Pathway to Purchase Down Payment Assistance Program for City of Tucson starting Monday, July 18

pathway

Pathway to Purchase Down Payment Assistance Program for City of Tucson starting Monday, July 18

 

The new down payment assistance program, Pathway to Purchase, is scheduled to begin taking application this coming Monday, 7/18 at 1 PM.

 

This program is available for only the city of Tucson and South Tucson. Here are the basics:

 

Income limit: $92,984 annual income

Sales price limit: $371,936 maximum

Debt ratio: 45% maximum

Minimum credit score : 640

Max LTV: 95%

Down payment assistance: 10% of sales price up to maximum of $20,000. 0% interest, no payments, forgiven after 5 years

Loan type: Conventional, 30 year fixed rate, owner occupied

Reduced mortgage insurance cost

Eligible properties: existing single family, townhouses or eligible condos

Buyers do not need to be first time homebuyers but cannot have ownership interest in any principal residence at the time of closing

Borrowers must complete Homebuyer Education Course

Current interest rate: 4%

Solar Power – to Lease or Not to Lease….that is the question.

In Arizona solar power is a very attractive alternate power solution. As Real Estate Agents we are often asked about how a solar system affects the value of a home. The answer is ‘it depends’.

It depends on if you own the system or lease the system. If you own the system, studies have shown that houses with solar systems increase the value 3-4% (depending upon age and condition of the system) over similar homes in the area.

However, when it comes to leasing solar systems it may not add any value to a home. In fact, we have seen solar leases make selling a home more difficult.

Some solar leases allow the seller to take the system with them to the new house (with some costs to do the transfer of equipment), or to pre-pay the lease. Those options may make solar leases more viable.

Sometimes the solar lease is a good deal – saves more money than if you didn’t have a solar system. We have seen studies that say the average person saves 10% to 15% on your electric bill after you calculate in your lease payment.
Keep in mind the solar lease companies are making money also. So obviously you are sharing a portion of your savings as their profit. A buyer client recently told us that he looked at solar leasing and was told he could pre-pay the 20 year lease and save 50% of the total costs. That pre-payment would be a lot of savings in lease payments and ultimately in electricity costs for someone that could afford to pre-pay the system.

The advantage of a pre-paid lease is the on-going maintenance of the system is covered. If you own a solar system outright you would have to pay for any maintenance. With the lease the equipment disappears after 20 years and with owning the equipment it would remain. (But, would it be obsolete after 20 years?)

In Arizona, over the last few years, the utility companies have reduced the amount they pay for energy put back into the power grid from individual solar systems. So you pay full price for the power you use from the utility, but may only get paid a fraction of cost of power you put back into the grid from your solar system. The solar reimbursement rates are an on-going regulatory issue in Arizona.

Having a solar lease can make selling your home more difficult. This is because not only do you have to sell the home itself, but you have to sell the lease to the buyer.

Assuming a solar lease may make some marginal home buyer borrowers not qualify for their financing on the property. Most investor buyers consider solar leases something that cuts into their cash flow and not a positive.

On a recent transaction with a solar lease involved, the buyer didn’t want the system. The solar company wanted us to provide them the buyers contact info so they could contact them and ‘sell’ them the lease. Buyer ultimately didn’t want to be contacted and ended up cancelling out of the deal.

So ultimately, if you are considering leased solar be prepared for a potentially harder time to sell your home. If you can afford to purchase the system that may produce the most savings and the desirability of the home to buyers.

We do believe in solar and like that clean energy is produced from the sun — making a decision to install solar has to also make sense financially.

Five ways you can get earnest money back

No matter how much time you spend on researching and educating yourself about your home purchase, it’s hard to cover every detail. Here are a few tips for avoiding rookie mistakes with your first home purchase.

Earnest money is a deposit you pay when you make an offer on a home—it’s a way to show the seller that you mean business. Usually you can’t get it back, but there are several circumstances that allow you to recover your earnest money.

1. Appraisal contingency: With an appraisal contingency, you can recover your earnest money if the home is appraised for less than your offer. This gives you a better negotiating position—if the seller doesn’t agree to a lower price, you can get your earnest money back and walk away from the deal.

2. Inspection Contingency: It may be your dream home at the surface level, but an inspection could reveal major, major problems—such as issues with the foundation, or flood damage. In that case, you can get your money back if the seller doesn’t agree to fix the issues or agrees to lower the price.

3. The seller backs out: Obviously, if the seller changes their mind about the transaction—maybe they decide not to sell, you get your earnest money back. However, seller can not just change their mind – it would take mutual agreement.

4. Your house hasn’t sold (AKA Sale Contingency): Many buyers can’t afford a new home if they’re still financially responsible for their old one. In this case, you can work a sale contingency into the contract, and get your earnest money back if the home doesn’t sell soon enough.

5. Financing issues: Though there are some limits on financing contingencies, you can get your money back if you’re unable to get a loan.

