Tag: Short Sale

San Mateo County Homebuyer Assistance Program

Music to my ears.  Just came across this program to help homebuyers living and working in San Mateo County.  Please visit their website for updates.

Homebuyer Loans

Downpayment assistance loans for first-time homebuyers
in San Mateo County

Together with Meriwest Mortgage, HEART has created a customized loan package that is not offered by any other lender. Our goal is simple: to help you buy a home with a 5% downpayment.

Working with Meriwest Mortgage, a wholly owned subsidiary of the not-for-profit Meriwest Credit Union, HEART has created an entirely new loan package that helps qualified moderate-income families earning not more than $150,000 and who have not owned a home in San Mateo County in the last 3 years and meet other qualifications, buy their first home in San Mateo County, or to move substantially closer to transit in the county. This program does not apply in Daly City.

* Guidelines current as of July 2012. Subject to change based on rapidly changing market conditions. Check back often for updates, or call John Souza at Meriwest Mortgage at (408) 849-7115.

How does the Opening Doors Program work?

Together with a Meriwest Mortgage first home mortgage loan, HEART of San Mateo County offers a below-market rate second loan up to $78,225 to help facilitate a home purchase with a minimum of 5% downpayment. This program does not apply in Daly City. You may purchase a home or condo anywhere else in San Mateo County.

Based on the maximum sales price of $521,250, with a conforming first mortgage amount limit of $417,000, the maximum 2nd mortgage loan is  up to $78,225. Borrowers can put more money down on a home purchase above the $521,250 limit, however, the first and second mortgages remain at the previously described limits.

The 2nd mortgage allows for an 80% loan to value ratio on the first mortgage. The purchaser is not required to buy private mortgage insurance (PMI) for this loan. This results in significant savings to the homeowner of thousands of dollars in annual mortgage insurance premiums.

The Meriwest Mortgage first loan products that will be available for this special program are:

a 30-year fixed rate

a 5/1 adjustable rate mortgage (ARM) 30-year full amortizing

and a 5/1 ARM adjustable 40-year loan fully amortizing.

In combination, these loans reduce the monthly payment to the homeowner. Note the maximum loan is subject to change depending on market conditions. The first mortgage may be up to 80% Loan to Value.

Who Qualifies?

In order to qualify for this loan, you must meet a few specific requirements. There aren’t many of them, but they are important, and you must be able to prove that you meet each and every one of them. Please review the list below and check those to which you can answer “yes.”
Guidelines current as of July 2012. Subject to change based on rapidly changing market conditions. Check back for updates, or call John Souza at Meriwest Mortgage at (408) 849-7115.

Do you and your family earn $150,000 or less each year?

Do all borrowers have good credit – FICO score 680 or higher?

Is the purchase price of the property you want to buy $521,250 or less?

Do you currently live or work in San Mateo County? If you live or work in Daly City, you may apply for this program, but you cannot purchase a home or condo in Daly City.

Is the home you are purchasing in San Mateo County? This program does not apply in Daly City.

Have you NOT owned a home during the past 36 months, OR, if you have, will you be selling your current home and buying one that is substantially closer to transit in San Mateo County?

Will the total household debt to income ratio be less than 45%?

Will you be able to make a down payment of 5% of the purchase price?

Will you be able to demonstrate continuous employment for 24 months prior to application?

Do you have 5% downpayment available?

If you answered yes to these questions, you may qualify for Opening Doors. To begin the application process and find out for certain if this program is right for you, click on the APPLY NOW button. You will be taken to the website of Meriwest Mortgage, a subsidiary of Meriwest Credit Union, and you will be asked to begin an application for a mortgage loan

Click Here to Apply

If you have problems accessing the site, have questions, or need further information, please call HEART at (650) 872-4444 ext. 4#, or email pstinson@heartofsmc.org.

FAQ

Q: What do I do if I have more questions?

A: You can download a full set of Frequently Asked Questions here

Q: What are the interest rates?

A:  Please call John Souza at Meriwest Mortgage, 408-849-7115 for today’s rates.

Q: How is the program funded?

A: HEART’s donations from local employers fund the program. HEART continues to raise funds to enable this program to grow and serve even more local employees. Please click on the Donate Now button to make a gift, or contact Paula Stinson at (650) 872-4444, ext. 4#, pstinson@heartofsmc.org Thank you!

