REALTORS® in Orange County who represent sellers and buyers of homes in
the communities of Ladera
Ranch, Talega,
and San Clemente should
understand the “community enhancement fee” required to be paid at the time of
close of any escrow or purchase.
Often described as a “lifestyle” fee, these private transfer fee obligations
are a recorded covenant running with the land obligation of the sellers.
Payment of this fee obligation is according to a recorded covenant and cannot
be avoided.
Such recorded community enhancement fees commonly have language such as: “By
its acceptance of a deed with respect to any residential Unit (as such term is
defined above), the Owner of such Unit is hereby deemed to acknowledge and
agree to the requirement that any Owner transferring title to such Unit shall
pay to the Association a Community Enhancement Fee in an amount not to exceed
one-fourth of one percent (0.25%) of the gross sale price of the Unit. By its
acceptance of a deed with respect to any residential Unit (as such term is
defined above), the Owner of such Unit is hereby deemed to acknowledge and
agree to the requirement that any owner transferring title to such Unit shall
pay to the Association such Community Enhancement Fee. Certain exemptions
apply.”
So even though FHA and government-backed loans have been made by lenders in
these communities for more than 10 years, HUD has recently said that such
government-backed loans are no longer authorized where there are required
private transfer fees.
HUD (U.S. Housing and Urban Development) representatives have recently said: “Ladera
Ranch is one of many master planned communities where mandatory private
transfer or other transfer fees are required upon each conveyance of the
property. This includes single-family dwellings, townhouses, PUDs, MH and
condos. Per the regulation at § 203.41, private transfer or other
transfer fees are not authorized. This rule was promulgated in 1994 and announced
via Mortgagee Letter 04-02 and, according to HUD, the “requirements of the rule
are still applicable.”
So despite HUD not enforcing its own regulation after more than 10 years in
Ladera Ranch and Talega, such purchase money loans will no longer be insured or
purchased by HUD. And unless it backs off on its declining to authorize loans
where such private transfer fees are required, FHA mortgage insurance will no
longer be available.
HUD representatives said further: “The rule has been in
effect since 1994 with limited or no compliance with the requirements therein.
Mortgagees should be aware of FHA requirements, including this rule – required
per FHA policy guidelines - and the loan transactions should not be scheduled
for escrow.” Moreover, “Sellers should not keep buyer deposits on FHA
transactions where the reason for the loan denial is not based on borrower
ineligibility of these fees upon conveyance.”
FHA will not likely publish any official notice of this change. There are
condominium projects still showing as approved on the HUD website. However, as
condominium project approvals expire, FHA could deny their application for
re-certification.
If you have questions about this change of government regulation enforcement or
if you want to express your own opinion, please contact:
Esther Yamashiro
Mortgage Credit Branch Chief
U.S. Department of Housing and Urban Development
Santa Ana Homeownership Center
34 Civic Center Plaza, 7th Floor
Santa Ana, CA 92701
714-796-1200 ext. 3465
Esther.M.Yamashiro@hud.gov
Saturday, March 28, 2015
Wednesday, September 10, 2014
Transitioning Into A Normal Market by Steven Thomas
In the August 2014 issue of OC Realtor, Mr. Thomas addresses the increasing inventory and the reliability of Fair Market Value as a basis for pricing properties.
Overpricing out of the starting gate is an intentional strategy that has captured the hearts of most sellers; but today's buyers want to pay the Fair Market Value of a home, and therein lies the disconnect. Overpriced homes are priced much higher than their Fair Market Value. Buyers see overpriced homes as an "unfair market value" and simply are unwilling to go there. The problem is that home values have appreciated a tremendous amount in a very short period of time, that is, between the beginning of 2012 and the end of August 2013. Since then, unstoppable appreciation has been replaced by sellers who completely ignore market fundamentals. Overpricing means sellers are going to sit on the market without any offers and, after a while, very few showings. The accumulation of overpriced listings has resulted in the inventory's continuously growing without pause so far this year.
The phenomenon of sellers who overprice and buyers who desire to pay the Fair Market Value of a home exists throughout Southern California. Buyers and sellers have dug in their heels, and the tug-of-war is on! As a result, the inventory has grown across the board in every county. From the lows established in March of last year, the Southern California active inventory has grown by 89%. The biggest offender happens to be Orange County, where the inventory has grown by 137% since March of last year. That's substantially more than double. So far, to be successful, it has been sellers who have had to succumb to the realities of the market and reduce their asking prices. For the most part, buyers have been unwilling to flinch.
Sellers who have priced their homes close to Fair Market Value have been able to achieve quick success and often with multiple offers. Multiple-offer situations work to the benefit of sellers, because they are able to ask for more and can pit one offer against another, but this situation can be created only by carefully establishing the initial asking price of a home.
For the most part, the juice in the market in terms of appreciation is done. Because the inventory is on the rise and buyers do not want to overpay, appreciation has come to a grinding halt. Also, it is extremely important to note that the housing market would not have been able to sustain much more appreciation or we would be in exactly the same boat as we were in 2006 through 2008, stuck with values too high and very few buyers able to afford to purchase. Currently, interest rates are cheap, making affordability better. But the sharp rise in appreciation has already eaten into home affordability. Interest rates are absolutely going to go up. I give it a 100% chance. What that happens, homes will become less affordable, For buyers, cashing in now on incredible rates is a very smart move. In a couple of years, they will look back and realize that purchasing while rates were low was a genius idea, as rates will undoubtedly be much higher than they are today.
With buyers desiring not to overpay, the inventory has swelled, giving buyers more choices and a lot more breathing room. Sellers and Realtors have asked where we go from here, concerned that the real estate market may change course and start to depreciate. That is unlikely to occur anytime soon. The current expected market time is nearly three months. Yes, that is far different from the market time of 1.4 months just one year ago, but it is still a seller's market - barely. Anything less than five months is a seller's market. The problem is that everyone has gotten used to being able to randomly overprice a home and then get the asking price - or more. Also, they were used to selling n just a few short weeks. They were used to sifting through twenty offers and picking the very best one. That is not today's market reality. It is a seller's market, but not one in which sellers can get away with overpricing their homes. They can call the shots if and only if they price their home accurately.
Realtors are so frustrated with sellers today. When I speak to rooms filled with exasperated real estate professionals, every hand goes up when I ask who is dealing with an unrealistic seller right now. These home owners sit across the table from experts in the field and choose to ignore the facts, accurate data, and credible advice. As a matter of fact, many homeowners decide whom to hire to sell their home based on who suggests the highest value for their home. Instead, they should be considering expertise, track record, and marketing knowledge in isolating the best candidate to represent their interests.
