Fear of overpaying for property is common in today's economic environment, especially in places like California where prices continue to be unstable.
Sunday, August 2, 2009
Fear of overpaying for property is common in today's economic environment, especially in places like California where prices continue to be unstable.
Friday, June 26, 2009
A first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle. Now both legislators and the business community are hoping to build on the incentive's success by expanding it.
A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes:
- Setting a new cap of $15,000.
- Extending the tax break into mid-2010.
- Making the benefit available to all home buyers, not just first-timers.
- Offering a separate tax credit to $3,000 for borrowers who refinance.
USA Today, Stephanie Armour (06/22/09)
Monday, June 22, 2009
Friday, June 12, 2009
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through aHousing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:
- You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
- You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
- In some cases, the loans are interest-free; check with the state HFA to find out.
- The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
- You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
- Loans can’t result in cash back to the borrower.
- The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
- If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
- Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
- There can be no balloon payment required before 10 years.
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
Source REALTOR® magazine June 2009
Wednesday, June 3, 2009
What information will be needed when Buyer's are applying for a loan
Here is a list of the information mortgage lenders will use to consider your loan application.
For all loans
Social Security Number, for borrower and co-borrower if any
For the last two years, employment dates, addresses, salary.
Current pay stubs or W-2 forms.
Check and Savings Accounts and Certificates of Deposit
Location of bank accounts, account numbers and balances;
Address of bank if out of town
Last 3 months' statements
Stocks, Bonds, and Investment Accounts
Broker's name and address, description of stocks, bonds, etc.
Last 3 months' statements or copies of stock certificates
Life Insurance Policies
Insurance company, policy number, face amount, cash value, if any
Approximate vested interest value
Copy of latest statement
Make and model of automobiles, their resale value
Market value of personal and household property
Liabilities and Other Non-Mortgage Debt
Creditors names, addresses, account numbers
Monthly payments and balances
Other income information you may need
If you're self-employed
Two years tax returns, profit and loss statements, both company and personal if separate.
Current balance sheet and profit and loss statement if more than two months into the new fiscal year, signed by CPA.
If you have income from:
You'll need two years' personal federal tax returns
If employed in family business
Personal federal income tax returns and all schedules for the past two years
If divorced or separated
Complete executed divorce decree and settlement agreement
Payment history of alimony/child support over the past 12 months, if it is a financial obligation.
If you choose to have this be considered as part of your income (you don't have to), be prepared to provide 12 months canceled checks or bank statements reflecting income deposits.
If you own real estate
Name and address of all mortgage lenders for the past 24 months, account numbers, monthly payments and balances
If you've sold your home but not closed:
A copy of the sales contract
If you've sold your home, closed, and you will use the proceeds for your new down payment:
A copy of the HUD-1 Uniform Settlement Statement
If you rent
Name, address and phone number of landlords for the past 24 months
If you're buying a home
Purchase sales contract or offer to purchase and all addenda
Furnish contract with original signatures of buyer and seller
If a source of your down payment is a gift:
Name, address and relationship of donor.
Gift funds will be verified in both the donor and recipient's accounts.
Note: Not all loan programs allow gifts to be part of your down payment.
For FHA Financing
Evidence of Social Security Number and photo identification
For VA Financing
DD214 and Certificate of Eligibility
For Construction/Perm Loan
Signed construction with cost breakdown, builder plan and specifications
Happy House Hunting!
Friday, May 29, 2009
Nearly 75 percent of economists, surveyed by the National Association for Business Economics, say that the recession will end in the third quarter. Another 19 percent think the turnaround will come in the fourth quarter. The rest are betting on the first quarter of 2010.
Americans seem to believe that things are getting better too. The Conference Board's Consumer Confidence Index rose 14.1 points in May to 54.9, the second month in a row in which there have been an increase.
Forecasters say that home sales will bottom out in the second quarter, an important stabilizing factor.
Source: The Associated Press, Jeannine Aversa (05/27/2009)
Tuesday, May 26, 2009
- You can modify or improve it as you wish
- Re-sale value is generally the highest on a single family home
- You can add on to the existing home if more room is needed
- Generally there are no property management fees as there are in condo and many townhouses
- All maintenance and repair costs are your responsibility including electricity, gas, water, sewer and trash removal
- Lack of amenities (for example, community pools, gym, playgrounds, etc.) that you may find in a condo or townhouse
- You are responsible for upkeep and landscaping
- In most areas, SFRs are more expensive
- Less exterior maintenance and repairs
- There may be amenities in the community such as pools, tennis courts, playground, etc.
