Real Estate News and Information

A home equity loan uses a borrowers "equity" in a home as collateral. The term generally refers to a loan taken out after the home has been owned for a while. The owner signs a mortgage, pledges his home as collateral, and walks away with a check. But technically, even a piggyback "second" loan, opened concurrently with a first for a new home purchase, is a home equity loan.

Then there are the Home Equity Lines of Credit, or HELOCs (pronounced just the way it looks). The difference is that you don't get a lump sum of cash. Instead you get a "checkbook" and the ability to "draw" on your home equity whenever you need cash. Naturally, the convenience comes with a cost—a higher interest rate. HELOCs are often referred to as "open-ended" loans while their fixed-amount counterparts (without the checkbook) are called "closed-ended."

Home equity loans were devised originally as a way to invest in home improvements, with the assumption that the money borrowed would be recovered eventually when the home was sold. But in recent years, home equity loans have financed everything from college educations to plastic surgeries.

Home equity loans and lines of credit may carry a shorter term than first mortgages. A 15-year term is common, as compared to a 30-year fixed loan. Many HELOCS are also ARMs, or Adjustable Rate Mortgages, with rates that float up and down along with some index such as the U.S. Prime Rate.

Home equity loans are "secured" by the underlying property, as opposed to credit cards which are a form of "unsecured" debt. Many homeowners have opted to refinance their higher-interest credit cards with home-equity loans or HELOCs. The lower rates and the tax deductibility of mortgage interest made the move a "no brainer," or so it seemed. But when the economy became weaker and home values dropped, their secured debt became a target for foreclosing lenders.

Conventional mortgages can be "non-recourse" loans in some states, secured only by the property itself. The lender may come after the home in a default situation, but the borrower is not personally liable. A home equity loan may be different and might be a "recourse loan" for which the borrower is personally liable. This distinction becomes important in foreclosure, because the borrower may remain personally liable for a recourse debt on a foreclosed property.

For the first time in the 40-year history of our iconic brand, we will air a commercial during the Super Bowl, the most watched television event of the year. In addition, we'll precede the game with 11 commercials on NBC throughout the day of the game. We hope you are ready to celebrate.

Century 21 Gold 951-479-4580

The need for more space was what got Kim and Jason Fitzsimmons thinking about buying their first home. They'd been married for a year and realized that a small apartment, even with two bedrooms, wasn't big enough for all they'd accumulated.

But it wasn't until they had their income taxes done that they learned from a tax preparer about the deductions they could get from owning a home. The Fitzsimmonses then got serious about buying their first home, and about doing it before the end of the year. Deducting the mortgage interest from their income taxes would make buying a home less expensive than renting. While that isn't true for everyone (check with your tax preparer first on home deductions), the couple started doing their homework and soon were out looking for their first home. #mini_module { BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; MARGIN: 10px; WIDTH: 265px; FLOAT: left; HEIGHT: 220px; FONT-SIZE: 12px; BORDER-TOP: medium none; BORDER-RIGHT: medium none } #mini_module IMG { BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; MARGIN: 0px; WIDTH: 265px; HEIGHT: 131px; BORDER-TOP: medium none; BORDER-RIGHT: medium none } #mini_module .mini_title { PADDING-BOTTOM: 0px; MARGIN: 0px; PADDING-LEFT: 0px; WIDTH: 265px; PADDING-RIGHT: 0px; HEIGHT: 131px; PADDING-TOP: 0px } #mini_module .mini_main { PADDING-BOTTOM: 0px; MARGIN: 0px; PADDING-LEFT: 0px; WIDTH: 265px; PADDING-RIGHT: 0px; BACKGROUND: url(http://www.aolcdn.com/travel/bg-short); HEIGHT: 85px; PADDING-TOP: 0px } #mini_module .mini_item { BORDER-BOTTOM: #cccccc 1px dotted; PADDING-BOTTOM: 12px; MARGIN: 0px 20px; PADDING-LEFT: 0px; PADDING-RIGHT: 0px; PADDING-TOP: 12px } #mini_module A { COLOR: #49a3ca; TEXT-DECORATION: none } #mini_module A:hover { COLOR: #f98419; TEXT-DECORATION: underline }

It's tempting to just go out and start shopping for your first home. After all, that's the ultimate goal and the most fun part. But doing your homework first will pay off in less stress and more savings. If you're a first-time home buyer, whether for tax reasons, the desire for more space or just for the chance to have your own washer and dryer, here are tips to get you started.


