Free Money - Yes Please!

There are numerous programs created to help buyers. Many cities have a first time homebuyer’s program that assist with the downpayment of your new home.  I encourage any first time homebuyer or anyone who has not owned a home in the last 3 years to see if your city offers these.

Currently, the city of Vacaville’s program is on hold and Suisun City is out of funds for this fiscal year, so I want to focus on Fairfield’s program.

Fairfield Silent Loan Program (FSLP)

I cannot say enough about this program! If you are able to qualify for it, I say use it. This program gives you the opportunity to potentially borrow money for free or at least close to it. 

This program offers up to $40,000 to assist with a downpayment and closing costs.

The $40,000 is at 1% simple interest and after 10 years 10% of the interest is forgiven each year (after 20 years 0% interest).

You do not pay on the $40,000 until one of the following occur: your first mortgage is paid off, you no longer live in the home, you sell the home or you have an ineligible refinance.

You must contribute 1% of the purchase price of your own money (cannot be a gift and they will want a paper trail) towards the downpayment.

Qualifications

1. You have not owned a home in the last three years.

Exceptions

You are a displaced homemaker.

You are a single parent who owned a home with your spouse.

You owned a mobile home not on a permanent foundation.

Your home was “red-tagged”.

2. You must have good credit.

They do not base this off of your FICO scores. You are not allowed to have more than 3 derogatory entries in the last two years. If you do not have credit established that is okay.

3. You must meet income requirements.

Your income cannot exceed the income requirements, which are based on household size and range from $44,950 for 1 person to $84,750 for 8 or more persons.

Income from assets is also included in your total income.  They use the higher of the actual income earned or 2% passbook rate if the asset is over $5,000.  (These assets include retirement funds/pensions, savings and checking accounts.

4. Home Buyer’s Class

All participants must complete a first time homebuyer’s class, which is offered about twice a month.

Visit http://www.fairfield.ca.gov/ to get more information about this program or other programs that Fairfield offers such as the NSP (Neighborhood Stabilization Program), which will be the topic of my next post!

Tick Tock – How long do you have to wait after a foreclosure, bankruptcy, or short sale?

If you have filed bankruptcy, been foreclosed on or had a short sale you might feel like it will be an eternity until you are able to purchase a home again. That is not the case!

Below I have laid out the waiting periods by the type of loan you wish to use, NOT the type of loan you previously had.

Conventional

Foreclosure       7 years

3 years if there were acceptable extenuating circumstances and

borrower must have 10% down payment. Owner occupied only

Short Sale         7 years if borrower with less than 10% down payment

                        4 years if borrower with 10% down payment

                        2 years with 20% down payment

                        2 years with acceptable extenuating circumstances

Bankruptcy       4 years from discharge date

Chapter  7         2 years from discharge date with acceptable extenuating circumstances

Bankruptcy       4 years from dismissal date

Chapter 13        2 years discharge date

Conventional examples of acceptable extenuating circumstances (must be verified and documented): Nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

FHA

Foreclosure         3 years

  Less than 2 years, not less than 12 months if there were acceptable

  extenuating circumstances

Short Sale            3 years

   No waiting period if borrower had no late payments on any

   mortgages or consumer debts within the 12 month period preceding

   the short sale and they are not taking advantage of declining market

   conditions

Bankruptcy          2 years from discharge date with re-established credit or no new

Chapter 7             credit obligations

                           Less than 2 years, but not less than 12 months from the date of

                           discharge if there were acceptable extenuating circumstances

Bankruptcy          1 year payout period under bankruptcy has elapsed and borrower’s

Chapter 13           payment performance has been satisfactory and all required  

                           payments made on time

FHA examples of acceptable extenuating circumstances (must be verified and documented): Serious illness or death of a wage earner. Divorce and the inability to sell a property due to a job transfer or relocation to another area does not qualify as an acceptable extenuating circumstance.

VA

Foreclosure         2 years

                          12-23 months if there were acceptable extenuating circumstances

Short Sale           2 years

                          No waiting period if borrower had no late payments on any

                          mortgages or consumer debts within the 12 month period preceding

                          the short sale and they are not taking advantage of declining market 

                          conditions

Bankruptcy         2 years from date of discharge

Chapter 7           12-23 months from date of discharge if credit re-established and paid

                          as agreed and was caused by acceptable extenuating circumstances

Bankruptcy         1 year payout period under bankruptcy has elapsed and borrower’s

Chapter 13          payment performance has been satisfactory and all required payments

                          made on time

VA examples of acceptable extenuating circumstances (must be verified and documented): Unemployment, prolonged strikes, medical bills not covered by insurance, etc. Divorce is not viewed as beyond control of the borrower and/or spouse.

If you have faced a bankruptcy, foreclosure or short sale, remember there is hope to becoming a homeowner again!

