Shopping for Your Home

Wednesday, December 26, 2012

Don’t Drench Your Home Sale by Ignoring Plumbing Issues




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)

A plumbing checkup should be among your top priorities when preparing your home for sale. Your buying prospects might flush toilets, turns on faucets and inspect the shower heads, while more seasoned “experts” will look under the cabinets for leaks and check for water spots around key areas. The last thing you want is to drench a buyer’s enthusiasm because you didn’t fix a simple plumbing issue.
Major plumbing renovations may be huge selling points, but many homeowners can get as much credit by simply fixing leaks and changing out a few faucets. If you can’t make repairs yourself invest in a reputable plumber.
Before allowing prospective buyers into your home, make sure you have strong water pressure and that there are no stains on any of the porcelain. Hire a local housecleaning company to remove difficult stains. 
If you do nothing else, take care of any leaks in your plumbing system, as these will be instant deterrents for buyers. Check as much of your plumbing as possible for corrosion or rust. If your house has more than one story, a smart buyer will look at ceilings for water stains from leaking pipes. Make sure to paint the ceiling following repairs.
Prospective homeowners tend to focus on places where they can use their hands, so make sure that all the hot and cold water knobs are easy to turn, and that the faucets do not leak. Also ensure that sinks and tubs drain easily.
Finally, updated fixtures catch the eye of prospective buyers. A relatively small investment for new faucets can pay off when prospects walk through.
No buyer wants problems. Take care of simple plumbing issues and keep your sale from going down the drain.

Ruben Gonzalez can be reached at (562) 507-0754 or Email me.

 Prudential (dba) is an independently owned and operated broker member of BRER Affiliates Inc. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity.

Thursday, December 20, 2012

Setting the Stage for a Home Sale




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)


            “You never get a second chance to make a great first impression.”
            This saying strikes a chord in the real estate industry, where many buyers are quick to jump to a conclusion about a potential home after just one glance. That’s why an increasing number of homeowners are employing professional home stagers to prepare their homes for sale.
            “Much of what staging accomplishes happens on a subconscious level,” said Carla Grammatica, a consultant with Stage Setters in New York’s Westchester County. “You are trying to create a positive association between your house and the prospective buyer. Anyone can change a paint color after they move in, but first impressions are difficult to undo.”
            With 91% of buyers searching first on the Internet for homes, MLS photos and virtual tours are extremely important in the selection process. Staging, as a priority instead of as a last resort, will give sellers key advantages.
            Stagers help eliminate clutter, give advice on adding colors, help in rearranging furniture and bring in various items to help spruce up a home.
            “One of the most important things is getting rid of things that look messy,” Grammatica said. “Life can get messy, especially with kids and storage issues, but you have to pretend that’s not how you live. You have to pretend your house is [always] neat and well maintained.”
            That means picking up shoes from the hallway, removing papers from tables and furniture and even taking down personal items—such as diplomas, pictures and trophies.
—that clutter the walls.
            Professional stagers take into account buyer demographics and buying psychology, and they use design elements in planning out the rooms, space and lighting.         “Some people think that staging is simply cleaning and packing up some of your things, but it is so much more than that,” said Linda Barnett, a certified staging professional with Indianapolis–based Home Matters. “Understanding traffic patterns and highlighting the positive attributes of a home while downplaying its negative features, all go into play.”
            One tip homeowners can do to stage their home themselves is to pack away unneeded items—such as seasonal clothes and old books—and put them in storage.
            It’s also important not to overwhelm potential buyers with wild colors and furniture, even if you think it makes your home “special.”
            Remember, making your home look like a model rather than lived-in can make all the difference in selling a home.

