Category Archives: Short Sales

Achieving The American Dream

Achieving The American Dream

The American Dream. Having a loving family, attaining a stable job, and most importantly possessing your own home, even if it’s not in Santa Maria, California or somewhere near the Central Coast. All of these accomplishments can be challenging at times, especially taking the next step of  having your own home. With financial planning and legalities, it all starts with a bit of knowledge of the industry and some research.

Purchasing a Home in the United States

The United States Real Estate market is tremendous, especially the Santa Maria Real Estate area since it is continuing to grow. One thing to keep in mind is that each state has their own unique set of policies, set of laws, and not to mention taxes. So don’t be surprised when you notice different tax rates in various cities and states. Also Keep in mind that their are many incentives for individuals such as veterans who have served our country. Veterans qualify for loans known as VA Loans and many lenders out there offer these kinds of incentives that better help them achieve the home of their dreams.

Property Taxes

As mentioned above, taxes vary by state. So when you are asking yourself how much house can I afford, do not forget to include property taxes as the tend to add up. They are used to fund public projects such as schools, parks, and things such as law enforcement. Knowing ahead of time what kind of taxes you will be paying will give you a better picture of the cost of living in your new home, especially if you are planning on moving out of state; do some research.

Educate Yourself On the Real Estate Market

One should also know what exactly drives house prices in the market, especially in the Central Coast Real Estate area because it has gained popularity in past years. Instability in house prices vary from state to state and from region to region. For example, a home in the Arroyo Grande, California will not have the same price as a beach from property in the Pismo Beach, California area even though their proximity is not to far apart. Same applies to locations such as Los Angeles, California and New York (especially within the city). We at Greater Mortgage Solutions and Valley Hills Realty want to teach you about the macro and micro trends that influence the real estate market. That way you can make a better decision when making a mortgage deal that is being offered to you.

So when you, a family member, or a close friend of yours is ready to achieve The American Dream, consider allowing one of our team of experts at Greater Mortgage Solutions and Valley Hills Realty help you attain the precise mortgage and the home you have always wanted. We are filled with team members that are ready to help you every step of the way.

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5 Common Mistakes That New Homeowners Make

Are you getting ready to purchase your first home? This can be exciting but grueling and challenging at time. Not to mention the fear that comes along with it. Renting a place is much different, you have less responsibility and worries but when you purchase a home, many things come into factor. For most people it may seem easy, they find a house that they love at a reasonable price but it is not that simple. Many of those people make common mistakes that hurt them in the long run. This article provides you with some of the common tips that most first time home buyers make when purchasing a home.

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1. Not Knowing What You Can Afford

One of the first things that you need to know is how much can you afford. If you are a first time home buyer in your early 30’s, maybe save your money for future investing because this is your first home but it will certainly not be your last. We suggest that you keep track of your monthly expenses and plan for any upcoming expenditures that may arise such as homeowners insurance, realtor fees, and loan payments. Keeping track of your current expenses is the key to figuring out how much you can afford.

2. Skipping Mortgage Qualification

Another big mistake that first time home buyers tend to make is to skip their mortgage qualification. Make sure to get pre-approved for a loan before placing an offer on the house of your dreams. This is especially true if you have little to no credit or an unstable income.

3. Not Considering  Further Expenses

Upon being a homeowner, you will encounter expenses on top of your monthly mortgage payments. Unlike renting, you’ll be now responsible for paying property taxes, home insurance and making any repairs the house needs.

4. Neglecting to Inspect

Before going into Escrow and close on the sale, you have to know what kind of shape the house is in. Just like buying a used car, you must give it a thorough inspection in order to know the car is fully functioning. This will allow you to avoid unexpected repairs that cause headaches to say the least.

5. Not Choosing to Hire an Agent or Using the Seller’s Agent

Walking into an open house without a qualifies real estate agent is one of the worst mistakes on can make. Real Estate Agents are held responsible to act on both the seller’ and buyers’ best interest so we suggest that you contract an agent of your own so that you two build a mutual relationship that is long lasting.

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Once you’re seriously shopping for a home, don’t walk into an open house without having an agent (or at least being prepared to throw out a name of someone you’re supposedly working with). Agents are held to the ethical rule that they must act in both the seller and the buyer parties’ best interests, but you can see how that might not work in your best interest if you start dealing with a seller’s agent before contacting one of your own.

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Should You Do A Short Sale On Your Home ?

I realize that depending on what you are listening to or reading that the Santa Maria real estate market is just booming, like every where in the country.   I am don’t necessarily agree with that  but then I do not have a talk show.  The economy has improved, getting a home loan has gotten a bit easier and we are not in the same situation we were a few years ago, I do agree with that.  I also realize that there are hardly any more foreclosures out there and hardly any one is doing a short sale anymore.

But there are still many homeowners that were able to avoid a foreclosure or cancelled the short sale that they were contemplating on doing because they did get a loan modification on their home loan.  So now they are able to keep their home.  But the thing is depending on the loan modification it really was just putting a band aid over a big wound.  Not all loan modifications are created equal.  For example some reduce your payment but then the difference of what you were paying is just added to the balance of the loan, not sure why you would agree to that, since you would almost never repay.  Others allowed you reduction in payment for certain years only to revert back to the original payment.   So some clients are realizing that the loan modifications, that they have may not be what they want. money house

So now that the debt forgiveness is over I get asked if it really matters whether to just let the house go or do a short sale.  It is still in your best interest to do a short sale.  In doing a short sale the bank or banks if you have two loans agree to accept what the house will sell for even if it is much less than what you owe.   This keeps them from going after you for the difference.  Especially if you have a second on your home, just because you let the home go to foreclosure does not mean that you are off the hook.  They will and can haunt you for years to come.

