Closing Costs
Although they tend to vary from lender to lender, closing costs generally are considered any costs tied to the purchases of a new home. Today, these costs range from 1 and 5 percent of the home’s purchase price and include three basic categories:

Prepaid Expenses
Prepaid expenses include homeowner’s insurance, mortgage insurance and the costs to set up an escrow account. An escrow account is when a lender will pay the annual insurance premiums and various taxes on the borrower’s behalf. The amount that goes into this account is based on the first year’s premiums; an additional amount also is included to pay for future premiums. Because they vary based on the type of property and the time of the closing, prepaid expenses are difficult to determine.

Mortgage Points
A mortgage point is equal to 1 percent of the mortgage loan amount and actually helps reduce the loan’s interest rate. For example, depending on prevailing rates, a $100,000 mortgage might be obtained at 4.25 percent with 2 points, or at 4.75 percent with no points. Obtaining the lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 — or 2 points — up front at closing.

Out-Of-Pocket Expenses
Fees for appraisals, title charges, credit reports, deed recording, tax services and other miscellaneous expenses make up the out-of-pocket expenses. Usually performed by a third party, these fees for services are directly charged to the borrower. The majority of out-of-pocket fees are necessary and legitimate; however, if the borrower encounters a fee that causes confusion, he or she should ask the Cavanaugh’s about it.

Purchasing a home is one of the largest financials investments you can make. It’s vital that you understand it fully and completely so that you avoid unwelcomed surprises and are confident in every step you take towards your new home.

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Sincere Service Competitive Price Expert Advice

Credit Cleaning Tips

Review your credit report line-by-line, specifically search for errors, omissions, duplications, and “common name” errors.

If you encounter errors, write out exactly what should be corrected and why. You are able to add 100 words or less to your reports on questioned items.

You can find assistance through credit counselors which are available through the various credit bureaus.
Federal law requires credit bureaus to contact all creditors on items where mistakes were made. According to the Fair Credit Reporting Act of 1971, if these firms fail to respond to you in writing within 30 days, they are obligated them to remove the disputed items from your records.

Most merchants are willing to negotiate customized repayment plans for those that find themselves with considerable debt.

Chapter 13 bankruptcies stay on an individual’s record for seven years. Chapter 7 bankruptcies stay on an individual’s for seven years.

Judgments, Garnishments, or Liens
Liens, garnishments, etc., typically are indicators of an unstable borrower. Any judgments, garnishments, or liens must be paid in full. Prior to closing, proof that the judgment, garnishment or lien has been cleared must be obtained; this can be reflected through a clear credit report supplement or a paid receipt form from the creditor. IRS tax liens also must be paid in full. Standard property tax liens do not have to be recorded as paid in full since they are not yet due or payable. Also, the borrower is obligated to provide a satisfactory letter of explanation.

Delinquent Child Support
Child support payments must be brought current, and specific documentation from the credit reporting agency evidencing this fact must be in the file with NO EXCEPTIONS! Because of the seriousness of the delinquency/default, which in many states can cause incarceration, the A letter from the court or the legal authority responsible for collection in the city/state (e.g. district attorney, sheriff, etc.) is acceptable. A letter from an ex-spouse and copies of personal checks are not acceptable, nor is an agreed upon, but not yet completed, payment plan.

Credit Bureaus:
There are a good number of reporting agencies that can provide you your credit score. Three of the leading services for this are:

Experian www.experian.com
1-888-397-3742

Equifax www.equifax.com
1-800-685-1111

Trans Union www.transunion.com
1-800-888-4213

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Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting cases of sole ownership are:

1. A Single Man or Woman:

A man or woman who is not legally married or in a registered domestic partnership. For example: Bruce Buyer, a single man.

2. A Married Man or Woman as His or Her Sole and Separate Property:

A married man or woman who wishes to acquire title in his or her name alone.

The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both spouses want title to the property to be granted to one spouse as that spouse’s sole and separate property. For example: Bruce Buyer, a married man, as his sole and separate property.

3. A Registered Domestic Partner as His or Her Sole and Separate Property:

A registered domestic partner who wishes to acquire title in his or her name alone.

The title company insuring title will require the domestic partner of the person acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both registered domestic partners want title to the property to be granted to one partner as that person’s sole and separate property. For example: Bruce Buyer, a registered domestic partner, as his sole and separate property.

CO-OWNERSHIP
Title to property owned by two or more persons may be vested in the following forms:

1. Community Property:

A form of vesting title to property owned together by husband and wife or by registered domestic partners. Community property is distinguished from separate property, which is property acquired before marriage or before a registered domestic partnership, by separate gift or bequest, after legal separation, or which is agreed in writing to be owned by one spouse or registered domestic partner.

