1. CONTACT AN EXPERIENCED REALTOR ASAP: First, you should understand clearly that Real Estate transactions are LEGAL transactions. You want a trusted, seasoned professional. The fact is you are making an investment that is often hundreds of thousands of dollars and can have a huge impact on the coming years. This is the time to select an experienced Realtor that inspires a sense of professionalism, confidence, and trust. They should have a knowledge of the area and a willingness to help. Remember a buyers agent represents your interests! They are not representing the seller. Realtors have access to the MLS which contains approximately 99% of the listings! You will be glad you contacted a realtor sooner rather than later!

2. PREPARE, PREPARE, PREPARE! Even if you make the decision to buy a home in a day, the preparation will absolutely take more time. It isn't just a matter of researching Realtors or the marketplace, but includes many more things that need to be considered. How does your credit look---have you checked? If you need money for a downpayment, have you saved enough?

3. PREQUALIFY, PREQUALIFY, PREQUALIFY... This is the most important of alll. Loan pre-qualifying helps you determine the home price you can afford and presents you as a genuine prospect to the seller. Getting pre-qualified will allow you totake advantage of opportunities as well as  save both time and money!.In fact,it is advisable to get this done before you even look at homes.You'll find out exactly how much you can afford and how well that fits with the amount you would like to spend each month on your payment. Prequalifying first will help make sure that you don't run into any surprises after you've put your heart and time into buying a home and will make buying a home a smoother, more enjoyable event

3a. You Don't Need a Down Payment! Many people want to purchase a home, but don't because they believe that a hefty down payment is required. Zero down programs are very common, and are quickly becoming the norm, rather than the exception to the rule. Because your new home is collateral for the loan, there are many banks that will jump at the chance to loan you 100% of its value. Perfect credit isn't a requirement, either. Because real estate typically appreciates in value, it's often easier to be approved for a 100% mortgage than it is to borrow 100% for a car!( if you use a 'Zero Down payment' program, most lenders will require approximately 2 months reserves in your checking/savings account) Watch your expenditures and avoid making large purchases right before buying a home. Prioritize buying the home and  fill the rest in afterwards.

4. BECOME AN INFORMED BUYER Visit web sites, read the Real Estate section of the newspaper, thumb through brochures, etc. and make it your duty to understand basic Real Estate and Mortgage terms. When your Realtor explains the terms of contracts that legally bind you, you need to have some understanding of this process. Any contract you sign should be done with your full confidence and COMPLETE understanding. Treat your investment with the respect it deserves  and become an active part of  the transaction.

5. UNDERSTAND YOUR NEEDS AND WANTS Create a list of things you value in a home and list those items in order of importance. Somewhere on this list draw a line that separates it into halves: The top half will be your 'needs' and the bottom half will be your 'wants'. Don't comprimise on your 'needs' and put your best effort into obtaining your 'wants'.

6.LOCATION, LOCATION, LOCATION! Theclassic rule of buying the worst house in the
best neighborhood still applies.If you buy with an eye towards improvement, you can customize
the home to fit your needs. Stay focused  on the long-term importance of theneighborhood, schools, shopping, community, etc. BUY A HOME YOU CAN AFFORD  The home buying process can be highly emotional and affect your decision making.  Don't do anything impulsively and give serious consideration to how your lifestyle may change with the purchase of this home. 

7. THE WRITTEN WORD IS LAW Don't make verbal agreements. Any agreement, offer, or counter-offer only exists if it is in writing. 'Understandings' have a way of becoming "misunderstandings". Remember, this is a legal transaction.

8. USE A COMPETENT HOME INSPECTION COMPANY A homewarranty is a service contract, normally for one year, which protects homeowners against the cost of unexpected repairs or replacement on their major systems and appliances that break down due to normal wear and tear.  There is very little legal recourse when a home inspection company fails to disclose all of a property's problems and potential problems. Make sure YOUR Realtor  chooses a reputable company that is acting in your best interest.

