Vanesse's Blog http://van4homes.com/Blog Discussing Homes, Property and other relevant info for the Murrieta, Temecula and surrounding areas. Tue, 01 May 2012 23:42:16 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 Is It Time to Buy? http://van4homes.com/Blog/?p=45 http://van4homes.com/Blog/?p=45#comments Tue, 01 May 2012 23:31:00 +0000 Vanesse http://van4homes.com/Blog/?p=45 Continue reading →]]> IS IT YOUR TIME TO BUY? 

There are many factors that go into the decision to buy a home.  Your lifestyle, current living situation, finances and plans for the future can all factor into your choice and your buying timeline.

Buying vs. renting

It’s common for first-time home buyers to weigh the pros and cons of buying against continuing to rent.  If you’ve been renting, you’ve probably been somewhat free from maintenance responsibilities.  However, you’re also losing the chance to build equity, take advantage of potential tax benefits1 and protect yourself from monthly rent increases.  Buying a home is an investment in your future and can offer many long-term benefits.  Plus, when you look into it, you may be surprised – owning your dream home may be less expensive than renting!

ARE YOU READY?

Questions to ask yourself…

  • Do you have a reliable source of income that can be documented?
  • Do you have a two year employment history?
  • Do you have a record for paying bills on time?
  • Can you afford to make payments on outstanding debts, such as school or car loans?
  • Do you have money saved or can you get a gift for your down payment and closing costs?
  • Can these funds be verified in a bank account?
  • Do you have the ability to pay a mortgage payment every month, plus additional expenses?

If you can answer “yes” to these questions, you may be ready to buy your dream home!

Getting Started

So you’ve made the decision to buy a home, but now what?  Where do you start?  Here are some preliminary steps you can take before you even apply for a mortgage.

Establish a budget.

When you’re ready to buy a home for the first time, it’s important to look at your finances and find out what you can afford.  While mortgage programs and lenders vary, a general guideline is to spend no more than 28% of your gross income on housing costs.  However, even that amount might be too high depending on your other expenses.  If you don’t already have a budget, write down all of your regular expenses and determine what kind of payment you can feel comfortable making every month.  Once you state house hunting, it will be easy to fall in love with a home that’s out of your reach.  Having a number in the back of your mind will help you stay on track.

 Where is your money going each month?
Income Take home (after taxes, etc.) $
Tips
Other forms of income

TOTAL INCOME
Fixed expenses Housing costs
Car payments
Car insurance
Utilities (water, electric, gas, etc.)
Student loan payment
Credit card payment
Savings account allocating
Phone/mobile service
Cable/satellite service
Other bills

TOTAL FIXED
Variable expenses Groceries
Dining out
Clothing
Entertainment
Gifts
Miscellaneous

TOTAL VARIABLE

 

When you have a detailed picture of both your income and your expenses, you can evaluate your spending, make adjustments and get an accurate look at how much you can afford to spend on a monthly mortgage payment.

]]> http://van4homes.com/Blog/?feed=rss2&p=45 0 Home Buyers Guide (part1) http://van4homes.com/Blog/?p=33 http://van4homes.com/Blog/?p=33#comments Tue, 24 Apr 2012 20:33:36 +0000 Vanesse http://van4homes.com/Blog/?p=33 Continue reading →]]> BENEFITS OF HOME OWNERSHIP

Buying your own home is a central part of the American Dream.  The benefits of home ownership are both practical and emotional.  We’ve summarized some of the main advantages below, but not every benefit can be put into words.  Nothing compares to the pride you feel when you’re handed the keys to the place where you’ll build memories with family and friends.

STABLE HOUSING COSTS

While monthly payments for renters go to the landlord, mortgage payments made by homeowners can build equity.  For those who choose a fixed-rate mortgage, the principal and interest payments are preset for the life of the loan, a clear advantage over rental market fluctuations.

YOU CAN MAKE IT YOURS!

If you’re like many first-time home buyers, you’ve been inspired by home design shows on television, but up until this point you have been limited in your ability to make many changes to your current living space.  Even if your landlord lets you paint and make other alterations, it’s hard to justify spending the cash to update a house or apartment that isn’t yours.

Homeownership will change all that.  You will have more opportunities to decorate your home to reflect your personality with paint, window coverings, landscaping and more.  Later on, you can also change the fixtures and finishes to further put your stamp on your new place.  When you choose to buy a brand new home, you can be the one to make the design choices from the beginning.  You may even be able to roll the cost of your new selections into your monthly payment.  There are also loan programs out there that allow you to buy a “fixer” and make the repairs or remodel to a certain value.

FURNITURE SHOPPING SIMPLIFIED.