Ruben Gonzalez can be reached at (562) 507-0754 or Email me.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Tuesday, December 11, 2012

Setting the Stage for a Home Sale




By: Ruben Gonzalez Jr.
Prudential California Realty (DBA)


“You never get a second chance to make a great first impression.”
            This saying strikes a chord in the real estate industry, where many buyers are quick to jump to a conclusion about a potential home after just one glance. That’s why an increasing number of homeowners are employing professional home stagers to prepare their homes for sale.
            “Much of what staging accomplishes happens on a subconscious level,” said Carla Grammatica, a consultant with Stage Setters in New York’s Westchester County. “You are trying to create a positive association between your house and the prospective buyer. Anyone can change a paint color after they move in, but first impressions are difficult to undo.”
            With 91% of buyers searching first on the Internet for homes, MLS photos and virtual tours are extremely important in the selection process. Staging, as a priority instead of as a last resort, will give sellers key advantages.
            Stagers help eliminate clutter, give advice on adding colors, help in rearranging furniture and bring in various items to help spruce up a home.
            “One of the most important things is getting rid of things that look messy,” Grammatica said. “Life can get messy, especially with kids and storage issues, but you have to pretend that’s not how you live. You have to pretend your house is [always] neat and well maintained.”
            That means picking up shoes from the hallway, removing papers from tables and furniture and even taking down personal items—such as diplomas, pictures and trophies.
—that clutter the walls.
            Professional stagers take into account buyer demographics and buying psychology, and they use design elements in planning out the rooms, space and lighting.         “Some people think that staging is simply cleaning and packing up some of your things, but it is so much more than that,” said Linda Barnett, a certified staging professional with Indianapolis–based Home Matters. “Understanding traffic patterns and highlighting the positive attributes of a home while downplaying its negative features, all go into play.”
            One tip homeowners can do to stage their home themselves is to pack away unneeded items—such as seasonal clothes and old books—and put them in storage.
            It’s also important not to overwhelm potential buyers with wild colors and furniture, even if you think it makes your home “special.”
            Remember, making your home look like a model rather than lived-in can make all the difference in selling a home.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail me.

Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Wednesday, December 5, 2012

Don’t Curb Homebuyers’ Enthusiasm with a Shabby Exterior





By Ruben Gonzalez Jr.
Prudential California Realty (DBA)


            Home sellers spend so much time preparing their interior for the sale that they can easily overlook what’s going on outside of the home. Yet great curb appeal can increase the value of a property by as much as 15-20%.
            Mario Garcia, a landscaper in Bethesda, Md. who helps prepare homes for market, says a well-manicured lawn is a magnet for buyers. On the other hand, overgrown trees or large bushes hiding the house are a no-no.
Buyers associate the condition of the exterior and landscape with the condition of the interior,” Garcia explained. “Curb appeal must invite buyers to view the rest of the property.”
            Landscaping fixes include adding flowers or sprucing up the property with decorative grasses or Japanese maples. Accent the trees with rocks or boulders for a bold statement. Consider adding a modest fountain to the yard or garden.
            In addition, rake leaves, wash windows and skylights, clean gutters and trim shrubs. Add low voltage lighting to highlight the yard, trees and the home’s exterior.
            And you needn’t spend a ton of money to make a difference. “Do something as simple as putting up a new mailbox and address decals on your home,” said Anne West, owner of Wilmette, Ill.-based Redesign Doctor. “Also, adding a new welcome mat with a grouping of potted plants by the front door makes things more inviting.”

 Ruben Gonzalez can be reached at (562) 507-0754 or Email me.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Thursday, November 29, 2012

Value of Takeaways


 

By Ruben Gonzalez Jr.
Prudential California Realty (DBA) 

 

            A time-honored business principal maintains that consumers generally base their buying decisions on emotion. Only later do they use logic, often to rationalize their emotional decisions.   

            Homesellers, working closely with their agents, will prepare their homes to evoke positive and personal emotions for those who come inside. They should also create “takeaways” that will keep those fond memories resonating in prospective buyers.

            “One effective takeaway is a personal letter from you describing your experience of falling in love with the home when you were the buyer,” said Kay Steele Faulk, a Lake Village, Ark. freelance writer.

