Home Buying for Veterans – Understanding The VA Loan Program

Many Veterans, including those returning from overseas need assistance in transitioning to civilian lives. Buying a home is often a first step in doing this and VA loans is one way our great nation helps them to do just that. Here are some important facts about VA loans that veterans, both old and young, need to know.

The Veterans Administration (VA) does not make loans. It guarantees loans made by an approved institutional lender, much like the FHA. The main differences between the two government programs are:

1) Only an eligible veteran may obtain a VA loan.
2) The VA does not require a down payment up to a certain loan amount.

Both programs were created to assist people in buying homes when the conventional loan programs do not fit their needs. When a veteran finds a home they wish to purchase, they will need to see a VA approved lender who will make the application and process the loan for them.

Important Facts About VA Loans

- A veteran must possess a Certificate of Eligibility, which is available from the VA, before applying for a VA loan. The certificate will show the veteran’s entitlement, or right to obtain a loan.

- A major benefit of a loan guaranteed by the VA is that no down payment is required on many of the loans. There is a maximum loan amount that is allowed for a zero down type of loan, and a very reasonable formula for calculating the minimum down needed for higher loans.

- If a veteran sells his or her home and the buyer gets a new loan that pays off the VA loan, then the veteran may restore the VA eligibility and apply for a new VA loan.

- A VA appraisal is called a Certificate of Reasonable Value (CRV). A loan may not exceed the value established by the CRV.

- Maximum loan amounts vary by state and by local community values, but there is no upper maximum price that a veteran can pay for a home.

Veteran Must Live In The Home

For VA loans the veteran must live in the home, there are no exceptions to this rule. Other criteria apply for these loans, and points are charged to the seller, which can be a big drawback. Also, there are no prepayment penalties allowed on VA loans and the seller usually has to pay discount points on these loans, unless it is a refinance. Many different types and terms of loans, also known as length of time to pay back the loan, are available for VA buyers.


Special Advantages for VA Loans

Even if you have foreclosure in your past, the VA has special programs to help buy another home but you have to contact them first to see if you qualify. Two of the biggest advantages are that there are no mortgage insurance premiums required and assumable loans are available.

We would like to extend our sincerest gratitude and thank all of our veterans, both young and old, for serving our country. The United States truly is the greatest nation in the world as evidenced in part by programs like VA home loans. Our hope is that this information will educate veterans about all the home buying and loan opportunities available to them. It is our desire that veterans will take advantage of this liberty. If you are a veteran or a family member of a veteran and have any further questions regarding VA loans, please contact us.

Anaheim, CA Real Estate – Buying A Home With FHA Financing.

Anaheim home buyers, especially those with minimum downpayments are finding FHA loans to be very desirable for financing real estate in Anaheim. An FHA loan gives home buyers the option of putting down a very small amount of money, some FHA loans require as little as three percent down payment. Here is some valuable FHA loan information that prospective buyers can use while looking at homes for sale in Anaheim, CA.

FHA History

The popularity of FHA loans in Anaheim, California is on the rise. Although the institution has been around since 1934, it may have never been as popular as it is now. The Department of Housing & Urban Development (HUD) absorbed the Federal Housing Administration (FHA) under its umbrella in 1965. Previously the lack of FHA loan popularity in California was due to rising home prices and very low loan limits set by the agency. Also, the FHA appraisal guidelines were very stringent and caused frustration among both buyers and sellers in Anaheim, CA. Fortunately, both of these issues have been greatly improved.

The FHA insures loans that are made by approved lenders. They do not make loans, but only insure loans made by approved lenders who service or sell the loans on the secondary mortgage market. As long as FHA guidelines are used in funding the loan, the FHA, upon default by the borrower, insures the lender against loss. If the borrower does default, the lender may foreclose and will receive cash up to the established limit of the insurance. The lender is protected, in the case of foreclosure, by charging the borrower a fee for an insurance policy called Mutual Mortgage Insurance (MMI). The premium is paid either as a cash cost at closing or it is added to the mortgage amount. The later being the most common preference.