9. THE NEGOTIATION PROCESS... Clarify everyone's role in the negotiation process. Not everyone is on your side and you don't want to innocently disclose information to the wrong party (Such as disclosing buying needs, financial abilities, or negotiating stategies with the seller's agent.) As well, be certain that you understand your rights and obligations when you do make an offer to purchase a home. You don't want to back out of an offer and find out you can't get your deposit back, for instance. Your Realtor should be happy to explain these rights and obligations to you---
it's in everyone's best interest that informed decisions be made.

10. NEVER USE A DUAL AGENT A dual agent is an agent that represents both the seller 
AND the buyer. How loudly can you scream,"Conflict of interest!!!"? Your Realtor is your 
best negotiator, not a friendly 'mediator'.

11. PREQUALIFY, PREQUALIFY, PREQUALIFY... This is the most important of alll. Loan pre-qualifying helps you determine the home price you can afford and presents you as a genuine prospect to the seller. Getting pre-qualified will allow you totake advantage of opportunities as well as  save both time and money!.In fact,it is advisable to get this done before you even look at homes.You'll find out exactly how much you can afford and how well that fits with the amount you would like to spend each month on your payment. Prequalifying first will help make sure that you don't run into any surprises after you've put your heart and time into buying a home and will make buying a home a smoother, more enjoyable event

Trust your realtor to guide you through this process!
 

.

Home Ownership is still the best deal! Owning a home isn’t for everyone. But if you want to 
have long term stability, to give your kids a place to grow and prosper, become part of a community  and build financial wealth, owning your home instead of renting it from someone
else should be one of your top priorities in 2005!
Experts say homeownership still offers the greatest benefit to the most people. If you have a down payment in hand-BUY! Even if you do not have a down payment , home-ownership has never before been so easily within your reach. In recent years mortgage programs have changed drastically now offering numerous no-down and low down payment options as 
well as adjustable rates, interest only, etc. As long as you have a steady salary, good credit, and few long-term debts, purchasing a home is probably within your reach And by taking things one step at a time, you'll
find that buying a home can be a very manageable process. 
Homeownership brings countless benefits. When you make a mortgage payment, you're building equity, which is an investment in your family's future. Owning a home can qualify you for tax breaks that actually lower your monthly out-of-pocket costs. The mortgage interest tax deduction and the equity-building boost. Buyers can deduct the interest component of their monthly mortgage payment, subject to an annual limit. Tax deductions may be as much as  80 % of the payments during the first few years, when most money goes toward interest.
Equity is worth something. Building equity, in turn lets people accrue money for a larger house 
down the road, as well as gain access to funds through home equity loans and lines of credit. 
Even with a modest annual increase in the property's value. 
Homeownership provides the kind of freedom, stability, and security that is attainable in few other ways. Wealth accumulation through homeownership is the key to financial independence and self-sufficiency.
A home is worth more than money- there's also the heart. 
Most people would still rather own thier own home!

