Home Buyer closing costs are arguably more important than the loan approval.     You  should consider them first.  While consulting with your Realtor ask them to describe all the different ways these costs can affect your offer, the price you pay and how you may be able to use them to help you afford a more expensive home or reduce you payment.

I have used these costs to make the best offer in multiple offers situations.    Call it creative offer structuring.   Remember,  only a few of these are commonly packaged in your mortgage and if they are not negotiated in, you should be prepared to pay them at closing.

Lender fees:

• Loan origination points – depends on your lender and type of loan
• Prepaid interest – depends on which day of the month you close
• Property tax impounds – depends on the type of loan and time of the year you close
• Insurance impounds – plan on 6 months of insurance, if required
• Processing/Underwriting fees – depends on your lender and type of loan
• Document prep fees – approximately $150.00
• Appraisal fees – approximately $450.00
• Funding fees – depends on your lender and type of loan
• Tax service, flood cert, etc. – approximately $150.00

Title fees

• Owner’s title policy – determined by purchase price
• Lender’s title policy – determined by the loan amount
• Document prep, notary, recording, courier, etc. – $200.00
• Escrow fee – also determined by purchase price

Other fees associated with the Buyer Side:

• Prorated property taxes – depends on the type of loan and when in the year you close
• Homeowner’s dues – varies depending on the development
• Transfer tax – $1.10 per $1,000 of purchase price
• Annual homeowner’s insurance policy – depends on the type of home being purchased
• HOA transfer fee – varies depending on the development
• Inspections – Property (est. $450), Termite (est $250) & Roof (est $175)- other inspections may be recommended i.e. Chimney, Septic, Foundation the list can be long in some cases.

What are buyer contingencies?     click here for a review

131 Millrich Dr.  this Los Gatos house sold for nearly 1% less than the asking and 411 Clearview Dr., a townhome, sold for nearly 5% over the listing price !

A reminder that ‘sweet spotting’ your asking price will always pay off.

The good news….neither property was a short sale.

2 Los Gatos Houses sold this week,

131 MILLRICH DR, Los Gatos 95030 (Los Gatos)Single Family Home 3 bed(s) Baths: 4|1 bath(s)   SqFt: 2,593  Lot: 9,100 sq ft

List Price: $1,449,000     Sold Price $1,332,000.00

______________________________________________________

411 CLEARVIEW DR, Los Gatos 95032 (Los Gatos)Townhouse  3 Beds, 2|1 Baths:  SqFt: 2,122 Lot: 2,220 sq ft

List Price: $749,000 Sale Price: $780,000

Assoc. Fee: $428

We see a crossroads ahead…one where the buyers in the Los Gatos Real Estate Market aren’t in the driver’s seat.    Could this mean the homes for sale are in a Seller’s market?

Remember…

Spring is coming and the end of the $8000 First time buyer’s credit is there waiting.   I wonder if will  lead to more vigorous sales?…bidding?

Rismedia reported this weekend…

The Department of Housing and Urban Development (HUD) said it’s taking a closer look at 15 mortgage companies to determine why they had such high rates of problems with FHA insured mortgages.

Can I answer that?  Lending to anyone who could fog a mirror tends to do that.    I told you Fannie Mae was getting a spanking before this new investigation.

“Each loan on this list will be thoroughly examined and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted, we are watching very carefully and that we are poised to take action against bad performers,” Donohue said.

I wonder if this has anything to do with the fact Fannie Mae is approving foreclosure without notifying banks.

I don’t think Ken Donahue has tried to actually apply for a Home Purchase loan lately.  In our local Los Gatos and Santa Clara County Real Estate market it is very difficult.  The symptoms have passed.

I am glad to see someone is checking up, but if it does not relieve distressed markets,  DON’T BOTHER!  It’s  glaringly obvious focus on future Real Estate recovery measures, rather than looking back,  is the best medicine.

