Read my lips: no new bills (or other financial blips). Most savvy buyers know better than to run out and buy a car while they’re trying to buy a home.  But you’d be surprised at how many don’t think twice before opening new credit accounts to buy appliances or finance the kitchen remodeling work they plan to have done as soon as they get the keys to the place.  Many a lender will run a quick credit check right before closing, mostly so they can detect whether your bills – your monthly obligations – have increased to a point that pushes your debt-to-income ratio too high to qualify for the home, or would make it tough for you to pay your new mortgage.

If your escrow runs 45, 60 or 90 days (or longer) as they commonly do in short sales and sales of bank owned homes, new accounts can certainly show up on your credit report in that time frame, endangering the deal and generating a surprise “no deal” from your lender just when you thought you’d be getting a set of closing docs to sign.

Also, some lenders conduct a last-minute check of borrowers’ bank account statements. Of course they want to make sure that you have the cash you need to seal the deal. But you might be surprised to learn that lenders also want to be sure that there are no unexplained, major deposits to your account, as well. They know some borrowers are inclined to borrow fistfuls of dollars from family and friends just before closing in an effort to scrape together the cash they need to close their home purchase by any means necessary.

And, unless the money is a lender-approved gift, that’s not allowed! (Why? The mortgage lender wants to avoid the friend or relative later saying they “own” part of the house, and also doesn’t want your obligation to repay a “friend-and-family” loan to interfere with your ability to repay your new home loan!)

If you have any large deposits (other than your normal income) come in just before or during escrow, be prepared to both explain them and document their source.

Make full disclosure when you first apply for your mortgage or short sale. Today’s loan underwriters are notorious for being sticklers about verifying and re-verifying the facts on your loan application.  And as mortgage guidelines have tightened, lenders have also tightened up the underwriting process, creating a virtual gauntlet of review after review, underwriter after underwriter that you have to get past in order to close your deal.  The most critical one?  The funder – it is this underwriter’s job to give the thumbs up (or down) on wiring your mortgage money into escrow.

Funders are the toughest to get past, understandably, because the buck stops with them when it comes to their employer’s issuance of tens, even hundreds of millions of dollars of mortgage money every year.  So, they want to be sure every last one of your loan qualifying i’s are dotted and t’s crossed – up to the very last possible moment before they green-light the disbursement.  They have the right – scratch that – the responsibility to re-check your credit, assets, even your employment at the last minute, and they take this responsibility very seriously.

And on a short sale, the pre-closing title check can reveal legal judgments and liens against the seller that have been placed on the property up to the day of closing.

I’ve seen deals fall apart or come to the brink of failure the day or so before they were supposed to close because a buyer had lost a job, turned out to actually be legally married (the divorce they’d put on the application was not yet final), or a new collection account had surfaced.  I recently saw a short sale nearly cancelled when a new collection account of the seller’s was filed as a lien on the house.  Once, I even saw a deal killed beyond salvation when a last minute credit re-check surfaced a social security number flag that revealed one buyer was not in the country legally!

To avoid these sorts of last minute surprises, be 100 percent honest with your real estate and mortgage agents at the beginning of your home buying (or selling) process about any and every area of your life that corresponds to a mortgage or short sale application question, even before you complete the application – there’s almost no such thing as an overshare at that stage.  That puts them in a position to help you avoid closing table drama from the jump, even if it means they advise you to stay in your job, settle some bills or buy the home on your own, rather than with your spouse.

Watch the calendar closely. Buyers who originally were pre-approved for their mortgage many moons before they find the right property should obtain updated estimates of their mortgage payments and the cash they will need to close their purchase as their house hunting period goes on, and especially once they have a firm closing date estimate. Mortgage interest rates can change dramatically over a period of a few months, and closing costs vary widely based on things as seemingly minor as whether your transaction closes at the beginning or the end of the month.

