General

Home Buyer Tax Credit Closing Deadline Extended

On Friday, President Obama signed into law a three-month extension of the homebuyer tax credit closing deadline. The extension only applies to transactions that had contracts in place as of April 30, 2010, but hadn’t yet closed. Now those buyers will have until Sept. 30 to make the closing deadline.

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Tips for getting your home ready to sell.

When preparing to sell your home, there are several things to keep in mind. The hardest thing to do, as a seller, is to think from a BUYER's point of view. After all, this is your house and you've been quite comfortable in it – things are just as you like them. But when you want to appeal to a wide range of buyers, there are several cosmetic things you can do to help prospective buyers envision THEMSELVES being comfortable in your home. Here is a short-list of tips that we've come up with to help you sell fast & sell for top dollar.

Curb Appeal – Because you never get a second chance to make a first impression

• Trim back hedges, bushes, and flowers so that the front of the home is more visible.
• Green the lawn with watering and fertilizer; be sure it is well mowed and trimmed.
• Repaint the front of the house, along with the trim and especially the front door.
• Be sure that all front windows are clean.
• Clean off the driveway & lawn – be sure there are no tools, toys, or anything else on the front lawn or driveway.
• Do whatever else is necessary to make the outside of the house look neat, tidy, and inviting to a buyer – some potted plants can easily make a home inviting from the street.

Interior - Home is where the heart is

• Remove at least 1/3 of the furniture and have it stored off the property. This effort will make the home look larger and more appealing.
• Paint any walls that have marks on them. (Cleaning often just makes the mess worse.)
• Have the carpets thoroughly cleaned or, if possible, replaced.
• Make sure the entry is spotless; clean floor tiles, and replace any that are broken.
• Remove most personal pictures from the house. Potential buyers want to imagine their family in the house, not be reminded of yours.
• Remove any items from the kitchen countertops and be sure it is spotless. Clean the kitchen cabinet doors if necessary.
• Clean the sink.
• Clean the appliances and wash dishes frequently so the dishwasher remains empty during showings. Get rid of any stains or drip marks on the stove and in the oven. 
• Replace bulbs throughout the house with a high wattage. Bring in extra light fixtures to remove shading from any dark areas. Turn on all lights before showing.
• Have all bathrooms thoroughly cleaned, especially removing all stains from toilets, sinks, tubs, and showers.
• Try to remove half of what's in your closet, if possible. Cluttered closets give the impression that the home doesn't have enough storage space.
• Keep the temperature around 70 degrees during showings.
• Clean windows, window sills, and window coverings.
• Freshen up! Plug in air fresheners are cheap and a great way to freshen up the air in your home. A great smelling home makes a great first impression!

If you would like any more tips, or a more personal opinion of your space, please drop us an email or give us a call to schedule a tour of your home!

Questions and Answers About the Simplified Short Sale Process

What is a Short Sale? In a Short Sale, a lender agrees to let a homeowner facing financial hardship sell a home for less than the amount of the mortgage owed. A Short Sale is an attractive alternative to foreclosure, and typically not pursued until after other efforts to keep the owner in the home have been exhausted. There are potential tax consequences that should be discussed with a tax professional.

Why is a Short Sale better than foreclosure? A Short Sale can be less damaging to the borrower's credit. The former owner can qualify for a mortgage backed by Fannie Mae or Freddie Mac to buy another home in as few as two to three years – far sooner than if there had been a foreclosure. Short Sales also help protect other property values in the community by keeping the home out of potential disrepair.

Why has the U.S. Treasury issued new Short Sale guidelines? Because of the challenges many homeowners have faced in their attempts at Short Sales, RE/MAX International has worked closely with major lenders, the U.S. Treasury and other federal agencies to streamline and standardize the process. The new guidelines are in response to this advocacy by RE/MAX and others in the industry. Short Sales are seen as a critical component in stemming the increasing number of foreclosures and stabilizing the housing market.

What's been improved in the Short Sale process? Under the Treasury's Foreclosure Alternatives Program, mortgage servicers have 10 business days to respond to a Short Sale offer. In the past, a lack of timely response has been one of the main reasons for delayed or derailed Short Sales. Also, paperwork and documentation are now standardized. Previously, such procedures varied widely between lenders. Various deadlines in the Short Sale process also have been standardized.

What's improved for the homeowner? Under the Treasury program, a successful Short Sale will release the borrower fully from the primary mortgage obligation. This lender may not pursue a deficiency judgment. Additionally, homeowners who complete Short Sales are eligible to receive $3,000 to offset the expense of moving from the home.

