Stockton Real Estate Blog

Common Short Sales Myths: Homes in Stockton

Common Short Sales Myths

There is a lot of misinformation about short sales about short sales that prevent underwater home owners from getting the relief they need. It is important to consult with a real estate professional, tax attorney or CPA that is knowledgeable about short sales and foreclosures. Underwater water mortgages are here to stay for the foreseeable future and home owners need factual information and options not myths and water cooler conversations to make decisions that are right for them.

1.    I will be accountable for the deficiency between what I owe and what my home sells for to my lender.

California Senate Bills 931 and 458 Short Sale Bill protects against deficiencies on first and second mortgage for owner occupied homes. This is a major victory for upside down homeowners in Stockton, Lodi and California and relieves short sellers from worrying about their mortgage lender pursuing them for the deficiency after a short sale. There are some exceptions and some other details. Contact us at our short sale hotline 209-479-9222 about you options and protections.

2.    My credit will be ruined if I do a short sale.

A short sale can help preserve your credit. It is treated by your lender as a settled and as contrast to a foreclosure, it has less of an impact on your credit score for a shorter period of time.

3.    My hardship is not serious enough to qualify for a short sale.

In today’s real estate market it's harder to not be eligible, than it is to be eligible. There are abundant ways to qualify for a short sale and a home owner does not have to be behind on payments although it does help with some mortgage lenders. If a home owner can demonstrate that they are struggling to make their monthly mortgage payments or are facing hardships such as a divorce, loss of tenant income, job transfer, medical emergency or chronic illness, reduction in hours or furlough at employment, a mortgage lender will seriously consider issuing an approval for a short sale.

4.    I will owe taxes federal and state on the deficiency my mortgage lender forgives on my short sale.

The IRS Debt Relief act of 2007 relieves those doing a short sale or foreclosure from paying taxes on the deficiency and California SB 401 brings California in line with the federal debt relief act. There are certain qualification and details, call our short sale hotline for details at 209-479-9222. It is very important to act now and list your home before these tax protections expire on December 31 st 2012.

Want to know when you home will be an asset again and have your answer in minutes with real numbers and see if a short sale is for you visit our short sale calculator at www.xpressshortsales.com at the results will be emailed to you in minutes.

How to Buy a Home After A Short Sale or Foreclsure and Mortage Interest Rates

Foreclosures and short sales have affected 100’s of thousands of homeowners in the Stockton, Lodi market as well as the national market.  Yesterday I had Alvin, one of my earlier clients that had done a short sale 31/2 years ago contacted me and asked when he could buy a home again, and he and his lovely wife couldn’t stand living in a rental. It’s a question I am asked daily. The answer is yes. If you have done a short sale or foreclosure after 3 years and in some cases 2 years.

·       FHA Mortgage Loans: One of the most popular loan programs available. FHA loans only require a 3.5% down payment as opposed to conventional loans that require 10 to 25% down. FHA requires 3 years waiting period. Today’s FHA interest rates are 3.75% to 4.25%.

 

·       FHA guidelines: If potential buyers have mitigating circumstances such as illness, temporary medical issues, job transfer or natural disasters FHA guidelines allow the buyer to avoid the 3 year waiting period.

 

·       Conventional Financing: most conventional mortgage lenders loans are insured by Fannie Mae or Freddie Mac and they require a 2 years waiting period. These lenders require a down payment of 20%. Average national interest rates are running 3.5% to 3.75% for conventional mortgage loans.

 

There is life after a short sale or foreclosure and if you have done a short sale or foreclosure 2 to 3 years ago and interested or curious about finding out if you qualify for a mortgage loan call us. To prepare to buy a home, maintain you credit, pay your obligations on time and work with a trusted lender that will help you prepare. The Real Estate Team of Hugh Lilly and Maria Estrada at PMZ Real Estate have help buyers reach the real estate goals. Call us at 209-479-9222 to qualify to buy a home. Search for homes for sale in Stockton and Lodi at www.your-new-address.com .

Stage Your Home and Short Sale for a Quick Sales In Stockton and Lodi

The condition of homes is extremely important and first impressions do count and that goes for short sales. Short sales many times have an advantage over foreclosures because of being in superior condition.

