First time home buyers in Temecula, where to start?
Temecula Ca- So what exactly is a First time home buyer? Most would say duh, it’s someone who has never purchase a home. Actually when it comes to most home loans, lenders consider a first time home buyer anyone who hasn’t purchased or owned a home in the last three years. This means that many of the first time home buyer programs are available to buyers in the Temecula, Murrieta, and Menifee valleys that thought they didn’t have access to these programs because they previously owned a home. So we now know if your a first time home buyer so where do we start?
The first step before doing anything is finding out what price range you fall into and how much you can afford. This is what the industry calls Pre-qualifying for a loan. There are many programs available for First Time home buyers in Temecula, the most popular being an FHA loan. An FHA loan is a loan backed by the government that allows you the buyer to put down a small down payment (3.5 percent of the purchase price) instead of the normal 20 percent. FHA loans also have easier first time home buyer requirements making it easier for you to qualify. All you will need is to answer a few questions, check your credit, and supply some paperwork and you’ll be ready to roll! To speak with a loan professional about an FHA loan click here.
Once you are pre qualified it’s time to go shopping! You’ll need to choose a real estate agent. Preferably someone with experience in the Temecula, Murrieta, and Menifee valleys and knowledge of current market conditions. The market is ever changing, Realtors are typically the most qualified and well trained type of real estate agent. Not all agents are Realtors. This is a special designation given the professionals who demand a higher level of service and commitment to their clients and the industry in which they work. All three real estate agents on the Live Temecula Valley staff are Realtors. Once you have found the perfect agent he or she will walk you through the buying process. That’s it! Congrats, your on your way to being the next Temecula Valley home owner!
For more information shoot us an email info@livetemeculavalley.com or a quick phone call at 951-212-7333.
Thanks for listening!
Temecula Short Sales- Tax Season is upon us!
Last year thousands of sellers in Temecula, Murrieta, and Menifee avoided foreclosure by successfully short selling their homes. With tax season in full swing, many are wondering how much is it going to cost me? After all, the lender can 1099 the homeowner and the homeowner would have to count the difference the lender lost in the short sale as income.
The Answer: Probably nothing.
Of course I am not a tax professional and you should always consult your CPA or tax advisor before doing anything tax related, but according to the Mortgage Forgiveness Debt Relief Act of 2007, Temecula Valley short sellers who successfully short sold their homes in calendar years 2007 through 2012 can exclude debt up to $2 million (for married couples) or $1 million (if filing separately) of income realized as a result of modification of the terms of the mortgage or successfully completing a short sale on your principal residence.
Normally if a Temecula, Murrieta, or Menifee homeowner completes a short sale that debt forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. There are other restrictions so be sure to speak with a tax professional. Visit http://www.irs.gov/individuals/article/0,,id=179414,00.html for more information on the Mortgage Forgiveness Debt Relief Act.
For those of you that didn’t complete a short sale last year but are in the process this should apply to you next year. Now that we’ve answered that question, would a short sale be possible for you this year? Shoot us an email here at Live Temecula Valley and we’ll figure it out together!
Thanks for listening and good luck this tax season!
Tax Preparer vs. Tax Advisor: Knowing the Difference Could Save You Thousands
You may have noticed that I often refer to myself as a Tax Advisor rather than a Tax Preparer.
Although I am a Registered Tax Preparer, I believe there is a major difference between those who refer to themselves as Tax Preparers vs. Tax Advisors.
I have also recently come to realize that I might be confusing people. Just the other day when I posted about year end tax saving tips, I received an email with the question, “Is a tax advisor the same thing as a tax preparer?”
I figure if one person asked that question, there are probably many more that I’ve confused as well.
Differences between a tax advisor and tax preparer
Short answer – Both Tax Preparers and Tax Advisors are “tax preparers” and can prepare tax returns, but a Tax Advisor provides many more services for their clients.
Long answer – If the only advice you are getting about reducing your taxes, or increasing your refund, is to change your withholdings and to contribute more to your retirement account(s), than you are most likely dealing with a tax preparer.