- Sharing common walls with neighbors may bring a greater sense of security
- You are responsible for Home Owner's Association fees (which cover common areas and other "perks" of community living)
- Your options for changing the exterior look of your house will be limited
- Sharing common walls with your neighbors, you give up privacy as compared to SFRs
- Little or no exterior maintenance or repairs
- Many condo communities offer amenities such as pools, tennis courts, playground, etc.
- Condos are often more reasonably priced and are good entry level homes for first-time homebuyers or excellent for empty-nesters looking to downsize
- You are responsible for Home Owner's Association fees Less privacy
- Resale of a condo is harder and often takes longer to sell
You do not want to do any exterior maintenance or repairs
Monday, May 18, 2009
Although most buyers are excited about the opportunities REOs (REO stands for Real Estate Owned by the beneficiary/lender that foreclosed) present in today’s real estate market, I find that many are also concerned about purchasing a home that can have many unseen problems which may not show up until long after escrow closes. This post is dedicated to addressing some of those concerns.
How Does a Home become an REO
An REO is a foreclosed property. In California, when you buy a home, unless you pay cash for it, chances are you will have to finance the purchase. A home is financed in much the same way a car is financed - you sign legal documents called “a note” for a loan. The lender gives you the money which you agree to pay back with interest over a term of (usually) 30 years. If you default on the loan, the lender can then take the home back and sell it to someone else. The legal process of taking the home back for default on a note is called foreclosure. Although the process in California includes a trustee (a neutral third party-typically a title or escrow company) who is given the note and who is notified by the lender to begin foreclosure proceedings in the event of non-payment the basic idea remains the same: don't pay the mortgage (or property taxes or Homeowner's assessments) and lose the home.
In order to begin the foreclosure process, the lender is required by law to send a homebuyer who has defaulted on the loan a Notice of Default. The lender notifies the trustee in writing that the trustor (borrower) is in default, and instructs the trustee to initiate foreclosure proceedings. This notice is recorded at the county clerk recorder’s office in the county where the property is located and is a document of public record. This means that anyone with an interest in the property may see it. The notice states when the lender is planning on foreclosing, ie. the date of the trustee’s sale and the outstanding amount the homeowner can pay to cure the default and stop the trustee’s sale.
More often than not, the default is not cured and the trustee auctions the property to anyone who will buy it. If there are no buyers at the trustee’s sale, the house becomes a foreclosed property and is referred to as an REO - real estate owned by the lender.
What you should know about an REO as a Homebuyer
Most lenders are not in the business of real estate; they are in the business of finance. And so, the house acquired by a bank through a foreclosure is usually put back on the open market. To come up for a sales price for the property, the bank hires a Realtor® and asks for a BPO - a Broker Price Opinion. The Realtor® appraises the property based on similar properties also known as “comps” and offers to list it. Since most foreclosures are fixers, they are usually placed on the market for a substantially discounted price.
As a home buyer of a bank owned home, your concerns are justified. An REO is usually a fixer. The most obvious reason for this being the family that was foreclosed upon was low on finances. If they didn’t have enough to make their mortgage payments, chances are there are quite a few things about the house that went unrepaired. This is also called deferred maintenance. Deferred maintenance can be a small problem, like a leaky faucet, or can hide bigger problems, like a leaky faucet that rotted the bathroom sub-floor.
You should also be aware that as a purchaser of an REO, you don’t receive full disclosure about the house. The bank is not required to provide you with a Transfer Disclosure Statement, partially because the lenders have never been in the home and are unaware of what exactly is wrong with it.
Resolve your Concerns
So is purchasing a foreclosure the best bet? Sure, the price is deeply discounted, but does that make up for everything else? While that's a question only you can answer, the one thing I stress to take the pain out of any future problems: Always, always, always get a physical inspection!
Brokers recommend a variety of inspections, including pest, roof, septic system and a complete home inspection. Disregarding any of these inspections can be a big mistake on the part of a homebuyer. While most banks will not repair any items listed as potential or real problems during these inspections, you can get an idea of how much work is involved in making the home as habitable as you want it and decide if the asking price is worth the risk and work involved. The price you pay for the inspections is well worth its weight in gold.