I read this article at: http://www.heartofsmc.org/programs/homebuyer-assistance/

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

Home Prices Rebound According to CNN Money – enjoy this shared article…

Home prices rebound

By Chris Isidore CNNMoney

NEW YORK (CNNMoney) — In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago.

According to the closely watched S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, the typical home price in July rose 1.6% compared to the previous month.

It marked the third straight month that prices in all 20 major markets followed by the index improved, and it would have been the fourth straight month of improvement across the full spectrum if not for a slight decline in Detroit in April.

The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. While home prices have been showing a sequential change in recent months, it wasn’t until June that prices were higher than a year earlier.

The July reading matched levels last seen in summer 2003, when the market was marching toward its peak in 2006. The collapse of the market after that led to the financial crisis of 2008.

“The news on home prices in this report confirm recent good news about housing,” said David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing.”

Record low mortgage rates and a tighter supply of homes available for sale have helped to lift home prices. Lower unemployment also has helped with home prices, although job growth in recent months has been slower than hoped.

Earlier this month, the Federal Reserve announced it would buy $40 billion in mortgage bonds a month for the foreseeable future. This third round of asset purchases by the central bank, popularly known as QE3, is its effort to jump start the economy through even lower home loan rates.

Related: Best home deals in Best Places

Mike Larson, real estate analyst with Weiss Research, said part of the improvement in the housing market is due to investors using the low mortgage rates to buy up homes that are in foreclosure and renting them in a strong rental market.

But he said that he doesn’t think there’s much chance of housing prices forming any kind of new bubble in the foreseeable future.

“Clearly the worst is behind us for this market., but this is not a market that is going to take off again,” he said. “While you have a firming up, you still have tight lending standards and people who have been burned are reluctant or unable to get back in the market.” He predicts it will take several more years before housing prices can gain more than 1% to 2% a year.

Related: Buy or rent? 10 major cities

But that is good news for a housing market that was plagued by plunging home values and high foreclosure rates for much of the last six years. And the good news has the potential to build on itself, said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

“Housing remains a rare bright spot in an economy that is otherwise muddling through,” he wrote in a note to clients Tuesday. “The price trend for housing is significant, because it provides economic stimulus via stronger household balance sheets.”

Correction: An earlier version of this article incorrectly reported that home prices had reached a 9-year high. In fact, they rebounded to the level last seen in summer 2003, before their peak several years later.

Curious about the local real estate market on the San Francisco Peninsula?  Email me! 

I read this article at: http://money.cnn.com/2012/09/25/real_estate/home-prices/index.html?source=linkedin

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Thanks for reading – Sabrina

Offer Subject to Inspection – What Does That Mean?

As a Realtor I have a whole dictionary for just real estate jargon.  One of the most confusing terms, and often buyers will get the wrong idea about their agent, is “offer subject to inspection.”  So allow me a moment to explain what on earth this means.

“Offer subject to inspection” is a typical hurdle for buyers to overcome when shopping for homes that are tenant occupied.  The term means – the buyer can physically go in and SEE the home AFTER an offer is accepted.  Sounds a little backwards right?

And no – your agent is NOT trying to strong arm you and force you to buy a home without evening seeing it!

Generally this clause is for homes which are tenant occupied.  In order to preserve the rights of the tenant to have the quite enjoyment of their home – the tenant has the right to refuse prospective buyers to come in and see the home.  That is – until an offer is accepted by the seller, then the buyers has the right to inspect the home.

How does this work you ask?  The buyer must write a REAL offer since the terms are binding once accepted.  When the seller accepts the offer, the buyer will have a certain amount of days which is written into the contract to actually go in and see the home for the first time.  If the home is to their liking and the buyer wants to proceed with the contract – they do.  If the home is NOT to the buyers liking – for just about any reason – during the agreed upon days – the buyer will have the right to cancel the deal and walk away without any harm to both buyer and seller.

So you found a home you like – how do you write an offer?  If there are inspections available before hand – it makes our job of writing the offer a bit easier since we have a good idea of what the condition is.  If there are no inspections, and we haven’t seen the home, we drive by and gather as much info as we can with our eyes from the safety of the car.  We write the offer as best we can with the information provided and once the buyer has seen the home and had inspections we proceed with the new information – either by moving forward or discussing the new information with all parties and find a common and suitable outcome for all parties.

