Looking for a home?

Everyone’s aware of the first time home buyer tax credit of $8000.00  and the existing home owner buyer tax credit of $6500.00, but are you aware of a very small window of opportunity where you could actually take advantage of a possible $18000.00 in tax credits?

If you’re looking to buy a home, especially if it’s for the tax write off because you have nothing to protect your earnings from Uncle Sam, this may be a great opportunity for you.  It’s good even if you already own a home, but if you’re a first time home buyer that has been sitting on the fence thinking about purchasing, it’s even better for you. The thing is though, you have to move quickly.

If you have been thinking about buying a home and have been watching the market for any time at all, then you should know the first thing to do is go get pre-approved for a loan by a lender.  If you have no idea which lender to go to, ask friends that own homes for referrals. Just remember, if you go to your bank, they have the strictest guidelines. If you go to a credit union, they are next, and the last but not least would be a mortgage broker or mortgage banker as they have many sources to find the loan that is right for you, and a lot more flexibility. You do not want to get “Pre-Qualified”. You want to get “Pre-approved”. If you find the house you want, especially if it’s a bargain basement house, you want to have an advantage to being able to purchase it.

We all knew about the federal tax credits, but under a newly enacted California law, you may be eligible to receive an extra $10,000.00 in tax credits if you are a first time home buyer or if you are a current homeowner purchasing a brand new home never lived in before. (Obviously trying to help out all the building contractors going under).

The basic guidelines are the same. You have to have a house under contract by April 30th and close by June 30th. (There is a little discrepancy in that the state law is May 1, but if you wait until then, you may lose the federal credits).

I am not an accountant, and there is no way I could possibly know a “blanket policy” when it comes to everyone’s tax situation, so you definitely need to consult your CPA or tax attorney.  If you are looking to buy a home, live in it for 5 years or more, this may be a great opportunity for you. If you’re buying a home thinking you’ll own it for a year, sell it and get rich, not so much.

For a ton of free information on buying or selling your home, be sure and visit my website at Silicon Valley Real Estate Online. If you’re a homeowner in trouble, feel free to contact me as I have “been there done that”, and I can help. If the governments going to give it, take advantage of the $18000.00 Tax Credit possible loophole. Why not us!

Homeaid Northern California, one of the region’s most active homeless agencies, is celebrating it’s 10th anniversary. They are a completely non-profit organization and $100.00 of the ticket price is tax deductible.

The event takes place at the Lesher Center’s Hofmann Theater stage in Walnut Creek on May 6th, 2010 at 7:30 PM.  It really sounds like a great evening. Dana Carvey is expected to bring many of his most memorable characters such as the Church Lady, Garth from Wayne’s world and much more.

To get more information, or to become a sponsor for the event you can go to: http://www.homeaidnc.org  They have various levels of sponsorship available. This is a great chance to spread your name through out the community if you are a local company.

March 31, 2010   6:00 PM  West Valley Branch Library                                             1243 San Thomas Aquino Rd.  San Jose 95117

Show up to learn about:

• Loan Modification/Loss Mitigation Options
• How to talk to your lender
• How to prepare all your documents
• What steps to take to receive help from a HUD approved counselor

To Register for the seminar call: 408-279-2600  ext. 229

If you need help before then, there is a place called “Foreclosure Help Center” in San Jose that is open Mon-Friday, 9:00 AM to 5:00 PM. These services also are free. The program is manned almost completely by volunteers, and they will help you get all your documents together and go over them with you. Then they will turn you over to the proper channel to get you the help you need. Just call them for an appointment. The phone number is:  408-794-1242 You can visit their website at http://www.foreclosurehelpscc.org and get more information about their services.

If you’re looking to buy a home, the tax credit is supposed to run out again. The rules this time are that you must be in contract to buy a residence by April 30, 2010 and close by June 2010. I have not heard any rumblings yet as to whether there will be another extension, but I rather doubt it. If you’re anxious to take advantage of the credit, I wouldn’t wait around to see how it goes.

If you are a homeowner in trouble, or know you will be the next adjustment to your loan, please, don’t sit and do nothing. Take advantage of all the services that are there to help you. This is just scratching the surface. There’s even more help for distressed homeowners. All you have to do is ask.

When applying for a mortgage, the lender you have chosen will take many factors into account. These factors not only influence what type of loans you can qualify for at what interest rate,  but also what your monthly payments will be and how many years you will take to pay the loan off completely.

