What are FHA Buyers to do? The New FHA 203K Loan Option

First time home buyers are growing frustrated as the number of available homes for sale in San Diego County declines. They can't seem to find a home that will qualify for their FHA loan or they can't seem to beat out the all cash and conventional loan buyers.

FHA loans have strict guidelines on what and won't qualify. Homes that will not qualify include those that are missing kitchen cabinets, heaters, toilets, worn roofs, unpermited garage conversion, or perhaps the seller won't pay for the required termite work.

What are FHA buyers to do? Don't give up. Looking through all those foreclosures and homes with deferred maintenance may now be the way to go. A new loan called the FHA 203K has recently emerged onto the scene. It will give buyers the opportunity to buy a home that may be in need of up to $35,000 in repairs. The repairs can include termite work, a new roof, a new kitchen or bathroom updates, converting back an unpermited garage. Often the seller or the bank won't pay for these improvement. Yet without many of these repairs being addressed the home would be uninhabitable. So there is usually less competition for these homes.

How does the FHA 203K loan work? Buyers still need to meet the FHA loan guidelines and bring in their 3 1/2% down . However, the big difference is the cost of needed renovation or upgrades will be added to the loan. The contractors have to be approved and the repairs must be completed within 6 months following the close of escrow. The added inspections and paper work can extend out the escrow a couple of weeks. While the interest rate may be higher than the traditional FHA loan, some sellers may be willing to help with closing costs to pay down interest rates to keep the loan affordable for the buyer and get the home sold.

So FHA buyers don't despair. There is still time to find that first home and collect the $8,000 tax credit. For more information on the tax credit, see my blog Uncle Sam Giving Money Away to First-Time Homebuyers .

--Virginia Hall, ABR, CRS, e-Pro, GRI
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Raze the Roof

From painting and HVAC to organizing and yard upkeep, there’s so much to think about when it comes to home care that it’s easy to overlook the one thing that protects it all — until it starts to leak.

Your roof is one of the most important parts of your house, and it also happens to take the biggest beating, thanks to the elements and general wear and tear.

A new roof is a hefty investment — it can cost $6,000 to $20,000 or more — so how do you know when to replace it or just repair it? Here are some tips for knowing when to patch and when to overhaul:
• As a general rule, roofs usually last 12 to 20 years, depending on the climate. If your roof is approaching the 20-year mark, shingles are more likely to be worn out, and flashing around chimneys, eaves and skylights might have decayed, leaving your roof prone to leaks.
• If there are a lot of missing or torn shingles, as opposed to just a few, then it’s best to replace the roof. Shingles also curl up and crack as they age, making them unable to resist water and exposing your home to leaks and interior damage.
• Inspect the interior walls that touch the roof. If paint is missing, they are moist to the touch or there are water stains in the house, it’s clear that water has seeped in, and the roof will most likely need to be replaced. But finding one or two leaks in a specific location could mean that a roof patch will be enough to stall any potential damage.
• Extreme weather can wreak havoc on your roof. If prolonged conditions such as rain, hail and direct sunlight have exposed parts of the house from the top, a minor patch will not be enough to protect the interior, and the roof will need to be replaced.
Keeping your roof clean and in good repair should prevent costly replacements for years to come. But before attempting any patch or replacement, talk to an experienced roofer.

Sources: DIYLife.com, ExtremeHowTo.com

FHA & VA Buyers Be on the Look Out--10 Most Common Home Problems

With no more 100% conventional financing available, many first time home buyers are turning to the FHA and VA lending. While the FHA loans require 3.5% down and, if you qualify, the VA loans requires zero down, these loans do have their challenges.

With the interest rates still reasonable, many investors and conservative borrowers are out making their moves on lower end properties that can make the offers from FHA and VA borrowers less appealing because of the stringent property condition requirements and financial volatility of the buyer and their qualifications.

The number of well maintained homes grows limited in San Diego County, increasing the number multiple offers. While it is possible to find a clean home that qualifies for FHA or VA lending and still have the seller pay your closing costs, it is more challenging. When competing with multiple offers, being able to pay some of all of your closing costs will definitely help your position.

However, if you have limited funds and need the seller to help pay for your closing costs, then you should plan to look at homes in a slightly lower price bracket and plan to offer above the asking price, or be prepared to settle for a home that is slightly dated but functional.

