Credit Info - Are You Able to Purchase a New Home?

For many homebuyers, credit is a big consideration in the buying process. In applying for a mortgage, your credit may be the single factor that opens or closes the door to purchasing the home you want at a low interest rate. You may believe you have a strong credit rating but have never actually seen your credit report. Or perhaps you're concerned that past credit problems will come back to haunt you as you apply for a mortgage Whichever boat you're in, the first step is the same: Obtain a copy of your credit report for a small fee and review it for accuracy. Credit reports are maintained by three credit reporting agencies: Experian,TransUnion and Equifax. It's a good idea to obtain your credit report from all three agencies, since each may contain different information and you don't know which agency will be supplying your report to your lender.

If there is incorrect or missing information that would improve your credit score, report it to the credit bureau. Under the Fair Credit Reporting Act, consumers have the right to review and contest information in their credit reports. Even if your credit report reads exactly like you expected and your credit is in fine shape, going into the mortgage application procedure with peace of mind is worth the nominal fee.

What is credit?

Credit is a record of a person's debts and payment history. Credit bureaus compile individual reports of consumer debt through an array of sources, including credit card companies, banks, the IRS, department stores and gasoline companies, and any other entities granting loans. A credit report is a résumé of your financial performance, with information on your payment standing for all the accounts you've held for the past seven to 10 years (seven years for accounts not paid as agreed and 10 years for accounts paid as agreed).

What is a credit score?

Credit scores, also called "beacon scores," are composites that indicate how likely you are to pay on a loan or credit card as agreed based upon your payment history, amount of debts, length of credit history and types of credit in use. The credit grantor reviewing your loan application compiles your score based on information from your credit report and other data, including your income level.

Fair, Isaac and Company (FICO) developed the mathematical formula for establishing scores. Scores range from 300 (poor) to 850 (excellent), and the rule of thumb is the higher the score, the lower the risk to lenders.

In the past, consumers have not been allowed to view their credit score or be informed of the factors that determined their scores. However, C.A.R.-sponsored SB 1607, signed by California Gov. Gray Davis on Oct. 2, 2000, granted California homebuyers access to their credit scores and pertinent information about what factors determined their scores. The legislation, which becomes effective July 1, 2001, also allows consumers to receive their credit scores when they request copies of their credit files for a nominal fee.

What role does credit play?

Lenders review credit reports to determine debts owed and if they are repaid according to the terms of the initial contract. If you have any outstanding debt, lenders will analyze your debt-to-income ratio and how that debt will factor into your ability to make your mortgage payments.

What do I do when I get my report?

Read through it carefully, paying extra attention to the section on your account payment history.

How do I establish credit?

If you have never taken out a credit card or borrowed money from a financial institution, or if your accounts are young, you can establish credit history by having your rent payments to landlords and monthly payments to utility companies added to your credit report. Credit can also be established by paying off a car, if it’s financed of course.

How do I re-establish good credit?

If your credit report contains negative information, such as frequent late payments, repossessions, collection activity or bankruptcy, you may want to wait to apply until after you've improved your credit record. Rebuild your credit by showing strong payment history in the years following any problems. Most lenders prefer for three years to have passed since a foreclosure on a mortgage and at least two years since bankruptcy. Lenders are willing to forgive past black marks on a credit report if you establish a pattern of responsible debt repayment.

How do I correct a mistake?

Follow the directions of the credit bureau issuing your report. The bureau will contact the source of the information in question and attempt to resolve the dispute. Also, if late payment information is accurate but you have a good explanation (e.g., you were laid off from work or became very ill), you are allowed to add that information to your report.

Source: CAR (California Association of Realtors)

www.KeyCaliforniaHomes.com

Laura.A.Key@gmail.com

Can I Purchase A Home with my Credit

Remodeling’s ‘Value’ on the Upswing

Now that the housing market is back, home improvements are, too. And they’re paying off better than in years past. 2013 is shaping up pretty sweetly for home owners.

First, there were the home owner-centric tax benefits (energy tax credits, PMI deduction,mortgage debt forgiveness) that Congress and the President extended through 2013; and now, we’re seeing that our home improvement dollars are working harder.

After several bruising years, spending on remodeling projects is up and so too is your return on your remodeling dollars. The national average percentage recoup on all 35 projects in Remodeling Magazine’s 2013 Cost vs. Value Report rose since last year. 

What a different story from 2012, when the ROI dropped in all but three categories.

The annual report is based on a survey that asks REALTORS® around the country to estimate what specific projects, from adding an attic bedroom to installing new windows, would recoup in their market at resale under current conditions.

Of course, what you recoup depends on the specifics of your project, your market, and when you sell. But the report offers a great bird's-eye view of project costs and returns.

So which projects offer the best value for the money?

Exterior projects like siding, window, and garage door replacements took seven of the top 10 spots in this year’s list.

Makes sense since REALTORS® always say curb appeal is half the battle when you’re trying to sell.

Although it’s not in the top 10, I was gratified to see that the backup generator project is up about 5 percentage points since 2012. One of our bloggers, Lisa Kaplan Gordon, invested in a portable generator last year after one too many storms and power outages, and despite the learning curve, she was glad she did. She had power when a lot of her neighbors didn’t; she even shared power.

Indoors, the top-10 projects include a minor kitchen remodel (involving cabinet refacingand new countertops and appliances), which recouped 75.4% nationally.

Kitchen redo aside, replacement projects, such as installing an entry door or new siding,tend to have a higher cost-to-value ratio than remodeling projects. But now that housing has turned a corner, home owners are stepping up their remodeling plans.

Harvard’s Joint Center for Housing Studies saw 9% growth in remodeling in 2012 and predicts that trend will continue as more and more distressed properties are bought and rehabbed.

The housing group says interest in energy-efficiency updates will keep on trucking, too. It’s the one area where spending on remodeling projects rose during the recession. 

I’m betting the revived energy tax credit will add fuel to that trend.

