FDIC Unveils Aggressive Mortgage Plan

Today the FDIC unveiled a plan that would help past due borrowers. It is still only a proposal and needs to get the Treasury Department's approval. Otherwise it would need to get approved by Congress or wait for review by President-elect Barack Obama's administration. The plan is very interesting and has the potential to help nearly 2.2 million borrowers. The plan would cost an estimated $24.4 billion, which could come from the $700 billion bailout Congress approved last month. To view more information on this mortgage proposal, please click on the link below to view the article from CNN.

Mortgage Proposal Article

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Should I Buy or Should I Wait?

The question almost every potential home buyer is thinking now is - should I buy now or should I wait? I get asked this many times each week. Based on the research I have done, I definitely know that now is the best time to buy. Coming from a Realtor, it doesn't mean a whole lot, especially if I get paid to sell homes. So instead of you just taking my word for it, I figured I would give you some information that should help you make a much more informed decision.

As you may already know interest rates have been very volatile and since the beginning of the year they’ve increased. The good news is historically speaking they’re still very low...a conforming 30 year fix rate loan is currently ranging between 6.0% - 6.5% with zero points.

Although rates have remained historically low most experts agree they will move higher sooner than we think! One reason for this expectation is that the Federal Government controls inflation by increasing interest rates…and inflation will most likely become a serious concern very soon.

Take a closer look at the potential risks of waiting for home prices to continue to drop versus the potential benefit. Let’s assume we waited another full year and let’s say home prices did indeed drop another 10%. During this same time frame let’s assume interest rates increased by about 1%. (Note: interest rates were at 5.5% in Feb 2008 and now they’re consistently above 6%. Therefore, assuming a 1% increase one year from today is very realistic and might even be considered to be a conservative estimate.)

Here’s the effect this scenario would have in terms of our monthly mortgage payment:

Today…

Sales Price $250k
Down Pmt. $50k (20%)
Loan Amt. $200k
Rate 6.25%
Payment $1231

One Year Later…

Sales Price $225k (10% less)
Down Pmt. $45k (20%)
Loan Amt. $180k
Rate 7.25% (1% higher)
Payment $1228 (potential benefit of waiting…save a whopping $3 per month)

The potential risks (reality) we face by playing the “waiting game” or trying to time the “bottom” of the market:

- Lenders continue to tighten their guidelines making credit less available

- “Life” happens and our current ability to qualify today may be affected tomorrow

- More buyers/competition will enter market and create bidding wars which results in price increases

-Purchase after 12-31-08 and we’ll have to wait until 2010 to benefit from Homestead Exemption

- Federal Income Tax Credit of $7,500 available today expires June 30, 2009

- The same dream home available today based on our needs will almost definitely be gone by next year

The fact is very few of us (if any) are able to time the bottom of any market correctly. By the time we see the “bottom” we’re looking at it through our rear view mirror which means the opportunities have past us by.

Unless you’re trying to save $3 dollars per month, the risks clearly out weigh the benefit.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Halloween Safety Tips for Children

If you have been a reader of my blog, you probably know that it is usually about real estate. You also probably know that it is about other topics as well. One of the things that is really important to me is helping parents find their missing kids. Halloween is a holiday that many people love to celebrate, but unfortuantely can also be very dangerous if we are not careful. Below are some Halloween safety tips for children from the Missing Kids website.

1. Be sure older children TAKE FRIENDS and younger children are accompanied by a TRUSTED ADULT when "Trick or Treating."
   
2. Accompany younger children to the door of every home they approach and make sure parents and guardians are familiar with every home and all people from which the children receive treats.
   
3. Teach children to NEVER enter a home without prior permission from their parents or guardians.
   
4. Teach children to NEVER approach a vehicle, occupied or not, unless they are accompanied by a parent or guardian.
   
5. Make sure all children wear reflective clothing and carry a glow stick when out at dusk and at night.
   
6. Make sure children are able to see and breathe properly and easily when using facial masks. All costumes and masks should be clearly marked as flame resistant.
   
7. Teach children to NEVER approach a home that is not well lit both inside and outside.
   
8. Teach children to stay alert for any suspicious incidents and report them to their parents, guardians, and/or the proper authority.
   
9. Teach children if anyone tries to grab them to make a scene; loudly yell this person is not my father/mother/guardian; and make every effort to get away by kicking, screaming, and resisting.
   