If on the other hand, the person who prepares your taxes takes the time to meet with you, goes over your taxes, and educates you on ways to reduce your taxes now and in the future, then you are most likely dealing with a Tax Advisor.
A Tax Preparer is best for people who want to have their taxes done as quickly as possible. A Tax Advisor is best for people who want to have their taxes prepared as efficiently as possible – while paying the least amount in taxes.
If you’d like to read more about a frustrating experience I had with a Tax Preparer when I was a teacher, click here. Not being educated almost cost me a couple hundred dollars that year!
Here’s my breakdown on differences between Tax Preparers and Tax Advisors:
Tax Preparer
- Prepares Tax Returns, usually in one quick appointment
- Usually only available between Jan – April
- Usually very limited advice on how to reduce income tax liability
Tax Advisor
- Prepares Tax Returns, usually meets twice with clients to insure lowest tax liability.
- Available all year
- Provides personalized strategies to help reduce income taxes for years to come
- Keeps in contact with his/her clients throughout the year
- Provides personalized strategies to help maximize paycheck
- Provides tax advice on issues like home ownership, retirement accounts, etc…
- Provides financial advice
- Considers tax implications now and in the future
- Understands the whole “death and taxes” analogy more than any one person should
- Is part of an Organization that promotes ethics
- (Here’s my Professional Profile)
I encourage everyone to educate themselves and find the right tax advisor for them. It’s almost always best to find someone who specializes either in your career field or business. Above all else, make sure you trust the person!
Do you have any questions? Would you like me to expand more on the differences? Feel free to comment below or contact me anytime.
Please keep in mind that all the information I post on this site is for general purposes only. I understand that every person’s situation is unique and should be treated as such. If you would like more information about how something listed in any of my posts specifically affects you, please feel free to comment below, email me, or call me anytime.
Attention Teachers! In a future post I’m going to also discuss the differences between 403(b)/TSA Salespeople and Financial Advisors. If you’d like to make sure you receive that post and any other future posts from me, please subscribe to my email list.
Mortgage Rates Rise – Still Good Time to Buy?
With mortgage rates on the rise, the consensus is that this will slow down home purchases.
I personally think that is the wrong way to look at it. Not everyone is going to buy when the interest rates are at their lowest, that’s past history now.
People buy when buying a home is affordable for them and when the opportunity is right. When is the best time to buy is dependent upon each person’s ability to buy.
Interest rates may be going up, home prices may be going down – in the end, it’s just about being ready!
3 Important things to consider about home purchase timing
- According to the mortage rate trends over the past 30 years, we are still at all-time lows. Getting the lowest rate at the bottom of the market is a myth – you don’t know what the lowest rate is until they go up.
- The median price for homes in California is low. With the number of foreclosures taking place and the anticipation of possibly 3 million next year, homes in California are more affordable now than they have been in many years.
- There are still “First Time Buyer” programs available. Some of these programs are limited to a certain amount of funds per program and can be depleted when you decide to purchase.
Keep in mind that purchasing a home is not only an investment it’s a place to live.
You will be making a payment either to a landlord or to yourself. The pride of ownership is still the American Dream. Being well educated in the process, is your first step.
Here at Homeownership University you will find a wealth of information for making wise decisions and finding down payment assistance programs in your area.
Find a good home buying team, a lender and realtor, who will be looking out for your best interests.
Final word, take a look at your options and then make a decision to buy. You may be surprised at what your options are.
8 Tax Saving Deductions That Most People Miss
I know, I know, you don’t want to hear about taxes in December, but I think that anytime is a good time to get tax saving tips.
Each year I prepare over 200 tax returns, and just like a teacher who has to grade well over 200 papers throughout the year – I remember this all too well during my 5 years of teaching junior high – you start to notice common mistakes or tax deductions that are overlooked repeatedly.
Most, but not all, of the tips listed below are for those who own a home and/or itemize their deductions.