Closing costs  fall into four types: 
1) Non-recurring closing costs 
Lenders Title Insurance - whether you are purchasing or refinancing your existing loan the lender will require a policy 
of title insurance. This gives them a guarantee (by the title insurance company) as to what liens are associated with the 
property the day the loan funds. If they miss something, it's their problem. 
Escrow (or attorney's) fee - an escrow company performs, essentially, two functions: Neutral agent who manages the
paper work involved in your transaction and the escrow funds. They collect all monies and disperse funds to all parties. 
They intereact with your mortgage company in the obtaining and signing of your loan documents. 
Appraisal Fee - this goes to the appraiser. Often it is paid at the time of inspection. Otherwise it is collected at escrow. 
Appraisal Review Fee - If the appraiser is not on the list of approved appraisers for the lender or if 
the value seems questionable or if it is a large loan the lender will request that another appraiser "review" the appraisal. This may be a desk review (just going over the paperwork and the 
databases) or a field review (going out and taking a look at the property). 
Brokers origination fee - this is a number that varies widely. In some state a common practice is for
the broker to charge a 1% "origination fee". Some brokers require an "up front" non-refundable deposit. 
Lender's Fees - these vary over a wide range and are sometimes divided into 2 or 3 pieces. This is what the lender is charging to underwrite your file, print the documents and fund the loan. This varies from a low of $300 to as high as $850. 
Flood Certification -  This specifies how susceptible the lot is to flooding. If it is in a flood zone you need flood insurance. The Flood Certification is an assurance to the lender as to what the flood zone classification is. The Flood Certification is not flood insurance, it is a guarantee (in most cases) that flood insurance is not needed. 
Tax Service Fee - this goes to a data processing entity which assumes the responsibility of informing your lender if you become delinquent in your property taxes. 
Credit Report - this is what the broker and/or lender pay to get your credit report. The credit reports used in the mortgage industry are called RMCR's and cost about $50. 
Statement Fee - If this is a refinance, your old lender may charge as much as $60 for providing the payoff information to the escrow agent. 
Reconveyance Fee - charged by your old lender in the case of a refinancing. This is the cost of generating and recording the Deed of Reconveyance, a public record that your old loan is paid off. 
Notary and Recording Fees - someone is going to charge you to notarize certain of the loan documents and the Country Recorder is going to charge the escrow company for recording them. 
Other - Allow another $150 estimate for fees such as courier fees, Overnight Delivery and wire transfer of the loan funds. 
2) Points 
This is a one-time fee that you can spend to bring your interest rate down over the life of the loan. 
This is a "you pay me now or you pay me later proposition". I suggest that you calculate the 
"recovery time" for the extra expense and decide if it is worth it. Generally it would depend on how long you plan to stay in the home.
3) Recurring closing costs 
These are costs that you would be responsible for but will pay early because of the timing of your 
loan. This is one area that you must pay attention to when refinancing because it can vary greatly depending on the time of the month that your loan closes. Recurring closing costs consist of: 
a ) prepaid interest. Take a time out and remember this: mortgage interest is paid in arrears. That is, when you are making your December payment, it is for the use of the money for November. If your loan is funding on December 15 and the first payment date is February 1, then you must pay interest on the new loan from December 15 to December 31. Thus, the expression "prepaid interest". If you are refinancing you must pay interest on the old loan until the day that the old lender receives the funds. This usually has the effect of creating an "overlap" of at least 2 days during which you are paying interest to both lenders. If possible, do not fund loans on Friday's to avoid paying at least 4 days "overlapping interest". 
An exception to this is VA  FHA loans. Here, one must pay interest for the entire month in which 
the loan funds. 
b) Property Taxes - this is a matter of timing. In California one's property taxes are due in 2 installments. The 1st is delinquent on December 10. If you are refinancing in October and the first payment date on your loan is not until December than you can be delinquent on your taxes before 
your first payment is due. Bottom line is this: if you have not made your 1st installment and the 1st payment date is in December or later that you must pay your first installment at escrow. If it is
getting close to that date, your loan officer and the escrow company must coordinate to make sure
that the payment is made and made only once. The escrow officer must be able to verify that the 
tax collector has received and posted the payment. 
c) Insurance - when you loan is funding your lender may require that 6 months or one year of "fire" insurance be in place. This is important in the case of refinancing when you have, say, 3 months left 
on your policy. You will have to plan on paying another half year at least. 
If your property is a condo and insurance is paid thru the homeowners association then this is not relevant. 
d) Impounds - Private Mortgage Insurance may require these. If you are refinancing near the time when your tax payment is due (the discussion above) this is another pain in the neck. Your old
lender may have all or most of your tax payment impounded but will be unwilling to part with it
before they are paid off. Thus, you have to pay for one installment of your taxes and will be 
refunded the impound account of your old lender. 
Apart from this detail, impounds consist of a certain number of months of PMI, taxes and insurance. 
4) Fees associated with purchase transactions 
These include: a) an owners title insurance policy. This you will keep as long as you own the 
property. If you refinance, you will not need a new owner's policy but you will need a new lender's policy. 
b) inspections - termite, roof, septic (for rural property), surveys,etc. 
c) Transfer Fees - these are charged by the county and municipalities, vary greatly and are most often paid by the seller. 
d) Prorations - the seller may have prepaid part of the property tax for the period during which you own the home and will be entitled to a reimbursement from you. 
Note that when we talk about "no cost" loans we are talking only about the "non-recurring" closing costs." 
 