10. Consider organizing or attending parties at home, in schools, or in community centers as a good alternative to “Trick or Treating.”

HAVE A SAFE AND FUN HALLOWEEN!

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

September 2008 South Florida Real Estate Stats

Here are some quick stats on the South Florida (Miami-Dade County) real estate market from September 2008. Contrary to what we hear in the media, sales are actually not that bad. Between single family homes and condos, there were 1,009 closed sales that took place in September. There were also 1,666 homes and condos that were placed under a sales contract and are just waiting to close. The months of inventory of homes for sale is 42.1 months. This number is still pretty high but a lot less than some recent months when there were over 70 months of inventory. For those homes that sell now days, the average amount of days they are on the market before a closed sale takes place is 120 days. The price that the home sales for is 90% of the last price it was on the market for.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Quick Mortgage Fraud Stat

Florida leads the nation in mortgage fraud, accounting for about a quarter of the nation's fraudulent loans, according to industry trade groups. Many people think that South Florida is number one in the nation for mortgage fraud. Although it would seem to make sense to assume this because South Florida had some of the greatest price appreciation during the housing boom and had very lax lending standards, Fort Myers is number one in the nation in mortgage fraud per capita. Because there are so many ways that innocent buyers or sellers get trapped into mortgage fraud without knowing it, it only makes sense to use an experienced Realtor, who is familiar with mortgage fraud, when entering into a real estate transaction.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Latest Real Estate Scheme

Today a large percentage of homes on the market for sale are foreclosed properties owned by banks, also known as REO's. Because they have been foreclosed, all of these homes are vacant and have lock boxes on the front door with the keys inside them. It is very easy for Realtors, appraisers, etc to get the combination to access the keys. To make it more convenient for accessibility, most banks use the same codes for all of their properties. If a person in the real estate industry knows a property is for sale by a particular bank, the odds are that they can get into the home without giving any of their information to any one. Due to this, a new real estate scheme has surfaced.

The real estate scheme works the following way. The crook gets a list of homes owned by a particular bank thru the MLS (multiple listing service) without giving any personal information. Since he knows that bank's lock box codes, he drives by these homes and previews them by himself. He will try to find a home that is in fairly good condition and also in a remote area without too many neighbors. The crook will also make sure that this home will be one that probably won't have that many showings. The next step is for the for sale sign to be removed. A rental ad for that home will be listed in the newspaper or somewhere else with a contact number for the crook. This number will be a number that will later be disconnected when the scam is over. The rental price will be a very good value for a potential tenant. When the tenant meets up with the crook, the crook tells the person that he can discount the price even more if the person pays his upfront money (first month, last month, and security deposit) with cash instead of a check. The tenant pays the upfront money in cash, signs what turns out later to be a meaningless lease, and moves in. The crook takes the cash and vanishes into thin air, never to be heard from again. Eventually the bank finds out that their home is not selling and that someone is living in it.

The bank can't just tell the person to leave the home. Because the tenant is a victim of a crime and has established that home as his residence, the tenant is entitled to an eviction process, which could take the bank many many months to resolve.

The reason I am writing all the steps to this real estate scheme isn't too teach someone how to be a crook but rather how important it is to use an experienced, trust-worthy Realtor to do a background check on a rental property. A good Realtor will check and make sure that the property is actually owned by the landlord, check to make sure that the landlord isn't past due on the mortgage or in foreclosure trouble, and check on many other things.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Updated Real Estate Stats

I'm sure all of you keep hearing about our failing economy and horrible housing market in the media every day. Many people have the perception that it is a terrible time to buy real estate and that no one is buying anything. Based on recent statistics from August 2008 (below), it seems like the opposite is true.

BROWARD

Sales of Single Family Homes are up 12% ..... but median sale prices down 27%!

Sales of Condos are remaining the same ..... median sale prices down 25%!


MIAMI

Sales of Single Family Homes are up 22% ..... but median sale prices down 30%!

Sales of Condos are up 13% ..... median sale prices down 20%!

Median Sale Prices are down probably due to short sales, foreclosures, and bank owned properties (REO's).


Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

Feds Take Over Fannie Mae and Freddie Mac

The government took over Fannie Mae and Freddie Mac yesterday. The stock market reacted very favorably to this news with the DOW Jones going up over two hundred points. So how does the news of the Feds taking over these two mortgage giants affect you? Please click on the link below to read an article on the topic from BankRate.com.