The 8 Tax Saving Deductions That Most Miss
- Classroom/Office Party – If you are having a party in your class/office, make sure to save those receipts.
- Unreimbursed School/Business Expenses – Purchases that you don’t get reimbursed for can be written off as long as you use them more than 50% for school/work.
- School/Work Shirts/Sweatshirts – Many people buy shirts with their school logo or work logo on them. Did you know you can write these purchases off?
- Charity/Church Cash Donations – This also includes donations through check and credit cards. Gift purchases used for “Toys for Tots” or some other charitable function can also be included, just make sure you save your receipts.
- Charity Non-Cash Donations – If you’re like me and my family, you may have already started de-cluttering your home and getting rid of some unused items. Donate these items to either Goodwill or some other non-profit that allows for such donations – don’t throw them away! Take a picture of the items you’re donating, and use value estimation worksheet provided by Goodwill® to help calculate the cost. This could save you a ton of money in taxes! Believe me, it’s worth it.
- College Tuition – If you, your spouse, or child/dependent are going to college next semester, you may want to pay the tuition this year.
- Energy Saving Home Improvements – The tax credit for the cost of energy-saving home improvements is 30 percent for 2010, up to a combined maximum of $1,500 in both 2009 and 2010. It applies to qualified insulation, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners.
- Have a Baby – Just Kidding! I just wanted to see if you’re still reading! If you do start though, you may get a credit/deduction next year!
Obviously, there are more things that can be done before the end of the year, and this is just a short list of commonly missed tax deductions.
If you do have any questions, or would like clarification on something I talked about above, or something I didn’t mention, please feel free to leave a comment below, or contact me anytime.
Would a Home Buyer Tax Credit Affect Your Decision to Buy in 2011? – Reader Poll
Would a home buyer tax credit affect your decision to buy a home in 2011?
That was the question I asked in last week’s reader poll. Again, I have to say I couldn’t have predicted the outcome.
- 43.5% said: Yes – I would buy a home anyhow and a tax credit might affect that timeline
- 39.1% said: Yes – I would only buy a home if there is a tax credit
- 13% said: No – I don’t think there should be another tax credit
- 4.3% said: No – I am planning to buy and a Tax Credit would not affect my decision
Thank you for your participation. I am learning much about how home buyers and home owners see the state of our current housing market.
There are many in the real estate and home loan industry that like to try to predict what normal folks are thinking, but the only way to know what people are thinking is to ask!
UPDATE: The only news I got this past week was that the bill that makes it illegal to include earmarks in new legislation, which is where Bill Nelson thought the money would come from to pay for the tax credit, was defeated in an initial vote.
As always, I’ll keep an eye on this story and let you know if I hear anything else.
Refinance Your Home Loan? Maybe, Maybe Not
What is the reason you want tor refinance your home loan?
It is common for lenders to try to get you to refinance for a reason that may not always put you in the best situation in the long run.
It really depends on what your ultimate goal is, and you may be surprised at the cost of that decision.
The four main reasons why people think they should refinance their home are:
1. A Drop in Home Loan Interest Rates:
Lenders love to get all excited about a drop in home loan interest rates. You see and hear more advertisements and commercials telling you that “now is the time”.
The reality of refinancing to get a lower rate is that you will “reset” your loan, meaning that the several years you’ve made “mostly-interest” payments on your mortgage are gone.
You start over with a fresh 30 year fixed and many times end up with a principle balance significantly higher than what you had previous in addition to having to make extra years of payments.
An ethical loan professional will explain this to you so that you can consider all the facts before refinancing.
2. Lower Home Loan Payments:
Lowering your payment can be achieved by lowering the interest rate, lengthening the loan term, combining two or more loans or removing mortgage insurance.
Again, lowering your payment may or may not save you money. If you extend the term of your loan you extend your total payments and ultimately your total cost.
This is also common when combining a 10 or 15 year second mortgage into a first mortgage with a 30 year term.
An ethical loan professional will explain this to you so that you can consider all the facts before refinancing.