FHA Mortgage Limits on Real Estate in Anaheim

The FHA periodically changes its mortgage limits and as of January 14, 2009, the maximum mortgage limit in high-cost areas is 115% of the local median price, but not to exceed a maximum of $625,500. In many parts of the country the upper limit is $417,000 for a single family home and can even be lower for some depressed areas. Orange County homes, including those in Anaheim are now at the upper limit of $625,000.

Anaheim Home Buyers with Blemished Credit History

If you are looking at homes for sale in Anaheim and your credit is less than perfect, FHA might just be the loan for you. You may qualify for a FHA loan even if you have had financial problems.

1) FICO scores can be lower than those for a conventional loan.
2) Bankruptcy - You might obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you have maintained a good credit since your debts were discharged.
3) Foreclosure - If you keep your credit in excellent shape since a foreclosure, an FHA loan may be available to you two to three years from the final date of your foreclosure.

Competitive Rates and Terms

Today’s rates and terms are very straightforward and very competitive.

1) The lenders have very little adjustments to the FHA loan rates, with the rates usually within .125 % of conventional loans.
2) Mortgage insurance is funded into the loan with just a very small premium added to the monthly payment, usually less than other private mortgage insurance.
3) As of January 1, 2009 buyers can get by with as small as 3.5% down payment. The FHA even allows downpayment money in the form of gifts from others.
4) Allowable debt ratios are higher with FHA than with the limits imposed by conventional loans. This simply means they are not as picky if you already have other debt from student loans, cars, credit cards, etc.

Fewer Required Repairs than the FHA of Yesterday

At one point, FHA repair demands were so excessive that the sellers would discount the selling price if the buyers would agree to obtain conventional loans instead of FHA. Today the requirements are much more reasonable.

1) Defective roofs that leak must still be replaced but an older roof that does not leak does not need to be replaced.
2) Windows that stick when opening or windows with cracks in the glass do not need to be repaired.

Home buyers in Anaheim should be advised that FHA appraisals never take the place of a professional home inspection. Buyers should still obtain a professional home inspection before a purchase is closed. FHA still does require some repairs to be done that a non FHA loan would not ask for. Some may consider these repairs to be “ticky tack” but they are mandatory nonetheless. This can often present a problem when the property in question is being sold “as is” such as often case with bank owned real estate.

After reading this information on FHA loans, Anaheim home buyers should have a better understanding of another type of loan available to them. An FHA loan can be extremely helpful if you are only able to make a minimum down payment and can be a valuable tool for buyers to have at their disposal. There are many important aspects to remember about FHA loans, so be sure to contact a reputable agent or loan officer with further questions about loans or real estate in Anaheim.

4 Places Your L.A and Orange County Twenty Something Wants to Live But Probably Shouldn't

Today’s Millennial Generation is known by mainstream America to be all about one thing...themselves. Many news sources have deemed the millennial "spoiled" and "wanting of everything, right now, without sacrifice."

We'll be the first to recognize that many of the millennial are hard working and an asset to American society. However, instead of chastising an entire generation, we'd like to encourage those who think they already deserve the corner office, sushi lunches, bottle service, and weekly massage therapy to rethink their current value set. We want them to think for the long term, become financially secure enough to afford the lifestyle they want, learn the value of patience and deferred gratification, and learn how their real estate decisions now will impact their plans for the future. Here are some of the top four places Los Angeles and Orange County twenty-somethings want to live in but probably shouldn't.

1.) Newport Beach, Balboa Peninsula

Sorry guys, but living Newport Beach as a twenty-something may be tougher than you think. If you have an average income and any aspiration of financial independence, renting in Newport is about as difficult a place to make that happen as you can get. Besides a premium for rent, there are a lot of other entertainment venues that are also sure to stab a hole in ones's wallet. There's Fashion Island (for the fashionistas!), Balboa Peninsula, and endless lists of different bars and clubs at night.



