The Moerler Team

The Moerler Team thanks all of our Clients for being so helpful in donating many socks for the homeless. The socks will be taken to Skid Row on Christmas Eve a drive by christmas! No seriously, we drive by giving away socks!

We invited some clients to help donate socks to the homeless, and in return we thought we would donate some wine to our clients!

So thank you to everyone for another amazing philanthropy event!

For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.

First, huge tax incentives are about to expire. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.

Secondly, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low. The fact is that the lowest rates of 2009 were driven down to their attractive levels because of the Fed's Mortgage Backed Securities (MBS) purchase program. The Fed has already used over 80% of the allocated funds for MBS, meaning less than 20% remains to be used over four months.

As the Fed's program winds down and ends, we'll likely see two things happen. First, we will probably see higher levels of volatility–with rates sometimes shifting dramatically in the middle of the day. Second, since MBS will have less support from the Fed, rates are likely to rise over time.

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1. Title Insurance will protect you against a loss on your home or land due to a title defect.
2. A deed or mortgage in the chain of title may be a forgery.
3. Claims constantly arise due to marital status and validity of divorces.
4. A deed or mortgage may have been made by an incompetent or under aged person.
5. A deed or mortgage made under an expired power of attorney may be void.
6. A deed or mortgage may have been made by a person with the same name as the owner.
7. A child born after the execution of a will may have interest in the property.
8. Title transferred by an heir may be subject to federal estate tax lien.
9. An heir or other person presumed dead may appear and recover the property or an interest.
10. A Judgement regarding the title may be voidable because of some defect in the proceeding.
11. By insuring the title, you can eliminate delays when passing your title on to someone else.
12. Title Insurance reimburses you for the amount of your covered loss.
13. Title Insurance helps speed negotiations when you're ready to sell or obtain a loan.
14. A deed or mortgage may be voidable if signed while the grantor was in bankruptcy.
15. Claims have risen dramatically over the last 30 years.
16. There may be a defect in the recording of a document upon which your title in dependent.
17. Title Insurance covers attorney fees and court costs.
18. Many lawyers protect their clients as well as themselves by procuring title Insurance.
19. A deed or mortgage may have been procured by fraud or duress.
20. A title policy is paid in full by the first premium for as long as you own the property.

First let me explain what a short sale is. A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. A seller generally needs to be in default or at least behind in payments. Being underwater is often not going to be sufficient unless the seller can prove there are no assets to take the shortfall from. The reason the seller would prefer to try and complete a short sale would be to protect his credit from having a foreclosure on his record. The seller would rather have his credit report stating the loan was "settled." Sometimes this can be negotiated with the lender as part of the short sale approval.

A lender will be more inclined to work with a seller if they can show some kind of hardship. If for instance there is a divorce, a loss of a job, or a devastating situation the lender will be more incline to negotiate with the seller. Every lender has different criteria and guidelines that they follow. There is no guarantee that a lender will cooperate with the seller in order to make a short sale work. Typically the homeowner contacts the lender to find out if the lender has a short sale package for the seller to complete. This will show the sellers assets/liabilities/income statements. A comparative market analysis will necessary for the lender as well. An estimated closing statement needs to be prepared including title and escrow fees, re-conveyance fees, notary fees, delivery fees, documentary fees, transfer fees, commissions and interest on the loan since the last payment a portion of unpaid property taxes to be submitted to the lender for their review. All the fees and cost are subject to the lender approval.

The seller will list the property for sale based on current market conditions. The list price needs to be realistic with what is happening currently in the market. Once the agent has an accepted offer on the property they will submit it to the proper department with the lending institution. At this point the buyer needs to be made aware that it may take some time to process. Imagine these lending institutions being bogged down with piles of files waiting to be processed. The more complete the package the better the opportunity for a more timely response from the lender. These people are understaffed and over worked. The phones do not stop ringing and they have only 8 hrs in the day to complete and process these packages. If the buyer is in a hurry to close a transaction a short sale may not be the right property for them. They need patience in this process.

If the lender does approve the short sale the seller will have some consequences; however, due to the recent mortgage relief act, the seller may be able to get out of the most serious consequence: IRS taxes owed due to the debt relief. The other problems are still capital gains taxes.

As you can see a short sale is complex, complicated and time consuming. If a buyer can be patient through this long process they may find they will get a great home at a very attractive price.

