You clung to your Laguna Beach home like glue. No way were you leaving the place you so dearly cherished. But the stack of delinquent mortgage payments got too heavy. Pushed you straight through a trap door. Now you’re in the pit. The mortgage pit. Debt collectors are hissing like snakes. Foreclosure fiends are clawing at you. How will you get out of this trap?

Luckily, there’s an escape route. It’s called short sale – a program that lets you sell your home for less than the total amount owed. Protects you from the hissing debt collectors and foreclosure fiends. Frees you from the pit. Get ready!

Launching Your Escape

Remember, a short sale isn’t a magic amulet. Plan on digging in your heels and expending much personal energy. You’ll begin with three documents, all of which should be signed and dated.

• A financial worksheet listing all of your monthly expenses. The more, the merrier.
• A hardship letter explaining why you got behind. You’re making your case here, so let the details flow.
• A letter authorizing your Realtor to access certain account information. The letter should include the last 4 digits of the borrower’s social security number, the complete account number, and property address.

What Else You Should Know

• The clock is ticking, so dawdle at your own risk. If the short sale doesn’t close within 30 days, chances are you’ll need to start the approval process over. Now wouldn’t that be a hoot.
• Send all inquiries, (and if necessary, bribes), to the assigned negotiator. The identity of this individual will be revealed during the introduction call.
• A short sale is never an inside job. This means, the property may not be purchased by anyone with close ties to the seller. This includes but is not limited to family members, friends, neighbors, personal trainers, and bookies.
• In certain cases, investors and mortgage insurance companies require lenders to sign an unsecured note for part or all of the difference between sale proceeds and the total amount due. This information is specified as part of any response to a short sale offer.

Well there it is. You see? There is an escape from the mortgage pit. And if you’re considering a short sale for your Laguna Beach home, I want to make sure you’re good and prepared for the journey.  I’ll make certain you get started on the right track. And stay on the right track. As an experienced professional well-acquainted with this prime beachfront community, I can answer all of your questions and help you discover the numerous opportunities the Laguna Beach Real Estate market has to offer.

Feel free to contact me at 949.922.8490 or hillary@thecoastalpropertyexperts.com.

Until next time, keep it classy, Laguna.

We have talked often about getting your financial ducks in order before hitting the pavement to find your Laguna Beach Dream Home for Sale. It’s always nice to look and dream about a life at the beach. But it’s even nicer to make that dream a reality.

I know that it’s hard to look past the forest of economic news that is in front of you and see the opportunities. But the fact remains that we are seeing prices of Laguna Beach Homes for Sale that were last seen in 2002! Plus, the interest rates remain at historically low levels.

Lenders are more cautious with some of their underwriting criteria for various reasons. Don’t let this keep you from doing what you can to position yourself to grab your dream home when the right opportunity and circumstances collide.

One of the entry level thresholds of obtaining a loan has always been your credit score. Understanding what is factored into this score will help you to create habits that will give you the best chance at the highest score available for you. Here are just a few tips:

• Bill payment history accounts for about 35% of your FICO Score. Paying your bills on time each month is important.
• Outstanding debt accounts for about 30% of your FICO Score. This is an interesting mix. The lenders want to see that you have other credit and you know how to use it wisely, but they don’t want you to use too much of it by maxing out your cards. Most experts advise to use less than 30% of the total credit limit. For example, if you have a credit card with a $5000 limit, then keep your balance at or below $1500. Unfortunately, if you have a card that you max out but pay off in full each month, it doesn’t always reflect in your favor on your report, even though paying the balance in full each month is a good practice. If you plan to apply for a loan in the near future, start getting your credit balances down to favorable levels.
• Credit history accounts for about 15% of your FICO Score. So if you are just starting out, you won’t get too many points here. However, it is a small percentage of the total score.
• The remaining 20%…well, that’s still a bit of a mystery!
• Don’t apply for too much credit in a short period of time since it may look as if you are desperate. If you are shopping for a loan, you get a little break since credit pulls from mortgage companies over a period of several days will count as a single credit inquiry.
• If you have been approved for a home loan, don’t make any major purchases, additional credit inquiries, or changes to your credit report. Lenders are pulling credit reports for approved borrowers right before they fund the loan (which could be after you have signed loan documents and think that it’s all over but the singing). Don’t get caught with your household belongings in the moving van and no place to go!

