What You Should Know About FHA Loans
Many buyers these days, especially first time buyers, are attracted to FHA loans, and with good reason.
Down-payment money is often a problem, and FHA only requires a 3.5% down-payment (and it can be gift money).
There are a couple of things you should know, especially if you are looking at condos:
1. FHA requires that the complex be FHA approved. Or, if it is not, you can get what is called SPOT APPROVAL which takes more time and adds to the process time frame. And there are no guarantees.
2. The owner occupancy of the complex must be 51% or better in order to use an FHA loan.
3. There is a 3-year guideline for conversions. Properties converted from apartments to condo in the last 3 years will not likely qualify for FHA financing.
Be sure to check with a qualified loan officer to make sure you understand the guidelines, as some properties that may interest you and fit your bduget may not qualify for this loan.
Should I Arbitrate or Not?
One of the issues you need to think about when comleting an offer to purchase in California is whether to use arbitration to resolve any conflicts that arise as the result of the transaction (this may not apply to other states).
I am not an attorney and cannot advise you on whether you should or should not, as it is a personal choice. That said, I have been told by legal advisors in our state that arbitration often can be a faster way to resolve issues, if any, adn less expensive than going to court. And most people tend to choose this option.
If you do not elect to use arbitration, the seller will also have to agree, since both parties must agree on which way to go.
Know that there are some issues that fall under the jurisdiction of small claims court (e.g., deposit issues) that can get resolved in court even if you elect the arbitration route first. Our Residential Purchase Agreement (RPA – CA) explains this in more detail.
What You Need to Know about the Recorder’s Office in San Diego
Recording the deed to your new home is a final stage in the process of closing. Often you cannot gain access until escrow has closed and recording has occurred.
Recent changes in how recording occurs and when will have a significant impact for new home buyers. It will no longer be possible for a loan to be funded AND to record on the same day (with two exceptions).
The 10 Buyer Challenges YOU Must Be Aware of
There are plenty of challenges to buying a home in today’s market. Here is a list of the 10 I think are the most relevant to buyers.
First time buyers have some challenges because for many the price range limits them, in large part, to homes that are distress sales and REOs (at least here in Southern California. And that means lots of competition.
And lots of patience.
Take a look at this list so you will be prepared. If I can help, just let me know.
Important San Diego MLS Information for Buyers
Many buyers in our area are looking at short sales, pre-foreclosures, and REOs as part of their home search. And there is LOTS of competition, so it is not really a “buyer’s market” for these kinds of homes. You will almost always find multiple offers on these properties, sometimes the day the new home is listed or within a day or so.
SANDICOR, the MLS for San Diego, has implemented a new status called CONTINGENT, which means there are offers awaiting approval of the short sale, or which have been submitted to the REO lender for approval. They are still ACTIVE but now there are multiple bids.
What You Should Know About Homeowner’s Insurance
If you are buying a new home, you will be required by the lender to have homeowner’s insurance, the purpose of which, in part, is to protect the lender’s collateral. No insurance, no closing.
If the home is a condo, then there should be a master insurance plan for the complex and that may be all you need, but check with your lender – you pay for your portion of this insurance in your monthly HOA fees. It is still prudent to also have a homeowner’s policy to cover the cost of your appliances, the walls, flooring and all your personal stuff.
If you are buying a single “family” home, then you will need to:
- Make sure the home is insurable during the contingency period as stipulated in your contract [this may vary in states outside CA] by checking with a insurance company (perhaps one you already use), and
- Obtain a 1-year paid in advance insurance policy with a binder (the receipt) to provide proof of coverage at the time of closing.
You should also know that some insurance companies perform on-site inspections of the home before they will set up a policy (AAA for one) and more and more are doing so because of problems with under-insurance, existing damage (e.g., REOs and short sales), potential liability issues (pools, spas, tennis courts), and to make sure the cost of replacement is accurate (if there are lots of upgrades but these are not part of the policy, your replacement cost will be less…a big problem).
Mortgage Protection Program for California First Time Buyers
The California Association of REALTORS has announced a new mortgage protection program for first time buyers in California through their Housing Affordability Fund (HAF).
You COULD receive up to $1500 per month for 6 months to help pay your mortgage if you are layed off.
Links to Help You Research Schools, Communities, Crime and the Housing Market
If you are buying your first home you are very likely spending a lot of time researching on the Internet. And why not? There’s a ton of information there.
Are You Researching on the Internet? You Should Be!
The things that tend to be of interest, apart from listings, of course, are schools, communities, crime and the housing market itself.
I wrote a recent article for relocations, providing a bunch of links to various sites in these areas. But you might find this resource useful as well.
READ MORE: Internet Aids for Helping You in Your Relocation to Carlsbad
Of course this information can be useful no matter what community you are interested in.
If I can help further, just let me know.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
My Buyer’s Short Sale Checklist
Lots of buyers these days are considering short sales in their home search. And you should.
A short sale MAY not be the best deal for you, and they require a great deal of patience because of how long they can potentially take to close.
In some markets and budgets, you may not have a choice but to look at distress homes.
Here are some things you need to consider:
1. Determine your patience level (know that getting a response on a short sale can take weeks or longer; how long are you willing or able to wait?)
2. Hire a knowledgeable agent (always a smart idea but work with someone who has some experience with short sales – what they are, how they work, etc.)
3. Get pre-approved (again, always a good idea, but know that some short sale listings will mandate you provide a pre-approval from a specific lender, namely the one who is the primary loan)
4. Understand why you want to buy a short sale (sounds simple, but they are not necessarily great deals and there are many hurdles – are you truly serious about buying one?)
5. Understand the basics of what a short sale is and how it works (there’s that requirement again to work with a knowledgeable agent who hopefully is not testing the short sale waters with YOU!)
6. Understand what AS IS means and be prepared for it (short sales generally are sold AS IS, i.e., without any warranties or repairs)
7. Plan to have a complete home inspection (you are foolhardy, in my opinion, if you are not VERY thorough in your due diligence; you can’t cry “I didn’t know” after the fact)
8. Look at your budget carefully (do you have cash to take on repairs and other unexpected expenses, on top of the mortgage, interest, insurance, HOA fees, etc.?)
9. Set expectations (but be realistic, and prepared. Some homes show well and others are, well, shocking)
10. Be prepared for surprises and changes (real estate is fraught with surprises, and short sales are no exception)
11. Don’t expect short sale transactions to act like other deals you may have been involved in – they have their own set of “rules”
12. Be willing to move on (be prepared to make the decision to move after submitting a offer if you need to) or to at least continue looking at other homes
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
Yet Another Tax Credit
Tax credits are popping up left and right.
First there is the $8,000 tax credit for first time home buyers that arose out of Obama’s stimulus plan. Good news for some buyers in today’s market.
Now California is providing a tax credit for buyers (first timers or anyone else) of up to $10,000. The requirements are:
- you must buy a home on or after March 1, 2009 and before March 1, 2010
- the home MUST be your primary residence
- the home must never have been occupied (new construction)
This credit program is being run by the State of California Franchise Tax Board, and credits will be allocated on a first come first serve basis until the total monies ($100,000,000) are used up.
Read more on the Franchise Tax Board website.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler
