Keep Current on your Homeowner Dues

And, someone taking advantage of this bought the home for the amount of the delinquency and the associations legal costs, $3,500!

33 states have ruled that Homeowner Associations do not have to go before a judge to collect on liens placed on properties. Many of these states can even foreclose on those properties in what is called a non judicial foreclosure.  Associations have become more aggressive about collecting on the delinquent fees as the economy has worsened.

If you are thinking of purchasing a home in a community represented by a Homeowner Association make sure that you keep those payments up-to-date.

The median price in April 2010 was $306,230 up from $253,110 the year before and up 1.5% over March 2010′s median of $301,790.

The annual sale of homes was down below the 500,000 mark for the first time in 19 months, primarily due to buyers delaying closing of escrow to take advantage of both the federal and state home buyers tax credit. May should be a much stronger month as these escrows close.

Also, there is a demand for good foreclosed properties with a low inventory of same.  And with mortgage rates so low, buyers are out there looking.  When something good comes on the market the competition is huge.

Even though sales may level off after the tax credits are gone, it is anticipated prices should stabilize or increase due to the lack of inventory and large demand.

If you have tried to file and found the fax lines busy the Franchise Tax Board suggest trying outside hours when the lines may be less congested.  Make sure that all the pages go through and keep a copy of the confirmation.

Some points to consider:

First time home-buyers:  you must close escrow after May 1, 2010 but you may have entered contract before May 1.
New home buyers:  you must have entered contract after May 2, 2010

Credits are limited to the lesser of 5% of the purchase price or $10,000 to be taken at the rate of $3,333 per year starting in the home was purchased for 3 consecutive years.

If you are buying a home in Los Angeles you may only apply for one tax credit and if you qualify for both the new home credit will be applied.

You will not qualify for the credit if a new home credit was applied in 2009.
If you or your spouse is related to the seller you will not qualify.

If you qualify for the new home tax credit you may request a reservation to keep your place in line if you entered a contract after May 1, 2010.  You cannot request a reservation for the first time buyers credit.

Visit the Franchise Tax Board for more information.

This is to ensure that you have not taken out, or even shopped for additional loans – a new car, furniture, and new credit card, etc. If the new credit screening finds that you have, the loan will be put on hold pending further investigation. If the loans are large enough to affect the debt-to-income ratio this could put an end to the loan as it could mean monthly payments that are too high to support your budget.

Part of Fannie Mae’s loan quality initiative, lenders will be required to get two credit reports, social security numbers and verification of the borrower’s occupancy of property.

When buying a home in Los Angeles resist the urge to continue spending after you have applied for a mortgage, because you spending pattern is going to be closely investigated after the second credit screening. You may need new furniture for that home, but you might want to wait until after the closing lest you lose your loan.

Search Los Angeles homes for sale

Do you know what comes with the home by default?  Did you know that you can ask for anything in your purchase offer?  You should certainly not be afraid to ask for that lovely chandelier in the dining room, or the patio furniture that just finishes off the garden, or the curtains.  They were after all made for the house.

However, if you don’t ask, you may not get.  Sellers don’t always know what to leave and what to take, so it can also be helpful to put everything in the contract.  Then there will be no confusion at the end.

Fixtures and fittings stay.  Personal property goes.  If you see a flat screen TV, or audio equipment attached to the walls, don’t assume that you are going to inherit it.  Unless they are actually fixed to the property, the Seller can take them.  This would include items attached to the walls with brackets.  Those are removable.  You can ask for them, but they are not automatically yours.

Also, to be sure;  ask for the appliances you want, even if you think they are fixed.  Better to be safe than sorry.

In the case of the chandelier, the Seller may take the chandelier you had your eye on and replace it.

Buying a home in Los Angeles? Don’t be afraid to ask for what you want.  You may be surprised and get it!

There are many other costs to consider and Los Angeles first-time home buyers should estimate an additional 1% of the home’s value per year in additional costs.

These include utilities:  gas, water, electricity, cable, telephone.

If you are thinking of buying a condominium of a home in a PUD (planned unit development) then there will be association dues, anywhere from the mid $100s to the $500s for an average unit.

Also, money is probably going to be spent on renovations, appliances and furniture.

And then there is maintenance.  An unknown.

So, Los Angeles first-time homebuyers, before jumping in over your head and being house poor, make the necessary adjustments for the amount of house you are going to be able to afford.

Hopefully, those buyers who purchased their homes in a rush to get in under the wire before the expiration of the home buyers tax credit got the homes they wanted.  Those that have not yet purchased should not take their time.

May 1, the California first-time home buyers tax credit kicks in and that is not going to last long.  This is a $10,000 tax credit given over 3 years.  This is also available for the purchase of a previously unoccupied home.  This also is not expected to last as the monies will run out.

