Posts Tagged ‘first time home buyers’

The Road Map to Achieve Your Financial Future

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LEARN what you MUST know

to make SMART investments.


Upcoming seminars at the Long Beach Real Estate Resource Center:

First Time Home Buyers Seminar
August 26, Thursday
7:00pm to 9:00pm

Multi-Unit Investing Seminar
August 28, Saturday
9:00am to 12:00pm

Creative Investing Seminar
August 28, Saturday

1:00pm to 4:00pm

Reserve your seat today and get a FREE gift!

Investment: $39 each seminar

Backyard Wealth Long Beach



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6 Creative Ways to Afford a Home

new home buyers - family
There are still various options to consider when purchasing a home:

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you’re in good financial standing, with a strong income and little other debt.

These creative strategies and more are covered in detail at our real estate seminars.  Find out your options and make sound financial decisions for you and your family.

Source: Realtor Magazine


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Private Mortgage Insurance (PMI): How does it protect you and when to cancel

private mortgage insurance

Private Mortgage Insurance (PMI) provides protection to a lender in case you default on your home loan. Unless you make a 20% downpayment on a house, you’ll most likely be required to purchase PMI. PMI premiums on a median priced home ($198,100 in 2008) can run between $50 and $100 per month, according to the Mortgage Insurance Companies of America.

PMI might be unavoidable, but it isn’t eternal. Knowing exactly when you’re entitled to cancel coverage can save you a bundle. If you own a median priced home, you’ll pocket between $600 and $1,200 for each year’s worth of premiums you can avoid. That extra cash can be used to pay down your principal instead.

When PMI is cancelled automatically

Though often maligned, PMI plays an important role. Many aspiring homeowners, especially first-time buyers, simply can’t afford to put down 20% on a house. Without the safeguard offered by PMI, lenders would be reluctant to extend mortgages to low-equity purchasers.

For many borrowers, the coverage is short-lived. The Mortgage Insurance Companies of America, the industry trade group, estimates that 90% of homeowners are done paying PMI premiums, which are tax-deductible for some, within five years.

If you purchased a house since 1999 and are still paying PMI, you probably fall under the Homeowners Protection Act (HPA) of 1998. Your lender is required to automatically cancel your insurance once you’ve paid down your mortgage to a 78% (0.78) loan-to-value ratio, or LTV. Put another way, once you have 22% equity built up. Many lenders will treat pre-HPA loans in a similar fashion. Call to confirm.

To calculate your LTV, divide the outstanding loan amount by the original price of your home. If you have a $190,000 mortgage on a house you purchased for $200,000, the LTV is 95%. You’d need to get the mortgage balance down to $156,000—78% of the original value—to qualify for automatic cancellation of PMI.

When you need to request cancellation

You don’t necessarily have to wait for automatic cancellation. When your LTV hits 80%, you can petition your lender to end its PMI requirement. The process can take several weeks. Your lender isn’t obligated to grant your request, but you’ll bolster your case if you have a good payment history.

Start by calling your lender, not the PMI provider. You’ll probably need to make a formal request in writing and pay out of pocket for an appraisal. The average cost of an appraisal is $362, according to a 2009 Bankrate.com survey. Your lender will usually select the appraiser.

Although an appraisal is conducted primarily for the benefit of the lender to confirm that your property hasn’t declined from its original value, a high appraisal can work to your advantage. As your property value increases, whether due to a general uptick in real estate prices or specific home improvements, your LTV decreases.

A way around PMI premiums

In search of a PMI loophole? Look for so-called piggyback loans, also known as 80/10/10 or 80/15/5 loans. Basically, the home lender finances 80% and immediately gives you a second loan for 10% to 15%. You put down 5% to 10%. No PMI is required.

This alternative has traditionally been available for homebuyers with minimal capital but excellent credit. In tight lending environments, however, this arrangement is harder to come by. And even when piggyback loans are available, the extra interest you usually pay on the second mortgage may actually cost more than PMI premiums. Do the math.

This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

Source: Richard J. Koreto (HouseLogic.com) Koreto is a freelance writer. He has been editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.


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How to Be the Architect of your Financial Future

backyard wealth real estate resource center

A Truly Great Opportunity!