Overpriced properties may attract some showing activity, but they will just sit on the market without success. And their sellers have nobody to blame but themselves. No marketing genius can overcome the hurdle of unrealistic pricing. Realtors can print out a single line MLS report of every active listing in the area and show a sea of red down arrows. These red arrows indicate homes where the asking price has been reduced.
For now, buyers can expect more breathing room as the inventory continues to increase and sellers take a while to figure out that overpricing is no longer a winning strategy.
Overpricing out of the starting gate is an intentional strategy that has captured the hearts of most sellers; but today's buyers want to pay the Fair Market Value of a home, and therein lies the disconnect. Overpriced homes are priced much higher than their Fair Market Value. Buyers see overpriced homes as an "unfair market value" and simply are unwilling to go there. The problem is that home values have appreciated a tremendous amount in a very short period of time, that is, between the beginning of 2012 and the end of August 2013. Since then, unstoppable appreciation has been replaced by sellers who completely ignore market fundamentals. Overpricing means sellers are going to sit on the market without any offers and, after a while, very few showings. The accumulation of overpriced listings has resulted in the inventory's continuously growing without pause so far this year.
The phenomenon of sellers who overprice and buyers who desire to pay the Fair Market Value of a home exists throughout Southern California. Buyers and sellers have dug in their heels, and the tug-of-war is on! As a result, the inventory has grown across the board in every county. From the lows established in March of last year, the Southern California active inventory has grown by 89%. The biggest offender happens to be Orange County, where the inventory has grown by 137% since March of last year. That's substantially more than double. So far, to be successful, it has been sellers who have had to succumb to the realities of the market and reduce their asking prices. For the most part, buyers have been unwilling to flinch.
Sellers who have priced their homes close to Fair Market Value have been able to achieve quick success and often with multiple offers. Multiple-offer situations work to the benefit of sellers, because they are able to ask for more and can pit one offer against another, but this situation can be created only by carefully establishing the initial asking price of a home.
For the most part, the juice in the market in terms of appreciation is done. Because the inventory is on the rise and buyers do not want to overpay, appreciation has come to a grinding halt. Also, it is extremely important to note that the housing market would not have been able to sustain much more appreciation or we would be in exactly the same boat as we were in 2006 through 2008, stuck with values too high and very few buyers able to afford to purchase. Currently, interest rates are cheap, making affordability better. But the sharp rise in appreciation has already eaten into home affordability. Interest rates are absolutely going to go up. I give it a 100% chance. What that happens, homes will become less affordable, For buyers, cashing in now on incredible rates is a very smart move. In a couple of years, they will look back and realize that purchasing while rates were low was a genius idea, as rates will undoubtedly be much higher than they are today.
With buyers desiring not to overpay, the inventory has swelled, giving buyers more choices and a lot more breathing room. Sellers and Realtors have asked where we go from here, concerned that the real estate market may change course and start to depreciate. That is unlikely to occur anytime soon. The current expected market time is nearly three months. Yes, that is far different from the market time of 1.4 months just one year ago, but it is still a seller's market - barely. Anything less than five months is a seller's market. The problem is that everyone has gotten used to being able to randomly overprice a home and then get the asking price - or more. Also, they were used to selling n just a few short weeks. They were used to sifting through twenty offers and picking the very best one. That is not today's market reality. It is a seller's market, but not one in which sellers can get away with overpricing their homes. They can call the shots if and only if they price their home accurately.
Realtors are so frustrated with sellers today. When I speak to rooms filled with exasperated real estate professionals, every hand goes up when I ask who is dealing with an unrealistic seller right now. These home owners sit across the table from experts in the field and choose to ignore the facts, accurate data, and credible advice. As a matter of fact, many homeowners decide whom to hire to sell their home based on who suggests the highest value for their home. Instead, they should be considering expertise, track record, and marketing knowledge in isolating the best candidate to represent their interests.
Overpriced properties may attract some showing activity, but they will just sit on the market without success. And their sellers have nobody to blame but themselves. No marketing genius can overcome the hurdle of unrealistic pricing. Realtors can print out a single line MLS report of every active listing in the area and show a sea of red down arrows. These red arrows indicate homes where the asking price has been reduced.
For now, buyers can expect more breathing room as the inventory continues to increase and sellers take a while to figure out that overpricing is no longer a winning strategy.
Wednesday, September 3, 2014
Real Estate Economic Update by Gary Watts, Real Estate Economist
The following was taken from OC Realtor, August 2014 which is a summary of his presentation at the OCAR Annual Membership Meeting.
When asked what makes a good sermon, a wise preacher replied, "Start off good, finish strong - and the two should be as close together as possible." I am going to try to do exactly that.
This year, almost everyone is asking questions about the direction of real estate. Sellers want to know where all the buyers are. Buyers what to know if home prices have peaked. Real estate professionals want to know what happened to inventory. Lenders wonder when loan volume will return. And, people everywhere ask me, "what the heck is going on with our market?"
Recessions aren't new. During the 1970s, we had the oil crisis. In the 1980s it was the savings and loan scandal. And, more recently, we had the global financial crisis of 2007 - 2008. Real estate responds to recession by going through cycles, and these cycles have distinct phases. The first phase of a real estate cycle begins immediately after a recession, and this phase can last from 18 to 24 months. During this phase, residential home sales boom.
In the later part of 2011, home price declines began to level off, and the word on the street was that real estate prices had finally "hit bottom." After nearly five years of stock market declines, large and small investors began pulling massive amounts of money out of the market and investing in residential real estate, something Warren Buffet had advised them to do. And long-term fence-sitters finally got back into the housing market by deciding to sell and then buy to move up or down or sideways.
Phase I lasted 23 months, from early Fall 2011 to the summer of 2013. During that time, Orange County home prices rose more than 40 percent, and investors were responsible for one-third of the sales. For comparison, in 2011, Orange County home sales totaled 29,425. In 2012, sales reached 34,380; and in 2013, home sales rose to 37,574.
In the fourth quarter of 2013, Phase I came to an end. After seven consecutive months of gains, home sales began to decline. In fact, they declined 13 percent from the summer quarter and 4 percent from the fourth quarter of 2012. Also, the MLS numbers showed a decline in sales of 3.4 percent from 2012, and Orange County's listing inventory had only 5,000 homes on the market by year's end.
During this period, the only positive news in the housing resale market came from properties valued at $1 million and above: 14 percent of all sales in the fourth quarter were million-dollar homes. But even though home sales declined, home prices continued to rise. Single-family resale home prices were up 21.2 percent, while resale condo prices were up 22 percent from a year earlier.
Now that Phase I has officially ended, the big questions are what comes next, how long will it last, and why is it happening like this.