By: Christina Hoffmann Published: January 24, 2013

www.KeyCaliforniaHomes.com • Laura.A.Key@gmail.com

Are Your Neighbors Friend or Foe?

Neighbors wage war every day over blocked views, loud noise, big and small annoyances. Do you have a good neighbor policy? How’s it working out? File this under No Good Deed Goes Unpunished: A Buffalo home owner sued her neighbors for cleaning up her littered patio without her permission. She said they trespassed and discriminated against her. A federal judge disagreed, and forced her to pay $107,000 in attorney fees. 

Think I’ll skip that neighborhood’s next block party.

I’ve been a home owner for 27 years and can think of no greater hell than waging war with neighbors. The idea of scurrying to collect my mail so I’ll avoid an angry couple next door makes me want to down a Xanax. 

So what do I do? I usually bend over backwards to keep the peace. 

Once, I hacked off the tops of my sunflowers because my neighbor complained they blocked the sun from shining on her tomatoes. 

For the past two summers, I’ve allowed a twangy lute to drown out summer crickets because another neighbor adds a mid-eastern soundtrack to his nightly pool parties. 

And I let it go when the couple across the street snuck into my yard and pruned my willow because they thought it blocked traffic sight lines around the corner. 

But I may be in the minority. These days, it seems like neighbor feuds are the rule, not the exception.

• Former Seattle Mariners first basemen John Olerud finally won a long, unhappy battle with the minister next door to remove a Chinese pine that obstructed Olerud’s lake and mountain views. The neighbors had been great friends, and it seems a crying shame they let a pine tree rip them apart.

• Sick of escalating fights over loud reggae music, a Tampa judge sentenced two feuding neighbors to monthly potluck dinners together. Maybe breaking bread will stop the fights: If it were me, I’d bring a taste tester before I bit into the tuna casserole.

• Neighbors complained when a “starving artist” in East Hampton, N.Y., invited any and all tothrow a pint of paint on his house. The artist wanted a free paint job: What he got was angry neighbors worried about property values.

Can’t we all just get along, or at least get some perspective?

I’m not saying hack off sunflowers to avoid a fight — that just worked for me, and my flower-loving neighbor felt guilty for years. But some honest communication, or perhaps a little mediation, could keep your front yard from becoming a battleground.

Have you ever confronted a neighbor? How’d it turn out?

By: Lisa Kaplan Gordon  Published: January 8, 2013

www.KeyCaliforniaHomes.com  Laura.A.Key@gmail.com

13 Lucky Superstitions for Your Home in 2013

Is 13 an unlucky number? We don’t think so. But just to be safe, we found 13 superstitions that just might bring your home a little luck this year.

1. Never walk under a ladder. This is believed to be the devil’s territory. If there’s no way around it, protect yourself by crossing your fingers or making the fig sign with your hand — closed fist, with the thumb between your index and middle fingers.

2. When you move out of a house, leave the broom behind. Along with the dust and dirt of your old home, old brooms also carry the negative aspects of your life. A new broom signifies a fresh start in your new home.

3. Carry bread and salt with you when you first enter a new home (along with your new broom). After crossing the threshold, sprinkle salt in front of the door to keep evil spirits away.

4. It’s bad luck to carry a hoe into the house. If you do it by mistake, carry it out by walking backwards through the same door — it’ll reverse the bad luck.

5. Stuff fennel, an herb with yellow flowers and feathery leaves, into your keyhole or hang it over the door to protect your home from witches.

6. Paint your front porch blue to ward off ghosts. This superstition, which originated in Southern plantation homes, tells us that “haints,” or ghosts, can’t cross water. Painting the porch “haint blue” would confuse ghosts into thinking the porch was made of water, so they wouldn’t enter the home.

7. Never put shoes on a dresser or table. Bad luck will ensue, according to a Jewish superstition.

8. In fung shui architecture, there should be windows on a house’s east side to face the sunrise. A 27-story home in Mumbai, valued at $1 billion, currently sits emptybecause its owner believes the lack of windows on the east side will bring him bad luck.

9. On Chinese New Year, which will be celebrated on Feb. 10 this year, you shouldclean your home thoroughly to get rid of bad luck and accept new luck into your home. Also decorate your doors and windows with posters featuring the word “fu,” which means good luck and happiness.

10. According to a Norse superstition, placing an acorn on a windowsill will protect a house from being struck by lightning. Window blind pulls decorated like acorns are still popular.

11. Never open an umbrella inside. Doing so would be an insult to the sun god, as umbrellas are commonly used for protection against the sun.

12. Don’t move into a new place on a Friday, Saturday, or rainy day. These days are unlucky and may prevent you from ever truly settling into your new home. According to Indian superstition, Thursday is the luckiest day to move in.

13. Never pound a nail after sunset, or you’ll wake the tree gods. Wouldn’t want to do that.

Have any superstitions to add to the list?

By: Courtney Craig Published: January 8, 2013

Laura.A.Key@gmail.com

www.KeyCaliforniaHomes.com

Thinking of Buying A HUD Home? Part 1

Ok, so it's 2am and you can't sleep.  You are flipping through mindless and endless infomercials trying to figure out why the sandman has not visited your home and you come across a commercial that says "BUY A HUD HOME FOR $1 - JUST SEND US $19.95 for a complete list of listings!"  Ok, it sounds too good to be true, you figure $19.95 is not that much to spend and I was thinking I am ready to purchase home!

Let me save you the money and explain to you a little about HUD homes.  There is no special list and there are homes available for a special price but buying a HUD home for $1 is a way to catch your attention and if there is one, believe me, it is only for a special group of people or organizations.