I’m inviting you to the upcoming real estate seminars to discover the many opportunities that exist in the Long Beach, CA market area.

Whether you are a first time buyer or an investor looking for income property, the Backyard Wealth seminars are filled with incredible information.  But none of it will mean a thing if you don’t take the first step and attend.  You can’t make money dreaming about it or complaining – you must take the time to learn how to achieve what you desire.

Seminar No. 1:  First Time Buyers
Thurs, July 22nd – 7:00pm – 9:00pm

Seminar No. 2: Multi-Unit Investing
Sat, July 24th – 9:00am – 12:00pm

Seminar No. 3: Creative Real Estate Investing
Sat, July 24th – 1:00pm – 4:00pm

Each seminar:  $39 Investment

Reserve your seat today!  (562) 598-9885 or visit us online:  Register Today!

Denise Cavanaugh - Backyard Wealth Long Beach Center (562) 598-9885

Homebuyers: Find out what you’re REALLY paying before you sign the papers to your new home.

sign contract papers

Three documents that are crucial to the homebuying transaction give both the seller and the buyer a better fix on virtually all costs they can expect to face during the ordeal.  This includes everything from the appraisal fee to the underwriter’s portion of the title insurance — as well as a sort of manual to understand how it all works — the documents make it easier to calculate, compare and question all the costs associated with the home buying ordeal.

“This is important because whether you buy a mansion or a cottage, you want to know how much your mortgage is going to cost — not just the interest rate but all the fees and charges you’ll have to pay to close the loan” as well as other homebuying costs, writes mortgage maven, Peter Miller, publisher of the Silver Spring, MD-based OurBroker.com.

  • 1. Under the federal Real Estate Settlement Procedures Act (RESPA), since Jan. 1, 2010, your mortgage broker or lender must give you the mandated Good Faith Estimate (GFE) within three days of accepting your application.  It shows the loan terms and the settlement charges you will pay if you decide to go forward with a given mortgage. It explains which charges can change before settlement and which charges must remain the same.
  • 2. At closing, the lender must provide borrowers with the new Settlement Statement HUD-1, the final line-by-line list of mortgage and closing costs.  It is a complete and final list of all your charges and credits. In addition to the cost of the property, your down payment, the financed amount, your monthly payment, and loan terms. It includes your loan type, annual percentage rate (APR), points, commissions, yield spread premiums, originating fees and other loan costs as well as title and escrow fees, closing costs, tax and insurance payments, inspection fees, attorney fees, and information and costs related to rate locks and prepayment penalties — the works.
  • 3. Along with the GFE, you’ll also receive the new “Shopping For Your Home Loan: HUD’s Settlement Cost Booklet” a guidebook to walk you through the other two documents.

Follow the links and get these documents online anytime, especially before you are in the thick of buying or selling a home in today’s market. Getting familiar with the documents now, can save a lot of headaches later.

You have the right under Real Estate Settlement Procedures Act (RESPA) to inspect the HUD-1 Settlement Statement before settlement occurs.
You should set aside a full day to see your HUD-1 document at least a day before closing, so you have time to go over all costs, eliminate surprises and ask the lender or other professionals involved any questions that might arise.

Source:  Broderick Perkins (RealtyTimes)



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What to look for in a Home Warranty

home warranty house under umbrella

Home warranties are on the rise.  According Carla L. Davis from RealtyTimes.com, below are some of the most common questions regarding home warranties:

What is a home warranty?

A home warranty is a residential service contract giving the homeowner repair and replacement coverage for major operating systems and appliances in a home. These repairs must be due to wear and tear, and not negligence or damage.

How can you benefit from a home warranty?

Repairs to homes are inevitable. And while homeowners cross their fingers in hopes that these repairs are relatively inexpensive, what if an entire system needs replaced, and you are left staring at a bill with a few too many zeros? A home warranty can offer you some level of protection.

Your home warranty plan also provides you with a selected network of professionals from which to choose. Many homeowners prefer having a list to choose from instead of taking a guess at which repair company will be reliable.