While the home condition guidelines for the FHA and VA loans are very similar, they are not always clear cut. The home will be inspected by a specially trained appraiser who will note any safety or health issues that may pose a risk for the buyer and require they be fixed before close of escrow. Below is a list of some of the most common list of repairs that will require attention before having an appraisal for a FHA and VA loan:

1. Any useful components (appliances if present, floor covering, etc.) of the home, especially the roof, should have 2 years of useful life remaining. A roof should not be leaking and have no more than 3 layers of shingles.
2. If the homes was built prior to 1978 , exterior and interior paint that is peeling must be scraped and painted.
3. Must have a functioning heater. Wall heaters must be designed to heat the entire home.
4. Health and Safety Hazards (ie. electric garage door opener won't reverse with resistance; burglar bars, etc. )
5. Broken windows and doors should be replaced.
6. Safety handrails should be installed in open stairwells of three or more stairs.
7. Termite inspections required, as well as any infestations of any kind should be exterminated (ie., insects, mice, bats, etc.)
8. Damaged or inoperable plumbing has to be repaired.
9. Structural or foundation problems must be repaired. Crawl spaces must be accessible for inspection.
10. Electrical box/system should have no frayed or exposed wires.

VA and FHA requires that Condo complexes be approved. Since very few FHA and VA loans were being used when many of the newer developments were being built and some of the developers did not want to pay the extra fees required to get that approval, you may want to check these websites for complexes that are approved . For FHA see https://entp.hud.gov/idapp/html/condlook.cfm and for VA http://condopudbuilder.vba.va.gov/2.2/frames.html.

Sometimes, the buyer can negotiate in the purchase agreement that certain obvious conditions be fixed. However, quite often the sellers may not be able to or won't repair these items. So it may be in your best interest to avoid the problem homes all together.

--Virginia Hall
DRE License 01409760
Coldwell Banker Residential Brokerage

19 Helpful Water Saving Tips

As of June 1, 2009, mandatory water restrictions started for most of San Diego County. A three year drought has reduced the supply from the state water project in Northern California. We are already using reserves for everyday water. For more information about the restrictions, you can visit http://sandiego.about.com/od/governmentcities/qt/water_tips.htm

Here are 19 tips for conserving water on your own:

In The Bathroom
1. While waiting for hot water to come through the pipes, catch the cool, clean, water in a bucket or a watering can. You can use it later to water plants, run your garbage disposer, or pour into the toilet bowl to flush. (Can save up to 50 gallons a week per person.)
2. Replace your regular showerheads with low-flow showerheads. (Can save up to 230 gallons a week.)
3. Keep your showers down to five minutes or less using a low-flow showerhead. (Can save up to 75 gallons a week per person.)
4. Turn the water off while lathering-up in the shower. Then turn the water back on to quickly rinse. (Can save up to 75 gallons a week per person.
5. Take shallow baths, no more than 3 inches of water. (Can save up to 100 gallons a week per person.)
6. Replace your older model toilets with new ultra-low-flush models. (Can save up to 350 gallons a week.)
7. Check your toilets for leaks. Drop a dye tablet or a teaspoon of food coloring (avoid red) in the tank. If color appears in the bowl after 15 minutes, you probably need to replace the "flapper" valve. (Can save up to 100 gallons a week for each toilet repaired.)
8. Flush the toilet only when necessary. Never use the toilet as an ashtray or wastebasket. (Can save up to 50 gallons a week.)
9. Never let the water run while brushing your teeth or shaving. (Can save up to 35 gallons a week per person.)

In The Kitchen
10. Hand wash dishes just once a day using the least amount of detergent possible. This will cut down on rinsing. Use a sprayer or short blasts of water to rinse. (Can save up to 100 gallons a week.)
11. If you have a dishwasher, run it only when you have a full load. (Can save up to 30 gallons a week.)
12. Scrape food scraps off dishes in the garbage can or rinse them off with very short blasts of water. (Can save up to 60 gallons a week.)
13. Never use hot, running water to defrost frozen foods. Plan ahead and place frozen items in the refrigerator overnight or use the microwave oven. (Can save up to 50 gallons a week.)
14. Rinse vegetables and fruits in a sink or a pan filled with water instead of under running water. (Can save up to 30 gallons a week.)
15. Run your garbage disposer only on alternate days. (Can save up to 25 gallons a week.)