            The letter, presented on brightly colored stationery, can describe the fun of meeting your new neighbors and the warm friendships you’ve established in the neighborhood. It can also recall joyous holidays around the home, show pictures of your home during special times and list neighborhood activities scheduled throughout the year.   

            “You should recall a memorable moment of coming home, such as after the birth of a child or after a long vacation, because these are all things buyers can relate to emotionally, they will serve to reinforce the positive feelings buyers experienced at your home,” Faulk said. “And to satisfy buyers’ logic—which they will use to justify their emotional connection to your home—also describe the loving care you’ve given the home while there.”

            Once all the words are in play to touch upon the emotions, then it’s time to write about things that will relate to buyers’ practical sides.

            Russell Goldstein, a New Jersey-based writer who often helps homebuyers prepare personal letters, stresses that this is the perfect way to say all the little things you can’t always place in advertisements and fliers.

            “You can list your routine maintenance tasks plus any remodeling, updates or upgrades you’ve done in the years you have lived there,” he said. “Include anything that gives buyers a sense of confidence in your home’s current condition, and be sure to mention any special features you paid high dollar for, such as thicker exterior walls, which have better insulation values. These are your home’s key marketing details that make it a better buy than the competition down the street.”

            A second effective takeaway is a home brochure created around high-quality color photographs of your home’s interior and exterior. “Use photos that highlight your home’s most appealing features,” Faulk said. “Just be sure each photo has a caption or short description that helps buyers remember. Even with a brochure, you still need that all-important section meant to satisfy buyers’ logic. This can simply be a descriptive sentence followed by a list of your home’s key marketing details and the T.L.C. you’ve given [the home] as owner. To make for easy reading, use bullet points to highlight each item of your list.”

            If you’re good at writing warm personal letters or if you have the ability to create a professional-looking brochure, it’s quite acceptable to save money by doing it yourself. If not, turn to a professional copywriter to create a compelling takeaway that ensures a lasting emotional connection with buyers.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail me.
 
Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Saturday, November 24, 2012

Technology and Home Sales




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)

            Today’s home buyers are often thinking about a home’s technology advantages as much as they are its floorplan, square footage and location.
            A recent survey by the Consumer Electronics Association of real estate agents showed that home-theater systems, home security systems, home automation management systems and energy management systems are selling faster than they ever have.
            “There is a strong relationship between home technologies and the real estate market,” said CEA’s Rhonda Daniel in a recent press release. “While the market needs to recover before home technologies play a more important role in home sales, the industry can help prepare real estate agents to be comfortable in discussing these types of systems with their clients.”
            According to the survey, the number of real estate agents who have been involved in buying, selling or showing a plugged-in home equipped with technology has risen greatly during the last two years. Those showing established systems such as monitored security were calculated at 93%; home theater or home theater-wired systems were 89%; home automation and management systems were 54%; and energy-management systems were 51%.
            The survey also shows that 68% of REALTORS® believe home technologies will play a more important role in the success of home sales within five years. “Manufacturers and electronic systems contractors should be laying the ground work now to take advantage of the eventual upswing in the real estate market,” Daniel said. “Educating rREALTORS® on the benefits, value and functionalities of installed technologies now will demonstrate that the CE industry can be a trusted partner to equip them with knowledge.”
            Nearly two-thirds of real estate agents surveyed offered that their clients are excited to see technologies in homes. That means current homeowners looking to sell should consider upgrading their home with some sort of home technology system.
            “The ideal goal for the consumer electronics industry is to have knowledgeable real estate agents who are excited and open to promoting technology as a selling feature of homes,” Daniel said.
            A less expensive way to appeal to technology enthusiasts is to simply make sure there are enough outlets, cable lines and phone jacks at the ready so that someone coming with their own equipment will have an easy time installing them. A home with only one outlet in the family room or media room and no place for a fiberoptic line to be added can be a turnoff.
            Thinking of the future may help you sell your home faster in the present.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail me.