According to the Service Contract Industry Council (SCIC), a home warranty, also called a home service contract, offers many benefits to buyers and sellers, including:

  • Repair or replacement coverage of most major appliances and home systems including heating, plumbing, and electrical;
  • Toll-free access to technical support and prequalified repair professionals;
  • Comfort for new owners and protection for sellers while their property is on the market;
  • Optional coverage for structural components such as roofs; recreational equipment such as swimming pools; etc.
  • Ability to transfer the contract from homeowner to buyer.

What are the average costs of a home warranty?

MSN Money says you will be looking to spend somewhere from $250 to $600. And then expect to spend from $25 to $75 for each service visit.

What isn’t covered?

According to The Home Warranty Review, you should make sure you get any repairs approved by your warranty company prior to calling a repair company. This will help to ensure you are reimbursed. Keep in mind that pre-existing conditions, improperly installed or mismatched equipment, and poorly maintained systems are not usually covered.

Warranties also do not cover “acts of God.” This means the pet damage, the graffiti, and the lightning strike are your own responsibility.

Keep in mind, as well, that items “outside the perimeter” of your home may also be off limits. The Review writes, “Some people are surprised to learn that the plumbing leak in the yard is not covered.”

How have home warranty changed in our current economy?

According to the SCIC director, Timonty Meenan, there was a “significant increase in home warranty contract renewals in 2009. Existing homeowners fueled the increase over the previous year, while sales by real estate professionals to home sellers and buyers held nearly steady.”

Florida broker/owner Ed Smith of RE/MAX Coastal Properties has seen a jump in home warranties sales over the past five years, noting, “buyers and sellers have come to understand the benefits of home warranties and there are plenty of customer testimonials demonstrating their value. It’s both a good marketing tool for selling and good protection policy for buyers and sellers.”

How do I choose a company?

MSN Money reporter, Liz Pulliam Westom, gives you three helpful tips.

  • Find out which government agency, if any, regulates home warranty companies in your state and check its complaint records.
  • If regulation is loose or nonexistent, pick a company that has a long track history in your state and solid financials. (If the company is public, you can ask for an annual report to see if its home warranty operations are making a profit.)
  • If someone else — the home seller or a real estate agent — is paying for the policy, insist that the warranty premium be paid in full for the term of the agreement before the sale closes. Check to be sure the amount is listed on the final escrow statement.

A final tip for anyone considering a home warranty, is to read carefully. A warranty is a contractual agreement, and like all contracts, you should know what you are signing. Warranties can vary in price and coverage depending on the company you choose, so be sure to shop around before signing on the dotted line.

Source: Carla Davis, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.



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Help for Home Buyers

house money

When it comes time to buy a home, you may need to strap on your thinking cap to come up with some creative ways to boost affordability. This can come in the form of assistance programs, special financing, leasing, and mortgage ideas.

Let’s take a moment to explore a few of these options:

Look Within Your Circle:

The first order of business could be to sit down with your family to see what assistance they’d be happy to offer. You may find that a father or grandmother would be more than happy to co-sign on a loan, or even offer you a loan at low, or zero, percent interest. You could also discuss a shared-appreciation or shared-equity arrangement. This is when a family member buys a portion of the prospective home, and then are able to share in its appreciative value when it is sold.

Research Buyer Assistance Programs:

The Department of Housing and Urban Development (HUD) has a link you can find on their website, which links to each state and their respective programs. You’ll find such things as programs to help fund rural housing, as well as information on Habitat for Humanity.

The Federal Housing Agency (FHA) offers many great options for potential buyers. Since 1934, the FHA has been helping buyers buy with low interest and little down. According to FHA, “your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan.” FHA even has financing options for manufactured and mobile homes.

While many downpayment assistance programs are unavailable currently due to a law that went into effect on October 1, 2008, you can still find other very helpful programs. How about the AmeriDream Building Affordable Homes Program – currently developing 106 affordable homes in Southeast Washington, DC. The Woodson Heights development is a $30 million project that is serving as a catalyst for change transforming a blighted neighborhood into a good place to call home and raise families.

As well, be sure to look into the Making Home Affordable program, which can offer you great options if you already own and are looking for ways to keep your home affordable. The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.

Feel free to contact us for additional resources and to find out which option is right for your situation. You may contact Backyard Wealth’s resource center directly at (562) 598-9885.

Source: Carla L. Davis (RealtyTimes)


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