2.) Santa Monica

Santa Monica, CA is a very big city and has a hip nightlife which can get very pricey. For a twenty-something not making that much money, it might not be such a great idea to have such close access to so much high-end entertaiment. The 3rd street promenade is a very popular destination to spend some serious money on fashion. Set in a beautiful seaside location, Santa Monica has a seemingly endless supply of things to do, the problem is most are not cheap.

3.) Hollywood Hills

Unless you're a star waiting to be discovered......no wait, especially if you're a star waiting to be discovered, the Hollywood area is just too expensive for you. Hollywood is known for entertainment, and the name itself has connotations of glitter and glam, fame and fortune. Hollywood is a great place to visit, and it's a great place to live if you have money, but it's not a great choice for a twenty-something with an unclear career path. Again, there is just too many places to spend money and too few legitimate opportunites.

4.) Downtown Long Beach

The Shoreline Village, The Pike, Pine Street...Just to name a few good places for increasing your credit card debt. Unique shops and fine dining are abundant in these places and it is easy to keep doling out money without even noticing.

Why The Cost Of Living In These Areas Really Adds Up

Parking: Most of these destinations are in and around L.A., as such, most metropolitan Angelinos are already well versed in pay-to-park lifestyle, but those from out of area need to be brought up to speed. You may walk more or learn to multitask better, but most will have to add it up to another cost of living.

Eating Out: It's too early to go clubbing, so let's go shopping and eat out! With the millennial generation, an average shopping spree cost about $50 and an average price of lunch at an upscale restaurant is $20. Plus Tip!

Bar Hopping and Clubbing: Club cover charges range from $10-$30. Drinks usually $10 each. Taxi rides cost about $2.95 for the first quarter mile and has a $30 per hour wait time. Imagine going clubbing at least three times a week, drinking at least two drinks a night, and needing taxi rides every night. That really adds up.

Rent: For the most part, rent ranges from middle of the road to sky high. Now and then, there are some deals to be found on apartments that will be more comparable to other parts of the County. We know there are many who will say they'd rather pay just a little more to live in these pricey zip codes, especially when it knocks down their commute. What people often don't take into account is the temptaion of living in such a potentially expensive area may make it harder to make that rent payment than ever before.

As parents, millennial adults can be difficult to understand and frustrating to manage. Many parents are irritated that their children seem to want, and often demand, a better lifestyle than they have. Rather than be irritated, we'd love to help you educate your loved ones on the power of sound saving and investing, particularly with real estate. We'd like to help you show those closest to you that living in expensive places is not a right, but a reward for hard work, dedication, and some deferment of gratification. Lastly we'd like to help you provide a roadmap for your children, and maybe yourself, as to how this type of lifestyle can be achieved if they are willing to make some sacrifices.

In the end, it's not an easy road to walk but one that will last forever. Investing in the future instead of wasting time, energy, and money on expensive things will help open the millennial's eyes to the reality of what their priorities should be. We want them to see that instead of blowing all their money on "fun" things, they should be looking past the weekend and start planning for their next ten years. They are blessed in that they are coming into a market with low prices, low interest rates, and a seemingly endless supply of inventory but unless they start preparing today, they may just miss the real estate opportunity of a lifetime.

CA Property Tax Appeals – Lowering Your Orange and Los Angeles County Taxes

With declining property values and a slumping economy, many Californians are looking for ways to cut back. For California homeowners who have purchased in the last 5-10 years, one of the easiest ways many people can reduce their spending is to pay less in property taxes. This can be accomplished by ensuring that your property tax assessment is accurate and as low as possible.

If you are not sure of the accuracy of your tax base, consult your local Realtor or real estate appraiser to find out if your assessed value is close to accurate given the current value of your home. Many Californians are finding their current assessments to be completely inaccurate, especially if they bought 2-10 years ago, and will save hundreds, if not thousands, by filing some simple paperwork.