 Prudential (dba) is an independently owned and operated member of BRER Affiliates Inc. Used under license with no other affiliation with Prudential.  Equal Housing Opportunity.

Wednesday, November 21, 2012

Wrapping Up Your Home for the Holidays




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)

            In the movie “National Lampoon’s Christmas Vacation,” Clark Griswold may have gone a little overboard with his Christmas lights, but if he was selling his house, he may have had the right idea.
            “Great decorations really set the tone for the holidays, a time when you can showcase your house in a different way to highlight areas that normally may not stand out,” said Amy Cornwell, President/ Lead Designer for Creative Impressions, which specializes in seasonal decorating.
            By creating a festive atmosphere, a home seller allows perspective buyers to envision what their holidays will be like in the property—complete with a beautiful tree, stockings hung from the fireplace mantels and the smell of Christmas cookies in the air.
            “[Buyers] associate a sense of ‘home’ through the traditions and memories of holiday d├ęcor,” Cornwell said. “It’s a great way to attract buyers.”
            Nighttime is when many perspective buyers are driving around looking at houses, and nothing will slow them down more than a great Christmas light display. “A well-designed display adds festive elegance to a home, and highlights the already-present features of the property,” said Brandon Stephens, vice president of Marketing at The Decor Group, Inc., Lubbock, Texas, specializing in interior and exterior holiday decorating.
            In fact, consider holding an open house at night, when you can serve hot chocolate and better show off the Christmas lights, holiday decorations and all that the house has to offer.
            Here are some simple suggestions to ensure your home captures the holiday spirit without interfering in the real estate process:
·        Keep decorations to a minimum so you don’t block views, make rooms feel smaller and disrupt the natural flow of the home. Consider a smaller tree and store gifts in another room.
·        Incorporate fresh evergreen or rosemary into your decorating for a classic look and to promote “the Christmas tree smell.”
·        Make sure light strings and extension cords are tucked away for everyone’s safety.
·        Eschew religious or cultural decorations to not alienate prospective buyers who don’t share your beliefs.
·        Leave a plate of holiday cookies and warm cider or cocoa for prospective buyers.
The holidays are emotional times for most people, including home shoppers. Holiday decorations, presented tastefully and sensibly, can help you wrap a bow on your home for just the right buyer.
Happy Holidays!
Ruben Gonzalez  can be reached at (562) 507-0754 or E-mail me.
 Prudential (dba) is an independently owned and operated member of BRER Affiliates Inc. Used under license with no other affiliation with Prudential.  Equal Housing Opportunity.

Wednesday, November 14, 2012

Green Tips for Your Home




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)

            When it comes to preparing your home for sale in an environmentally friendly way, Kermit the Frog had it wrong. It is easy being green.
            With so many homebuyers seeking green features in the homes they consider, sellers should create an eco-friendly atmosphere for the buyer, and that doesn’t always mean costly fixes.
            It’s always nice for a homebuyer who’s been touring houses all day to find water or a snack waiting for them in your kitchen. Instead of leaving the customary bottled water, go the eco-friendly route and have a pitcher of filtered tap water at the ready. Add some organic fruits and vegetables and keep trash minimized. Also, use glassware and plates instead of plastic cups and paper plates. This practice is not only green, it shows class.
            Talk with your agent about using recycled paper for all your brochures and advertisements around the neighborhood. Someone who is environmentally conscious will appreciate the effort.
            Another way to act “green” is during your de-cluttering stage, when you remove furniture and other items from your home prior to the home’s listing. Instead of simply throwing out all those things you no longer want or need, you can recycle, resell at a garage sale, donate to a charity, or give away the items at the popular website Freecycle.com.
            Big fixes around the home can go a long way, too. In this age of global warming and high-energy costs, more buyers are looking for houses that embrace energy conservation. The simplest upgrade is to replace all the light bulbs in the home with CFLs (compact fluorescents), which use a quarter of the electricity as regular bulbs.
            To help with heating, make sure cracks are tightly caulked and leaks are sealed. Doing so can reduce your annual heating bill by $100, according to Department of Energy figures.
            Justin Barnes, a policy analyst for the Database of State Incentives for Renewables & Efficiency, funded by the U.S. Department of Energy, said some of the easiest green fixes deal with appliance replacement. Most of today’s appliances are highly efficient and will reduce your energy bills. They’re also more attractive than their worn-out predecessors.
            Barnes also suggests replacing doors and windows if the budget allows, and looking for better ways to insulate the home.  
            Also consider tankless water heaters, which are energy efficient and ultimately use less water during the heating process.
Don’t be afraid to boast about your green home and any recent enhancements. Working with your agent to highlight your eco-friendly features may just be what makes the difference in completing the sale.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail me.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Saturday, November 10, 2012

