Short Sale? You Better Know This Before you List Your Home!

While this really has nothing to do with getting a home loan, chances are you or someone you know is thinking of short selling their home.  Or perhaps you are shopping for a home  right now and this could affect you as well.

Let's first talk about the person who is or is thinking of short selling their home.  The 2007 tax forgiveness act is about to expire.  So what does that mean to you if you are currently short selling or thinking of short selling your home?  Well it could mean huge tax liabilities.  I want to start off by saying I am not a CPA nor am I giving tax advice here.  What I am saying is there could be a huge consequence if this tax break expires.  An example would be this.  Let's say someone sells their home for $100,000 less than what they owe.  Theie income is in the 30% tax bracket.  This could mean you would now have a $30,000 tax liability that you will have to pay.  Again, I am not a CPA and I always advise my clients to speak with a CPA before they move forward with listing their home as a short sale.  As you can see in this example, this could be financially devastating.  Therefore, please, contact your CPA and if you don't have one, you need one now.   Even if you have sold your home this month, will it close on time to avoid the tax penalty?  You only have a few weeks left before the end of the year and the expiration of this tax forgiveness.  Protect yourself now!

As a buyer?  If this tax forgiveness doesn't get extended, than that means the inventory is going to be even less than it is today.  While it may be good for someone that wants to sell their home because it will create even more multiple offers, it does mean that finding that home and getting your offer accepted just became harder.  With the fiscal cliff looming and Congress Christmas break looming, there is a good possibility nothing will happen until next year.  But when next year?  January? February? March?   

As a Seller or potential Seller with a short sale I would say talk to your CPA now!  Also write to your Representative and tell them to get it approved now!  Click here to find  your Representative.

Please feel free to email or call me anytime.  But if you have a home listed right now that's a short sale, time is of the essence! Get the professional tax advice before it's too late!

Loan Modifications - 5 Scams to Watch out For!

Are you or someone you know looking to do a loan modification on their home?  Be sure they are aware of these following scams! Please pass this on to them as it could cost them their home.

Phony Counselors – Scam artists present themselves as “counselors” who will negotiate a deal with the lender IF the borrower pays a fee first.  Some scammers even require that all the mortgage payments be made to them while they negotiate on the borrower’s behalf. 

Fake “Government “ Modifications – Scammers will claim to be approved or affiliated with the government.  Their documents and website will use terms like “federal” and “TARP”.  They will claim a fee is necessary to use the modification program.  Borrowers should call their lenders directly to find out if they qualify for a government loan modification.

Bait and Switch – The scam artist tells borrowers that by signing loan modification documents the existing mortgage will become current.  What the borrower is really signing surrenders title to the scammer in exchange for a “rescue loan”. 

Rent-to-Own or Leaseback Schemes  – Scammers tell borrowers that if they will surrender title to their home that they can stay there as a renter, and then buy the home back in a few years.  The scammer then raises the rent over time to the point they can’t pay.  The scammer evicts the borrower and sells the home.  Another variation is when the scammer has the borrower sign over title and move out.  They promise to find a buyer for the home and share part of the profit once the home is sold.  What really happens is that the scammer rents out the home, never making the mortgage payments and lets the lender eventually foreclose, while they walk away with all the rent money. 

Bankruptcy to Avoid Foreclosure – The scammer promises to negotiate a refinance with the lender for a fee.  He pockets the fee and files a bankruptcy in the name of the borrower without the borrower’s knowledge to temporarily stop the foreclosure process.   The borrower thinks things are going well because the collection calls stop. 

If you are still current on your payment you may qualify for some of the refinance options that are available today.  Even if you're upside down!  Call me first to see if you would be eligible for any of these products before allowing any of your payments to go delinquent.

Call me today!
Jayne Combs
NMLS#222444
Mortgage Loan Officer
First California Mortgage 
588 San Ramon Valley Blvd #202
Danville, CA  94526
jcombs@firstcal.net

 

5 Reasons to Sell Now

5 Reasons to Sell Now

Many Renters CAN Afford to Buy a Home, But Don't Realize It!

IS YOUR HOME UNDER WATER?

 


I have some exciting news for those of you homeowners who are currently upside down on their homes.  If you have a mortgage that is held by Freddie Mac, FannieMae, FHA, or VA you may be able to refinance your home to take advantage of today's lower rate without any equity in your home.  In some cases, you can even refinance your investment property as well!

Homeowner's with FreddieMac and FannieMae loans may be eligible under the HARP program depending when their loan was sold to them.

VA has a VA Refinance Streamline to help Vets that do not have any equity in their home and will consider refinancing without an appraisal.

FHA just released new lower insurance premiums for people with FHA loans sold to them prior to 5/2009.  If you have wanted to refinance in the past but it just didn't make sense because of the increase in the mortgage insurance now is the time!

To get started to see if your current mortgage qualifies for any of these products, just email me your mortgage statement to jcombs@firstcal.net for your free, no obligation consultation.  Unfortunately due to law changes, I am only licensed in CA.  But I may be able to direct you to a licensed loan officer in other states if necessary.