HUD homes are an excellent way to purchase your first home, heck you can even buy a HUD home if you have purchased before.  HUD's are usually FHA approved which means you can obtain a loan with only 3.5% down.  And in some areas, HUD runs a wonderful incentive for buyers by offering only $100 for the downpayment.  Be aware, that program is not in all states and areas but it is out there!  I  have closed quite a few!  But I digress....HUD homes are generally a good value, most of the time they are priced a little lower than the value in the area, but if it's been on the market a while and they have lowered the price a few times, you have magically walked into a bit of equity! (NICE PERK)

What is the difference between a HUD home and a foreclosure.  Not much really...a HUD home is a home that was financed by a government loan and if someone lost a home, they buy it back from the lender so it becomes a government home.  Foreclosures are generally, not not always, homes purchased with a conventional loan.

Buying a HUD is a bit different.  There is a bidding period.  You will need a registered real estate agent to perform the process for you. (Shameless plug....contact me at Laura.A.Key@gmail.com) You do not know how many bids are in the system and once the bidding process is done and you are determined the winner, you will be on a timeline to get the paperwork into the correct people. 

But Laura, my Realty Goddess....what about the $1 HUD homes?  There are special programs out there to help non-profits and special people who serve our community.  The $1 homes (if any) are usually presented to the non-profits.  The special programs are usually offered to the following: Police Officers, Teachers, EMT's and Firefighters.  Those homes are won on a lottery bidding system.

*This ends Part 1 of "Thinking of Buying a HUD Home" tune in to the next episode where we will discuss the bidding progress and steps to closing the deal.

Contact me with any questions you may have! Laura.A.Key@gmail.com

www.KeyCaliforniaHomes.com

*By Laura Key, please do not use without permission.

Loans for Fixer Uppers

Low housing inventory has resulted in a lack of move-in ready homes available for sale.  Many buyers, especially first time buyers, tend to overlook properties in need of extensive repairs, but a federally backed lending program enables buyers to roll the cost of necessary repairs into their mortgage, which can sometimes yield a quick return on investment.

Making sense of the story

• The Federal Housing Administration’s 203(k) program provides for loans that cover purchase and renovation costs for single-family homes and multifamilies with up to four units. The total loan amount is based on the property’s appraised value once the repairs are completed.  The down payment requirement is 3.5 percent.

• FHA 203(k) loans are not available to investors – borrowers must live in the properties.  But some borrowers have used a 203(k) loan to buy and renovate a multifamily property, live in the property for a year or so, refinance into a conventional loan, and then sell the rehabbed property.

• The loans are more expensive than conventional financing, because the interest rates are slightly higher and private mortgage insurance is required.
• Additionally, borrowers must pay a building consultant, who writes the initial estimate of the cost of planned repairs.  Fees range from $400 to $1,000, depending on the extent of the repairs.  The consultant also ensures that the repairs will bring the house up to government health and safety standards.

• The loans do not cover the addition of luxury items, such as a pool.  But allowances are made toward the cost of repairing or removing a pool, as well as for the addition of solar panels.

• Renovations must be made within six months after closing.  The contractor is paid in intervals after periodic inspections of how the work is progressing.  Borrowers should make sure they hire experienced contractors who understand that they won’t be paid upfront and must adhere to strict timelines.

For more information contact Laura Key, Real Estate Agent at Laura.A.Key@gmail.com

www.KeyCaliforniaHomes.com

Source: New York Times By LISA PREVOST Published: January 17, 2013

Fountain of Youth Slows to a Trickle

The fallout from the housing crisis is still being felt today. One major casualty is the rate of homeownership in the country, which has fallen substantially. The picture is especially bleak for younger households, who comprise the bulk of first-time home buyers. According to U.S. Census Bureau data, the biggest declines in homeownership were among households headed by those under 35 years of age. Rates for this demographic plummeted from a peak 43.6 percent in the summer of 2004 to 36.3 percent at the end of September 2012.

Meanwhile, households aged 35 to 44 experienced a decline in homeownership from 70.1 percent at the start of 2005 to 61.8 percent as of last year's third quarter.

There are two major reasons for the decline in homeownership among younger people. First, tight lending requirements and weak labor markets made homeownership unattainable for many in the younger age brackets. Second, foreclosures caused some of these homeowners to become renters or cease to be households entirely and move in with friends or family.

Also of concern is the fact that declining homeownership rates for younger households have broad ripple effects ranging from delays in marriage and having children to reduced wealth accumulation.

Source: "In the Wake of the Housing Bust, Fewer Young Homeowners," U.S. News & World Report (01/22/13) © Copyright 2013 Information, Inc.

Buying a home is not like buying a car! Have someone who can help guide you through the curves, ups, downs and joys! Contact me today! Laura Key, Real Estate Agent Laura.A.Key@gmail.com www.KeyCaliforniaHomes.com

Super Bowl: ‘Home Is Where the Game Is,’ Survey Says

Americans consider “home” the best place to watch the Super Bowl, Century 21’s “Big Game Survey” of more than 2,800 adults reveals. Century 21 is an advertiser in this year’s Super Bowl for the second year in a row. The franchisor will have ads running during halftime and also will be sponsoring an hour-long pre-game show. “For millions of Americans who tune in, it’s not just about the game and the commercials, it’s about getting together with friends and family in the home,” says Bev Thorne, chief marketing officer of Century 21 Real Estate LLC. “This game represents the last great American campfire, and we thought it’d be fun to take a look at the role the home plays in what has become an iconic cultural event.”

Century 21's survey of adults uncovered these nuggets among others:

• Nearly nine in 10 Americans say home is the best place to watch the Super Bowl. The majority of those surveyed plan to watch the Super Bowl at either their home or a friend or family’s home rather than at a bar or restaurant.
• 66 percent say they plan to watch the game at a “home” because it’s a more comfortable and relaxing atmosphere. Nearly 60 percent say it’s important for them to be able to find a comfortable seat at home.
• 76 percent of Americans who plan to watch the game say they prefer to watch it in their pajamas or comfortable clothes (a more common response among women).
• 46 percent say that cleaner bathrooms are another benefit of watching the game at home.
• 52 percent say the quality of the television with its size and resolution is important in throwing a successful Super Bowl party at home.
• 42 percent of the adults surveyed say they plan to supplement their viewing of the game by using their mobile devices, such as checking sport news apps on their phone or tablet for additional commentary.

