What a First Time Home Buyer Needs to Make An Offer

So you have spent some time looking at houses online, have visited some open houses and maybe have seen a few houses with your agent if you have one - you have a pretty good idea of what you are looking for. But when you find the house that you love, will you be ready to make an offer? What exactly will you need? To make the process a little clearer for first time home buyers, below are some of the main items that you should have


1. Speak to a mortgage agent or lender to get pre-approved for a loan, and obtain a loan pre-approval letter. This is really something you should do before you even START looking for a property. A mortgage broker or lender will be able to tell you exactly the type and amount of loan you would qualify for, based on your credit, income, etc., which will tell you the exact price range you should be looking. They will also be able to provide you with a written confirmation of your loan approval (called a pre-approval letter), which will be required by just about all sellers to be submitted with your offer.

2. Have a good buyers agent representing you. A good agent will be able to not only help you locate all of the available properties within a given area and price range, and tailor the search to fit the exact features you like and dislike in a property, but their true value is proven once you have found the home you would like to buy. A good agent will research all of the comparable sales in the area to help determine the fair market value of the property, and help you acquire the property at the best possible price through negotiations on your behalf with the listing agent and seller. Your agent will also prepare and explain to you all of the intricacies of the paperwork compromising the offer, and well as make sure the myriad of additional forms and disclosures are completed as required by law in each transaction. The agent will also coordinate and guide you through the additional steps in the closing process, such as the inspections, appraisal, possibly negotiating a credit from the seller, etc.. Agents who represent buyers in the purchase of property are customarily paid by the SELLER, so having a good agent on your side is not only essential to a buyer, it is also FREE!

3. Be prepared to provide proof of funds for the cash down payment amount, and a copy of the deposit check with your offer. These days more than ever, it is customary for sellers to require that potential buyers submit a "proof of funds" with their offer, demonstrating that they have enough available liquid cash on hand sufficient to cover the amount of the purchase price that is not being financed. Generally, a copy of the bank statement reflecting a sufficient balance would be acceptable. Most sellers will also want to see a photocopy of the check from the buyer for the opening deposit with the offer, which is customarily equal to 3% of the total purchase price. Only when the offer is accepted by the seller will the deposit be required to be actually submitted to escrow, so you will not have to put forward any money until you have an accepted offer in place.

4. Be ready to schedule your inspection immediately upon acceptance of your offer. The time periods on each transaction are negotiable, but the standard time frame for the inspection contingency is 17 days in a California Association of Realtors Residential Purchase Agreement. The contingency period means that during this time, the buyer has a right to back out of the transaction and cancel escrow for any reason relating to the physical inspection of the property, and have the right to request the opening deposit returned to them and not be at risk of losing that deposit to the seller. It is strongly recommended that all buyers obtain a physical inspection, which generally runs approximately $300-$400, and is paid for out of pocket by the buyer. The inspection report will show you the detailed condition of the property and any potential problems, and could be a basis for asking for a price reduction or credit from the seller for problems diagnosed in the report. In order to stay within the time contingency periods and protect the buyers deposit, the inspection, review of the report, and negotiations with the seller should be done all within the time contingency period. Therefore it is critical to have your inspection scheduled and performed as soon as possible upon having your offer accepted.

Hopefully by this time you will be well on your way to becoming a homeowner!

CalHFA Announces New 30-Year Fixed Rate FHA-Insured Mortgage for First Time Home Buyers

The California Housing Finance Agency announced a new mortgage option for first time home buyers this past week, which the department hopes "will help open the door to first time home ownership for many California families", according to CalFHA executive director Steven Spears. The new mortgage, done in partnership with the Federal Housing Administration, is a 30-year, fixed interest rate FHA-insured loan, and features below-market interest rates as well as affordable down payments. According to the California Association of Realtors, that could mean a fixed rate of approximately 4%. Borrowers are also able to use the California Homebuyers Downpayment Assistance Program (CHDAP) with this loan option, which can provide up to 3% of the purchase price to qualified borrowers for closing cost or down payment assistance.

In order to qualify for the program, borrowers must meet several eligibility requirements, including meeting CalFHA's income limits, meeting the minimum credit score requirements with maximum debt to income ratios, and completing a HUD approved first time home buyer education program, among others. Income limits vary by county - for a family of four in Los Angeles County, income must be less than $111,020 per year.

You can find more information on the CalFHA loan program HERE.

Info on the California Homebuyers Downpayment Assistance Program can be found HERE.

