Things to AVOID Before Buying a Home

Many new home-buyers make the mistake of rushing out to buy things to fill their home with as soon as the seller accepts their purchase offer and the lender pre-approves their loan. But there are still a few major hurdles to overcome before the keys are handed out.

Here are some things to avoid during the home buying process to assure your transaction goes as smoothly as possible:

• Don't make an expensive purchase. It may be tempting to order that new sofa for your soon-to-be living room, but its best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing that furniture with a store credit card or even one of your own credit cards could jeopardize your credit worthiness during the time it means the most. Using cash to purchase big items can also create a problem because many banks take into consideration your cash reserve when approving your mortgage.
  
  
• Don't get a new job. Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan - especially if you are going to be making more money. But for some people, getting a new job during the loan approval process could raise some concern and affect your application.
  
  
• Don't switch banks or move money around. As your lender reviews your loan package, you will likely be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account - even if its just to consolidate funds - could make it difficult for the lender to document your funds.
  
  
• Don't give a good faith deposit directly to the seller in a FSBO purchase. As a rule, your good faith deposit belongs to you, not to the seller, until the deal closes. Your FSBO seller may not know that your good faith funds should be applied to your expenses at closing. Get an attorney or other neutral party who can hold the deposit or put it in a trust account until you close on the home. Your purchase contract should dictate to whom the funds go should the transaction fall through.
  
  
• Don't disregard your lenders requirements. You may have been pre-approved for the loan but your work with the lender is far from over. In order to process your loan, you need to meet certain requirements. Your lender will need copies of your bank statements, W2s and other paperwork. It is up to you to get it to him or her as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.
  Taken from www.govloansus.com

SHORT SALE: The Good, The Bad, and The Ugly

Since the economic crisis in 2007-2008 I have done my fair share of short sales.  Those of you who have been involved in a short sale (in any capacity) know that it can be a never-ending process of frustration, confusion, and repetition; and that’s just in trying to get approved to do the short sale!

Well, Fannie & Freddie are implementing some new guidelines in hopes of streamlining the Short Sale timeline. Below is an article from the magazine, UTAH REALTOR (Third Quarter 2012).

Fannie Mae and Freddie Mac SHORT SALE Improvements:  New guidelines to streamline Fannie Mae and Freddie Mac short sales took effect Nov 1.  The Federal Housing Finance Agency announced in August that it is consolidating all existing short sale efforts into one program that will “enable lenders and servicers to quickly and easily qualify eligible borrowers for a short sale.”

One of the key changes will allow a short sale for people who have a legitimate hardship but are still current on their mortgage payments.  In these situations, which include the death of a borrower or co-borrower, divorce, disability or relocation for a job, the servicer will be able to process the short sale without additional approval from Fannie Mae or Freddie Mac – even if the borrower is not yet behind on payments.

Another change will provide up to $6,000 to second lien-holders.  “Previously, second lien-holders could slow down the short sale process by negotiating for higher amount,” the announcement said.  The $6,000 incentive is designed to help get an OK faster.

FHFA has also reduced documentation requirements for those who have missed several mortgage payments, have low credit scores and have serious financial hardships.

Military personnel who are relocated will automatically receive short sale approval.  They will also be under no obligation to cover the shortfall between the mortgage amount and the sales price of the property.

Finally, there will be more clarity for processing a short sale when a foreclosure is pending.

Although a Short Sale can be frustrating for both the Seller and the Buyer if you are a homeowner struggling to make mortgage payments and facing the reality of foreclosure a short sale can be a lifesaver.

Here are a few FAQ's concerning short sales:


Do I still owe the bank after a short sale?

Maybe. When you sell your home for less than the amount you owe against it, something needs to be done about the balance left over.  This is called the deficiency balance.  The bank can do one of three things:

1. choose to forgive this balance, known as a waiver of deficiency.
2. they can ask you to pay it back by carrying a unsecured note.
3. they can pursue a judgement or collection on the remaining balance.

Some states like California have passed laws that require lenders to waive the deficiency if they agree to accept a short sale. Utah does not currently have such a law so you will need to negotiate the waiver of deficiency

Do most banks waive the balance after a short sale?