Source: Century 21 Real Estate LLC

Ready to have your own Super Bowl Party in  your OWN HOME? Contact Laura Key today, dedicated, experienced and LOVES HER JOB! Laura.A.Key@gmail.com www.KeyCaliforniaHomes.com

8 Kitchen Trends to Watch in 2013

Kitchens are a popular spot that home shoppers judge in a home. So what are the trends in the kitchen for 2013?HomeThangs.com, a home improvement superstore, offers up some of the following kitchen design predictions for the New Year: 1. Modern style: Kitchens are getting more modern in style, boasting simplified lines and offering up big, open spaces perfect for entertaining.

2. Tucked-away appliances: Appliances designed to blend in with the rest of the kitchen, like with the same wood of the cabinets, are becoming more popular. Also, some appliances, like undercounter or mini refrigerators or trash compactors, are being tucked away into a kitchen island.

3. Lots of lights: Great lighting in the kitchen is becoming more important, with lighting being layered with a mixture of task lighting and ambient lighting. Under-cabinet LED lights are becoming more commonplace.

4. Supersized kitchen islands: “2013 kitchen design trends are moving away from dining rooms and toward eating, drinking, and interacting in the kitchen itself, and a large kitchen island complete with bar stools is the perfect way to make this happen,” according to HomeThangs.com. this helps to create “a nice open-air feeling – especially if one can be used to bridge kitchen and living areas, another major 2013 kitchen design trend.”

5. Neutral color schemes: The use of neutral colors in the kitchen is on the rise, particularly in shades of grays and greens and a variety of wood tones. Bright colors are being reserved for only small accents in the kitchen.

6. Fancy appliances: Professional gas ranges and induction cooktops are popular kitchen appliances for making a more gourmet kitchen.

7. Decorative range hoods: Trends are moving away from a conventional stainless steel trapezoid-shaped hood to more decorative range hoods. These hoods may have built-in LED lights and are even serving almost like a decorative chandelier for a kitchen island.

8. Glass backsplashes: High gloss is “in” for cabinets, appliances, and backsplashes. A single-sheet, back-painted glass blacksplash is growing in popularity, which are also known for being easy to clean. These glass backsplashes are also reflective, adding a polished decorative touch to kitchens. Glass mosaic tile sheets are also increasing in popularity.

Source: Melissa Dittmann Tracey, REALTOR(R) Magazine

Photo Credit: HomeThangs.com

Interesting in buying or selling? You need someone experienced to help make your journey easier!  Laura Key, Real Estate Agent (DRE: 01908085) Laura.A.Key@gmail.com www.KeyCaliforniaHomes.com

Great Los Angeles HUD Home!

3 Bed 3 Bath 2 Car Garage - $616k - Click Photo Below for Virtual Tour SINGLE FAMILY HUD HOME IN MOUNT WASHINGTON AREA OF LOS ANGELES*** GREAT VIEW HOME IN A SECLUDED AREA OF LA. THIS INCREDIBLE TRI-LEVEL FEATURES 3 SPACIOUS BEDROOMS INCLUDING A LARGE MASTER SUITE, A LARGE LIVING ROOM, DINING AREA AND A KITCHEN WITH DARK WOOD CABINETRY AND GRANITE COUNTERS. FOREVER VIEWS FROM TWO BALCONIES, A NICE PATIO AND A FRUIT ORCHARD. EASY ACCESS TO DOWNTOWN AND THE VALLEY VIA THE 5, 110 AND 134 FREEWAYS. THIS HOME HAS TREMENDOUS POTENTIAL FOR THE CREATIVE HOMEOWNER. DON'T MISS THE BEST BUY IN LOS ANGELES TODAY!

Contact me to schedule a showing!

Laura.A.Key@gmail.com

www.KeyCaliforniaHomes.com

Owner Occupied Bidding Ends Feb. 1, 2013 - Investors can bid after that date!

Short Sale Process Cut in Half or More, Freddie Mac Says

Short sales are getting much shorter, Freddie Mac says. The mortgage giant launched a Freddie Mac Standard Short Sale program on Nov. 1 that sought to speed up the short sale process and make it easier and more transparent. "We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent," as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.

Among the changes that took effect Nov. 1, 2012:

• Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days.
• Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
• Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments.
• Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
• Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance.

Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)

First-time Home Buyers Face Greater Competition

First-time home buyers are playing a larger role in the housing market, but they’re finding big changes. Thirty-nine percent of home sales nationwide were from first-time home buyers during the 12-month period ending June 2012, according to the National Association of REALTORS®. That's up from 37 percent a year earlier.

But while first-time home buyers once had a huge inventory of homes to choose from, now they’re finding tightened supplies and steeper competition for what’s left.

Housing inventories are hovering at record lows in many markets, limiting supply. First-time home buyers face increased competition from investors, who are often trying to snatch up the same bargain-priced housing deals. Investors often make all-cash offers, too, which makes it difficult for buyers requiring financing to compete against them. Also, banks have tightened up their underwriting standards, creating more hoops in just qualifying for financing.

It’s not easy to be a first-time home buyer, some say. But first-time home buyers are critical to a healthy housing market. They allow existing home owners to sell and trade up into larger homes.

To respond to the changing housing market, first-time home buyers may need to broaden their search and be more “flexible and compromise,” says Chip Rowand, a Broward County, Fla., real estate professional.

Also, first-timers shouldn’t automatically settle for a Federal Housing Administration mortgage due to the low down payment requirements (usually 3.5 percent of the purchase price). The FHA can have several restrictions that makes some sellers prefer buyers who offer cash or who are using conventional loans, says Stephen B. McWilliam, president of Greater Fort Lauderdale (Fla.) REALTORS®. Some conventional loans require just 5 percent down and so may serve as an option for first-timers.