Around The House
16. Repair all leaky faucets, fixtures and pipes both inside and outside your home. (Can save more than 150 gallons for each leak.)
17. When doing the laundry, never wash less than a full load. (Can save up to 100 gallons a week.)

Outdoors
18. Set lawn mower blades one notch higher since longer grass reduces evaporation. Leave grass clippings on your grass, this cools the ground and holds in moisture.
19. Mulch, compost and wood chips are available at the Miramar Greenery.

From the City of San Diego's Water Conservation program.

Join your neighbors and community in conserving water.

---Virginia Hall

San Diego County Median Home Prices Slowly Climb

Good news for the over-all San Diego market. The countywide medium home price increased again in May. According to the DataQuick the Median Home Price hit $295,000in May, a $15,000 rise since January and $5000 in May.

Since January, three out of five areas of San Diego County continue a modest recovery. While overall prices are still down 22.6% from a year ago, Buyer activity remains steady.

While the number of "All Homes and Condos" sold countywide decreased by 133 in May compared to April, the number of "New Homes and Condos" increased by 19. Most of May’s increases were seen in higher valued condo sales, which increased from $182,000in April to $199,000 last month.

For example, while Santee showed a 4% decrease in resale house prices from April, the New Home and Condo sale showed increases from April--resale condo prices rose 4% along with new home sales 28%.

While the number of foreclosures decreased from 43.1 percent of all resales in May compared to 51.1 percent in March, some believe the 90 day foreclosure moratorium that went into effect on 6/15/09 along with banks attempting to modify loans may be producing a temporary reduction in the number of foreclosures.

"DataQuick analysts suggested that home prices may have bottomed out, but caution that price depreciation may be hitting more affluent neighborhoods because of mortgage defaults and impatient owners of higher-end homes who need to sell in the current market," according to Ned Randolph, San Diego Business Journal.

The number of homes sold at prices greater than $500,000 has gradually increased from 18.8 percent in March to 20.5 percent in April to 23.1 percent in May.

However, with the reduction in the number of homes available down to about two months supply, demand should continue to push prices slowly upwards.

--Virginia Hall
Coldwell Banker Residential Brokerage

Don't Huff and Puff...Buy While Home Prices are Still Low...Buy!

Bad News Good News--Santee Housing Market

The bad news always seems to be first, when the media talks about the housing market. While bad news may sell more, a lot depends on how you are looking at it--half full or half empty.

The statistics for April emerged yesterday. While the job layoffs and economy is definitely slowing the housing market return, some areas of San Diego are still sputtering along showing signs of revival. From January until April home prices have slowly climbed in the East County.

While year over year home values have shown a 26.5% decline from April 2008 to April 2009; although, since January the medium home prices in the East County have actually increased 4% from $240,000 in January 2009 to $250,000 in April 2009. Other signs of recover include the number of home sales increased 51% year over year from 323 in April 2008 to 488 in April 2009.

Like several areas of San Diego, Santee home prices have also risen since January the medium home prices have risen from $270,000 to $285,000 in April, over 5% increase. However, again looking at it year over year, from April 2008 to April 2009, it has declined 20.2%. The number of homes in Santee remained steady, from 58 in April 2008 to 59 in April 2009.

As I mentioned in What Happened to All the Houses on the MLS?, with the declining inventory we should continue to see the housing prices slowly recover. If you have been waiting for the bottom to hit, we may have already seen it. So with the interest rates low and all of the buyer incentives mentioned in Uncle Sam Giving Money Away to First-Time Homebuyers and Buy Today with Recession Proof Plans now is the opportune time to buy.

--Virginia Hall


As I mentioned in What Happened to All the Houses on the MLS?, with the declining inventory we should continue to see the housing prices slowly recover. If you have been waiting for the bottom to hit, we may have already seen it. So with the interest rates low and all of the buyer incentives mentioned in Uncle Sam Giving Money Away to First-Time Homebuyers and Buy Today with Recession Proof Plans now is the opportune time to buy.

--Virginia Hall

What Happened to All the Houses on the MLS?

Frustrated agents and buyers cheer the new change at Sandicor, the San Diego County area multiple listing service (MLS). As a result of a change that occurred on 5/20/09 , about a third to one-half of the homes that were listed as "Active" moved to a new category titled "Contingent" overnight. This will eliminate the frustration of many buyers who find the perfect home only to find out it has multiple offers on it.