The Psychology of Color on your Home




By Ruben Gonzalez
Prudential California Realty (DBA)

Agents frequently suggest that homeowners paint before placing their homes on the market. Don’t be offended!
Agents understand “color psychology,” which focuses on color’s effect on human behavior and emotion. Since people’s reaction to color is immediate, color has a tremendous influence on the choices they make every day.
“Color choices are very personal and when selling your home, it’s critical to appeal to the greatest number of potential buyers,” said Allegra Dioguardi, president of Styled and Sold Home Staging in New York. “With so many people beginning their search for a home on the Internet today, your home and listing photos must stand out from your competition. Color is one very simple way to do this.”
Added Eric Brown, one of the authors of House Selling for Dummies: “Painting your house’s exterior before you put it on the market will give the biggest bang for your fix-up buck, as long as you are using colors that conform to the neighborhood’s decorating norm.”
Colors affect human beings in many ways, and by using the principles of color psychology, you can make your home stand out from the competition, sell more quickly, and at a higher price. In short, the stimulus and effect of colors normally cross cultures. Blues will feel cool, reds and oranges feel warm. Deeper shades of color imply intimacy and serenity.
Your home’s exterior color is the first thing most potential homebuyers see when they drive up or inspect the property on the Web. The correct color may be the most powerful and cost effective design tool at your disposal.
What is “correct” these days? Brown’s research shows that homes painted in pale yellows with cream or beige accents have sold fastest during the past few years.
In general, lighter colors are favored for exterior as they make the property seem larger. Conversely, painting your sideboards with a darker color will make the house seem smaller, though dark colors can draw more attention to home’s details.
For those painting an older home, you may want to consider historical accuracy, as this could be a big selling point as well.
When choosing interior colors for the home, consider the purpose of each room. Kitchen and dining areas painted in “food colors” such as coffee browns, celery greens and scrambled-egg yellows will make the rooms feel more natural.
Hallways are a great place to bring in the exterior colors for overall harmony.
According to Jeanette Fisher’s book Joy to the Home: Secrets of Interior Design Psychology, since, deeper shades of color imply intimacy and serenity, she recommends painting master bedrooms a medium shade of green or blue for warm selling seasons, and rouge red for cooler weather. Other bedrooms can be painted in creamy tones of green, blue, or a pale shell pink.
For your bedroom and bathroom, cool colors can form a relaxing atmosphere with paint. Consider shades of blue, green or even lavender.
Of course, common sense should help you with any color choices. You need to match other things in your home and keep a comfortable environment as well.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Monday, November 5, 2012

The Importance of Assets





By Ruben Gonzalez Jr
Prudential California Realty (DBA)


