Understand your Risk for Winter Flooding

The Federal Emergency Management Agency (FEMA) wants to take this time to remind homeowners are still at risk for flooding during the winter months. First, the dangers of severe weather and related flooding do not end when colder weather begins. Floods are a year-round hazard, and they can be especially damaging during the winter due to heavy seasonal rains, melting snows and other factors. Second, most homeowners insurance does not cover flood damage. Without the financial safety net that flood insurance provides, residents may be forced to cover thousands of dollars in damage on their own.

Flood risks are particularly significant in the Western portion of the United States this time of year. The rainy season in these states brings the majority of annual precipitation to the region. Portions of the country may also see an increased risk of flooding because of summer wildfires, which leave the ground charred, barren and unable to absorb water, creating conditions ripe for flooding and mudflow. 

There are simple steps residents can take to prepare for seasonal winter flooding, and one of the most critical ways to protect homes and businesses is by obtaining flood insurance. Because flood policies typically take 30 days to become effective, residents should not wait for the next storm to take action - the time to get protected is now.

Flood insurance is available to renters, homeowners and business owners through approximately 90 insurance companies in more than 21,000 participating communities nationwide. Individuals can learn more about seasonal flood risks and what to do to prepare by visiting FEMA's FloodSmart.gov website, or by calling 1-800-427-2419.

Short Sale Fraud and a Warning from Freddie Mac

With the rise of short sale, so to is the risk of fraud. Freddie Mac is sending out a warning to Realtor's & the public of the top four short sale fraud schemes.

Rigging sales & illegal flipping. In essence, a Realtor rigs the transaction to a low price & hides the better offer from the distress homeowner & from Freddie Mac. Once the home sells, the fraudster flips the home for a better price. By this concealment the distressed homeowner & tax payer loses.

Freddie Mac has a unit dedicated to short sale fraud. If you are a distress homeowner or a buyer of a short sale property, insist on signing an Arm's Length Affidavit. This affidavit is signed by all parties in the real estate transaction and states there are no hidden terms nor special agreements among the buyers, sellers and/or agents.

Treasury Rates Trend Downward, but Don’t Expect Mortgage Rates to Follow

It is widely believed that the rate on the 30-year fixed rate mortgage tracks the 10-year Treasury bond. But with the latest downward trend in treasury and the mortgage rates not following the two rates may have become unhinged.

The typical homeowner with a 30 year note, lives in their home for 8 to 10 years hence why the two rates have been tied. However, when the Treasury rate falls, especially if the decline is rapid and sharp, the 30-year fixed rate mortgage seems to have trouble keeping up. The reason for its sluggishness is that investors face a greater risk of homeowners refinancing as rates plunge investors have to re-shuffle their portfolio..

Take away, if you are a buyer waiting to lock in your mortgage because you feel it will drop further. It may not be a wise decision.

How to Buy a House Before Your Other House Sells

In a buyer's market, the inventory of homes for sale can be astounding. Deciding on a home to buy is difficult enough, but what happens when you have one to sell beforehand? Many times, especially in a soft real estate market, a buyer may get into a situation where they find a new house before their current house sells. Acting as a buyer and a seller in separate transactions can be tricky business, especially if you need the equity from your current home to pay for the new home. Luckily there are some best practices that can help show you how to buy a house before your other house sells.

Consider a Bridge or Home Equity Loan. There are many financing options available when it comes to home buying, and bridge loans can be an easy way to finance a new home sale before your existing home closes. A bridge loan is one that is used to provide funds needed for a short period until another source of funds becomes available. Sometimes called a "swing" loan, it allows a homebuyer who needs the equity in his old home to pay for the new one to close on the new home purchase before closing on the old home sale. The interest rates on these loans are typically high. However, because the loan will be paid off in a short period of time, this should not be a huge problem for buyers. In a similar vein, you might consider a home equity loan on the house you already own. This is a bit riskier, but provides the same benefits.

Rent your current home. If you can find short-term or month-to-month tenants who are willing to rent your current home until it sells, you can avoid having to worry about the house sitting vacant while you are moving into the new home. This can help you avoid having to winterize or de-winterize the property and stage the home for showings. You will also be able to apply the rental income to your existing mortgage on the house, to alleviate the financial burden of paying two mortgages.

Work with the Seller. In a soft market where buyers are limited, sellers are often willing to work with the buyer on a purchase agreement that works for both parties. If you've already found the house you want to buy, but haven't yet sold your existing home, it may be possible that the seller will allow you to make a small down payment with a signed contract that permits you to wait to make the purchase until your old house sells.

Thinking About Moving?

Compare where you live to a new location or multiple areas using current information on community summaries, market stability, schools, listing vs. sold price, buyer vs. seller market, and even smoking bans. It's an easy to use tool that provides valuable information.

Understanding Federal Government Grants for Home Improvements

In today's economy, it may not be an easy choice to make improvements to your home. From basic necessities like a new roof to luxury enhancements such as an upgraded kitchen, deciding how much money to spend in a tightened economy can be a difficult decision for many homeowners to make.

Luckily, there are some federal government grants for home improvements available if you meet certain criteria. And for those that don't qualify, you might be able to deduct home improvements from income taxes.

Federal Government Grants for Home Improvements

Below are some of the most popular federal government grants for home improvements and who may qualify:

Rehabilitation and Repair Loan - Also known as the Section 203(k) program, this loan is the Department of Housing and Urban Development's main program providing assistance for repairing and rehabilitating single family properties. To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year.

