Everyone knows that when you first apply for a home loan, your credit needs to be in good shape, but did you know that what you do during the processing of your loan can have an impact too?

Lenders look at:

• Credit balances and minimum payments
• Credit depth (the number of accounts, with or without balances and length of time that the accounts have been open)
• Inquiries in the past 120 days that could result in new credit
• Judgments or liens

The credit report that’s pulled when you first apply for a real estate loan is not the only one that gets pulled.  That credit report needs to be updated after 90 days and it’s very likely that there will be a second credit check at underwriting (that’s a pretty close to closing) just to make sure that nothing has changed.

Changes that could result in the need to re-qualify for the loan, possibly creating a delay or even stop you from getting your loan:

1. New Loans–don’t do it, don’t get any new credit while you are in the process of buying a home
2. Increased balances on existing credit line–don’t do it, don’t use that credit line to pay for appraisals, inspections or anything else
3. Inquiries by potential creditors–don’t do it, don’t shop for a new car, appliances, home improvement or furniture
4. Derogatory items (reports of late payments etc.)–in this case, do it, pay it on time or early, pay the whole amount due.

Is A New Home On Your Gift Registry?

If you’re planning to get married and buy a home, but wonder where your down payment funds will come from, FHA might have a solution for you.

FHA has a Bridal Registry program that allows the money you receive as a wedding gift to be used towards your down payment. With this special program, friends and family can now give you something you really want – money for your first home! Forget Crate & Barrel and Macy’s and achieve your dream of homeownership.
Here’s how it works:

• Inform your mortgage professional of your intention to obtain all or part of your down payment from gifts to the “bridal registry” account
• Open an interest bearing account at any FDIC insured bank prior to the wedding;
• Spread the word to friends and family;
• Keep a ledger of the funds and who they are from;
• All of the gift funds can go towards the FHA required 3.5% down payment;
• There is no requirement that you be married prior to closing on your new home
• Change in plans? Withdraw the money and use as you wish

It’s that simple! The sooner you open your Gift Registry Account, the quicker the funds can accumulate.

This guest post was provided by

Holly Smith
Senior Mortgage Banker
MLO-211163

Pacific Residential Mortgage, LLC
2405 14th Ave. SE, Suite C
Albany, OR  97322

Office (541) 791-2612 ext 202
Cell (541) 740-3777
Fax (541) 791-2625
Toll Free (800) 207-7984
Driving directions to my office

Single Level Home for sale: 2940 NW Circle Blvd, Corvallis, OR 97330

Well maintained, single level home close to local parks (Cloverland Park and Woodland Meadow as examples), shopping, medical, bus line and schools,  only about two (2) miles from Oregon State University (OSU). Spacious family room with wood accents and brick flooring. Exterior features brick accents. Fireplaces in both the livingroom (with gas) and family room (burns wood). Spacious finished two (2) car garage .24 acre lot with large private, south facing, landscaped and fenced backyard with 14′x13′ finished studio/shop building. This property would suit the needs of many including: first-time home buyers, investors, or those looking to downsize. 3 bedrooms, 1.5 baths and approx. 1444 sf. 

For additional information contact Dava

A New Resource for First Time Homebuyers

Coldwell Banker Corporation has just added a new resource for First Time Homebuyers to its web site ColdwellBanker.com.  The First-Time Home Buyer Resource Center includes videos, articles and tools to answer questions and guide new home buyers through the real estate search process.  If you’re thinking about buying a home for the first time in Corvallis, Albany, Philomath or for that matter, anywhere in Oregon or the U.S., this site would be worth a visit.

If you want to ask questions or need help buying your first home, Contact Dava.

My clients that are buying and selling homes in the Corvallis and Albany areas frequently, ask  ”What is escrow?

In general, “escrow” is the neutral third party that holds instruments (deeds or other documents that convey ownership); funds (or other items of value); or evidence of title for real or personal property.  In Oregon, the escrow agent is typcially a Title Insurance Company (but this does not always have to be the case).

In a real estate transaction, “escrow” is the neutral third party that holds the deeds, collects and disburses the funds and follows instructions on behalf of the parties to the transaction.

It is the function of escrow in a real estate purchase transaction to make sure that all the instructions (which are really the terms of the sales agreement and the lend, er instructions) are followed; that all bills are paid (through the instruction of the buyer, the seller or the lender) and that funds are disbursed (lender loan proceeds, seller’s proceeds and any excess monies deposited by the buyer to the buyer).

Escrow follows the instructions of the parties to the transaction to determine how proration of taxes and other re-occuring charges such as homeowner association fees are handled. Escrow also makes sure that appropriate parties such as taxing authorities, homeowners associations, water districts and so forth are notified when there is a change of ownership. Escrow does not typically notifiy public utilites of changes of ownership.  An owner that is selling should notify their hazard/homeowners insurance of the sale (but not until the sale is completed and the sellers proceeds are disbursed.)

Escrow is also responsible by law for the collecting of information and reporting of sales information to the state and federal government in the event of a possible income tax liability on the part of the seller of real estate.  It’s important that sellers and buyers understand the tax ramifications of their transactions prior to closing.  Escrow will send out questionnaires to be completed early in the process to help alleviate problems that can arise from tax consequences of a sale (such as FIRPTA and State and Federal witholding requirements), if for some reason you do not receive paperwork from the escrow company early in your transaction, you will want to check on it.

Escrow is not allowed to act independently.  In general, once a buyer’s earnest money deposit is “in escrow” escrow cannot release those funds without express instructions from all parties.  Escrow is not allowed to proceed with finalizing or cancelling a transaction without instructions from all parties.  If there is a dispute that arises from disagreements from any of the parties to the transaction, escrow must wait for instructions between the parties that are consistent before they act upon them.

