How can I get the best deal on a home? Where do I start?
The home buying process can be daunting. There are many variables involved and my home purchase is likely to be the largest that I ever make. I don’t want to make any mistakes and I DO NOT WANT TO PAY TOO MUCH!
Thousands of prospective home buyers ask themselves these questions every day. Most understand that home ownership has both benefits and drawbacks. A monthly house payment is almost always going to be more than rent. How is it going to affect my lifestyle? If I do make a purchase, am I going to be house poor for the rest of my life? A home purchase in a major commitment, am I ready for that?
One of the major advantages of home ownership is long term appreciation. Although the downturn in the market over the past few years belies the fact, single family homes appreciate 6.7% per year on average. Buying a home now, after a major market correction, is likely to put the buyer in an excellent position to reap the benefits of that long term appreciation. And don’t forget the tax advantages of home ownership. Both interest and property taxes are deductable. So Uncle Sam and the Governator pitch in to help you make that house payment each month. Finally, when you buy it, it is YOURS. You can paint it any color YOU want; you can change it any way YOU want. There is no landlord making up rules that you have to follow: The American Dream.
Once you decide that the possibility of home ownership warrants a little investigation it is time to do some research. Today, most potential buyers start their search on the Internet. There is so much information available the one can get overloaded quickly.
A caution here: many large property search web sites do not provide up-to-date information. Homes are still listed that have been sold months ago. We have had buyers spend hours looking at homes that are already sold, so you can save time by seleting property search tools that are updated daily, or more frequently. http://www.BuyYourVilla.com is one such site. There is no cost for it’s use and you do not have to register if you don’t want to do so. That translates into no bothersome e-mails and speaks to our attitude about providing buyers with as much acurate and timely data as possible..
If one takes it one step at a time, with an organized approach, things will fall into place more quickly than you might think. The purpose of this Blog thread is to help the prospective buyer with that organized approach. Every few days a new piece of the puzzle will be added.
Feel free to ask questions at any time. Every buyer’s situation is different and there are over 500,000 licensed real estate agents in California ready and willing to help. Of course, I would like to think that I am more ready, willing and able to help than any of them!!
For direct contact call (916) 337-0658 or e-mail Mike@BuyYourVilla.com
Tune it for the next segment.
NEW HARP 2 MAY HELP HOMEOWNERS
In recent months, there has been some positive momentum in the government’s Home Affordable Refinance Program (HARP), designed to help troubled homeowners refinance their home loans so that they can afford the monthly payments.
In late October, the Obama administration announced a modification of that program, designating it HARP 2. It applies to loans that purchased by Fannie Mae and Freddie Mac. Those two government sponsored enterprises are now releasing the specifics of this new program. The government hopes to simplify the program for both the distressed homeowner and the banks and loan servicers who are dealing with the defaulted loans.
By helping the banks and loan servicers, they will indirectly help the homeowner. With that goal in mind, they are reducing or eliminating the risk-based fees Fannie and Freddie charge the loan originators for underwriting mistakes made when the loan was processed and originated.
They are also streamlining the underwriting process in an attempt to speed up the lending process.
Although many distressed homeowners will not qualify for this program, those who do will find it easier and cheaper to refinance.
Lenders will no be accepting loan applications until December 1, 2011, and will not be considering certain types of loans until March of 2012.
- The loan must have been sold to Fannie Mae or Freddie Mac on or before March 2009
- The loan balance must be more than 80% of the home’s market value
- There can be no late mortgage payments in the past six months and no more than one 30 day late payment in the past twelve months
- Loans refinanced under HARP 1 do not qualify
Some improvements over HARP 1 include:
- Borrowers can refinance into a new fixed rate loan no matter how much they owe. The HARP 1 program caps the loan amount at 125% of the home’s market value
- Borrowers can refinance into a new adjustable rate mortgage loan as long as the loan has a fixed rate for at least five years. However, in this case the new loan has a cap of 105% of the home’s market value.
- The new program reduces or eliminates the fees Fannie Mae and Freddie Mac charge on loans based on risk (lower borrower credit score, higher loan to value ratio). In the past, those fees could exceed 3% of the loan balance! Under HARP 2, the fees will be caped at .75% of some loans and will be zero on fixed rate loans with a term of 20 years or less.