First-timers also need to be able to act fast and be able to have their financing processed quickly if they are going to stay competitive. Some banks won’t sign off on mortgages for eight to 12 weeks. But some sellers won’t wait that long. Some housing experts suggest first-timers look into working with a community bank or local mortgage banker, which often don’t have as long a wait.

Source: “First-time Home Buyers May Have to Compromise,” Sun Sentinel (Jan. 10, 2013)

Looking for a free 1st Time Home Buyer Class? Contact Laura Key at Laura.A.Key@gmail.com An educated buyer is a smart buyer!!!!

Competition to Buy Remains High in California

Are you ready to buy your new home? Contact Laura Key for top-notch service! Home Education, Home Buying, Selling a Home, Short Sales, Luxury Homes!  She has you covered! www.KeyCaliforniaHomes.com

Laura.A.Key@gmail.com

Short Sale Approved! Ready to Close Escrow!

Short Sale Approved! Ready to Close Escrow! We will close this escrow by the end of January 2013!  Are you facing foreclosure, not sure where to go?  Don't know what a short-sale is and how it can benefit you?  Give me a call, I can help you decide what is best for you!  You have options!

The Color of the Year for 2013 Is …

Home interiors are going green this year. Pantone has named “Emerald” its color of the year for 2013. Pantone describes the jewel-like hue as a “lively, radiant, lush green” that can offer sophistication and luxury.

“Green is the most abundant hue in nature – the human eye sees more green than any other color in the spectrum,” says Leatrice Eiseman, executive director of the Pantone Color Institute. “Symbolically, Emerald brings a sense of clarity, renewal and rejuvenation. This powerful and universally appealing tone translates easily to both fashion and home interiors.”

Emerald paint, accents, and accessories will likely be decorating more home interiors this year. Pantone says that Emerald can be used to add luxury to an entryway, powder room, dining room, or study, or it can help transform a living room by using it as an accent wall. Emerald-colored bedding, pillows, and bath towels will also likely be making its way into more decors this year, Pantone says.

Emerald replaces last year’s color of the year — the reddish orange color known as “tangerine tango.”

By Melissa Dittmann Tracey, REALTOR(R) Magazine

Find more interesting Real Estate info at: www.KeyCaliforniaHomes.com or contact Laura Key, Real Estate Agent at Laura.A.Key@gmail.com

Avoiding Loan Modification Hoaxes

Please make sure you speak to someone who can really help you!

Homeowners wary of being taken in by bogus “loan modification specialists” should not assume that a law office is the most reliable way to work with their lender.  Consumer advocates say a growing number of fraudulent modification services involve lawyers, or people who say they are lawyers.

Making sense of the story

• Increasingly, lawyers are lending “their names, their offices, their credentials” to fraudulent operations that vaunt superior skills in obtaining loan modifications, according to a senior counselor at the Lawyers’ Committee for Civil Rights Under Law in Washington.

• While Federal Trade Commission rules generally prohibit demanding upfront fees for mortgage relief services, there is a narrow exception for lawyers.

• Under the rules, a lawyer may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.

• Certainly, many lawyers provide legitimate foreclosure-avoidance services, but borrowers should know that when going to a lawyer whose sole business is loan modifications, that is a red flag.

• As more homeowners become aware of these tactics, some operations are changing their practices.  Instead of selling loan modification services, they are advertising so-called loan workouts and forensic loan audits. Some are even posing as nonprofit groups.

• The Homeownership Preservation Foundation and the Lawyers’ Committee both belong to a coalition of public and private agencies that maintain a national database of loan-modification complaints.  Since March 2010, some 28,000 homeowners have reported potential fraud.  Their reported monetary losses total around $66 million.
• (source: New York Times)

7 Home Improvement Projects for $1,000 (or Less)

By: Lisa Kaplan Gordon Published: November 1, 2011

Americans still think buying a home is one of the best decisions they’ve ever made. Here are some ways to increase your home’s value and comfort for less than $1,000.

We knew reports of the death of American home ownership were greatly exaggerated (nod to Mark Twain), and now we’ve got the numbers to prove it.

A just-released survey by the Meredith Corp., which publishes Better Homes and Gardens magazine, says the vast majority of people polled believe owning a home is a smart financial move and a source of pride.

Here are some results of the 2,500 people surveyed online:

• 86% of home owners still feel owning a home is a good investment.

• 85% feel "owning a home is one of their proudest accomplishments."

• 69% of Americans who don’t currently own a home agree with the statement, "No matter what happens in the U.S. housing market, owning a home is still an important goal in my life."

• 68% of Americans plan to spend money on their homes in the next six months, with roughly half (49%) expecting to pay up to $1,000.

A thousand bucks may not seem like a lot, but it goes long way toward improving the value and comfort of your home. Here are some projects we recommend:

1. Add a new entry door. Spruce up your curb appeal and save energy by upgrading your exterior door. Steel doors, which can mimic many types of wood, typically run for $400 at big-box stores and offer the strongest barrier against intruders.

2. Get organized. Decluttering and maximizing storage space are inexpensive ways to transform a home. Add space to kids’ rooms by installing platform or bunk beds ($400-$600); neaten piles of shoes with shoe organizers ($20), which can do double duty as catch-all organizers in family room closets and kitchen pantries; extend bookshelves to the ceiling, creating storage in otherwise dead space.

3. Save with a programmable thermostat. Switching from a manual to a programmable thermostat (less than $500) can save you up to $180 a year in energy costs. The latest models offer remote programming via the Internet.

4. Replace cabinet hardware. If you’ve got traditional knobs and pulls, try contemporary; change from staid to whimsical. Big-box retailers often have huge selections for budget prices. (10-pack for $20).

5. Update bathroom flooring. Give bathrooms a quick facelift by replacing old tile with vinyl flooring or ceramic tile, which can cost as little as $3 per square foot for material and installation.

