Reverse Mortgage

I would like to share with you information I learned while attending a conference last week.

Do you know what a Reverse Mortgage is? A reverse mortgage is a financial instrument that allows seniors to access the equity in their home without income or credit qualification. Seniors must be 62, live in their own home and have equity in it. This can also be used as a tool to pay off an existing mortgage or to purchase a home without making monthly P&I payments.

Requirements:

  • Must be 62 and older (everyone on title or loan)
  • Primary residents only
  • Down payment and closing costs, including gifted funds, must be documented
  • No income or credit score requirements
  • All liens and or judgments must be paid
  • Must be able to pay taxes, insurance and normal maintenance

Acceptable Property Types:

  • Single family homes
  • 2-4 unit dwelling
  • Condos that meet FHA guidelines
  • Manufactured homes that meet FHA requirements
  • Planned Unit Developments

How does the Reverse Mortgage Purchase work?

  • The loan amount available is based on age, home value, FHA loan limits, and current interest rated and any mandatory payoffs
  • The down payment requirement is the sales price minus the loan amount above
  • No payments are required as long as the homeowner lives in the home, pays their property taxes/insurance, and maintains proper upkeep of the property.

Example Purchase

Age:                                                                                       65 Years Old

Purchase Price:                                                               $300,000

Calculated Loan Amount:                                            $150,000

Down Payment Required:                                          $150,000

Monthly Mortgage Payment:                                    $0

 

Possible Uses/Benefits

  • Downsizing/Upsizing
  • Relocating near family members
  • Divorce
  • Purchase 2nd home or rental properties
  • Gifted funds for family purchase
  • Payoff existing mortgage to stay in home
  • Foreclosure Prevention
  • Financial planning tool

*It may be advisable to season the loan 12 months to access the maximum funds, so planning may be a priority.

There are great benefits to a reverse mortgage. If you are thinking of this option or know anyone who might be, please give me a call to discuss all of your options!

 

Earnest Money Deposit…

What defines an ‘Earnest Money’ deposit is the deposit made to the seller showing the buyer’s good faith in a transaction. Earnest money allows the buyer additional time when seeking financing. It is held jointly by the seller and buyer in a trust or escrow account. The reason for this is the show the seller that a buyer is serious about purchasing a property. When the transaction is finalized, the funds are put toward the buyer’s down payment. If the deal falls through, the buyer may not be able to reclaim the deposit. But this is not always true. Typically, if the seller terminates the deal, the EMD will be returned to the buyer. When the buyer is responsible for retracting the offer, the seller will usually be awarded the money but, not always.

If the deal falls through, a cancellation fee will usually be taken out of the deposit, but the remainder will remain in escrow. Whoever is holding the money will determine whether the buyer should get the money back under the terms of the purchase agreement.  Without EMD’s, you could simply make offers on many homes, essentially taking them off the market until you decide which one you like best. In addition, if you find problems with the property, you usually get your money back.

In some markets demand is so great that the seller will look for a higher deposit before accepting your offer over someone else’s. You can sometimes win a bid if you give the seller a larger deposit. In fact, the seller may be willing to come down in price a little if you make a bigger deposit. This strategy may save you money in the long run.

All in all, an EMD is an important part of a real estate transaction and knowing what and how it works is always valuable time spent finding out.

 

Top Benefits of Staging a Home

One of the biggest trends in real estate over the past few years has been Home Staging. Real estate professional’s ad home sellers nationally and even internationally, have implemented this strategy with outstanding and very profitable results. With the market shifting frequently, it is more important than ever that staging be put to use in the marketing of a property. Unfortunately, in recessions, many real estate professionals and homeowners struggle to sell their properties quickly and many think the best way to survive is to cut their staging budgets. The opposite is true, if you want to sell a property quickly.

Many realtors and homeowners who have taken a hasty approach to putting a house on the market and choosing to not stage has experienced the penalties of that decision as their houses languish on the market, month after month price reduction after price reductions, with no sale.

The benefits drastically outweigh vetoing staging. Three benefits of staging include financial, emotional and visual.

