Real Estate Market

As we've reported in previous issues, qualified first-time buyers (and those who haven't owned a principal residence in three years) can take a tax credit worth up to $8,000 if they close/settle on the purchase of a principal residence no later than November 30, 2009 (unless extended by Congress). The credit cannot exceed 10% of the home's purchase price.

In late May 2009, the Department of Housing and Urban Development issued guidelines allowing the credit to be "monetized" so borrowers can apply it to closing/settlement costs and down payments (with restrictions). Prior to the new plan, borrowers who qualified for the credit had to wait for their federal income tax refund to actually receive it -- preventing them from using the cash to help with the home purchase.

Now, approved institutions are allowed to offer bridge loans, secured by the anticipated tax credit, to borrowers of loans insured by the Federal Housing Administration. The monetized credit can then be used to help pay discount points (to reduce the mortgage interest rate), lender fees and additional down payment -- provided the borrower is able to pay FHA's minimum 3.5% down payment without using the tax credit.

Here are two valuable online sources for more information:

• Summary of the First-Time-Buyer Tax Credit: www.TinyURL.com/ckywn4
• HUD news release on monetizing the tax credit: www.TinyURL.com/ny8vun
• You can also contact the FHA Resource Center at (800) 225-5342.

Timing Is Everything

Your friends, neighbors and relatives may be thinking about buying or selling a home in today's market. And they may be looking for accurate, up-to-the-minute answers to their questions. We hope you'll pass this newsletter on to them after you've finished reading it. They'll appreciate the information and, as always, we'll appreciate your referral!

As a first-time home buyer you can take advantage of the 2009 Tax Credit.  Visit 2009 Tax Credit for more information.  Do let time slip by.

Homeowners facing possible foreclosure are especially vulnerable to the various schemes employed by today's con artists. Don't fall prey to their promises. The best first step is to call your lender at once if you think you may miss your mortgage payment.

Are you thinking about refinancing your home or selling it and buying another one? Whether you are able to do either may depend on how much equity you have in your home. Lenders today are requiring more equity for refinancing and larger down payments for new mortgages, compared with the days of the housing boom.

Given recent declines in home prices in general, some homeowners are no longer sure how much their homes are worth and, therefore, aren't sure how much of their homes they really own. Often would-be refinancers and buyers don't learn the answer until after the lender has had the property appraised. If the appraisal comes up short, the homeowners may not be able to refinance or buy their next home -- and be disappointed after paying hundreds of dollars in up-front fees. You do have several alternatives, however:

• Check your tax assessment and see how much it has changed since you last knew what your home was worth. Although tax assessments are often not equivalent to market value, the difference between your old assessment and your current one can give you a rough idea of how your home's value has increased or decreased.
• Study recent list and sold prices of comparable homes in your area. Some of this information may be gleaned from your local newspaper or online from companies such as Zillow.com and Trulia.com. Be aware, however, the estimated prices on these public data one-formula-fits-all services often don't reflect real-world market values today.
• Call on us! We have all of the most recent market data about homes in your area as well as a finger on the pulse of local trends. Let us run a Comparative Market Analysis of your home to estimate what its true market value is likely to be. Our analysis will show you whether you might have enough equity to qualify for refinancing or to purchase your next home. Better still, our service is free!

When you get ready to buy a home (or if you're thinking about refinancing the one you own), you'll want to get the lowest interest rate possible. How can you get the best rate? Here are eight inside tips for today's stricter lending environment:

1. Get a conforming mortgage, one guaranteed by Fannie Mae or Freddie Mac, usually carrying the lowest interest rates available. They're called "conforming" mortgages because they meet the organizations' underwriting standards (debt-to-income ratios, down payment or equity requirement, loan amount, etc.), allowing these mortgages to be more easily sold in the secondary mortgage market.
2. Have a credit score of 720 or higher. The credit score requirement may vary somewhat from one lender to another, depending on their own standards and which credit scoring model they use.
3. Make a 20% or larger down payment (or ensure you have at least 20% equity, if refinancing). Lenders are willing to offer lower rates to borrowers who have more "skin in the game" (greater ownership stake in the home).
4. Buy (or refinance) a principal residence. Investment properties and second/vacation homes are easier for borrowers to walk away from, presenting more risk to lenders.
5. Buy (or refinance) a single-family home. The value of multi-family properties (e.g., condos, duplexes, co-ops) can more easily decline based on factors unrelated to the particular home being financed. That's why loans for these properties often come with higher interest rates.
6. Don't take a second mortgage, equity loan or line of credit to purchase or refinance the home. The more lenders who have a claim on your home, the more risk all of them assume.
7. Pay discount points at settlement/closing. A point is equal to 1% of the loan amount. Usually, paying one point can reduce your interest rate by about .25%; two points .50%; etc. Calculate whether you are likely to own the home long enough to recoup the cost of points in monthly payment savings.
8. Don't just look at the quoted interest rate. Fees charged by the lender will impact the overall cost of your loan, so pay attention to the APR (Annual Percentage Rate), which expresses the effective interest rate of the loan, taking lender fees into consideration.

For the uninformed, blogging is hitting the Internet today and making a real impact!

What is a blog? An easy explanation of this is a WEB LOG or a journal on the web. It’s a place where folks can “voice” their thoughts, share ideas, or comment on those of others.

Chino Hills, California now has such a blog where new items of interest will be posted and comments can be made. Topics range from those related to real estate and community highlights to local events of interest or anything personal or business related that might be perceived as worthwhile information for public knowledge, discussion and/or use.

It’s even possible to subscribe to a blog of interest and receive text updates on your iPod! Check out the latest updates for the Southern California Real Estate Blog:

http://www.MyAgentLeticia.com/blog.asp

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