1. Know how much you can afford

This should be the first step in buying your first home so you don't waste your time, or a real estate agent's, by looking at houses that you can't afford a mortgage on. The Fitzsimmonses visited a real estate broker who helped them determine how much of a loan they would qualify for, based on their income and credit. They also factored in property taxes, maintenance, utilities, insurance and possible homeowner-association dues. They totaled those expected costs and set up an experiment: After paying the rent on their apartment, they set aside money equaling the difference between their rent and the projected cost of homeownership. They did this for a few months so they could get used to making the payments. A loan calculator will help figure out how much a home loan will be.

2. How long will you stay in your first home?

The longer you live in your first home, the better the savings because you're spreading out the upfront costs of buying a house. Those costs include a real estate agent's fee, closing costs, inspection fees and loan fees -- which can add up to 10 percent of the sale price, or approximately 18 months of rent.


3. Get a loan

Getting preapproved for a home loan helps make buying a first home faster and easier, especially if there are multiple offers on the home. Your mortgage lender or broker should be able to give you an estimate, down to the penny, of how much money you'll need in closing costs. Then you'll know how much of your savings to set aside for a down payment, which will help determine how much your loan -- and the monthly mortgage -- will be. Putting down 20 percent will eliminate the need for mortgage insurance, although your lender or broker might be able to find loans at good rates that don't require 20 percent down. This is where it really pays to shop around for the best loan rate and terms.


4. Know the market

After determining where your finances stand, the fun part begins in finding out what you can afford and where you want to buy your first home. Research neighborhoods that interest you and find out the median price of homes there. You can research homes on websites such as AOL Real Estate, Zillow, Realtor.com, Trulia.com or others you trust. Finding homes similar to the kind you want, and in the same neighborhood, will give you an idea of how fair the price is when you are ready to buy.


5. Shop around

Every house buy requires sacrifices, and you won't get everything you want. There are many factors to consider, such as how much room you need. Does your first home have to be a single-family home or will a condo work? Is it near transportation, good schools, parks, shopping and your other essentials? Does the home have the amenities you want, such as a fireplace, dining room, backyard, pool or deck?

Find a Century 21 Gold to represent you, or if you're brave and want to do it on your own, go out and shop on your own. Either way, stick to these five steps and you should be fine.

Buying a house, whether your first home or several down the line, is one of the most stressful and expensive transactions you'll ever undertake. But if you do your homework and prepare for it with the above steps -- figuring out how much you can afford, how long you'll stay, getting a loan, studying the local market, and shopping for a house -- it should be a lot easier.

Sunday, January 29th 2pm to 5pm

at Bob's Big Boy Restaurant a gathering of Classic American Cars and Trucks, vintage music, games, awards, and discounts on food.

For more information phone:

(951) 371-5833

 

Fun for the entire family - Hope to see you there!

 

 

JPMorgan Chase (JPM: 35.92 -2.52%) must sort through more than $2.3 billion in claims to buyback defaulted mortgages sold mostly to Fannie Mae and Freddie Macat the end of the fourth quarter, nearly double the $1.2 billion outstanding at the end of 2010, according to the bank's financial statements.

Chase and other originators must comb through the mortgage file. "Claims are fact intensive," said CEO Jamie Dimon at an investor conference this past December. "There is no repurchase absent proof that an underwriting breach 'materially or adversely' affected value of the loan."

He added at the time that for private-label investors, the process was often more difficult than with the GSEs. The bank's mortgage business swung to a $258 million loss in the fourth quarter with more than $390 million in losses directly from rep and warranty claims. That's up 12% from the same quarter a year ago.

At Chase, the amount of outstanding rep and warranty claims from investors increased every quarter since the middle of 2010 when the bank reported more than $1.3 billion in claims. And the wave doesn't appear to be regressing, according to some analysts.

"Rep and warranty repurchase related efforts will likely intensify further in 2012 and some decisions/settlements may happen before the end of next year," said Barclays Capital analysts in a recent report. "That said, we expect any benefit to be chunky and unlikely to boost prices at a generic level."

Chase currently holds roughly $3.6 billion in reserves for mortgage repurchases.

"That's another number that over time should come down materially," said the bank's Chief Financial Officer Doug Braunstein said in a conference call with investors in January.

It's a tarnished silver lining for people at risk of losing their houses and homeowners in neighborhoods blighted by bank-owned properties, but the robosigning scandal that slowed the foreclosure process to a crawl appears to have increased lender interest in short sales. 

"Foreclosure sales are pretty devastating," said Faith Schwartz, executive director of Hope Now, a resource for homeowners facing foreclosure. "We'd much prefer a modification, but if [homeowners] don't quality, then the next best alternative is deed-in-lieu or short sales." 

