House Closings

This year is already shaping up to be the year of the boomerang buyer, or the repeat homebuyer.  As it is now seven years since the housing crash, there are many buyers who experienced a financial hardship in the recent past who are getting back into the market to purchase a home again in 2015.

There were several changes recently to the waiting periods when a buyer or homeowner can obtain a new mortgage and repurchase a home again after a foreclosure, short sale or bankruptcy.  Borrowers today essentially have three options when it comes to obtaining financing to purchase a home. In fact, more than 9 out of 10 mortgages are either funded by Fannie Mae/Freddie Mac, the FHA or VA. So, if you are looking to purchase and need financing, it is more than likely you will be using one of these three financing options and it is important to know the current waiting periods when you can repurchase after a hardship.

After Foreclosure:

• Conventional: Seven years. If you included the foreclosure in a bankruptcy, you can qualify after four years instead of seven years.
• FHA: Three years. FHA buyers can qualify again after just one year if they experienced an economic event.
• VA: Two years.

After Short Sale:

• Conventional: Four years.
• FHA: Three years. If the FHA buyer did not have any late payments before their short sale, they are allowed to automatically qualify again for FHA financing. There’s also a fantastic FHA program called the FHA Back to Work Program. If a buyer experienced an “economic event” whereby their household income fell by 20 percent or more for a period of at least six to 12 months, the agency has now reduced the waiting period to only one year.
• VA: Two years.

After Bankruptcy:

• Conventional: Chapter 7, four years; Chapter 13, two years.
• FHA: Chapter 7, one year; Chapter 13, one year.
• VA: Chapter 7, two years; Chapter 13, one year.

What if you don’t fit into these rules?

There are new mortgage options available for borrowers who do not fit these more traditional mortgage options above. Portfolio lenders are stepping in to provide mortgage options for buyers who cannot qualify for conventional, FHA and VA financing, and with terms much better than private financing.

There are lenders who will provide financing for buyers less than six months out of a foreclosure, short sale or bankruptcy. Of course, this does not come without a price. You need a larger down payment and rates will be higher than traditional loans.

Another part of the puzzle to helping you get in a position to repurchase again is ensuring you have also started to re-establish your credit since the financial hardship.

For example, even though the required timeline of say two or three years may have passed so you can qualify for conventional or FHA financing again, it is important you have also started to rebuild your credit and have the required credit scores to qualify again for financing. The FHA and VA only require a 580 credit score to repurchase again.

The first step is to get a copy of your credit report to verify if the financial hardship or discharge is reporting correctly and to also see what your scores are.

You can go to www.annualcreditreport.com to get a free copy of your credit report (consumers are allowed one free credit report per year).

Then the next step is to start rebuilding your credit scores.

Filed under: Blog, boomerrang homebuyer, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Relocation by Kim Bregman
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For most people, buying a home is the largest and most significant purchase they’ll ever make. Hiring a real estate attorney early in the process will protect you against the unexpected, and ensure a smooth and low-stress closing. Every state and sometimes regions within states have differing requirements. Some states leave that as an option open to the buyer and seller while others mandate it as a necessity. Your local real estate agent should be able to advise you what the protocol is in the area in which you are buying.

A real estate lawyer will protect your rights and interests in the transaction…unless you are using an Exclusive Buyer Agent; they are the only party truly “on your side”. Hiring a real estate attorney is a smart choice.  A real estate attorney takes over after the selling price contract terms have established and all parties have signed.  They will review the contract itself, negotiate repairs based on the home inspection report, and collaborate with the title company.

A real estate lawyer has the experience and training to handle the unique issues regarding real property, and the problems most people can’t anticipate. They see a lot of contracts and know the local customs, and can help cut through roadblocks. In most states a real estate agents cannot draft changes to the contract or give legal advice and very few transactions fit into a “boilerplate” contract. In addition, most Realtor form contracts are drafted to the benefit of the Seller; an attorney will add language to further protect a buyer’s interests.

Your lawyer will review the purchase agreement during the contract review period and will check the fine print of the Conditions, Covenants and Restrictions (CC&Rs) in common interest developments like condominiums, coops, country club communities, developments, and townhome projects.

Your attorney works with your mortgage loan officer, the other party’s attorney and agents to make sure that dates are set for attorney approval, home inspection, title search, mortgage commitment and other contingencies are reasonable and achievable.

Your attorney will also review important documents, including legal descriptions, mortgage loan documents, the property survey, and the title and title insurance policy, and deed.

The attorney will inspect important documents for common mistakes such as typos and misspelled names, including the legal description of the home.

The bill of sale may be another important part of the transaction that categorizes and inventories any personal property, such as appliances or furnishings, that are to be included as part of the deal.

They are also extremely helpful in negotiating for unpaid prorated expenses due to you from the seller, such as: property taxes, condominium assessments, and utilities

In most states, attorneys can change legal language in a purchase contract and void a purchase contract under state laws. You might need this in case an inspection comes back with serious red flags such as mold, plumbing, or foundation issues.

Your attorney attends the closing, to ensure the process moves along efficiently and effectively. In the case of problems/issues, the attorney will counsel and represent you.

Your attorney has no direct emotional involvement in the transaction, and no conflict of interest. You’ll appreciate a levelheaded counselor by your side if the situation becomes difficult.