Below are the companies that received subpoenas from HUD’s Office of Inspector General:

-First Tennessee Bank N.A., Memphis, Tenn.
-Alethes LLC, Lakeway, Texas
-Security Atlantic Mortgage Co., Edison, N.J.
-Pine State Mortgage Corporation, Atlanta.
-Birmingham Bancorp Mortgage Corporation, West Bloomfield, Mich.
-Alacrity Financial Services, LLC, Southlake, Texas
-Assurity Financial Services, LLC, Englewood, Colo.
-D and R Mortgage Corporation, Farmington, Mich.
-Webster Bank, Cheshire, Conn.
-Mac-Clair Mortgage Corporation, Flint, Mich.
-Americare Investment Group, Inc., Arlington, Texas
-1st Advantage Mortgage, Lombard, Ill.
-American Sterling Bank, Independence, Mo.
-Sterling National Mortgage Company Inc., Great Neck, N.Y.
-Dell Franklin Financial LLC, Columbia, Md.

I bet these companies end up walking away from the testimony with more bailout money.  Want to bet?

The new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period.

what you can and cannot deduct as a homeowner

Get your taxes done FREE

Great short Video Explanation of Credit

Create a Quip Contest!  Choose One of the Perils and Create a Quip Contest.

Pick a Peril from the list below, create a quip and post it as a comment below.  We will take a community vote at the end of the month.

The winner will have a $100.00 donation made, in their name, to their favorite charity helping the Haitian earthquake victims!

David Letterman announced where donations can be made directly.

You can text to 90999 and enter Haiti  to make a $10 donationtoo.

2 silly Contest Examples:

Why do transactions fail?

8. Applicant makes large purchase on credit before closing.

Quip: At least the store was still open.

9. Illness, injury, divorce or other financial setback during escrow.

Quip: You should know better! Mom warned you about escrowing!

Help others! Choose one of the 88 snags -below the video – and create a quip then post it in the comment section below.   It’s Easy and will help someone in need.  Do It Now!  Please.

Pick Your comment to create a quip…

The Haitian earthquake reminded me of the 1989 Loma Prieta earthquake and how hard it hit Los Gatos.    I was lucky no one I knew was hurt.   I only had to fix a cracked coupling on my grandmothers gas pipe in the Carlton Meadows neighborhood where she lived.

Think ahead!

I added a couple of links below this post to help you obtain the items discussed here.

‘Safe Up’ your home by addressing these 10 things.

1. Make sure shelves are fastened securely to the walls.
2. Place large, heavy objects on lower shelves or on the floor. They might fall. You can also screw them onto things, such as on desks.
3. Place breakable items (bottles, glass, china, etc.) in closed cabinets that have latches. Make sure to board them up so that the cabinet doors won’t fly open.
4. Heavy pictures and mirrors should be hung away from beds, couches, and anywhere that someone might sit.
5. Overhead light fixtures should be braced to prevent falling.
6. Evaluate your electrical wiring and gas connections and repair if needed. During an earthquake, these can become potential fire hazards. Additionally, turn them off and unplug them, so the outlet is not neat the metal part of the cord.
7. Secure your water heater by strapping it to wall studs (not just the drywall) and bolting it to the floor.
8. If you have any deep cracks in the ceiling or foundations, repair these immediately. You might need to consult an expert if there are signs of structural weakness.
9. Store flammable products in closed cabinets with latches on the bottom shelf.
10. Prepare a Grab Bag

Have you ever watched a spy movie or the TV series “24″?

Every good spy has what is called a ‘Grab Bag’.  This is a bag you can grab on the run in an emergency.  Your Grab Bag should have these items in it.  If one bag is too heavy have 2 or put heavy stuff in your car trunk.

Gather these  disaster supplies to place in your ‘Grab Bag’.

