Pre-Approval vs. Pre-Qualification
REALTORS® recommend that buyers get pre-approved prior to initiating the mortgage process to determine the best type of mortgage for you and avoid rushing into a mortgage decision. Pre-approval is an official agreement by the lender specifying the exact amount for which you've been approved. In order to get pre-approved, you'll meet with a loan officer who'll review your credit history and often suggest a mortgage type that fits your situation. This process requires supplying the lender with various financial documents discussed in the Financing section. By receiving pre-approval before making an offer to purchase, you'll demonstrate your serious intentions and financial ability to the seller.
Pre-approval is not to be confused with pre-qualification, however. Pre-qualification provides an informal means to find out how much you may be able to borrow. Before setting your price range for how much you can spend on a new home, you may want to pre-qualify for a mortgage. You can be pre-qualified over the phone by answering a few questions about your income, long-term debt and the amount of your downpayment. Getting pre-qualified gives you a ballpark figure of the amount you may have available to spend on a home.
Downpayments and Financial Assistance
Even first-time buyers are usually aware that they'll be required to make a downpayment in order to secure a home. But what you may not have heard is that within the past decade, downpayment assistance programs have been developed that either lower the deposit dramatically or eliminate it altogether. Before making your downpayment, you'll want to investigate these programs to see if you qualify. Several California and federal assistance programs are outlined in the Financing section.
While low downpayments might seem attractive to cash-strapped buyers, keep in mind that the larger the downpayment, the smaller the mortgage loan -- thereby allowing you to develop equity quicker. You'll also want to consider that mortgages with less than a 20-percent downpayment usually require mortgage insurance. When determining the size of your downpayment, you may want to weigh the other costs involved, including closing costs and relocating expenses.
You'll find information about the various types of mortgages, application process, homeowners' insurance and more in the Financingsection.
I don't know how long that sign has been up there, but I do remember climbing Sign Hill as a child. While it was a very sunny and calm day the afternoon my brother and I decided to climb Sign Hill, it was extremely windy once we made it up to the top of the mountain. I'm not even sure we made it to the top because it was so windy. I thought I would get blown all the way down the mountain. Neither one of us did, but we did make it to letters. If memory serves me right, I tried to climb one of the letters only to slide back down. We didn't stay very long because again it was so windy we couldn't breathe. We were children then and probably shouldn't have been up there but we enjoyed the adventure. While holding an open house on Poplar a few weeks ago, which was right around the time the San Francisco Giants were vying for the World Series Title, was when I first saw it. I was admiring the lovely view from the living room waiting for visitors. Someone made the same trip my brother and I had taken up that mountain only they took a can of orange paint and painted in the letters "S" and "F". In the "S" it appeared to have the word "Giants" printed in black. At first I smiled and didn't think too much about it. Someone was proud of the Giants status. Heck, San Francisco had never won the World Series championship in all the years they have been in San Francisco which was 1958. This was something to be proud of. But then the other day, I noticed two other letters - only they are in blue. Guess the Giants competitor and ultimate loser of the World Series wanted to have their say. So the "T" and "R" for Texas Rangers were also painted. The first time I saw the orange letters, I had hoped that it would wash away in the rain. Well it didn't and now I have mixed feelings. What did those Ranger fans think they were doing to our sign? They didn't win. They shouldn't be represented on OUR sign! Who do they think they are? But if you think about it, neither the Giants fans or the Ranger fans should have defaced the property. Just because you won, doesn't give anyone the right deface property. Or for that matter, do what some of the fans did in San Francisco after the game - jump on buses, or be a menace to people or property. Overall, the celebration at the parade was just that a wonderful celebration and non-violent event the way it should be. I didn't get a phot of the blue letters, but here is a photo just outside my listing on Poplar. While the Giants fans who painted the letters were probably wrong, a part of me still smiles about it.