Little Knows Features of the Expanded Homebuyer Tax Credit Help Members of the Military Serving Our Great Country

Most people are aware of the fact that the first time home buyer tax credit has been extended through April of 2010, and has been expanded to include a $6,500 credit to existing homeowners who qualify. But did you know that qualifying members of the military, and their spouses, may qualify for an EXTRA YEAR to take advantage of the credit? This is one of the little-known provisions of the Worker, Home Ownership and Business Assistance Act of 2009, signed into law in November, which extended and expanded the tax credit. Under the new law, servicemen & women who serve on qualified official extended duty service outside the country for at least 90 days between 1/1/2009 and 4/30/2010 would qualify. They would have until 4/30/2011 to sign a binding contract, and must close the transaction no more than 90 days later. Only one spouse is required to be overseas to qualify.

Some of the other features of the new law which benefit members of the military:

• Most buyers would have to repay the credit if the house is sold or otherwise ceases to be their principal residence within three (3) years of the initial purchase. But when a home belongs to a qualifying member of the armed services, Foreign Service or intelligence community, this provision is waived, as long as the home is sold in connection with orders sending the taxpayer to a new duty station more than 50 miles away.
  
• Members of the military may also be eligible for financial assistance if forced to sell their home for less than what is owed on the mortgage, due to a mandatory, permanent duty transfer.

For more information on the benefits to military members in connection with the extended and expanded tax credit, visit the following link: http://www.irs.gov/newsroom/article/0,,id=215594,00.html

In addition, general information on the Act can be found here: http://www.irs.gov/newsroom/article/0,,id=204335,00.html


Visit my website: www.JBKnowsTheValley.com

A Beautiful Day in Southern California!

A beautiful, picture perfect day in Southern California, looking just like the pic above!!!

Today I am going to be previewing some properties for a client in the Mount Washington area north of downtown Los Angeles. Looking forward to seeing some of the spectacular views and hopefully some spectacular properties as well...

I am excited that 2010 is here and starting off with a flourish! The real estate market looks very exciting and promising in the year to come, as the residential housing market leads the country out of the recession, and we continue to see double-digit increases in sales figures from month to month. Many people (the smart ones) see the incredible value in todays market, and the extention of the first time homebuyer tax credit, as well as the addition of the expanded credit to include ALL homeowners, looks to make it a promising year, and one where many many people will realize their dream of owning a home for the first time...




Photos of my day to follow...

***************** Update ********************

Had quite an adventure with my daughter.. Unfortunately, not all of the places we saw looked all that promising, such as the house in the photo below... What you are looking at below is the window to the front bedroom of one of the places. Don't think I would feel all that safe here...

But, after seeing a few other places, the next place we saw, located in the community of Mount Washington north of Downtown Los Angeles, had some SPECTACULAR views! Unfortunately, it was not the kind of place my client was looking for as far as the house goes (although better than the one above!!!) - it was a little too small, but it was worth making the trip for the views alone..

First, we had to negotiate the precarious hilltop road leading to the property:

But once we made it, we negotiated a narrow staircase built into the hill, to arrive at the back porch area of the house:

...where the views were SPECTACULAR!!! Here is my daughter enjoying the incredible views of the San Gabriel mountains:








Anyhow, it turned out to be a strikeout for my client as far as the properties I saw that day, and and I am continuing my search.. But that is why I like to preview homes for my clients. I know their time is valuable, and I don't want to waste it until I find something worthwhile for them to see!! Onward and upward!!!

Nine Steps to Buying a Home

Buying a new home can seem like an overwhelming experience for many first time (as well as seasoned) homebuyers. It may seem like there are so many things to remember and so many things to do, and can seem daunting for some. It helps to to have a great agent to help you through the process, and it certainly helps to be able to break it down step by step and just concentrate on each individual portion at a time, as you march down the path on your journey toward home ownership!

Here is how the Dept. Of Housing and Urban Development (HUD) breaks down the home buying process in nine steps. The link to the source of the info can be found at the bottom of the post.

Step 1: Figure out How Much You Can Afford

Talk to a lender or a good mortgage broker, and they can run your credit score and see how much of a loan you would qualify for, based on your income, credit score, employment, etc.. It is definitely a good idea to do this up front, so that you know your exact purchasing power and the price range in which you should be seriously concentrating your house hunting efforts. Also, most all seller’s entertaining offers on property they are selling these days will require that a pre-approval letter be included with any offer coming in to them. Best to start here, and possibly save yourself wasted time and effort in the future.


Step 2: Be Aware of your Rights!

Familiarize yourself with the Fair Housing Act

http://www.hud.gov/offices/fheo/FHLaws/FairHousingJan2002.pdf

and the Real Estate Settlement Procedures Act (RESPA):

http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm

Both are designed to protect borrowers and buyers in the homebuying process – it is highly recommended for all borrowers to familiarize themselves with the provisions, so you KNOW YOUR RIGHTS!


