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Make Sure Your Homeowner Dues are Current

July 21, 2010 by Jane Peters · Leave a Comment 

A recent news story tells of National Guard commander who served in Iraq last year received an urgent call from his wife while there telling him that their Homeowner Association had foreclosed on their paid for $300.000 home because she had missed two  payments.  Yes, only two payments.

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.

Reverse Mortgages Now Less Costly

July 2, 2010 by Jane Peters · Leave a Comment 

If you are 62 or older and interested in a reverse mortgage you now have more choices as upfront fees have come down substantially and some lenders are eliminating them totally and even offering to pay some of the mortgage insurance premium fees up front.

A reverse mortgage allows homeowners to use the home’s equity while still living in their home.  The amount available of course depends on the age of the borrower and the appraised value of the house.  The money can come in a lump sum or installments, or you can establish an home equity line of credit.

The reason for this drop in cost is that investors are looking for securities backed by those mortgages.  The securities backed by Ginnie Mae and based on a reverse mortgage backed by the FHA make for an attractive package, and investors are willing to pay a premium.  Lenders are passing on those premiums to borrowers in the form of lower fees.

Borrowers need to shop carefully for these mortgages and wade through all the offers being presented.

With the declining value of homes these kinds of mortgages are not as popular.  Those that took out reverse mortgages when home prices were at their peak will not see changes to their loans.  There are people who have higher balances than the home is worth, but won’t be on the hook if they or their heirs have to sell.  Because of the FHA insurance they will never have to pay more than the home is worth.

However, because of falling home prices the H.U.D. imposed a 10% reducing in borrowing limits for FHA-insured reverse mortgages.

In the past seniors have taken out reverse mortgages in order to make ends meet and pay off bills, but now people who normally would have sold their home are taking out these mortgages in order to be able to stay in their home until they can sell because they can’t sell now and the money will  eliminate their mortgage payments.

Distressed homeowners are looking at reverse mortgages especially those facing foreclosure.  For them they are a lifesaver.

This type of financing is only for people looking at staying in their homes for a long time.

Check out the HUD Website for more information on taking out a reverse mortgage.

California Median Home Prices Up 21%

May 27, 2010 by Jane Peters · Leave a Comment 

According to the California Association of Realtors the California median home price rose 21% but sales of existing homes dropped by 8%.

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.

Buying a Home in Los Angeles – California Home Buyers Tax Credit Will Run Out Soon

May 19, 2010 by Jane Peters · Leave a Comment 

If you are thinking of buying a home in Los Angeles now is the time to buy.  The California first time home buyers tax credit is due to run out soon.  The new home buyers credit will last longer.

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.

When Buying a Home in Los Angeles Hold Off on Your Spending

May 16, 2010 by Jane Peters · Leave a Comment 

If you are buying a home in Los Angeles and you have been approved for a mortgage based on your credit, be aware that, effective June 1, 2010, your lender may order another full credit screening.

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

Los Angeles Could Stop Paying for Driveway and Sidewalk Repairs

May 9, 2010 by Jane Peters · Leave a Comment 

More signs that the City of Los Angeles is broke.  They are considering ending the policy of repairing driveways and sidewalks.

The burden will then fall on homeowners and with lawsuits totaling anywhere from $3 to $5 million a year in defense of trips and falls, homeowners who do not take care of these hazards after a warning could also be liable.

Insurance companies could refuse to insure homes with dangerous sidewalks.  This is not something that has been given fair hearing and a lot of people are not going to be happy.

Recommendations have been made to wait a year before warnings are issued, develop a proper system for inspection and issuing of notices and provide a list of contractors who can do the work.  Also if a home is in escrow and the seller has not done the repairs, the city would be notified so that this can be a part of closing requirements.

Another option on the table is for the city to borrow from a new bond to be paid for by the owners through property taxes. Having the property owner pay for repairs is not a new concept.  Until the 1970s the City would inspect the sidewalks and cite the owners to make repairs.  It these were not done, the City would make the repairs and bill the property owner.

