Many homeowners’ mortgages are higher than the current market value, often referred to as an upside down mortgage. HUD has rolled out an FHA Short Refinance option on September 7, 2010 to help the 3-4 million struggling “upside down” homeowners who are current with payments. The program requires the consent of all lien holders and the homeowner must qualify under standard FHA underwriting requirements with a credit score of at least 500. The property must be the homeowners primary residence and the first lien holder must agree to write off at least 10% of the unpaid balance, bringing the borrower’s combined loan-to-value ration to no greater than 115%. Additionally, the existing loan must not be an FHA-insured loan. Contact your lender to discuss this program and to see if they are willing to write down a portion of the unpaid balance. Today’s real estate market reports are overwhelming; stay positive, we will get through this.
An agreement of sale is not necessarily a done deal. Contingency clauses can make or break a deal. Unless the market is extremely competitive and you risk losing the home of your dreams, it is wise for a buyer to include as many contingencies as possible. It is always a good idea to have a financing contingency that guarantees an out if your financing falls through. There are instances where individuals who are pre-approved are denied mortgages because of financial circumstances that effect their mortgage qualification. A home inspection contingency protects you from unforeseen repairs or problems with the home. You can re-negotiate the sales price or you can walk away from the deal. An Appraisal Contingency is a protection to guarantee your offer is a good investment. Take the time to review the checklist of contingencies that are standard with most agreements, it is better to be safe than sorry.
Are you ready to sell your house? As a seller you need to disclose latent defects. A latent defect is a fault in a property that is not visible to the naked eye. What if there are problems lurking behind your walls that you don’t know about? More often than not, sellers will not have a house inspection. I can tell you from first hand experience that is not a good idea. After you have negotiated a price, the buyer will perform a house inspection. If undisclosed defects are found your buyer has the right to cancel the sale or you may find yourself back at the negotiation table. Last minute surprises will more than likely result in a lower selling price.
Has your house been on the market with no signs of selling? Are you considering renting to wait out this dismal housing period? If you decide to rent remember that in order to qualify for tax-free capital gains of 250,000 per individual or 500,000 per couple you must live in the residence for at least 2 of the past 5 years. The clock starts ticking the moment you rent. Income generated from rental properties is taxed as income. You can write off out of pocket expenses including, taxes, mortgage interest, repairs, insurance, maintenance, utilities, management services and even travel expenses related to collecting rent. You can depreciate the value of the home over 27.5 years, but if you sell you will be taxed on the amount depreciated. Call your real estate agent for current rental values in your area to determine if renting is an option worth consideration.
Thinking of Buying, here is a quick Homebuyer Checklist:
Look for a home equal in value between 2 to 3 x your gross income. 2. Obtain a copy of your credit report and check for any errors. 3. Get Pre-Approved for a Mortgage. You will need. W-2 Forms, Copies of a few pay stubs, All financial account numbers with 2 – 4 months of statements 4. You should have 20% of the purchase price as a down payment.
Stay tuned for more tips and Contact Your Real Estate Agent to help guide you through the process.
Today many prospective homebuyers are tempted by the low prices of properties in foreclosure. They hope to show up at the foreclosure auction and win with a low bid. Remember that many of these homes are not available for inspection prior to purchase. Buying a home you cannot inspect is very risky. The price of the foreclosed house must be low enough to compensate for the amount of work required to bring the condition of the home up to par, or you will lose money.
Great news if you are a qualifying member of the US military, the Foreign Service, or the intelligence community. The $8,000 tax credit for first time buyers, and the $6.500 credit for repeat home buyers have been extended. For these qualified homebuyers, the tax credit now applies to homes with a binding sales contract in place on or before April 30, 2011. Note that your sale must close by June 30, 2011. Your real estate specialist can provide complete details about how to qualify for this extension.
A harsh reality for some homeowners today is the inability to keep up with their mortgage payments due to factors such as job loss, illness, or divorce. This can result in a foreclosure by the lender, which has harsh repercussions on your credit ratings for years to come.
There is an alternative to foreclosure called a Short Sale, which makes sense for some homeowners.
In a Short Sale, you make arrangements to sell your house for less than the amount due on your mortgage. While some lenders will agree to these arrangements, many will not. Experts advise that the moment you realize you may not be able to meet your monthly mortgage payments that you consult with your lender about a Short Sale. The more you fall behind in your payments, the harder it becomes to arrange a Short Sale.
While a Short Sale will have a negative impact on your credit score, it is a much better alternative than a foreclosure. To learn more about if a Short Sale is right for you, find a real estate professional experienced in helping homeowners avoid foreclosure.
If you are trying to sell your house, knowing how to set the right price is essential
To make a deal in today’s market means pricing aggressively — low enough to compete with foreclosures in some markets. That may be a hard decision to make, but it cannot be avoided.
Many people with homes on the market are slashing prices to catch buyers’ attention. Twenty-four percent of listings on the market nationwide as of July 1 had gone through at least one price reduction.
The result is that buyers just don’t feel urgency about making a purchase. Mortgage rates have been relatively low for a while so buyers aren’t concerned they’ll miss that window, and inventory has been creeping up.
Your Real Estate Agent is an expert on conditions in your market and your neighborhood, and is an excellent source of guidance about how to set a price that will sell your house. Contact him or her today and ask, “What is the right price for my house”? You’ll be glad you did.
What is a mortgage pre-approval? A mortgage pre-approval is critical for a buyer when submitting an offer on a property. The mortgage pre-approval tells the listing agent and the seller that the proposed buyer is qualified to buy the property and that’s what they need to know when evaluating the offer. How does someone go about getting a pre-approval? They are going to work with a mortgage consultant providing information on their employment and their income and their assets and their credit so that information can be reviewed and analyzed ahead of time so that a pre-approval letter can be produced, so the buyer has that to submit with the offer.
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