Tag Archives: real estate advice

Money Monday: Don’t make these homebuying mistakes

When venturing into shopping and buying a home, avoid some common mistakes:

home buyer regrets

  1. Interviewing only one lender
  2. Not getting pre-approved right away
  3. Maxing out your mortgage limit
  4. Letting your dreams and emotions dictate which house you purchase
  5. Waiving contingencies without understanding just what that means

More tips for homebuyers are available in CNN’s article here: “7 first-time homebuyer mistakes to avoid”.

TOP TEN Legal Mistakes Buyers Make

In the complicated maze of trying to buy a home are the pratfalls and obstacles that can be so costly that you can regret ever buying a new home!
Call a Realtor(R) who is full time and has the track record to get the results you deserve.  The Department of Real Estate website will be able to tell you if there are any reprimands or suspension for any licensed agent or broker.

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Five real estate tasks best done early

While I’m a big proponent of avoiding premature real estate moves, there are a number of tasks that are best done before you think they need to be. These are things that tend to take longer or often turn out to be more complex than people plan for.

Please, give me a call if I can help you in your home shopping process in any way! (619) 890-3648

1. Check your credit. Everyone knows that you should check your credit, or have your mortgage broker do it, some time before you get ready to start house hunting. What people fail to factor in are the real-life turnaround times on rehabbing your credit in the event there are errors, fraudulent entries, balances you need to bring down, or trade lines (credit accounts) you need to build up in order to qualify for a home loan.

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Four affordable improvements to make to your home now

Now’s a perfect time of year to create a plan for how you can tweak and hack your home to be a happier place. Here are a few inexpensive suggestions:

1. Paint like a scientist. Studies show that painting rooms colors that are consistent with their purpose actually makes a home’s residents happier than they were before the paint job. Spending a weekend shifting to crisp and clean green bathrooms, soothing blue or cream bedrooms, and warm browns, golds, oranges, and reds for dining and living areas turns out to be one of the least expensive ways you can use your home to give your family an emotional boost.

fixer upper2. Fix (or toss) what’s broken. If your coffee machine has been sitting on the counter for four months waiting on a trip to the repair shop, you have drawers that don’t close all the way, your dining table wobbles or your shower needs regrouting, you are incurring a little drain of energy, getting a little injection of frustration every single time you look at or try to use these items. Throw out or repair items that don’t work — stat. Just let them go.

Then, create a little inventory for home projects that need to happen, and get a handyman or the appropriate contractors on the horn and get bids so you can budget and plan for getting them done.

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Home improvements that pay off

The temptation is strong: Clean up the yard, declutter the house, and put it on the market without spending time and money sprucing the place up for sale. This is especially the case if you anticipate losing money on the sale.

Some real estate agents recommend you do little if anything to get your home ready for sale. This could work if you price the listing to look like a bargain. However, most buyers in today’s market are nervous and picky. They aren’t in a hurry and they want a house that’s move-in ready.

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A Happy New Year With a Few Twists

mortgage debt forgivenessThe HOT topic for real estate that everyone was talking about coming up to the new year is official, but with an asterisk regarding the extensions of the Mortgage Forgiveness Debt Relief Act and American Taxpayer Relief Act. This is a little lengthy article, but worth your extra 15 minutes to digest. While federal government has extended the tax law, California to this date has not extended their tax law, but more importantly the Mortgage Debt Forgiveness has been definitely extended. What does all this mean to you and your situation, whether owner-occupied or an investment property that is upside down and you’re wanting an answer to what you have to do, CALL ME for help. Letting a property go to foreclosure or doing a Deed in Lieu could put you in a liability situation for all the debt of a Trust Deed. I work with CPAs and attorneys that can help. After over 20 years of short sales, hundreds closed, you owe it to yourself to only talk to the BEST!  CALL NOW! JOHN A SILVA — 619-890-3648. MAKE IT YOUR BEST YEAR!

III. Extension of Mortgage Cancellation of Debt Relief

Q 4. What is mortgage cancellation of debt relief?