The good news is, wherever you are at right now in terms of your credit score, credit scores are salvageable. With the right information about what will give you the most bang for your buck, and a little determination, you can get your score to a level that the banks will approve.

Take action today with the following steps:

• Get a copy of your credit report. Call your lender and have them pull it for you or get a copy from the credit companies for free.
• Take the time to review the information to make sure that it is accurate.
• Correct any errors by writing to the credit bureaus and notifying them that there is an incorrect item on your report.
• Finally, make a list of steps that you will take to improve your score (i.e.…start paying bills on time, reduce the balances to less than 30% of the limit per company)
• Take action on the steps, little by little, consistently, each week.

Remember…nothing happens until something moves…so, get moving!

See you at the beach!

Until next time…

Are you sorry that you missed the $8000 Tax Credit?

For example, the average interest rate in the Month of April, prior to the deadline, was 5.34%. A borrower with a 30 year fixed rate on a $280,000 mortgage would pay $1561.82 per month. If that same borrower were to purchase in May with an average interest rate of 4.625%, that payment would be $1439.59 per month. This is an annual savings of $1467 which over 30 years result in savings of over $44,000. That’s quite a bundle!

“In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” said Lawrence Yun, chief economist for the National Association of Realtors.

Borrowers who wanted to take advantage of the credit have now purchased. Some describe these as “borrowed buyers” who would have normally purchased over the course of the summer months, concentrating buying activity into a set amount of time. This concentration resulted in an increase of 30% in home sales for the month of March.

For now, with the interest rates as low as they are, there is still a good incentive to purchase which will soften the landing for the tax credit expiration. And there are Laguna Beach Homes for Sale which could become great values with favorable prices and low interest rates.

However, there is still the question of that “shadow inventory”, the millions of foreclosures that need to be sold but haven’t yet been listed. That number could be as high as 4.5 million homes owned by banks and individuals that are waiting for the right time to enter the market.

When they do, the normal supply and demand factors will come into play to determine price. As prices rise, inventory will increase which could drive the prices down as supply outpaces demand. As the inventory decreases, prices will creep up again until demand is met. This cycle could result in a sawtooth recovery of home prices – moving up and down until inventory is stabilized.

For buyers looking for a bottom in the market, it may be wise to watch for several dips and be ready to take advantage of the right home at the right price. As always, get your financial ducks in a row before you find the home of your dreams. If you are going to use bank financing, get preapproved now. It is always best to be ready so when that home you want enters the market, you will be able to act.

And for Laguna Beach Homes for Sale, you just may be able to find a home priced less than $1 million that could qualify for favorable financing. Imagine, investing and living a Laguna Beach Lifestyle!

Until next time…

“Fannie Mae recently announced that people purchasing a Fannie Mae-owned HomePath® property will receive up to 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1.

Properties eligible for this incentive are listed on HomePath.com and most listings include detailed property descriptions; photographs; community and school information; and more. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as 3 percent down.”

Real Estate investors as well as those purchasing with the intention of living in the property can buy a designated HomePath home; however, the financing options may only be available to those that intend to occupy the property. Be sure to ask your lender about details.

In addition, as noted on the Fannie Mae HomePath website, there is special financing available. This is, no doubt, offered as an incentive to clear their inventory of homes. Some of the benefits of the special financing are:

• Low Down Payments
• Flexible Loan Terms
• Less-than-perfect credit – OK
• 3% Down payment requirement can be a gift, grant or other source
• No mortgage insurance is required

In addition to this financing, there is also a plan for Renovation Mortgage Financing which includes:

• Funds for the purchase and renovation of the home;
• Low down payments
• Flexible Loan Terms
• No Mortgage Insurance

For more financing information, visit the HomePath Site

Currently, there are 156 Homes available with this program in Orange County Real Estate.

So what does this mean? The higher the percentage; the more affordable for a first time home buyer to purchase a house. What these numbers are telling us is that 67 percent of households in California can now afford to purchase a home. And for Orange County, 53 percent of households are able to purchase an entry-level home.

The second quarter of 2009 brought in the following stats:

• The median price of an entry-level home in California was $224,180;
• The estimated monthly payment, including tax and insurance, was $1330. This assumes a 10 percent down payment and an interest rate of 4.92 percent; if your terms are different, the payment will vary;
• The minimum household income needed to purchase an entry-level home in this price range was $39,930.