Property Improvement Loan - Also known as Title 1, this program insures loans to finance the light or moderate rehabilitation of properties as well as the construction of nonresidential buildings on the property. This program may be used to insure such loans for up to 20 years on either single- or multifamily properties. The maximum loan amount is $25,000 and only lenders approved by HUD can qualify.

Rural Area Loans - The Department of Housing and Urban Development offers a number of single family housing programs to low- and moderate-income rural Americans through various loan, grant, and loan guarantee programs. Certain income and credit restrictions apply and should be verified with HUD.

Native American Loans - The Section 184 Indian Home Loan Guarantee Program is a home mortgage specifically designed for American Indian and Alaska Native families, Alaska Villages, Tribes, or Tribally Designated Housing Entities. Section 184 loans can be used for new construction, rehabilitation, the purchase of an existing home, or a home refinance.

HOME Program - The HOME program provides grants to communities in partnership with local nonprofit groups to fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for low-income people.

Community Development Block Grant - This program provides homeowners with resources to address a wide range of development needs, benefiting low and moderate income households through the elimination of slums and addressing urgent community needs.

For those that don't qualify for any of the above grants, you can also check out the U.S. Department of Housing and Urban Development (HUD) website for additional home improvement programs. New programs are updated and added on the government website on a routine basis. If you're planning to deduct home improvements from income taxes, the IRS website is a great resource to see which improvements might qualify for a deduction. Generally, you can deduct expenses such as construction loan interest and sales tax on building materials. If you operate a home-based business or use part of the home as a rental, you can even deduct a percentage of all home improvement costs on your tax return.

Between all the government grants and tax return deductions available, you can be well on your way to enjoying an updated and improved living space that won't put a strain on your bank account.

There is many homes in the Austin area that qualify for these types of loans, if you would like to find out more, please contact me.

Survey Reveals Significant Optimism Among Distressed Homeowners who Receive Housing Counseling

A growing number of government studies show that if a homeowner in distress seeks out housing counseling, the odds of the borrower receiving a loan modification or work out plan brings better and more sustainable terms. In a news release by HPF (Homeownership Preservation Foundation), an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure released survey findings underscoring a surprising level of financial optimism among home buyers who call HPF for foreclosure prevention counseling.

Despite a majority (52%) of survey respondents reporting a significant decline in their household income compared to a year ago and 88% reporting anxiety around their ability to make payments on their debt, nearly three-quarters (71%) of survey respondents said they are confident that they will be in their home 12 months out. Nearly three-fifths of respondents (58%) said that they expect their personal financial situation to get better over the next year. An expected reduction in mortgage payments (41%), a new job (19%), or an increase in wages (12%) was the most common reason cited for the anticipated improvement to their personal finances.

The takeaway for homeowners, there is help for you. For a list of non-profit housing counseling in your area, you can visit HUD.gov.

To find out more about the market in your area, click here.

Bank of America Overhauls Equator System, Accepts Back Up Offers

The short sale process can be lengthy and complex. Unforeseen changes may occur during this process that would prompt you to submit a backup offer to replace the original short sale offer on the property.

This could occur if:

•The original buyer walked out during the process, but you have a backup offer ready to submit from a different buyer.
•There is a change in the buyer’s name during the process.
•The original offer was declined for being insufficient, and you have a backup offer that can be submitted.This guide outline how to submit a backup offer under any of these circumstances.

This is big news for both buyers and sellers because (1) the short sale process doesn't have to be abandoned & restarted if a buyer walks (2) your file isn't reassigned to a new processor.

If you want to search for shorts sale properties click here.

Foreclosures Dropping to New Low in Texas

According to said Scott Norman, president of the Texas Mortgage Bankers Association Residential mortgage foreclosure rates continue to fall in Texas, dropping to percent during the first quarter of 2011 — well below the national average of 4.52 percent. Texas now has the sixth lowest foreclosure rate in the country. If this trend continues, it’s good news for homeowners in Texas. To read more about the article click here. To find out more about homes in the Austin area, click here.

Homebuyer Tax Credit Extended and Expanded

Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren't looking to purchase - pass on this article to anyone you think might be in the market to do so.

Here is a brief overview of the Homebuyers Tax Credit - and its benefits - based on the new bill:

Tax Credit for First-Time Homebuyers
FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners
The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What's So Great About a "Tax Credit"?
The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Remember, the new tax credit program includes a number of details and qualifications. Call or email today if you have questions or would like to see if you can benefit from the tax credit.

Short Sales

Many sellers in today’s market have little or no equity, or simply, the seller owes close to or more than the property is worth. In these situations, lenders are apt to accept less than the full amount due, commonly referred to as a ‘short pay’ or ‘short sale’.

Many folks who are ‘upside down’ on their mortgage opt to simply ‘walk away’ from their home, and allow it to foreclose. The short sale offers a much better solution and provides a win-win for the lender and home owner.

From the lender’s perspective, a short sale saves many of the high costs associated with the foreclosure process: attorney fees, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. In a short sale scenario, the lender gets their money faster and is able to cut its losses.

The bottle line, if your home is worth less than you owe, you can still sell it via a short sale – without bringing any money to the closing.
If you have any questions about this process, please contact me.

This Month In Real Estate: May 2009

I thought you would want to see the latest in a series of news reports on real estate trends. It's called "This Month in Real Estate."
We understand how hard it is to escape the national media's dire predictions for home buyers and sellers in today's market.
But there's another side to the real estate story: this market offers amazing opportunities for buying and selling real estate right now -- in your area.



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We're not missing those opportunities, because we're in the market every day, working for our clients to make the most of this market. And we can't wait to do the same for you!

If you would like the best deals on the market, then please email me at cyndi_bell@kw.com.