One explanation for what is happening is first-time buyers. First-time buyers are what make the real estate market go, and we are not getting enough of them. As of June 1, resale homes were down 21 percent from the first six months of last year and resale condos were down 22.4 percent.
A second explanation is movement - or the lack of it. The homes from Irvine south are more than forty years old, and there is less mobility in this area. folks in these homes bought them a long time ago, paid off their mortgages, and are staying put to enjoy what they worked so long and hard to own.
A third explanation is that the focus has shifted to new homes. Historically, they have not been a big competitor of ours, but they are up 88 percent from where they were in 2012 and are up 18.1 percent this year from the first six months of last year. There are fifty new developments from Irvine south. New home sales represented 14 percent of all home sales in the fourth quarter of 2013 and have definitely affected the single-family resale market.
Forecast
My forecast is that Phase 2, which usually lasts about a year, will persist through 2014. Listing inventory will start dissipating in August. Sales are going to decline at least 10 percent this year. Interest rates are going to rise, probably by a quarter to a half of a percent. Home prices will appreciate about 7 percent. Lending will put a buffer on our sales, and new home sales will continue to increase.
The Good News
And now for that strong finish. The good news is that Orange County ranks second in the nation in the speed and degree of its real estate recovery. Orange County had the fastest decline in listing inventory in the United States. Only 4.4 percent of homeowners are under water. Orange County home prices are only 6 percent below their 2007 peak.
When asked what makes a good sermon, a wise preacher replied, "Start off good, finish strong - and the two should be as close together as possible." I am going to try to do exactly that.
This year, almost everyone is asking questions about the direction of real estate. Sellers want to know where all the buyers are. Buyers what to know if home prices have peaked. Real estate professionals want to know what happened to inventory. Lenders wonder when loan volume will return. And, people everywhere ask me, "what the heck is going on with our market?"
Recessions aren't new. During the 1970s, we had the oil crisis. In the 1980s it was the savings and loan scandal. And, more recently, we had the global financial crisis of 2007 - 2008. Real estate responds to recession by going through cycles, and these cycles have distinct phases. The first phase of a real estate cycle begins immediately after a recession, and this phase can last from 18 to 24 months. During this phase, residential home sales boom.
In the later part of 2011, home price declines began to level off, and the word on the street was that real estate prices had finally "hit bottom." After nearly five years of stock market declines, large and small investors began pulling massive amounts of money out of the market and investing in residential real estate, something Warren Buffet had advised them to do. And long-term fence-sitters finally got back into the housing market by deciding to sell and then buy to move up or down or sideways.
Phase I lasted 23 months, from early Fall 2011 to the summer of 2013. During that time, Orange County home prices rose more than 40 percent, and investors were responsible for one-third of the sales. For comparison, in 2011, Orange County home sales totaled 29,425. In 2012, sales reached 34,380; and in 2013, home sales rose to 37,574.
In the fourth quarter of 2013, Phase I came to an end. After seven consecutive months of gains, home sales began to decline. In fact, they declined 13 percent from the summer quarter and 4 percent from the fourth quarter of 2012. Also, the MLS numbers showed a decline in sales of 3.4 percent from 2012, and Orange County's listing inventory had only 5,000 homes on the market by year's end.
During this period, the only positive news in the housing resale market came from properties valued at $1 million and above: 14 percent of all sales in the fourth quarter were million-dollar homes. But even though home sales declined, home prices continued to rise. Single-family resale home prices were up 21.2 percent, while resale condo prices were up 22 percent from a year earlier.
Now that Phase I has officially ended, the big questions are what comes next, how long will it last, and why is it happening like this.
One explanation for what is happening is first-time buyers. First-time buyers are what make the real estate market go, and we are not getting enough of them. As of June 1, resale homes were down 21 percent from the first six months of last year and resale condos were down 22.4 percent.
A second explanation is movement - or the lack of it. The homes from Irvine south are more than forty years old, and there is less mobility in this area. folks in these homes bought them a long time ago, paid off their mortgages, and are staying put to enjoy what they worked so long and hard to own.
A third explanation is that the focus has shifted to new homes. Historically, they have not been a big competitor of ours, but they are up 88 percent from where they were in 2012 and are up 18.1 percent this year from the first six months of last year. There are fifty new developments from Irvine south. New home sales represented 14 percent of all home sales in the fourth quarter of 2013 and have definitely affected the single-family resale market.
Forecast
My forecast is that Phase 2, which usually lasts about a year, will persist through 2014. Listing inventory will start dissipating in August. Sales are going to decline at least 10 percent this year. Interest rates are going to rise, probably by a quarter to a half of a percent. Home prices will appreciate about 7 percent. Lending will put a buffer on our sales, and new home sales will continue to increase.
The Good News
And now for that strong finish. The good news is that Orange County ranks second in the nation in the speed and degree of its real estate recovery. Orange County had the fastest decline in listing inventory in the United States. Only 4.4 percent of homeowners are under water. Orange County home prices are only 6 percent below their 2007 peak.
REMINDER: SEPTEMBER 15TH IS THE LAST DAY TO FILE AN ASSESSMENT APPEAL
Property Value notices for the 2014-15 fiscal year were mailed out by the Office of the Assessor in early July. Please make sure you review the notice carefully and if you disagree with the value listed, you can file an application for a changed assessment or an assessment appeal with the Clerk of the Board of Supervisors between July 2 and September 15th. For more information call the Clerk of the Board at 714-834-2331 X 3 or go to: https://assessmentappeals.ocgov.com/aa/ to complete the form and print it for mailing.
Remember you are still responsible for paying the entire property taxes on time. If you are granted an appeal, you will receive a refund on the overpayment.
Remember you are still responsible for paying the entire property taxes on time. If you are granted an appeal, you will receive a refund on the overpayment.
Monday, August 18, 2014
SMWD Implements Mandatory Water Conservation Measures - New Pools Cannot Be Filled
The Santa Margarita Water District (SMWD) announced mandatory water conservation measures which includes residential lawn watering is limited to three days per week and new swimming pools cannot be filled. Existing swimming pools can be filled up to a foot for maintenance. Car washing must be by bucket or use the local car wash that has already implemented recycling measures.
Under this measure they do have some bite...first offensive is a citation. Second offense a fine of $100, third offense a fine of $250, fourth offense a fine of $500 and they can restrict your flow of water. Let's all be water-wise and make sure we are not watering our sidewalks. Repair broken or leaking pipes and hoses
Under this measure they do have some bite...first offensive is a citation. Second offense a fine of $100, third offense a fine of $250, fourth offense a fine of $500 and they can restrict your flow of water. Let's all be water-wise and make sure we are not watering our sidewalks. Repair broken or leaking pipes and hoses
Monday, April 7, 2014
85% Loan to Value to $1,000,000 and No Mortgage Insurance
I wanted to re-post this email I just got from a lender to pass along this valuable information for those of you shopping for a new home and not sure what options you had for loans. This is not an endorsement of this loan program, just another resource provided to consumers.