What is interesting to note is that the minimum qualifying income was lower than last year when it was reported that a person needed a household income of $60,460 to qualify for a loan on an entry-level home. Interest rates are still low, as they were last year; however, with the decrease in home prices in Orange County overall, first time homebuyers are still able to buy a home now at good terms and great prices. The median income for the State of California is $61,030.

You may be wondering how this relates to Aliso Viejo Homes, Laguna Niguel Homes and Dana Point Homes. These are the areas that we have seen a lot of activity in first time home sales with people buying a home, getting great deals. For the beginning of November, 2009 there are 23 homes actively listed for sale in these cities with a maximum price of $225,000. Most of these are condos; however, there are a couple of single family residences as well.

This is incredible!

Add to this the just announced extension of the tax credit and you should start to wonder why you are waiting to buy a house in Orange County! First time homebuyers and investors alike should be able to see some interesting opportunities.

It’s the end of another great week here in beautiful Laguna Beach! 

It seems that I continue to get the same question from my clients and friends, and that is: Should I Buy a House Now or Wait?

 While I don’t claim to hold a crystal ball, and cannot see the future of the economy,

I can give you the Top 5 reasons to buy a California home right now.  Consider

this as you enjoy your weekend and as always, feel free to call me with any of your

real estate questions!

The National Association of Realtors is running advertising right now asking the question, “Why are you sitting on the fence?” For the cynical out there, you may be thinking that this is a shameless way for the Real Estate industry to drum up business. After a few lean years real estate agents are hungry for a sale, you may think.

Well, while it may be true that some agents have dropped a few pounds and have had to tighten their belts just like everyone else, the good agents are keenly aware of the great deals that are out there. They are on the phone, sending emails, and educating their clients about what is happening in the industry and in the real estate market.

There are fantastic deals available, and the smart money is investing in these deals as a way to expand their wealth base and take advantage of the opportunities right now, while others are still sitting on the fence.

Is this the bottom of the real estate market? Well, nobody knows for certain, and pundits on both sides of the issue make a strong case for whether or not we have seen the bottom. While it’s interesting to hear what “they” have to say, at the end of the day it is your family’s financial well being and quality of life that should determine if you are ready to buy a home. Most often, the bottoms are not recognized until we are well on our way back up and many opportunities are missed.

Affordability: Across the nation for various reasons, prices have declined.  The counties that experienced the greatest increases in prices are now experiencing drops in prices which are starting to look like great buying opportunities.

Low Interest Rates: True, lending standards have tightened up; however, there are still loans to be made. Buyers are taking advantage of conforming and FHA loans where rates can still be found in the 5% interest range. With FHA financing available in the Orange County area, the increased loan limit of $729,750 is looking especially attractive. Even borrowers with a credit score as low as 580 can consider a home purchase in today’s market. It is best to talk to your lender or mortgage broker to get the most recent information on the loans available to you.

Government Incentives:  Don’t miss out on this one. Many homeowners have claimed that it is the $8000 tax credit offered for 2009 that prompted them to take the step into home ownership. This tax credit expires December 1, 2009 so don’t wait if you want to qualify for this benefit.

Mortgage Protection Programs: For those that may be concerned with the viability of their employment, there could be a program to assist with your mortgage payment if you become unemployed. The California Association of Realtors (C.A.R.) offers the Housing Affordability Fund Mortgage Protection Program for first time home buyers who lose their jobs due to layoffs. There has also been mention of some lenders that are offering similar programs so be sure to ask your loan specialist about this option. Also, another insurance program that has always been available is through disability insurance which applies if you become disabled. Be sure to check out all your insurance and “safety net” options so that you can weather out the storm of any unforeseen event.

Choosing to live the life you want in an area you choose: Do you love your neighborhood, your school district, your commute, your view, your community, the size and “feel” of your house? If you cannot answer with a strong “Yes!” to any of these questions, then now may be the perfect time to step up and live the life you’ve always dreamed of. For the coastal communities of Orange County and Laguna Beach, that means waking up to the smell of the ocean and cool ocean breezes; a year-long temperate climate; great restaurants, entertainment and schools; a short drive or walk to the beach to surf or sun. It’s a lifestyle choice…is it yours?

As always, feel free to request a Market Snapshot of the areas that interest you most!