For homeowners with over-assessed property, there are two different ways for you to get it reduced. The first is the Informal Assessment Review, which we could call the easy way because you simply ask the county assessor to review their assessment of valuation for your property by filing a simple form. When this doesn’t work, The Formal Request for Changed Assessment, which is a little more intensive but can still pay dividends, involves filing an appeal with the Assessment Appeals Board where you can choose to have an independently reviewed Hearing regarding your case. In many districts, including Orange County, the Assessor wants property owners to file the informal review before requesting a formal review so owners really need to check with their local Assessor.

Informal Property Tax Appeal or Review - Each county has deadline dates that may vary, but the informal appeal process is desirable because with little effort you may get the assessor’s office to lower your property assessment just by filing a review request. On the other hand, they are the ones who set the value in the first place and it may not be realistic for them to readily admit that they made a mistake especially considering there is no independent overview party reviewing the process and decision. If the assessed value is determined to be in error (lower), then you will be granted a reduced assessment and they will reduce the taxes required. This will result in a tax refund (with interest) that will automatically be sent to you. If you are denied and still feel that the assessed value is overstated then you may need to file the Formal Appeal.

Formal Property Tax Appeal or Review - Formal Requests for Changed Assessment and Appeals are usually due either on September 15th or November 30th. The advantage of the formal review is that you will get an independent review of your assessed value by a Hearing officer. The disadvantage is that it will take more time and involve more effort. It is not necessary to provide comparable values and information at the time of the application, but you might as well get them prepared since you will need them at the Hearing later. Finding the data is more difficult as time proceeds, so it is smart to get the homework done early. Comparable sales (dated no later than March 31st for 2008) are a basic minimum of evidence that is needed at the Hearing. After filing your Formal Request for Changed Assessment it may take 6-9 months before you hear from them regarding an appointment to schedule a Hearing. Once you do hear from them then it may be prudent for you to call the Assessor’s office to see if you might be able to reach an agreement on a lower Assessed value without going to a Hearing. If an agreement can be reached on a lower value, you can enter a Stipulation Agreement which reflects the revised Assessed value for your property for the appeal year.

Appeals Board Hearing - If an agreement is not reached, you either present your case to a Hearing officer (the default method) or you present your case to the Assessment Appeals Board. After a decision is reached you will be notified if a reduction is granted. If so, you will receive a refund usually within 6-8 weeks

Addition information and forms can be found at the California State Board of Equalization Website http://www.boe.ca.gov/proptaxes/pdf/pub30.pdf and forms for informal reviews requests can be found at your county tax assessors website. Residents of Orange and Los Angeles Counties can feel free to contact us to aid in finding comparable properties for their assessment appeal. Filing these simple forms has helped many people save quite a bit of money so if you have reason to believe your assessed value is too high, we’d encourage you to at least check it out.

LA and OC Housing Market Update

The recent statistics are in and home sales in the local areas have some definitive trends. Entry-level homes, currently defined by those at $350,000 and less have been the best selling housing demographic. How much better? Try 70% of the current home sales for last month!

We attribute this statistic to a few things:

• Most of the distress sales fit this price point
• FHA loans have increased in popularity helping buyers with smaller down payments
• Investors looking for best cash-on-cash opportunites are finding this market attractive
• Rents are still very strong for modest single family homes

With interest rates recent decline and many home shoppers finding rates around 4.5-4.7% for convential fixed 30 year financing we expect this to remain the strongest market segment in 2009.

The other hot selling segment has been the luxury property market. Less influenced by stringent financing and a sluggish economy, the ultra affluent are still buying expensive real estate. While market prices have had to become more competitive, luxury home owners are still finding sales chugging along.