The information in this article is not intended to be legal advice for a specific situation but rather inform the general public. Advice in specific situations may differ depending up a side varitety of actors; therefore, individuals with specific issues should seek the advice of an attorney, financial advisor or other professional.

For the past five years as a buyer’s agent I have seen the craziness that happens when inventory of homes and condos on the market is low and every buyer is competing for less product. The moment a new listing appears on the market the buyers do not consider location or condition of the property they just want to buy it no matter what. Offers are written way over asking prices and purchases frequently become “As Is” without Seller paying for repairs. Many times important contingencies that protect the Buyer are waived. For instance loan, appraisal, and inspections. If there is an inspection and defects were discovered the Seller may refuse to take care of repairs in hopes that escrows be cancelled, thus enabling them to accept a higher offer. Not the best time to buy. The best time to make a purchase is when others are not buying.

Have you seen the frenzy that happens every time a new electronic product or game is introduced? People line up all night just to be the first to have it. They pay top dollar and yet if they waited until the product became more plentiful the cost would often be far less.

Finally in most areas of the United States we are in a Buyer’s market with many houses offered for sale. This is great for the home buyer. In this new market it is important to know the motivation of the seller, do they really have to sell or will they only sell if they get the right price? Are they relocating because of a job transfer? Is this a Trust Sale or Probate sale? Maybe even a short sale (to prevent foreclosure)?

If the buyer is short of cash for closing costs they can negotiate with the seller to pay all or some of these fees. It the buyer needs to lower the monthly payments in order to purchase then they can ask the seller to pay loan points to reduce the monthly interest rates. If there are major items that need repair or replacement after the physical inspection then the Buyer can request the seller repair these items or receive a credit to take care of them. This would not apply in most cases for bank owned properties, trust sales or probate sales which are usually sold “As Is.“
Don’t fall in love with the house until after all the negotiations are final. Be willing to walk away if the Seller is unreasonable, there maybe other properties on the market that will fit your requirements.

If you are buying a home to live in and plan to be there over five years don’t worry about the price dropping more. It will change again. In the 30 years I have been in real estate sales property values have always increased in the long term.

Yes, it is more difficult to qualify today for a loan. You will need a higher FICO score (680 or more on loans over $417,000). At least 10% down payment. If there is no urgency this is the time to work on lowering debt, saving money and increasing your credit scores.

Remember, millionaires were made in the last housing slump because they were willing to purchase when others kept waiting for the bottom of the market.
.
Margaret Gazey
Real Estate Consultant, RE/MAX Marquee Partners

On Wednesday, February 13th- President Bush signed H.R. 5140, the Economic Stimulus Act of 2008, making official a temporary boost to both conforming and FHA loan limits. The new law boosts the conforming limit to as much as $729,750 through the end of this year.
The main question on everyone’s mind is when does this go into effect and what does it mean to me?

It goes into effect immediately upon the President’s signature. The U.S. Department of Housing and Urban Development now has 30 days to publish a database of house prices that will be essential in determining which markets get access to the new ‘jumbo conforming’ loan.
However, Fannie Mae, Freddie Mac, and various wholesale lenders may have different policies as to how these new loans are going to be priced and underwritten. This is because jumbo loans are categorized as being more “risky” and they might place a slight premium in cost to the higher loan amounts. This is still being analyzed.

The H.R. 5140 might not help as much as originally thought since it will only help those that acquired a purchase mortgage starting in July of 2007 until now. So those who had a mortgage prior to July with the higher loan limits might not be able to take advantage of this new law. More details are being discovered as we are investigating the various details of this new law and we shall soon know what Fannie Mae and Freddie Mac will allow within the next 30 days or so. Stay tuned for future updates.

Ever since the stories about the Fed’s recent rate cuts and the Stimulus Package hit the news, everyone has been wondering if now is a good time to refinance. You can crunch the refinance numbers a few different ways, but perhaps the best current advice for jumbo loan (>$417,000) borrowers is to wait and see what happens with the proposed increase in the conforming loan limits, then initiate a refinance at that time.