Interest rates and home prices are slowly rising so it is a good time to catch the wave.  What we do need to see is new inventory, so it is a win-win situation for both buyers and sellers.  A new, well-priced home is going to be a desirable commodity.

California First Time Home Buyers Tax Credit

It is anticipated that the $100 million allocated is going to run out within the first few days.  There is also $100 million available for new homes that have never been occupied.  Both available on a first-come first-served basis.

The California Association of Realtors economics team estimate that the funds may last only 10-20 days based on May sales figures.  They did not take into consideration the fact that buyers may delay their April closings until after April 30 to take advantage of the Federal and State first time home buyers tax breaks.

It will be interesting to see how long this program will last.

The $8,000 Federal home buyers tax credit is due to expire on April 30th so you must be under contract by that date and you must close by June 30th.

The $10,000 California home buyers tax credit starts on May 1st and you must be under contract by December 31st.  This is a credit against your taxes of $3,333 per year for three years.

For more detailed information on these credits visit my blog.

The bill provides $100 million for first-time home buyer who buy existing homes and $100 million for home buyers who buy new or previously unoccupied homes.

To qualify you must close escrow between May 1 and December 31, 2010.  Or, if you were under contract on or prior to December 31, 2010, you still qualify if it is your principal residence on or after December 31, 2010 or before August 1, 2011.

The amount of the tax credit is equal to the lesser of 5% of the purchase price, or $10,000, whichever is less and is a credit against tax, taken in three equal amounts over three consecutive years.

Purchases must live in the home as their principal residence for a minimum of two years or forfeit the credit.  It will have to be repaid to the state.

This is an arms-length transaction and the buyer cannot be related to the seller.  Also, the minimum age of the buyer is 18.

The definition of first-time buyer is someone who has not owned a property in three years.

More information on the Bill – AB 183

If you are buying a home in Los Angeles, then now is definitely a good time to buy.

1. Are you aware that you do not pay your Buyer’s agent a commission?  This is paid by the Seller.  All the more reason to use an exclusive buyer’s agent who will be looking out for your interests and walking you through all the negotiations.
2. Making your first offer can be scary.  However, the purchase contract is designed to protect you by setting contingency periods that you need to meet in good faith.  But, if you cannot, through no fault of your own, meet these time-frames, then you can cancel the contract.  The main contingencies are:
   1. Loan and Appraisal – generally 17 days, and
   2. Inspection – also 17 days.
3. If you are unable to receive a loan, the property does not appraise, or are unhappy with the inspection report, and the Seller will not make any concessions, then you can walk away from the deal, and your good faith deposit will be refunded.
4. Once you have removed all your contingencies, however, then your deposit funds become hard.
5. The purchase contracts are mostly standardized and your agent will walk you through the parts that can be customized to your requirements, the main ones being:
   1. Length of escrow period.
   2. Length of contingency periods (loan, appraisal and inspection).
   3. How much home warranty plan to purchase and what it shall include.
   4. What items you would like to request that the Seller leave, etc. fridge, washer/dryer, etc.
6. Your agent will assist you with finding a home inspector and help you understand the report once delivered. He or she will also help you decide whether to hire additional inspectors based on the first report.  They will also help you draft a “Request for Repairs” should you so wish.
7. Your agent will work with your lender to ensure that things move forward in a timely manner as much as possible.  They will also follow-up with the listing agent to make sure that you receive all the required disclosures due from the Seller.  These are important as the Seller has to disclose everything they know about any faults the house may have.

Basically, the escrow process is quite straightforward, at least it should be if you are working with a capable agent who is representing your interests. The information above is a pretty basic overview of that process.  I you would like a more detailed description, please do not hesitate to contact me and I will provide you with a step-by-step guide.

Little time remains for you to take advantage of the Federal Home Buyer Tax Credit. Along with high affordability and low mortgage
rates, tax incentives make now a great time for first-time and repeat buyers to purchase real estate. It also presents a good opportunity for sellers. Now is the time to make sure your home appeals to motivated buyers.

First-time Buyers

If you have not owned a home within the last three years, you may be eligible for a tax credit of 10% of the purchase price of your first home, up to $8,000. The tax credit program has some additional incentives for those who purchase another home. You may be eligible for a tax credit up to $6,500 if you have owned and occupied your current residence for five consecutive years during the last eight years.

Repeat Buyers

The tax credit program has some additional incentives for those who purchase another home. You may be eligible for a tax credit up to $6,500 if you have owned and occupied your current residence for five consecutive years during the last eight years.

