Friday, November 14, 2014

Delayed Financing: Become an All-Cash Buyer

Money! by Tracy O, on FlickrPhoto by  Tracy O 
The 2008 financial crisis - brought about in large part by reckless lending – saw an immediate and dramatic tightening of mortgage loan requirements.  However, over the past couple years the market has shown significant signs of recovery, and loan requirements have begun to look a little bit more like what we were used seeing prior to 2008.  This is evident in the re-emergence of a few products that had virtually disappeared up until about a year ago.  Products like mortgages with loan-to-value ratios of 85-90%, Lender Paid mortgage Insurance, and mortgages to borrowers who are shouldering debt-to-income ratios of up to 50%.  All of this should go a long way in restoring optimism in hopeful homebuyers, but it isn’t what should be capturing headlines.
What’s more interesting is that there is an entirely new loan program that didn’t exist prior 2008, mostly because the problem that it addresses wasn’t nearly as prevalent as it is today.  This new program is called delayed financing, and it allows for a buyer to make an all-cash payment on a home and then turn around the next day and refinance.  Until earlier this year, there were seasoning requirements in place that prevented this practice.
Why would someone do this?  Well, cash buyers have a competitive edge over buyers who are taking out mortgages.  Sellers prefer cash buyers because their money is a sure thing and they make transactions quick and easy, making it hard for buyers taking out mortgages to compete.  This was never really a huge issue, but recent foreign investment has flooded the market with cash buyers, particularly in the Bay Area, and some borrowers are starting to feel the heat.
Delayed financing offers a solution to this problem.  Some people may have the ability to find enough cash to purchase a home, but doing so would leave them with no liquid assets.  Being able to take out a mortgage the day after they make a cash purchase allows them to enjoy the competitive edge they get from being a cash buyer without leaving the bank accounts empty in the process.  It essentially gives you the best of both worlds: the competitive edge of being a cash buyer, and the financial security of not having all of your money tied up in your home.

Thursday, November 13, 2014

Google Confirms Redwood City Purchase, Continues to Expand


Google has officially confirmed their $585 million purchase of six office buildings at the Pacific Shoes Center in Redwood City.  They have also confirmed their intentions to occupy said buildings.  But even with the ink still drying on their Redwood City purchase, the tech giant is continuing their dizzying pace of real estate acquisitions.
A Google subsidiary, Planetary Ventures, just leased NASA's Moffett Field for 60 years, during which time they will pay roughly 1.16 billion dollars.  The deal gives them control of a few hangars which officials say they intend to refurbish and use for research into new space exploration technology.
They also have plans to expand into San Francisco, where they have recently purchased an 8 story building on the Embarcadero.
One of the reasons that Google is likely expanding into so many different parts of the Bay Area is to resolve the commuting problems that their employees face getting to and from their Mountain View headquarters.  The Redwood City location is adjacent to the Port of Redwood City, where Google has long been toying with the idea of getting a commuter ferry running, and having real estate in San Francisco will make things a lot easier on their many employees who already live there.

Friday, November 7, 2014

Refinishing vs. Replacing Your Old Hardwood Floors


 Hardwood floors are typically fairly durable, but like any type of flooring, they take all sorts of abuse over the years. They can become warped, chipped, stained, dull, or any combination of the above, and eventually you are going to be faced with the question of whether you want to refinish or replace them. There are pros and cons to both options, and which route you take will likely be dictated by the extent of the damage to your floors and/or how much money you are willing to sink into them.
Under normal circumstances hardwood floors can go 20-30 years before needing to be refinished, and most floors can be sanded and refinished 6-7 times over their lifetime.  So unless there is significant structural damage to the planks, or to the subfloor beneath them, your hardwood can usually be professionally refinished and touched up at a much lower cost than if you were to completely replace them.  With that being said, this doesn’t mean that refinishing your hardwood floors will make them look brand new.  If your floors are severely warped, chipped, or loosened, simply sanding and refinishing them will just brighten up badly damaged floors.  Contractors can replace patches of damaged planks, or temporarily nail down loose or warped ones, but if the damage is pervasive enough, it might be best to just replace the floors altogether.

 While replacing is almost always more expensive than refinishing, the upside is that it is usually a lot quicker and easier.  Refinishing hardwood floors is a messy process that can take 4-5 days, during which time the floors can’t be touched.  It requires brushes, basecoat sealer, topcoat sealer, sanders, edgers, and a lot of dirty work.  Replacing, on the other hand, can be done with minimal mess by a professional contractor in as little as 1-4 days depending on the amount of floor that is being installed.

On a side note, if you do decide to go the replacement route, it would be worthwhile to look into engineered hardwood.  Its slightly cheaper than solid hardwood, and it stands up to humidity and weather problems better because of its multilayer composition (usually only the top 1/8” is hardwood).

If you are trying to figure out what to do with your hardwood floors, feel free to give us a call.  Our in-house licensed contractor can walk you through your options, and help you decide which one is best for you.