Conventional sellers or better known as equity sales recognize when marketing their home that staging and condition are of prime importance, the better the condition the quicker the sale of their home and the higher the sales price.  The key points that a buyer sees when they pull up in front of your home is the appeal of the landscaping and when they walk through the front door the key interior points are: paint, floor coverings and the kitchen and bathrooms. We urge our short sellers in Stockton and Lodi to stage their homes for success.

If you are upside down and underwater and in the process of considering a short sale, you may have given up on making repairs or doing maintenance. A word of caution is due. If you have stopped making your payments, hopefully you are putting that money away in anticipation of your coming relocation. You should consider investing a little of your time and money in making the home as presentable as you can. Completing the short sale will likely protect your financial future

Homeowners that are underwater in their mortgages and trying to make a decision to short sale or walk away tend to forgo upkeep. Many have given up on yard maintenance making repairs and general upkeep of their home. Being underwater is stressful and depressing but if you are going to short sale your home and you have stopped making your payments invest some of the money you are saving and take care of the repairs and upkeep. The faster the home sells the faster you will be out from under the threat of foreclosure and be on the road to financial recovery.

Short sales continue to be the majority of homes in Stockton and homes in Lodi or sale. The Real Estate Team of Hugh Lilly and Maria Estrada at PMZ Real Estate are Short Sale Specialists. Discover your options. For up to date information on short sales and foreclosures contact the Xpress Short sale Group at PMZ Real Estate. Call 209-479-9222 or e-mail hlilly@pmz.com .

Homes For Sale in Stockton: A Decline in Foreclosures

Foreclosures comprise approximately 20 percent of homes for sale that closed escrow in the third quarter according to RealtyTrac a leading reporting company in the U.S. There has been a notable decline from the third quarter of 2010 when foreclosures amounted to over 30 percent of home sales. During normal housing markets foreclosures were 5 percent or less of closed sales. There has also been a significant decline in foreclosures coming on the real estate market and especially homes for sale in Stockton and homes for sale in Lodi listed on the Multiple Listing Service (Metrolist).

From all indications mortgage lenders and servicers have purposely slowed the processing of foreclosures as they have come under increasing pressure from government oversight and litigation. The robo signing scandal coincided with this down tic in foreclosures. Another big reason for the slowdown is that mortgage lenders and servicers don’t want to inundate the real estate market with foreclosure a further depress home values.

Buyers are having difficulties purchasing homes because of a low inventory of homes on the real estate market. Lower sales prices and some of the lowest mortgage interest rates in over 40 years should be a boon for buyers but the inventory of available homes on the market has been a problem. Short sales in the Stockton and Lodi real estate market are dominating the homes for sale; approximately 73 percent of homes for sale in Stockton and Lodi are distressed mortgages. This situation has had an effect on sellers with equity in their homes having to discount their sales prices. The Real Estate Sales Team of Hugh Lilly and Maria Estrada at PMZ Real Estate have been helping buyers and seller realize their real estate goals call us at 209-479-9222.Search our site for homes in Stockton and Homes in Lodi.

 

Homes For Sale in Stockton: The Year of the Short Sale

2012 is ramping up to be the year of the short sale in Stockton and San Joaquin County. I talk with homeowners daily that are faced with the choice of giving up everything they have worked for and making monthly payments on their home, even though they love their homes, are deciding to short sale.

Homeowners want to be optimistic and wanted to believe that they could ride out the declining economy, have seen the depletion of savings, retirement accounts and other assets. Many are simply broke and trying to keep their heads above water.  Homeowners are faced with the only way out is either foreclosure or short selling their home. Foreclosures and short sales are dominating the real estate market in Stockton and Lodi California. Underwater homes are an epidemic in the United State: California, Nevada and Florida have been especially hard hit.

The reality that people’s homes are worth much less than the balance of their home loan and what they originally purchased their home for is causing homeowners to reach out to real estate agents in Stockton and Lodi and ask for short sale help. There are options available to avoid foreclosure.