Mello Roos Question

Q. What is a Mello-Roos District? 
A. A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax you pay is used to make the 
payments of principal and interest on the bonds. 

Q. Are the assessments included within the Proposition 13 tax limits? 
A. No. The passage of Proposition 13 in 1978 severely restricted local government in its ability to finance public capital facilities and services by increasing real property taxes. The !lMello-Roos Community Facilities Act of 1982!1 provided 
local government with an additional financing tool. The Proposition 13 tax limits are on the value of the real property, 
while Mello- Roos taxes are equally and uniformly applied to all properties. 

Q. What are my Mello-Roos taxes paying for? 
A. Your taxes may be paying for both services and facilities. The services may be financed only to the extent of new
growth, and services include: Police protection, fire protection, ambulance and paramedic services, recreation program services, library services, the operation and maintenance of parks, parkways and open space, museums, cultural facilities, flood and storm protection, and services for the removal of any threatening hazardous substance. Facilities which may be financed under the Act include: Property with an estimated useful life of five years or longer, parks, recreation facilities, parkway facilities, open-space facilities, elementary and secondary school sites and structures, libraries, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines,etc. 

Q. When do I pay these taxes? 
A. By purchasing an interest in a subdivision with a Community Facilities Distrcit you can expect to be assessed for a 
Mello-Roos tax which will typically be collect with your general http:llwww.clta.org/publicationsITitle%20Consumers/Mello- Roos.htm 3/1 012001 property tax bill. These special tax payments are subject to the same penalties that apply to regular property taxes.
Q. How long does the tax stay in effect? 
A. The tax will stay in effect until the principal and interest on the bonds are paid off along with any reasonable
administrative costs incurred in collecting the special tax or so long as it is needed to pay the expenses of services, but
in no case shall exceed 40 years. 

Q. What happens if a general tax payment is not made on time? 
A. Because the Mello-Roos tax is typically collected with your general property tax bill, the Facilities District that obtained the lien may withdraw the assessment from the tax roll and commence judicial foreclosure. 

Q. What is the basis for the tax? 
A. Most special taxes levied on properties within these districts have been structured on the basis of density of development, square footage of construction, or flat acreage charges. The act, however, allows for considerable flexibility in the method of apportionment of taxes, and the local agencies may have established an entirely different method of levying the special tax against property in the district in question. 

Q. How much will the Mello-Roos payment be? 
A. The amount of tax may vary from yea r-to-year, but may not exceed the maximum amount specified when the district was created. In the case of the purchase of a new house within a subdivision, the maximum amount of the tax will be specified in the public report. The Resolution of Formation must specify the rate, method of apportionment, and manner of collection of the special tax in sufficient detail to allow each landowner or resident within the proposed district to estimate the maximum amount that he or she will have to pay. 

Q. How is the special tax reflected on the real property records? 
A. The special tax is a lien on your property, essentially like a regular tax lien. The lien is recorded as a "Notice of Special Tax Lien" which is a continuing lien to secure each levy of the special tax. 

Q. How are Mello-Roos taxes affected when the property is sold? 
A. The Mello-Roos tax is assessed against the land, but is not based upon the value of the property, therefore, the possible increased value of the property does not affect the amount of the tax when property is sold. The amount of the tax may not exceed the original maximum amount stated in the Resolution of Formation. Any delinquent payments must be satisfied

Tax Benefits

Mortgage interest

One of the biggest incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to a limit of $1 million. This deduction, like most other tax breaks for homeowners, applies to any kind of home. That includes a second home, as long as you spend a certain amount of time there: either 14 days each year, or 10 percent as much time as it's rented.

