A Reason Why I am in Real Estate

There are many reasons why I chose to work in the real estate industry, but today I was reminded of my #1 reason. After forty-five grueling days of contract negotiations, inspections, signing disclosures, and coordinating movers, I delivered my Seller's house keys to their new owners - The Chillous'. While I don't know anything about the buyers, other than they have three beautiful children, work in the Air Force, and are purchasing their first property, I was overcome with joy, watching their children eagerly rush up the front stairs and screaming at the top of their lungs calling out each of their rooms. On top of that, seeing the wife's smile (ear to ear) as she tried calming her children down was also gratifying. However, the moment that put me over the top was seeing a note left behind by my Seller to the new homeowners. The note read, "Thank you for your service" and it was posted on a flat screen TV and surround sound stereo system he left behind for the new buyers. The new homeowners looked like they had just won the lottery and couldn't even enunciate "Thank you" because they were so overcome with happiness and surprise. I, too, was overcome with happiness; as I not only helped my Seller, sell his home in less than a month and a half (and for over asking), but I know that I chose the right buyers for this home, who will thoroughly enjoy living there and appreciate all that was given to them.

Thank you, Craig, for allowing me to sell your home. And thank you, Chillous', for reminding me why I love what I do!

In case you were wondering, here is the old virtual tour of the property: www.2018Tsushima.com

Wells Fargo lowers credit score requirement for FHA mortgages

Wells Fargo recently announced that effective Jan. 15, 2011, it will accept FHA-insured mortgages for borrowers with credit scores as low as 500. For borrowers with credit scores ranging from 500 to 579, a 10 percent down payment is required, and the down payment may not be a gift or be part of a down payment assistance program. Borrowers with credit scores of 580 to 599 are required to put down 5 percent, and the down payment may not be a gift or part of a down payment assistance program. Borrowers with a credit score of 600 or higher are required to have a 3.5 percent down payment, and a gift is acceptable. For all borrowers, seller concessions are limited to 3 percent.

Source: CAR Newsline (February 9, 2011)

10 Reasons to Buy a Home

Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed.

Why is now a great time to buy? Here are 10 reasons:

1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.

Source: Wall Street Journal, Brett Arends (9/16/10)

Five Surprising Reasons to Buy a Home Now

ForSaleByOwner.com offers five good reasons why now is a great time to buy a house:

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today's record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

2. Houses are in move-in condition. Home owners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they are in marked contrast to tattered foreclosures.

3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

5. Plenty of programs. Many programs that encourage middle-class families to buy homes continue to exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today's low mortgage rates.


Source: ForSaleByOwner.com (07/29/2010)

Effort to Extend Tax Credit Closing Deadline Gains

The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction. The extension was added to a bill to pay for jobless benefits, which still must pass.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The overall bill, once it passes the Senate, must be approved by the House.

Source: Associated Press, Andrew Taylor (06/16/2010)

How to Help a Family Member Buy a Home

Helping someone close to you buy a low-cost property – $50,000 or less – is a fairly straight-forward transaction, although it may require specific legal advice, says Charles Carter, an attorney and a consultant at Haint Blue Realty in Mount Pleasant, S.C.

Carter suggests that buying a property outright, using the gift exclusion ($13,000 for singles; $26,000 for married couples) to pay for a down payment and closing costs and then giving the recipient a 30-year mortgage on the remaining amount at 5 percent interest is a good way to go.

There won’t be any gift taxes. And the mortgage holder may later cancel the mortgage and gift what remains on the loan as another annual gift-tax exclusion.

Source: McClatchy-Tribune News Service, Charles Carter (06/03/2010)

Service Members Get Extra Year for Tax Credit

Members of the U.S. military, foreign service and intelligence communities have another year to purchase a home and claim the home buyer tax credit.

Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.

The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.

Source: The National Association of Home Builders (04/26/2010)

Five Costly Mistakes First-time Buyers Make

Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:

1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.

2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.

3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.

4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.

5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.

Source: CNNMoney.com, Les Christie (04/19/2010)

New California Tax Credit May Go Fast...

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become available.

REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.

For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.

Source: CAR Realegal (04/15/10)

$18,000 in Combined Homebuyer Tax Credits for a Limited Time

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

For more information, visit Tax Credit

Source: California Association of Realtors (03/31/10)

FHA Loan requirements are about to change...

The FHA's move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower's closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that "this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA's assistance to purchase a home." He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)

Govenor signs New Tax Credit Bill

Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.

To learn more about the California Home Buyer Tax Credit,
Click Here

IRS Clarifies What's Needed to Claim Tax Credit

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)

Are interest rates about to rise?