6. Create luxury with a shower panel. Turn you bathroom into a spa with a programmable shower panel with adjustable spray jets, fog-free mirror, and multifunctional shower head. Most systems easily attach to existing plumbing. Panels typically sell for $360.

7. Turn a mudroom into a garden room. Bring nature inside by recasting your drab mudroom into a flower-filled garden room. (If you already have a utility sink, you’re halfway there. If not, it will cost you $200 to $350 to tap into existing, nearby plumbing, and $80 for a plastic tub.) Repurpose an old wood table into a potting bench. And hang your basket collection from J-hooks attached to a forged iron curtain rod ($100).

www.KeyCaliforniaHomes.com

Need a Real Estate Expert! Call Laura Key today! Caring and professional! 

How to Buy a Short Sale

Are you considering buying a short sale? More and more homes listed for sale these days are short sales and buying one can save you 20 percent or more. However, there are some major differences about short sales that you should know before you make an offer.  Short sales are way for homeowners who are in financial trouble to get out of their mortgage obligations and get on with their lives. They lose their homes and they suffer nearly as much damage to their credit as if they go through a foreclosure. However, short sales are faster today than foreclosures, which can take a year or more. That's a major reason more and more owners are choosing foreclosures. The average foreclosure now takes 587 days from the time the owner defaults until the property is re-sold. It's no wonder families facing foreclosure want an alternative. In the past two years, short sale volume has tripled and they are expected to increase by another 25 percent in 2011.

Short sales make sense when owners owe more on their home than it is worth and they are 90 days or more delinquent on their mortgage. Under those conditions, lenders are willing to take a loss on the sale of the home.

For buyers, getting your offer accepted and then closing on a short sale can be more complicated and takes longer than a normal transaction. The more prepared you are for dealing with a short sale, the more successful you will be.

Buyers need patience, patience, patience. Though they are faster than foreclosures today they are not speedy. Short sales can take six months or longer. When short sales became popular several years ago, most lenders were neither staffed or prepared to handle them. Many lenders dragged their feet because they would prefer not to take the loss, or to delay putting in on their books as long as they can. The greatest problem many short sales run into is the fact that most mortgages today are securitized—bundled with mortgages and sold as securities to investors around the world. Getting approval for a short sale from the actual owners can be mind boggling.

If you're a buyer considering entering into a short sale, don't even think about going it alone. Consult a real estate professional who can answer your questions and help you navigate the process. In recent years, thousands of real estate professionals have obtained special training on short sales. New software platforms help them manage the short sale process, which can be like herding cats.

If you're ready for the challenge, here are six important steps you can take to significantly save time and improve your chances of landing a short sale.

1. Get your credit in order before you start looking at houses. If you're bidding on bargain you'll be bidding competitively, possibly against investors paying all cash. That's tough because when lenders see all cash they also see no risk. Do everything you can to reduce the risk factor by having your credit in tip top shape, putting down as much as you can muster and getting a Pre-Qual Plus letter. DON'T buy anything expensive on credit or be late on a credit payment by even a day until the deal is done.

2. When you make an offer, make a strong one and . Many first-time home buyers put down an earnest money deposit of $1,000, but an amount between 1 percent and 3 percent of the sales price puts you way above the crowd. The minimum down payment for FHA loans is 3.5 percent of the purchase price, and the earnest money is part of that down payment. Some real estate contracts call for the earnest money deposit to be placed into a trust account upon short sale approval. Sellers like to see that buyers are ready to put their money where their mouths are, because it shows that those buyers are committed to the transaction.

3. Do your homework on pricing. Check comparable sales on Realtor.com. Some short sale listings are deliberately priced under market value to attract eager buyers, but it doesn't mean the home will sell at that price. However, many banks will approve a short sale that is priced between 5% and 10% under market. Call the listing agent to find out if there are other offers. If the agent has already received a number of offers, your offer may need to be priced much higher than list price. If the seller has already accepted an offer and sent that offer to the bank, you may be wasting your time trying to buy that home.

4. Shorten your contingency period for inspections. In most states standard purchase contracts give buyers from 14 to 30 days to conduct inspections without jeopardizing their deposits. That means the home is basically off the market while the buyer does due diligence, and the house is not considered solid until that contingency period ends. You will speed up the process and gain a competitive edge if you can line up two or three inspectors in advance and cut your contingency period in half in your offer.

5. Communicate patience. If you're not willing to be patient, don't get into a short sale. It's not enough to be patient, you must also communicate the fact that you are willing to wait on the bank for the short sale approval process. Although it is possible to receive short sale approval within 3 to 4 weeks, many banks take at least 6 to 8 weeks, and sometimes longer, to approve or reject short sales. Be prepared to wait 120 days and to act immediately if approval arrives earlier. The biggest problem short sale listing agents and their sellers face is buyers who walk away. No short sale listing agent wants to work on a transaction for several months only to find out the buyer whose offer was accepted has vanished upon short sale approval.

At the end of the short sale rainbow lies a great deal on a home that would have cost you thousands more if it were not a short sale. Though you may have to wait months to close, your new home will probably be in better shape that it would be if it were a foreclosure and sat vacant for a year or more.

Source: By Steve Cook Real Estate Economy Watch

Ready to purchase your home? A little home education will help you enjoy the journey!  Contact Laura Key for a schedule of Home Buying Classes! Laura.A.Key@gmail.com www.KeyCaliforniaHomes.com

Risks of Leasing a Home with an Option to Purchase

I get a "TON" of questions about Rent to Own properties.  I am not saying NONE of them work but I can speak of experience to say, I have never had anyone who tried to participate in one come out on top.  Buyers....beware...if it looks too good to be true, it is.  Call me, let me help you get what you need so you can buy the "right" way. In today’s economy, many people are looking to rent a home or an apartment instead of purchasing a home due to financial hardship.  Renting is an excellent alternative for anyone not able to afford a home today and needs to get their lives settled before taking the leap to home ownership once again.