Let's do it! 

Jayne Combs
Licensed Mortgage Consultant
NMLS#222444
First California Mortgage
588 San Ramon Valley Blvd
Danville, CA 94523
(925) 270-7763

Applying for a Mortgage Loan

10 Commandments

Thou shall not change jobs or become self-employed

Thou shall not buy a car, truck or van unless you plan to live in it

Thou shall not use your credit cards or let your payments fall behind

Thou shall not spend the money you have saved for your down payment

Thou shall not buy furniture before you buy your house

Thou shall not originate any new inquiries on your credit report

Thou shall not make any large deposits into your bank account

Thou shall not change bank accounts

Thou shall not co-sign for anyone

Thou shall not purchase ANYTHING until after the closing

So you think you have to go through a big bank to get a loan?  Here's Chase's rates as of today that they posted on the web.  Not only could I beat their rates, I can also close this month too!  Chase is running about 60 days for purchases and longer for refinances.  What are you waiting for?  If you own a home that is currently "under water", let's talk too!  There are some programs that don't require appraisals.  Email me today at jcombs@firstcal.net.

For Sale By Owner (FSBO) Is it for me?

FOR SALE BY OWNER (FSBO)

Is it for me?

If you ever owned a home and had to sell it, you may question why must I pay someone 6% commission just to put a sign in my front yard to sell my home?  Well that’s exactly what Colby Sambrotto, the founder and former CEO of forsalebyowner.com preached.  He believed in selling your home without a real estate agent and showed you how you could do it yourself and save thousands if not tens of thousands of dollars doing it.

The Wall Street Journal, recently wrote a story about how Colby Sambrotto had to hire a broker and paid 6% commission in order to sell his own home after failing himself at what he preached and taught others to do.  Here’s two of his myths:

Myth #1 – You Will Pocket More Money Selling on Your Own

This is a common tune sung throughout any FSBO sites you visit.  So what happened in Sambrotto’s case?

From the WSJ article:

“The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.
By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”

Wait, what?  Had he been able to sell his home on his own he would have lost $150,000!  By waiting to hire a professional, it also cost him additional monthly interest for each month he remained in the home.  I bet that was more than the 6% the real estate professional would have received.  

Myth #2 – The Internet Alone Can Sell Your Home

The internet has certainly played a huge roll in “marketing” your home by giving it a greater exposure.  People can sit back in their recliners at 1:00 a.m. and search for property.  So, if this is true as he preaches, why didn’t it work for him?

From the WSJ article:

“Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling successes and switched to a broker because many buyers were so reliant on brokers.”

Real Estate Agents are not going away.  People rely on them to not only list their homes, but to find them homes. Potential buyers may miss your FSBO since it is not listed in the multiple listing services (MLS).  Marketing falls back into your lap to hit the target audience. 

When potential buyers are looking for property on the internet, they may gravitate to sites such as ZipRealty or Trulia and not think about looking for FSBO sites.  In addition, they may not be comfortable representing themselves in such a huge investment.  Real estate professionals are trained and will seek to protect you and your best interests.  When you preview a property, they may see a potential hazard or problem you may not have known on your own and will request the proper disclosures and/or inspections.  I personally know someone who sold their home without a real estate professional and failed to disclose properly a water leak/problem they had.  Long story short, there was mold that was not disclosed and they ended up being sued for tens of thousands of dollars.  Again, losing a huge chunk of money they “saved” by doing it on their own.
 
Bottomline

Why would you risk one of your largest investments?  Use the internet to educate yourself, be able to ask questions to the real estate professionals you interview.  But don’t risk everything, use a trained professional.  When looking for a Real Estate Agent, ask your friends, family, or use YELP or some other search rating engine for a recommendation.  Protect yourself and your investment! Align yourself with a licensed Realtor and Mortgage Loan Officer.

After all, you wouldn't perform open heart surgery just because some faceless stranger told you that you could save money by doing it yourself would you? 

How long do I have to wait after a bankruptcy, foreclosure, or short sale?





Modification, Short Sale or Foreclosure?

I would first like to begin by saying I am only writing this article for informational purposes only. Please contact a local real estate attorney and a Certified Public Accountant with respect to local laws and tax consequences.  Now with that said, let's jump in to this a little further. 

What exactly is a loan modification?

A loan modification is somewhat like a refinance. The bank will modify your original terms and may reduce your balance, the term of your loan, lower your interest rate, etc.  However,  the bank usually wants to see some type of a financial hardship on your part.  They will ask for you to complete their form, provide bank statements, pay stubs, and anything to substantiate your claim.  In some cases, just your loan adjusting from an interest only loan, option arm, or hybrid loan may create a financial  hardship for you without you having lost any actual income.   You do not have to be behind in your payments to be considered for a loan modification.  I have heard from some people that the bank won't consider the modification unless they are delinquent.  I personally know people who received loan modifications without 1 late payment on their loan.  But it took over 1 year and 3 attempts.  I have personally applied for a loan modification and you can do this yourself.  But you must stay on top of it and be prepared to send them papers they lose several times and not take NO for an answer.  It took me a couple of times applying to finally get my loan modified.  