You, The Homebuyer
With so many bargains out there in short sales, REOs and pre-foreclosures, if you are serious about buying a home at a deeply discounted price, chances are you will find what you are looking for. Do yourself a favor and get all the facts, look hard and long and don’t be scared to make an offer when you find the right one!
Friday, May 15, 2009
Meet the Team
Maurice Anderson-Broker, REALTOR, GRI
Sharing his father’s passion for helping people realize their real estate objectives Maurice Anderson obtained his Brokers license and joined the company in 1976 after graduating from the University of Oregon with a BA degree in Finance and Business Economics.
Maurice is an expert in the southern california real estate market. Always willing to share his experiences and knowledge, he has taught courses at the local community colleges helping others realize their potential in becoming real estate agents.
His professional goal is to serve the client first. Clients who are seeking to purchase a home appreciate the dedication and commitment he shows in partnering with them to view and understand what the current market offers. He takes the time needed to help clients realize their dreams, and works diligently to attain the highest price and best terms for his sellers and the best deal possible for his buyers by providing unique negotiating strategies that have proven successful on homes in every price range.
Susan Anderson- Office Manager
As an active member of the Long Beach community, Susan has a deep understanding and appreciation for the areas she serves.
After earning her BS degree in Psychology and a Masters in Public Affairs-Business Management-Curriculum and Instruction at the University of Oregon, Susan moved to the Long Beach area and raised three children here, gaining an even better insight into local communities, entertainment, services and schools.
Since 1979, Susan has been effectively representing both sellers and buyers in purchases of single-family homes and condominiums, as well as investment properties. She loves what she does and enjoys greatly the interaction and relationships with both clients and other real estate professionals. In addition, Susan works as the office manager, helping to guide other associates through their transactions.
Andrea Bolder-REALTOR, REO Buyers Agent
Andrea is the newest addition to the Anderson Realty team. A former professional track & field athlete and Olympian, Ms. Bolder has nearly eight years of professional sales experience.
Andrea holds a BS in Biochemistry from the University of California, Los Angeles where she attended on a full scholarship and was awarded multiple honors, including All-American, three-time Pac-10 Champion and NCAA National Champion. Upon graduation, she traveled the world running professionally for two years before entering the business arena.
Andrea worked as a sales account manager with a major corporation before committing full time to real estate. The same professionalism and dedication that made her successful in the athletic and corporate world she now brings to her real estate clients and customers.
Let Anderson Realty be your partner in Real Estate!
Monday, April 13, 2009
A Real Estate Agent will help you save time and effort in your search for a new home. They have access to home buying tools and with their experience will guide you through the buying process. An agent will assist in finding a home that suits your needs and price range. They’ll help you:
1. understand the contracts and paperwork
2. find a home that meets your needs
3. search property values in your area
4. negotiate the offer
5. coordinate the closing process
Buying and selling real estate is a complex process. Every property is unique. No two properties are alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike. An experienced agent can walk you through the legal forms, financing, inspections, marketing, pricing and negotiating.
Talk to family and friends. See what experiences they had with the Realtors that sold them their homes. Ask for referrals but make sure that the agent is right for you. Take the time to interview more than one agent. In the times of where over 80% of both buyers and sellers turn to the internet when they initially decide to buy or sell, it is to your advantage to have a tech savvy REALTOR. Remember, your agent is an extension of you and you want to make sure he/she represents you well.
Tuesday, March 31, 2009
Get Pre-approved for a Loan
Very few people buy a home with cash. According to the National Association of REALTORS® (NAR), nearly nine out of 10 buyers finance their purchase, which means that most all buyers -- especially first-time purchasers -- require a loan.
When it comes to financing, the real issue is not getting a loan (anyone willing to pay higher interest rates can find a mortgage), but getting the loan that provides a mortgage with the lowest cost and best terms.
Agents suggest that serious buyers start the mortgage process well before bidding on a home. By meeting with lenders and looking at loan options, you will find which programs best meet your needs and how much you can afford.
REALTORS® also recommend pre-approvals for another reason: Purchase forms often require buyers to apply for financing within a given time period, in many cases, seven to 10 days. By meeting with loan officers in advance and identifying mortgage programs, it won't be necessary to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.