If you would like more information on this topic, please contact me.

FHA recently released it’s ‘FHA Back-to-Work’ guidelines

FHA recently released it’s ‘FHA Back-to-Work’ guidelines:

The following is from Mortgagee Letter 2013-26, Back-to-Work – Extenuating Circumstances.

“As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

FHA and some mortgage companies are allowing for a consideration for borrowers who have experienced an Economic Event.

So in essence, if you have a documentable economic hardship you may be able to qualify for a new mortgage earlier than the traditional 2-3 years for a short sale and 5-7 years with a foreclosures.

What is a Short Sale?

What is a Short Sale? 

A real estate transaction in which the sale of the property is less than the balance owed on the mortgage is called a short sale.  Yes, it is possible to sell a home for less than the mortgage.

Homeowners can find themselves in a situation where they cannot make mortgage payments. There are many reasons why this can occur. Health issues, divorce or a loss of job can put homeowners into a financial bind. Perhaps the homeowners have taken out a second mortgage and the property values have fallen.  A short sale may be a solution.

A short sale must be approved by the lender as well as the homeowner.  This option allows both parties to avoid foreclosure.  Lenders may choose to approve a short sale upon deciding that a moderate loss is acceptable over a foreclosure. This agreement may or may not release the borrower from the deficiency amount remaining on the loan balance.

A short sale process may involve the following steps.

  • Seller makes an agreement with the lender to accept a lower selling price on property than the mortgage balance.
  • In many cases, the lender forgives the remaining balance.
  • The seller can sell their property without a foreclosure.
  • The buyer gets a discounted property.
  • The lender forgoes the foreclosure costs and burden of selling the property.

Seller Information

  • A short sale may damage credit but not as much as a foreclosure.
  • Each lender has stipulations on short sales and these procedures must be followed.
  • A short sale is very time consuming.
  • There is a lot of paperwork involved.
  • There is no profit on the sale.
  • Not all lenders will relieve seller of deficiency balance.
  • The 2007 Mortgage Debt Relief Act allows some exclusion from debt discharge.
  • Procedures must be followed on a step by step basis with complete information.

Buyer Information

  • May get discounted price, but may have repairs
  • Additional paperwork involved more than a regular sale
  • Very time consuming and tedious with back and forth negotiations.

Short sales are becoming more and more common where home values have dropped in many parts of the United States. There are many advantages and disadvantages of short sales for both a buyer and a seller.

It is recommended that those considering a short sale do their homework on the property.  If a seller finds themselves in a financial bind, ask your lender for their short sale requirements. A short sale can be a long term advantage.

Why Should Someone Hire a Realtor verses FSBO?

Why Should Someone Hire a Realtor verses FSBO? 

“Why should I hire a realtor?” is a very common question with all of the internet sources available for FSBO marketing.  FSBO is an acronym for the term For Sale by Owner. There are many people who are successful without using a professional in the sale of their home.  If you are wondering why to hire a real estate agent, consider the top reasons to hire an agent.

Experience and Education 

By hiring the right real estate professional, homeowners can buy the experience and education of a professional. Market and price conditions do vary and hiring an expert saves time and money on the learning curve.  Real estate agents have the education and experience to combat unforeseen problems that can occur.  This saves a homeowner time and money.

Market and Neighborhood Knowledge

Agents have the internet tools to find any information about available properties. They can run the numbers of comparable sales, find school, crime and demographic information with the push of a computer key.  Most of all, agents know your area and can find out the latest news about properties and neighborhoods through their networks.

Property Condition and Pricing 

A realtor can make suggestions to homeowners on property conditions to make a home sell faster. They are experienced in market sales and know what buyer’s look for in properties.

Another advantage of using a realtor is they can show a homeowner market comparisons for the home that is to be sold.  An agent can make suggestions on the price point.  The biggest mistake a homeowner can make is to overprice their home.  Many FSBO’s make this mistake.  But ultimately, it is the homeowner that chooses the selling price.  Hopefully this price reflects the current market conditions to sell.

Market Conditions 

Agents have access to data that will disclose market conditions for buying or selling a home. There are many factors within market conditions that help with buying or selling.  Factors such as average sales price, days on the market, average price per square foot, etc help someone to determine a right or wrong decision based on statistics.

Realtors have professional service networks 

Agents work with other professionals who can provide services you many need.  They are allowed to give you a list of references. 

Agents negotiate and keep your information confidential 

A good real estate agent will negotiate on your behalf without the emotions of the transaction. They are skilled and experienced in negotiations. They will fight on your behalf and represent your interests in the best possible light.  The greatest asset of all is that a realtor has a moral obligation to keep your information confidential.

Agents work so you don’t have to 

Agents have the experience and know how to navigate a listings showings and visits.  Your realtor can see through the phone calls of curious people verses serious buyers. A buyer’s agent will protect your interests and keep the listing agents away from you.