As strange as it seems – it happens more than you know.  For some buyers, they cannot imagine writing an offer for a home without ever seeing the home.  For investment buyers, this very typical and generally have no issues writing up a fair offer to get in.  Of course, what happens after a buyer gets to see the home is a far different story.  I have experienced both follow throughs on the contract and recessions – so truly we cross that bridge together when we get to it.

Which is truly at the root of what us Realtors do.  We are the buyers and sellers guides through Real Estate – what can The Caton Team do for you?

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

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10 things to know about mortgage debt forgiveness

Came across this great article I had to share…

 

10 things to know about mortgage debt forgiveness

Over the past several years, millions of homeowners have had billions of dollars in mortgage debt forgiven, either through foreclosure, refinancing or short sales. It’s important for real estate professionals and homeowners to understand that mortgage debt forgiveness has significant tax consequences.

Here are 10 things the Internal Revenue Service says you should know about mortgage debt forgiveness:

1. Normally, when a lender forgives a debt — that is, relieves the borrower from having to pay it back — the amount of the debt is taxable income to the borrower. Thus, a homeowner who had $100,000 in mortgage debt forgiven through a short sale would have to pay income tax on that $100,000, as an example.

Fortunately, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from your taxable income up to $2 million of debt forgiven on your principal residence from 2007 through 2012. This means you don’t have to pay income tax on the forgiven debt.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude from your taxable income debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

5. The Mortgage Forgiveness Debt Relief Act applies to home improvement mortgages you take out to substantially improve your principal residence — that is, they also qualify for the exclusion.

6. Second or third mortgages you used for purposes other than home improvement — for example, to pay off credit card debt — do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness , and attach it to your federal income tax return for the tax year in which the debt was forgiven.

8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax-relief provision. In some cases, however, other tax-relief provisions — such as bankruptcy — may be applicable. IRS Form 982 provides more details about these provisions.

9. If your debt is reduced or eliminated, you normally will receive a year-end statement, Form 1099-C: Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

The IRS has created a highly useful Interactive Tax Assistant on its website that you can use to determine if your canceled debt is taxable. The tax assistant tool takes you through a series of questions and provides you with responses to tax law questions.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, see IRS Publication 4681: Canceled Debts, Foreclosures, Repossessions and Abandonments. You can get it from the IRS website atirs.gov.

Real Estate Tax Talk

By Stephen Fishman

 

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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How to Write a Great Offer on a Short Sale Property…

So you’ve found your dream home only to find out it is a short sale.  Nuts.  Now what?

A short sale is a pre-foreclosure property.  Perhaps the seller has stopped paying their mortgage and are in default, or perhaps the seller is on top of paying their mortgage, but are forced to sell when the market is down.  Either way it comes down to one thing – the seller owes more than the home is worth and in order to sell the property free and clear of any liens the seller must ask the bank to take less than they are owed – thus the term short sale.

For a seller to qualify for a short sale they must be in financial distress and prove this to the bank.

For a buyer in requires great patience while the offer package and seller financial documents are reviewed by many many many investors.

Because of the tedious review process – a buyer must be wise when writing their initial offer.

How to write a good offer on a short sale home…

To be frank, when writing an offer on a short sale property you only get one shot.  Once and if the bank accepts the short sale offer – that price is firm.  During the buyers contingency period – if they find out there is an expensive issue – there is no going back to the bank and re-negotiating.  The buyer can either walk away from the deal due to the new information – or the buyer can take a look at their other options on the market and decide what is best for them.  Of course, as your Realtors – the Caton Team will try to renegotiate the price and if an appraisal comes in low – that’s ammo.

The good news – since generally the owners still occupy the home, it is not in too bad of shape and disclosures can be provided up front.

So, how do we write a good offer?  Buyers and their agent will take into consideration the pro’s and con’s of the home and write their best offer after taking a look at comparable properties on the market.  The short sale bank will conduct one or more appraisals of the home and if the buyers offer price is in line with market price – generally the bank will move forward with that offer.

Price is important but sometimes it is not everything.  When writing any offer, a buyer will need to have a bank pre-approval letter, copy of their bank statements and pay checks to show their financial security.  The short sale bank wants to be sure the purchaser is strong.