Right now, the spread between jumbo loan rates and conforming loan rates is very large – probably one full percentage point or more on most loan products. That means a borrower who can get a 30 year fixed conforming loan at 5.75% today would likely have to pay at least 6.75% if her loan were a jumbo. That extra 1.0% could translate into hundreds of dollars in extra mortgage payments each month! But, part of the proposed Stimulus package is a temporary increase in conforming loan limits. In a few weeks, the new conforming loan limit will likely be increased from the current $417,000 limit up to $625,000 or more until December 31, 2008.

What does this all mean? Put simply, when that loan limit increase happens, the interest rate many jumbo loan borrowers will be able to get will be significantly better than any refi rate they can get right now. And that’s not all… Over the last 12 months, the subprime loan situation and other factors have caused jumbo rates to increase quite a bit. However, most experts agree that rates will drop throughout the remainder of this year due primarily to a slowdown in the economy. So, not only will many borrowers probably be able to refinance their jumbo loans at conforming rates when the loan limits change, but those that still need jumbo loans will hopefully see better jumbo rates as the year rolls on.

There is a lot of exciting stuff happening in the lending world right now. Stay tuned…

There are a lot of variables that go into answering this question. Most of which depend on the seller. Is the seller willing to do what it takes to present the property in the best way possible?

This might include painting, landscaping, a home inspection to see what repairs may be necessary, as well as staging. Past are the days of putting a sign in the yard and waiting for the buyers to line up with their offers. Savvy sellers are doing everything it takes to make their homes the most attractive on the market. Hiring the right professionals can make the difference between your home selling within a few weeks or chasing the market over a few months.

Timing is another factor to consider. Waiting until all of the repairs, painting etc. is complete before opening the doors for prospective buyers is a must. Although, some buyers can see beyond a few drop cloths, if you start to show your home before it's ready, you are not taking full advantage of all of the work that has been done.

Oh, and then there is the price. Pricing is crucial, going back to look at the comps over the past six months is good knowledge, however, in this market your more accuarte information will be current lisitngs, expired listings, listings in escrow and the number of days on market. Most homes that are well priced, staged, and in good condition sell faster and for a higher price then the neighbor's home that doesn't show well and is slightly over priced.

There is also the 30 day, 60 day and 90 day price to consider. If you have 90 days or more to sell your home then over pricing might be an option for you. But, what usually happens is that a seller will price their home at the price they want to get, and not what the market is reflecting. As a result, the home will sell below the original market price, because over the course of 90 days the buyers that have seen the house when it was overpriced now need an incentive to entice them to revisit. So the seller then starts to chase the market with a series of price reductions and now they are selling it for less then they could have, had they originally priced it at or just below the current inventory.

In addition to help with a quick sale some seller's are offering incentives such as paying for closing costs or offering credits if the property closes escrow before a certain date. They are also more negotiable when it comes to repairs and buyer requests.

All of these factors come into play when answering the question about how long it can to take to sell a home in this market, but mostly it depends on the seller's motivation.

If you're like most first-time home buyers, you've probably listened to friends', family's and coworkers' advice, many of whom are encourageing you to buy a home. However, you may still wonder if buying a home is the right thing to do. Relax. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are eight good reasons why you should buy a home.

Pride of Ownership:
This is the number one reason why people yearn to own their own home. It means that you can paint the walls any color, turn up the DVD player, attach permenant fixtures, and decorate your home the way you want. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.

Appreciation:
Although real estate moves in cycles, sometimes up and sometimes down, over the years, real estate has consistently appreciated. Many people view their home investment as a hedge against inflation.

Mortgage Interest Deductions:
Home ownership is a superb tax shelter and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment.

Property Tax Treatment:
Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes.

Capital Gain Exclusion:
As long as you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. You do not have to buy a replacment home or move up. There is no age restriction.

Preferential Tax Treatment:
If you receive more profit than the allowable exclusion upon the sale of your home, that profit will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment.

Mortgage Reduction Builds Equity:
Each month, part of your monthly payment is applied to the principal of your loan, which reduces your obligation. They way amortization works, the principal portion of your principal and interest payment increases slightly every month. It is lowerst on your first payment and highest on your last payment.

Equity Loans:
Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%. Equity loan interest is often much less and it is deductible. For many homeowners, it makes sense to pay off this kind of debt with a home equity loan. Some state law restrict home equity loans.

This information is provided for information and educational purposes only. Please consult an attorney or a tax specialist for your specific situation.

Thank you,
Mary Pineda
Johnson Pineda Realty