You’ll receive something of great value: peace of mind!

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings by Kim Bregman
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Your home is more than an investment and a place to live-it also can be a valuable source of tax deductions. For many homeowners, one of the biggest itemized deductions on Form 1040

is the one for qualified residence interest (commonly called the “mortgage interest deduction”). In the usual situation, you can write off all, or almost all, of the mortgage interest you’ve paid for the year.

Under current law, you may claim deductions for three basic types of mortgage interest, up to certain limits:

Acquisition Debt: This involves mortgage proceeds you use to buy, build, or substantially renovate a home. The loan must be secured by a qualified residence (either your principal residence or a second home such as a vacation home). Interest on such debt is deductible on amounts of up to $1 million. Acquisition debt often amounts to the lion’s share of your mortgage interest deduction.

Home Equity Debt: If it’s allowed by the laws of your state, you also may deduct the interest on home equity loans secured by a qualified residence, regardless of how you use the proceeds. But with home equity debt, deductions are limited to interest paid on loans of up to $100,000. In addition, the loan amount can‘t exceed your equity in the home.

Points:  Although points really aren’t mortgage interest, the tax law essentially treats them as if they were. These are the charges a lender may impose when you obtain a mortgage. (One point equals 1% of the amount you borrow.) You can deduct any points you paid for acquisition debt, but you’ll need to deduct charges for refinancing over the term of the loan. For instance, if you refinance a $200,000 mortgage with a 10-year loan and pay two points – or $4,000 – you may deduct $400 in points ($4,000 divided by 10) annually for 10 years.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Home Buyer Advice, Home Buyers, House Closings, Kim Around the Web, Mortgage Information, Real Estate by Kim Bregman
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ANY open permits and or code violations need to be fully addressed and resolved by the potential home buyer, prior to closing.  Failing to do so can be very costly for a homeowner.

Open permits remain with the property, despite any change in ownership.  Failure to uncover any open permits prior to closing means that these permits become the responsibility of the new owner.  Requirements to remedy an open permit can include fines, fees, and completion of pending work and removal of work that does not meet building requirements.  Open permits can be quite costly and time consuming.

Q. What is an open or expired permit?

 An open or expired permit is a permit which has been issued by a County or Municipal building department but has not been formally finalized in accordance with established guidelines, typically by means of a final inspection, within the time provided.  Once the time has lapsed for the permit to be closed by the issuing department it is referred to as open or expired.

Q. Why do I need an open permit search?

One of the biggest obstacles for home sellers these days is the issue of open permits.  Since many Counties have declared war on open permits, homeowners are finding themselves at the mercy of county inspectors when the time comes to close on the sale of their home.  Attorneys and title companies may recommend that buyers not close if a permit search reveals open permits

Q. Will title insurance cover open or expired permits?

A good title company or real estate closing attorney will take care of this for you but you have to ask for it because it normally is not done.  Title companies can close the sale on a property with an open permit on it, and most will never even conduct an open permit search; it’s not the same as a lien search.  You should order an Open Permit Search at the same time you schedule your inspection.

This is a service that I provide for my Buyers. I usually go to the Building Code department of the town or municipality where the home is located and pull the record on all permitted activity on the home.  If there is work that has been done that has not been permitted that is an issue that should be addressed by the home inspector.

Q. Will my closing agent check for open or expired permits?

Oftentimes the person selling the home or their listing agent has no idea about his or her own permit situation. They may have had some work done and their contractor told them everything was good to go and somewhere down the road they will find out that the permit is still open and if you are the new owner this is now your problem to deal with.  Sometimes work was done before the current owner bought the home and they have no idea anything could still be open.

The best way to protect yourself is to do an open permit search.  If you are selling your home it is a good idea to make sure your home has all of its permit issues in order because nothing can kill a deal faster than when a buyer finds out there are open permits  If you are the buyer, take care of it before you face a potential issue in the future.

Q. Who is responsible to close an open permit?

Open permits can be grounds for the title company to balk or the lender to renege on financing.  Uncovering open permits and closing them typically falls on the shoulders of the SELLER but may not be written in a standard contract. Every State or County’s standard contracts vary.  Make sure you understand the terms and conditions involving permits in whatever contract you are using. It often can be grounds for terminating a contract.

Q. Is it really that important? What is the worst that can happen?

If open and/or expired permits exist and are not closed prior to closing, these permits become the responsibility of the new homeowner. The new owner will be responsible for paying all fees and/or fines and will be forced to complete the pending work.  If the permit is not properly closed, the building department may be able to order the removal of the work on the property.

Q:  Found an open permit.  Now what?

If there are any open permits on your home the Building and Zoning Department can provide you with the name and contact information for whomever pulled the permits.  You can then contact the contractor to get the permit closed.

Q:  What if the contractor is no longer in business?

If your contractor is no longer in business, you have a couple of options:

You can close the permits yourself. This involves contacting the Building and Zoning Department; arranging for any missing inspections; following up with inspectors and the department to make sure that the permit is closed on the computer.  Or, you can contact a local permit expeditor to close the open permits for you.

Filed under: Blog, Home Buyer Advice, Home Buyers, House Closings, Real Estate by Kim Bregman
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