WHY DO LENDERS CHARGE POINTS?

Whenever governmental regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest which would make the real estate loan competitive with other fields of investments, the lender must seek some other method of increasing the yield for their investors.  By charging "points" (a percentage of the loan amount being borrowed), the lender can bring the real estate loan up to those other investments.

Are Points Called by Different Names?  Yes.   Commitment Fee, Discount Fee, Warehousing Fee, Funding Fee

Do the Number of Points Charged Fluctuate?  Yes.  If rates on mortgage loans are lower than other investments (such as stocks, bonds, etc.) then funds will be drawn away from mortgage market.  Also when there is heavy demand upon the money market because of business needs, military requirements or other government borrowing, the result is that money for home mortgages becomes scarce and more expensive.  When this occurs, more "points" (a percentage of the amount being borrowed) can be charged.  Points balance the market.  Points are not set by government regulation but by each lender individually.

FOR MORE INFORMATION CONTACT ME AT MY I Sell AZ Sunshine website.

What Does the Title Company Do?

Here's what the title company does in a nutshell:

*Opens the escrow and assigns a Escrow number.
*Requests a Title Commitment to determine the status of title to the property.
*Comply with the lender's requirements as specified on its instructions to escrow.
*Receive and handle purchase funds from the buyer.
*Prepare or secure the deed and documents related to the escrow.
*Prorate taxes, interest, insurance and rents.
*Secure releases of all contingencies or other conditions stated on the escrow.
*Record the Deed and any other documents.
*Request the title insurance policy.
*Close the escrow per the instructions supplied by the seller, buyer and lender if any.
*Disburse funds as authorized by the instructions including charges for title insurance, recording fees, loan 
  payoffs and real estate commissions.
*Prepare final statements for all parties involved that account for the disposition of all funds held   the escrow account.

NEED MORE INFO CONTACT ME on my I Sell AZ Sunshine website.

WHAT HAPPENS TO EARNEST MONEY?

A earnest money deposit is made to show the seller you are serious about buying their home.  The Realtor will inform you of the amount that is usually given in your area.  The seller doesn't actually receive the earnest money.  A third neutral party like the Title Company holds the amount in a special trust or escrow account until the sale is closed or the contract is canceled.


If you go through with the sale, the money is usually applied to your down payment or other closing costs depending on what is agreed to in the contract.  If you fail to buy the home, the seller has the right to keep the earnest money.  However, you can get your money back until the point at which you are notified that the seller has accepted your offer.  And if the seller fails to fulfill their obligations, the money is yours.  Other contractual contingencies can also come into play so ALWAYS have your Realtor explain the contract and it's contingencies to you thoroughly prior to signing.

FOR MORE INFO CONTACT ME AT MY I Sell AZ Sunshine website.

WHAT TITLE INSURANCE PROTECTS AGAINST

The matter of title insurance arises in every real estate transaction.  For the Seller, the title policy covers the insured for their loss up to the amount of the policy.  It assures owners that they are acquiring marketable title and is designed to eliminate risk or loss caused by defects in title for the past.


For the Buyer and/or Lender, title insurance is issued to guarantee to the insured party or parties "Free and Clear" title to the property being insured, from the beginning of time until the date and time the buyer acquires title to the property.  In the case of a lender's policy until the date and time the lender's loan document is recorded against the property.


"Free and Clear" is defined as there being no loans, liens, encumbrances, back taxes, easements or covenants, conditions or restrictions against the property that were not disclosed on Schedule B of the commitment for title insurance issued by the the insuring company.


Here's a few things Title Insurance protects against:
*False Impersonation of the True owner of the property
*Forged deeds, releases or wills
*Undisclosed or missing heirs
*Mistakes in recording legal documents
*Deeds by persons of unsound mind
*Deeds by minors
*Deeds by persons supposedly single but actually married
*Fraud
*Liens for unpaid inheritance, income of gift taxes

FOR MORE INFO CONTACT ME AT MY I Sell AZ Sunshine website.

WINTER VISITOR---TO BUY OR RENT A HOME??

Arizona vacation rentals have some of the most sought out space, especially for those who are getting away during the frigid northern winters.  Wintering way away from home by purchasing a home or your own vacation rental has its advantages but so does renting prior to taking the leap to buy.

If you are renting, you do not have to worry about any upkeep or maintenance of the rental home as there is always someone to call for that job. For instance with vacation rentals in the Gold Canyon, Mesa, Queen Creek, Sun Lakes or Scottsdale areas, most are going to have pools and spas for your use which don't require any maintenance by you the tenant.  All you have to provide is the money to pay for your rental.