Have you ever bought a sofa, only to find that a year later you can’t fit it through the hallway of your new apartment?  Buying lasting pieces of furniture is a big investment and one that’s hard to make when you’re a renter.  As a homeowner, you won’t have to worry about spending money on something that may not work with the floorplan in your next place.  Instead, if you plan to stay in your new home for a while, you can buy furniture knowing that the pieces you select will work with your home’s layout for years to come.

MOVE ON YOUR OWN TIMELINE

If you rent a house or a condo, you always run the risk that your landlord will want to sell the property and you may be forced to move at the end of your lease.  As a homeowner; the power is in your hands.  You don’t have to move until you’re ready to sell.

]]> http://van4homes.com/Blog/?feed=rss2&p=33 0 HUD Home Purchases Made Easy http://van4homes.com/Blog/?p=16 http://van4homes.com/Blog/?p=16#comments Fri, 04 Nov 2011 23:22:18 +0000 Vanesse http://van4homes.com/Blog/?p=16 Continue reading →]]> Some of my clients have been looking at HUD Homes and have had questions on how a transaction with HUD would work. Below are some of the questions that have come up in conversation that may be of value to you.
What is a HUD Home?
A home that has gone into mortgage default with a loan that is insured by the Federal Housing Administration (FHA) is referred to as a HUD Home. When this occurs, the lender takes possession of the property and conveys ownership to HUD. HUD then sells the home through their Asset Management (AM) contractor. A HUD Home may be a single family house, townhouse, condominium, mobile home or a multiple family attached home up to 4 units.
Who can purchase a HUD Home?
HUD Homes may be purchased by any individual, company, HUD approved non-profit organization, or government entity that can secure financing or pay cast for the property. Interested buyers must submit bids through a HUD registered real estate agent – this is done electronically. A pre-qualification letter from a lender is required for buyers obtaining financing. Cash buyers are required to provide proof of funds for at least the amount of the purchase price. HUD will award the winning bid to the purchaser with the highest acceptable net to HUD. Up to 3 back-up offers may be selected as well. Back-up offers will be honored until the property closes. Winning bids are subject to completion and receipt of all required documentation by the Asset Manager.
What is an Owner Occupant?
An owner occupant purchaser is a person who plans to live in the property as their primary residence for at least 1 year, and has not purchased another HUD Home as an owner occupant within the past 2 years.
What is an Investor?
An investor purchaser is someone who buys the property as a second home or as an investment, or who does not qualify as an owner occupant.
What is the Exclusive Listing Period for HUD Homes?
When a HUD Home is first listed for sale, priority is given to owner occupants, non-profit organizations and government entities. The duration of this exclusive Listing Period will vary depending on the property’s FHA insurability.
If the property is being sold as Insured (IN) or Insured with Escrow (IE), the Exclusive Listing Period is 30 days for owner-occupant buyers, non-profit organizations, and government entities. Bids received during the first 10 days are considered to be received simultaneously and the initial bid review is on the 11th day of the Exclusive Listing Period. If there is no winning bid, bids continue to be reviewed on a daily basis until the 30-day period ends.
If the property is Uninsured (UI) or Uninsured 203(k) eligible (UK), the Exclusive Listing Period is 5 days for owner-occupant buyers, non-profit organizations, and government entities. Bids received during these 5 days are considered as thought they are received simultaneously, and are not opened until the 6th day of the Exclusive Listing Period.
What is the Extended Listing Period for HUD Homes?
After the Exclusive Listing Period has expired, unsold properties enter the Extended Listing Period. The properties are available for all purchasers, including investors, until an acceptable bid is submitted. Bids are reviewed the following business day.
When can investors submit bids?
Investors may submit bids on all properties during the Extended Listing Period.
May more than one bid be submitted?
A buyer (Owner-occupant or Investor) may submit bids on as many properties as they choose, but can only submit one bid per property. Please not that an Owner Occupant purchaser can only be awarded one Owner Occupant bid, therefore if one award is made, any other Owner Occupant bids by the purchaser would be disqualified. Contrary to this, Investors can be awarded multiple Investor bids, provided they can prove adequate financing or pay cash.
Will HUD pay for any closing costs?
HUD will pay up to 3% of the purchase price in closing costs that are considered to be reasonable and customary in the jurisdiction where the property is located. Any funds remaining after the allowable closing costs have been paid will not be credited to the buyer at closing. Note that the higher closing costs will reduce the net to HUD, and may affect the competitive bidding ratio. Only the selling agent may choose to reduce his/her commission.
When can the buyer get a home inspection done?