In addition, you can deduct the interest on up to $100,000 of other debt that uses your home as security -- for example, a home equity loan. However, the amount you can deduct may be limited if the money you borrow raises your debt above the home's actual market value. This can sometimes happen when a lender extends you a loan based on more than the value of the house.

You can also deduct any amount you pay for points to reduce the interest rate of your mortgage or other loan linked to your home. In most cases, the points on a mortgage to buy or build your principal home can be deducted fully in the first year. However, if you refinance, take a home equity loan, or a loan secured by a second home, the points must be deducted over the life of the new loan. The exception is if you use part of a refinanced mortgage to improve your house; that portion of the points can be deducted in the same year.

Tax-free profits

Another major advantage of home ownership is that, in most cases, you don't have to pay taxes on any profit you make when you sell your home. The law allows you to exclude from taxes up to $250,000 in profit from the sale of your principal home -- $500,000 for a couple who file jointly. This exclusion also covers the sale of a parcel of land adjacent to your house, unless it's used for business.

There are some stipulations, however. The home must be your principal residence, and you (and your spouse, where applicable) must have lived there for at least two of the previous five years. You can only claim the exemption once every two years. If you don't meet those requirements, you may still claim a partial exemption if the sale was due to a change in your place of employment, necessary for health reasons, or due to other unforeseen circumstances.

Property taxes

You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any others you may own. Any money held in escrow to pay future taxes, however, is not deductible.

Moving expenses

The government allows you to write off many of your moving costs when you buy a new home if it's at least 50 miles closer to your job than your old home. To qualify, you must continue to work full-time in the general area of your job for 39 weeks during the following year. If you're self-employed and work in your home, any move of 50 miles or more will make your moving expenses deductible. However, you must also work full-time near the new location for 78 weeks during the next 24 months.

Of course, because tax rules vary based on income and other factors, be sure to consult an accountant or financial advisor about your particular situation.

In the market for a new home or a second home.

FinancingYour Home

Getting Pre-Qualified for a home loan:
Before you start looking for a home to purchase, you should find outwhat you qualify for. If this will be your first home  or a "transitional home" -- one you plan to own for a short time, an ARM may be the best typeof loan. If it's going to be  your dream home or one you plan to raise afamily in, then you may want the stability of a fixed rate mortgage. Ifyou  choose an ARM, the index should be based on the Cost of Funds Indexif rates are increasing, and Treasury Bills if they are decreasing. TheCOFI's are less volatile over time than T-Bills; make sure the teaser rateis understood and what the real rate would be. Make sure that you scrutinize all the closing costs receive a good faith estimate from the lender. Also,make sure there are no prepayment penalties so that you can utilize anaccelerated mortgage plan. A good mortgage reduction plan can save you  tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in yourjob, health, or marital status, you can revert to the standard payments in your mortgage contract.  The price range of the homes you look at willdepend on this. As a local lending professional, I can guide you throughthe pre-qualification process, discuss your options and make you awareof any special loan programs you may be eligible for which exist in this area. After getting pre-qualified, the most important thing you can dois to go ahead with the loan process and get fully pre-approved beforeyou decide or extend an offer on a home. This will give you advantageswhen you are in 
the negotiating process. I can arrange to get you pre-approvedfor that home purchase. 
Too Early / Late to Refinance?
 Given the continued slide in interest rates and with the 30-yearfixed-rate mortgage (FRM) averaged 5.87 percent, this is  the still thelowest the 30-year FRM has been since Freddie Mac began tracking it in1971. 
"Is it too late to refinance? A absolutely not, as long as it's appropriate for you to refinance, While almost everyone  with ahigh rate has already refinanced, most people who will benefit from refinancingnow have had something happen to make refinancing now appropriate. Maybea divorce, needing money for a cabin or education, maybe getting creditcards under control, maybe an old ARM or balloon loan that they'd ratherfix at current low rates. Maybe you have a 3-, 5-, 7-, or 10-year loan,thinking you would move before it changed and now your not so sure aboutthe move. There is a never-ending supply of reasons for people to refinance,and for those people, rates are great now! Timing is less a factor thancommon reasons financially savvy home owners refinance -- to lower monthlymortgage payments, to shorten loan  terms, to pay off more expensive andnon-tax deductible debt and for capital improvements or investments likely to give  you a better return on your money that the mortgage. Given anyone of those situations, it's almost always a good time to refinance, as long as the interest cost is deductible Whatever the reason, the fundamentals still apply -- refinancing homeowners need to stay put long enough for the new mortgage to pay off in terms ofcovering the up front cost of the refinance. That means adding all the costs of refinancing (points, fees, settlementcharges, application fees, appraisal fees, credit report fees, recording fees, title insurance, underwriting fees -- all of them -- and then determining how long it'll take savings from the new mortgage to pay off the refinancing costs. If you'll be in the house for at least a few years, it's worth
to crunch the numbers. Even if you missed rock bottom lowest interest rates.To determine the payoff duration in months, divide the total refinance cost -- all costs -- by the expected per-month savings. It is also compellingif the refinance rate  of a new no cost mortgage (you pay nothing at closingand nothing is added to the loan balance) mortgage is lower than your present rate. 

