Welcome to the "Z" Team!

The “bank of mom and dad” is increasingly becoming an option for young adults who otherwise may not have been able to afford or qualify for a mortgage for a new home. Even though mortgage rates are at record lows, tight credit standards have prevented many young adults from taking advantage of those rates.

Parents who no longer want to risk their money in the stock market, therefore, are turning to financing their childrens’ mortgages, USA Today reports. This “is an opportunity to create a win-win,” Timothy Burke, chief executive of National Family Mortgage, a company that offers intrafamily loan services, told USA Today. 

The children are able to avoid paying closing costs, appraisal fees, and other expenses that are generally charged by a lender and they’re usually able to get an even lower interest rate on the loan. Meanwhile, the parents are finding the interest rate charged on the intrafamily loans still offer them higher returns than they’d be able to earn on other investments.

National Family Mortgage say they’ve helped families finance more than $12 million in loans, anywhere from an $18,500 down payment to a $1.17 million refinancing. Burke told USA Today that another perk of intrafamily loans is that it sometimes allow clients to make all-cash offers on a home too, which has become more important in making competitive offers when bidding on foreclosed properties. 

The number of first-time home buyers receiving loan help has steadily been growing. For example, in 2010, 9 percent of first-time home buyers had received a loan from a relative or friend. In 2009, that number was 6 percent, according to research by the National Association of REALTORS®.

However, some parents who want to help their children with buying a home may find it a better route to get a mortgage on their own, buy the home, and then just rent it back to their children, some housing experts say. Parents who finance a child’s mortgage or help with the down payment need to make sure they follow IRS guidelines, particularly in avoiding problems with  IRS guidelines, particularly in avoiding problems with gift taxes. 

. 

Source: “More Parents Finance Their Kids’ Mortgages,” USA Today (Oct. 5, 2011)

Other Placerville, El Dorado County, California information at: www.dougandbudzeller.com

First-time home buyers make up a big chunk of home buyers. So what are their top priorities when shopping for a home? Bankrate.com recently featured “must-haves” for first-time home buyers. Here are a few top priorities:  

Affordable price. “Unlike a trade-up buyer, they don’t have any equity to roll into the purchase of their next home, so coming up with a down payment and the financial aspects of buying a home is the first concern,” says Paul Bishop, vice president of research for the National Association of REALTORS®. Fortunately, home affordability is at one of its highest in years and a large inventory of homes on the market provides plenty of options, which is helping first-time buyers find a good home at a great price.

Room to grow. Ken Shuman, Trulia.com spokesman, says that first-time home buyers often find its smart to search for a first home that not only accommodates their needs now but one that can accommodate them in 10 years, too. Space to accommodate growing families will likely be a higher priority than upgrades, such as granite countertops, Shuman says. 

Turnkey. Surveys have recently shown first-time home buyers showing a preference for homes that are in move-in condition and in stable neighborhoods, rather than fixer uppers in depressed neighborhoods. 

Read more from Bankrate.com about must-haves of first-time home buyers.

 Source: “5 Major Must-Haves for a Fab First Home,” Bankrate.com (Aug. 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

It is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities, according to Trulia.com’s latest Rent vs. Buy Index.  Meanwhile, a nation of renters has emerged as more Americans rent by choice or due to unforeseen financial difficulties.  In contrast to this nationwide trend, renting is only less expensive than buying in four of the cities included in this study – namely New York, Seattle, Kansas City, and San Francisco.  The remaining 10 cities are locations where buying still may be a financially sound long-term decision, despite the relative affordability of renting.

Cities overwhelmed by foreclosure filings and unemployment, including many cities in Florida, Arizona, Nevada and central California, typically correspond to more affordable markets for prospective buyers; however, there are exceptions. Oakland and Los Angeles, which are experiencing similar rates of unemployment or foreclosure filings as Phoenix, Miami, and Sacramento, still are more affordable to renters.  Moreover, close proximity to economic centers with promising job growth projections has propped up both the demand for homes and costs of homeownership in Oakland and Los Angeles. 

More information at: http://info.trulia.com/index.php?s=43&item=113 

Other articles at: www.sierraproperties.com

Affordable home prices and historically low interest rates have created an ideal situation for many qualified first-time home buyers to purchase a house. Despite this opportunity, some buyers may be overconfident and make mistakes during the home-buying process.

KEEP THIS IN MIND

• Some first-time buyers are unaware of the vast amount of paperwork and negotiations that go into purchasing a home. As a result, buyers may think they can save money by forgoing the use of a REALTOR®. However, managing the nuances of offers, inspections, financing, and other pivotal steps when buying a home often causes confusion and anxiety for buyers. Working with a REALTOR®–who is obligated to put the buyer’s best interests first–will help to alleviate buyer concerns during this process.

• Online mortgage calculators can help buyers estimate the amount of house they can afford, but calculators should not be the sole source for mortgage-approval information. Buyers are advised to meet with a mortgage broker or banker prior to beginning the home search to help determine the loan amount for which they are most likely to be approved.

• Although there is a large selection of homes available for sale, home buyers should not assume they can make low offers or unreasonable demands. Even in hard-hit housing markets, homes in desirable neighborhoods are receiving multiple offers.

To read the full story, please click here: http://online.wsj.com/article/SB10001424052748703579804575441472748516734.html?mod=WSJ_hpp_sections_realestate       

Great advise in post by Dan Steward

Those who missed taking advantage of the first-time buyer tax credit but who are still planning the purchase of their first home, continue to have a wealth of opportunities in today’s marketplace. A few smart steps can save first-time buyers thousands of dollars. Here is a look at some of the ways how:

1. Don’t buy if you don’t plan to stay
If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner – even in a rising market. When prices are falling, it’s an even worse proposition.

2. Start by shoring up your credit
Since you probably will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Choose carefully between points and rate
When picking a mortgage, you usually have the option of paying additional points- a portion of the interest that you pay at closing- in exchange for a lower interest rate. If you stay in the house for a long time- say three to five years or more- it’s usually a better deal to take the points. The lower interest rate will save you more in the long run.

4. Hire a home inspector
A home inspector can let you know if you’re about to buy a lemon of a house or warn you about potential problems. At best, you can move into the house confident that it’s in good shape; at worst, the inspector’s report can let you back out of the deal if the house has major, unexpected problems. Most typically, the home inspection can allow you to negotiate the home price to account for necessary repairs.

5. Get professional help
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

6. Bonus Tip: Be patient
Buying a home is one of the largest purchases most people will make in their lifetime. The key to avoiding buyer’s remorse is to be completely comfortable before signing on the dotted line.

Dan Steward is president, Pillar To Post. For more information, visit www.pillartopost.com.