Contact your lender for more detailed guidelines.

Using Your VA Loan in a Competitive Market

In Solano county we have been experiencing situations where there are multiple offers on one piece of property. Our military service men and women are able to purchase homes without a down payment using their VA benefits, but typically a VA buyer is put at the bottom of the pile when there are multiple offers. 

So, how can a VA buyer compete with FHA, Conventional or cash offers? This post is a little lengthy so here is the bullet point version:

• Offer a reasonable price
• Pay your own closing costs
• Offer to pay for repairs
• Write a heartfelt letter
• Ask for a simple disclosure
• Have your agent present your offer in person

Obviously to be competitive you must offer a reasonable price. That means writing an offer that is not too low or too high for the area. Sometimes people fall in love with a home and are willing to offer well above market value. Most sellers have been informed that if the appraisal comes in lower than the price offered they will need to come to an alternative agreement, which typically results in a lower purchase price. Therefore, the seller will be more likely to accept an offer closer to market value that does not require them to pay closing costs, warranties, repairs, etc.

If you have some cash do not ask the seller to pay closing costs. Guidelines have recently changed allowing VA buyers to pay what are considered “VA mandatory” closing costs up to 1% of the purchase price if they are not paying an origination fee (which is usually sufficient for $200,000 purchase price). Make sure your real estate agent speaks to the seller agent about this. Some agents are unaware a VA buyer can pay these and will assume the seller needs to pay the VA mandatory closing costs.

State in your contract you will pay for repairs up to a specified dollar amount to satisfy VA requirements. Make sure you note all repairs must be approved by the buyer.

The less you ask the seller to pay for the better your chances!

Tug at some heart strings. Write a letter about wanting to raise your family in the home, how you grew up in the area, the kitchen reminds you of your grandma’s house, you have been moved all around the country and can finally settle down, pretty much whatever you can think of.  

You also have the choice to ask for one of two disclosures, the “Seller Property Questionnaire” or the “Supplemental Contractual and Statutory Disclosure.” The “Seller Property Questionnaire” is a four page disclosure the seller fills out covering in detail things such as neighborhood nuisances, water and mold issues, pets on property, repairs and alterations. The “Supplemental Contractual and Statutory Disclosure” is a more broad one page disclosure. I always recommend a buyer request the “Seller Property Questionnaire” so they can get as much information about the property as possible. If a buyer is desperate to obtain the property and feels it could increase their chances of getting their offer accepted if they request the shorter disclosure, it is an option.

The most effective way to get an offer accepted is to have your real estate agent personally present your offer to the seller. Your agent can clearly explain to the seller the advantages of choosing your offer and give them an idea of what the home would mean to you. This also shows the seller your agent is willing to put in the extra effort and will hopefully be easier to work with than other buyers’ agents.

Good Luck!

Fixing Up a Fixer Upper - With No Cash

With so many homes being foreclosed on, the amount of bank owned (REO) properties continues to grow. Although the prices are relatively low, unfortunately many times so is the condition of the home. If a homeowner cannot afford his or her mortgage payment do you think they would invest money in updating the kitchen, replacing carpets, or making various repairs?

Investors have been buying homes that need cosmetic updating and basic repairs, fixing them up and selling them for 30-40%  more than they paid for the home. For example, a home in Vacaville was purchased by an investor for $130,000 about 2 months ago and is selling for $200,000. This home has new paint, carpet, appliances, granite countertops, vanities, lighting fixtures, windows, and landscaping. I am by no means an expert on pricing for these various updates, but I can tell you there are not $70,000 worth of upgrades in the home.

The average buyer does not have the funds to pay for $15,000 to $35,000 worth of upgrades when they purchase a home, and most buyers looking for a home they can move into as quickly as possible.

There is a solution!

There is a program called the Streamline 203(K). This allows homebuyers to finance up to an additional $35,000 into their mortgage to make upgrades or improvements before they even move in. Paint, flooring, basic kitchen remodeling, appliances, roofs, and plumbing are all covered under the program. I was able to talk to a "203(K) Expert" and was amazed at how easy the process is for homebuyers. There are many ways to have the repairs or upgrades done but the easiest is to have a company that is approved by the program such as Home Depot or Lowe's do everything for you. You meet with the contractor and go over everything you want done and pick colors, materials, etc. Once escrow closes the company will go into the home and do the work you have agreed upon. Once everything is completed you get to move into a home that is even better than one of those investor flips because you got to pick everything out yourself. Also, depending on the details of your loan mortgage payments typically do not start until you have moved into the home.

The best part about this program is the homeowner only has one mortgage payment and at the end of the process has most likely built equity into their new home.

Contact your lender for more details about this program.