A. As a result of a foreclosure on a recourse loan, a short sale or a deed in lieu of foreclosure, a lender may cancel, reduce or forgive the debt that the borrower owes on the loan. The IRS and the California Franchise Tax Board consider this cancelled or forgiven debt as income to the borrower. As a result, the forgiveness or cancellation of the whole or a portion of the loan balance, often termed “cancellation of debt income,” may result in a tax liability.

The cancellation of debt income is generally treated as “ordinary income,” as opposed to capital gains income which is taxed at a lower rate, and the taxpayer will typically receive a 1099 tax form from the lender in the amount of the cancellation of debt.

Under the tax law there exist various situations where the cancellation of debt income is not taxable including bankruptcy, insolvency and when there is a foreclosure on a non-recourse loan. However, for most homeowners involved in a short sale, foreclosure or deed in lieu of foreclosure, the tax relief provided by the Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) signed by President Bush on December 20, 2007 and subsequently extended by the Emergency Economic Stabilization Act of 2008, provides the most important protection against having to pay tax on the cancellation of debt income.

As a result of the Mortgage Forgiveness Debt Relief Act of 2007, Internal Revenue Code §108(a)(1) (E) was added and provides that a taxpayer will not be taxed upon cancellation of debt income if the following conditions are met:

The property sold in the short sale is the taxpayer’s principal residence, as that term is used in IRC §121.

The cancellation of debt is Qualified Principal Residence Indebtedness under IRC Section 163(h)(3)(B). Qualified Principal Residence Indebtedness is a loan secured by the residence used to acquire, construct or substantially improve the residence. The income relief provided is capped at $1,000,000 in the case of a married person filing a separate return and $2,000,000 for all others. Any reduction of indebtedness excluded by IRC §108(a)(1)(E) will be applied to reduce the basis of the taxpayer’s principal residence, but not below zero. This could result in a higher amount of capital gains tax owed by the taxpayer. Also the cancellation of debt relief provided by the law, therefore, does not apply to any portion taken as “cash out” and not used to substantially improve the residence.

Q 5. How does the American Taxpayer Relief Act affect the mortgage cancellation of debt relief?

A. The original law applied to indebtedness discharged before January 1, 2010. That end date was extended by three years from 2010 to 2013 pursuant to H.R. 1424, the Emergency Economic Stabilization Act of 2008. The new law extends the date one year further to any indebtedness discharged prior to January 1, 2014.

Q 6. Does the federal law apply to potential cancellation of debt income under California tax law?

A. No. California has its own cancellation of debt relief law which has been codified as California Revenue and Tax Code Section 17144.5 which is similar to the federal law but with some significant differences (see next question). That law has expired. However, C.A.R. has sponsored Senate Bill 30 (Calderon, D- Montebello) to extend California’s debt relief protections which is currently pending. The proposed law would be effective retroactive to January 1, 2013. Information on the status of the bill can be found at www.leginfo.ca.gov.

Q 7. What are some of the differences between the state and federal law on cancellation of debt on qualified principal residences?

A. California law has different limits for maximum indebtedness and the amount of cancellation of debt income that can be forgiven which are detailed below:

The maximum amount of qualified principal residence indebtedness is $800,000 for married couples filing jointly, registered domestic partners filing jointly, single persons, head of household, or widow/widower; and $400,000 for married couples or registered domestic partners filing separately;

The maximum amount of debt relief income that can be forgiven is $500,000 for married couples filing jointly, registered domestic partners filing jointly, single persons, head of household, or widow/widower; and $250,000 for married couples or registered domestic partners filing separately.

This is an excerpt from California Association of Realtors Legal — Part 2 coming next week will be on Taxation of Foreclosures and Short Sale.

Eight tips on buying a home

Eight things to know about buying a home today

The home-sale market is showing signs of life. More buyers are confident now than they were a year ago that now might be a good time to buy. Interest rates are near all-time lows and home prices in some areas are back to 2002-2003 levels.

Some analysts are finally suggesting that we may be headed for recovery. If you have a secure job, plan to stay put and feel this is the right time for you to buy a home, consider the following.