Agents handle the paperwork

Along with guiding the real estate process, your agent handles the paperwork from offers to closing. The average purchase agreement is between 6 and 10 pages not including additional paperwork needed for the offer.  Federal and State Disclosures are required by loan type and locale.  Did you know that most real estate files average one to three inches of paperwork?

Mistakes made in FSBO’s could put a homeowner in court or cost additional money.

The advantages of hiring a realtor are many.  To hire a realtor is a great choice.

Why is it important to stage a home?

Why is it important to stage a home?

It’s all about the first impression. As a seller, your goal is to get top dollar for your home as soon as possible. This requires providing the best possible first impression to potential buyers. Home staging is the avenue to make your home appeal to the new buyer.

Home staging has other advantages.  It forces the seller to de-clutter and organize, thus making the new move easier. Studies show staged homes sell quicker and this eliminates days on the market. It gives the seller an edge on other homes in the neighborhood.

What is home staging?

The best definition comes from Barb Schartz, author of (Home Staging: The Winning Way to Sell Your House for More Money.) “Home staging is not decorating. Decorating is personalizing. Staging is de-personalizing.”

The goal of staging is to create that wow factor so potential buyers can envision the home as their own. A rule of thumb is less is more when staging homes. Don’t forget the outside is just as important for the inside.

Some basic home staging tips

Deep cleaning your home including windows, wipe down all surfaces.

De-clutter your home

De-personalize; take down personal photos and potential offensive material.

Professionally clean your carpet if possible.

Accentuate the positive, angle furniture to highlight positive features

Take down refrigerator magnets and notes

Make necessary paint touch-ups on walls

Use neutral or warm toned paint colors on the walls

Pressure wash the outside of home before listing

Landscaping is a must, keep grass cut and trim bushes and trees.

Yellow flowers are the color of choice for outside pots) Use bullet points for this list 

What are the advantages? 

  •  Studies show that home staging decreases days on market. There is a 30 to 50% increase in sales for a home that is well staged.
  •  Studies show that home staging increases home value. Home staging is listed as one of the top national home improvements for sellers according to a Home Gains national survey. With a $300-$400 investment in home staging, the home value increased in value from $1500-$2000.  That is a 586% return on investment.

Staging gives the home Emotional appeal;

After proper staging, your home allows buyers to visualize themselves living there. Emotional appeal is met when potential buyers have opportunities to use most of their senses at the showing.

  • Sight:  Curb appeal, clean outside and in, open, airy, neutral warm colors
  • Smell: Odor free or a light smell of clean
  • Taste: Candy or mints in a dish placed strategically
  • Hear: Soft background music
  • Touch: Buyers open doors and blinds

Home Staging Resources:

Professional home stagers are available. Their services include quotes and recommendations on everything from colors and fabrics to furniture and accessory arrangements.

There are also many internet resources such as the HGTV Program, Designed to sell.

The host Lisa LaPorta provides excellent tips for those on a tight budget..

What do you need for a mortgage?

What do you need for a mortgage?

The thought of applying for a mortgage can be intimidating. In the past, the process was a complicated one. But mortgage companies have streamlined the process to make the application process easier. You may not need paper copies of everything since some mortgage companies can gather information electronically with your permission.

Personal information to gather would be to verify income, debts, credit score and assets. Of course, include a sales contract on the property to be acquired.

With the aid of technology, you may find yourself gathering less paperwork. Check with your mortgage company for a complete list of needed information for that lender’s guidelines.

Recommended list of documents

  • Social Security number.
  • Address and previous addresses.
  • W-2 forms or tax return forms for business.
  • 3 months checking and savings statements.
  • Names and addresses of prior employers.
  • Landlord verification of timely payments.
  • Copy of at least one pay stub.
  • Installment loan account no’s, lender name and amount owed.
  • Addresses for the past 5 to 7 years.
  • Copies of account statements for brokerage accounts.
  • List of assets(ex boat, stocks, bonds not in brokerage account).
  • Documentation to verify additional income such as child support.
  • Personal tax forms for the past 2 to 3 years.
  • A copy of the sales contract.
  • List of debts and payment history.
  • Copy of your IRA or retirement accounts.

Additional list for special circumstances

Alimony and child support documentation may require different forms of information. Ask your lender what is needed in this circumstance. Some lenders may require all court records and cancelled checks. Ask before tackling cumbersome piles of paperwork.

Bankruptcy may require court documents as well as the reason that you filed. Although lenders have the choice of risk verses reward in your approval, a good credit history can add a lot of weight to this decision.

Commission sales and self employment may require additional paperwork. Schedules of pay related documentation can break down earned income. If you own your company, you may be asked for business tax returns as well as a profit and loss statement. Ask your lender what information is needed for this circumstance.

With the mortgage industry redefined, perhaps you will find the application process easier than before. Don’t forget to shop around for the rates and factor in the application process before making your final choice.