The terms of the contract are equally important.  Time is always of the essence in Real Estate – it is even a term in the contract.  When dealing with a short sale bank – a buyer and their Realtor have got to think like a bank – that means moving fast when the bank is ready.  Close of Escrow should be a 30 window – shorter if possible.  Longer than 30 days tends to turn the bank away.  As for as contingency periods (time for the buyer to conduct their inspections and appraisal) the short sale bank will give the buyer the standard window of time – generally 10-17 days after acceptance.  Having a tight contingency period will make the short sale bank a bit more happy.  Also, the bank doesn’t move at anyone’s pace except their own – so giving the bank at least 3 months to review the short sale package is acceptable, longer is better if a buyer doesn’t mind.

Now on my end, as the Realtor – I want to make sure I send the bank your offer and all the paperwork by mail instead of fax so the bank has everything it needs and hopefully cutting down on the back and forth.

In the end, a buyer must write THEIR best offer, and whether they get the house or not, be comfortable with their purchase.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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A Cinderella Story… Jake and Sophia

It was 2008.  Jake and Sophia had been working hard and saving their money to buy their first place.  The market had fallen enough to make a home a reasonable dream.  Armed with their pre-approval from Melanie Flynn, we took a look at homes in San Carlos and Redwood City.  It didn’t take long for us to find a darling place in Redwood City.  It was a short sale.  Two loans on the property with two different banks.  We knew it would be a tricky deal, but the home was well worth the work.

We wrote an offer and the sellers accepted right away.  The offer was sent to both banks and together we waited on pins and needles to hear back. Weeks passed.  Each Wednesday I’d call the Listing Agent to get the scoop.  And each week she told me she hadn’t heard back.  Months passed.  Six – I think – could have been more.  Finally I get some answers.  The two banks were at a stand still.  Neither would budge.

Now during these six months when everyone was in the dark – Jake wanted to propose to Sophia and wanted to do so in their future home.  At the time – The Caton Team didn’t know the shenanigans going on with the bank – so we arranged to show them the home again and hang out in the car so Jake could properly propose.  It was super cute and of course, Sophia said yes.  (They are high-school sweethearts.)

We all went home with hearts and stars in our eyes – that lasted until I got the phone call.  You see,  a short sale with one home loan is easy compared to a home with two loans.  One loan, means one bank decides their bottom line.  Two loan, and now we have a fight.  Technically, the 1st loan has precedence over the 2nd loan, so much so, the 1st loan could foreclose on the home and own it – wiping the 2nd loan off the face of the earth – the 2nd loan would have no recourse and just take the loss.  But since the 1st loan was trying to work with the sellers to avoid foreclosures – the fight is over how much the 2nd loan would accept in the short sale and walk away.  Typically, the 1st loan gives about $1000 – $3000 to the 2nd loan as a courtesy since the 1st loan is not foreclosing.  Generally the 2nd loan is happy to get anything – and accepts what the 1st loan gives them.  Well not this time.  The 2nd loan was demanding more money – the 1st loan wasn’t going to give it to them.  Both Realtors tried every which way to put the deal together, but in the end, nobody had enough money to satisfy this 2nd loan.

After a long talk with Jake and Sophia we knew it was time to walk away.

Thankfully, since we saw the writing on the wall – we started looking for other homes.  Seems like everything that would work was already pending or sold.  Except for one.

The trick to being a great Realtor is also being a great detective.  Combing through the pending listings, Susan saw a cute home which was pending but in the agent comment section – it was begging for a back-up offer – it appears the current buyer was threatening to walk away since they were tired of waiting for the short sale bank to respond.  The Listing Agent knew she was so close to a short sale approval – but the buyer had enough.

We called right away and showed the home that night.  Jake and Sophia loved it.  Sadly, the home was priced about $50,000 over their budget.  That didn’t stop the Caton Team.  We knew the buyer was going to walk, the bank was ready to sell and we knew to strike when the iron was hot.  We wrote the offer right away.  The seller accepted the offer and sent it to the bank.  In the mean time, the other buyer rescinded their offer and suddenly we were the only offer on the table.  It was the banks call – wait another 356569546 days or sell it now…

With bated breath we waited.  Two offers on two short sales – it was like roulette.

Before we knew it, the bank accepted our $50,000 below price offer and we were in the home stretch.  We rescinded our offer on the 1st house and about 25 days later handed the keys to Sophia & Jake.  They couldn’t be happier.

Just so you know – the original house – the two banks fought for over 1 year and in the end the 1st foreclosed on the 2nd.  It wasn’t the best solution for the seller, but thankfully they were finally able to move forward.