Step 3: Shop for a Loan

Now that you know you are pre-qualified and are ready to do some serious looking, devote some of your serious attention to shopping for a good loan in addition to the time spent looking for your new home. If you do your homework, comparing costs with several lenders and looking at the different costs and interest rates may save you serious dollars over the life of the loan.


Step 4: Learn About Homebuying Programs

Downpayment assistance is available if you qualify! – you can find information on some of California’s programs here: http://www.hud.gov/local/ca/homeownership/buyingprgms.cfm .

Contact me at john.barry@coldwellbanker.com for more information about specific programs available in your area.


Step 5: Shop for a Home

This is the fun part!! (Or it can be the most frustrating part!) Remember that it is not easy to find a home with EXACTLY 100% of what you are looking for. If you find a property with 80% of the features you are looking for in a home, it might be the one for you & you seriously consider making an offer, especially if the amenities or features it is missing is something that can be added later on. Choose an agent you like and trust who can help you and guide you through the process from searching for the home to moving day!


Step 6: Make an Offer

This is where your real estate agents expertise and knowledge of the market conditions will help them advise you of what would be a fair price to offer on a property, to help give you the highest possibility of getting your offer accepted. Sellers do not necessarily look at the highest dollar offer as the strongest offer. When buyers are in a multiple offer situation for the same property, there are other things that sellers look for in an offer besides the final price, when deciding which to accept. A good agent can assist you in presenting the strongest offer possible which would give you the greatest chance as a buyer of having it accepted.


Step 7: Get a Home Inspection

Now that you have found a home you love and have an accepted offer (lucky you!), you are ready to schedule a home inspection. This should be done as soon as possible as soon as you have an accepted deal. Any property you purchase should be contingent upon the buyer being able to obtain and approve of a physical inspection of the property. By spending a few hundred dollars up front, a potential buyer can find out about the condition of the home, and discover any minor or major repairs needed on the home before committing to the purchase. If the potential buyer discovers any serious issues with the condition of the property at this point, they can then go back to the seller and ask for a credit at the close of escrow based upon the estimated cost of the repairs, or decide to cancel their purchase of the property based upon the inspection contingency. Again, a good agent will be able to help you & guide you through this process. Contact me at john.barry@coldwellbanker.com for personal assistance, or if you would like a referral to a qualified agent in your local area.


Step 8: Shop for Homeowners Insurance

All lenders will require homeowners insurance, so be sure to shop around for the best deal possible. Not all insurance companies may offer you the same rate.

The US Govt.’s Insurance Information Institute (iii) has some great information on 12 ways to lower your home insurance costs, which can be found here: http://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.htm


Step 9: Sign Loan Documents

You’re almost there!! One of the final steps before closing is to sign loan documents – be sure to read everything before you sign! Some helpful information on settlement costs and other as[pects of the loan process can be found here: http://www.hud.gov/offices/hsg/ramh/res/stcosts.pdf

Usually you will be required to go into the escrow office to sign the loan documents where a notary will notarize the applicable ones. Sometimes it is possible for the escrow company to arrange a mobile notary to meet the borrowers and have them signed outside of the escrow office (although this is not always allowed by the lender and the borrower will also usually pay several hundred dollars extra for this service). Once the loan documents have been signed and returned to the lender, and once everything else is in place and the buyer has deposited their final down payment, the lender funds the loan, and the escrow officer sets up the file for closing.

The next biggest decision you will have to make is what to serve your guests at the housewarming party!!!


Source of information: US Department of Housing and Urban Development (HUD) - http://www.hud.gov/buying/index.cfm

Fabulous Loan Opportunities for California School Employees!!

State of California school employees have an EXCELLENT opportunity available to them for the financing of a new home, by taking advantage of the CalSTRS Home Loan Program, offered to members of the California State Teachers' Retirement System. Loans are available up to $834,000.00, depending on the particular loan program. In addition, through their "80/17" program, borrowers can obtain financing with as little as 3% down, and will have a first and second deed of trust securing the loans on the property. The first deed of trust would be for 80% of the value, and the second deed of trust would be for 17% of the value, with the additional 3% coming from the borrower. The beauty of this is, the payments on the second deed of trust are DEFERRED for five (5) years, with no payments required until after that time period.

So basically, you can purchase a home with 3% down, with monthly mortgage payments on the 80% first trust deed ONLY for the fist five years. Not a bad deal...