All HUD Homes are sold “AS IS”. HUD does not make any repairs to the property. Therefore it is important that the buyer do a visual inspection of the property prior to submitting a bid. The buyer is also encouraged to have a professional home inspection performed with the utilities activated, AFTER the contract has been accepted and signed by HUD. The buyer has a 15 day period after contract ratification to activate utilities and complete the home inspection. All inspections, tests, and risk assessments are performed at the purchaser’s expense. The buyer must request permission to activate the utilities with the Field Service manager assigned to the property, which may require an additional fee from the buyer to the Field Service manager. Please also be advised that the utility activation deposit may be non-refundable.
Please note that pools are not to be filled at any time. HUD REO properties do not require pools to be filled, which differs from front-end FHA transactions. Pools are also not required to be covered as long as there is a secure fence surrounding the backyard. HUD directive states that the lender is to obtain an “as is” statement from the buyer accepting the pool in “as is” condition. If the underwriter will not accept this method, the transaction must be cancelled.
Financing Types
HUD Homes may always be purchased using cash, conventional, or other special financing. However, FHA offers financing options that are tailored to HUD Homes. There are many variables that are taken into consideration when the disposition of a property is created. The condition of the property as reflected in the FHA-approved appraisal and the Property Condition Report (PCR) weigh heavily in determining its insurability. Once the disposition of the property has been established, the property is initially listed at the as-is appraised value and will reflect the financing acronym that is appropriate.
(IN) Insurable, FHA 203(b)
Properties listed as Insurable (IN) qualify for FHA 203(b) financing. This disposition represents properties that do not have obvious Minimum Property Requirements (MPR) repairs. Please note that properties with MPR repairs totaling $250 or less will be listed as IN and will not include those MPR repairs.
(IE) Insurable with Escrow, FHA 203(b) with Repair Escrow
Properties listed as Insurable with Escrow (IE) qualify for FHA 203(b) with Repair Escrow. This disposition represents properties that have MPR repairs which must be addressed post closing. The MPR repairs cannot total more than $5,000, except in case where the 10% contingency causes the increase in escrow, and is the financial responsibility of the buyer.
The repair escrow is never a credit to the buyer. The purchaser must finance the repair escrow with the lender writing the FHA loan. The lender holds the money for repairs in an escrow account until they are completed. FHA allows up to 90 days after closing for MPR repairs to be completed. Once the repairs have been completed for the property, the lender will inspect the contractor’s work and disburse the funds to the appropriate parties.
The repair escrow only applies to FHA 203(b) financing. The repair escrow does not apply to financing outside of the 203(b) or to cash purchases.(UI) Uninsurable
Properties listed as Uninsurable (UI) do not qualify for FHA 203(b) financing. Typically, these properties have MPR repairs exceeding $5,000 or may not meet the guidelines for FHA financing for other reasons.
Non-FHA financing and cash purchases are most often used for properties with the disposition of UI.
(UK) Uninsurable – 203(k) Eligible
Properties listed as Uninsurable – 203(k) Eligible (UK) also do not qualify for FHA 203(b) financing. However, these properties may qualify for FHA 203(k) financing. The 203(k) option is a rehabilitation loan for owner-occupants only. Most lenders offer both the standard FHA 203(k) and the 203(k) streamlined loan.
Over-Bidding with FHA financing and 2nd Appraisals
If a buyer is securing FHA financing, their lender will be required to use the HUD’s FHA “As-Is” appraisal, unless HUD’s Appraisal is over 4 months old at the time of the contract acceptance. A second appraisal may not be ordered to facilitate support of a higher purchase price. In the event the appraisal is over 4 months old at the time of Acceptance, the buyer will be required to obtain a new FHA “As-Is” appraisal at the buyer’s expense. If a buyer’s bid is accepted, and their bid amount is in excess of the HUD appraised value, the purchaser must pay the difference between the bid amount and the appraised value in cash. FHA will not approve a loan amount that is greater than the appraised value of the property.
If a buyer is securing a loan that does not involve the FHA financing, then the buyer’s lender will always order a new appraisal on the property at the buyer’s expense, regardless of whether they overbid on the property or not.
Gift Funds
There are many options for financing the purchase of a HUD Home, including gift funds. If a buyer is utilizing gift funds for any portion of the down payment, certain guidelines must be met for the funds to be considered acceptable. Gift funds may be provided by the purchaser’s family, employer, friend, or charitable organization, but there must be no expected or implied repayment of the funds. Also, the gift cannot be received from a person or entity with an interest in the sale of the property, such as the seller, real estate agent or broker, builder, lender or any other associated person or entity.

Hope this has helped you. Remember, if you have family and/or friends that are looking to buy or sell a home in Riverside county, please refer them to me.
Vanesse Hiten
Vanesse@van4homes.com
www.van4homes.com
951-288-7421

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