In the end – Jake & Sophia got a home that was far better than the first place.  It’s why I tell each buyer upfront – we’re going to see a lot of homes, we’re going to write a bunch of offers, some will be accepted or rejected, some homes will move faster than other – but in the end – what’s meant to be is meant to be.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

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How To Read Disclosures

Congratulations –  you’ve found a home you’d like to write an offer on.  This is very exciting!  The first step before writing an offer is to review the disclosures that have been provided by the seller in advance (if given the opportunity).  Here are the instructions on how to go about reviewing the disclosures package & preparing yourself to write an offer.

1. Grab a highlighter, pen, paper & post-it notes.

2. You will need to read & review the entire disclosure package before we get together.

3. We will review your questions & concerns before we write an offer & answer them as best we can & make notes to ask the seller, inspectors & the listing agent during your contingency period.

4. Please DO NOT WRITE on the disclosures – it is OK to use a highlighter.  Write you questions & concerns on a separate piece of paper & use post-it notes.

5. As you read each page, most forms will have a “Buyers Initials” or “Buyers Signature” at the bottom of each page.  PLEASE SIGN & INITIAL WHERE REQUESTED after you have read & reviewed the page.  Please note – regardless if you “like or dislike” what you are reading – you will need to initial & sign where necessary.  The purpose of the disclosures package is to inform you of any known defects upfront.  How we (your buyers agents & you) go about repairing/correcting said issues is part of the contract & negotiations.

6. You will need to sign ALL upfront disclosures before we write the offer – doing so in advance will shave 1 to 2 hours from our appointment.  Giving us more time to discuss your options.

7. Once we’ve discussed your questions & concerns you can make an educated decision on how much you want to offer & what issues you want clarified or corrected.

8. Please allow 2-4 hours for our offer appointment.

9. Bring the signed Disclosure Package to our appointment.

Please Bring With You the Following:

  • Copy of you Bank Statement showing Proof of Down Payment & Closing Costs
  • Loan Approval Letter
  • CHECK BOOK!!!!!  Please remember that your good faith deposit of up to 3% of the Purchase Price must be available funds

Got Questions – The Caton Team is here to help.  Email us @  Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!

Senate Bill 458 – Help for Short Sale Sellers

A new California law will further protect homeowners pursuing short sales by barring first and secondary lienholders from going after sellers for money owed after the short sales close.

Gov. Jerry Brown signed Senate Bill 458, authored by Senate Majority Leader Ellen Corbett (D-San Leandro,) into law on Friday.

A short sale is a transaction in which the homeowner owes more on the loan than the property is worth. To sell the home, the lien holder or lien holders must approve the sale because the amount owed to the lien holder will be “short” of what is currently owed by the borrower.

Real estate tracker DataQuick said short sales made up 17.7 percent of Southern California home resales in June.

The new law builds on the protections offered by a previous law, SB 931, which required the first lien holder in a short sale to accept an agreed-upon payment as the full payment for the outstanding loan balance. The previous law did not address junior lien holders.

The new law, which became effective immediately, now prohibits secondary lien holders from pursuing deficiencies after a short sale closes.

“As the economic recession continues to impact Californians, SB 458 will allow homeowners forced to sell at a loss to have closure at the end of the process,” said Corbett, in a statement to the Union-Tribune. “By extending anti-deficiency protection to all loans on a home when a short sale occurs, a homeowner can use a short sale as an alternative to foreclosure or bankruptcy.”

The California Association of Realtors call the bill’s signing a “victory for California homeowners.”

“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” said Beth L. Peerce, president of the Realtors group, in a statement.

For more information please visit: http://www.car.org/newsstand/newsreleases/sb458/

 

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

 

 

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A Quick Review on the Different Real Estate Markets…

Google buying a home and words like short sale, REO, bank owned, or regular sale pop up.  All these terms can be a bit confusing.

Right now, on the San Francisco Peninsula market we are experiencing three very different niche markets.

  • Regular / Normal Sale
  • Short Sale
  • Bank Owned Sale

Allow me a moment to explain what these three niche markets are and how they affect the buyer.

Regular / Normal Sale

These may feel like transactions of the past – but a normal sale is when the seller owns their property and the mortgage on the home is below the current home value.  In other words – the seller has equity in their home.  Equity is the profit for the seller.  The best part of a normal sale is working with living breathing humans who will respond to a buyers offer within a normal period of time and provides the buyer with disclosures upfront that sometimes include a recent home or pest inspection.  A quick glance at Redwood City last week (July 2011) showed 73% of the homes on the market are normal sales!  Wow – not what you expect if you listen to the news!