Bottom line is that staging homes tend to sell faster and for more money. Listings that are staged and priced competitively sell at minimum, 50% faster than non-staging properties, according to trulia.com. A 2007 survey found that 94% of staged homes sold on average in one month or less. Homes that were staged spent 80% less time on the market then those who were not staged.  Lastly, the cost associated with staging is a drop in the bucket compared to a price reduction. When you consider that price reductions usually start at $10,000 before anyone notices a price change, most home sellers invest only a small fraction of that in preparing their homes for sale.

The second most rewarding benefit is the emotion it creates to buyers. 95% of buyers buy on emotion so you’ve got to make it emotional for them. Home buyers begin their shopping process with a list of criteria, but what pulls them towards one house over another is the emotional experience they have upon entering a specific house.  When they start to see where their furniture can be placed, whose room is whose, and how they can create a home in that property, you have got a sale. Staging a home, bring these emotions on. Placing nice furniture and bedroom sets into a home will make a buyer feel like they have arrived home.

That is why it is so important to create the most desirable environment possible so that you attract and pull at your prospective buyers heartstrings. In fact, if you are able to do that with several prospects at the same time, you will benefit from multiple offers which usually results in a higher selling price. The ultimate goal is to appeal to the greatest number of prospective buyers within a certain target market.

The third most value benefit of staging a house is the visual aspects. According to the National Association of Realtors, 84% of buyers use the internet as the information source used in their home search. As buyers are searching the internet for properties, if your photos do not capture their attention, or worse, you don’t have any photos at all, then you are losing a significant amount of prospective buyers. Hands down, photos of stages properties are more appealing than photos of a non-staged home.

If buyers are searching for properties online, they want to get as much information as they can to narrow down their choices. A major part of that decision is what the property looks like, not just an exterior photo of the house, but what the interior has to offer. If what they see meets or exceeds their expectations, they will take the next step and visit the property in person. If you are not capturing their attention online, then you most likely lost them for good because they will not consider your property an option.

Remember, you only have one chance to make a first impression. Whether that first impression is online or in person, you have only a few seconds to make them stop and notice your property. This is the number one reason why staging is so important.

Real Estate is not for Everyone….

Many people consider working as a real estate agent as a possible career choice at some point in their life. One might imagine big deals, big money, fancy cars, working your own schedule, and being your own boss. To be honest real estate can offer those things to you, but not to most. That driving around all day looking at houses isn’t much hard work when at the end of the day they land that big commission check. But the reality is that real estate agents have a much harder job than we can imagine. The uncertainty about their income for starters can create a stressful situation, this also comes with the lack of benefits, a decline in housing values and the risk associated with meeting strangers in vacant homes can make real estate a stressful and dangerous occupation.

For starters, working strictly on commission is stressful. Agents do not have a guarantee paycheck. Most do not earn a dime until a sale closes. A lot of money can be riding on each transaction.  Whether working independently or at a large firm, most realtors tend to work as their own small business. While this has a lot of perks it can also lack things like support, paid sick, vacation and health insurance.  Agent commissions vary by region and firm, but the typical average ranges from 5% to 6% nationwide, according to the NAR and a typical agent may sell a half a dozen to a dozen properties per year. A realtor’s commission is what drives them to be the best realtor that they can be and to those who are patient and diligent, they can be the most rewarded. But, like I said, it’s like owning your own little enterprise and with that comes a lot of out of pocket expenses.

It takes time and money to stay licensed. Periodically you will need to renew your real estate license. This is normally every year or two. As part of this renewal, you will generally be required to have completed a certain number of hours of continuing education classes. These classes will usually have a fee to attend, although you may be able to pick up a few hours for free during the year through local title or escrow companies. Also, to be part of the Realtors Association, you can expect monthly, quarterly and/ or yearly dues as well. You should budget for a bare minimum of $1000 to keep you going each year. This isn’t even including any marketing/advertising that is highly recommended you do. Advertisement is great part in gaining clients and contact and in turn gain referrals for the near future.