            Mortgage lenders dissect the entire credit history of a potential client with strict attention to income, credit, collateral and assets. Of the four, assets are perhaps the least discussed yet may be the most important in securing credit and buying a home.
            Simply put, assets include the amount of money needed for the down payment, in addition to closing costs, pre-paid costs such as insurance and taxes, escrow fees and funds that would be available in case of an emergency.
            “Assets may be the truest reflection of a borrower’s fiscal strength,” Dean Hartman, regional vice president for Benchmark Lending, Melville, N.Y., in his post on the KCM (Keeping Current Matters) blog site. “Their ability to save and properly budget could be a significant indicator to their future paying habits.”
            Common assets considered in a mortgage loan application include stocks, bonds, mutual funds, 401K and retirement accounts, life insurance, cars, boats, antiques, jewelry and other real estate.       
            The source of the assets is also important. Anyone who has attempted to secure a loan recently knows that restrictions have tightened, and when borrowers are paying off credit cards to get their ratios in line, lenders want to know where the money came from. 
 “For instance, we can obviously see a direct deposit from your employer or a transfer from one account to the next,” says Justin Miller, a mortgage broker for FEMBi Mortgage, Fort Lauderdale, Fla. “If we cannot determine this, we will need a letter of explanation and show proof of where it came from. My suggestion is to not make any cash deposits or take any monies from someone personally unless it is going to be a gift from a relative.”  
            Large and recent savings deposits raise underwriter concerns as they can indicate loans that have yet to appear on borrowers’ credit reports. Borrowing from relatives to boost savings and creditworthiness also doesn’t help. If funds aren’t reflected on income statements and tax returns, they can’t be used to qualify for mortgages.
            Indeed, make sure your assets are in order with proper documentation. Your preparation can speed you on the road to homeownership.

Ruben Gonzalez can be reached at (562) 507-0754 or E-mail.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Thursday, November 1, 2012

Mortgage Points: To Pay or Not to Pay




By Ruben Gonzalez Jr.
Prudential California Realty (DBA)


            If William Shakespeare financed a home today he’d probably ask on the subject of mortgage points: “To pay or not to pay? That is the question.”
            Homebuyers direct the same question to their real estate agents. Here are some perspectives:
            In its simplest definition, a point is an additional loan fee that is paid to the lender in exchange for a lower interest rate. It’s called “buying down,” and it allows you to reduce your rate for the life of the loan.
            Let’s say you secured a mortgage loan for $500,000 without points, at 4.6% on a 30-year mortgage, your payment would be approximately $2,560 a month. If you paid two points ($10,000), the interest rate in this example would go down to 4.1% and the monthly payment would decrease to around $2,415, a savings of $145 a month.
            In this scenario, it would take you about eight years to recoup the money you paid up front, so if you are planning on staying in your home a while, this will save you money in the long-run.
Home buyers must answer some key questions to determine if paying points is a wise decision. Specifically:
·         How long will you keep the home?
·         Do you have extra money to pay points?
·         Could that money be better used for something else?
Money managers may suggest that a smarter option is to invest that $10,000 because you could do much better than your $140 savings, but you have to weigh the variables.
            “Paying points depends on your career, your interests and all the things that predict your future,” said financial advisor Thomas Watkins of Total Mortgage Services in Milford, Conn. “Points are paid up front while your savings will be spread out into the future. Therefore, you get more benefit if you own your home longer, or if you don’t refinance for a long time.”
            The rule of thumb when it comes to points is simple: If you plan to stay in the house for less than three years, do not pay points. If you plan to stay in the house for more than five years, pay 1 to 2 points. If you’ll be in the house for three to five years, paying points doesn’t make a significant difference.
            Another important aspect to consider: Since points are interest-payment related, they are fully deductible on your taxes in the year that you close. See your tax advisor for details.
            Mortgage points can add up to valuable savings over the course of your loan, but the future isn’t always predictable. Even if you “plan” on staying in your home for
20 years, changes in your career or family life could alter the plan.

