Post-Foreclosure or Short Sale Home Buyers

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Scottsdale Real EstateWhether you are re-entering the market after a foreclosure or short sale, there are a few things you will need to know.  There are mandatory waiting periods before these homeowners can apply for a new mortgage.  For a new FHA loan, the required waiting period is three years, whether it’s a prior foreclosure or a short sale.  The waiting period begins the date the prior foreclosure or short sale was actually recorded, not when the homeowner has left the home.  So if the transaction took several months to be negotiated, those months need to be excluded from the three-year time period.

For a conventional loan, the waiting period is typically four years after a short sale, and seven years post foreclosure.  VA loans typically have a waiting period of only two years.  There may be extenuating circumstances such as a significant reduction or income that may reduce these timeframes.

Homeowners who have gone through a short sale or foreclosure will also have to take special care to raise their credit scores.  Paying down or paying off any other debt such as credit card debt or automobile loans are the quickest way to do this.  Pulling your credit reports from the three national credit companies—Equifax, Experian, and TransUnion—and examining them closely for any outstanding debts and liabilities is another important step to take before applying for a new mortgage.  If there are any inaccuracies, you will need to notify these credit bureaus as soon as possible.

Finally, there are many resources to assist these homeowners who want to re-enter the housing market.  The Arizona Department of Housing, for example, has a program called the HOME Plus Home Loan Program which may offer assistance with down payments thanks to grants.  Another mortgage program to consider may be The Pathway to Purchase Down Payment Assistance Program, which provides a 30-year fixed-rate mortgage with a down-payment assistance second mortgage (equal to 10 percent of the purchase price, or up to a maximum of $20,000).

I’d be happy to help you navigate these mortgage solutions or find others that may be more suitable to your personal situation.

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What Exactly Are Closing Costs?

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buying_home_cycle photoAnyone who has ever been involved in assuming a mortgage, or even watched a few real estate shows on HGTV, is familiar with closing costs.  But what exactly are closing costs?  Here’s a quick rundown of these additional fees.

Simply put, closing costs are additional fees associated with processing the mortgage, and are not paid to the mortgage company.  Generally speaking, closing costs are assumed by the buyer of the property (VA mortgages are one exception to this rule) and are paid at the time of closing of escrow.  The bulk of closing costs is comprised of lender’s fees.  These fees include the appraisal fee, which is an independent assessment of the value of the property being purchased, as well as the credit report and any property taxes.  Lender’s fees also include mortgage and homeowner’s insurance, as well as any flood certification and pre-paid interest charges.  These fees may also include origination and discount points depending on your lender, as well as loan application and loan processing fees.

Title fees are also part of closing costs.  These fees include the title service fee, which covers the handling of title documents and funds, as well as half of the settlement and escrow fees, which cover the fees for the title search and examination.  Finally, title fees also include any title insurance.   Recording fees are another part of closing costs and include recording fees, transfer taxes and an affidavit of property value.   HOA transfer fees and HOA dues are typically also included within closing costs.

While this is a quick overview of closing costs and is by no means an exhaustive list, I hope this has shed some light on these omnipresent fees in real estate transactions.  Every transaction is different, and while I am unable to give legal, tax or accounting advice, I look forward to helping you navigate your own process with ease and clarity.

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Downsizing When a Tiny House Isn’t an Option

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C Park condoTiny houses seem to be quite the popular trend nowadays.  Thanks to TV shows, the news, and home magazine articles, we’ve been inundated with the popularity of tiny houses.  With the typical American home size being 2,400-2,600 square feet, the 100-400 square feet of tiny houses represents a 65 to 90% decrease in living space.  The reasons for the popularity of tiny houses range from financial to environmental, as well as a desire to simply downsize and simplify one’s life.

Quite simply, tiny houses aren’t for everyone, but for most people, downsizing will be necessary at some point in life, whether it’s a home post-retirement or a vacation home or even a home to create a simpler lifestyle.  However, making the move from a larger home to a home with a smaller footprint takes some planning.

One of the first steps in downsizing is to take inventory of your things, as your possessions that currently fit into your larger home simply will not fit in your smaller home.  There are dozens of resources which address this process, but deciding what to keep and what to get rid of is the most critical part of this process.  Try focusing on what items you love and what items bring you joy.  By process of elimination, the remaining items that do not, should be thrown away, sold or donated.  An exciting part of downsizing is letting go of things that you don’t absolutely need, which helps you to focus on what is important.

Another way to take inventory of your items is to gather like items together.  For example, putting all of your baking and cooking items into groups can help you identify whether you have duplicates of items as well as items that you’ve never used at all.  You may not have space in your new downsized home to house small kitchen appliances such as pasta makers or bread makers, especially considering these items may not be used sufficiently to justify taking up precious storage space.

Finally, make decisions as to where you are putting the items you are keeping in your new space.  Larger furniture items may not be appropriate for the scale of your new home, so winnowing down the larger pieces to one or two favorite pieces will make the transition much easier.  Recognize that storage will not be as plentiful for your smaller items, and this will drive your decision-making processes.   While a tiny house may not be in your future, a home which provides more freedom and financial sufficiency will be, and that’s something to celebrate.

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