Knowing these factors and doing what you can to improve them all can make a tremendous difference when you go and see your lender and start the process that will get you your new property.

Some of the basic factors apply for just about any loan but are especially important if you are trying to get a mortgage. The big one is, yep, credit.

How good is your credit? Get copies of all of your credit reports from the 3 major consumer reporting companies and check each one for errors. Some companies will give you all three in one spot for one price. You want to be sure and get copies that include your “credit score“.

Many times they have errors that can be corrected in just a few weeks and that helps boost your score. If you have credit cards, pay them off as well as any other outstanding bills.

A nice large down payment will always improve your chances of being approved. If your credit isn’t completely top notch, the bigger the down payment, the more likely you may get approved. Now adays, what used to be a great credit score is only marginal, so it’s important to know what you are facing. If your credit is great, you can still put down as much as possible to lower the monthly payments or decrease the total loan time.

Above all else, don’t lie to your lender. If you tell them you are a supervisor of a power plant and they find out you are a UPS man who has only had the job for 6 months, you will be totally screwed. Be honest and your lender will do their best to work with you. Make sure you have w-2′s, tax returns, a list of your current bills and balances. All these go together in figuring out what the lender thinks you can afford.

For more information whether you are buying or selling a home, be sure and visit my website at http://www.SiliconValleyRealEstateOnline.com Feel free to leave any comments or questions you may have below.

It has actually been a law for years that if you apply for a real estate loan, you are supposed to get an estimate of what that credit will cost you within 3 days of the day the loan application was taken.  For the most part the mortgage industry did that, except the estimate was just that. Merely an estimate and it was rarely correct.  If you’ve ever bought a home you know exactly what I’m talking about. It’s that piece of paper that puts you into shock when you look and see the $100,000.00 you’re borrowing to buy that $120,000.00 house is actually going to cost you $300,300. to pay back, or something like that. They figure in the APR which is the amount of the fees, etc. you are paying and shows what your loan may adjust to if you have an adjustable rate.

In the past, you’ve gone through the escrow period, you’ve gotten loan approval, you’re at the title company to sign off on the house you’re buying and low and behold, these are not the costs the lender had told you about. This is not the interest rate you applied for.  Welcome to one of the most stealth real estate scams ever run. You are at the perfect point where if you don’t agree to what’s before you in escrow, you don’t get your house. This was the perfect spot to insert a little “emotional blackmail”. This was an industry standard for many years and I personally have never seen one person in escrow refuse to sign.

Finally there is a new law to protect home buyers from this type of thing in the future. Oh sure, where there’s a will, there’s always a way, but for now it will be a little tougher. There is a “uniform” form to be filled out, lender fees cannot change between when you get the statement and when you get to escrow. All fees for closing costs where the lender has provided the service provider have to be within 10% of actual costs (which to me is still too much leeway). They still have to give you the estimate within the allotted 3 day time period from when they take your application, but for the most part there will be no more drastic and last minute changes in escrow.

This is supposed to provide a lot more transparency into actual fees the new buyer is paying, and to avoid any more of one of the oldest real estate scams on the books.

To see the new law, actually made in 2008 to take effect Jan. 1, 2010, just visit the HUD website, and click on RESPA. The FAQ’S may be easier to understand, and you can find them here RESPA.

If you have any comments or questions, don’t hesitate to leave a comment. If you’re looking to buy or sell a home, or if you’re a homeowner in trouble, visit my website at SiliconValleyRealEstateOnline.com and get some free information.

Now that “they”, the powers that be have decided that all the government issued help hasn’t done what it was meant to do, and they’re afraid of FHA going the way of Fannie Mae and Freddie Mac, we can get ready for some new rules to play the real estate foreclosure game. Real Estate financing is still changing, trying to find another way to keep homeowners in their homes, and put new families into affordable housing.

We all have heard the rumors about FHA being the next entity to go under. On Jan. 20, 2010 FHA announced changes to strengthen and stabilize themselves, while working on several occasions with the National Assoc. of Realtors to keep it a viable resource for homeowners and home buyers. One thing NAR did score was keeping the down payment minimum requirement at the current 3.5 % and allowing the upfront mortgage insurance premium to be financed. What FHA did do was raise the premium from 1.75 to 2.25%.

The other change regarding financing that wasn’t in place before will be that borrowers with a credit score of 580 or below will be required to put down a minimum 10%, instead of the allowed 3.5% for prime borrowers. One thing they did that may open the door to more sellers co-operating with FHA financing, is reduce the seller concessions from 6% to 3%, making it a little more attractive. This would also open the market for home buyers.