Well, if the real estate market is topsy turvy due to the unconventional loans of the recent past, the lenders today are making up for those bad decisions. Not only is it very difficult to get a loan if you have good credit, they are wrecking havoc on the unsuspecting buyer who is trying to buy his first home. It is important to have good credit and that credit is all calculated on what is called your FICO score - Fair Issac Corporation I recently had a young buyer with whom I had been showing property and she had a very small down payment. Her down payment increased a bit when she received a small inheritance during the time we started looking for her first home. We looked and looked and all we could find in her price range were rundown homes or a condo. Finally, she decided to ask her brother, with whom she is very close if he wanted to buy a home with her. He agreed. Even though they both had good credit, their loan agent, John Barrett of Delloro Financial, told them both not to buy anything during this time because it could affect how much house they could afford. We looked and looked and made many offers only to be outbid on all of them. Then the time came and their offer was accepted on a great house in the Sunshine Gardens tract in South San Francisco . It was perfect for them. They both had grown up in South San Francisco, the brother had lots of friends that lived by and he also works for the City. It had been quite a few months since they were pre-approved and some of the requirements had changed. John Barrett updated all their information only to discover that the brother's credit score dipped just enough that they needed more money down or they had to take a FHA loan. Thinking that he had been late paying his credit card bills or charged a lot on his cards, I was surprised to find out the reason for the dip in his credit score. The brother decided to pay his credit cards DOWN so he would have less debt. In doing so, the credit card companies lowered the amount of money he could borrow, thus showing that he was at the higher end of his credit limit! This lowered his credit score just enough that he now needed an FHA loan which was more costly in terms of a higher interest rate and higher fees! Can you believe that? Here he was trying to pay down his debt and the credit card companies penalize him to where it cost him and his sister in terms of paying more for their loan. I'm not trying to tell you not to pay your debts down because at 12%, 18% or more, it is usually much better to have less debt. You can't write off those interest payments like we used to many years ago,but paying those high interest rates doesn't help your pocketbook. If you can, pay off your cards each month. However, the credit card companies don't like that very much either because they lose money. When our daughter was in college, we showed her a trick that she uses to this day. When you charge something, take it out of your checkbook so you know you have the money. I don't like the debit cards and won't use them because you don't have the security of disputing a charge if you have a problem as you would if you use a credit card. With checks, cash and a debbit card you have no recourse. When you charge, normally you have 90 days to dispute the charge, but check the rules with your credit card company. We have used this in the past when when we received defective material or items that were never received. So, if you are considering buying a house using a loan, make sure you are pre-approved first but be prepared for for things to go awry. Buying a house is sometimes not for the faint of heart. Here is a little interesting note - the brother and sister bought the house and seem quite happy there. In fact, the father of the buyers is an old classmate of mine and my husband's. Not only that, but so is the owner of the house. We all went to school together. Small world, isn't it?
There will be a citywide garage sale tomorrow. It is sponsored by the South San Francisco Scavenger Company as a way to recycle used items instead of adding to our trash. I love garage sales. As an avid reader, finding an interesting book is alway so much fun for me. I sometimes find a new author or maybe a book by an author whose stories I enjoy so much that I continue to find other books by the same author. And getting a bargain is a bonus. Who doesn't like a sale! If books aren't your thing, then maybe you are looking for a small appliance or any type of kitchen appliance, glassware, furniture, clothes, art or more. Cleaning out the closet is somehow renewing even if it means picking up something else from someone else's garage sale. So, from 9 am to 4 pm tomorrow, shop until you drop. See what treasures you can find.
Who doesn't like a free doughnut? In honor of the Salvation Army women who gave out doughnuts to our soldiers in 1930, you can get a free doughnut at participating doughnut companies. Actually National Doughnut Day for is the first Friday in June. So get to those doughnut places this Friday, June 4, 2010 for a tasty treat. Do you know which companies give them out: www.krispykreme.com will give away one doughnut per customer. www.dunkindoughnuts.com will give one away but you have to purchase a drink to get one. mmmm - the glazed doughnut is my favorite - I can taste it already.
Governor Schwarzenegger signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes. Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit. This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years. To learn more about the California Home Buyer Tax Credit, click here. http://www.car.org/governmentaffairs/stategovernmentaffairs/homebuyertaxcredit/ If you missed out on the Federal tax credit for buying a home and getting into escrow by April 30, 2010 and closing escrow by June 30, 2010, you have another chance with the State of California. While this credit is a bit different, you can still receive tax credits up to a total of $10,000 over 3 years but only if you are a first-time home buyer. If you were lucky enough to be in escrow before April 30 and closed escrow after May 1 but before June 30, 2010, you qualified for both tax credits. That would be a total of up to $18,000!