In most places in the country, home prices are still declining. It has only been recently that the market picked up and it’s too soon to know if this will result in a sustainable increase in prices.

Job growth in some areas combined with low inventory of good homes for sale has resulted in multiple offers with buyers bidding the price up sometimes hundreds of thousands of dollars over the asking price.

In other high-demand, low-inventory areas, buyers may find themselves in a bidding war. This doesn’t necessarily mean that the price will be bid up significantly over the asking price. This will vary from one listing to the next depending on property location, condition, and price.

It’s important to research the local community where you want to buy. Find out what homes are selling for, if multiple offers are common and if listings are selling for more than the asking price. This will help you make a realistic offer that might be accepted when you find a home you’d really like to buy. It helps to work with an experienced local real estate agent.

Some sellers in high-demand niche markets intentionally list their home at a low price hoping to stimulate multiple offers. If you see such a listing and there are a lot of buyers wanting to make offers, you will be better able to know how high your offer would need to be to win the contest if you have done your due diligence.

HOUSE HUNTING TIP: Whether you’re anticipating competition or not, you should be preapproved for the mortgage you’ll need to complete the purchase before you write an offer. In competition, this will make a big difference, particularly if everyone else who is offering is preapproved. It also lets you know what you can afford. And, it puts you in a good bargaining position with the seller.

Buyers aren’t the only participants in the housing market that have heard the news that the market has improved. Some sellers are putting their homes on the market because they’ve been waiting for a better time to sell. This is good news for buyers looking in low-inventory markets.

You should expect that you will have to negotiate. Many of today’s sellers are selling for less than they paid. Even though the market has improved a bit, sellers may be disappointed with the current market value of their home. Be prepared to negotiate, not just the initial price, but after inspections are completed if items come up that you hadn’t anticipated.

Include realistic contingency time frames in your purchase contract for loan and appraisal approval if you’re applying for a mortgage. The recent uptick in the market means that lenders are suddenly overwhelmed.

THE CLOSING: Underwriters could require that additional conditions be met before you can be approved. Act quickly to avoid further delay.

Dian Hymer is a real estate broker with more than 30 years’ experience and is a nationally syndicated real estate columnist and author.

Taxes, real estate, and marriage: ’till death do us part

Taxes, real estate, and marriage: ’till death do us part

In the aftermath of tax day, specifically personal taxes, some people have a sigh of relief while some people are devastated. We cannot all avoid some emotion for this day whether we filed early, at the last minute, or are prolonging the agony with an extension. I would say that if someone is experiencing agony, their taxes are usually always postponed and prolonged. Why is this?

In marriage, with the highest divorce rates ever, is it not the same result as in taxes by delaying the inevitable if there is a problem? The procrastination of not addressing a problem or not thinking it is a problem when the other spouse does, spells disaster.

In real estate, I also see similar scenarios: with most people waiting ’till the last minute, whether trying to keep their home with a bad loan that’s worth more than the actual house, while days or weeks away from a foreclosure. Or with false hopes of keeping the property and thinking that they will get the modification done or that better yet, a miracle will happen and their loan will go away! While all these positive results are possible, isn’t it also possible to win the lottery? Your answer of “yes” is correct, but unfortunately the answer of “unlikely” is also correct. Unrealistic expectations rarely add up.

Anyone who has married knows they take a vow of “’till death do us part”, while taxes literally follow you until death and could even lower your estate in the process after death.  In real estate, some people have the notion that they will not leave their home unless they are dead! My take on this is that many people just do not see the big picture. I ask the question again: Why is this?

Everyone knows that life and everything on this earth is not forever–taxes, real estate, marriage–but still want to hold onto everything in it. We are all guilty of this, and yet we all know the reality deep down inside. If everyone told their friend going through the rough bumps in life that they knew of someone right here that could advise them on their situation, and has the experience and record to back it up, wouldn’t that make a difference in that person’s life?

I work with attorneys and accountants, and am a seasoned real estate professional that will handle your situation as if it were my own. Won’t you call? I am here to help 24-hours a day, your Realtor in Action–call now, or better yet: “Just Do It!”

– John A. Silva

(619) 890-3648