Federal funds were made available and, until 1978 when the funds ran out, the City would repair root damage from trees on the sidewalks.  In 2005 a shared-cost program was launched whereby residents could pay half the cost and move to the front of the line.

The irony of all this is, try and call the City to get a tree removed.  You can’t…..

Los Angeles First-Time Homebuyers Beware of Hidden Costs

May 2, 2010 by Jane Peters · Leave a Comment 

There was an interesting article in the Los Angeles Times today which spurred me to write about the hidden costs of homeownership.  Los Angeles first-time home buyers may not be aware of what is involved over and above the amount they have in mind after their lender presents them with based on the PITI, principal, interest, taxes and insurance.

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.

Mortgage Debt Forgiveness Will Not be Taxed in California

April 16, 2010 by Jane Peters · Leave a Comment 

Governor Schwarzenegger has signed into law a “mortgage debt tax relief provision” which will shelter Californians who have lost their homes in this down market.

Part of bill SB 401, the provision will allow individuals to exclude up to $500,000 on the forgiven debt, or $250,000 for married individuals filing separately.  This covers only principal residences from 2009 to 2012.

Homeowners would have had to pay taxes on the amount remaining on the loan as the result of a short sale or foreclosure. Debt-reducing loan modifications are also covered by this new law.

Second homes, income or business property, and cash-out equity refinance loans are excluded.

California Homebuyers Tax Credits are Not Going to Last Long

April 15, 2010 by Jane Peters · Leave a Comment 

As you may know the California first-time home buyer tax credit was extended, to commence on May 1, 2010 and end on December 31 2010.

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.

Now is the Time for California Homebuyers to Double Dip their Tax Credit

April 8, 2010 by Jane Peters · 1 Comment 

This is a great time to be buying a home in California.  Although mortgage rates are starting to rise, they are still at an all-time low.  Home prices are at or near the bottom and two tax credits are in effect.

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.

Homebuyer Tax Credit Extended in California

March 25, 2010 by Jane Peters · Leave a Comment 

The homebuyer tax credit has been extended in California.  Governor Schwazenegger signed the bill providing $200 million dollars in home buyer tax credits.

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.

First Time Homebuyers – How to Buy a Home

March 21, 2010 by Jane Peters · Leave a Comment 

I realize that many first-time home buyers don’t know what is involved in the buying process, so I have itemized below the main points with which you may not be familiar:

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.

It Pays to Buy Now

March 19, 2010 by Jane Peters · Leave a Comment 

Grab this opportunity to take advantage of the home buyer tax breaks which expire at the end of April

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.

Understanding How Mortgage Rates Work

February 28, 2010 by Jane Peters · 1 Comment 

Thanks to Rick Pelleriti, Upfront Mortgage Broker, I am providing a video that explains in simple terms how mortgage rates are calculated.

The mortgage rate itself never changes, but the price associated with the rate you choose, does.

You may have heard the term “Yield Spread Premium”, also known as a rebate. This video should help you understand.

Don’t Let the Credit Report Companies Market Your Personal Information

February 9, 2010 by Jane Peters · 1 Comment 

The major credit report companies, Equifax, Transunion, Experian are marketing the information they gather from your credit reports.

Are you tired of receiving unsolicited offers of credit and insurance?  Do you know how they receive your information?

The major credit report companies are providing this information.  The Fair Credit Reporting Act (FCRA) permits this, but it also permits you to opt out of receiving these mailings.

To opt out go to OptOutPrescreen.com

With New Federal Guidelines Short Sales Should Become Easier

January 27, 2010 by Jane Peters · Leave a Comment 

With new guidelines due to take effect in April, and with lenders able to implement them earlier, the frustrating process of short sales should become easier.

The guidelines are part of  the new government Home Affordable Foreclosure Alternative Program (HAFA).  The purpose is to enable borrowers who are eligible for loan modification programs but are unsuccessful in their attempts, to work out a plan with their

lenders to execute a short sale or deed in lieu of foreclosure (where the homeowner relinquishes their rights to the property and passes ownership back to the bank).