PrimeLending is pleased to announce we are offering
Jumbo financing with a 15% down payment and there is no mortgage insurance!
The typical down payment
on Jumbo loans is 20%. With less equity coming from the sale of homes buyers
are finding it harder to come up with the required minimum down payment
requirements when financing properties in the higher sales prices.
We are offer both Fixed
Rate and Adjustable Rate loans with our new Expanded Opportunity Loan.
There is not a second loan or Home Equity Line associated with this program,
just one first loan.
We are seeking ways to
better assist your clients with their financing needs to help structure your
next transaction. Please let me know any questions you may have.
 |
28202
Cabot Road #135
Laguna Niguel, CA 92677 |
|
 |
Kevin
Budde
Branch Manager
Office:
949.325.1254
Cell: 949.422.2075 Fax: 866.908.3894 kbudde@primelending.com http://www.loanapprovalsfast.com/ NMLS: 325450 |
|
 |
||
Wednesday, April 2, 2014
New Listing...San Clemente, CA
MLS #OC14065377 Priced to sell at $1,329,000
Wednesday, March 5, 2014
MYTHS OF V.A. FINANCING
With so many realtors
unaccustomed to VA financing or many who just haven’t had a transaction that involved VA
financing for a long time, I decided to discuss some of the objections lenders and agents hear
all of the time.
Myth
#3 “VA appraisals have too many work requirements”
San Diego County
$527,500
5.0% to 9.99% Down Payment
1.50%
Myth
#1 “The seller has to pay points based on the loan
amount”
Back in the 70’s and 80’s
a seller had to pay anywhere from 1-6 points or more (a point is 1% of the loan
amount) depending on interest rate markets. The Veterans Administration
determined the rate so points were charged if Conventional rates were higher,
also known as discount points. Now the VA rate fluctuates daily like all loans
and the seller no longer has the cost of points.
Myth
#2 “The seller has to pay additional fees”
In the past lenders would
charge the veteran a 1% loan origination fee. When the veteran was charged
this, the veteran was not allowed to pay the escrow fee, some county and
miscellaneous fees and a limited amount of lender fees. Therefore, these fees
would be charged to the seller. Most lenders no longer charge the 1% loan
origination fee therefore the veteran pays his own customary fees and the
seller pays his own fees.
There was a time when VA
appraisers would require painting of window sills, repairs to cracked
faceplates, replacement of missing cabinet handles and many other minor
repairs. Now the focus is on health and safety issues of the property which are
deficiencies that could cause harm to the occupant.
VA financing offers no
money down financing with no mortgage insurance and very competitive interest
rates. The no down loan amounts vary by county. 2014 limits are:
Los Angeles
County
$687,500
Orange
County
$687,500San Diego County
$527,500
Riverside
County
$417,000
When the sales price
exceeds these loan amounts the veteran is required to pay 25% of the difference
between the sales price and the no down county limit as a down payment to a
maximum loan of $1,000,000 and higher in many areas.
As an example, with a
sales price of $800,000 in Orange County the down payment can be as low as
$28,125.
The Veterans
Administration charges the veteran a VA Funding Fee which will vary depending
on whether the veteran has used his eligibility previously or not and the
percentage of the down payment. The VA Funding Fee can be financed into the
loan. For first time users the fee, which is based as a percentage of the loan
amount, is as follows:
No Down
Payment
2.15%5.0% to 9.99% Down Payment
1.50%
10.0% or more Down
Payment
1.25%Wednesday, February 5, 2014
The True Impact of Mortgage Defaults on FICO Scores
There is an interesting article in the February 2014 issue of OC Realtor that I wanted to share. The article was written by Nabil Captan, founder and president of Captan & Company. The article is written in a question and answer format, which I will summarize.
1) How long will a short sale, deed in lieu, foreclosure, or bankruptcy remain in my credit file?
The answer is seven (7) years. A loan modification with rate and term alteration and no principal reduction is simply a re-finance transaction, and will not impact credit scores. Chapter 13 bankruptcy remains on your credit file for seven years, whereas a Chapter 7 bankruptcy remains for 10 years.
2) How many points will I lose if I choose a specific type of default?
It depends. The number of points lost depends on your starting credit score at the time of the default. The higher your credit score, the higher the negative impact on that score. A short sale with deficiency balance continues to present a higher risk, similar to a foreclosure.
CONSUMER A B C
starting FICO score 680 720 780
30 days mortgage late 600-620 630-650 670-690
90 days mortgage late 600-620 610-630 650-670
9 months 2.5 years 3 years
short sale no def balance 610-630 605-625 655-675
9 months 3 years 7 years
short sale with def balance 575-595 570-590 620-640
3 years 7 years 7 years
Foreclosure 575-595 570-590 620-640
3 years 7 years 7 years
Bankruptcy 530-550 525-545 540-560
5 years 7-10 years 7-10 years
3) How much time will it take to recoup points lost because of a mortgage default or bankruptcy?
The higher the score, the longer it takes to recover to the starting score before the occurrence of any type of mortgage default or bankruptcy.
Everyone is entitled to receive one free credit report a year and they are available from www.annualcreditreport.com. You can also pay $20 if you wish to obtain a genuine FICO score from www.myfico.com
Educate yourself by visiting only these websites: www.ftc.gov, www.cfpb.gov, and www.myfico.com for free and truthful information.
1) How long will a short sale, deed in lieu, foreclosure, or bankruptcy remain in my credit file?
The answer is seven (7) years. A loan modification with rate and term alteration and no principal reduction is simply a re-finance transaction, and will not impact credit scores. Chapter 13 bankruptcy remains on your credit file for seven years, whereas a Chapter 7 bankruptcy remains for 10 years.
2) How many points will I lose if I choose a specific type of default?
It depends. The number of points lost depends on your starting credit score at the time of the default. The higher your credit score, the higher the negative impact on that score. A short sale with deficiency balance continues to present a higher risk, similar to a foreclosure.
CONSUMER A B C
starting FICO score 680 720 780
30 days mortgage late 600-620 630-650 670-690
90 days mortgage late 600-620 610-630 650-670
9 months 2.5 years 3 years
short sale no def balance 610-630 605-625 655-675
9 months 3 years 7 years
short sale with def balance 575-595 570-590 620-640
3 years 7 years 7 years
Foreclosure 575-595 570-590 620-640
3 years 7 years 7 years
Bankruptcy 530-550 525-545 540-560
5 years 7-10 years 7-10 years
3) How much time will it take to recoup points lost because of a mortgage default or bankruptcy?