Before Wednesday, these homes showed actively listed, while indeed they were not available for offers. However, listing agents were unable to move them to "Pending" until the bank officially approved the offers. Agents seemed to be at odds with each other due to the added work to find truly available properties.

The reduction in the number of available homes will certainly seal the changing tide of the Housing Market, that many agents and buyers have been feeling already. The inventory of homes for sale has gone from about 3 1/2 months in San Diego County to about 2 months. While it is uncertain because of the economy, the law of supply and demand should cause the 2009 Housing Prices to slowly climb.

Although interests rates are still low and first time home buyers have lots of great incentives to take advantage of, including the items in the Economic Stimulus Package that can be found in my blogs Grab That Golden Housing Ring! and the Mortgage Protection Program outlined in
Buy Today with Recession Proof Plans.

--Virginia Hall

Help for Military Being Forced to Sell Their Homes

"I am being transferred," said my client, a navy captain . I hated to break the news to him that his home value in San Diego had fallen $100,000 since he had bought it in 2005. I discussed his options which included a short sale. However, since he owned another home in Florida this might not have been the best option for him. The banks could potentially attach a lien to the small amount of equity that he had in that property. I encouraged him to talk to a Military lawyer and to talk to his commander. Fortunately, he was able to delay his transfer. However, not all military personnel are so fortunate.

It didn't seem fair. The military serving our country and risking their lives, and as a result of being transferred, at no fault of their own, they could lose everything and face financial ruin. Finally, help is on the way.

Recently, as the result of the American Recovery and Reinvestment Act, The Department of Defense(DOD) Homeowners Assistance Program (HAP) was expanded to include military members affected by the housing market, who face financial hardships as a result of being permanently reassigned during the mortgage crisis.

Below are the eligibility requirements:

1. Permanent reassignment requiring move of more than 50 miles.

2. Reassignment ordered between 1 February 2006 and 30 September 2012 (or earlier date designated by SECDEF (Secretary of Defense).

3. Property purchased (or contract to purchase signed) before 1 July 2006.

4. Property sold by owner between 1 July 2006 and 30 September 2012, or earlier date designated by SECDEF.

5. Property was the primary residence of the owner.

6. Owner has not previously received these benefit payments.The process is owned by the Army Corps of Engineers, however each base should have a focal point (MPF or housing office) for this program to provide local guidance/oversight and to validate eligibility based on PCS (permanent change of station) orders.

According to the Homeowners' Assistance Program--Department of Defense website http://hap.usace.army.mil/homepage.html the funding policy process is still being worked out, and according to some sources may be available as soon as May 15, 2009.

The instructions and application can be downloaded from the website above. The link provides all the information about the program and specifically on PCS eligibility when you click on "Service Members Homeowners on PCS".

While the application processing will commence as soon as possible after the DOD guidance is posted, they encouraged potential service members to submit an application. The application is found under "How to Apply". They will process the applications based on the implementation guidance.

Having two sons who are veterans and one that is still in the reserves, it is good to know our country is offering the military help during a difficult time.

Virginia Hall, ABR®, GRI® , e-Pro
Coldwell Banker Residential Brokerage
http://www.virginiahall.com/

(619)258-8585

Uncle Sam Giving Money Away to First-Time Homebuyers

What a great opportunity for the first time homebuyer! If you have been considering buying a home, but have been waiting for the opportune time...well it has arrived. As part of the American Recovery and Reinvestment Act of 2009, the Federal government has enacted the Homebuyer Tax Credit providing an $8,000 tax credit to first-time home buyers (or buyers who have not owned a private residence in the past three years) who purchase a home that they will live in on or after January 1, 2009 and on or before November 30, 2009. Unlike the previous 2008 tax credit, this credit does not require repayment and will be used to reduce the purchaser’s income taxes. If any of the credit remains unused, it will be refunded.

The National Association of REALTORS recently came out with the details:

How does it works?
• The Tax credit has been raised from $7,500 to $8,000 or 10% of purchase price (whichever is less).
• The credit does not require repayment.
• First time home buyers or buyers who have not owned a home in the last 3 years.
• To qualify, a single person must make less than $75,000 a year in income.
• Joint ownership must make less than $150,000 a year in income to qualify.
• Qualified buyers must purchase home on or after January 1, 2009 and no later than November 30, 2009.
• The property must be the primary residence.
• Purchaser must remain in home for 3 years or the credit will be recaptured at the sale of home.