FHA also says it’s going to crack down on lenders. In the past, they always say they have their rules, but cannot force the lenders to go by them. The lender may have their own requirements. Now they are planning on implementing a sort of “watch system” to see that their FHA endorsed lenders are actually lending. That is a big score for home buyers.

Tomorrow, Fannie Mae news regarding down payment assistance.

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What the heck?

It’s pretty scary times for real estate out there, and I don’t just mean because of foreclosures and big drops in value causing people to lose all their equity. It’s scary because on one side you have people who still think like it’s 2005, on the other side you have “real estate gurus” coming out of the woodwork teaching creative financing and doing deals like they did 30 yrs. ago, and then in the middle you have the government relaxing standards and doing the same kind of loans that got us here in the first place.

Then I see a question posted in one of the Real Estate forums from someone wanting to know about hiring a Realtor or a real estate attorney to help with the paperwork on a piece of property she’s buying. One of the answers she got was from someone saying to let the other agent do the paperwork, and the title company handle everything. That’s how they bought theirs and there was never a problem. While I concede that there are many deals between people that didn’t use either a Realtor or an attorney that turned out OK, there are many that turned into nightmares. In a transaction described like the one above, who is looking out for her interest? What recourse is she going to have against the seller if she has the seller’s agent write up the contract? Do you think that agent is going to worry as much about taking care of her as he is the person that actually hired him and is paying him? I don’t think so. While we have a code of ethics that states we have to be “fair and honest” in all our dealings, do you think everyone really is?

Then we have the ads on Craig’s List where investors love to advertise to buy homes. One I read yesterday specifically said “No Realtors or attorneys”. Now why do you think that is? I understand they want to save on costs so they don’t want to pay commissions, or a lawyer a fee for looking over the paper work, but do you think it might be also because all their contracts, etc. may be geared their way with no concern for the seller, or buyer, whichever the case may be?

Remember the old saying “Desperate times call for desperate measures”? Don’t be so desperate you make your situation worse instead of better. If you’re in a situation where you need some help with a contract most Realtors will look it over for you for free (like me. LOL) in the hopes of either getting your business in the future or a recommendation to your friends on what a nice person they were. Take advantage of the service.

I have a buyer that has a friend whose a Realtor, but until I came along no one ever went through the contract with him and his wife to know what they were signing. It’s like hiring a stock broker. No one is going to watch out for your money with the same love and care that you are, and the same is true when it comes to getting involved with buying or selling real estate. It’s your job to make sure you are protected. No one is going to cry with you when you get yourself into a mess. All the courts care about is what you signed your name to. It’s up to you to make sure it’s something you can “live” with.

If I can help with any of your real estate needs, please feel free to contact me by phone, email, or leave a comment below. I’d be honored to help in any way I can. Like I said, it’s pretty scary times in real estate right now.

Investing in Foreclosures

Investing in real estate in Silicon Valley is a real possibility right now but there is not much of a margin for error. As prices have fallen and rates are low, it is possible to buy a “rental” property for specifically that reason, to rent it out. This is an opportunity for investors we haven’t seen for many years and they are coming out of the woodwork like crazy. I must get at least 5 e-mails a week from somebody with a new “system” for buying up property. Unfortunately, they’re not “new” and most of them are totally illegal for a licensed real estate professional here in California.

I’m sure most of you have heard that the FDIC is going broke. That FHA is in trouble. Fannie Mae and Freddie Mac have been in trouble. Besides what’s on the market (the MLS) these institutions are dumping properties as well.  It’s amazing some of the bargains you can pick up, although you do have to be careful and do your own due diligence. Make sure you crunch all the numbers. A condo that looks attractive numbers-wise when you figure the mortgage payment, may not be so attractive if you add in a hefty Homeowner’s Association Fee, along with insurance on the unit itself. Remember, the Homeowner’s Association only insures the outside of the unit, nothing inside the 4 walls.

What is amazing to me is that for as much as everyone is saying credit has dried up, etc. many of the same loans that got us where we are today are still out there. Oh sure, for now your credit score has to be a little higher than it used to be, but I’m not sure how long that’s going to last since now even people with A+ credit are going into foreclosure. FHA has laxed a lot of their standards so that their loans are more usable. Not only that but they have a loan program that will help you buy the property and give you “fix up” costs. It’s almost as if they will pay you to fix up your new property. VA still has a no money down adjustable rate mortgage. Some of the conventional lenders are willing to bend criteria a bit to get properties off their books.