On a positive note, you may still be motivated to buy after you spend some time doing your homework. Never overlook the fact that you can both buy and rent your own vacation home in one of the most popular vacation markets to date as well as have a second-home tax write-off.  Furthermore, since this is a second home, you can opt to migrate and head North for the summer. Any qualms about purchasing can be overcome by testing the waters first and spending time in an Arizona vacation rental to make up your mind. Give it a month and talk to local homeowners about their experiences and the local housing climate.  Since it is a buyer's market the housing sector will get it shot in the arm in due time.  AND, while you are visiting sunny Arizona be sure to apply SPF 32 sunscreen liberally and enjoy yourself.

NEED MORE INFO CONTACT ME AT MY I Sell AZ Sunshine website.

"I'VE FOUND A BARGAIN!" OR HAVE YOU???

It's try that affordability is at record levels today but many buyers need help putting price into perspective.

Buyers, especially first time buyers, think they can get a really really nice home for $60,000 but the average home in the Queen Creek, Arizona area (where there is an abundance of bank owned homes for sale) is running around $105,000. The closer you get to the center of the Phoenix valley then the average sales price is $150,000.  Buyers perceive that there are really great deals which is true.  But a lot of homes are stripped of all of their fixtures.  While a home maybe listed for $75,000, buyers are going to need $20,000 to $30,000 in cash to replace the plumbing and restore the kitchen and bathrooms.  The prudent buyer will look at some of the really low-priced homes first and decide if they want to do all that work.  Know what your costs will be up front by making a list of all needed repairs before making an offer....no Surprises!!!  You might even decide to spend a little more and not have to do the home repairs.

What is a Foreclosure & REO (Real Estate Owned)? Part 1

A Foreclosure sale begins with a minimum bid that includes the loan balance, all accrued interest plus legal fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a $10,000 cashier's check in your hand and the full amount of your bid is due within 24 hours after the sale has ended. As the successful bidder, you obtain the property in "as is" condition and that can include a tenant still occupying the property.  Recent legislation can prevent you from having the tenant removed and you may have to honor their lease with the previous owner so do your homework on this one before bidding.
In today's real estate arena the amount owed to the bank is almost always more than the value of the home resulting in very few successful foreclosure auction sales. Hence, the property "reverts" back to the bank and becomes an "REO" or "real estate owned" property. 

NEW Community-Owned or Privately Maintained Streets FNMA Requirements

In our ever-tightening environment appraisers are doing their research more carefully and lenders are finding that many streets thought to be publicly maintained are actually private roads.  This triggers an underwriting requirement to provide the recorded road maintenance agreement---which often does not exist.

If the property is not situated on a publicly dedicated and maintained street, then it must be situated on a street that is community owned and maintained or privately owned and maintained. There must be adequate vehicular access and there must be an adequate and legally enforceable agreement for vehicular access and maintenance.  

 

Community-Owned or Privately Maintained Streets

If the property is located on a community-owned or privately-owned and maintained street, an adequate, legally enforceable agreement or covenant for maintenance of the street is required. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:

•	responsibility for payment of repairs, including each party’s representative share,

•	default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations, and

•	The effective term of the agreement or covenant, which in most cases should be perpetual and binding on any future owners.

Note: If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required.

If the property is not located in a state that imposes statutory requirements for maintenance, and either there is no agreement or covenant for maintenance of the street, or an agreement or covenant exists but does not meet the requirements listed above, the lender must indemnify Fannie Mae for any losses or expenses it may incur due to the physical condition of the street or in order to establish and/or retain access thereto.

DON'T BUY ON THE REBOUND

It happens to thousands of homeowners each year.  They find their dream home but are outbid by another buyer.  Out of frustration they buy the next house they see.  BAD IDEA!!! 

Sure, it's disappointing to lose the "perfect" house.  But rushing to find a replacement can bring an even greater regret.  The fact is that most home buyers face some kind of a setback during their home search...albeit it pricing or financing or timing.  The key is to approach each step in the home buying process as part of a valuable learning experience.  

Finally, buying a home is not the ultimate goal.  Buying the right home is the goal.  Compromising with an inadequate choice is a sure path to Buyer's remorse.  I found out a long time ago that there will be another house coming on the market soon very often better than the first one you thought was the "perfect" house.


 Courtesy of Sherri Buttler, Sun American Morgage Company  sherri.buttler@SunAmerican.com  

       






   

MORTGAGE IS DENIED? HERE'S WHAT TO DO

Talk about raining on your parade!  You find your home, make an offer & then learn that your loan application as been turned down.  What to do now?