The HAFA program applies to a large volume of risky loans not owned by Fannie Mae and Freddie Mac (these agencies will be issuing their own guidelines) as follows:

• The property must be the owner’s principal residence.
• The mortgage loan is a first lien mortgage originated on on before January, 1, 2009.
• The mortgge is delinquent or default is resonably foreseeable.
• The current unpaid principal balance is equal to or less than $729,750.
• The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income.

The HAFA guidelines are voluntary, but many of the major banks, smaller lenders, and servicers are expected to participate in order to clean up the mess and to avoid an influx of short sales.

These guidelines should help as there is an incentive for lenders to participate.  They receive $1,000 to cover costs, and subordinate lien holders receive up to $3,000 in order to release their lien.  Also borrowers receive $1,500 towards moving costs.

Standardized forms, procedures, and timelines will be provided and the borrower will receive pre-approved short sale terms prior to listing the property.  This will attract more serious buyers who are loathe to invest time and money in the short sale process with no guarantee of ever getting the property. The HAFA guidelines also prevent lenders from coming after the borrower for the balance of the debt.

Even though it will take months for lenders to put procedures in place to comply with the guidelines, and it will not solve all the problems, it will alleviate some of the pain.  Bsnk of America has had a short sale fall-out rate as high as 70% as compared with REO transactions with a 10-15% fall out rate.

Wouldn’t we all like to see the short sale process being planned and well-orchestrated as opposed to the free-for-all we have seen in the past.

Buyers Beware of the Good Faith Estimate

January 17, 2010 by Jane Peters · Leave a Comment 

The Good Faith Estimate, or GFE was intended to protect the buyer by documenting all the fees that need to be paid by a buyer at closing.

The fees at closing cannot differ more than 10% of what was quoted, and if it is more, the lender is liable for the difference.  This was put in place to keep lenders honest.  Previously, cost estimates would be massaged in order to lure a borrower away from the competition, and when it came time to pay up at closing the actual fees could be substantially more.

Some lenders are getting around this requirement by issuing work sheets, and loan scenario forms which are not legally binding.  They can effectively do this if an application is incomplete, either because the lender did not ask for the information or the borrower did not fill it in correctly, either innocently or on purpose, thus per HUD’s definition, this is not an application.

Lenders are loathe to issue a hard and fast estimate as they cannot be 100% sure of actual closing costs.  They feel the worksheet gives a good idea of the final costs.  However,  if you would like a clear picture of those final fees, insist on a GFE.  It is a binding document and you will have no surprises come closing time.

Buying a Home in Los Angeles

January 9, 2010 by Jane Peters · Leave a Comment 

You have decided you are ready to buy a home in Los Angeles but you are waiting for:

The bottom of the market.
Interest rates to go even lower.
A great deal on a foreclosure……

There are many reasons to avoid actually jumping in an making the purchase.  But:

You will never know where the bottom is, and common opinion is that we are at the bottom now.
Interest rates are at an all-time low, and are likely to rise this year.
You and the rest of the world are looking for a great deal on a foreclosure.  The great deals usually to to insiders and if not the number of people bidding on the house will most likely put you out of the market.

If you are buying to make a quick profit, now is not the time.  If you intend to stay in your home at least five years, now is an excellent time to buy and you should certainly see a return on your investment come time to sell.

Typically investing in real estate far outweighs investing in stocks over the long term and the risk is much less.  The house is always going to be there, the stock could very well disappear.  We’ve certainly seen that happen.

Look what we have now:

Low prices
Low interest rates
Federal tax credit, up to $8,000 for first-time homebuyers and the possibility of an extra California State tax credit coming up, $3,333 a year for the next three years.

What’s your next step?

Get qualified.  You cannot buy a home until you know what you can afford.  You will also need a pre-approval letter from a lender before you can make an offer on a property.  For a ballpark figure go to CNNMoney.com.

Narrow down your criteria:  size of home, number of rooms, location, school district, etc.