The slowest market segments are the mid-range and upper mid-range homes which we are attributing to owners in the lower segment lacking home equity making "move up" sales tough. While sales are tough, they are not impossible, but home owners need to expect to be very aggressive with their pricing.

What to expect next?

• Prices to continue a slow creep downward
• Interest rates to slowly creep upward with inflationary pressures
• Sales to continue to increase in the lowest and highest segments
• More bidding wars for rock bottom priced bank owned property
• More lenders willing to workout short sales

Well, that's our crystal ball, well worth the price of admission!

Have a great month and as always, we're always here to discuss any of your real estate needs regardless of the challenging market.

FICO Scoring Formula Change – Will It Affect Your Ability To Buy A Home?

A new revision to the FICO scoring formula will soon be rolled out. In fact, two of the three credit bureaus have already admitted to the new rules. In effect the credit balances that you carry will matter more than ever to the scoring, but luckily your little missteps will count less.
This update to the credit scoring system (called FICO 08) has been delayed for several months, but it finally will be rolling out early in 2009. It offers a few advantages to the consumers but also includes some serious new risks. The new scoring system is supposed to do a better job of predicting defaults than the classic FICO that we are used to.

Somewhere between 75% and 90% of national lenders use the FICO system to evaluate the credit worthiness of applicants. It is reported that FICO 08 is even more sensitive than the classic FICO to how much of your available credit that you are actually using. If a credit card issuer reduces your credit limit then you could see your credit scores plunge, even if you are not carrying a balance over from month to month.

Also the new formula responds more negatively if your number of open accounts falls, as is the case currently when the card issuers are closing or deactivating accounts that are not used much (those accounts are not very profitable, but still offering risks to the card companies). Your FICO 08 scores can go down with just this reduction of open/available credit.

On the other hand, many changes to the new system are not bad . FICO 08 does provide some improvements, including:

Collections – The new formula does ignore some of the small collections (garbage) that can occur if the original debt is less than $100.00. This is a way overdue improvement.

Credit missteps – The new formula is less punishing to people who have had a repossession or account charge-off as long as the more recent activity is problem free.

Authorized users – The new formula will be factoring in some limited number of authorized user accounts (used by some to improve their own account scores), but supposedly ignore additional ones if they materially affect the score.

Installment loans – The new formula is even more sensitive to the mix of revolving credit (cards, etc) and installment loans (homes, cars). Preference is given to the installment type loans over the revolving type loans and the scores will reflect this preference.

Credit inquiries – This is still a confusing issue, with many experts on both sides. Some believe the new formula will allow more inquiries without punishing the score, while others say this is not true. The best path is still to be very conservative on who and how often your credit is searched

Closing Escrow – Finally, The House Is Yours!

An escrow closing is the pinnacle of the real estate transaction. It signifies legal transfer of title (ownership) from the seller to the buyer and the completion of all conditions set up as part of the escrow.

Generally, ownership is shown through a grant deed. This deed is recorded with the County within one working day of the escrow holder’s receipt of loan funds from the buyer’s lender. This recording completes the transaction and is what is commonly known as the “close of escrow.”

Prior to this and once all of the conditions of escrow have been satisfied, and escrow officer or your real estate agent will inform you of exactly the date escrow will close.

After the escrow officer has verified with the County Records Office that the documents have recorded and legal transfer of title has occurred, the final closing papers are disbursed (usually within one day of close). The final acts of closing the file, preparing statements, and the disbursing of any remaining funds is the end of the escrow. At this time you may or may not be receiving the keys. Depending on how the purchase contract was set up, it may be as long as three days before you are allowed to move in. Reference the first page of the purchase agreement, paragraph 3b, to determine when you will be given possession.

To obtain keys, we will contact you to arrange a drop off or pickup. We hope that you will take this time to check out the place, order a pizza, break out a bottle of wine, and spend some time warming up to your new home. There’s still plenty of work ahead with the move in but this is the perfect time for a little celebratory break. Congratulations, you’ve earned it!