It’s important the that escrow agent: be finanacially responsible (and have financial strength); have expertise in handing complex transactions; act in a manner to assure that payment of liens and other encumbrances is accomplished; provide single point of contact for coordination of flow of documents and funds; remains an impartial third party.

If you need more information or have specific questions I can answer, please get in touch. Contact Dava

Every so often I am asked if a property I represent is a short-sale or a foreclosure. 

I’m always curious about why they ask…

Typically, it’s for one of two reasons

1) The interested party doesn’t want to invest the time and energy in a “distressed” property

or

2) The interested party is interested in getting a “really good deal”.

Both positions have some very valid points and are reasonable positions to take.

A few points to consider:

• It can take months to get the lender to respond to a “short sale” proposal. (Which can take the buyer out of the market (passing up other potential properties while waiting, but there are ways to work around this issue).
• Some lenders are taking a pro-active position and getting their “short-sales” pre-approved during the listing period.
• Some “short sale” offers sit and the property goes to foreclosure anyway.
• The condition of the short sale property can change during the wait.
• Distressed properties are often not as well maintained as non-distressed properties due to the economic constraints of the owners and/or other issues during the period between default and the lender take over.
• Some lender owned properties deteriorate during the vacant period between the time the former owner moves out and the time of sale.
• Some lender owned properties may be conditioned on an “as-is” sale.
• Some lender owned properties were never owner occupied. Leaving a question mark as to maintenance and care.
• Some lender owned properties are not financeable.
• Some lender owned properties are offered to the market with incentives.
• Lenders have an obligation to their share-holders to recover as much as the market will bear when they sell their REOs, which may make it difficult to get that “great deal”.
• Some lender owned properties that are aggressively priced are seeing multiple offers, limiting the “good deal” factor considerably.
• Some short-sale and/or Lender owned properties are a great fit and/or investment for buyer and the transactions work out fine.

I know that there are a million good and bad stories (which in turn can create a million more points to consider…) Anyone considering buying a distressed property would be well served to get some good advice, do their homework and go into the process with eyes-wide-open.

The Oregon Association of Realtors Reports the Following as of Today (07-01-2010):

Congress Extends Closing Deadline for Homebuyer Tax Credit 
After a close encounter with the deadline, the United States Senate passed an extension of the Homebuyer Tax Credit closing deadline last night. The extension applies only to transactions that have approved contracts in place as of April 30, 2010 and have not yet closed. The legislation should create a seamless extension and the new closing deadline for eligible transactions is now September 30, 2010. There will be no gap between June 30, 2010 and the date the President signs the bill into law.

It’s important to note that this does not extend in any way the time frame for buyer’s to make a contract or get into one. It helps the approximately 180,000 individuals that have already entered into binding agreements as of April 30th and have not been able to finalize their transactions–this is espeically true for those that are involved in Short Sale transactions or are bogged down in the lending process.

National Flood Insurance Extended

Last night, the Senate also passed the National Flood Insurance Program Extension Act of 2010, which extends flood insurance until September 30, 2010, and will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010, to the date the extension is enacted.

Hopefully, before September 30th, they’ll come up with a more permanent solution. The lack of flood insurance creates instablility in the market and is potentially damaging to many homeowners.

Here’s some basic advice from CBS MoneyWatch.com that will help buyers in the Corvallis, Albany, Philomath or other markets in the mid-Willamette Valley.  Most buyers are starting their research process on the Internet, and there’s a ton of data out there.  Not all of it accurate, so it takes some time and experience to filter out the good from the bad. I think this is great advice. What do you think?

Don’t Miss Out!

Some existing homeowners who purchase a replacement personal residence may qualify for a tax credit as well.  Here’s a link to a guide that can help you determine if you qualify or not. Timing is crucial and of course, check with your tax advisor for complete details. This eligibility test works for either existing homeowners or first time homebuyers.

Tax credit timing:  You must be in a contract by 4/30/2010 and close by 6/30/2010 to qualify.  We are not anticipating this credit to be extended.  The industry leaders that worked so hard to accomplish getting this credit passed, have publicly stated that they will not be asking for more.

If you’re interested in buying, time is running out; you need to get into the market sooner rather than later.  I specialize in residential real estate in Corvallis, Albany, Philomath, Lebanon and surrounding areas of the mid-Willamette Valley in Oregon.  I’d be happy to help you work your way through the process.

Check to see if you qualify for a home buyer tax credit (first time or current homeowner)

Note: Test provided by Alishia Jones, Mortgage Loan Officer, Bank of America, Corvallis, Oregon.

Money Matters

• Federal Housing Administration (FHA) is rolling out new guidelines soon (April) for their loan programs, increasing the up-front Mortgage Insurance Premium (MIP) to 2.25% (currently at 1.75%).  For every $10,000 in loan amount, this translates to a cost of $50.00 extra in closing costs.  For example, if you were to borrow $200,000 the additional cost would be $1,000.
• FHA is also reducing the amount that a seller can contribute toward closing costs from up to 6% of the purchase price to 3%.
• The first time homebuyer credit is expiring soon as well.  April 30th is the deadline for a written contract to be in place; June 30th is the last date for that contract to close.
• Attention existing homeowners; you too may be entitled to a tax credit.  There are many out there that are unaware that if you purchase a replacement primary residence (in contract by April 30th, Closed by June 30th) you may qualify for a $6,500 tax credit.

(Certain conditions apply for transactions to be eligible for tax credits—check this web site: http://www.homebuyertaxcredit.com/  and get advice from your professional tax advisor)