The Grangetto Group, Inc. - Real Estate Services (760) 525-4228

One Of The Most Asked Questions - Should We Do A Short Sale?

We continue to hear this question.

"We would really like to get rid of our house because owe more than it's worth and our payment is going up. We don't want to let it go into foreclosure. Someone mentioned a short-sale. Should we try this?"

"What impact will it have on our credit rating?"

Here's the skinny on a short sale: Basically you sell the house for less than what the mortgage balance is and the lender forgives the difference.

In order to get a short sale approved it is beneficial to be able to present a hardship explanation and supporting documentation.  

The problem isthat your FICO score will drop as you become late on your mortgage payments. It can potentially be about as much as it would with a foreclosure, depending upon how late you become (i.e. 30 days, 60, 90, 120, etc.). However, you are eligible to buy a home with a loan backed by Fannie Mae or Freddie Mac more quickly with a short sale than you would be if your home went into foreclosure. As I've previously written, the lending guidelines are clear about not being able to obtain another mortgage within a five year period when a foreclosure shows up on your credit report.

Clearly, the benefit of the short sale appears here because 'short sale' does not appear on your report.

I'm sure you realize how difficult this process can be, not only to be in but also how it's handled. The difference can be the ability to buy a home again sooner than later. 

You want an experienced expert to help you or the people you care about if you are in this situation.

I am a Certified Distressed Property Expert and I will use all my skill to help you or those you care about. Please call me at (760) 525-4228 if I can help you in any way.

MORTGAGE RATES HIT 52 YEAR LOW

Refinancing may be a good option for some right now. If you have any equity in your property and have not taken advantage of the historic lows in mortgage rates in recent times, give it some thought.

"The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.

The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, acccording to Bankrate.com.

To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.

Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points."

The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions.

Portions of this article were taken from an article on CNN Money's website.

I had a flood!

As house floods go it was not like the ones you hear about, i.e...

"I started the washer before I left and when I came back 8 hours later, my house was full of suds and under water"...not like that.

But for me it was bad enough. The sink in my bathroom was left on and for some reason, it backed up and poured over the top of the sink and you know the rest of the story.

The good news is, we caught it within the hour it happened and got someone out right away. (Here is where the story gets good...) We called Rancho Carpet Cleaning, Inc. (a local owned business) and they were amazing!

We called them at 4:00pm and they were at my place by 5:30pm with two guys, blowers and dehumidifiers. In a flurry of activity, they tested the carpet to see how far back the water had gone (you can't see it when you look at it) they pulled back the carpet, yanked out the soaked pad...they were fast and efficient (they were pros). Once they felt things were in hand, they left and said we'll be back tomorrow to follow up. Someone came out the next day (as promised) to test the walls for moisture and check on the progress.

I don't know about you, but when something like this happens to me, my brain starts to focus on all of the potential problems. I am so glad I had professionals take care of this problem for me. If I had tried to do this on my own, I shutter to think of the outcome. The best part of it was, the work was done for less cost than my homeowners insurance deductible. (a word to the wise...if you call your insurance company about an in home flood, your home will be on record as having had flood damage - EVEN IF NO CLAIM IS FILED - it could affect future insurance on the home)

The moral of this story - get a pro to handle things for you! Who would you rather have help you when you need it, an amateur or a pro? I want a pro.

If you need to get in touch with Rancho Carpet Cleaning, Inc. their number is (800) 932-1151. www.RanchoCarpetCleaning.com

Mortgage help: Do you qualify?

A lot of people are asking this question.

The is an excerpt from an article about the 'real estate rescue plan'.  This portion goes into depth about who is eligible.

"Homeowners in default or at risk of default may qualify for loan modifications, which restructure the terms of loans.

Anyone at risk of default, such as those suffering serious hardships, income loss, increases in expenses, payment "shock" (such as when interest rates jump), high mortgage debt compared to income, who are underwater or who show other indications of being at risk of default, may be eligible for modification.

The mortgage must have originated before Jan. 1, 2009, and the unpaid principal can amount to no more than $729,750 for a single family home (more for a home with two-to-four units). Borrowers with other debt, such as car loans and credit cards, exceeding 55% of their incomes, may still qualify for a modification, but they'll be required to accept debt counseling in a HUD-certified program.