The higher the score, the longer it takes to recover to the starting score before the occurrence of any type of mortgage default or bankruptcy.
Everyone is entitled to receive one free credit report a year and they are available from www.annualcreditreport.com. You can also pay $20 if you wish to obtain a genuine FICO score from www.myfico.com
Educate yourself by visiting only these websites: www.ftc.gov, www.cfpb.gov, and www.myfico.com for free and truthful information.
Thursday, October 10, 2013
The Roads of South Orange County Will Be Improving
It seems that over the past few months, everywhere I drive there is road work going on. Some of these are short term local projects while others are going to be major projects that will yield big results once they are completed.
Re-alignment of the Ortega Highway Interchange is one such project that in underway and is expected to be completed by the Spring of 2015. This is a Caltrans project and as a part of this project, the Ortega Highway west of the freeway is being realigned to connect directly to Del Obispo instead of going straight to Camino Capistrano. The Ortega Interchange bridge is being rebuilt, and the north and south on- and off-ramps are being widened. Traffic can be a bear getting through this area - especially on Friday afternoons. For construction updates, log onto www.ortega.dot.ca.gov.
Closing the Avenida La Pata Gap Gap between San Clemente and San Juan Capistrano is another project that is just about ready to go out to bid. I have heard that there is still about a 15 million funding short-fall, but that the project will commence even with the funding issue. More information is available on this project by going to http://pcpw.ocpublicworks.com/projects/la-pata/
Extending the 241 Toll Road is a project of the TCA (Transportation Corridor Agencies) which intend to extend the 241 Toll Road 5 1/2 miles south from where it currently ends at Oso Parkway to an area near the Ortega Highway - also being called Cow Camp Road. This project is known as the Tesoro Extension and has been going through the permitting process over the summer with construction scheduled to begin as early as December 2013. For more information on this project go to www.relievetraffic.org.
The Orange County Transportation Authority (OCTA) has two projects they are undertaking to improve Interstate 5. During the first project, one carpool lane will be added in each direction on Interstate 5 from San Juan Creek Road in San Juan Capistrano to Avenida Pico in San Clemente. Avenida Pico in San Clemente will also have the freeway interchange widened. As everyone knows that lives in San Clemente, this project is desperately needed, but living with the construction will be tough since it is not expected to be completed until mid-2017. More information is available at www.octa.net/i5pico.
The second project from OCTA which is scheduled between 2018 and 2022, will address Interstate 5 from El Toro Road to the 73 Toll Road Interchange - which will be improved and the second carpool lane will be extended from its current terminus near El Toro Road to Alicia Parkway. In addition, either one or two new general purpose lanes may be added to Interstate 5 between El Toro Road and the 73 Toll Road. In June 2018, OCTA will begin rebuilding the interchanges at both La Paz Road and Avery Parkway. More information on this project can be found at www.octa.net/i5eltoro.
Re-alignment of the Ortega Highway Interchange is one such project that in underway and is expected to be completed by the Spring of 2015. This is a Caltrans project and as a part of this project, the Ortega Highway west of the freeway is being realigned to connect directly to Del Obispo instead of going straight to Camino Capistrano. The Ortega Interchange bridge is being rebuilt, and the north and south on- and off-ramps are being widened. Traffic can be a bear getting through this area - especially on Friday afternoons. For construction updates, log onto www.ortega.dot.ca.gov.
Closing the Avenida La Pata Gap Gap between San Clemente and San Juan Capistrano is another project that is just about ready to go out to bid. I have heard that there is still about a 15 million funding short-fall, but that the project will commence even with the funding issue. More information is available on this project by going to http://pcpw.ocpublicworks.com/projects/la-pata/
Extending the 241 Toll Road is a project of the TCA (Transportation Corridor Agencies) which intend to extend the 241 Toll Road 5 1/2 miles south from where it currently ends at Oso Parkway to an area near the Ortega Highway - also being called Cow Camp Road. This project is known as the Tesoro Extension and has been going through the permitting process over the summer with construction scheduled to begin as early as December 2013. For more information on this project go to www.relievetraffic.org.
The Orange County Transportation Authority (OCTA) has two projects they are undertaking to improve Interstate 5. During the first project, one carpool lane will be added in each direction on Interstate 5 from San Juan Creek Road in San Juan Capistrano to Avenida Pico in San Clemente. Avenida Pico in San Clemente will also have the freeway interchange widened. As everyone knows that lives in San Clemente, this project is desperately needed, but living with the construction will be tough since it is not expected to be completed until mid-2017. More information is available at www.octa.net/i5pico.
The second project from OCTA which is scheduled between 2018 and 2022, will address Interstate 5 from El Toro Road to the 73 Toll Road Interchange - which will be improved and the second carpool lane will be extended from its current terminus near El Toro Road to Alicia Parkway. In addition, either one or two new general purpose lanes may be added to Interstate 5 between El Toro Road and the 73 Toll Road. In June 2018, OCTA will begin rebuilding the interchanges at both La Paz Road and Avery Parkway. More information on this project can be found at www.octa.net/i5eltoro.
Thursday, September 5, 2013
Orange County Real Estate Updates
Our market is continuing to improve with some of the following news bite updates...Orange County ranks in the Number 2 spot among the top ten locations leading the national housing recovery as per Realtor.com The city in the number 1 spot is Oakland!
The median price of an existing single family home in Orange County is now $657,080 which requires an annual income of $126,300 to qualify for this mortgage. There are 23% of Orange County households with this minimum annual income.
The median price of an existing single family home in California in June was up to $428,510 and there are 44% of California households able to qualify for a home in this price range.
Another statistics that came my way is San Clemente real estate is expected to appreciate 11.5% this coming year. So if you are still just barely breaking even on the equity in your home, there is hope that this next year will bring you back to a positive position and able to make some real estate changes.
The median price of an existing single family home in Orange County is now $657,080 which requires an annual income of $126,300 to qualify for this mortgage. There are 23% of Orange County households with this minimum annual income.
The median price of an existing single family home in California in June was up to $428,510 and there are 44% of California households able to qualify for a home in this price range.
Another statistics that came my way is San Clemente real estate is expected to appreciate 11.5% this coming year. So if you are still just barely breaking even on the equity in your home, there is hope that this next year will bring you back to a positive position and able to make some real estate changes.
Wednesday, August 28, 2013
Home Statistics for the County
As of May 2013 the median price for a resale home in Orange County is up to $540,000. That is a jump of $105,000 since the same time last year
During the first quarter of 2012 105,251 homes had mortgages that were underwater which was about 19% of homes (SOURCE: CoreLogic).