Remember that Tax Credit that I wrote about back in December fo 2009? Well, it is about to expire at the end of this month - April 30, 2010. In order to qualify you must be in a valid sales contract and be in escrow on or before April 30, 2010 and close escrow by June 30, 2010. So, if you are thinking about writing an offer on that property you saw recently and it is something you could see yourself living in, now may be the time to go forward. Remember, this is not only for first-time buyers but also for a repeat buyer who will live in the property. However, repeat buyers only receive $6,500 instead of the $8,000 for first-time buyers. The tax credit will be in the amount of 10% of the purchase price of the new home, not to exceed $8,000 for first time buyers (or $6500 for repeat buyers) and the home can't cost more than $800,000. There are income limits of $125,000 for single tax payers and $225,000 for married tax payers filing jointly (for sales occurring after November 6, 2009). For unmarried joint purchasers, the IRS allows the tax credit to be allocated to any purchaser that qualifies as a first-time home buyer. The government has added a new tax credit of up to $6,500 for repeat buyers. In order to qualify for the repeat buyer tax credit of $6,500, these buyers must have owned and used a prior residence as a principal residence for any five consecutive years in the 8-year period before the date of the purchase of the new principal residence. Now, what is a tax credit? A tax credit reduces your income tax bill on a dollar for dollar basis. This credit can be claimed on your 2009 tax return, due April 15, 2010. However, if your tax bill is less than the tax credit, you will still receive the money in the form of a check. All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check. Remember though, you will receive this refund from the IRS after you purchase your new home, so you cannot use the funds to help with your down payment. For further information, please talk with your tax accountant or go to the IRS website at: http://www.irs.gov/newsroom/article/0,,id=204671,00.html However, this tax credit is expiring soon – so get into a valid contract and escrow must be opened in order to qualify by April 30 and close escrow by June 30, 2010.
Have you heard about the $8,000 that the government is giving to first-time home buyers ($6500 to repeat buyers)? A tax credit will be given in the amount of 10% of the purchase price of the new home, not to exceed $8,000 for first time buyers (or $6500 for repeat buyers). This tax credit is good for home purchases of less than $800,000 which occur from January 1, 2009 through April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify. There are income limits of $125,000 for single tax payers and $225,000 for married tax payers filing jointly (for sales occurring after November 6, 2009). For unmarried joint purchasers, the IRS allows the tax credit to be allocated to any purchaser that qualifies as a first-time home buyer. A first-time homebuyer is someone who has not owned a property within the past 3 years. This can be very beneficial if a parent assists their son/daughter in buying a home. The credit also applies if you have co-signers on the mortgage loan. The government has added a new tax credit of up to $6,500 for repeat buyers. In order to qualify for the repeat buyer tax credit of $6,500, these buyers must have owned and used a prior residence as a principal residence for any five consecutive years in the 8-year period before the date of the purchase of the new principal residence. Now, what is a tax credit? A tax credit reduces your income tax bill on a dollar for dollar basis. This credit can be claimed on your 2009 tax return, due April 15, 2010. However, if your tax bill is less than the tax credit, you will still receive the money in the form of a check. All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check. Remember though, you will receive this refund from the IRS after you purchase your new home, so you cannot use the funds to help with your down payment. For further information, please talk with your tax accountant or go to the IRS website at: http://www.irs.gov/newsroom/article/0,,id=204671,00.html If you are considering a move, now may be the time to do it.
There are lots of events going on tomorrow, September 12. They are as follows: Disaster Preparedness Day Free Admission Free Hot Dogs & Soda Free Gift Guaranteed for the first 500 Families Emergency Kit and Disaster Plan Instructions CPR - Take a free and fast course in basic CPR Time: 10 am - 2 pm Where: South San Francisco High School 400 B Street South San Francisco, Ca 94080 Friends of the Library Book Sale There should be lots of mysteries, cookbooks, etc. I know I will be there as this is one of my favorite past times. Time: 10:00 am to 2 pm Where: Main Library Auditorium, lower level 840 West Orange Avenue South San Francisco City Wide Garage Sale No registration is required. Time: 9:00 am to 4:00 pm Farmer’s Market This is ongoing every Saturday until October 31. Time: 10:00 am to 2:00 pm. Where: Plaza area at the South San Francisco Bart Station
The 400 block of Grand Avenue between Walnut and Maple will be closed to traffic on Sunday, September 13, between the hours of 9 am and 5 pm. Sur San Francisco Unidos will host festivities for "Las Fiestas Patrias" in observance of the 199th anniversary of Mexico's Independence, as well as the independence of Brazil, Chile, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The formal program begins at 1:00 pm, and includes raising flags from the balcony of City Hall, students from local schools presenting flags, and a program of folkloric dancing from various Latin American countries. Everyone in the community is invited to attend! If you have any questions, please call the Office of Parks and Recreation Department at 829-3800