 Ruben Gonzalez can be reached at (562) 507-0754 or E-mail 

Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Saturday, October 27, 2012

Credit Score Requirements Ease for Some



By Ruben Gonzalez Jr
Prudential California Realty (DBA)


Tight lending guidelines have weighed on the U.S. housing market during its ongoing recovery. Most lending institutions during the past two years raised their credit score requirements to as high as 650, making it nearly impossible for many people to obtain a loan.
Wells Fargo made it a little easier for homebuyers this past year, when the lender lowered its credit score requirements on FHA mortgages.
“Under its new policy, Wells Fargo will accept borrowers with credit scores of 500 to 579 if those borrowers can make a down payment of at least 10%,” said Robert Lentini, a mortgage expert who blogs for the website thetruthaboutmortgage.com. “For borrowers with credit scores of 580 to 599, borrowers must put down 5%. Borrowers with credit scores of 600 or higher can make a 3.5% down payment.”
Quicken Loans, Inc. adapted similar policies— dropping to a minimum 580 FICO score. “There are folks who have steady incomes and a solid payment history but were temporarily affected by the economy or a life event in some way. These challenges can lower their credit score significantly,” said Quicken Loans Inc.’s Chief Economist Bob Walters in a company statement. “We believe that a credit score, on its own, is not the sole arbiter of a person’s credit worthiness. This change will open up credit to a significant group of people and allow them to again have access to purchase or refinance a home.”
Such developments have been welcome news to FHA Commissioner David Stevens, who earlier this year urged lenders to lower their minimum credit score requirements to help the real estate industry as a whole. Stevens said that stringent requirements have constrained home sales by as much as 20% over the past year.

Ruben Gonzalez can be reached at (562) 507-0754 or Email.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Wednesday, October 24, 2012

Short Sale Guidelines Are Making a Difference




By Ruben Gonzalez
Prudential California Realty (DBA)


The theory behind short sales seems simple enough: If a homeowner owes more money on a house than the house can sell for, and the homeowner is struggling to pay the mortgage, the lender will allow the house to be sold for less than is owed.
For obvious reasons, lenders are not big fans of short sales and often make it a complicated process.
In April 2010, The Home Affordable Alternatives Program (HAFA) released new guidelines designed to streamline the short-sale process and allow more delinquent homeowners to sell their homes and move on with their lives.
In its first year, participating servicers initiated 12,266 HAFA agreements and completed 5,447 transactions.
According to the National Association of Realtors, the share of distressed homes—bank-owned properties and pre-foreclosure short sales— in April 2011 dropped to 37% of total sales volume, down from 40% in March and an average of 39% over the first quarter.
HAFA complements the Home Affordable Modification Program (HAMP), a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments by providing alternatives for borrowers who don’t qualify for or don’t complete a trial modification.
“[HAFA short-sale guidelines] are designed to help people who are unable to keep their home under the HAMP loan modification program,” said Jeff Lischer, managing director for regulatory policy for The National Association of Realtors. “Let’s say you can’t keep your property under HAMP, the next step is a short sale, which is better than a foreclosure.”
It’s estimated that lenders lose about 40% of a property’s value on a foreclosure, whereas the figure is reduced to about 19% on a short sale. Moreover, the short sale is a graceful exit from the ownership, which is better for people’s credit scores.
New rules also add incentives for the short-sale process. One incentive helps sellers relocate by providing them with $3,000 for moving expenses. A second incentive is for mortgage servicers, who receive $1,500 from the federal government for each completed short sale. Under new guidelines, homeowners can secure a short sale approval in advance from the bank representing a minimum net amount the bank will accept.
Lenders participating in the HAFA program maintain the following requirements for homeowners considering short sale: The loan must be less than $729,750, made before Jan. 1, 2009, and the home must be the owner’s primary residence. Also, the homeowner must be delinquent and unable to pay the mortgage, and the homeowner’s mortgage payment must be more than 31% of his or her before-tax income.

Ruben Gonzalez can be reached at (562) 507-0754 or Email.

 Prudential (dba) is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.