If you qualify, your servicer - the company that administers the loan and to whom borrowers make their payments - or lender will reduce your monthly mortgage payments to 31% of your gross income. The reduction would come mostly through interest-rate reductions - though rates can be lowered no more than to 2% - or by extending the length of the loan to 40 years. In some cases, principal reduction also would be an option.

The reduced payment would stay the same for five years and then gradually revert back to the conforming loan rates in place at the time of the modification, increasing by no more than 1% a year.

Borrowers would also receive incentive bonuses, in the form of principal reduction, of up to $1,000 a year for five years for making payments on time.

Servicers who participate are required to modify all eligible mortgages under the program unless they are specifically prohibited from doing so by the contracts they have signed with investors, who are the actual owners of the notes. In those cases, lenders and servicers have to make good-faith efforts to obtain permission from investors to make the modifications.

President Obama estimated 3 to 4 million homeowners could benefit from the new modification procedures. Eligibility for the program will sunset at on Dec. 31, 2012, and borrowers may tap the program only once."

This article was posted courtesy of CNN Money Real Estate Section

SHORT SALE vs. FORECLOSURE - The Truth

I often meet homeowners these days who are either struggling with, or know someone who is struggling with their mortgage. They may be behind on payments and have no equity in their home.

“How do you avoid foreclosure?” they ask.

It's a common question.  After some discussion and realizing that a short sale may be the best option the inevitable next question is:

 “Will a short sale hurt my credit score? And if so, by how much?”

I recently came across some great information. It appears that in terms of the Fair Issac scoring model (how your credit score is calculated), there is no difference between a foreclosure, a short sale, and a 120 day late (Notice of Default) it is EXACTLY the same...

HOWEVER, here is what is IMPORTANT. These are the Foreclosure guidelines by Fannie Mae and Freddie Mac:

Foreclosure
None in past 5 years with minimum 3 active trade lines more than 24 months old, with no late payments or derogatory credit after the foreclosure. 
Definition of Foreclosure: Any 120 day mortgage late within the last 24 months, any notice of default or settlement on a real estate secured trade line (short sale), any deed-in-lieu or forbearance agreements.

What it means is this…AND THIS IS IMPORTANT...Your credit will be impacted equally by NOD, Foreclosure, and Short Sale (provided you are up to 120 days late on your mortgage)

HOWEVER...

You will be able to get another mortgage and buy a home again in two years after a short sale, whereas you will have to wait 5 years after a foreclosure. (unless you can document extenuating circumstances and then the waiting period is four years)

Please share this information with the people you care about, it could be a costly mistake to make.

Federal Tax Credit for First Time Home Buyers

  Should you give the $8,000 home buyer tax credit a second look?

As part of the stimulus plan - Congress may have just made a true tax credit and one that never has to be paid back.

Based on the latest IRS guidance, here are a few things you should know if you're thinking about buying a house this year:

• The $8,000 is available to singles, married couples filing jointly and unmarried co-purchasers, provided you meet a nonownership test for the previous three years (first time home buyers). Unmarried individuals can allocate the credit on their filings according to their respective ownership shares or capital investments in the house.

• Only primary residences - or in the IRS's words, "the one you live in most of the time" - are eligible. No second homes, investment properties. (there are a few other options, but simply put you need to live there)

• Even if it's your first home purchase, you are not eligible if your adjusted gross income is above $75,000 (single filer) or $150,000 (married joint filers). You can't claim the credit if you buy your house from a "related person," i.e., spouse, parents, grandparents, children or a corporation or partnership where you own more than 50 percent of the stock or capital interests.

If you meet the above criteria, and get the purchase done by whatever deadline date Congress decides as part of the final stimulus package, you should be able to take $8,000 off your federal tax bottom line, and not worry about ever paying it back. As always, check with your financial adviser first.

Stay tuned!

Numbers Don't Lie

I've been digging into the numbers.

Much of the media information these days is full of doom and gloom. I'm sure they can't find a lot of good to report with the economy, jobs and property values being such an issue.

I think I found the silver lining in the gray clouds.

Did you know that real estate sales in San Diego County are up vs. last years numbers?  Here are the facts:

SALES                       Dec. '08     Nov. '08       Dec. '07        +/-   *
Resale houses             2,033         1,631         1,074         89.3%
Resale condos                971            780            521         86.4% 
All combined               3,003         2,411         1,595         88.3%

Simple economics, prices go down, sales go up. Who says right now is a bad time to buy real estate?

*Source: MDA Dataquick