What's the incentive for a primary lender to approve a Short Sale? Using program guidelines, lenders will determine a minimum acceptable offer for the property. Typically a lender's loss on a Short Sale is less than the loss it faces should the property go into foreclosure. Through the Treasury program, mortgage servicers receive $1,500 for every Short Sale successfully closed.

How does the program work? If the owner of a principal residence does not qualify for refinancing and has exhausted Making Home Affordable loan-modification options – or if they make a direct Short Sale request to a lender in the program – the lender determines if a Short Sale is possible. If it is, the borrower is given at least 120 days (up to a year, depending on local market conditions) to sell the home using a real estate agent experienced in the local market. Meanwhile, the foreclosure process can move forward, but it cannot be finalized until after the marketing period has expired. During the marketing period, lenders must respond to a fully completed "request for approval of a Short Sale offer" within 10 business days.

Does the borrower continue to make primary loan payments during the Short Sale marketing period? Yes, in some cases. The amount is determined by the loan servicer in accordance with terms of the Treasury guidelines. If there is a payment, it cannot exceed 31 percent of the borrower's gross monthly income.

What if there's a second mortgage, home equity line of credit or other junior lien? The borrower is responsible for either paying off such debt or negotiating release from the debt and any potential for deficiency judgment. An experienced RE/MAX Short Sale expert can help you with this process. The Treasury program provides some financial incentive for junior lenders and investors who hold such loans to participate in the Short Sale and release the liens.

Are there restrictions on who can make a Short Sale offer? Yes. Among the program's many restrictions are requirements that the property not be sold to a relative and not be occupied or repurchased by the former owner. The buyer may not receive any funds from the transaction and cannot sell the property for at least 90 days after closing.

Is a Short Sale the only alternative to imminent foreclosure? If a Short Sale is not successful, the lender can opt to accept a "deed in lieu of foreclosure." In this process, the homeowner gives clear title to the property to the lender. Under terms of the Treasury program, the borrower is released from the remaining mortgage obligation and can still receive the $3,000 for relocation expenses. The borrower then has 30 days to vacate the property. In some cases, it's possible to pursue a "deed in lieu of foreclosure" without first pursuing a Short Sale.

Is there an expiration date for the Treasury program? Borrowers have until Dec. 31, 2012, to enter into a Short Sale or deed-in-lieu agreement with their lender under terms of the Treasury program.

Are Short Sales still possible for borrowers and lenders not covered by the Making Home Affordable Program? Yes. Short Sales remain possible for borrowers with mortgages not covered by the Treasury program's incentives and guidelines. RE/MAX agents with Short Sale expertise can help such homeowners pursue a Short Sale with their mortgage servicer or investigate other possible options.

Government Plan Will Help Homeowners Avoid Foreclosure

Homeowners across the United States who are undergoing financial hardship could avoid foreclosure under a plan announced by the U.S. Treasury Department. Under the plan, which is in effect as of April 2010, millions of at-risk homeowners could be free of mortgage debt without going through foreclosure, and given $3,000 for relocation.

The Treasury plan provides incentives for lenders and homeowners to complete Short Sales – transactions in which the lender agrees to a sale price that’s less than the borrower owes on the mortgage. Short Sales are preferred to foreclosure because homeowners take less of a hit on their credit and lenders realize a smaller loss.

However, Short Sales often get bogged down because of the complicated nature of the transaction. Deals can fall through because the process takes too long.

Under the plan, which speeds up and simplifies the Short Sale process, mortgage servicers have 10 days to approve or reject a request for a Short Sale. And when the sale is done, the borrower must be fully released from the debt of the primary mortgage.

Read more details of the Treasury plan.

The plan is a positive step for the real estate market and for communities across the country, RE/MAX International CEO Margaret Kelly says. RE/MAX has been advocating simplified Short Sales for more than a year and has been actively working with U.S. government officials, including legislators and the Obama administration.

“Foreclosures have played a major role in keeping housing values down,” Kelly says. “This will help the market return to normal, stabilize prices, improve neighborhoods and prevent hundreds of thousands of homeowners from suffering the agony of being evicted from their homes. It should also play a role in the continued recovery of the economy.”

RE/MAX has been training its agents to help homeowners avoid foreclosure by offering courses on Short Sales. More than 10,000 RE/MAX Affiliates hold the Certified Distressed Properties Expert designation – over 50 percent of the total U.S. CDPE-holders – and more than 1,300 hold the Short Sales & Foreclosure Resource designation. Many other RE/MAX Associates have extensive experience with foreclosures and pre-foreclosures.

If you’ve fallen behind on your mortgage payments or received a pre-foreclosure letter from your lender, contact us!  With over 15 years of experience in foreclosure & short sale transactions, we can help.