- In most cases, the borrower will not have to pay for a new appraisal. Fannie Mae and Freddie Mac will use their automated in-house appraisal system
- In most cases borrowers will not have to meet a specific debt-to-income ratio or credit score level
- Borrowers who refinance with their existing lender will have reduced document requirements
- Second mortgages are permitted if the borrower qualifies
The government target is to refinance between one and two million loans through this program.
Qualified borrowers will benefit, but investors may suffer. Since their investments are guaranteed, guaranteed payments may come with strings that require them to reinvest their proceeds at a lower interest rate.
For more information, select this link to the San Francisco Chronicle article:
FREDDIE MAC HOLDS SALE ON BANK OWNED HOMES
These homes, offered through their “Homesteps” program, include some attractive benefits for homebuyers. In order to be eligible for this program the buyer has to occupy the home as their principal residence.
- The program lasts through January 31, 2012
- Escrow must close on or before March 15, 2012
- Freddie Mac will pay up to 3% of the final sales price toward the buyer’s closing costs
- Homes purchased through this program are covered by a two-year limited home warranty covering heating, air-conditioning, electrical, appliances, plumbing and other major systems
- The home protection component will also offer a discount of up to 30% on the purchase of appliances
For a complete list of eligibility requirements go to http://www.HomeSteps.com/smartbuy
That site also has a link to all homes available through this program.
For a list of homes available through this program select this link:http://www.homesteps.com./featuresearch.html
If you have any questions about this program or would like to visit any of the eligible homes, feel free to give us a call at (916) 337-0658.
The Lotus blossom is one of the most ephemeral of all flowers. The Lotus plant blossoms once a year if you are lucky. More competent gardners may get better results. When the blossom opens it only lasts for two or three days at best. This is a photo that I took in my courtyard in El Dorado Hills at about 3:00 PM on a day in August. It did not blossom again the next day.
A step by step process for distressed homeowners.
This is the seventh in a series of posts designed to be a step-by-step directory for distressed homeowners to use to try an avoid foreclosure.
We continue the discussion of various options that a distressed homeowner may have. Some of these options only apply to homeowners in very specific situations and will not apply to most; however, if you meet the criteria you should take advantage of any opportunity that presents itself.
This option will stop the foreclosure for a period of time but may only delay the process. Anyone considering this option should consult an attorney who specializes in Bankruptcy. Be careful to select one who has a good reputation. Call if you need a referral.
There are several kinds of bankruptcy. Chapter 7 Bankruptcy is a process to liquidate your assets. Chapter 13 allows you to restructure your debt. You may have 3 -5 years to catch up on your delinquent accounts.
I major drawback is that you will find it difficult to sell your property during the bankruptcy process. You will have to get the trustee’s approval to do so. Also, if the homeowner is not able to make all of their payments after the bankruptcy the home will foreclose anyway. All of the time and effort will have been wasted.
Note that a bankruptcy has an impact on your credit similar to that of a foreclosure. Loan applications always ask in you have filed for bankruptcy, so there is a long lasting effect on your ability to buy on credit.
In order to qualify for a Short Sale the homeowner must have a financial hardship that is acceptable to the lien holder. Major loss of income, loss of a job, major medical, death in the family are some of the hardships that lien holder may accept.
As a result of the financial hardship, the homeowner must have a monthly short fall–more month than money.
And Finally, the homeowner must be insolvent. They can not have significant liquid assets that would allow them to pay their loan shortfall and expect the lien holder to forgive a portion of their loan commitment.
When a homeowner meets the lien holder criteria there is a strong possibility that a short sale will be approved. The process takes time, a lot of documentation supporting the hardship, shortfall and insolvency; and a lot of work. A majority of Realtors avoid short sales because of the amount of work involved and uncertainty that they will be approved.
There is also a strong possibility that the homeowner will owe taxes on the portion of the loan that is forgiven. Not every attempt at a short sale is successful. Each case is different and has to be examined in detail by a professional who specializes in helping homeowners avoid foreclosure.
Those who do complete am approved short sale are able to purchase another home after two years. The hit to their credit is not nearly as damaging as is a foreclosure or bankruptcy. Loan applications do not ask if you have completed an approved short sale. Long term this option is far superior to many of the others listed.
The latest news is that most banks are now telling their borrowers in default that a short sale is their best option. Of course, it is better and less costly for them than would be a foreclosure, but it is also much better for the borrower.
Here are links to a few web sites with helpful information for less specific situations:
Feel free to contact Mike West, Realtor, CDPE, if you have any questions or need help.
(916) 337-0658 e-mail: Mike@BMikeWest.com