Short sales, in which the lender agrees to let the owner sell the home for less than the amount owed on the mortgage, and foreclosures both climbed in 2010, but while short sales rose by 26,000 this year, the number of foreclosures fell by 255,000, according to Hope Now. Short sales, along with deed-in-lieu of foreclosure deals in which the lender takes the deed essentially as payment for the mortgage, still upend families, torch credit ratings and hurt neighboring property values, but they're far less toxic than foreclosures.  

Short sales are better for homeowners. They can stay in their homes, and the quicker process means they can begin rebuilding their credit sooner. Credit scoring firm Fair Isaac Co., which developed the FICO score, says foreclosures and short sales slash the same number of points from a homeowner's credit score. Homeowners with short sales may be able to obtain a loan sooner than foreclosed homeowners, though, which can improve their credit.

In some states, mortgage lenders can pursue a delinquency judgement against homeowners for the difference between the amount due on the mortgage and the purchase price at a foreclosure auction. A delinquent homeowner engaging in a short sale has an opportunity to negotiate away the bank's right to sue for that judgement.

The biggest plus for banks is that they stand to make more from a short sale than a foreclosure. According to foreclosure specialists RealtyTrac.com, the average price of a foreclosed home in the second quarter of 2011 was $164,217, while the average price of a short sale was $192,129.

Besides yielding less, foreclosures also cost lenders more in legal and administrative resources. "The incentives against foreclosing are even larger now," Karen Dynan, co-director of the Economic Studies program at the Brookings Institution, said via email. "Servicers are facing enormous staffing constraints because they are trying to deal with so many distressed properties, so it is probably even harder now to find the staff to do the paperwork for the foreclosure."

Lenders are also spending more on due diligence, she said. "Servicers and lenders are being heavily scrutinized right now so they probably are more worried than ever about making a mistake in a foreclosure that could subject them to legal liability in the future."

Neighborhoods also benefit from short sales rather than foreclosures. "Short sales typically sell at less of a discount than foreclosure sales do," Jed Kolko, chief economist at real estate website Trulia.com, said via email. "Also, foreclosed homes often sit vacant while short sales are re-occupied more quickly. For both these reasons, short sales tend to depress neighboring property values less than foreclosures do."

Another issue that plagues foreclosures is vandalism, either from opportunistic criminals preying on vacant homes or from disgruntled homeowners. "It's often not a friendly process so you frequently have cases where people deliberately vandalize homes," Dean Baker, co-director of the Center for Economic and Policy Research, said.

Some economists worry that the drop in foreclosures is less an indication of lenders' willingness to compromise and more a function of a huge backlog of foreclosures that haven't been processed. "Foreclosures are going to be a drag on the market for along period of time," Baker said. Until these distressed homes are resold and assimilated back into the market, real estate prices can't stabilize. 

Baker added, though, that lenders facing years' worth of legal wrangling and costs to execute a foreclosure may be more willing to accept a buyer's offer in a short sale. 

The other caveat is that short sales aren't an option for all distressed homeowners. Short sales are contingent on the ability of sometimes multiple lenders to agree on a price that a buyer is also willing to pay. For people who took out multiple mortgages or have other liens, this presents a challenge. "It's just a little more complicated when you have more parties involved," Schwartz said.

What do I do now?

Too bad a house doesn't come with an owner's manual. And a weeklong seminar during which you learn the purpose of every button, switch and wire. But the keys to the castle come with no troubleshooting guide to dog-ear — and, we're betting, no wise master to unlock the mysteries of the place you call home.

Then again, that's what we're here for: to provide fast fix-it advice when it's time for you to do your homeowning duty. Because, at some point, you're going to have to know how to change out a light fixture without zapping yourself to kingdom come. Or paint a double-hung window without gumming up the works. Or stem the flood when the toilet overflows. And you're going to want to do things right. The first time.

So consider these 10 tips a crash course in homeowner self-confidence. Study them well. Owning a house means you're going to have questions. Luckily for you, we've got answers.

1. Fix a leaky faucet

This particular type of water torture is likely due to a failed washer inside a handle. The faucet is just the messenger.

To replace the washer, turn off the water supply valve under the sink. Stuff a rag in the drain so you don't lose parts, then take the handle apart. Pop the screw cover on top, remove the screw and pull off the handle. Use a wrench to disassemble the stem and line the parts up on the counter in the order they came off, so you know how it goes back together. Examine rubber parts or plastic cartridges for cracks, and take the offending piece to the hardware store for an exact replacement. Reassemble the parts you've laid out, in reverse. Then revel in the ensuing peace and quiet.