Let's fast forward to 2013 and 44,000 Orange County homes have been pushed above the water in the past year by rising home prices. This still leaves 60,989 homes with a mortgage still underwater. This equates to 11.1% of homes in the first quarter of 2013 (SOURCE: CoreLogic).
During the first quarter of 2012 105,251 homes had mortgages that were underwater which was about 19% of homes (SOURCE: CoreLogic).
Let's fast forward to 2013 and 44,000 Orange County homes have been pushed above the water in the past year by rising home prices. This still leaves 60,989 homes with a mortgage still underwater. This equates to 11.1% of homes in the first quarter of 2013 (SOURCE: CoreLogic).
Property Tax Assessment Review Period About to Expire
Just because property values have improved this past year, still does not necessarily mean that your assessed value is where it should be. Between July 2 and September 16, Orange County property owners who believe that their homes have been valued too high for property tax purposes can request a formal review of their property tax assessment value for the upcoming 2013 tax bill.
To do this you need to complete, print out, and sign the Clerk of the Board's Online Application for Changed Assessment, which is available at https://assessmentappeals.ocgov.com/aa/ you must mail the signed form to the Clerk before the deadline.
This is only for your base property tax rate and has nothing to do with special assessments. While on the topic of special assessments - remember this year when you file your tax return, you can no longer write off the special assessments as a part of your property tax bill on your California State Income Tax Form. Although legitimately we were never to write off the special assessments, it went without any enforcement until 2012 when the State has decided to enforce that component and you can be liable for fines and back unpaid taxes if you continue to use things such as your Mello Roos assessment as a property tax deduction.
To do this you need to complete, print out, and sign the Clerk of the Board's Online Application for Changed Assessment, which is available at https://assessmentappeals.ocgov.com/aa/ you must mail the signed form to the Clerk before the deadline.
This is only for your base property tax rate and has nothing to do with special assessments. While on the topic of special assessments - remember this year when you file your tax return, you can no longer write off the special assessments as a part of your property tax bill on your California State Income Tax Form. Although legitimately we were never to write off the special assessments, it went without any enforcement until 2012 when the State has decided to enforce that component and you can be liable for fines and back unpaid taxes if you continue to use things such as your Mello Roos assessment as a property tax deduction.
Sunday, August 4, 2013
Interest Rates and Inventory...What To Do???
Well, as interest rates slowly creep back up so is our inventory. While by most recent standards rates are higher (A/O 6/27/13 4.46%) we want to remember those lows of 11/2012 when they hit 3.31%. But back in November we had very little inventory and very little activity outside of the "all-cash buyer". But, many of you remember the days back in 1981 when rates skyrocketed to 18.63%. Although that was an unusual high - hovering in the 6-8% range has occured for the first decade of this century. Yes, as rates creep up your buying power shrinks...so now is the time to go looking. Inventory in Orange County, CA as of 7/3/2013 was up to 4,727 units. The low end of the market is shrinking while the upper ends continue to show growth. The largest sector of the market locally that has grown is the properties in the $500K to $750K price range which has increased 74% since March of this year. With the increase in inventory we will see a less crazy, more normal housing market which is really what we want and need.
What I hear many people saying is that we are in a new "housing bubble". While housing prices are not going to go crashing down anytime soon, as more sellers add to the inventory, the housing market is becoming more balanced and appreciation will slow down. Higher interest rates will also encourage that balance.
What I hear many people saying is that we are in a new "housing bubble". While housing prices are not going to go crashing down anytime soon, as more sellers add to the inventory, the housing market is becoming more balanced and appreciation will slow down. Higher interest rates will also encourage that balance.
Wednesday, July 31, 2013
More Information About Purchasing Again After A Short Sale - It's All About How It Is Reported
Current Fannie Mae guidelines require a 2 year waiting period after a borrower has had a short sale to be eligible for new financing with a 20% down payment. The loan must be submitted through Fannie Mae’s automated underwriting system, Desktop Underwriter (DU), to insure the short sale on their credit report will be approved.
There are three different results DU will report a loan file as:
A) Approved/Eligible-this means the buyer is approved
B) Refer/Eligible-this means the buyer’s file must be manually approved by an underwriter
C) Refer with Caution- this is a loan denial
There are 3 main credit bureaus that collect and report the information-Experian, Equifax and TransUnion. Each of the bureaus makes their own decision on what internal codes are to be used in reporting a short sale. The code most commonly used is an I-5, “Installment with Severe Delinquency”. Unfortunately the code I-9 is sometimes reported which represents a “Foreclosure”.
If two of the bureaus report an I-5 and one of the bureaus report the short sale as an I-9, Desktop Underwriter reads the report as a foreclosure and will issue a Refer with Caution because the waiting period after a foreclosure with FNMA is 7 years.
Experian refuses to change the code from I-9 to I-5 if they are the bureau reporting the short sale as a foreclosure. Their reasoning is the definition of a short sale is a pre-foreclosure which is deemed a type of foreclosure.
The remedy would be a manual underwrite because the buyer’s documentation would prove the home sold and the bank settled for less than full. However, most investors require a DU Approve/Eligible in order for them to purchase the loan so most lenders do not offer a manual underwrite on Fannie Mae loans.
One solution has been waiting for the 3 year time period to elapse and finance with FHA. The waiting period after a foreclosure is 3 years with FHA. The down side is the mortgage insurance requirement even if the borrower has 20% down payment. That can be a very expensive option for the buyer.
The takeaway from this is to know it is more than just meeting the timeframe after a short sale for the buyer to be eligible for new financing. The buyer needs to be fully approved by having their loan file entered in Fannie Mae’s automated underwriting system and have the final decision be Approved/Eligible before entering escrow.
There are three different results DU will report a loan file as:
A) Approved/Eligible-this means the buyer is approved
B) Refer/Eligible-this means the buyer’s file must be manually approved by an underwriter
C) Refer with Caution- this is a loan denial
There are 3 main credit bureaus that collect and report the information-Experian, Equifax and TransUnion. Each of the bureaus makes their own decision on what internal codes are to be used in reporting a short sale. The code most commonly used is an I-5, “Installment with Severe Delinquency”. Unfortunately the code I-9 is sometimes reported which represents a “Foreclosure”.
If two of the bureaus report an I-5 and one of the bureaus report the short sale as an I-9, Desktop Underwriter reads the report as a foreclosure and will issue a Refer with Caution because the waiting period after a foreclosure with FNMA is 7 years.
Experian refuses to change the code from I-9 to I-5 if they are the bureau reporting the short sale as a foreclosure. Their reasoning is the definition of a short sale is a pre-foreclosure which is deemed a type of foreclosure.