Today, when searching for rentals, many have found themselves coming across the term “lease-option.”  Before considering entering into a lease with option to purchase, one must do two things first:  1.) research it heavily to make sure it’s the right choice for you, and 2.) consult areal estate attorney.

The initial information below is a good place to start in realizing some general risks involved with a lease-option.  This is strictly informational purposes only, not legal advise.  You are strongly urged to seek legal counsel if you have any legal or financial questions with regards tolease-options.

What Is a Lease Option?

A lease-option agreement is an alternative to purchasing a home where the home is leased to a household that may not be able to qualify for a mortgage.  A right to purchase the home may be exercised after a certain amount of time.  The lease-option may lock in a sales price and preserve the property until the Buyer obtains a mortgage.  The Buyer can receive credit towards the purchase price for the rentals the Buyer pays to the Seller.  If the Buyer decides not to purchase the property, the Buyer can walk way without exercising the option to purchase.

Disadvantages of a Lease Option

LEASE PAYMENTS ARE HIGHER:  In a lease-option, the monthly payments are typically higher than the current going market rent rate.  This is normally to compensate the Seller in return for locking the home in a lease instead of being able to offer the property for sale to the public. The difference between the going rate and actual lease payment rate can go toward the future down payment if the option is exercised, depending on the contractual terms of the lease-option.

FORFEITURE OF PAYMENTS:  In a lease-option, the Buyer forfeits everything paid to the Seller if the Seller cancels the lease due to things such as late payments and canceled insurance.  The Buyer will also forfeit all payments that have been made if Buyer does not complete the purchase. The “option” as well (lump sum paid at the execution of the agreement) is normally forfeited (per contractual lease-agreement terms). CURRENT MORTGAGE MAY PROHIBIT SUCH A TRANSACTION: If there is an existing mortgage on the property, the current mortgage may prohibit the owner from entering into a lease-option agreement.  The lender may have the right to demand the entire amount of the loan if the owner sells or enters into a long-term lease.  Your rights may be cut off by the lender unless you or the seller has the ability to immediately pay off the underlying loan. NO PROTECTION FROM ACTS OF SELLER:

• Judgments Against Seller - The Seller may not be able to deliver a clear title when the right to purchase is exercised.  Judgments obtained against the seller may attach to the property if a notice of option right is not recorded.  If an option is recorded, however, the lender may elect to enforce the due on sale clause and demand immediate payment of the note. Unless the buyer or the seller can pay off the underlying mortgage loan balance, all rights may be cut off by the lender.
• Bankruptcy of the Seller - If the seller files bankruptcy, your rights may end.  Even if you have paid on the lease-purchase for several years, you may find yourself with no rights and no legal recourse against the seller.
• Death of Seller - If the Seller dies before Buyer obtains legal title, the Buyer may not be able to get clear title unless the Seller's estate is probated.  If estate has little or no money there may be little incentive to probate the estate.
• Unscrupulous Seller - An unscrupulous Seller may transfer title to another Buyer or borrow money against the house creating an additional mortgage.  Since a lease-purchase typically not recorded, another buyer would have no notice of your property interest.  The new buyer may take title to the property, free and clear,cutting off the original Buyers' rights.  The only way for Buyers to protect themselves against claims against their title is to record the lease purchase agreement at the courthouse.  ..... Sellers usually do not want Buyers to record lease-option agreement, because recording may trigger a due-on-sale clause.  Recording a lease-purchase agreement may also put a cloud on the title of the Seller, limiting what they can do with the property.  

HOMEOWNERS INSURANCE POLICY: the Seller usually requires the Buyer to pay for insurance and taxes on the property.  If the Seller carries a standard homeowner’s insurance policy, the lease-option agreement may terminate the coverage of the policy.  ... If the policy is changed to permit the lease, the insurance company will send a new copy of the insurance policy to the lender, potentially violating the due-on-sale clause.  If the policy is not changed, the Buyer and Seller runs the risks that there is not a valid insurance policy covering the property and that the mortgage will be violated since there is no a valid insurance policy on the property.   ....If something were to happen to the property, and the property is insured properly, the Seller will collect proceeds.  The amount the Buyer pays the Seller for the house will not be reduced. IMPROVEMENTS MADE BECOME THE PROPERTY OF THE SELLER: Until the Buyer pays for the property in full, any improvements to the property (e.g. new kitchen cabinets) by the Buyer will be the Seller's property.  The Seller does not have to reimburse the Buyer for costs associated with improvements even if the Seller evicts the Buyer. Ways to Protect Yourself from Lease Option Risks

Examine the options available to you before you decide to enter into any type of agreement.

• Have an attorney review your agreement.
• Buyers should have a professional home inspector inspect the property, especially if agreement states the property is in "as is" condition.  
• Take photos and video tape the entire property for current condition upon taking possession.
• Make sure the initial lease-option inspection/walk thru paperwork is signed by both yourself, and the Seller/Landlord.
• Obtain title insurance.  The title company can insure that there are no existing judgments or liens against the property when the lease-optionis entered into.  It will not protect the Buyer against any judgments filed against the Seller after the date the lease-option is entered into.
• Record a Memorandum of Option.  This gives notice that an option to purchase the property exists and may protect the buyer against judgments filed against the Seller after the date the lease-option is entered into.  WARNING:  The recording of a Memorandum of Option may trigger a due-on-sale clause.

Buyer Beware

Please visit these resources for more information on lease-options, the current trends, scams and risks involved:

Risk of Lease Option - High Failure Rate

Risk of Lease Option - Losing Your Option

Risk of Lease Option - Can Turn into Disaster

Lease Option - Q&A

THE LEASE OPTION - General Information

A lease option is the abbreviated form of the appropriate term “Lease With the Option to Purchase.” It is a type of contract used in both residential and commercial real estate. Commercial real estate can get pretty complex so we are going to stick with residential.

The contract is typically between two parties: the tenant (also called the lessee), and the landlord (lessor), who owns or has the right to lease or dispose of the property.