2. Locate a stud

Say you want to hang a shelf. Knuckling the wallboard can pinpoint a stud, but to improve the odds when your electronic stud finder has gone missing, use deductive reasoning. Most studs are placed at 16-inch intervals; once you know where one is, you can usually find the rest.

Start at a corner, where there's always a stud, or take the cover plate off an electrical outlet and find out on which side it's mounted to the stud. From there, measure 16, 32, 48 inches and you should hit a stud at each go. Eliminate all guesswork by using a thin bit to drill a test hole at the top of the base molding, which you can easily repair with a dab of caulk.

3. Unclog a sink

"Chemicals rarely clear a stoppage — they only make a small hole," says Richard Trethewey, This Old House's plumbing and heating expert. "A full stoppage requires mechanical clearing." Remove the stopper and block off overflow holes. With water in the bowl — the water puts more pressure on the clog — plunge with a flat-faced plunger. If that's not enough, get under the sink and take off the trap to see if that's where the clog is lodged. If the blockage is deeper, rent a hand snake. Slowly push the coil down the drain, carefully twisting, pulling and pushing when you hit the blockage. If the snake fails, call a drain-clearing service to get things flowing.

4. Remove a stripped screw

Hey, even This Old House master carpenter Norm Abram has been there. He recommends a hand screwdriver appropriate for the screw and a double dose of elbow grease to fix this unfortunate bit of handiwork. Gently hammer the screwdriver into the head. Then use as much downward force as you can while you slowly back out the screw.

5. Hardwire a light fixture

Anything powered by electricity requires that the current make a full circuit to and from the main box. All the wiring in a house has two lines: one that brings in the electricity (the hot wire) and one that carries it back (the neutral wire). Connect hot wires to each other and neutrals to each other. And make sure you don't become the conduit in between.

The hot is usually black and the neutral white. But if yours look different, use a circuit tester. With the electricity on, touch one node of the tester to the wire and the other to something metal that is not touching you. If the light goes on, that's your hot wire.

Turn off the electricity and connect the black ("hot") wire to the black wire or the brass screw on your fixture and the white (neutral) to white wire or silver screw. If your fixture has two like-colored wires, the grooved one always goes to the neutral connection. Be sure to connect the copper grounding wire from the cable to the green grounding screw in the junction box, then to the grounding wire coming from the fixture, if there is one.

6. Know which breaker to turn off

When you finally get around to putting in that dimmer switch, you won't want to be stumped by a poorly labeled breaker box. Ditch the pencil and paper chart — you're not changing your wiring any time soon. Instead, write directly on the metal next to each switch with a fine indelible marker. Have a friend plug lamps into all the sockets in a room and tell you via cellphone which ones go dark when you flip a switch. Be specific ("sofa and window walls only" or "kitchen minus fridge") when you jot it down.

7. Use a fire extinguisher

Work fast — the typical extinguisher has as little as eight seconds of life, so know in advance how yours works. Make sure to stow it near an exit so you can back out as you fight the flames. Then remember the acronym "PASS": 1) Pull the pin. 2) Aim the nozzle at the base of the flames. 3) Squeeze the trigger. 4) Sweep the spray from side to side. Don't assume the fire is out just because the flames are gone. Call 911 and wait for the fire department to give you the high sign.

8. Stem a flood — and save your wiring

As a safety measure, you should know where your main water and electrical shutoffs are. The water shutoff will be near where the water enters the house. Look for a metal wheel or a flat handle like a paddle. Or check outside for a mini manhole cover — the shutoff may be there. The main electrical switch will be in or near the main box. On an old fuse system, it may be a big lever or a handle that pulls out a whole block. On a modern breaker box it will be an isolated switch near the top of the box. Flip it to keep the circuits (and you) from getting fried.

9. Paint a double-hung window

Forget the blue tape for this job. Your No. 1 tool is a 1½- to 2-inch sash brush. Its angled bristles come to a point, giving you a fine line. Raise the bottom sash and lower the top sash so they've almost switched places.

1. Paint the exposed parts of the top sash, now on the bottom, including the muntins.
2. Carry a thin line of paint onto the glass to seal the glazing.
3. Nearly close the window and paint the rest of the top sash.
4. Paint the entire bottom sash, without getting paint between the sash and the stops (the pieces of wood in front that hold them in place).
5. Paint the casing, sill and apron. Before the paint dries, move the sash up and down. "If you can't see a clear crack between the sash and the stop because of wet paint," says Tom Silva, "then you just glued the window shut."

