Thinking of Buying A Home In Santa Clarita, Ca? Why Are You Waiting?

If you are planning on becoming a homeowner, or moving up to the home of your dreams in 2015, here are four great reasons to consider buying a home now, instead of waiting until spring.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 11.7% (most pessimistic) and 27.5% (most optimistic). The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of 2015. An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren't? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

4 Myths About Buying a Home

Debunking Myths About Buying A Home!  A recent study by the Joint Center for Housing Studies at Harvard University revealed when renters were asked why they do no plan to own in the future, financial constraints were a more common response than the perceived lifestyle benefits they may receive from renting. Today, we want to go over those financial challenges and see if we can put some fears to rest and also clear up some misconceptions. Here are the top four financial hurdles that cause renters not to buy: You Cannot Afford a Home Well over 50% of renters consider this as a financial barrier to homeownership. However, study after study has shown us that there are major misunderstandings about what is required to purchase a home. The biggest misconception is the amount of a down payment required. A recent survey revealed that 44% of respondents believed that a 20% down payment was required. In actuality, mortgages are available with as little as 3.5% down (and even 3% in certain situations). The same survey showed that 30% of respondents believe that only individuals with ‘high incomes’ can obtain a mortgage. In actuality, there are several programs intentionally created to help moderate income families buy a home of their own (look at the FHA program for example). You Do Not Have Good Enough Credit to Get a Mortgage The survey mentioned above showed that 64% of respondents believe they must have a “very good” credit score to buy a home. Most people don’t realize that the average credit score for closed loans has actually dropped 24 points in the last two years. It’s Not a Good Time to Buy a Home Determining when is the right time to buy a home from a pure financial calculation can be difficult. There are two elements of the cost of a home: the price of the house and the mortgage interest rate. When considering a purchase, you want to have at least an indication where prices and mortgage rates are headed. According to over 100 experts, house values are expected to increase by almost 20% between now and 2018. And Freddie Mac recently projected that mortgage rates would be as much as one full point higher by this time next year. With both prices and interest rates projected to increase, now is the perfect time to buy a home. It’s Cheaper to Rent than Buy This is a myth that doesn’t want to die. However, Trulia recently reported that, in fact, buying is actually dramatically cheaper than renting. Here is what they said: “Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas. In fact, buying is 38% cheaper than renting now, compared with 35% cheaper than renting one year ago.” Bottom Line If you are even thinking about buying, get the facts from a trained professional. You may be pleasantly surprised by what you find out.

Does It Cost Too Much To Live in LA?

We all know that LA – and most of California for that matter – is an expensive place to live, but what percentage of income is spent on housing here? The answer may surprise you, as a recent study has found that residents of LA spend more of their income on housing than in any other metropolitan area across the nation! The report is the latest evidence of a growing affordability crunch in Southern California’s housing market.

Let’s face it – costs to buy and rent homes have grown far faster than incomes in recent years, pushing more families to spend a greater share of their income to live here.

According to a new study from Harvard University, half of the households in metro Los Angeles spend at least 30% of their income on rent or mortgage payments, the highest rate of 381 metropolitan areas in the U.S. One in four households here spends at least half its income on housing.

But Los Angeles isn't alone. Seven of the 10 metros with the highest share of “cost-burdened” households are in California, including the Inland Empire, San Diego and Ventura County.

Many economists peg 30% of income as a point at which housing costs start to become burdensome, crowding out other spending. At 50%, it becomes a “severe burden.” Of low-income households that spend at least that much on housing, 39% reported spending less on food and 65% cut spending on healthcare, the report said.

“Pretty much all other necessity spending is getting crowded out,” said Dan McCue, research manager at the Harvard Joint Center for Housing Studies. “Food, clothing, healthcare, you name it. There’s just less to go around.”

Renters are especially squeezed, with 6 in 10 renting households spending at least 30% on housing. Among homeowners in metro Los Angeles, 4 in 10 spend that much, the sixth-highest rate in the country.

In Southern California, the challenge is one both of high housing costs and stagnant wages. Median household income, adjusted for inflation, has fallen 11% here since 2005, while rents have climbed.

“The basic cause of these high cost burdens is weak income growth,” McCue said.

Reason To Own A Home #3

FEELING A LITTLE CRAMPED!!!

How To Keep Your House Cool This Summer WITHOUT Running the Air!

Knowing what appeals to today’s homebuyers, and considering those trends when you remodel, can pay off years from now when you sell your home.

Two new surveys about what homebuyers want have me feeling pretty smug about my own home choices. Maybe you'll feel the same.

Privacy from neighbors remains at the top of the most-wanted list (important to 86% of buyers), according to the NATIONAL ASSOCIATION OF REALTORS’® "2013 Community Preference Survey." Privacy is no doubt the best feature of my mid-century ranch home, since I can only see one neighbor’s house and it’s a couple hundred feet down my driveway.