In California, real property conveyed to a married person, or to a registered domestic partner, is presumed to be community property, unless otherwise stated. Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Each owner has the right to dispose of his/her one half of the community property, by will. For example: Bruce Buyer and Barbara Buyer, husband and wife, as community property.

2. Community Property with Right of Survivorship:

A form of vesting title to property owned together by husband and wife or by registered domestic partners. This form of holding title shares many of the characteristics of community property but adds the benefit of the right of survivorship similar to title held in joint tenancy. There may be tax benefits for holding title in this manner. On the death of an owner, the decedent’s interest ends and the survivor owns the property. For example: Bruce Buyer and Barbara Buyer, husband and wife, as community property with right of survivorship.

3. Joint Tenancy:

A form of vesting title to property owned by two or more persons, who may or may not be married or registered domestic partners, in equal interests, subject to the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will. For example: Bruce Buyer, George Buyer, as joint tenants.

4. Tenancy in Common:

A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Bruce Buyer, a single man, as to an undivided 3/4 interest and Penny Purchaser, a single woman, as to an undivided 1/4 interest, as tenants in common.

Other ways of vesting title include as:
1. A Corporation*:

A corporation is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.

2. A Partnership*:

A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.

3. Trustees of a Trust*:

A Trust is an arrangement whereby legal title to property is transferred by the grantor to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement, called the beneficiaries.

4. Limited Liability Companies (LLC)*:

This form of ownership is a legal entity and is similar to both the corporation and the partnership. The operating agreement will determine how the LLC functions and is taxed. Like the corporation its existence is separate from its owners.

*In cases of corporate, partnership, LLC or trust ownership – required documents may include corporate articles and bylaws, partnership agreements, LLCoperating agreements and trust agreements and/or certificates.

Remember
How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.

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THE REWARDS OF HOMEOWNERSHIP
Invest in your future
Your monthly mortgage payments are not going into the pockets of a landlord. Instead, with each payment, you build equity in your home and contribute to your own long-term, personal investment.

Lighten your tax load
You’ll find homeownership opens up a world of potential tax savings. Typically, the interest paid on your mortgage is tax deductible which can provide significant financial relief. To discover all the possible tax advantages available to you upon purchasing a home, it’s best to consult with a trusted tax advisor.

Develop your credit further
Homeownerships is one of the best investments you can make. Additionally, making monthly mortgage payments on time will further improve your credit history and will help you with future and additional investments.

Remove questions
With homeownership, your monthly payments are no longer subject to increases by the renewal of a lease and the discretion of a landlord. This will help you make a long term budget plan and remove variable factors in your future financial decisions.

Find freedom
With the only potential parameters being homeowner association guidelines or city codes, you are able to remodel, renovate, and redecorate according to your own personal tastes. You are free to make your home your own — however you see fit.

THE REALITIES OF HOMEOWNERSHIP
Know the numbers
Certain renting situations provide coverage for the expenses of some or all the utilities. This is not the case with homeownership. Not only will the utilities be the responsibility of the homeowner, but property taxes and homeowner’s insurance also will be additional expenses.

Expect repairs
There’s no more calling the landlord to fix what might be broken. Any repairs and maintenance that are required on the home and/or appliances will be your responsibility. And, you can expect that these will always come with a bill or invoice to pay.

Stay put
Renting provides flexibility. You regularly are given an opportunity to resign a lease (or not) and suffer only minimal penalties if you decide to break the lease prior to the time of renewal. On the other side, owning a home is a long term investment and will be more financially beneficial the longer you stay in the home. Project ahead; can you see yourself happy in that home and in that neighborhood 5 to 10 years down the road? Deciding to move out of a home does not remove your financial responsibility as the home owner; plus, the process of selling a home can be a time consuming and costly endeavor. It may not happen as quickly as you would like or hope.

Be ready to gamble
The housing market is perpetually unpredictable. While the hope is that the home will appreciate in value over the time of ownership, this is not always the case in every market. If and when the time comes to sell your home, be prepared for whatever condition the market might be at the time. Housing prices could be down, the market may be slow, and the home may have depreciated in value. Owning a home is typically a sound investment, but it provides no guarantees.

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Be proactive. Federal rules allow you to provide the appraiser your own comps — recently sold properties of similar size, condition and amenity levels in your immediate market area. Your realty agent can help you pull them together before the appraiser arrives. Or for a fee of $200 to $300, you can hire an experienced local appraiser to assist you.

