is growing and that is new. Not since the Great Depression have so many homeowners opened their homes up to renters. 

A search on Yahoo Real Estate on the term San Ramon CA, shows 256 properties in the foreclosure process. A search on Danville CA, shows 129 properties in the foreclosure process.

We are being bombarded by foreclosure news stories. Congress is playing politics with the situation, banks are over spinning the amount of assistance they are offering and people are sill losing their homes.

It’s a mess, but how big of a mess is it really? To the homeowner in foreclosure it is a huge, total mess, but to the overall housing market what do the statistics really mean?

If the 1.2 million properties in the foreclosure process were foreclosed, that would represent less than 1 percent of U.S. households. Keep in mind, receiving a notice of default, puts your home in the statistics. Many of these homes never go through foreclosure.

In 2000, more than 60% of households didn’t even have a mortgage. Thirty five million of those were renters, 26 million people owned their homes outright – paid in full. None of these people are in danger of losing their homes to foreclosure.

At the end of 2006, there were about 51 million outstanding mortgages in the U.S. According to Loan Performance, 92 percent of the 2.1 million sub prime ARMs are scheduled to up this year. That sounds like a big number, but the total amount of ARM increases reflects only 2.6 percent of U.S. households.

Reading all the national news and hysteria around foreclosures and the housing market can get people worked up. Even in communities like Danville, San Ramon, Pleasanton, Blackhawk, Alamo and others along the 680 corridor where local housing market trends are far better than national averages.

According to Bankrate.com, three primary factors in California were significant declines in home prices, low housing affordability, and investor speculation.

Homeowners with loans in trouble or loans that even look like they may be in trouble, need to be aggressively pro-active. Homeowners planning on staying where they are for another five years should have nothing to worry about unless we have a complete meltdown of the U.S. economy, in which case we’re all in trouble.

Homeowners that purchased between 2004 and 2006, that need to sell are one group of homeowners that need to look at their situations very carefully. Expert, professional advice and local market trends are of utmost importance for these homeowners.

And while all of this is happening – investors and buyers are beginning to return to the market to gobble up those foreclosures that represent great deals in East Bay real estate.

Whcih way is your mortgage interest rate heading?

Many people assume that when the Fed cuts interest rates it will lower mortgage interest rates, but this is a misunderstanding. Long term mortgage rates are not tied to short-term treasury notes.

The Federal Reserve cut interest rates by three-quarters of a percentage point Tuesday, but don't expect mortgage rates to go down too. In fact, home loans could be heading higher.

Long-term mortgage rates (30 year) are tied to inflation concerns and not the Fed rate.

But, your Adjustable Rate Mortgage interest rate may lower because there is more of a connection between ARM’s and the Fed rate.

Related articles

• Pain relief for mortgage flare-up
• Fed to crack down on shady lenders
• Home Foreclosures Hit Record High
• Record Number in U.S. Lost Homes in '07

San Ramon, Dublin & Pleasanton, CA

Foreclosures on the Rise 

We've been reading more and more about the rise in foreclosures, short sale situations and the trouble more home owners are facing with ARM mortgages coming due. Many Adjustable Rate Motgages that many took out to purchase a home 3 to five yearsago are getting ready to "kick up" the monthly payment of many home owners.

The California Association of Realtors® reoprts:

"The number of foreclosure filings across the nation exceeded 100,000 for the sixth consecutive month in January, with foreclosure activity increasing in all but 17 states, according to RealtyTrac's "January 2007 U.S. Foreclosure Market Report." Texas and California led the country with the most foreclosure filings last month, with 14,728 and 14,430 foreclosures, respectively. In California, foreclosures were up 14.3 percent compared with the previous month and up 54.3 percent from January 2006."

In the last 24 hours, we have held discussions with two of the top mortgage institutions serving the San Ramon and TriValley areas. The loan officers we talked to reported an increase in refi's. They have solutions for home owners facing problems with their re-ARMing.

If you are in such a situation, don't delay - start the refinance process before things reach a critical point. Many people are not aware of all of the options available and wait too long to deal with a difficult situation that then becomes more difficlut.

Contact us for recommendations - no obligation on your part.