How the Fannie and Freddie Takeover Affects You

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

IndyMac Borrowers Get Some Help

Yesterday the FDIC (the Federal Deposit Insurance Corporation) said it would offer new mortgages to thousands of troubled homeowners whose loans came from or were serviced by IndyMac Bank, which failed in July.

To read the full story from the Sun-Sentinel, please click on the link below.

IndyMac Borrowers Get a Do Over

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

First Time Home Buyer Tax Credit Fact Sheet

2008 Housing Stimulus Legislation
First Time Home Buyer Tax Credit Fact Sheet

Who is Eligible?

1. The $7,500 tax credit is available for first time home buyers only.

2. The law defines a first time home buyer as a buyer who has not owned a home during the past three years.

3. All US citizens who file taxes are eligible to participate in the program.

Types of Homes that Qualify for the Tax Credit

1. All homes, whether single family, town homes or condominiums will qualify.

2. However, there are several conditions:
a. The home must be used as a principal residence, and
b. The buyer has not owned a home in the prior three years.

3. The Tax Credit includes newly constructed home.

Income Limits

1. Home buyers who file as single or head of household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less that $75,000 annually.

2. For married couples filing a joint return, the income limit doubles to $150,000 annually.

3. Single or head of household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first time home buyer tax credit.

4. Married couples filing jointly who earn between $150,000 and $170,000 annually are eligible to receive a partial first time home buyer tax credit.

5. The credit is not available for single taxpayers whose AGI is greater that $95,000 and Married couples filing jointly with an AGI that exceeds $170,000 annually.

Effective Dates for the Tax Credit

1. First time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009.

2. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable

1. A refundable credit means that if you pay less than $7,500 in federal income tax, then the government will write you a check for the difference.
a. For example, if you owe $5,000 in federal income tax, you would pay nothing to the IRS and the will send you the difference of $2,500.
b. If you are due to receive a $1,000 tax refund then your refund will total $8,500. ($1,000 plus the $7,500 tax credit)

2. If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax return.

Payback Provisions

1. The tax credit is an interest free loan that must be repaid over 15 years.

2. The minimum repayment amount must be 15 equal annual installments. For example, if the credit amount is $7,500, then the home buyer must repay a minimum of $500 each year for 15 years.

3. A home buyer must begin repaying the credit two tax years after claiming the credit. For example, if the credit is claimed on the 2008 tax return, repayment of $500 (or less, if the credit amount is less than $7,500) per year begins with the 2010 return.

4. If the home owner sells the home for a profit and there is a remaining credit, then the home owner is required to repay the remaining credit during the tax year of the home sale. The amount of the repayment will depend upon the amount of profit from the home sale:
a. If the profit on the sale is more than the remaining credit, then the home owner must repay the entire remaining credit.
b. If the profit on the sale is less than the remaining credit, then the home owner must repay an amount equal to the profit on the home sale. The remaining credit payback will be forgiven.

5. If the home owner sells the home but did not make any profit on the home sale, then the remaining credit payback would be forgiven.

Further information regarding the tax credit may be found at ww.FederalHousingTaxCredit.com or www.irs.gov.

This information is provided for general awareness only, and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. Please consult with your tax professional for complete details.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

President Signs Housing Bill

Today President Bush signed into law a massive housing bill that is to offer affordable government-backed mortgages to homeowners at risk of foreclosure, and to bolster Fannie and Freddie with a temporary rescue plan and a new, more stringent regulator. To get all the details, please click on the link below.

President Signs Housing Bill

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

"Last Lecture Professor" Dies

I'm not sure if you read my post in March about one of the most inspiring people I have come across in my life, Randy Pausch. If you haven't, please take a few minutes to read and view the video from my earlier post.

Randy Pausch Post

It is with great sadness that I report that Randy passed away today at his home in Virginia. Many times in life we get wrapped up with our daily struggles and aren't really aware of what is really important. Thank you Randy for teaching me and millions others what life is all about.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

FHA and VA Loans

In today's South Florida real estate market, we are seeing more and more FHA and VA loans. I will go into much greater detail about these loans in a future post in this blog. For now, here is some basic information. A person DOES NOT have to be a first time buyer to qualify for an FHA loan, and a person MUST have served in the military to qualify for a VA loan. Both FHA and VA loans allow the home buyer to put down a much smaller downpayment than a conventional loan. This is the main reason more and more people are doing these types of loans today. If you do decide to ask your bank or mortgage broker to see if you qualify for one of these loans, below is a list of items that hold up FHA and VA (government) loans as well as some recommendations on making them smoother transactions.

