“Should I buy now even if prices may go down again?”
The answer is you should buy a home for the stability of owning a tangible investment that you can use and enjoy and improve Do this for yourself and you will find people like yourself to buy the home in the future. You shouldn’t buy a home that alters your life style so much that your health or free time is compromised. You shouldn’t try to project short term prices in the market. Look at a home as a long term investment and plan on keeping it for at least 4.5 years.
Buyers should be aware of tax consequences of a sale and other programs that might influence their buying power
• California Housing Finance Agency
• Mortgage Revenue Bond Programs
• Mortgage Credit Certificate Programs
Knowledge of these programs will provide tax relief to help make your new home more affordable.
If you find yourself asking questions about your ability to make the payments on your home or what the status of your equity is, there are no substitutions for good legal or tax advice. The only source that’s free is the realtor, and I have a wealth of information and contacts to help. Market value is based on location and condition. One of the best source to determine market sale timing and what your home is worth today is your realtor – that is me. Buyers are still in competition for entry level housing, good schools and specific home locations close to jobs.
This may be a time to downsize. The baby boomers are retiring later but certainly scheduled in the next few years. Plannin early may be the answer to secure your future for a higher sale and a lower buy. If we are facing economic difficulties then having more cash available may be a prudent move. The real estate market is cyclic and at the end of 2015 we have peaked the market. A sale now may mean the ability to recapture equity later through another less stressful purchase.
LOAN MODIFICATION OR SHORT PAY-OFF:
The government’s relief programs are not easy to navigate and you and your home must fall within fairly strict guidelines. The HAMP (Home Affordable Modification Program) clarifies loan modification guidelines.
Borrower eligibility is based on
• likelihood of delinquency
• the existing mortgage payment is greater than 31% of gross monthly income
• full documentation by the borrower
• primary residences only
• the lenders approval that a regular refinance will not work
What does this mean: the lender will do everything to spend your equity. The best case scenario is applying for relief with a short pay-off of the loan or doing a short sale without being too delinquent. You may be able to buy a more affordable hone immediately.
If eligibility requirements for HAMP are met, the monthly mortgage payment is adjusted to
• 31% of borrower’s total pretax monthly income by:
• Reducing the rate to as low as 2%
• Extending the term of the loan up to 40 years
• Deferring a portion of the principal as a balloon payment and waiving the interest on the deferred amount – this is important for couples where one job has been lost
OFten you should look at the total amount borrowed not the cost to borrow. If you can not pay off the total amount in a reasonable amount of time then consider moving.
HAFA (Home Affordable Foreclosure Alternative)
This program allows borrowers who can’t loan modify through HAMP to receive pre-approved short sale terms releasing the borrower from future liability for the debt. In some cases a new home may be purchased immediately or a moving check of up to $5000 or more may be awarded the borrower. The holder of the second loan is provided incentive to release their hold on the property. It also puts the foreclosure process on hold. We have submitted a package and stopped auctions the next day. It also provides financial incentives to borrowers, servicers and investors because MOST of the real estate business is being done outside of the limited government programs.
An attornye is a valuable asset to prevent deficiency judgements. If you are in default on an investment property, you may not only lose your home but you may have a tax liability. Tax liabilities if your primary residence was refinanced to make consumer purchases outside of your purchase loan may also be subject to tax consequences.
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Contact Me »Sandy Kay