Financial advisors such as Suzie Orman have advised people to build up a six month or a year’s worth of cash reserves to weather a financial crises., but his economic down turn goes on and on without a clear end in sight.  When on the brink of depleting of their cash reserves homeowners are reconsidering their position on keeping their homes. One of the single biggest factors that will cause 2012 to be a year in which many choose short sale is the expiration or the Mortgage Forgiveness Debt Relief Act of 2007 on December 31^st 2012.

Homeowners that wait too long to list their home for sale and close escrow before December 31^st 2012 may find that they face the loss of a home plus a large IRS tax bill of $15,000 to $25,000 or more added to their financial burdens.  Don’t miss our YouTube Video from Xpress Short Sale TV on the Tax Relief Act of 2007.

 

 

 

 

 

Stockton Short Sales Avoiding Foreclosure

Avoiding Foreclosure is the main objective of most homeowners. Over 75% of those homes on the real estate market in Stockton are either short sales or foreclosures. Managing the foreclosure process is stressful and complicated. FACS and CHS designated Realtors who have undergone specialized training essential to evaluate all potential foreclosure alternatives, and are in partnership with other financial professionals and the homeowner to seek the best solution. FACS and CHS designated Realtors attend several days of training learning about foreclosure avoidance and how to negotiate the short sales process competently and ethically. The FACS and CHS designations mean you are working with the most up to date Realtors and information available.

Homes in Stockton: Short Sales and The Buyers Advantage

One of the biggest problems we see in a short sale transaction is buyer education. Patience is one of the most important attributes of a buyer considering a short sale and this also includes the buyer’s real estate agent. The buyer’s agent needs to educate the buyer’s expectations on the time frame it takes to get a short sale approval. The process can of take 60 to 90 days to receive an approval from the seller’s lender. The upside for the buyer is that the home is in usually better condition and many times there is instant equity.

The Lender You Choose can Make or Break the Sale

Choose a lender who understands short sales. The pre-approval process should be the same whether the buyer is being pre- approved to buy a short sale or pre-approved to buy a property with equity. It has been our experience that 10 to 15 percent of short sales that have been approved by the sellers lender do not close because the buyers loan falls through.

Inspections

We advise buyers to do inspections before the short sale approval,  if the problems with the condition of the property is known before  the initiation of the short sale process, the sellers lender will be more agreeable to approve  a purchase price that is less than  the current market value. It is difficult to go back to the bank and ask for a lesser purchase price when a home inspection that was done after short sale approval.  

A majority for the homes in Stockton and homes in Lodi for sale are either foreclosures or short Sales. very often the short sale is the best option for potential homebuyers. We urge buyers to do their homework and choose a real estate agent that is experience with short sales to guide the process. The Real Estate Team of Hugh Lilly and Maria Estrada at PMZ Real Estate have helped buyers achieve their real estate goals, visit www.your-new-address.com  and start you home search.

Homes in Stockton: Mortage Interest Rate and Trends for January 2012

Searching for a mortgage lender with the right fit is extremely important for the first time homebuyer and for move up buyers. Rates are at an record lows and home values are flat making a perfect environment to purchase a home. Because there are so many mortgage companies out there, mortgage lending has become extremely competitive.

 

By shopping around and comparing rates, fees and service, you will be able to get a feel for what is out there, and whatever lender offers you the best deal to fit your needs and your budget, should be your lender of choice.

Buying a home is not something you want to rush into. So take your time and educate yourself. Talk to people within the industry, talk to trusted advisors and friends that have recently purchased a home shop around, than make an educated decision based on what best fit your needs.

 

Mortgage Interest Rates as of January 13^th 2012

 

Mortgage Loan Type	Today	Last Week	Change
15 Year Fixed	3.449%	3.428%	0.02%
30 Year Fixed	4.122%	4.093%	0.03%
40 Year Fixed	4.307%	4.279%	0.03%
1 Year ARM	3.329%	3.340%	0.01%
3/1 Year ARM	3.304%	3.289%	0.02%
5/1 Year ARM	3.224%	3.221%	0.00%

Home values for homes in Stockton and homes in Lodi are relatively flat and mortgage interest rates are stable. The perfect picture is now for your next home purchase. FHA mortgage loan limits have recently increased and often only require a 3.5% down payment. Visit www.your-new-address.com and search for homes on the MLS currently available.