Federal Reserve Bank of New York President William Dudley says the central bank will scale back its purchases of mortgage-backed securities late next month. While interest rates likely will climb when the program ceases, the extent of the rise remains to be seen.

Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.

Source: Inman News (02/08/10)

Fannie to Offer Closing Cost Aid on Foreclosures

Fannie Mae, the largest provider of residential home funding in the United States, announced Friday that it would pay the closing costs on purchases of foreclosed homes in its inventory.

The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.

The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.

"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.

Source: Reuters News, Al Yoon (01/28//2010)

6 Surprising Facts About the Buyer Tax Credit

The homebuyer tax credit is not as simple or straightforward as you might think.

Here are some nuances that will affect homebuyers who plan to use it.

* To qualify for the move-up tax credit, a home owner must have occupied the same principal residence for five of the last eight years consecutively.

* Buyers can elect to claim the credit on either their 2009 or their 2010 tax return, whichever is best for them.

* Buyers who claim the credit in 2009 can’t file electronically because the Internal Revenue Service hasn’t put the required forms on line. The wait for a refund is three or four months.

* The home can be a mobile home or travel trailer that is fixed to land owned or leased by the home owner. A mobile home or travel trailer that is actually mobile doesn’t qualify.

* The home can’t be purchased from a close relative, including a parent, spouse, child, grandparent or grandchild.

* A buyer who earns no taxable income or doesn’t owe any federal income tax can qualify for the tax credit and file a tax return just to claim it.


Source: Bankrate.com, Marcie Geffner (01/21/2010)

FHA Flipper Rules Waived - Starting February 1st

An excerpt from a HUD Release January 15, 2010 #10-011:

On 2/1/2010 there will be a one-year waiver of the regulation that prohibits insuring a mortgage on a home that has been owned for less than 90 days. There are some restrictions such as no reverse mortgages, must be arms-length and there are specific conditions if the sales price is 20% more than the purchase price.

Why this new rule? HUD says, “In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts that willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.”

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

For more information HUD No. 10-011.

Source: Duane Gomer (www.duanegomer.com)

FHA To Toughen Down Payment Rules

The Federal Housing Administration will raise the minimum down payment for its least credit-worthy borrowers, agency announced Tuesday.

Borrowers with credit-rating scores below 580 will be required to put down at least 10 percent. Those with a credit score above 580 will be able to continue to put down only 3.5 percent. The changes are intended to shore up the agency's finances.

The FHA also will increase its upfront mortgage insurance premium from 1.75 percent to 2.25 percent. The agency is expected to seek congressional approval to raise annual mortgage insurance premiums, paid by borrowers over the life of the loan, above the current 0.55 percent maximum. The amount it will seek has yet been announced.


Source: Reuters News, Corbett B. Daly (01/19/2010)

Another Tax Credit Extension in the works?!?

During his State of the State address, Governor Schwarzenegger today announced his 2010 proposals for California. Included in the proposals is a recommendation to set aside $200 million for a new round of $10,000 state tax credit by including both new and existing homes. Last year's tax credit only applied to new homes.

The tax credit could be combined with the recently extended and expanded federal tax credit for home buyers. The current first time home buyer tax credit is set to expire this March.

For more info, go to:
http://gov.ca.gov/press-release/14124/

Foreclosed homes aren’t always the best deal in town

Here are 10 reasons why foreclosures aren't always the best deal in town, offered by Vince Mastronardi, president of On-Site Specialty Cleaning & Restoration in suburban Detroit.

No heat in the winter. When a home has been left unheated, buyers run a risk of damaged pipes.

Not removed but ripped. Thieves and even angry former owners can do a lot of damage when they depart with fixtures and key systems like heaters and air conditioners.

Peeling, bubbling, and discoloration. Water incursion isn’t always obvious, but these are signs.

Mold. Where there is water there is mold. Look inside cabinets, behind drawers, and around built-ins.

Blocked drains and pipes. Sewer backups can be expensive to fix.

Black cobwebs. This is the result of a malfunctioning furnace, common in properties where there hasn’t been maintenance for a long time.

Homemade and handy. Where renovations don’t look professional, check with the municipal authority. They may have been completed without permits and that could mean they have to be redone.

Fresh paint everywhere. What is the seller covering up?

Check the basement. Look for discolored subflooring, which can point to mold. And search for asbestos, common in older homes that haven’t been brought up to code.

Air quality. Include air and surface testing in a home inspection. It’s a few hundred dollars well spent.

Source: On-Site Specialty Cleaning & Restoration (12/16/2009)