It may not be practical to move your neighbors farther away (although I’m sure many people wish they had that superpower), but you can increase your home’s privacy (and therefore its resale value) by planting a living privacy screen of trees and shrubs or by physically screening off your patio.

3 More Takeaways for the Next Time You Remodel

1. More and more generations are living together. Another NAR survey, the "2013 Profile of Home Buyers and Sellers," found 14% of buyers purchased a home suited to a multigenerational household due to children over the age of 18 moving back into the house, cost savings, and the health and caretaking of aging parents.

I did that back when my parents were still alive, and it worked out great for everyone. I didn’t have time to let my infant daughter nap on my shoulder all afternoon, but my mom did. She couldn’t drive to church meetings at night, but I could take her. And neither of us liked cleaning the gutters, but my husband didn’t mind that chore.

Even if you’d rather live in a cardboard box than with your mother, you might want to consider the multigenerational living trend when you’re remodeling. For instance, opting for a full bath when finishing the basement could offer more convenience for you now and boost your home’s resale value by making it more appealing to a multigenerational family.

2.  On average, homeowners live in their home for nine years. That’s up from six years in 2007. Since you’ll be in your home for a long time, it makes sense to remodel to suit your taste but also with long-lasting marketability in mind. After all, you don’t want to have to redo stuff. For instance, you can go for trend-defying kitchen features, like white overtones and Shaker-style cabinets, which work with a variety of styles.

I feel compelled to caution against going so far out of the norm for your neighborhood that it’ll turn off potential buyers even nine years from now. (It never hurts to get your REALTOR®’s opinion on your remodeling plans.)

3.  Homebuyers love energy efficiency. Heating and cooling costs were "somewhat" or "very important" to a whopping 85% of buyers. If your home could use an energy-efficiency upgrade, go with projects that have a solid return on investment, like sealing your air leaks and adding attic insulation. You’ll save money on your utility bills now and when you’re ready to sell, your home will appeal to buyers looking for efficiency.

By the way, to take back your energy bills, you need to do at least four things. One to two fixes won’t cut it, thanks to rising energy costs.

About two-thirds of survey respondents also thought energy-efficient appliances and energy-efficient lighting were important. Tuck away your manuals and energy-efficiency information when you buy new appliances and lighting. When you’re ready to sell (in nine years) you can pull those out and display them where buyers will see them.

If You Sold Today, Do You Have The Kind Of Home Buyers Are Looking For?

Knowing what appeals to today’s homebuyers, and considering those trends when you remodel, can pay off years from now when you sell your home.

Two new surveys about what homebuyers want have me feeling pretty smug about my own home choices. Maybe you'll feel the same.

Privacy from neighbors remains at the top of the most-wanted list (important to 86% of buyers), according to the NATIONAL ASSOCIATION OF REALTORS’® "2013 Community Preference Survey." Privacy is no doubt the best feature of my mid-century ranch home, since I can only see one neighbor’s house and it’s a couple hundred feet down my driveway.

It may not be practical to move your neighbors farther away (although I’m sure many people wish they had that superpower), but you can increase your home’s privacy (and therefore its resale value) by planting a living privacy screen of trees and shrubs or by physically screening off your patio.

3 More Takeaways for the Next Time You Remodel

1. More and more generations are living together. Another NAR survey, the "2013 Profile of Home Buyers and Sellers," found 14% of buyers purchased a home suited to a multi-generational household due to children over the age of 18 moving back into the house, cost savings, and the health and care taking of aging parents.

Even if you’d rather live in a cardboard box than with your mother, you might want to consider the multigenerational living trend when you’re remodeling. For instance, opting for a full bath when finishing the basement could offer more convenience for you now and boost your home’s resale value by making it more appealing to a multi-generational family.

2.  On average, homeowners live in their home for nine years. That’s up from six years in 2007. Since you’ll be in your home for a long time, it makes sense to remodel to suit your taste but also with long-lasting marketability in mind. After all, you don’t want to have to redo stuff. For instance, you can go for trend-defying kitchen features, like white overtones and Shaker-style cabinets, which work with a variety of styles.

I feel compelled to caution against going so far out of the norm for your neighborhood that it’ll turn off potential buyers even nine years from now. (It never hurts to get your REALTOR®’s opinion on your remodeling plans.)

3.  Homebuyers love energy efficiency. Heating and cooling costs were "somewhat" or "very important" to a whopping 85% of buyers. If your home could use an energy-efficiency upgrade, go with projects that have a solid return on investment, like sealing your air leaks and adding attic insulation. You’ll save money on your utility bills now and when you’re ready to sell, your home will appeal to buyers looking for efficiency.

By the way, to take back your energy bills, you need to do at least four things. One to two fixes won’t cut it, thanks to rising energy costs.

About two-thirds of survey respondents also thought energy-efficient appliances and energy-efficient lighting were important. Tuck away your manuals and energy-efficiency information when you buy new appliances and lighting. When you’re ready to sell (in nine years) you can pull those out and display them where buyers will see them.