Other Eligibility Requirements

There are limits on the highest income you can earn and still be able to qualify for the full amount of the tax credit. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this, but less than $145,000 can receive a partial credit. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap, but less than $245,000 can also receive a partial credit. Qualifying buyers may receive the tax credit for properties with a maximum purchase price of $800,000.

There is so much that goes on behind the scenes that you need your own personal agent.  Only this agent does not take his or her 10%.  You have the benefit of  someone guiding you through the process for absolutely free!

This is what your real estate agent will do for you:

Provide you with a market analysis to determine the value of the home.  This is done by researching comparable properties that have recently sold in the area.  They will also look at your competition, homes on the market or in escrow.  Those homes that have been sitting for quite a while are most probably over-priced and the ones that went into escrow quickly should be well-priced.  This information will give you a basis for your offer.

Prepare a strong offer which shows your genuine interest in purchasing the property.  This will be reflected in terms and conditions that will be attractive to the Seller and reasonable to you, the buyer. You need to ensure that you are protected and know to what you are entitled.  Your agent will also submit proof that you are financially qualified to buy the property, having worked with you on getting your pre-approval from a lender and proof of funds.  No Seller is going to accept an offer in this market from someone who does not demonstrate their financial viability.

Negotiate on your behalf with the Seller’s agent.  Your agent will present you in the most positive light as someone who is really motivated and able to purchase the property.  This is also a business of human connection.  The Seller may be, and often is, still attached to their home and will want to know that the new owner is going to take care of it as they did.  This can all be part of the negotiations which your agent is doing on your behalf.

Manage the process after your offer is accepted.  There are several contingencies that a buyer has to meet during the escrow period and a mountain of paperwork that has to be filled out correctly.  Your agent will guide you through this process and ensure that all your concerns are addressed, inspections fully satisfied and contingency periods met.

How do you feel about managing this yourself?  And why would you?

How much can you afford?

Your first step is to consult a mortgage professional. They will be able to tell you the price range in which you should be looking. In this market, your realtor is going to insist that you are pre-approved, before they spend their time and yours looking at houses that are not within your reach. There is nothing more disheartening than getting excited over homes you cannot afford.

What the Mortgage Broker Does

The mortgage broker will inform you how much down payment and monthly payments you can afford based on your income, savings, etc and on the various mortgage programs available which will determine your buying power. Closing costs will also be taken into consideration. These include, your share of escrow fees, loan fees, cost of inspection(s), pro-rated property taxes and other miscellaneous charges.

When you find the house you want to buy, you need to be ready to go. This is a tough lending market and in a multiple-bidding situation (yes this still happens) the most qualified buyer is going to get the home.

Find Your Home

Define your wants and needs. Make a list of priorities: Location, size of house, lot, number or rooms, etc. The more specific you are, the more efficient the process will be. Based on your budget your agent will be able to help you to target your search more efficiently.

Be prepared to make an offer. Chances are, if you like something there are others who will like it too. If you are waiting for a deal the market is going to pass you by. If you are looking to live in your home for several years, buying one that you love is going to be a deal in the long term.

Real Estate 101 is a great resource for first-time buyers.

Make An Offer

With your agent’s help you will submit a Purchase Contract to the Seller. The cleaner the offer, the better the chance it will be accepted. The offer is time-sensitive and if it is a reasonable one, the Seller will either respond with a signed acceptance, or you will receive a Counter Offer and then the ball is in your court. You can either accept the counter, submit your own, or simply walk away.

Once the Offer is Accepted..

The fun starts. You are now in escrow.

A Home Inspection will need to be done immediately, and it is advisable that you are present for that inspection. Upon reviewing the Inspection Report you will have to make a decision. You can ask for repairs to be done. You can ask for credit through escrow. You can ask for a reduction in the price of the home. You can also choose to do the work yourself. Or, you can walk away from the home.

There will be a ton of paperwork to fill out, a lot of it time sensitive, so you need to make yourself available during the escrow process.

Once all the contingencies have been removed, the main ones being Loan, Appraisal and Inspection, then you have basically committed to purchasing the house. The next step will be to sign the Loan Documents. They will be sent to the lender, the lender will fund and the next day title should be transferred into your name, you will be given the keys and the house is yours.

How to Prepare to Take Ownership

Generally you will take over the utilities that the Seller is using, such as gas, electric, water, etc. Arrange to have everything transferred over on the day you take possession. The Seller most likely will have canceled the services in his/her name the same day and you will not be charged to reinstate them.

Your primary residence must have 30% equity and an appraisal will be ordered to confirm this. A rental survey will also be ordered so that the mortgage payment can be washed out.

or

Both mortgage payments must be included in qualification.

or

The new property would be purchased as non owner-occupied.