Real estate is a great business. This blog was not meant to scare you out of the idea of becoming a real estate agent. On the contrary, if you are a hard-working, self-motivated, honest individual, the industry could use more people like you. But you need to go in with your eyes wide open. The good, honest agents will continue to be a success, as they have survived and overcame the struggles with becoming a REALTOR!

 

 

Lincoln Avenue

Willow Glen is perhaps the most unique neighborhood to be found in San Jose. Starting out as a small community in the early 1900s, the town of Willow Glen was founded in 1927. Even though the town was annexed into the city of San Jose in 1936, the neighborhood has managed to retain its own distinct identity and style.  This success can be attributed to the strong sense of pride and vision of the residents of this area, who have staved off numerous initiatives by the city that would have changed the face of Willow Glen.  Lincoln Avenue is considered the “downtown Willow Glen” business district, which is lined with sidewalk cafes, Italian delis, home design stores and clothing boutiques. Willow Glen is lush with tree-lined streets, punctuated with architecturally distinctive family homes, many of them Victorian and Spanish-style built in the 1920s and 1930s.

Willow Glen is both and enjoyable and a very livable part of Silicon Valley!

 

Things to Consider before Buying a Home

When buying a home it is easy to let emotions get in the way. It is not always just about the size, style and price. It goes much deeper than that. Sometimes we get so emotionally invested in something that we act on impulse instead of rationality.

It is very important to research a property before making that big purchase. To put into perspective, ask yourself if the pool is worth the cost and time it takes to maintain. Don’t just look at the things you see, but get inspections to look deeper into the things you can’t see as well.

  1. Visit at various times a day to see how light comes in, how the traffic is, especially if it is on a main street. The seemingly quiet neighborhood may be louder than you expected. If there is a school close by, will the before and after school traffic effect your schedule. The adjacent school may seem like a nice perk if you’re buying a home in the summer, but while school is in session, daily playground noise may be more that you bargained for.
  2. Talk to your neighbors. How many people in that neighborhood own their home and how many of them rent. This can greatly affect the neighborhood. Sometimes it’s hard to tell at first if you’re choosing a neighborhood that’s primarily rental houses.
  3. Ask If the neighborhood as an association. How often do your neighbors get together? Is there a neighborhood newspaper that goes out and if so how often? Are their block parties? These can be a fun way to get to know your neighbors and for your kids to make new friends. Neighborhoods that do things as a group tends to make great friends and are willing to loan you milk and look after your children while they play ball in the street.
  4. Make sure you ask for all building permits and inspections done in the past. Get proof of all the upgrades they did on the home.
  5. Consider the view. The view of a freeway may not be ideal. Of the view of the other homes may be distracting when you can see everything your neighbors are doing.
  6. Ask about utilities. Are they more expensive in that area? Are you on city water or well water?
  7. Reconsider parking. Are you sure you can live with a one car garage, or a detached garage, or on street parking?  Do you only have enough room for one car to park in the driveway? If so are you okay with parking on the street. Is the street big enough for your guests to park?

These are some things to think about before buying the home. In the end it is all your decision.  But make sure that is it the one that you are willing to live with. Don’t let the sellers fool you. They may say that the home is great, but maybe they have had some of the same problems as the ones you’re trying to avoid.

 

Tips for FSBO sellers

Some people simply like to do things by themselves. If this is you, you might want to sell your house by yourself. Others would simply prefer to spend their time elsewhere and hire somebody else to perform the task. This is where hiring a real estate agent comes in.

I am here to give you some tips on how you would sell your home by yourself. The biggest shock to most sellers is the true value of their homes, either determined by one or more agents in comparative market analysis reports or through actual offers from buyers. The reality is that markets change, and home values rise and fall. Many factors affect home values, and most of them are subjective and difficult to measure.

You love your home and fully expect others to appreciate the same qualities in it that you do, but buyers have their own lifestyles, preferences, tastes and attitudes. The chances of finding a buyer who will want you home as is are slim to none. In fact, buyers will look at your home with an eye to how they can make it their own.

