We’ve all heard the sad news that foreclosures are increasing here in the Aloha State. Of course that also correlates to a lot of short sales as well. The reality is that this does present a buying opportunity for people who dreamt of owning a home over the past few years but couldn’t afford it. Not only are values lower than they have been in years, but the large number of foreclosures and short sales have banks ready to sell the properties at less than market value. Is this too good to be true? Let’s take a closer look.
What a Short Sale is…
First of all, what is a Short Sale? Is it different than a foreclosure? Or different than a ‘bank sale’, bank owned property or ‘REO’? They are all related, but there are critical differences between each. A short sale is an event where the owner of a property wants to sell his/her house, but owes more on the house than it is currently worth. So, in order to sell the property, the owner must obtain permission from the bank that services the loan on the property (because the sale amount isn’t enough to pay off the loan). (more…)
We’re excited to announce our new 2010 edition of our VA Homebuyers’ Guide. This updated guide is an expanded version of our original guide that includes information regarding the new VA loan loan limits for all four Hawaii Counties for 2010. In addition, we’ve included a list of the “Top 5 Mistakes a Veteran Should Avoid When Doing a VA Loan”. This write-up is a compiliation of our experiences closing VA Loan transactions in the past & critical information to help Veterans avoid some possible pitfalls when doing a VA Loan.
Here’s the table of contents:
- Introduction
- Understanding VA Loans
- Benefits of Homeownership
- VA Loan Benefits
- Entitlement
- Eligibility
- Certificate of Eligibility
- Occupancy Requirements
- The Funding Fee
- Condo Eligibility
- 5 Mistakes a Veteran Should Avoid
- The Home Buying Process
- Conclusion
- About the Authors
We’re a little bias, but we think that this guide is a must read for anyone interested in utilizing their VA loan benefits to purchase a home in the future. Feel free to download your free copy here.
Remember a few years back when Google Maps launched their ambitious new satellite tool that allowed you to see what your home looks like from space? If you thought that was impressive, wait until you see what Google just released for the Hawaii market; a tool called Street View. Street View allows you to see what a property looks like at street level, right from your computer screen. In addition, with the click of a few arrows, Street View allows you to move up and down that street as if you were taking a stroll in the neighborhood.
As you can imagine, this new feature, which which has been available in other mainland and foreign markets but only available in Hawaii as of last Monday, has major implications for home buyers scouting out their upcoming home purchase. There are already great web services that provide online MLS listings for Hawaii, but the pictures used in these applications are images provided by the listing agent as well as an aerial view supplied by online map provider such as Google or Microsoft. Now the aerial views are great, but it doesn’t give you the “curb appeal” of a particular property and you can bet the seller’s agent will only show images that display the property in the best possible angles which could be deceiving.
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The credit for first-time purchasers is scheduled to expire November 30. Meanwhile, housing lobbyists are busy at work gearing up a major campaign to extend the $8,000 home buyer tax credit.
Home builders, Realtors and the Mortgage industry mounted an aggressive campaign during the recent congressional recess.
The expansion — or, at a minimum, extension — of the $8,000 first-time-home-buyer tax credit is at the top of the legislative agenda for the Mortgage Bankers Association, with one of the MBA’s leaders saying the trade group is “very close” to winning that battle in Congress.
The Effects of the Tax Credit So Far
Nationwide, pending home sales have been on the rise for seven months in a row, according to the National Association of Realtors. But just as auto sales dropped sharply once the government’s Cash for Clunkers program ended, real estate pros are bracing for a letdown if this tax credit disappears.
The IRS estimates that 1.4 million taxpayers have utilized the program. At these numbers, the total cost of the tax credit is slightly over $11 billion or less than 4% of the overall stimulus package (didn’t AIG get about fifteen times that???).
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We often get the question from first time homebuyers, “How do I pick a realtor?” It’s a great question and there are several angles to take and nuances to consider. First and foremost, if you are looking to buy a home, you should obtain a Realtor© to help you. The best part of doing do is that obtaining a Realtor should cost you nothing. Realtors, even your (the buyer’s) realtor, are paid by the seller of the home. So don’t worry about price shopping, all you need to shop for is service.
Buying a house is the most important, and often the largest, financial transaction most people will make in a lifetime. You want to make sure that you have an expert helping you through the process. If you don’t know a Realtor, there are a few items to think of when finding and selecting one. The next few paragraphs should help you through the process.