As the name lease with an option to purchase says there are two events and one is not mandatory. In order to have a valid option the tenant/buyer must provide valuable consideration for the option. In other words buy the right to purchase at a later date at an agreed amount of money.

The lease option only binds the seller to sell, it does not bind the buyer to buy. That is why consideration is important. Valuable consideration is approximately 1-3% but there is no rule.

The basic elements are

1. Buyer purchases the option, the parties agree to what the cost of the option is.

2. The parties agree to a purchase price. It can be decided that the price will be appraised value at the time the option is exercised.

3. The length in residential real estate is typically 1-3 years and may start to get longer because of the current credit conditions (spring 2010)

4. How much the monthly lease payment is, whether any of the lease payment is to be credited towards the purchase price reducing the purchase amount.

5. Whether the tenant/buyer will occupy the property or whether the tenant/buyer has the right to sub lease or the right to sell the option.

6. An investor may acquire a distressed property with a lease option and make improvements to the property. Then the investor can sell the option to a buyer that is willing to pay the new market value for a profit. It is a common financing technique with investors.

6.a An example of this. Seller has a property that needs considerable amount of work.Retail buyers typically cannot get financing or have too much to choose from to bother with physically distressed properties. Investor enters into a lease option agreement for let’s say $100,000, rehabs the property with about $20,000 and now the market value is approximately $135,000 the investor can sell the right to purchase for $35,000 and the new buyer would close with the original seller for $100,000

6.b Another example of this would be a buyer buys the same property and uses their own money to rehab and may use their rehab money towards the down payment. This allows the buyer to NOT have to come with a large down payment and rehab money.

Everything functions like a lease except there is a schedule when the buyer can decide to purchase the property.

The terms of the lease have to be negotiated also. The responsibilities of maintenance, utilities, taxes, pets, how many occupants, what type of insurance...

During the term of the lease option, the tenant makes lease payments to the landlord for the use of the property with the terms mutually agreed. At the end of the contract, the tenant has the option to purchase the property outright; the tenant would typically obtain the money to do this using a mortgage.

Excess credit may also be applied towards the eventual purchase of the property, or towards the down payment for a mortgage (CAUTION, the buyer and seller can agree to whatever they want, but when the buyer goes to get permanent financing the bank has guidelines to what can be applied towards the down payment or the purchase. Typically a banks only allow an amount that is above and beyond market rent to be considered for a down payment) In that case, the lease option works as an automatic savings plan for the tenant. This down payment is applied as part of the "option consideration fee"; in the arena of lease option purchasing this is a fee charged for the right to purchase the property.

Reasons for using a lease option

1. Buyer is relocating and may need to sell a property in another area before the buyer can qualify to purchase the new home.

2. Buyer may have had some credit issues that have since been resolved and can afford the payment but needs to time to get permanent financing.

3. Buyer may have started a new business and otherwise qualifies and can afford the payments.

The lease option may carry less risk for the landlord than a mortgage would for the lender. In the event of non-payment, it may be possible to remove the tenants through eviction, which is likely to be cheaper than foreclosure on a mortgaged property. The lease option may also require less money up front, while a mortgage might require a substantial down payment from the tenant.

If the tenant does not exercise the option to purchase the property by the end of the lease, then any up front option money along with any monies that the tenant paid in addition to the market rental rate for this option may be retained by the owner depending on the agreement. This might occur if the tenant no longer wishes to purchase the property, or if the tenant wishes to purchase the property but is unable to obtain the financing required to do so.

Advantages to the seller. Allow the seller to sell a property that they may not have otherwise been able to sell. Most cases a seller can net more money when offering terms to a buyer.

There is an expression, “Price or Terms, Pick One” Usually you get one over the other. So for a seller to get a better price they can offer terms that favor the buyer and the opposite is true. For the buyer to get a favorable price the terms usually have to favor the seller.

Default if the buyer defaults and the contracts are drafted properly then there is an automatic tenant landlord relationship. All valuable considerations are typically surrendered and then it would be an eviction.

Some forms of lease option have been criticized as predatory, if a lease option is sold to a tenant who cannot realistically expect to ever exercise the option. These types are usually but not always advertised as “rent to own”. Owner Carry, Seller Financing, Owner will Carry, Owner Carryback are all terms that can be used for Lease Option purchases.

Default if the buyer defaults and the contracts are drafted properly then there is an automatic tenant landlord relationship. All valuable considerations are typically surrendered and then it would be an eviction.

Some forms of lease option have been criticized as predatory, if a lease option is sold to a tenant who cannot realistically expect to ever exercise the option. These types are usually but not always advertised as “rent to own”. Owner Carry, Seller Financing, Owner will Carry, Owner Carryback are all terms that can be used for Lease Option purchases.

When Will the Housing Supply Normalize?

"Realty Goddess" note: I hate predictions, they depend on who is the person with the prediction.  The real estate market changes every single day and those of  us in the trenches are fighting the good fight, but I thought this one was worth sharing"

The housing supply is expected to normalize in two to four years, Barclays Capital projects, assuming that household formation rates increase to 1.1 million and construction remains slightly above 2011 levels.

Household formation–which is a reflection of population growth and housing affordability–has drastically dropped since 2007, reaching about 300,000 to 500,000 per year. Historically, the rate is about 1.25 million.

Home prices will likely see a 1 percent appreciation this year (that’s after falling 3 to 4 percent through March), Barclays Capital estimates. It is also projecting a 1 percent price appreciation in 2013, followed by 2 percent to 3 percent appreciation levels.

But to reach those goals, the housing supply needs to continue to shrink first. Our region in the Sierra Foothills of Placerville, California is experiencing a low supply in the under $300,000. price range. This is the primary market for first time home buyers and cash investors. So we’re off to a supply, demand race for the spring market?

Source: “Barclays: Housing Supply Could Normalize in 2014,” HousingWire (3/2/12) by Bud Zeller