A pre-approval letter, unlike a pre-qualification letter, involves verification of your financial information. The lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification. The additional due diligence is exactly why the pre-approval carries more weight and shows your borrowing power. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.
Although not a final loan commitment, the pre approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. You'll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in situation where the seller is presented multiple offers.
Keep in mind, pre-approval letters aren't binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.
How do you get pre-approval?
Real estate financing can be obtained from a number of sources, including banks, savings and loan, credit unions, mortgage companies, various government lenders and in some cases, individual REALTORS® themselves. Talk with several lenders before you decide. Your real estate broker will be familiar with lenders in the area and what they are offering. With their experience they can usually suggest lenders that have a variety of programs and competitive rates.
The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most-closely meet your needs.
This is also an opportunity to ask your lender about the following programs:
· Government Loan Programs: FHA and VA offer loan programs particularly beneficial to low-and moderate-income individuals.
· State and Local Housing Programs: Potential home buyers can familiarize themselves with a variety of state and local housing programs that offer additional benefits in their local area
For instance, a first-time buyer may qualify for state-backed mortgage programs with little money down and low interest rates, while a repeat purchaser (someone who has bought a home before) with more equity (money invested in the home) might want to get a 15-year loan and the lower overall interest costs it represents. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the life of the loan.
Friday, March 27, 2009
A credit score is a single number that helps lenders and others decide how likely you are to repay your debts. One kind of credit score is a FICO score (FICO stands for Fair Isaac Corporation Inc., the company that developed a common scoring method). FICO scores range from 300 - 850 points.
When you apply for a mortgage, your credit score is evaluated. Your credit score may also be used to determine the mortgage interest rate.
Your credit score is based on several types of information contained in your credit report:
Your payment history.Late payments will decrease your credit score.
The amount of debt you owe.If your credit cards are at their limits, this can lower your credit score - even if the amount you owe isn't large.
How long you've used credit.Your credit history is important. If you show a pattern of managing your credit wisely, keeping credit card balances low, and paying your bills on time, your credit score will be positively affected.
How often you apply for new credit and take on new debt.If you've applied for several credit cards at the same time, your credit score can go down.
The types of credit you currently use.This includes credit cards, retail accounts, installment loans, finance company accounts, and mortgages.
Your credit score is only one factor in the credit decision. Mortgage lenders also look at your credit report, employment history, income, debt-to-income ratio, and the value of the home you want to buy.
What the Numbers Mean
FICO does not make specific statistics available to the public regarding credit scores. However, they do provide some snapshot numbers that can help you understand how to interpret your credit score:
Credit scores ranging from 770 to 850 are considered very good, and the best credit rates are usually available to borrowers within this
Credit scores above 700 are considered good, according to FICO, and most borrowers' credit scores are within this range. The median credit score is about 725.
When credit scores are below the mid-600s borrowers may experience higher interest rates when looking for a loan.
It is important to remember that credit scores are like snapshots of your credit – they show a "picture" of your credit based on current information. By using credit wisely, you can improve your score over time.
Credit and Credit Reports
Your credit can have a big influence on whether or not you can get a mortgage, as well as the terms of the loan and the interest rate. If you have good credit, you will have a wider range of options. That is why it is important to understand what affects your credit and to monitor your credit reports regularly.
Your credit report should accurately represent your credit history. From the moment you first apply for a loan or a credit card, you likely have a credit history.
Credit-related transactions appear on your credit report, including your current debts, paid debts, and payment histories. Your credit report is compiled by three private companies: Equifax, Experian, and TransUnion. These companies sell your credit report to banks and other creditors so they can review your past credit history.Your credit report includes:
A list of debts and a history of how you've paid them.This can include credit cards, car loans, and student loans.
Any bills referred to a collection agency.This can include phone and medical bills.
Public record information.This can include tax liens and bankruptcies.
Inquiries made about your creditworthiness.An inquiry is made when you apply for credit. Your credit report can also show if you were given credit based on the inquiry.
Adverse or derogatory credit information in your credit report is required to be deleted after 7 years (bankruptcy-related information and federal tax liens are required to be deleted after 10 years). Your credit report is continuously updated, which is why you should always know what it looks like.
Additionally, regular monitoring of your credit can help you spot and put a stop to identity theft early before your credit is seriously harmed.
Happy House Hunting!