The one thing FHA has tightened up on is “flipping”. They have a “no flipping rule” that says if you buy a property using an FHA loan, you may not sell it for at least 90 days. Now to me, if you move into a property you’ve bought, fix it up while you live in it, which is not at all unusual for investors, and you’re flipping houses every 91 days, you can still do quite well. You have to pay to live somewhere anyway. Why not the property you’re buying to fix up and sell? Not only that, but the lenders look much more kindly on properties that are going to be owner occupied.

I realize it’s pretty much a feeding frenzy out there, but if you’re going to invest, invest smart. The “gurus” of real estate don’t talk about the properties they get stuck with, or the holding costs, or the bad tenants. They talk about the upside without the downside. I’m all for investing in real estate to build your wealth, but be prepared. It’s not all the bed of money it’s cracked up to be. And if you think you can go negative cash flow on a house because it’s only $50 or so, think about how much that turns into per month if you do 10 of them, or 100.

If I can help you with any of your real estate needs, whether looking for a bargain on your first home, looking to invest in a rental property, or selling your home for the best price in a down market, feel free to contact me or leave a comment below.

I am always ready to learn new things that I can use to help my clients where ever they come from, be they a renter wanting to buy their first home, an investor buying several homes, or a seller needing to get out of a bad mortgage in a hurry. I thought this would be a prime time to learn a little from the expert, Mr. Trump, even if it wasn’t him but one of his students doing the seminar. I thought there would be some really new innovative techniques for this market that I hadn’t heard yet or that I could incorporate. I’m so sorry to say that wasn’t the case.

Granted I did not learn everything they have to teach in a 90 minute seminar, which is why they have a 3 day workshop for $1495., but I did here enough to know 1) it was the same information I had learned 25 yrs. ago when I started out in real estate as a buyer and watched the late night infomercials on TV 2) that many of the techniques I as a Realtor cannot use as they are illegal when you are licensed in California 3) If anyone practiced what this gentleman did teach in the order he said to use it, they are looking at a possible lawsuit also.

I’m sure he just got the order of a couple things wrong due to trying to pack so much information into a 90 minute seminar, but… how much wrong information do they pack into 3 days?

This is a fabulous market if you’re just starting out and buying your first home or you’re an investor buying homes for your portfolio, but please people, be sure what you are learning or who you are learning it from is telling you things that pertain to your particular state and their laws. Also make sure  they are telling you all the downside that can go with what you’re doing, as well as dangling all the cash you can make before your eyes.

If you have any questions about different types of transactions, or something you’re about to do, please feel free to leave a comment below or email me direct. I’d be happy to help.

Second, I would like to thank President Obama for the shot in the real estate arm by signing the extension on the higher loan limits for Fannie Mae, Freddie Mac, and FHA. Anyone who knows anything about real estate in the Silicon Valley knows we needed this. Until this crisis happened, the loan limits on FHA loans were so low they were almost useless. The only homes they were good for were the lowest priced homes in San Jose and the surrounding areas, and even then the buyer would have to either bring a lot of cash to the table  or do a lot of fix up. The very buyer they were supposed to be helping, the ones on the lower end of the affordability scale, couldn’t afford to go with FHA financing because they didn’t have the extra cash.

Now the next “good news” in real estate is that it looks like the bill to extend the First Time Buyer Tax Credit is going to pass through Congress also. Not only that, but they are going to extend it to current homeowners also. It is not as good a bill as we would have hoped for, but it’s something. It’s unfortunate the the bill is pretty restrictive when it comes to current homeowners and comes in at a whopping $6,500.00. I’m not really sure myself if that would be enough to make me want to move.

Another “thank you” to the Obama Administration’s announced move to provide support to housing finance agencies across the nation. This action will help restart the housing market for low to moderate income first-time homebuyers, including in California, which has been among the hardest hit by the real estate crisis. These loans in California are known as the CalHFA, which had suspended their programs due to all the finance mess in the market. Supposedly this will be a new and better CalHFA.

Last but not least, I would like to render my opinion about all the hype in the news. First I think the news media is getting their numbers and stats from somewhere different than I do. Second, I wouldn’t be singing la, la, la, la, la just yet. I still don’t think we’ve felt the commercial real estate crash in all it’s glory yet, and that also will affect the housing market. Have we seen the bottom of the housing market and bounced back yet? I’m not so sure.