To avoid getting to closing and realizing that you have to come up with an extra few weeks’ worth of prepaid mortgage interest because your closing date changed, make sure your real estate and mortgage brokers are in close communication, and ask them to keep you apprised of how any closing date changes will impact the size of the check you’ll have to write to close the deal.  And if you’re buying a property that is a short sale or foreclosure, ask them to give you this briefing as soon as possible (and as frequently as possible!) in the transaction so that you can prepare a little cushion of extra cash in case closing is delayed for reasons beyond your control (which happens very frequently in these sorts of sales).

Obtain and review your closing documents in advance.  I used to give this advice mostly to buyers, urging them to ask their agent and mortgage broker to provide them with their loan and title documents at least a day or so in advance – earlier, if possible.  If you have to sign 300 pages at the closing table and you know your keys and moving plans hang in the balance, the chances you’ll be scrutinizing every line are pretty slim – and if you do happen to catch an error, the time it will take the lender to revise and reissue a set of papers can throw your moving calendar entirely out of whack.

The best practice is to get these documents in advance, so you can check on line items like the interest rate and monthly payment in the comfort of your own home or office, ask questions of your representatives and initiate any corrections that need to be made without disrupting the plans for signing and closing.

And this applies to sellers, too – even though buyers have a much higher volume of paperwork to get through at closing (and errors can be costly), closing doc errors occasionally arise that have a serious impact on sellers, as well.

Information provided through Trulia

By Jack Guttentag, Monday, September 27, 2010.

Inman News

Seniors approaching retirement with a mortgage balance and financial assets are faced with the question of whether they should liquidate assets to pay off the mortgage.  With income declining at retirement, the mortgage payment becomes more of a strain. Yet liquidating assets to repay the mortgage reduces the income being generated by the assets, and leaves the borrower with less to liquidate later on when needs may be even greater.

This is not the first time I have written about this topic, but the world has changed and so have some of my perspectives. I never squarely confronted the core problem, which is that we don’t know how much money we will need to support our lifestyle in retirement because we don’t know how long we will live. The only foolproof solution to that problem is to accumulate more wealth than we can possibly outlive, but most seniors can’t manage that. For all the others, the question of whether to pay off the mortgage looms large.

My general view is that for most seniors, paying off the mortgage (or paying it down by enough to reduce the payment significantly) is a prudent move. The major reason is that for most borrowers, the interest rate they are paying on their mortgages exceeds the rate they can earn with a reasonable degree of safety on their assets.

Paying off a 5 percent mortgage is an investment that yields 5 percent with no risk, so if you can do it by liquidating assets yielding 2 percent, you increase your wealth.  In comparing the return on mortgage repayment with the return on alternative investments that are taxable, it doesn’t matter whether the comparison is made before-tax or after-tax.  If mortgage repayment earns the higher return before-tax, it also earns the higher return after-tax. If income on the alternative investment is not taxable, however, returns should be compared after-tax.

Some borrowers facing retirement don’t want to deplete their cash by an amount sufficient to pay off their mortgage, but they will have excess cash flow for a period, which they can allocate to mortgage repayment. The borrower in this situation confronts a new investment decision every month.

Modifying a loan is the best tool that you can use if you haven’t paid several monthly payments. Once a loan is modified, it will be restructured in such a way that the monthly payments will fit into your budget. If you’re not sure about this alternative, you may need to talk to some professionals.

Most people who are in having problems with their mortgage can qualify for loam modifications. If you wish to keep the existing terms, everything might lead to foreclosure. You should also be aware that modifying a loan is different from debt consolidation, forbearances, and refinancing mortgage loan. These are considered long term solutions which can further put homeowners like you in an undesirable situation.

Through the modification programs, a homeowner can forget about the risk of foreclosure since the loan will be reinstated. In loan modifications, both parties benefit from the changes made in the terms. The interest, outstanding principal, late fees, and past dues will be included in the modified loan and so the lender will not be at a loss. The period for repaying the loan will also be extended for a longer time and so the borrower will not be affected much.

Since the loans are extended over longer periods, the lender will enjoy more of the added interests. On the part of the borrower, it doesn’t matter if the payment period is extended as long as the monthly payment is reduced to a smaller amount that they can afford to pay. So you see, both parties are able to benefit.