Be aware that should you decide to stop making  your mortgage payments and get behind, you are not guaranteed for a loan modification.  And in some cases, I know people who did this and found out the terms they were offering they didn't like or the bank refused it at the last minute. Unfortunately, they were so far behind on their payments and didn't have the  money  to get caught up and ended up losing their homes.  In one case I know of, they lost their home of 23 years when the bank refused to help them.  Be prepared!  

What exactly is a short sale?  

A short sale is when your existing lender will agree to accept less money than what is owed to release their lien against your home so you can sell it.  Someone may short sale their home to avoid foreclosure, relocation, divorce, etc. 

In a short sale, the difference between what was owed and what was paid off is called a deficiency amount.  In some cases, the lender may forgive the remaining deficiency,  require you to pay the deficiency back over time or file a judgment against you for the deficiency. I cannot stress enough how important it is to work with a Realtor who has a lot of experience negotiating short sales.  They are familiar with the bank negotiators, understand the need to stay on top of everything,  and will do their best to protect your best interest and possibly getting the bank to forgive the deficiency amount.

A bank will not usually consider a short sale unless there is a hardship.  You may  need to provide a letter explaining your situation, bank statements, pay stubs, etc.  In some cases, I have had clients tell me their loan servicer required them to become delinquent before they would consider allowing a short sale to take place.  This can be a very dangerous game as you will be playing Russian Roulette with your home.  Just because you are delinquent, does not necessarily guarantee that you will get an offer on your home that the loan servicer will accept.  You will incur substantial late penalties and even possible legal fees if they begin the foreclosure process.  If you choose to go this route, be sure to continue to set the monthly payments aside (including late penalties) so if you have to bring your loan current you can. 

In most cases you may not be able to purchase another home for a period of 2-3 years from the date the home actually transfers to the new owners.  There are a few exceptions to this and I would recommend speaking with a mortgage professional prior to the short sale.

What is a foreclosure?

This is actually when the bank/lender takes your home back either through the court system or trustee sale for failure to make your mortgage payments.  Whether or not it was your choice not to make your payments on your home, a foreclosure can be an emotional traumatic event in a person's life.  In some cases, there is denial or shame.  You have nothing to be ashamed of at all!  Especially in today's economy.  Don't bury your head in the sand.  Pick up the phone and call your bank right away.  Because there are so many people going through exactly the same thing, the banks are backlogged.  Give them plenty of notice to give them the time they  need to possibly help you.   See if they can help to modify your loan or will allow you to possibly do a short sale. If you do lose your home in a foreclosure, you will be able to buy again.  Most lenders are 3 years unless there were extenuating circumstances. Contact a mortgage lender for further details.

If for any reason you feel a short sale or foreclosure is something you are going to or thinking of doing, please take the time to speak to a real estate attorney and a CPA.  In some cases, the deficiency judgment may become taxable income to you. So, be sure you run this by your CPA ahead of time to avoid any surprises as tax time.

I hope this has helped to clarify some things for you.  Please feel free to contact me directly with any questions.  

Property Descriptions and What They REALLY Mean?

As a change of pace with all of the changes going on, I thought I'd bring some levity to my blog today.  I found these descriptions/phrases on various real estate websites and thought I'd bring them together here.  Be sure to let me know if you have one of your own or know of one you can add to this list.

When it says:                                                                       This is what it REALLY means:

MUCH POTENTIAL                                                            Steer clear unless you have a lot of money!

UNIQUE CITY HOME                                                         Used to be a warehouse

CONTEMPORARY                                                             Lots if steel shelves with little holes like the

                                                                                              kind your dad used to store tools on.

ONE-OF-A-KIND                                                               Ugly as sin

UPPER BRACKET                                                               If you have to ask…

YOU’LL LOVE IT                                                                No you won’t

MUST SEE TO BELIEVE                                                     An absolutely accurate statement

SPACIOUS                                                                           Average

CHARMING                                                                         Small

COZY                                                                                   Very Small

WALK TO STORES                                                             Nowhere to park your car

BRIGHT AND SUNNY                                                        Drapes and blinds not included

SPRAWLING RANCH                                                         Floor plan sucks

SECLUDED SETTING                                                         Just try and find it

EXECUTIVE NEIGHBORHOOD                                        Taxes are really high

UNAFFECTED CHARM                                                      Needs painting

STARTER HOME                                                                  Run Down

NATURAL SETTING                                                            Deer will eat your plants and bushes

PARK LIKE SETTING                                                          There's a tree in the yard

AND MUCH, MUCH MORE                                                Can’t think of anything more to say

When I was searching for a home it boasted of the great views and needed some TLC.  I can say it had an awesome view that was getting closer all the time.  The house was falling down the side of mountain.  You had to take dramamine just to view it!

Don't forget to put your favorite sayings and meanings below.

Are you Upside Down on Your Home?