As a father of an 11 year old girl heading into the 6th grade in the Los Angeles Unified School District, I know how important and influential teachers are in shaping the minds of kids, and how hard they work with the limited resources they have. Hats off to all the teachers in this world!! Teachers generally don't get enough thanks, praise and credit for the wonderful and important job that they do, and let me say that I for one appreciate it very much!! Its great to know that there are programs like this to reward teachers and help them achieve their dream of owning a home...

If you would like more information about The CalSTRS Loan Program, let me know and I would be happy to provide it. You can also find more information on their website, which can be found HERE

If you would like my help in realizing your dream of owning your own home, I will gladly give you my personal undivided attention. Please email me at john.barry@coldwellbanker.com , or call me at 323-810-7976. It is my job is to help YOU...

Finally Closing the Deal.....

Congratulations to the Snyders, and congratulations to the new buyers and new owners of the home at 5162 Windermere Avenue!! Escrow successfully closed on April 23, 2009... A great experience from start to finish, a very smooth closing, and absolutely wonderful buyers, sellers and agents to work with - a top notch transaction all around!! Congratulations and a big thank you to everyone who helped make it happen!!



Less than 45 days from listing in the MLS to the close of escrow and the sellers receiving 5% ABOVE the asking price - I have been blessed with an incredibly smooth deal and my clients couldn't be happier... (Unless of course, they have their offer accepted on their new home!!!!).

Now its time to push on and go forward... Plenty of houses out there for everyone!!!

And with the $8,000.00 first time homebuyers tax credit, along with low home prices and historically low interest rates, it is a fantastic time for buyers to realize their dream of owning a home for the first time. Home ownership is now within reach and an actual reality for people to whom just a few years ago, it was only a dream....

$8,000.00 TAX CREDIT FOR FIRST TIME BUYERS AS STIMULUS BILL BECOMES LAW!!!!

With the signing into law on Tuesday by President Obama of the American Recovery and Reinvestment Act of 2009, the rumors swirling regarding the details of tax credit for first-time home buyers, and the differences int he amounts and terms between the House and Senate versions, can finally be put to rest - a compromise has been made, and the credit has now become the law.

Here are the main details regarding the credit:

• Amount of the credit is $8,000.00 (or 10% of home value, whichever is less) ;
• Available to first-time home buyers only;
• Home must be purchased (close escrow) between January 1, 2009 and November 30, 2009.
• Income restrictions: $75,000.00 for single filers and $150,000.00 for married couples;
• Credit DOES NOT have to be paid back, as long as buyer occupies home as primary residence for at least three (3) years (otherwise, buyer obligated to repay amount).
  

Of course, it is highly recommended and strongly suggested that you discuss with and seek the advice and guidance of your tax advisor regarding this credit or any other tax related questions or issues...

With low interest rates, incredible value in the Los Angeles housing market, and now EIGHT THOUSAND MORE DOLLARS in your pocket, the time may never have been better for first time home buyers to realize their dream of owning a home...

DON'T MISS OUT ON THE INCREDIBLE OPPORTUNITIES AVAILABLE IN THIS BUYER'S MARKET!!!!!

Call me at (323) 810-7976, or EMAIL ME for a no obligation chat to see if I can help you FIND YOUR DREAM HOME!!!!!

Could Be the Opportunity of a Lifetime for First-Time Buyers!!!

For first-time buyers who are debating whether or not now is a good time to buy, recently enacted Federal legislation may now offer the needed incentive, providing up to a $7,500.00 tax credit for first-time home buyers, for homes purchased on or after April 9, 2008 and before July 1, 2009. Note that for purposes of the credit, "purchased" means that the actual CLOSING must occur by July 1st. Assuming a typical 45-day escrow, it is in any first-time home buyers best interest to act as quickly as possible, in order to have an ACCEPTED OFFER and be ready to go into escrow by mid-May at the latest, so as not to possibly lose out on this INCREDIBLE OPPORTUNITY!!

Currently it is established as a zero-interest loan, which must be repaid to the government over a 15-year period, but I understand that there are provisions in the current economic stimulus package to make this credit PERMANENT, and one that NEVER HAS TO BE PAID BACK! Now that's what I call a TRUE tax credit!!! We will follow this stimulus bill very closely.

Please see this site for more information regarding the credit: **

Federal Tax Credit

Feel free to call me at (323) 810-7976, or email me at: jb@jbknowsthevalley.com if you are interested in finding out any more information on available properties in the Eagle Rock/Glendale/San Fernando Valley areas, and if you would like my assistance in making an offer in order to take advantage of this great opportunity.

** For specific questions regarding the tax credit and how it would apply to your particular tax situation, I strongly recommend you consult with your tax advisor or accountant.