You may be able to turn a "NO" into a "YES" by taking the right steps:

Low appraisal-Try negotiating with the Seller or consider making a larger down payment should you have the money.

Not enough up front Cash-Lender determines that you don't have enough money to cover the downpayment + closing costs.  Ask the Seller to assume some of the closing costs or consider a non-repayable gift of funds from a relative.  Your lender will instruct you how to document this gift.

Insufficient Income-Due to governments "Making Homes Affordable" program, lenders are using a 31/38 rule when calculating allowable loan limits. Monthly PITI (principal, interest, taxes & insurance) should not be more than 31% of your gross monthly income. Your total debt (car loans, credit cards etc.) plus the PITI should not exceed 38% of your gross monthly income.  If your credit record is good & you've been carrying an equivalent housing payment, try to convince the lender to ease this guideline. If you or your spouse are expecting a salary increase, tell the lender who can then verify the forthcoming income increase.

Unsatisfactory credit (FICO) score--Lenders are looking for defaults, bankruptcies as well as late or missed monthly payments.  The lender needs to know the full picture if these issues are due to an illness, job layoff, marital problems or other short-term situations.  If you've regained financial stability for at least a year, the lender may reconsider.  If you have an up-and-down credit history, the only solution is to reestablish prompt payment practices.  There are also a few good lenders that will assist you in "cleaning up" your credit report and therefore increasing your FICO score.  Please contact me and I can refer you to these lenders which do not charge for this service...they just want to handle your loan when it comes time to buy.

FIRST TIME HOMEBUYER CREDIT ENDS DECEMBER 1, 2009

To qualify for this credit, the closing date for the home must take place after December 31, 2008 and before December 1, 2009.  If a taxpayer is building a home they must occupy the home between those dates.  The credit amoung is the lesser of 10% of the purchase price of the home or $8000.  The home must be occupied by the taxpayer for 36 months.  In addition, the taxpayer must not have owned a home in the United States for three years prior to taking the credit.  Selling or converting a home to rental property before the 36-month perior may subject the taxpayer to repayment of the credit.  The credit is not available for vacation homes or rental property.  In addition, this credit also has a phase-out range based on income.  You can find details on the IRS website  http://www.irs.gov/

REAL ESTATE MOVES-TOP MOST FORGOTTEN ITEMS

When you are running around on moving day, here are some items to remember:

A. Copies of family medical records, vet records and prescriptions to transfer to a destination pharmacy.  Also your child's permanent school record and shot records.

B. Anything that you have placed in a hidden spot....like jewelery, wills or other valuables.

C. Check with the dry cleaners to make sure you haven't forgotten to pick up your favorite piece of clothing.

D. Keep your new address handy....you may be so stressed that you can actually forget it.

E.  Leave out cleaning supplies for a final cleaning.  Many of these items mover's won't transport anyway.

F.  Don't pack your garage door openers and appliance instruction manuals.  Put them in the cabinet over the stove with a sign for the movers "Don't Pack" on the doors. Spare house keys, mailbox keys and pool keys should be placed there too.

G. Don't forget your pets.  Make arrangements for their transport....just don't leave them with the house....like so many people are doing these days.

H.  Open a destination bank account about a month before your move so that you will have immediate access to your funds and local bank checks.  This also gives the Title company an account for the transfer of closing funds from the sale of your home.

I.  Collect all the spare keys (from neighbors or other outside hiding places) and leave them in a predetermined spot for the new owners.

DON'T MAKE MAJOR CREDIT PURCHASES DURING LOAN QUALIFICATION

Home buyers---don't go on a spending spree using credit if you are qualifying to purchase a home. Your loan pre-approval is subject to a final evaluation of your credit report just a fewdays prior to closing. Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility ie. $300 car payment could mean that you qualify for $30,000 less in a mortgage. Even if you have sizable savings, don't make any large purchases until after closing. The last thing you want to happen is to have your loan declined and lose your new home.

SHORT SALES DEFINED & WHAT INFO TO PROVIDE LENDER & REALTOR

Here's my definition in a nutshell: A short sale is nothing more than negotiating with loan holders a payoff for less than what they are owed. Otherwise, a sale of debt generally on a piece of real estate, short of the full amount owed. It does not extinguish the remaining balance unless this is clearly settled in the acceptance of the offer. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing since there are legal and other carrying costs that are associated with a foreclosure. This occurs on a daily basis since many homes have loans that are considerably higher than the current value of the home. If you would like my Homeowner's Short Sale 16-Step Instructions emailed to you please contact me through this blog site.