10. Stop an overflowing toilet

A toilet works by gravity: The water in the tank — just enough to fill the bowl — drops down and pushes waste through the drain. The float drops, opening a valve that lets in water to refill the bowl and the tank simultaneously. The valve closes when the float rises far enough to shut off the water.

If the water from the tank can't leave the bowl fast enough, the refill will spill over. To stop the refill action, take off the top of the tank, grab the float and pull it up to close the valve. That should give you time to reach down and shut off the water, or at least wait for some of the water in the bowl to drain.

 

What seemed like a housing market downturn is now nearly universally seen as the new normal. Accordingly, many homeowners are taking a tough look at their mortgage situations in this stark light.

This New Year's season, I've received a massive influx of reader questions -- quasi-challenges, really -- asking me why they shouldn't just walk away from their underwater homes and upside-down mortgages.

If you've read my work at all, you'll know that I almost never give an absolute answer to such an important question. The decision whether to walk away from your home is too big and too personal, and there are simply too many variables -- legal, financial, credit, tax, personal, lifestyle, family, etc. -- at play for me to give a glib black-and-white answer.

If you're trying to make this decision now, it absolutely behooves you to consult with a reputable real estate broker, mortgage broker, local attorney and local tax professional -- at minimum.

However, I've also noticed that most upside-down homeowners don't really want to default on their mortgages. If you count yourself in that number, I thought I'd take the opportunity this New Year's week to encourage you to harness the renewed energy and commitment that comes along this time of year and provide you with some direction for it, in the vein of avoiding foreclosure if you decide that is the right path for you.

Here are six alternatives to walking away, some more obvious, some less, but all underutilized, from my vantage point.

1. Get rid of your credit card debt. Again, this might seem obvious, but I've encountered a number of people who say they can't afford their mortgage payments who actually could afford them if they dealt with their credit card and other debt.

Call your creditors and make an effort to settle your debt; many will take a lump sum payment much lower than your balance. While this might have tax and credit score implications, it might also help you keep your house. Or work through steps No. 2 and No. 3, below, to just eliminate those balances, by any means necessary.

2. Get a second job. This seems obvious, too, but I believe it's simply not done nearly as often as it should be, mostly out of pride and emotional defeatism.

You already work 40 hours a week. You're already tired. But you know what? I know MBAs who got into a bad debt situation and are climbing their way out with high-end, table-waiting tips. It won't last forever and, again, could be very much worth it.

If you're not up for this sort of hustle, and you're a white-collar professional, there are tons of consulting or contract gigs out there to be had, which can help you catch up on missed mortgage payments or bring down your debt.

3. Start a side business. Sites like Etsy, TaskRabbit and elance allow people to monetize their spare time, quirky hobbies and special skills. I know a journalist who nearly matches her day-job income dog-sitting while she writes.

4. Rent a room -- or two -- out. Put your man cave on Trulia or Craigslist for rent. If you can't stomach the idea of a permanent roommate, check out Airbnb and see if you can generate some extra cash renting out your rooms to those visiting for short periods of time.

5. Apply for everything. Decide right now to simply refuse to be deterred by the first roadblock that comes up in your pursuit of a loan modification -- and there might be many. Commit, instead, to applying for everything for which you might possibly qualify, and don't make assumptions about what programs might work for you (many loan mod programs have loosened their guidelines or gotten more efficient over time).

Apply through your lender to the federal HARP program, and also to the lender's own loan mod program. Visit this federal site to determine whether there are additional state programs available to you under Treasury's Hardest Hit Fund. Apply to the wildly successful (as these things go) Home Save program run by NACA.

It ain't over till it's over.

6. Short-sell it. Banks are now taking a couple of years, on average, after the first missed payment to foreclose on and repossess a home. If you list your home for sale with a local agent who has experience closing these transactions right this moment, your chances of selling it and having the short sale complete in time to qualify for the income tax exemption that expires Dec. 31, 2012, are actually better than your chances of qualifying for the exemption if you stop making your mortgage payments right now.

Again, it's ubercritical that you work with professionals, from the folks at NACA to a local agent and attorney and certified public accountant (CPA) if you're seeking a loan mod or a short sale. Beyond advising you about implications to be wary of, the pros can help educate you about the full scope of options available to you.

Your best bet is to run even getting a second job past your trusted advisers before you do it, as it might impact your prospects of getting relief from your lender.

Fortunately, your options for avoiding a foreclosure are not so limited as they might seem at first glance.