Be realistic and be flexible.  You are most likely not going to get everything you are looking for in one package, so you need to decide what is most important.

When there is an opportunity to view a home of interest make yourself available.  Know that if a good house comes on the market you are not going to be the only one who is going to like it.

Above all be prepared to write an offer.  The more offers you write the easier it will become.  If you don’t write someone else will.

If you are ready to buy, if not now, when?

New Loan For California Healthcare Workers

January 3, 2010 by Jane Peters · Leave a Comment 

There is a new mortgage available for California Healthcare Workers.

Broadview Mortgage has an exciting new  loan for healthcare workers making home-buying affordable.

This loan is available to almost anyone in the medical field – medical office receptionists, ambulance drivers, doctors, nurses, physicians aids, physical therapists, etc.

Here are some of the program’s highlights:

• Fixed origination fee…the maximum origination charged is only 1%
• Fixed lender fees…the maximum lender fee is $350.00. This includes our underwriting and processing fee!
• The rates are based on the CalSTRS daily rate and there can be no lender manipulation just like the CalSTRS program.  What you see is what you get.
• One time free float down during escrow.  This means if you are locked at 5.5% but the rate goes to 5.25%, you get the lower rate for free with just a phone call to Broadview’s lock department.
• Low down payment….only 3. 5%….just like FHA.
• Minimum FICO score is 620.
• This is a 30-year fixed mortgage.
• No first-time homebuyer requirement.

Underwriting turnaround times from time of submission in 48 hours and most of the files are closed within 30 days.

If you have any questions, please don’t hesitate to contact me.

Good Faith Estimate – Buyer Beware

December 17, 2009 by Jane Peters · Leave a Comment 

This post is courtesy of Bill Ladewig, a mortgage broker who specializes in FHA, VA loans.

Buyers should educate themselves on the revised Good Faith Estimate (GFE) due to come into effect in January.

The revised GFE is another failed attempt to protect consumers,  The problem is, consumers cannot be protected with forms because those who wish to deceive will always find a way.  Consumer education is the only real consumer protection.

The new GFE requires lenders to guarantee their fees but it allows lenders to estimate fees for Title, Settlement, Prepaid Interest and Impounds.  Once again, it appears the rules are made by people with absolutely no understanding of real world lending.

Based on my experience, consumers are less interested in the individual fees than the grand total.   So, guess which fees will continue to be understated.

So, how can consumers be protected?  The answer is only with a little education.

Rule #1 All rate shopping should be on the same day and within a couple of hours

Rule #2 is really simple but, for some reason most people don’t get it.

ANY RATE QUOTE IS WORTHLESS WITHOUT ALL 3 OF ITS PARTS:

The parts are:

1. RATE… for equal comparison request a 30 day lock price.
2. POINTS…
3. FEES!!!

It bares repeating, RATE… POINTS… FEES.

Lets put it to music:
1, 2, 3  umm papa Rateta da…Points tra la, Fees tra la
Like love and marriage, you can’t have one without the otherrrrr.

Ok, So I am not a song writer but it makes the point

Providing credit where credit is due; the revised GFE points out that total lender charges are a function of the interest rate.  The relationship of points fees and rate is an important piece of information.

Note: Forget about APR because it is the most gamed number in lending and with Rate, Points and Fees it is not needed to compare rates from various lenders.  APR is only as dependable as the lender.

Rule #3

Unless a closing date is known… PREPAID INTEREST MUST ALWAYS BE ESTIMATED AT LEAST 15 DAYS!!

Rule #4 requires a little help from Buyer’s Agents.

1. Impound amounts vary by the month and locale so every real estate agent should provide their buyers with a local impound schedule.
2. Title and settlement costs vary by locale and every real estate agent should have average fees for title and settlement to provide their buyers.
3. Agents should make their buyers aware of any special state or local fees or taxes.

Note: Most title companies have schedules for impounds, title and settlement fees.

Education is the consumers best protection.  Below are listed some educational articles on lending.

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