Homes in Stockton: Assumable FHA Mortgage Loans

Most sellers don’t realize that one of the advantages of FHA mortgages is that they are assumable. When a seller wants to sell his home, a credit qualified home buyer can assume their FHA loan which is an advantage when they sell because when you assume a mortgage, the terms and interest rate remain the same. This means an interest rate under 4% in today’s real estate market rather than a 6 or 7 percent interest rate in the future,

As an example, a $300,000 loan at 4% today carries with it a $1,432.25 principal and interest payment on a 30 year fixed mortgage. If offered for sale in five years, the purchaser could assume the $271,858.56 balance with the same $1,432.25 payment and remaining term of 25 years. The total payments over the 25 years would be $429,675.

Compare that to a new $272,000 loan at 6.5% for 25 years, which would carry a monthly payment of $1,836.56 (over $400 more a month than the assumption and more than $120,000 more over the 25 year term).

At 6.5% for 25 years, to wind up with the same payment as the assumed mortgage, our borrowers would only be getting $212,000…$60,000 LESS!

The point here is that, when rates go up, homes with assumable mortgages will have more value and will sell at higher prices because they are more affordable. As an additional bonus, the closing costs on assumable mortgages are significantly less. The homebuyers must be credit-worthy of course they must have good credit, qualifying income, and necessary assets to close, but they would have to be credit-worthy to get a new mortgage too!

The real estate team of Hugh Lilly and Maria at PMZ Real Estate have been helping buyer’s achieve the real estate dreams call us for a no obligation consultation at 209-479-9222 or vist www.your-new-address.com and search for homes that are currently available

Stockton Home Buyers: FHA Home Loans

The FHA mortgage loan program is serving Stockton home buyers giving them the opportunity to purchase homes with as little as 3.5% down and record low home loan interest rates. It is one of the loans that serve first time home buyers and move up buyers. Recently loan limits were increased at their upper end to $400,000 plus in Stockton and San Joaquin County.

 

FHA FACTs:

 

·       In 2010, FHA was used by 56 percent of all first-time homebuyers

·       60 percent of all African-American and Hispanic homebuyers.

·        In addition, 85% of borrowers obtaining homes at the higher loan limits had incomes below

$150,000,

·       65% had incomes less than $100,000.

 

The pieces are place to purchase that first home or home buyer's wanting to move up to that dream home: historic home loan interest rates, declining home prices and low down payments. Call Hugh or Maria for you free homebuyers package at 209-479-9222 or visit www.your-new-address.com .

Homes in Stockton: Mortgage Interest Rate Trends and Rates

Low mortgage rates likely to continue through 2012

The mortgage market did not live up to predictions from the experts for 2011. Record low interest rates for mortgages are the lowest in 40 years, but very few potential homebuyers took advantage of these rates and record low prices for homes in Stockton and nationwide. There is a great deal of uncertainty because of the economic outlook and many buyers are asking if their job will be there tomorrow. Rents for homes and apartments are rising and often are higher that what a monthly mortgage payment. The low interest rates and declining prices are creating the perfect storm for home purchasers wanting to buy. If your dream is to own your own home or move up to that perfect home now is the time.

The probable state of affairs for housing in the 2012, according Fannie Mae, Freddie Mac and other housing analysts, is more of the same as in 2011. The Federal Reserve has pledged to keep interest rates low throughout 2013.

Mortgage lenders are offering 30-year fixed-rate mortgages to homebuyers with an average interest rates of 3.95% in the previous week, Freddie Mac said “this is the 9th successive week of interest rates at or below 4%”.

Examples of interest rates today: These rates are subject to change and buyer qualifications.

Loans up to $417,000	Rate	APR
30 Year Fixed	3.250	3.506
15 Year Fixed	2.750	2.957
7 Year ARM	2.000	3.114
5 Year ARM	1.500	3.092
3 Year ARM	2.125	3.468
FHA Rates	Rate	APR
30 Year Fixed	3.375	4.093
15 Year Fixed	2.750	3.171

Visit www.your-new-address.com and search for homes that qualify for these low mortgage interest rate. Call us at 209-479-9222 for our no obligation homebuyers’ consultation; we can point you in the right direction.