Short Sale

These transactions are trickier than the rest.  A short sale means, the seller owes MORE on their mortgage than the home is currently worth.  They have negative equity.  If circumstances change in the sellers life and they now need to sell their home – the home is placed on the market like a normal sale, however, when an offer comes in and the seller accepts it – it is their bank (where the mortgage is held) that needs to agree to take a shortage on their loan – thus the term Short Sale.  Doing a short sale hurts a seller’s credit less than allowing the bank to foreclose.  For a buyer it means patience since the response time for a bank to review their offer is anywhere between 3-6 months. Generally the seller still resides in the home and can provide disclosures upfront, though money is tight and the seller may opt to have the buyer pay for their own inspections.  In Redwood City last week 17% of the homes on the market were known short sales.

REO (Real Estate Owned) or Bank Owned Sale

The REO or Bank Owned property is a post foreclosure property.  That means the bank has foreclosed on the seller and now the bank owns the home and is selling it themselves.  The good news – a bank can respond to a buyer’s offer within a week – instead of the 3-6 months on a short sale.  The bad news, there are NO additional disclosures on the property aside from the CA mandatory disclosures.  The buyer holds the burden of conducting their own home and pest inspections (plus any other investigating they desire) during their contingencies.   Since the bank has never lived on the property they do not complete a Transfer Disclosure Statement that covers – along with many other items – neighborhood nuisances that a seller would have to disclose.  Have no fear – as the buyer you are protected and will have time to inspect the home to ensure it is in satisfactory condition.  Last week in Redwood City – 8% of homes for sale were bank owned.

(The remaining properties were 1% Auctions, 1% Court Confirmation /Probate Sales)

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Please enjoy my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/

All That Real Estate Jargon

When considering the purchase of a home many factors come into play. Budget, Goals, Needs and Wants are all key players when deciding your next step.

Here are a few things to remember and consider:

Determine your Budget. Lenders will allow up to 30% of your monthly income to go to all debt. That includes your car loan, student loans, credit card debt and the mortgage.

When talking about your monthly mortgage payment – we uses the term PITI:

PRINCIPLE: How much of your monthly payment that goes towards your loan principle

INTEREST: How much of your monthly payment goes towards your interest rate

TAXES: Property Tax is 1.25% of your purchase price (and rises yearly), we divided it by 12 and add it to the monthly cost of homeownership. (It is actually paid in two installments, Feb & Nov)

INSURANCE: A home or condo needs homeowners insurance, we estimate the yearly premium and add the monthly cost to the total.
This gives the borrower and accurate picture of the monthly cost of the home, even though many of the payments are annual or semi-annual.

DOWN PAYMENT: These days a borrower needs a minimum of 3.5% for their down payment to qualify for an FHA loan. FHA loans do have strings attached and Private Mortgage Insurance is an expensive cost of putting less than 20% down. It’s best to sit down with a lender to discuss your loan options. We have several trusted lenders you can work with.

CLOSING COSTS: Many borrowers expect the need for a down payment but do not understand what “closing costs” are. Closing Costs are the fees associated with purchasing a home. Closing costs run about 3-4% of your purchase price and must be liquid and available. Closing Cost Fee’s included:

Lender Fees: Costs for your loan, including but not limited to, appraisal fees, credit report fee, points (1% of loan amount to pay down your interest rate up front), doc prep, underwriting, administration fees, and wire transfers to name a few.

Title & Escrow Fees: When purchasing property you will also purchase two Title Insurance Policies to ensure the property is yours and no one can stake a claim to your property. The Title & Escrow companies also charges Escrow Fees for handing the monies, loan docs, and recording the property with the county.

Inspections Fees: There are also fees that are paid outside of escrow, such as Inspections on the property that are often given a discount if paid at time of the inspection.

Gift Funds: When a borrower is receiving monies for the home as a gift, the lender will require a paper trail, including a Gift Letter signed by the person giving the gift expressing the money is not a loan and will not expect the money to be paid back. Also, it is best to get that Gift Money upfront to “season” the money in the borrowers bank account. Banks like to see 3-6 months of “seasoning”.

Got Questions – we’re here to help.  Email us @  Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!