1. Flashlight light with extra batteries (preferably one for each individual)Portable, battery-operated radio with extra batteries
2. Purchase and use “Self Powered Radios” and “Self Powered Flashlights”. Batteries will be hard to find, if you can find them. Some models will charge cell phones, but the cell phone towers may be damaged, even destroyed.
3. Purchase and use “Glow Sticks”. These are SAFER than candles, since you will be dealing with ruptured gas lines, flammable, explosive gas.
4. First aid kit and manual
5. Emergency food and water (some sources say you should have up to 2 weeks worth of extra food on hand in case rescue workers cannot reach your location)
6. Nonelectric can opener
7. Essential medicines
8. Cash and credit cards
9. Sturdy shoes for each family member

Home Survival kits

Car Earthquake kits

Tait Ave Home Sold In Los Gatos

You can do a detailed search for homes available for  sale in the  the Los Gatos Real Estate market here.

If you have been reading my Los Gatos Real Estate musings you already know that since the program was announced in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people, but has largely failed to provide lasting relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

This fact that credit scores are affected by modifications boils my brain!  The program was meant to help!   In fact, it is hurting too many people.   How are you going to rent or lease a new home if your credit is injured?

How does renting become a component of the problem?   Selling the subject property will become the only option if the modification does not become permanent.   Where is one supposed to live?

In a rental probably.

This introduces a troubling fact of reality for troubled homeowners.  Having to sell their home.  Most will find they are going to have to apply for a short sale approval, some will be confronted with foreclosure or submitting a deed in lieu of foreclosure.   All very unattractive options and all very real.

To those of you in the midst of this debacle I would suggest you speak with a Realtor or a Property Manager as soon as possible and make inquiries as to how you may secure a property before this ridiculous negative credit reporting causes a new layer of frustration for you.

related article…

Loan modification document links

Buying a home means you need to understand your credit score better and how it weighs in and out of your favor.

With all the misguided information flying around about loan modifications understanding these myths will prevent some misteps.

“Many Americans hold mistaken beliefs about credit scores,” cautioned  Ethan Ewing, who heads the free online consumer portal at Bills.com. “Misinformation on television and in hearsay from friends and neighbors only compounds the problem.”

Here are the top 10 commonly held myths surrounding credit scores:

Myth #1: A credit score is a credit report. The credit report is a detailed listing of all debts and payments, going back throughout an individual’s entire payment history, Ewing explained. For each entry, it shows the creditor’s name, amount owed, the highest balance owed, the available credit, whether the account is open or closed (and who closed it), the number of late payments and whether the account is in default. A credit score is a number between 300 and 850 that is based on complex formulas incorporating all the data in the credit report.   Most homes for sale in Los Gatos yield many offers so, you need to have the best credit score.

Myth #2: Those who are not in default do not need to check their credit report. Everyone should check his or her credit report at least once a year (quarterly is not a bad idea in today’s market) to be sure the report contains no erroneous information. Visit www.annualcreditreport.com for a free, no-obligation copy of the report.

Myth #3: Checking a credit report damages credit. Reviewing your own credit information has no effect on a credit score, Ewing said. Neither does a credit report review by a prospective landlord or employer.  Lenders will look, unfavorably, if you have had more than 3 credit reviews by lenders in recent weeks.  Try to do online research for a lender before you apply.

Myth #4: Everyone has one credit score. Credit score calculations are compiled using data from three different credit scoring agencies (Equifax, Experian and TransUnion). The resulting scores might vary slightly among the three agencies if they have slightly different information, but they will be similar.

Myth #5: Married couples share a credit score. If all of a couple’s accounts are joint, their scores will likely be similar, but each individual maintains a unique credit record and credit score. On the flip side, after a divorce, ex-spouses need to follow protocol to have creditors remove either party from a joint account.

Myth #6: Shopping for a loan destroys credit. It is true that “hard inquiries” – examinations of a credit score in preparation for extending credit can have a small negative impact on credit. However, credit bureaus take into account that consumers might inquire about a loan from multiple mortgage companies or auto lenders.