The remedy would be a manual underwrite because the buyer’s documentation would prove the home sold and the bank settled for less than full. However, most investors require a DU Approve/Eligible in order for them to purchase the loan so most lenders do not offer a manual underwrite on Fannie Mae loans.
One solution has been waiting for the 3 year time period to elapse and finance with FHA. The waiting period after a foreclosure is 3 years with FHA. The down side is the mortgage insurance requirement even if the borrower has 20% down payment. That can be a very expensive option for the buyer.
The takeaway from this is to know it is more than just meeting the timeframe after a short sale for the buyer to be eligible for new financing. The buyer needs to be fully approved by having their loan file entered in Fannie Mae’s automated underwriting system and have the final decision be Approved/Eligible before entering escrow.
Wednesday, July 3, 2013
Mello-Roos Explained
In 1978 California voters passed Proposition 13 which limited property taxes to about 1% of assessed value. This was great for homeowners but didn't resolve the issue of local communities needing access to tax revenues to support schools and infrastructure in newer communities. In 1982 as an end-run around Proposition 13, state legislators came up with the Community Facilities Act or more commonly referred to as Mello-Roos (named after the bill's sponsors). Mello-Roos is a special assessment on real property and is commonly found in the newer developments of Orange County, CA. Mello-Roos tax assessments help fund schools, new roads, and infrastructure such as water bonds, bridge bonds, etc. It is an assessment based upon either square footage of the lot or the building and runs usually from 15 to 30 years. Since the assessment is based upon bonds that are floated, the re-financing of these bonds can extend the initial time period of the assessment.
As a Realtor, many people specifically state that they do not want to pay Mello-Roos taxes, so you need to steer clear of areas such as Talega, Coto de Caza, Ladera Ranch, Newport Coast, and most of Aliso Viejo. Although there are newer developments such as the Reserve in San Clemente that do not have Mello-Roos taxes specifically because the developer paid off the bonds and wrapped those fees into the actual price of the homes. In Talega, the initial development had two Mello-Roos bonds while the "newer" part has an additional bond to cover the cost of the bridges. While in the age-restricted senior community, they only pay one bond (water), since to pay for a school bond would not be fair to retired homeowners.
Everyone plugged along using the Mello-Roos tax assessment as a write-off on their income tax returns along with all the other "special" assessments that show up on property tax bills. That is until NOW! Effective in the 2013 tax year, ALL special assessments can no longer be written off as a tax deduction on income tax returns. This is causing many homeowners additional grief since there are so few tax write-offs to begin with. Many homeowners in Mello-Roos tax districts are re-evaluating the cost of these assessments.
One idea that I am attempting to apply is paying off the Mello-Roos assessment at the close of escrow in selling a home. Once the assessment is paid off, the home remains free and clear of Mello-Roos for the remainder of it's life. Many homeowners are not even aware that this is an option, and it really needs to be used more frequently as a market differentiation strategy. So in essence you can buy in Talega without the burden of Mello-Roos taxes (if you happen to negotiate with a seller that is open to this strategy).
With tighter lending, eliminating the Mello-Roos cost could allow you to afford more house and who wouldn't rather have more house than more taxes?
As a Realtor, many people specifically state that they do not want to pay Mello-Roos taxes, so you need to steer clear of areas such as Talega, Coto de Caza, Ladera Ranch, Newport Coast, and most of Aliso Viejo. Although there are newer developments such as the Reserve in San Clemente that do not have Mello-Roos taxes specifically because the developer paid off the bonds and wrapped those fees into the actual price of the homes. In Talega, the initial development had two Mello-Roos bonds while the "newer" part has an additional bond to cover the cost of the bridges. While in the age-restricted senior community, they only pay one bond (water), since to pay for a school bond would not be fair to retired homeowners.
Everyone plugged along using the Mello-Roos tax assessment as a write-off on their income tax returns along with all the other "special" assessments that show up on property tax bills. That is until NOW! Effective in the 2013 tax year, ALL special assessments can no longer be written off as a tax deduction on income tax returns. This is causing many homeowners additional grief since there are so few tax write-offs to begin with. Many homeowners in Mello-Roos tax districts are re-evaluating the cost of these assessments.
One idea that I am attempting to apply is paying off the Mello-Roos assessment at the close of escrow in selling a home. Once the assessment is paid off, the home remains free and clear of Mello-Roos for the remainder of it's life. Many homeowners are not even aware that this is an option, and it really needs to be used more frequently as a market differentiation strategy. So in essence you can buy in Talega without the burden of Mello-Roos taxes (if you happen to negotiate with a seller that is open to this strategy).
With tighter lending, eliminating the Mello-Roos cost could allow you to afford more house and who wouldn't rather have more house than more taxes?
Wednesday, June 12, 2013
PHOTOS FROM NEW LISTING
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| Street view of house from street |
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| Dining room into living room with peek of entry in rear |
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| Family room toward eat in kitchen |
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| Master bedroom |
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| Master bathroom |
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| Rear patio area |
THE BEST OF TALEGA WITHOUT THE BURDEN OF MELLO ROOS
Enjoy the best of Talega without the burden of Mello Roos taxes. Picture yourself in this recently updated light and private 6 bedroom, 5.5 bath home that has two downstairs bedrooms both with in-situ baths. From this ideal end of cul-de-sac location, the property boasts a large wrap around rear and side yard including a black pebble-tec saltwater rock pool, spa, waterfalls and a large entertaining area with built-in Jenn-Air gas grill.
Updated kitchen (May 2012) with stainless steel Kitchen Aide appliances including a built-in French door refrigerator, slab Colonial Cream granite, large center island, and a walk-in pantry. Master bath was updated last summer with slab Carrara White Italian Marble. Large porcelain oval handmade vessel sinks by Whitehaus with Kraus fixtures. Tub surround with slab marble and Calcutta gold marble tile backsplash. Tub and shower were designed with access panels to plumbing valves.
Handpainted crown molding in the master bedroom with a bult-in bookshelf unit. The powder room was updated with granite, a glass vessel sink with waterfall faucet and a "statement" mirror. Two additional bathrooms were updated this year with Venetian Marble. The upstairs Jack 'n Jill bath in Blanco Perlato, Kohler under-mount sinks with glass tile backspash and decorative accents in the tub/shower with frameless European shower door. The downstairs bath was done in Tibetan Beige with a Kohler under-mount sink with glass and metal tile backsplash and decorative accents in the stall shower with a frameless shower door.
The side yard was designed with copper pipe custom-made arbors which is a haven for the local hummingbirds and finches while a small producing veetable garden is in the side rear. There is room for children's play equipment or a trampoline. Pacifica is easy walking distance to the Talega Swim and Athletic Club and the private Calle Altea Park. This property has a three-across direct access garage with 7'9" garage doors for higher profile vehicles with a large driveway that can easily accommodate 4 additional cars.