QR Codes

Okay so this post isn't real estate specific but I've come across quite a few people who don't know what QR codes are and since you might start seeing them pop up I thought I would share what I know about them.

QR (quick response) codes are supposed to be the next big thing in marketing. I just saw one on my REI mailer that I got other day and I heard there are some on bus stops. They are basically a barcode that anyone can scan using their smart phone (you just have to download a free QR scanner). These barcodes can take you to a website, play a video for you, send you a text message, share contact info and I'm sure much more.

Here is an example of just plain text.

 

I never get sick of this video.



I have only been using QR codes two ways so far.

I put them on the back of my business cards that take you to my mobile website.



And I put them on my open house flyers so people can share details about the house with their friends and family or just save the information to look at later. Here is one from an open house I did a few weeks ago.




How do you make your own QR code?

It's easy just go a QR code generator website such as http://qrcode.kaywa.com/ and have fun creating your own. Once you generate the code you can copy and paste them on whatever you want. Make sure you test out your code, especially if you are using it for marketing purposes.

I tried thinking of fun ways to use QR codes:

Maybe make a personalized video and put a QR code in the card you send your friend or family member so they can see you belting out "Happy Birthday" for them.

It might be cool to get a QR code printed on a coffee mug for your sweetie so they can scan it in the mornings and get an encouraging note. I don't know how that would work and I wouldn't put anything on there that you wouldn't mind his or her coworkers scanning...

Do you have any fun creative ways to use a QR code?

A regular sale? More like REO, HUD or Short Sale!

I just wanted to take a minute (maybe 5) to try and easily explain the differences between REO, HUD and short sales. The majority of homes currently on the market in Solano County and across nation are short sales and REO’s. I think it’s important for people to understand the differences and how it will affect their real estate activities.

REO (Real Estate Owned) – Means a bank owns the property because they foreclosed on the owners. These homes typically vary in condition. Sometimes the banks will paint, put in new carpets, make miscellaneous repairs, and replace broken or missing items. Other times banks put the home on the market in the same condition they received it, this could mean holes in the walls, broken cabinets, and other random things people do when they get made they are loosing their home.

REO’s are listed at a price the bank has approved and therefore can typically close in 30 days or less. Keep in mind banks do not like to hold properties on their books for extended periods of time and are very motivated to sale.

HUD (Housing and Urban Development) – When an FHA (Federal Housing Administration) loan goes into foreclosure it then goes to HUD. HUD wants to help individuals own a home. They have a pretty neat process where they have a certified FHA appraiser go out the property and determine the value. HUD then lists the property for the appraised amount (great for FHA buyers, they don’t have to pay for an appraisal if the appraisal has not expired). Individuals purchasing the home as their primary residence have a period of 10 days to submit offers before the bidding opens up to investors as well. Just like REO’s, HUD wants to sale their properties as soon as possible. Make sure your agent is registered with HUD, only registered agents can submit offers.

Go to http://hudhomestore.com/HudHome/Index.aspx to view a list of HUD homes for sale in your area.

Short Sale – Before a home goes into foreclosure individuals have the opportunity to “short sale” their home. Many times a short sale is a much better alternative than a foreclosure. If the owner has experienced a change in income or circumstances (e.g. medical, divorce, loss of job, retirement, a balloon payment coming up, etc.) they can hire a real estate agent (paid by the bank) to find a buyer for their home and negotiate with the owner’s bank to accept the sale and forgive the remaining balance of their mortgage (the seller coming up “short” of what they owe). What buyers need to know about this process is that it can be time consuming. The bank needs to approve that the seller has a circumstance that warrants a short sale and the bank needs to determine the value of the house to ensure they are getting a fair value.

In this crazy economy the days of a buyer and seller working directly with each other are rare and it’s important for anyone dealing with real estate understands the different options and processes to find what works best for them.

Oh Mr. Doe

Nothing like holding an open house to give you material to write about.

I was holding an open house yesterday when in walks Mr. Doe (name changed for the purpose of this blog). Mr Doe was at an open house I held a couple weeks ago! After joking around about how he drives around looking for open house signs, I asked him if he was working with an agent. Obviously he wouldn't be driving around wasting his gas and time looking for open houses if he was working with an agent.

What I learned from Mr. Doe was that some people don't know that a buyer's agent is a huge resource. Not only do they work for free from the buyer's stand point (they are paid by the seller), they also have access to open pretty much every door that is listed for sale and they have information available to them that is not available to the general public. If Mr. Doe was only looking at homes that held open houses he would be missing out on the other 80% or more of homes that never have open houses.

So my advice: If you or someone you know is looking to buy a house, use a real estate agent. They will be able to help you in every aspect of searching for a new home, and the best part is you don't pay them!

P.S. I am taking Mr. Doe out to look at homes this week!