Real Estate Information Archive

 Today in the United States there are more and more homeowners facing the devastating financial challenge of foreclosure. Many times it can be avoided. Here are a few options besides foreclosure, along with a short explanation of each.

1. Reinstatement: This option is extremely simple, but the most difficult. The homeowner asks the mortgage company the total amount owed and pays it all, including fines and fees. It does not require approval, and lenders will allow this up to the day before the final foreclosure sale.
2. Forbearance or Repayment plan: This is when a homeowner negotiates repaying their back payments over a period of time. Usually, the homeowner makes their current payment as well as a portion of the back payments owed. Most lenders require homeowners to be qualified for this option.
3. Mortgage Modification: This plan is when either the interest rate of the loan, the principal balance or the term of the loan is reduced. The result is generally a lower, more affordable payment for the homeowner. Homeowners need to qualify for this option and must supply all necessary documentation, while the lender has to be actively pursuing modifications.

For more information on ways to avoid foreclosure go to the HUD website.

There is so much misinformation out there these days about Short Sales. While this transaction may be a somewhat complicated process, here are the three very uncomplicated things lenders are looking for to see if you qualify:

1. Financial Hardship: This is defined as a verifiable reason that has or will cause you to miss a payment, such as a mortgage payment adjustment, a job loss, too much debt or a business failure.
2. Monthly Shortfall: Lenders want to see that you cannot afford to pay your mortgage. You will be required to provide your agent a financial worksheet that demonstrates this. The shortfall equation is simple: Total Monthly Income - Total Monthly Expense = Monthly Shortfall.
3. Insolvency: You must be able to prove to the lender that you owe more than you have in cash. Insolvency can be proven in many cases, even though you may still have some money for living expenses.

For more information about the Short sale process go to Homebuying.com.

Statistics show that around 5% of reported identity theft case victims are children. The reason your child is a target is because the crime will very likely go undetected for years. Most do not realize it until they are in college and apply for their first credit card, and find then that they have been victimized. Take heart, there are many ways to avoid becoming a victim of identity theft. Here are some of them:

• Create a list of every credit card number and bank card that you keep in your wallet.
• Never keep your social security card or any information with your social security number on it in your wallet.
• Never give out any private information on your e-mail.
• Cease all bank and credit card mailings.
• Always reconcile your bank statements and go over your credit card statements. Some thieves start small, to find out who pays attention.
• Keep your car registration and car insurance together in a closed envelope, hidden away in your car. Be sure to always lock your car.
• Try never to use a public computer for business use or to make a purchase.
• Memorize your ATM pin, and make sure no one is standing nearby when you use your ATM card.
• Never save financial information on your cell phone.
• Never apply for a job on-line, unless the employer has a verifiable address.

If you are a first-time home buyer, before you even look at houses for sale, the most important thing you can do is figure out exactly how much you can afford on a mortgage payment per month. This will save you wasted time and the disappointment of looking at houses that you may later learn that you simply cannot afford. You first must figure out your debt-to-income ratio. Lenders prefer that you use 36% and under, but you might want to consider using 28% of your gross monthly income for housing expense. Following are the steps to figure out the math:

1. Figure out all of your debt. Multiply your gross monthly income by .36 to find your total allowable monthly debt.
2. Add up all of your fixed monthly expenses.
3. Subtract your fixed monthly expenses from your total allowable monthly debt.

This number is the amount that you have for your mortgage payment, your home owner’s insurance and your property taxes.

For more help figuring out your total allowable monthly debt see a home affordability calculator.

If you are a first-time home buyer, before you even look at houses for sale, the most important thing you can do is figure out exactly how much you can afford on a mortgage payment per month. This will save you wasted time and the disappointment of looking at houses that you may later learn that you simply cannot afford. You first must figure out your debt-to-income ratio. Lenders prefer that you use 36% and under, but you might want to consider using 28% of your gross monthly income for housing expense. Following are the steps to figure out the math:

1. Figure out all of your debt. Multiply your gross monthly income by .36 to find your total allowable monthly debt.
2. Add up all of your fixed monthly expenses.
3. Subtract your fixed monthly expenses from your total allowable monthly debt.

This number is the amount that you have for your mortgage payment, your home owner’s insurance and your property taxes.

For more help figuring out your total allowable monthly debt see a home affordability calculator.