This is an excellent way to prevent foreclosures. Lenders are willing to modify loans as long as you take the initiative to approach them and make a deal. You are not only protecting your home from foreclosure, but you are also protecting your credit rating through the loan modification.

From The National Association of Home Builders

Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.

Exemption From Tax Credit Recapture Rules

• Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
• However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.

Extension of Tax Credit Deadlines

• The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by June 30, 2010.
• However, for qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.

Definitions

• “Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
• “Official extended duty” means any period of extended duty while serving at least 50 miles away from home for a period in excess of 90 days.

For personal help with buying or selling in the Sacramento California area contact me (Gay Sprague)

10-15-09
Home buyers still are paying less than a home’s asking price, but had slightly less negotiating power in August than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3 percent, less than the last listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July, according to the report. Negotiating power peaked in January 2009, when buyers were paying 4.5 percent less than last listing price, a median of $10,096.

Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.

Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.

“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”

A home staging interior designer dresses up an existing house to make it more ‘saleable’. A home staging interior designer can offer to make a house look attractive to prospective customers at very competitive rates and increase the prospects of a sale double fold. They do not remodel an entire house from start to finish but concentrate their design efforts only on key rooms or areas of the house. This contributes to a maximization of returns on the house.

Professionals say that when selling a home, first impressions are vital. Houses with a cluttered unappealing look can stay on the market for months and years without being sold. One of the most common elements of home staging is to ‘de-clutter’ any rooms which are unorganized and untidy allowing a potential buyer to visualize how they would like to utilize the space.

As decorative tastes are very personal some people like to use bold strong colors of paint on their walls. This can be very off-putting to a potential buyer, in which case it is often suggested to repaint using a neutral color scheme to allow the buyer to view the room as a blank canvas.

Unlike a typical interior designer who brings new elements into the home to make it livable, a skilled home staging designer works with existing elements, adding very few or minimal elements to modify the look. The owner after all intends to sell the house and move out. Home staging interior designers make effective and creative use of design pieces like mirrors, lamps, plants, rugs, baskets, plastic chairs, and pillows to build on existing room colors and furniture. When well done, staging draws the eye to the best features of the house while minimizing the flaws and diverting attention from the more un-pleasing features of the house.

A home staging interior designer usually offers a consultation service to determine the needs of the client’s home. A rough estimate of the cost is available at this point. Once the client and the designer have agreed, the plan is set to task. The prices for a home staging interior designer’s services vary depending on location and demand. For a home owner, it is advisable to refer to a number of home staging interior designers to obtain a feel of the prices. The home owner should bear in mind that top design companies may charge more for their expertise. Also, costs can be cut down by doing the major chunk of the basic ground work (For example; repainting, carpet cleaning and de-cluttering) before seeking out the designer.

There is a good chance that potential buyers will have seen a few properties before yours so make sure you make the experience as positive as possible. Ensure that the property is clean from top to bottom and that the presentation of the garden, if you have one, is up to scratch. The buyer needs to be able to see themselves living in what is your home so it’s a good idea if you can to try and make the property as neutral as possible. Get rid of unnecessary clutter and if you are redecorating any time soon before selling stick to bland and neutral colours and decoration. You want to give buyers as blank a canvas as possible to imagine themselves living there. Don’t go overboard however. You still want it to have a homely feel.

A lot has been said about baking fresh bread before a viewing. Smell is a very powerful tool and can help associate a property with good feelings and happy memories. The smell of certain foods or fresh coffee will not be the overriding selling factor but it can help in making a buyer feel comfortable in the property.

Whether you are selling a property in Scotland  or one in Sun City Lincoln Hills, CA you will need to produce a home report which will contain a single survey, an energy report and a property questionairre. The three documents will cover areas such as the property valuation, information such as council tax band, factors arrangements and how energy efficient the building is. You can get a report made up by a home report provider or get a surveyor to complete the single survey and energy report. The property questionairre can be completed yourself.