Are there restrictions for the home I want to purchase?
• The primary residence can be a condo, single family detached, co-op, townhouse or something similar
• The home must be located in the United States.
• Vacation homes and rental properties are not eligible.
• For new construction, the “purchase date” is the date you occupy the home. So the move in date must be before December 1, 2009.

Who is not eligible for the credit?
• If your income exceeds the phase-out range. This means joint filers with Modified Adjusted Gross Income (MAGI) of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
• You may not buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• Vacation homes and rental properties are not eligible
• If you stop using your home as your main home.
• If you sell your home before the end of three years.
• If you are a nonresident alien you are not eligible

Recapture-3 Year Residency
• If the home is sold prior to three years of ownership, the tax credit must be repaid at closing.
• This provision is designed to prevent flipping homes in order to get the credit.

Other Provisions
• Purchasers who utilize state/local revenue bond financing can now use the credit.
• Purchasers who bought before January 1, 2009 and received the previous $7,500 tax credit are still subject to the terms of that repayable credit.

When Can I Claim the Credit?
• It can be claimed on your 2008 Tax Return (to be filed by April 15, 2009), an amended 2008 Tax Return, or your 2009 Tax Return.

So don't let this great opportunity pass you by...Buy!

Virginia Hall

8 Tips to Maintain Beautiful Wood Flooring

Houses with wood flooring sell faster and for more. Wood flooring continues to be the popular choice among many homeowners. Hardwood...Pergo...Bamboo...There are a multitude of options. Before investing into a wood flooring, homeowners need to investigate which one will work best with their families and lifestyle. You will want to visit the National Wood Flooring Association website http://www.woodfloors.org/ for more information on styles and types of flooring.

While there is a variety of Wood floors styles and types, with the advances in stains and finishes, most require little more than sweeping with a soft-bristle broom and an occasional cleaning with a reputable wood floor cleaner.

According to the National Wood Flooring Association, the following tips will help protect and maintain your hardwood floors:

1. Use a cleaner that is specially made for wood floors. Avoid using sheet vinyl and tile floor care products. Self-polishing acrylic waxes can cause the wood to become slippery and appear dull quickly.
2. Use throw rugs both inside and outside of doorways to prevent scratches and keep dirt and grit from being tracked onto the floor.
3. When cleaning, do not use a wet mop. Standing water can dull the finish, damage the wood and leave a discoloring residue.
4. Wipe up spills immediately with a slightly dampened towel.
5. Avoid walking on wood floors with cleats, high heels and sport shoes, which can dent the floors.
6. When moving heavy furniture, pick it up instead of sliding it. Place guides under furniture legs to prevent scuffing and scratching.
7. For wood floors in the kitchen, place an area rug in front of the kitchen sink.
8. Use a humidifier throughout the winter months to keep wood movement and shrinkage to a minimum.

Using these tips, will help to maintain the luster and beauty of your wood flooring.

For more tips on preparing your home to sell, see my blog Price Wars and Beauty Contests--8 Simple Tips to Win!

--Virginia Hall

Buy Today with Recession Proof Plans

Afraid to buy a home during this Economic Recession? Afraid of losing your job? Then how will you make your house payments? Even in good times and even if you are renting, this is a concern. But not quite as much as now when the news is filled with layoffs and people you know in San Diego are losing their jobs.

Normally, I would say you need to have some reserves and then you just have to find another job. However, in these uncertain times it may take longer than usual. Well the California Association of Realtors® has the come up with a safety net that you can rely on to make that leap of faith into home ownership with a secure feeling.

On April 2, James Lipsak, the 2009 C.A.R. President, announced, "Through the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million to the program this year, and estimates that as many as 3,000 families will benefit from the program throughout 2009."

"To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer – someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
First-time home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®."

"The Mortgage Protection Program is a proactive approach by C.A.R. to address consumers’ concerns about the real estate market and their ability to make their mortgage payments should they loose their jobs. I encourage you to take full advantage of this new program by sharing information about the C.A.R.H.A.F. Mortgage Protection Program with your clients. There is no cost to either you or your clients to participate."

So don't let the uncertain times keep you from making your move. Know that this plan is there if you should need it.

--Virginia Hall