How Do I Begin Finding an Agent?
The first thing you want to do is ask around. Word of mouth may be the very best way to pick a realtor. Talk to everybody you know about the realtor they used and if they would use that realtor again.
If you are new to the area and are unable to find any referrals, there are several ways to go about finding a realtor you like:
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es·crow (ěs’krō’, ě-skrō’)
n. Money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified.
First of all, what are escrow impounds and why should you care? Escrow impounds (often just called ‘escrows’ or ‘impounds’) are fees collected by the lender at closing and then each month in order to pay third party bills on your behalf. Lenders do this to ensure important bills are paid and to help budget for these payments because they are due in lump sums which are often quite large. The homeowner pays these fees each month and the bank holds them in a separate ‘escrow’ account and pays the bills when due.
Typically, for single family homes, the impounds cover the insurance and property tax bills. For condos, insurance costs are paid by the condo association and the condo fees are paid monthly by the homeowner to the condo association, so impounds solely cover property taxes.
Taxes are typically due twice a year, while insurance is paid annually. The lender does not charge for this service and often requires it. For all government insured loan programs (FHA, VA and USDA), impounds are required. For conventional loans, many lenders require it and will charge a fee of 0.25% if a borrower wants to manage these payments on their own. For a $400,000 loan that becomes a cost of $1000.
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In this current mortgage environment, the VA loan program is arguably the best loan program available to help veterans become a homeowner. Despite the fact that VA loan guidelines are generally more flexible than their conventional loan counterparts, there are still many potential pitfalls that can delay or ultimately kill your VA loan transaction. Here are the 5 most common mistakes to avoid:
Mistake #1: Putting an offer on a condominium that is not eligible for VA financing:
One thing to always keep in mind; not all condominiums (this also includes townhomes) are eligible for VA financing. I’ve seen people fall in love with a particular condo, only to find out later that the condo is not approved for VA financing. If you are certain that you will use a VA loan to finance your purchase, don’t waste your time looking at condominiums that are not eligible for VA financing.
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Earlier this year Congress & President Obama signed into law the American Recovery and Reinvestment Act of 2009. This bill, enacted to help stimulate the battered economy, included a tax credit of up to $8,000 for First-Time Homebuyers, replacing the old $7,500 tax rebate program.
According to industry reports, first-time homebuyers now account for more than one-half of all home sales. It’s obvious that this tax-credit, as well as historically low interest rates, are providing huge incentives to potential home buyers who were previously sitting on the fence to now make a move. In addition, those who were not interested in buying a home in this market, are seriously reconsidering with these new incentives dangling in their face.
Now before you rush out and start applying for a mortgage loan, here are 5 important things to know about this $8,000 First-Time Homebuyer Tax Credit:
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“What interest rate can you offer me?” Ask any mortgage loan officer and they will tell you that this is probably the first and most commonly asked question they get from their customers. Rightfully so, since the interest rate determines what your mortgage payment will be and, of course, we all want the lowest payment possible.
Now, this is a loaded question because one’s interest rate depends on many factors like down payment, equity in the home, credit score, property type and when you actually lock in the rate (here’s an old post we wrote on what determines mortgage rates). Another important factor is the type of loan program you are using – a Conforming loan (a mortgage which the meets the underwriting requirements of Fannie Mae or Freddie Mac – and is most likely sold to them) or a Government loan (mortgage guaranteed by the government, most typically an FHA or VA loan).
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Let’s start off by clarifying that a condo is not an “apartment” building. Apartment buildings are multi-unit buildings owned by one entity with units that are rented out. A condominium or “condo” for short is a way of owning property. Condos often resemble apartments in the sense that they can be similar in physical appearance. Especially in cities, they are often multi-story buildings that contain many units. The difference is that each unit in a condo is individually owned. Of course, a building is composed of more than just the units. Sometimes there is a pool, lobby, lawn or some other common area. Each unit owner has a proportionate interest in the common areas. For example, if there is a condo with 100 identically sized units, a pool, barbecue area and lobby, each unit owner owns a 1% interest in all of those elements as well as the walls of the building, elevators, etc…
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3 Minute Thursdays: 3 Options When Your Appraised Value is Low
VA Funding Fee Changes – Or Not!