Homes-in-Stockton: Short Sales a Buying a New Home

Short Sales Can Benefit You When It’s time to Buy a New Home: Recently Fannie Mae has adopted policies loans associated to the time that is necessary before borrowers can show they have reestablished a satisfactory credit history after a short sale or foreclosure.

Foreclosure: At this time Fannie Mae requires 5 to 7 years from completion of a foreclosure with the following additional requirements that apply after 5 years up to 7 years following completion date:

·       The purchase of a owner occupied residence with a minimum 10 percent down payment and minimum credit score of 680.

·       Purchase of a second home or investment property is not allowed.

·       Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.

·       Cash-out refinances are not permitted

Short Sale:   Fannie Mae will allow a purchase 2 to 3 years after a short sale.  
There are no other requirements after this time period. Fannie Mae does not allow exceptions to the 2 to 3 year time period because of mitigating situation.

Deed-in-Lieu of Foreclosure: Fannie Mae requires a 4-year time period from completion date of a deed-in-lieu. Additional requirements are generally the same as a foreclosure.

In many cases short sales is the best option for homeowners facing foreclosure, there are alternatives. Many distressed homeowners facing foreclosure don’t know where to turn for advise and ignore their situation a eventually get that knock at the door from the sheriff executing an eviction. This does not have to happen. The Xpress Short Sale Group at PMZ real Estate of Hugh Lilly and Maria Estrada can help. Call us at 209-479-9222 or visit www.xpressshortsales.com to actually crunch the numbers on our short or stay calculator and view our video.

Homes in Stockton: Short Sales and Your Tax Burden

My team recently received the following e-mail from a homeowner in Stockton: “ My wife and I are underwater in our mortgage we have not made payments in 3 months, I recently was cut back on my hours at work and it looks like I may lose my job. My monthly payment on my adjustable rate mortgage is increasing. We have exhausted our saving and can no longer afford the payments on my home. I know that the only two options we have are foreclosure or a short sale. The mortgage on the home is $425,000 and at best we probably can sell it for $189,000. I am really worried if we do a short sale we will owe the bank for the difference and be taxed by the IRS on the difference. We really don’t want to compound our problems, can you help?”

David these are questions we are asked every day and many Americans and those who own homes in Stockton are in your same situation. There are protections for distressed homeowners that are underwater in their mortgages. In California there are three Protections:

·       The IRS Debt Relief Act of 2007

·       Senate Bill 938

·       Senate Bill 458

The IRS Debt relief act of 2007, in most cases on purchase money loan 1^st mortgages on your principle residence, will relieve the homeowner from paying taxes of the deficiency which is the difference between what is owed on the home and what it sells for, for example David on your home you owe $425,000 and you can only sell it for $189,000 which leaves you with a deficiency of $236,000. The IRS will forgive up to 2 million dollars for a couple and 1 million dollars for a single taxpayer.

it’s important to emphasize that the tax relief act expires on December 31 st 2012, short sales take time so it’s important David that you don’t wait too long to act you may have a large tax burden on the deficiency of $236,000.

David the California Senate Bill 938 will relieve you of the deficiency on you first mortgage whether you do a short sale or foreclosure and Senate Bill 458 will relieve you of the deficiency on a 2^nd mortgage on a short sale but not on a foreclosure.

We know that the possibility of short selling your home can be a hard decision to make. That's why we created the Short or Stay Calculator to help you crunch the numbers. Visit www.xpressshortsales.com and calculate whether a short sale is for you.

Homes in Stockton: Seller Financing for Home Loans

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Seller financing is difficult to find but it is out there and we don’t find a lot of this type financing available in Stockton. The seller assists the potential buyer in purchasing the home by lending the buyer either a portion of the amount to be financed or the entire amount. Seller financing can be a good strategy for sellers by retaining the principal while earning interest and it can also have positive income tax implications.

