After spending much of this year in the 1300’s-1400’s, sales have declined to 1013. That’s better than the 958 of a year ago, but an improvement of less than 6 percent puts Santa Clara toward the back of the activity pack. Unfortunately, median has dropped almost $200,000 since late spring...most of these reflecting short sales and foreclosed properties. Silicon Valley, after all, is prone to extreme reaction when the economy softens.
A Sunnyvale reader came up with a new question: "What do you think about refi for an existing jumbo loan into a fixed rate 625.5K and the remaining 100k or so on a HELOC...monthly payments are lower given lower mortgage rates....anything we should watch out for...thoughts?"
My first reaction is to ask more questions. What is their existing loan on the property? Is it fixed or adjustable? What is the current rate, and is there a prepayment penalty?
Next, what are the terms on the new loans? Are there any upfront costs or points involved? The things to watch for are a prepayment penalty on the new loan (If the conforming-jumbo rate should rise to $729,900 in the future, you might want to pay off the HELOC...line of credit...and refinance to one fixed-rate mortgage.) There is always a risk with a line of credit, which would most likely adjust if interest rates go up, but if your current loan is already adjustable, the smaller HELOC is still a better choice.
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