Second reason would simply be, that if you ever want to be a home owner again or do another home loan.  If you allow the home to go to foreclosure, you will not be able to get conventional financing for the next 7 years vs. 2 years if you just agree to do the short sale.  FHA will allow you to do another home loan after 3 years, whether its a short sale or a foreclosure.  But you will be limited to one loan and FHA has a pmi that is added to the loan that will cost you several hundred a month added on top of the loan for the life of the loan now with new changes.

Long story short if you want to start over again and save some serious money and heart aches, just do a short sale.  I know many people have just said, screw it here are the keys and walked away but it will haunt you later.  A short sale can be a long and frustrating process but in the long run its a much better alternative than a foreclosure.

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What To Do In A Short Sale

 

If you are in the process of doing a short sale or think you have to do one.  There are just a few things that you have to do.  Now I know that for many people this is a tough decision and even here in the Santa Maria real estate market we are still doing short sales.   But for some its one of the best decisions that you can make.  The reality is that sometimes you just have to look at things from a business point of view as an investor and take the emotional component out of.   The sooner you can look at things from a different perspective the easier it will be to move ahead and not only start over.  But you may even find yourself in a better position.

There are just a few things to remember that you have to do when you are doing a short sale.  Just follow the steps below.

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1) Do not move out if you move out while in the process and before your lender approves your short sale.   Many times they will deny you any kind of financial assistance to relocate.  Since you moved out you no longer need the assistance.  This can actually be thousands of dollars and can vary from loan to loan as well from lender to lender.  So there is not a set amount or standard amount.   The largest dollar amount our office was able to get for a client was close to $20,000.00.  But on the flip side when your agent does get the approval you need to seriously make arrangements to be out in time, before the transaction closes.  You can forfeit those funds if not and kill the short sale transaction.  But just for the record typically a person receives $3,000.00 to $5,000.00.  But then some there are times the bank will no pay anything so keep that in mind as well.

Remember you have not been paying anything for months during the time the short sale has been in the approval process.  So when the time does come you should have plenty of money saved up.  Just because your not make mortgage payments does not mean you have extra money to spend.  You should be saving like your life depended on it.  Because in a way it does if you plan on starting over and money does make that a bit easier to do.

2) Income documentation you need to be organized your lender and agent will be asking for this repeatedly.  To the point of frustration.  Pay stubs and bank statements.  Your lender wants to see if based off of your paystubs if it is possible for you to afford those payments lets say if you were to get a home loan.  As well as bank statements just how much money do you have in the bank.  They will ask for these items in the beginning and near the end and several times during the whole process.   But if you prepared and organize you can easily just give it to them without any delays.

3) Most importantly is patience.  The short sale process is frustrating for everyone especially your agent.  He does not get paid till the transaction closes.  He will be make calls upon calls and resending the information over and over again.  If you take into account the number of months it takes to close a transaction, hourly income starts to look less and less.  So patience is needed because the process does take months we currently at the time of writing this have one transaction that we have had for over a year now.   Still sending up dated paystubs and bank statements to the lender only hoping for an approval soon.

4) One last thing you agent is paid by your lender.  You should not have to pay your agent anything to do the short sale for you.  If your agent is asking for funds upfront or some kind of processing fee this is where you need to cut your ties and look for another agent, pronto.

Good luck out there.

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Is A Short Sale Taxable ? Should I Do A Short Sale

Well I cannot tell you whether you should do a short sale or not that is something you will have to decide on.  But I can tell you that this is your LAST CHANCE if you are worried on paying for taxes whether you do a short sale or not.   The Mortgage Debt Foregivness act was extended to the end of this year.  Basically what that means is that if you think or have been wondering if you want to do a short sale or if a short sale is something that might be in your benefit.  The reality is you do not have much more time to be giving it any thought.   A typical short sale takes appox. 6 mos close from start to finish, and sometimes longer.  We have a short sale in our office now for over a year, literally over a year still trying to get the approval from bank to do the short sale, actually its the second giving us a headache on it.

But in order for the debt to not be counted as taxable income the short sale must close by the end of this year.  Meaning the home has a new owner before 12/31/2013 other wise the yes it will become a taxable event.  For example you owe $400,000.00 on your home its only worth $250,000.00.   The difference would be a $150,000.00 tax bill to you.  Under normal circumstances when debt is forgiven or charged off as far as the IRS is concerned you reaped the benefits of that loan.  So as far as they are concerned you have received some form of income from this loan.   This is what they call phantom income, but not if you do a short sale and close before the end of this year.  Now this had to have been your prinpal r

After this year you may still be able to avoid the tax consequences via bankruptcy or other alternatives such as showing you are insolvent.  But that will be something that you will have to get with your tax preparer or possibly attorney.  Just remember even if you find yourself having to file for bankruptcy its not free and can cost a few thousand.

A short sale for many may be ideal if they can get past the emotional attachment to the home.  The problem is that if the home is a financial burden and you are doing everything you can to save the house.  You may only be prolonging the inevitable and by that time doing a short sale may not be as beneficial.  But the Clock Is Ticking!

Just a few last things, 1) you should not have to pay the agent you use to do the short sale for you, their compensation will come from your lender.  2) You can live in the house even while the short sale is in progress and even if you are not making any payments.  3) Your lender can, and may even offer you a loan modification on your home even if they have denied you before and you can cancel your short sale.  4) Do not move out till you have to but do plan on moving if you move out to early you may be denied relocation assistance which can be as much as $5,000.00, so stay put but be advised this does not mean you will get any funds.  But if you move out you will forfeit that option.

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