Identity theft has become a very serious problem in the United States. Thieves are not only stealing your personal information for themselves, but many simply sell it on the black market to another thief. They are using this personal information not only to obtain cash and credit cards, but high-cost medical procedures as well. There are a myriad of ways that thieves can steal your private information. Be aware of the following threats:

• Phishing: This is an e-mail in your Inbox that claims to be from either your bank, Paypal or Ebay, or other online service. They then ask you to click on a link and enter your personal information.
• Spoofing and Pharming: Thieves can actually redirect legitimate website traffic to an imposter site, where they will ask you to enter your personal information.
• Spyware: It is very common for people to mistakenly download illicit software and find themselves accidentally clicking on a pop-up. This opens the door for thieves to steal your credit card numbers and passwords by accessing information on your hard drive.
• Vishing: This is “voice phishing”, which is when a thief sends you a phone message asking you to key in your personal information.
• Bank card skimming: Thieves actually add a fake ATM slot and camera to a legitimate cash machine so they can copy your account information. Servers at restaurants can also be armed with a portable card reader.
• Thieves try to steal your wallet and can also go through your garbage for personal information.

Although mortgage rates are still above the record lows, 30-year fixed mortgage rates are decreasing. These rates do vary state by state. Fifteen-year fixed mortgage rates fell as well this week, as did 5-1 adjustable rate mortgages. Georgia’s thirty-year mortgage rates were the lowest, at 5.32%. At this time last year the average rate for a thirty-year fixed was 6.37%. The average rate this week was 5.2% - not quite as low as the record low of 4.78% from early spring. Rates rose this past June due to the yields on long-term government debt climbing; investors became concerned that large amounts of extra government debt would trigger inflation. Experts speculate that mortgage rates fell this past week from market concern due to the weakening labor market. Keep in mind that the above rates do not include the add on fees called “points”. The average nationwide fee for a 30-year fixed rate mortgage and 15-year fixed rate mortgage averaged 0.7 of a point, while 5-1 adjustable rate mortgages averaged 0.6 of a point.

For more information on mortgage rates go to Zillow.

If you have fallen into the category of a second-home owner who is having financial difficulty and trouble selling it, there are things that you can do to try and save money.

• Wait for rates to come down again and re-finance the loan.
• Hold off on any planned home improvements.
• Rent the property. You may rent your property for up to fourteen days before having to report the income to the I.R.S. This is a wonderful option if your property is near a popular annual event that brings in many out-of-towners needing places to stay for the event.
• Donate the home to charity. You can donate a week for a charity auction and then possibly deduct the fair market rental value from your income taxes. A home can be donated as a Life Estate, which gives the homeowner the right to live there until death and provides a large tax deduction.
• If you are ambitious you could hire a tax attorney and appeal your property taxes. Many property taxes were assessed on values at the peak of the market, and are now valued much lower.
• Write up a written agreement or family limited partnership to share the financial burden of the second home with a “partner”. This could be a family member, or not.

If you are finding yourself in a position where you are having trouble making your mortgage payments, you may be able to ask your borrower for a modification. A refinance is more advantageous but if you are ineligible due to inadequate income, a low FICO score, have little or no equity in your home or are behind in existing payments, a mortgage modification may help you. Here are some things to know as you begin the process:

1. Answer all of the questions on the servicer’s questionnaire. If they do not get answers to all of their questions, they may decide not to help you based on the inadequate information they have received from you. 
2. Answer all of these question as accurately as possible. Many of these questionnaires are not borrower-friendly, so if you need help answering a question ask for it. The servicer could reject you based on not receiving enough information.
3. Many servicers prefer you to fax all of your information to them, although some still accept it by mail.
4. When you do fax information, make sure it gets to the right person by labeling each page that you fax with your name and mortgage number in bold at the top of each page.
5. To avoid being overlooked for a “special program” such as “Fast Track Solution” and (MHA) program, be sure to include the reason why you believe you may be eligible in your hardship letter.
6. Due to the large number of folks in need of mortgage help, the number of people hired to do these transactions has greatly increased over a very short period of time. Hence, these servicer employees are very likely newly trained and are doing much of the work manually. It can’t hurt to stay on top of them by calling them to follow-up on your loan.

For more information go to MHA program  or for information on the ”Fast Track Solution” go to Wells Fargo.

In today’s market, sellers who have kept up with all of their home’s maintenance needs are finding themselves in a much more enviable position than a homeowner who has neglected theirs. The reason for this is the market change from a “seller’s market” of just a couple years ago to the current ”buyer’s market”. Buyers are no longer saying yes to the “as is” agreement when purchasing a home. It used to be that before listing their home, sellers would put most of their time and energy into things like pretty new paint, updated light fixtures, fresh new flooring and hip hardware. Unfortunately, for a seller in today’s market you still must manage these minor updates, as well as keep home maintenance up-to-date to sell quickly. For example, it is helpful for a seller to have their roof maintenance performed or any termite damage corrected before putting the home on the market. Buyers are looking more closely at the costs of these things before buying. If there is another home down the street with good home maintenance and not such great curb appeal, in today’s climate a buyer may choose the former - as it will be less cash out of pocket and less headaches for them down the line.

For more information about home maintenance tips see Home Tips.