Let's say the buyer and seller agrees on a price of $200,000 for the house. In many cases a lending institution would require a 20 percent down payment -- $40,000 -- and give the buyer a mortgage for $160,000. But if the buyer has only $25,000 initial investment, the seller could finance a second mortgage for the $15,000 the buyer is short. The buyer makes payments on the first loan to the bank and the second loan to the seller.

Another example of seller financing: If the sale price of the home is $150,000 and the buyer has only $15,000 for a down payment, the buyer gives the $15,000 down payment directly to the seller, who agrees to carry the entire mortgage amount of $135,000. The buyer makes all payments directly to the seller.

Pro: Seller financing reduces the cash needed to get into a home and could dramatically reduces closing costs. Often the seller will be more flexible in accepting an under qualified buyer.

Con: The seller determines the interest rate for that portion of the mortgage being carried, and it usually comes with a higher rate and a shorter term. Perhaps most importantly, it very often comes with a balloon payment. This means that monthly payments would be computed as though the mortgage was to continue for, say, 30 years, but at the end of five or 10 years the entire remaining balance has to be paid in one lump sum. That normally requires refinancing at that point, when rates could either be lower, higher or about the same, or selling the house to meet that balloon payment. Visit www.your-new-address.com  for your home search. The Real Estate team of Hugh Lilly and Maria Estrada has been assisting buyers reach their real estate goals for almost 30 years call us at 209-479-9222.

Homes in Stockton:Good news for Stockton Investors and homebuyers, flips are in. For FHA Buyers

Good news for Stockton Investors and homebuyers, flips are in. For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its anti-flipping policy, meaning homebuyers using FHA financing for mortgage loans will continue to be able to purchase homes that have closed escrow in the past 90 days. Flips continue to be problematic for other types of mortgage loans. Flips occur when an investor buys a fixer home under market and rehabs it and puts it back on the market. Lenders often necessitate that the seller provide receipts for upgrades and repairs. Also a second appraisal is required which the homebuyer does not have to pay for.

The waiver has been extended through the end of 2012, when the purchase price of a home is 20 percent or more higher than what seller purchased it for, to qualify for the waiver the mortgage lender must document the reason for the increase in value. 

 

The waiver is a fortunate for investors looking for to rehab and flip properties, because it expands the number of qualified potential borrowers relying on FHA low down loans which are popular with first-time homebuyers and others who a large down payment. The down with a FHA loan is as little as 3.5%.

FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes foreclosed on by Fannie Mae, Freddie Mac, and their financial institutions were excused from the rule.

The pool of available homes in a condition that will pass FHA inspection is rather limited and this wavier enlarges that pool of quality homes. Visit www.your-new-home.com for homes that qualify for FHA mortgages or call 209-479-9222 for your free homebuyer’s consultation.

. For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its anti-flipping policy, meaning homebuyers using FHA financing for mortgage loans will continue to be able to purchase homes that have closed escrow in the past 90 days. Flips continue to be problematic for other types of mortgage loans. Flips occur when an investor buys a fixer home under market and rehabs it and puts it back on the market. Lenders often necessitate that the seller provide receipts for upgrades and repairs. Also a second appraisal is required which the homebuyer does not have to pay for.

The waiver has been extended through the end of 2012, when the purchase price of a home is 20 percent or more higher than what seller purchased it for, to qualify for the waiver the mortgage lender must document the reason for the increase in value. 

 

The waiver is a fortunate for investors looking for to rehab and flip properties, because it expands the number of qualified potential borrowers relying on FHA low down loans which are popular with first-time homebuyers and others who a large down payment. The down with a FHA loan is as little as 3.5%.

FHA instituted the anti-flipping rule in 2003 to protect its mutual mortgage insurance program from losses on homes that were merely flipped, rather than rehabbed. Homes foreclosed on by Fannie Mae, Freddie Mac, and their financial institutions were excused from the rule.

The pool of available homes in a condition that will pass FHA inspection is rather limited and this wavier enlarges that pool of quality homes. Visit www.your-new-home.com for homes that qualify for FHA mortgages or call 209-479-9222 for your free homebuyer’s consultation.