This is NOT your typical Talega home, but so much more...call for a private viewing
Updated kitchen (May 2012) with stainless steel Kitchen Aide appliances including a built-in French door refrigerator, slab Colonial Cream granite, large center island, and a walk-in pantry. Master bath was updated last summer with slab Carrara White Italian Marble. Large porcelain oval handmade vessel sinks by Whitehaus with Kraus fixtures. Tub surround with slab marble and Calcutta gold marble tile backsplash. Tub and shower were designed with access panels to plumbing valves.
Handpainted crown molding in the master bedroom with a bult-in bookshelf unit. The powder room was updated with granite, a glass vessel sink with waterfall faucet and a "statement" mirror. Two additional bathrooms were updated this year with Venetian Marble. The upstairs Jack 'n Jill bath in Blanco Perlato, Kohler under-mount sinks with glass tile backspash and decorative accents in the tub/shower with frameless European shower door. The downstairs bath was done in Tibetan Beige with a Kohler under-mount sink with glass and metal tile backsplash and decorative accents in the stall shower with a frameless shower door.
The side yard was designed with copper pipe custom-made arbors which is a haven for the local hummingbirds and finches while a small producing veetable garden is in the side rear. There is room for children's play equipment or a trampoline. Pacifica is easy walking distance to the Talega Swim and Athletic Club and the private Calle Altea Park. This property has a three-across direct access garage with 7'9" garage doors for higher profile vehicles with a large driveway that can easily accommodate 4 additional cars.
This is NOT your typical Talega home, but so much more...call for a private viewing
Monday, January 28, 2013
Update on Getting A Mortgage After Bankruptcy or Foreclosure
As with most things these days, the rules seem to change as our real estate market struggles to improve. It used to be that if you suffered a bankruptcy or foreclosure you could kiss home ownership goodbye for at least 7 years, now for the most part, the rules say that you must wait at least 3 years, depending upon the reason you lost your house.
If you lost your house do to "extenuating circumstances" over which you had no control; this includes "life-changing" events such as a job loss, serious illness, or the death of a wage earner. A divorce, a business failure or being overwhelmed by too much credit does not count. You won't just automatically qualify, but you must provide documentation that you can handle credit and afford the payments. You need a squeaky clean credit history after your life changing event.
Unfortunately, after the loss of a home, many people cut up the credit cards and live on cash. That won't cut it, you must show a good payment history to obtain a mortgage. Although you can develop an alternative credit report using your rent payments, utility bills, and cellphone payments, most lenders still want to see trade lines and a credit score.
The other factor that comes into play is if you seek a mortgage with a government-backed financing, the wait time is usually less. For instance, mortgages insured by the Department of Veterans Affairs, after a Chapter 13 bankruptcy, the minimum wait time for VA financing is just 12 months; a Chapter 7 bankruptcy the wait is usually about 24 months.
FHA has essentially the same rules as the VA regarding bankruptcies - one year for Chapter 13 and two years for Chapter 7. If you went through a short sale or foreclosure it is usually three years...again if there are documentable extenuating circumstances the waits can be shorter.
For conventional loans, the wait times are tiered, 2 years after a short sale if there are extenuating circumstances, 4 years without. Freddie Mac guidelines say that when a borrower's financial issues were due to his mismanagment: An acceptable credit reputation must be reestablished for at least 84 months if he or she was foreclosed upon, 60 months if the borrower filed more than one bankruptcy petition in the last seven years, 48 months after the discharge or dismissal of a Chapter 7 bankruptcy, and 48 months after conveyance of a deed in lieu of foreclosure or a short payoff.
The wait is 48 months for all other significant adverse or derogatory credit information, but only 24 months from the discharge date of a Chapter 13 bankruptcy. If extenuating circumstances can be shown, and if there is evidence on the credit report that the borrower has reestablished an acceptable credit reputation, the wait is 36 months if you went through a foreclosure of filed more than one bankruptcy petition in the last seven years. If the bankruptcy was discharged or dismissed, the wait is only 24 months. As well as for a short sale, deed-in-lieu, or if the borrower suffered another significant adverse or derogatory credit event.
So don't despair, there is light on the horizon.
If you lost your house do to "extenuating circumstances" over which you had no control; this includes "life-changing" events such as a job loss, serious illness, or the death of a wage earner. A divorce, a business failure or being overwhelmed by too much credit does not count. You won't just automatically qualify, but you must provide documentation that you can handle credit and afford the payments. You need a squeaky clean credit history after your life changing event.
Unfortunately, after the loss of a home, many people cut up the credit cards and live on cash. That won't cut it, you must show a good payment history to obtain a mortgage. Although you can develop an alternative credit report using your rent payments, utility bills, and cellphone payments, most lenders still want to see trade lines and a credit score.
The other factor that comes into play is if you seek a mortgage with a government-backed financing, the wait time is usually less. For instance, mortgages insured by the Department of Veterans Affairs, after a Chapter 13 bankruptcy, the minimum wait time for VA financing is just 12 months; a Chapter 7 bankruptcy the wait is usually about 24 months.
FHA has essentially the same rules as the VA regarding bankruptcies - one year for Chapter 13 and two years for Chapter 7. If you went through a short sale or foreclosure it is usually three years...again if there are documentable extenuating circumstances the waits can be shorter.
For conventional loans, the wait times are tiered, 2 years after a short sale if there are extenuating circumstances, 4 years without. Freddie Mac guidelines say that when a borrower's financial issues were due to his mismanagment: An acceptable credit reputation must be reestablished for at least 84 months if he or she was foreclosed upon, 60 months if the borrower filed more than one bankruptcy petition in the last seven years, 48 months after the discharge or dismissal of a Chapter 7 bankruptcy, and 48 months after conveyance of a deed in lieu of foreclosure or a short payoff.
The wait is 48 months for all other significant adverse or derogatory credit information, but only 24 months from the discharge date of a Chapter 13 bankruptcy. If extenuating circumstances can be shown, and if there is evidence on the credit report that the borrower has reestablished an acceptable credit reputation, the wait is 36 months if you went through a foreclosure of filed more than one bankruptcy petition in the last seven years. If the bankruptcy was discharged or dismissed, the wait is only 24 months. As well as for a short sale, deed-in-lieu, or if the borrower suffered another significant adverse or derogatory credit event.
So don't despair, there is light on the horizon.
Tuesday, December 11, 2012
Some Great Charts To Check Out
The following post has some great charts regarding the real estate market and when they are anticipating will be the best time to sell...like wait until 2019...but the BEST time to buy is right NOW!!!
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