Sara W. Stephens, president-elect of the Appraisal Institute, the largest group in the industry, says, “If you know there are comparable sales in the neighborhood” where the price was affected by a divorce, financial distress or heavy seller concessions to the buyer, “make sure you call the appraiser’s attention to” these factors. And give the appraiser a list of all the value-enhancing upgrades and improvements you’ve made, including dates and costs.

Accompany the appraiser during his or her inspection of the house. Ask questions crucial to competency: Where are you based? How long have you been in the business? What certifications and professional designations do you hold? Are you a member of the local multiple listing service (MLS), an essential trove of data for any accurate appraisal? Do you know local agents or brokers who can supply you with pending sales information and guide you on neighborhood price trends?

If the appraiser doesn’t have good answers, you are much more likely to end up with a poor appraisal. Alert the lender to your concerns as early as possible.

After the appraisal is completed, always ask for a copy to review; it’s your right under federal law. If the value comes in low, check everything in the report, from selection of comps to the accuracy of property measurements. If you find serious mistakes and the appraiser refuses to make corrections, appeal directly to the lender. Most have procedures to follow regarding “reconsiderations of value.” Ask for a second valuation by a locally competent appraiser, even if that costs you more money. Ken Harney

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Last night Congress passed an omnibus bill, which included an increase to the Federal Housing Administration (FHA) loan limit and extension of the National Flood Insurance Program. If the bill is signed by President Obama, the FHA loan limit will be increased to $729,750 for San Mateo and Santa Clara counties and the flood insurance program will be extended until December 16.

The bill, which passed by a 298-121 vote in the House and 70-30 vote in the Senate, did not include an increase to the conforming loan limit. The Fannie Mae and Freddie Mac loan limits for high cost areas will remain at $625,000.

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The basic eligibility requirements for an enhanced HARP loan are as follows:

• Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Copy and paste into your browerse here http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx
to see whether a borrower has a Fannie Mae or Freddie Mac loan.

• Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.

• Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).

• Current loan-to-value (LTV) ratio must be more than 80 percent.

• Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.

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Under previous law (SB 931), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.

SB 458 contains an urgency clause making it effective upon signing. Silvar

The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

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Many borrowers have assets but their income is not sufficient to qualify for a loan. Maybe the borrower is self-employed and their tax returns do not indicate enough income to qualify. Or maybe the borrower is retired and no longer has enough income. Asset Depletion is a way for an underwriter to use a borrower’s assets to provide more income to qualify. After all, the borrower’s assets are in an income bearing vehicle, like checking, savings or money market accounts, or stocks, bonds and mutual funds…the assets are working for the borrower and generating income. We can use those assets to help your borrower qualify. Although this makes perfect sense, it is highly irregular for an underwriter to approve a borrower using assets as income. However, our underwriters understand the logic in approving a borrower who has demonstrated their ability to save and accumulate assets. Asset Depletion is simply an Underwriter’s tool to apply more qualifying income by calculating a return on the borrower’s “liquidable” assets.

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Fannie Mae is currently offering buyers up to 3.5 percent in closing cost assistance through October 31, 2011. A $1,200 selling agent bonus is also available to selling agents who close on an owner occupant property and meet all eligibility requirements and terms and conditions.

Terms and Conditions:
• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer.

• Initial offer must be submitted on or after June 14, 2011 and close by October 31, 2011. Initial offers made prior to June 14 are not eligible for the June 14 – October 31 incentive.

• Sale must close on or before October 31, 2011. No exceptions will be made to this deadline. (Note: Initial offers submitted after September 15, 2011 may not close by the incentive deadline of October 31, 2011.)

• Buyers must be purchasing a HomePath property to use as their primary residence to receive closing cost assistance. Second homes and investment properties are excluded from the incentive.

• Sales closed via the retail channel are eligible, including those utilizing public funds. Pool and auction sales are ineligible.

• Buyers must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.

• Buyers with total closing costs under 3.5 percent are not eligible to receive the difference as a credit.

• Properties where Fannie Mae acquired the property in connection with financing under a reverse mortgage are not eligible. Ask the listing agent for details.

• Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5 percent incentive. For example, the lender may consider the incentive a Seller Contribution and limit the amount to 3 percent. In those instances, the remaining 0.5 percent will no longer be available to the buyer.

• Fannie Mae reserves the right to remove any property from promotion or end the promotion at any time. Any dispute over the payment of the incentive shall be resolved by Fannie Mae in its sole discretion.

NO PMI
No Apprasial
3% Down Payment

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408-356-2506