“If multiple inquiries are received from the same type of lender within a 14-day period, the credit scoring companies do not count each inquiry against the borrower,” Ewing explained. But credit card account inquiries to open new accounts are counted individually.

Myth #7: To improve a score, close unused accounts. An important component of a credit score is available credit, or the unused credit that has been offered (on a credit card, for instance) but not used. Closing unused cards removes those available balances from the equation and can actually lower a credit score. Today, some banks are automatically lowering limits or closing accounts to reduce their own credit exposure. Individuals whose debt load is manageable should not experience an extreme effect on their scores.

Myth #8: To boost credit quickly, just pay off bills. Credit scores reflect performance over time. Scores will not change overnight.  This is the worst myth of them all.   One of my clients did just that, without conferring with me, and dropped their score by nearly 60 points.   They failed to qualify for the FHA mortgage they applied for.    Working together we will get them in the front door of their new home sometime in the next few months.

Myth #9: For a fee, vendors can fix a bad score. Again, credit scores show historic behavior. Be cautious about companies that claim to “fix” or “repair” credit.

“You yourself can remove inaccurate information,” Ewing said. “Beyond that, be aware that some companies send credit scorers a deluge of letters asking that they verify – and in the process, remove all past negative information. If and when truthful finance information is verified, however, it will quickly return to the credit report.”

Myth #10: Never get help – it is too hard on credit. It is true that credit counseling, debt settlement and bankruptcy all can cause significant black marks on a credit report.

“If you are in real trouble, however, you can and should seek help,” Ewing urged. “Which option you choose will depend on the severity of your situation. Credit counseling can help to manage bills, and lower interest rates and monthly payments to creditors. Debt settlement firms can negotiate to lower the principal amount of your debts, typically providing a faster path to debt freedom than credit counseling. Bankruptcy, an even more serious alternative, should be discussed with a bankruptcy attorney.”

“Credit is important, but knowing the truth about credit might be even more important,” Ewing concluded. “Before taking action that might hurt or help your score, check your facts to be sure your actions will help your financial picture.”

]]> http://michaelrobertshomes.com/2010/01/07/home-buying-credit-myths-debunked/feed/ 1 http://michaelrobertshomes.com/2010/01/06/los-gatos-benefit-event/ http://michaelrobertshomes.com/2010/01/06/los-gatos-benefit-event/#comments Wed, 06 Jan 2010 21:41:23 +0000 Michael Roberts /?p=1209

A cat sculpture by artist Jolene Anderson that was auctioned off at the 2003 Touch My HeART gala.

Los Gatos-

Hand-painted cat sculptures by 21 award-winning local artists will go on display throughout downtown Los Gatos on Jan. 5, as part of the upcoming Touch My HeART 2010 fundraiser for the Museums of Los Gatos.
Families are encouraged to bring their children to tour the feline figures, who’ve been adopted by local businesses, to find the hidden heart on each sculpture. The cats will then be auctioned off at the “Cats Night Out” gala on Feb. 27 at the Toll House Hotel.
“Cats Night Out is sure to be one of the most exciting events to be held in Los Gatos this year, and we look forward to a fabulous turnout,” said Museums of Los Gatos Executive Director Elke Groves in a press release.
Launching the art season in Los Gatos for the past nine years, Touch My HeART is the major fundraiser for the Museums.
The ninth annual gala will feature fine food, wine and musical entertainment, all benefiting the 501(c) 3 non-profit that aims to promote local history and fine arts throughout the town. Also up for auction at the event will be a weekend of golf at Carmel Valley Ranch, a week’s stay at a vacation home in Truckee and a dinner for eight at La Estancia.
“This gala has become a tradition that brings together the community’s most enthusiastic and generous individuals in support of the Museums of Los Gatos” said Touch My HeART president Sandy Decker in a press release.
The Cats Night Out gala will take place from 6pm to 9pm. Tickets are $120 per person.  Visit http://www.museumsoflogatos.org for more information.

Guest Post Written by Jessica Fromm