The buyer, in order to improve bargaining leverage, may pick your home apart. Many of the buyer’s complaints and requests for repairs will be legitimate, but some may not. In fact, some requests can be outrageous. But, this would be something that you would have to negotiate yourself.

Buyers aren’t going to operate on your schedule. When your home is put on the market, you won’t have just your own Realtor showing your home, you may have dozens of Realtors and their clients wanting to see the home at almost any time of the day or evening. There is no reason for an unaccompanied buyer to be in your home for any reason. They should have a Realtor and have permission before viewing your home.  This is something that you are going to have to schedule. If you want your home sold fast you will have to be available to show many perspective buyers. It will higher your odds for as many buyers to view your home as possible.

These are some on the things that come along with selling your house on your own. If you had a Realtor they will use all their resources to sell your house. They have access to the MLS which allows them to market your home; they put up signs, make flyers, provide open houses, contact other Realtors and most importantly find a buyer for your home. It is possible to sell your house yourself, but a lot easier to have a Realtor do it for you.

Steps to Buying a Home

Buying a home can be very intimidating and stressful, especially if it is your first time.  I believe that the first question to ask is whether or not owning a home is something you want to do. This may or may not be for you and this decision is going to depend on what your circumstances are. Are you ready to put in the time it takes to maintain a house? Are you ready to pay for those extra costs that go along with? If you are then I am ready to take through the basic steps to becoming a home owner.

Step 1: Make sure you have the Credit to get a decent rate on your home loan.

Before getting a mortgage or any kind or loan, you should always check your credit. According to the law, you are allowed to receive one free copy of your credit report each year. I would get online and obtain a copy so you have something to work off of. To get the best rate for a loan you need a higher score. Credit scores typically range from 300 to 850. Try to stay above 700 at all times.

Step 2: Figure out how much you can afford

Some people think that just because they are approved for a certain amount means you need to find a house within that range. I believe that if you still want to take that two week vacation to Hawaii every year that you should stray away from having a mortgage that is going to keep you house broke. Try to balance your finances, that way you can still have enough extra money to save for those vacations and broken water heaters.

To find the right mortgage lender it is best to show around. Get recommendations from friends, family and coworkers.  Once you have the right mortgage lender, make sure you at east get pre-approved. Pre-qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for.  The lender will pull all of your income, taxes, and credit reports to get the loan you’ll qualify for. Make sure that before you go house hunting that you are already pre-approved. That way the sale will go more smoothly and quickly.

Step 4: Looking for the right home

Make a list of all the things you want in a house. Ask yourself how many bedrooms you think you will need, how big of a yard you need, and most important the amount of space you need to feel like at home. How big do you want the kitchen to be? Do you need lots of cabinets and open spaces? Do you have kids? If so, do they need a lot of play room? Once you have made your decision on how many rooms you need, how much counter space you prefer in your kitchen and whether or not you want a pool, it is time to get an agent. An agent is going to have access to all the properties on the market. They can narrow any search to fit your needs and price range. They will help and guide you through the entire process.

Now that you have your agent and must-have’s, it is time to think about the neighborhood you prefer to live in, the types of schools in that are, how long the commute to and from work is and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.

Step 5: Make on Offer on the Home

Now that you have found the home for you, it is time to make a solid offer, one that they cannot refuse. After all, there may be a lot of other buyers who think this is also the home for them.  Most sellers price their homes higher. Depending on the market it is safe to stay within %5 of their asking price. Again, this is something that any good agent will advise you on. Be prepared for a counter offer to which you can also counter. Once you have agreed on a price, you will make an EMD (earnest money deposit), which is money that goes in escrow to give the seller a sign of good faith.

Step 6: Get the right Mortgage

There are many types of mortgages out there. Get the one that works for you.  There are Adjustable rate mortgages (ARMs). These are short term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. This type of mortgage is good for people not planning on living in their home for very long.

Another type of mortgage is a Fixed-rate mortgage. These are more traditional and offer a fixed interest rate for a longer period of time. These are good for people who like a predictable payment and plan on living in their home for a long time.