1) Tax returns must be SIGNED and DATED even if they were filed by an accountant or online. (Full return w/all schedules must be included)

2) Bank statements must include NAME of the bank and the customer, Account number, and cover a 30 day history. If they are online statements they must be printed directly from a secure website indicated by “https” at the bottom of the printout. If they are provided by a bank employee, ALL pages must be signed, dated, and stamped.

3) A pest inspection must ALWAYS be done for VA loans and submitted to the lender for approval. If the inspector comments on items like rotted wood, be prepared to fix them in order to close the transaction. Also, if the inspector “calls for action” by checking a box or making comments be prepared to fix those items before closing. (example - soil line is too high, wood to ground contact, etc.)

4) Contract must be signed and dated by all parties, as well as all changes initialed/dated by all parties. This can no longer be taken care of at closing.

5) Do not put items in the contract such as “Seller to pay buyer $500 for repairs.” Anything the seller is paying to the buyer must be “towards closing costs” or paid directly to a third party vendor. (example - handy man, home warranty, etc.)

6) You should not leave for vacation during the process or the day after closing. Delays that are out of control happen with government loans.

7) As noted above, delays happen many times on government loans. Don't set up appointments with movers, contractors, parties, etc. for the day after closing. The mortgage company understands and cares that customers have obligations but sometimes delays are unavoidable. Don't schedule appointments a week after the closing date.

8) Turn in the contract as soon as possible to the lender. If there are changes required that must be initialed, sellers can get very irritated when they have to tend to the contract again a couple of days before closing.

9) The worse the credit, the more documentation required.

10) Government loans require a lot of documentation so don’t allow yourself to become frustrated. It is imperative for everyone to cooperate fully in order to have a smooth government transaction.

11) All VA applicants must have their Certificate of Eligibility (COE). If they have never used their VA benefits before, the lender can generally obtain this online instantly. If you have used your benefits before, this process can take SEVERAL WEEKS! Make sure this is taken care of before you find a home, so you can close on time.

12) All FHA/VA applicants must have 2 years of work history. School/College does count. If the customer does not meet this requirement, they will have to provide a satisfactory letter of explanation telling us why.

13) An offer letter is not sufficient to show income for FHA/VA loans. You must provide a pay stub including 30 days history prior to closing, NO EXCEPTIONS!

14) If you receive a gift for down payment and closing costs, you must show this transaction properly by way of a gift letter. There should be a paper trail proving transfer of funds from the donor to the recipient (example - Gift letter filled out by both parties as well as a copy of the cancelled check. Sometimes donor will be asked for a bank statement to prove ability to gift funds.). This is very important.

Please print this information and refer to it as a checklist, and I can guarantee you that it will save you a great deal of stress and heart ache that previous home buyers had to go thru.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

What is Title Insurance?

Title insurance is something that most buyers and sellers have heard many times, but the majority of those people aren't exactly sure what it is. So what is title insurance? Title insurance provides coverage for losses due to defects in title that occurred prior to a new homeowner's ownership. It is the only protection against things such as unpaid taxes and liens, judgements against the seller, fraud or forgery on deeds and wills, missing heirs, transfers of title by a minor, or other issues that might go undetected until after closing and which could possibly jeopardize the new homeowner's ownership and investment.

Why does someone need title insurance? There are many defects in the title that may not be revealed in the title examination. Some examples of these hidden defects might be fraud or forgeries on documents such as deeds and wills, missing heirs, defective deeds, clerical errors in records, claims arising because a married person conveyed property without his or her spouse, and transfers of title by a minor. An owner's title policy will protect and defend the homeowner's investment if any claims are made against the property, whether the claim in valid or not, at no additional cost to the homeowner.

I hope the above clears up some of the confusion that many of us have about what title insurance actually does. As with every case, it is always best to consult a real estate attorney if a problem with your title ever arises.

Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com

How Do I Sell My Home in Today's Market?

How do I sell my home in today's real estate market? That is a question that is asked a lot now days, especially in a depreciating market. There was an excellent article in today's Sun-Sentinel that gave home seller's a blue print of what to do in order to sell their home quickly. The article is below.

How Do I Sell My Home in Today's Market?


Amit Bhuta
Real Estate Helper
Kendall Village Homes
(305) 439-3031
www.DadeCountyMLS.com