3. New Mortgage Program:
Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second or paying off a balloon loan are three possible reasons to explore a refinance.
Again, depending on your specific situation this may be a good option for you.
If you plan to stay in the home for only a couple of years, refinancing your home loan into a fixed rate may not always be the best decision.
An ethical loan professional will explain this to you so that you can consider all the facts before refinancing.
4. Debt Consolidation:
If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly home loan payment can significantly reduce the short-term deficits in a budget.
It’s important to keep in mind the total cost of that debt by adding it into a 30 year payment.
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Frequently Asked Refinance Questions:
Q: Do I have to refinance with my current lender?
No, you may choose any company to refinance your home loan since the new loan will replace the existing mortgage.
Q: Is it easier to refinance with my current mortgage company?
It is possible your current lender may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you’re getting the best deal.
Q: Will I automatically qualify if I’ve never made any late payments?
No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance.
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Related Article – Refinance Process:
- Refinance Process Overview
- Mortgage Approval Process
- Calculating The Net Benefit Of A Refinance
- Should I Refinance Or Get A Home Equity Loan To Make Improvements?
- What Do Appraisers Look For When Determining A Property’s Value?
- Understanding The Difference Between Appraised Value vs Neighborhood Listing Comps
- Five Myths About Home Values
Home Loan Qualifying Guidelines Your Real Estate Agent Should Know
Home loan qualifying guidelines are something your real estate agent may have trouble keeping up on, heck even those of us that do this every day have trouble keeping up. Qualifying guidelines have changed many times since housing crisis began in 2007.
While many experienced real estate agents have a general understanding of the home loan approval process, there are a few important details that frequently get overlooked which may cause a purchase to be delayed or denied.
New regulations, updated disclosures, appraisal guidelines, credit score, loan level pricing adjustments, property type, HOA insurance requirements, title and property flip rules are just a few of the daily changes that can have a serious impact on your home loan financing.
With today’s volatile lending environment, it’s obviously important for home buyers to get a full loan approval which clearly defines all contingencies that pertain to each unique home buyer’s scenario prior to spending any time looking at new homes with an agent.
Either way, we’ve listed a few of the top things your real estate agent should keep in mind while showing you new properties:
Caution – Agents Beware:
Property Type
High-Rise, Condo, Town House, Single Family Residence all have specific lending guidelines that can influence the down payment, credit score and mortgage insurance requirements. Recent changes to FHA condominium guidelines make it very challenging to find financing – This is something your real estate agent needs to know before they start showing you a bunch of Condos!
Need to sell one home before moving into another? Can I buy this as a second home? What if I’m buying a home for my children to live in, it is still considered an investment property? What if I co-signed for someone, am I still a first time home buyer?
These are just a few of several possible residence related questions that should be addressed by your agent and loan officer at the initial loan application.
Mortgage Rates are typically locked for a 30 day period, and one of the only ways to get a new rate is to switch mortgage lenders. Rates also have certain adjustments for property / residence type, credit score and down payment which could have a big impact on monthly payments and therefore approvals.
A 1% increase in rate could literally mean the difference between an approval or denial.
Underwriters watch the news as well. If you work in a volatile industry during hard economic times may have to jump through a few extra hoops to prove that their employment and income is secure.
Job changes, periods of unemployment or property location in relation to the subject property are other things to consider that may cause a speed bump in the approval process.
Title / Property Flip
A Flip is considered a property that has been purchased by an investor and quickly sold to a new buyer within a 30-90 day period. Generally, an investor will do a little rehab work, fresh paint, landscaping…. and try to re-sell the property for a significant profit margin.
While it seems like a perfectly fair transaction, many lenders have strict guidelines in place that prevent borrowers from obtaining financing on properties that have a previous owner with less than 90 days of documented ownership.
These rules change frequently, and are specific to particular property types, so make sure your agent is aware of all the boundaries associated with your approval letter.
Homeowner’s Association Insurance
Some lenders require Condos and Town House communities to have sufficient insurance and reserves coverage pertaining to specific ratios on units that are owner occupied vs rented.