Buyers Market-Buy now or wait? t

Is now a good time to buy a home? Prices are falling and mortgage rates are still low! However, inventory is also decreasing. Many sellers are waiting out this market if they can affort do. Bank owned and short sales are still plentiful in some markets but only around 25% of short sales are actually making it to escrow before foreclosure. Also, banks are increasing thier efforts to avoid foreclosures and this is creating an environment for loan modification agrements with homeowners who want to keep thier homes.

One answer to this question could be : It's a bad time to buy real estate. Prices and mortgage rates might be lower in a few months. With so many short sales and foreclosures on the market sellers are bound to get desperate so why not wait them out?

Another answer is: If you find the right house and the right price-BUY IT!

If you are serious about purchasing a home this is the first and final goal. You can't be distracted by market forces outside your control. You will need to decide if you will absolutely shop and negotiate a fair deal or if you will browse listings hoping to stumble on a deal. If purchasing a home is your goal you are more likely to succeed with this approach instead of waiting (possibly in vain) for prices to fall further. You can't predict when houses will hit bottom. You will also run the risk of someone else buying your favorite home while you are waiting.. The experts advise these tips

• If you find the right home at the right price-buy it!
• Put technology and a buyers agent to good use
• Negotiate effectively
• Avoid gimmicks-such as free tv's, trips, etc.

Remember a house is a home first and this is where you will build your memories. Over the years real estate does experience price fluctuations- increases along with decreases. It is just part of home ownership. Real Estate is still a very sound long term financial investment. The only time people know where the bottom of the market is?-Is when they see it pass them by. As long as we are in a decreasing market it is a good time to negotiate your new home. Historically, when the market corrects it does so very quickly.

Purchase a home that can grow with you and start enjoying the American dream

First Time Home Buyer Tips

Purchasing your first home is a big step. To break it down follow these tips and don't end up renting longer than your should! Before you begin ask yourself how long you will live in your new home. To make this process less intimidating follow some easy steps.

1.First ask yourself how long you plan tolive in the property. If you plan to live there at least 3 years? This can determine the type of laon that might be best for you. There are many options available.

2. Do you Need a Downpayment? Financing is becoming more difficult these days so best to find out right away what your options are and if you will need a downpayment.

3. Get Pre-Qualified:

4. Consult a Real Estate Professional ASAP. It is best to start working with a realtor right away. With their extensive experience in the local areas they will knowledgeable about any conditions affecting the local communities.

5. Pick a list of must haves and wants: Remember it will be difficult to find a home with everything you want! Prioritize!

6. Pick your Neighborhood: Location, Location, Location, You are better off buying the worst home is the best neighborhood thatn the best home in a bad neighborhood.

7. Make Your Decision!