PMI Insurance-The One Expense Buyers Underestimate

Sixty-five percent of home owners with private mortgage insurance say that the additional cost of PMI prompted them to pay a higher monthly mortgage payment than they had originally expected, according to a new survey released by TD Bank of more than 2,000 Americans who purchased a home in the past 10 years. 

"PMI has had a definitive impact on many home buyers – including making them rethink or delay the purchase of a home in light of not being able to meet monthly mortgage payments," says Michael Copley, executive vice president of retail lending at TD Bank.

Borrowers are required to get PMI if the loan exceeds 80 percent of the home’s value. The insurance protects the lender in case the borrower defaults on their loan. 

Many buyers say that PMI has an impact on their home purchasing decisions. For example, 35 percent of people who purchased a home in the past two years said that PMI influenced their decision of which house to buy. Also, 53 percent reported facing a negative impact due to the additional cost of PMI. About 40 percent of those surveyed said that having to pay PMI forced them to curtail small and daily purchases or larger household purchases. 

The survey showed that PMI is fairly common: 37 percent of those who purchased a home in the past 10 years said they were required to have PMI, and 43 percent in the past two years. Forty-five percent of home owners aged 18 to 34 years old have PMI; 37 percent of home buyers aged 35 to 54 have it; and 23 percent of people older than 55 had required mortgage insurance on their loans over the past decade, the TD Bank study found. 

On average, home owners reported that PMI cost about $100 extra a month, according to the study.

Things To Consider When Buying a Short Sale

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.

When sellers need to sell their home for less than they owe on their mortgage, they’re shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.

Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.

1. Get help from a short sale expert

A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they've represented in short sales and, of those, how many successfully closed the transaction.

2. Build a team

Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.

A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3. Know the home’s fair market value

By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4. Expect delays

There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.

The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5. Firm up your financing

Lenders will weigh your ability to close the transaction. If you're preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6. Avoid contingencies

If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.

Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

This article includes general information about tax laws and consequences, but isn't intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

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Is A Fixer Upper Really For You?

When you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.

Trying to decide whether to buy a fixer-upper house? Follow these seven steps, and you’ll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house. 

• Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.

• Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

2. Price the cost of repairs and remodeling before you make an offer

• Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.

• If you’re doing the work yourself, price the supplies.

• Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

3. Check permit costs

• Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it'll cause problems when you resell your home.

• Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.

• Factor the time and aggravation of permits into your plans.

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems.

Get written estimates for repairs before you commit to buying a home with structural issues.

Don't purchase a home that needs major structural work unless:

• You’re getting it at a steep discount

• You’re sure you’ve uncovered the extent of the problem

• You know the problem can be fixed

• You have a binding written estimate for the repairs

5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

If you’re planning to fund the repairs with a home equity or home improvement loan:

• Get yourself pre-approved for both loans before you make an offer.

• Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.

• Consider the Federal Housing Administration’s Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It’s a simpler process than obtaining the standard 203(k).

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it’s a good idea to share your cost estimates with the sellers, to prove your offer is fair. 

7. Include inspection contingencies in your offer

Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

• Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.

• Radon, mold, lead-based paint

• Septic and well

• Pest

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.

If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

Reason To Own A Home #14

If you want Red, paint it RED!!!

4 Tips To Determine How Much Of A Home You CAN Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability

As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment

How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home's cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.

The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt

Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide

The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

Boomerang Buyers Get Second Chance!

About 7.2 million homes have been lost to foreclosure or short sale since the housing crash began, according to housing data from Black Knight Financial Services. That has forced millions of former home owners into renting, as they work to rebuild their credit.

But a government program launched last summer by the Federal Housing Administration is helping these former home owners step back into home ownership in as little as a year after a foreclosure or short sale. The FHA’s Back to Work program allows them to qualify for low interest rates with a minimum of a 3.5 percent down payment. Applicants must show that the main culprit behind losing their home was that they lost at least 20 percent of their household income for at least six months. They also must show they have worked to repair their credit for at least a year.

Lenders are reporting an uptick in boomerang buyers coming in to explore financing opportunities for a home purchase.

"We see a lot of boomerang buyers,” says Matt Weaver, a lender with PMAC Lending Services in Florida. “I'd say about 20 percent of my current clientele has either suffered a short sale or a foreclosure in the past and are now re-buying back into the marketplace."

But while opportunities to apply for a home loan are increasing, some are hesitant to step back in, housing analysts say.

"Based on the fact that the home ownership rate isn't rising again and demand for single-family rentals is historically high, the comeback buyer is not a significant phenomenon in the market," says Mark Fleming, chief economist at CoreLogic. "Given the duration of the recovery, it's likely that many of the initially foreclosed borrowers have repaired their credit and are now creditworthy, but the scale at which they will enter the market is not sufficient to significantly influence demand."