Both fixed and adjustable rate mortgages can have an interest only payment. What this means it hat for a certain amount of time during the loan term, you are allowed to pay only enough to cover the interest portion of your payment.  You can still pay principal when you wish, but do not have to if your budget is tight. There is a myth that with interest only mortgages, you don’t build equity. This is not true, since you can build equity through home appreciation. The benefit to interest only mortgages is that you increase your cash flow by not paying principal. This is something that your mortgage lender should advise you on.

Step 7: Close on your new Home

Make sure you get all home inspections and appraising done. These are well worth the money since it ensures you that the property is in good condition and worth what you’re paying for.

Pay your closing costs. Closing costs will most likely include your down payment, title fees, appraisal fees, broker fees, and inspection fees.

Step 8: MOVE IN

Buying a home could be a long, drawn out process, but, not if you have the best support by a reputable agent. Picking the right agent can break a make a deal.  A good agent will listen to your needs and work on the process with you not without you. Beside this is your home after all!

Improving your credit score to buy a home!!!!

Lenders analyze your credit scores to determine whether or not to approve a home mortgage, a car purchase and nearly all other types of loans.  First and foremost lenders want to know how much of a risk you are.  In other words how likely is it that you will pay off your loan or later default on that loan. Credit scores are the many indicators that lenders look at. Good credit helps a lot when applying for a loan. Most increases to your credit scores take place over time and require on ongoing effort from you. The only try credit score quick-fixes are to pay down debt and to successfully dispute negative information on a credit report.  Ways to improve your credit score when thinking of buying a home;

  • Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down
  • Pay off debt, don’t move it around. Owning the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
  • Don’t close unused accounts, because zero balance will help better than a close account.
  • Don’t open any new account. Keep the ones you have open and work on getting the balances low. Balances need to be below 50 percent of the available credit line.
  • And most important do not obtain any new inquires to your credit. Try to hold off on applying for anything until you get your home loan.

Of course the length of your credit history helps out a lot. Time is the only thing that can improve this aspect of your scores, but you can manage it wisely. For instance, don’t open several account in a short period of time, especially if your credit history is less than three years. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly.

Just remember, when the time has come to purchase a home, your credit can greatly affect the type of loan you get, your interest rate and may affect you getting the loan all together. Prepare a year in advance. Make sure that by the time that year is up that you have paid down all your credit accounts, and are closer to the 700 range. The higher the score the better it looks for home purchase!!!!

Real Estate Transactions

Things that can go wrong during a Real Estate Transaction~

If you have made the decision to buy or sell your home, these may help you during the process. Buying and selling your home can be exciting, especially when the market is right for it. While most transactions close without incident, there can still be some issues.

Now, I’m not trying to scare you away from purchasing your dream home, but I thought I’d share some of the things that could go wrong with a real estate transaction.

  1. Listening to friends and family members who are not real estate professionals
  2. Being inflexible or uncompromising in negotiations
  3. The home inspection reveals major defects
  4. The seller refusing or forgets to make repairs
  5. The appraisal comes back significantly under value
  6. The buyer doesn’t satisfy underwriting conditions in a timely manner
  7. The buyer’s letter was a prequalification, not a full preapproval
  8. The buyers can’t get out of their current lease without paying a large fee
  9. The buyer doesn’t lock their rate
  10. Closing is delayed due to errors, contingencies, or missing documents
  11. The title search reveals defects, and liens
  12. The termite inspection reveals major infestation
  13.  Someone fails to disclose pertinent information relevant to the transaction
  14. Buyer or seller gets cold feet and decide to back out of the deal
  15. The home is not insurable

These are only some of the issues that can occur during a real estate transaction. This is why it is very important to have a real estate professional with honorable experience to represent you during one of the largest investments you will make during your life!

Oh and did I mention that the most common issue is choosing the wrong real estate agent!

There are several things that could make an agent the “wrong” agent that are not necessarily related to competence or capabilities. Certain situations require a certain level or expertise or specialization. The above listed challenges are common in a real estate transaction, but nothing a trained professional can’t handle. Having an experienced, knowledgeable agent can help you work through the above challenges and any others you may face. The most important rule is to get to know your agent!!!!!!