Six Tips to Getting the Mortgage You Want

Now is the best time to purchase a home. Interest rates are at a historic low, and housing prices in many markets have adjusted to levels that have not been seen in years.

But before you start your Internet search or drive around neighborhoods looking at every house with a "For Sale" sign in the yard, you'll need some information. In particular, you'll need to know how much house you can afford and get preapproved for a mortgage.

Get Advice Seek out a trusted real estate professional first. A Realtor who's recommended by family, friends or business associates is your best bet. When asking for a recommendation, specify that you need an agent who understands your needs and circumstances and who will work within your budget.

Understand Your Income and Debt Ratios Today it's more vital than ever to consider your income and debt ratios. A good rule to follow for your monthly housing payment is principle, interest, taxes, and insurance (PITI), which should not exceed 28 percent of your total monthly gross income.

Share By knowing your optimum monthly payment and how much of your savings you want to use for a down payment, a skilled real estate agent can determine approximately how much house you can buy. Be ready to supply some basic income and debt information to your agent and be honest with the payment you feel you can realistically afford. Just because you may eventually qualify for a higher monthly payment doesn't mean you should put your family's finances in jeopardy by stretching your budget.

Ask for a Lender Recommendation Ask your real estate agent to recommend a mortgage professional who has given clients excellent service in the past. Find one who will work within your comfort level.

Be Prepared with Financial Information When you sit down with the lender, have your two most recent bank statements, pay stubs for the most recent month, and your W-2 forms and tax returns for the last two years available. The lender will run a credit check and review your income and debt information and your credit scores with you.

Plan Ahead If buying a house involves a higher payment than you're currently making in rent or mortgage payments, take the difference between the current and proposed monthly payments and put it in a separate “house” account. At the end of several months, two things will have happened: First, you'll have trained yourself to make the higher monthly payment and second, you'll have grown the savings account for your home purchase.

To Claim Tax Credit, Close Before July 1

U.S. homebuyers who secured a purchase contract by April 30 have taken the first step toward receiving the Homebuyer Tax Credit of up to $8,000 for first-time buyers and $6,500 for some repeat buyers. But there’s still one more hurdle: You must close on the sale before July 1 to get the credit.

First-time buyers can receive a credit of 10 percent of the home price up to $8,000. You are considered a first-time buyer if neither you nor your spouse has owned a principal residence in the U.S. in the last three years.

Homebuyers who owned and lived in their principal residence for five consecutive years of the last eight are eligible for a credit of up to 10 percent of the purchase price, up to $6,500.

This is money that never has to be repaid, provided you live in the home for three years.

Other facts about the Homebuyer Tax Credit:

• The upper income limit to receive the full credit is $125,000 for individuals and $225,000 for couples.
• If the purchase price is more than $800,000, you are not eligible for the credit.
• There is no minimum income for claiming the credit. You qualify for the full credit even if you won’t owe any taxes for 2009 or 2010.
• You can apply the credit to the 2009 or 2010 tax years. And you can even apply the credit to your down payment for the purchase of an FHA-insured home.

Contact Us today!

Don’t Wait: The Time to Buy Is Now

By Michael Drotman

RE/MAX Execs
Manhattan Beach, Calif.

You may have heard or read advice that suggests you should wait until next year to buy a home because prices are likely to go even lower than they are now.

That may or may not be true. But even supposing prices do decline further, will it really benefit you to delay your purchase? There are exceptional values available right now in many markets on homes and investment properties. Combine these great values with the low monthly payments provided by extremely low interest rates, and it becomes clear that there’s no real advantage to waiting.

Let’s explore the issue:

• No one knows what’s going to happen with prices – or when. It’s possible these may be the lowest prices ever, and the still-low interest rates will keep your monthly payments affordable.
• Let’s say prices go down in the next year. How long do you plan to be in the home you buy now? Three years? Five years? Ten years or more? Unless you plan to sell next year, it’s irrelevant whether prices go up or down in the next 12 months.
• The most important question to ask yourself is this: Do you think prices for homes in your area will go up or down during the time you plan to own the home? History suggests that in most areas, prices of homes tend to increase over time.
• What if prices go down, but interest rates go up? Even if homes are priced lower, your monthly payment may be higher for the same home, or homes in the same price range.
• If you have a home to sell before buying, everything is relative. Yes, it’s possible the price of the home you want to purchase may be less next year – but if it is, the value of the home you are selling will be lower also. This means you will have less equity to use as a down payment, and thus a higher loan amount, when purchasing your next home. This could equate to a higher monthly mortgage payment.

The reality is that, in many markets, you can buy a lot of home for the money, with low monthly payments, right now.

Learn more about financing a home on the Mortgage Center on remax.com.

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