It may also take a few weeks and cost up to $300 to receive an HOA Certification, so make sure your Due-Diligence period is set accordingly in the purchase contract.
Appraisal ordering guidelines are changing quite frequently as regulators implement many new consumer protection laws created to prevent future foreclosure epidemics.
Unfortunately, some of the new appraisal regulations have proven to slow the home buying process down, as well as confuse lenders about the true estimate of neighborhood values.
VA, FHA and Conventional loan programs all have separate appraisal ordering policies, so make sure your agent is aware of which loan you’re approved for so that they document any anticipated delays in the purchase contract.
For example, if an appraisal takes three weeks and the average time for an approval is two weeks, then it probably isn’t smart to write a purchase contract with a four week close of escrow.
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Related Articles – Home Buying Process:
- Home Buying Process
- First-Time Home Buyer Credit Checklist
- Assembling Your Home Buying Team – Knowing The Players
- Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
- Where Does My Earnest Money Go?
- HOA Hurdles to be Aware of When Looking at New Properties
- What You Need To Know About The Home Inspection Process
Interest Rate Predictions for 2011 – Reader Poll
Interest rates have been absolutely bananas these past couple of weeks. Rates today are higher they were when I launched the poll.
Two weeks ago I asked you if you thought home prices would drop or rise in 2011. Surprisingly it was split almost down the middle, which tells me that we really have no idea, right?
If there is clear path to recovery, if the housing market is improving or worsening, it’s not obvious.
I think what weighs heaviest on the direction of the housing market is buyer/owner opinion which is also consumer confidence.
This has been a great experience for myself and everyone else that reads our blog to hear your voice and your opinion, I appreciate your input and feedback on these polls.
Here are the results of last week’s question about what interest rate expectations in 2011
Homebuyer Tax Credit Coming Back in 2011?
If U.S. Senator Bill Nelson from Florida has his way it will.
On November 22nd, 2010 Senator Nelson gave a speech to the Chamber of Commerce of Southwest Florida in Fort Meyers and proposed that Congress use money from congressional earmarks to reinstitute the homebuyers tax credit.
The previous homebuyer credit required that buyers have an executed purchase contract on or before April 30th, 2010 and close escrow by September 30th, 2010.
Under the old credit, first time home buyers could claim $8,000 and non-first time buyers could claim $6,500.
Qualified Veterans are still eligible for the original homebuyer tax credit until April 30th, 2011.
Below are excerpts from the Senator’s speech:
Here in South Florida, where housing values have dropped so, there’s an additional measure that I believe will help, too: renewing the successful homebuyers’ tax credit.
It is an $8,000 tax credit for qualified first-time homebuyers and a $6,500 tax credit for repeat buyers. In the first quarter of this year, the tax credit led to a six percent increase in all home sales and a forty-two percent increase in the sale of new homes.
That means: jobs. Jobs selling houses. Jobs financing houses. Jobs building houses. And jobs making everything you put in a house.
That is the kind of boost we need to get Florida moving again.
That’s why next week I’m going to file legislation that will reinstitute the tax credit for 2011.
But, it will carry a price tag. If the Senate’s going to vote to ban so-called earmarks, which you’ve probably heard much about, then I think we should take the money that would otherwise be spent on lawmakers’ projects and use it to pay for the homebuyer tax credit.
If my colleagues in Washington are serious about banning earmarks, instead let’s put the money into the pockets of homebuyers.
With the shift of power in Washington in November, it’s difficult to say whether or not this proposal will be taken seriously. This debate also surfaced a year ago, in December 2009, where it seemed pretty clear that the feeling was that the cost to tax payers was just far too great and that an extension was not in the stars.
We will keep on top of this story and let you know if it has legs.
In the meantime, what do you think?
Does bringing back the credit make sense to do? Would a tax credit sway you one way or another if you are considering buying a home? Which is more important, a tax credit or stability in the economy? I look forward to your thoughts.