Generally, most 1st position lien holders will waive the remaining balance on a short sale.  2nd liens get a much smaller portion of the funds in a short sale and as a result will generally want to make up the difference in some way.  They may ask for you to contribute funds at closing, send your account to collections, or sue you in court to get a judgement against you.
There are federal short sale programs like HAFA, that require all participating lenders to waive the balance. There are other programs like the Chase Short Sale Outreach and the Bank of America Cooperative Short Sale Program that also have the deficiency waiver built in.  If you are not participating in these programs, it is important that your agent negotiate this release and have it built into the short sale approval letter

Do I have to hire a real estate agent to do a short sale?

There is no state law that requires you to hire a licensed agent to sell your house in a short sale.  The bank however may require that you list the home for sale with a local real estate professional to ensure that you are doing everything possible to get fair market value for the property.  They can’t force you to list your home with an agent, but they can refuse to do a short sale if you don’t.

Do I have to show the bank my financial information?

Generally the bank will want to see that you do not have the capacity to continue to make your loan payments until it is paid off as agreed when you borrowed the money.  Because of this, they will need to see that there is a reason for you to sell your home.  If you are claiming that you can no longer afford to make your payments, they will require proof of that.  This is done by having you supply tax returns, bank statements, and recent paystubs and a short sale hardship letter.  There are some short sale programs that require a limited amount of documentation which would eliminate the need to supply financial documentation.

Do I have to pay for someone to negotiate my short sale?

No.  You don’t have to pay to sell your home on a short sale.  The commissions paid to real estate agents come out of the banks proceeds. Some states  allow for short sale negotiators to collect a special fee for negotiating a short sale that will be separate from a real estate commission. It is beneficial but not necessary to hire a specialist to handle your short sale.  They can often be paid by the buyer, bank, agent or the seller.

Judicial or Non-Judicial Foreclosure State?

Primarily non-judicial foreclosure that does not involve court action is used in Utah. This requires that notice be given to the borrowers and the public, so this foreclosure method is commonly called sale of trust property by public auction. The trust deed usually contains a provision called a power of sale clause which allows a trustee to sell the property in order to satisfy the underlying defaulted loan.  In Utah there is no express requirement for the power of sale language to actually be in the trust deed.  Only certain parties or entities can serve as trustees, including attorneys, banks and title company officers. The trustee acts as a representative of the lender to complete the sale, which typically occurs in the form of an auction.  There are strict notice requirements inherent in the non-judicial foreclosure process.

Does Seller Owe Deficiency Amount After Foreclosure or Short Sale?

Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage or deed of trust secures.

For a short sale, the deficiency can be waived if agreed in writing on the short sale approval letter.

If you have more questions about the short sale process please do not hesitate to contact me.

IS IT TIME TO BUY A HOME?

In 1992 mortgage rates were double what they are today.  Today's FHA 30-year fixed-rate is between 3 and 4 percent; in the 1980's it was between 13 and 18 percent.  Interest rates are at a historical low and homes are at their most affordable prices on record.

However, it has been noted in recent news articles that home prices are on the rise again with prices jumping "4.6% nationally in August compared to a year ago - Utah being one of the states seeing the greatest increases at 8.9%**." 

It has also been noted that previously occupied home sales are also on the rise.  "Sales of previously occupied homes jumped in August to the highest levels since May 2010. And the lowest mortgage rates on record have made home buying more attractive**."

Furthermore, home building permits for a 12-county area along the Wasatch Front were at a blistering pace in August, 28 percent year-over-year and generally have been on an upward trend each month from a year ago.

What does this all mean?

The best opportunities in real estate may be right now!  If you are waiting for better interest rates... can you afford to wait?  Supply is shrinking and demand is increasing.  Sales of new and previously owned homes have been slowly improving this year, and home prices are starting to show consistent gains in Utah and nationally.  Even if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

What if you are a current homeowner wishing to upgrade?
While it is still a buyers market, it is beginning to move to a more neutral market.  Current home owners interested in upgrading are perhaps in one of the best opportunities.  If you are a homeowner considering upgrading, but want to wait until your current homes improves in value, you may actually loose money!  Consider this:  If you wait to sell your current home until the market has increased another 4% the new home will have increased 4% as well!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

If you are on the fence today... it is time to get off that fence and act!



**  http://www.standard.net/stories/2012/10/02/utah-sees-dramatic-increase-home-prices
**  http://www.sacbee.com/2012/10/02/4873735/corelogic-august-home-price-index.html

KELLY 101

Okay... here goes the formal stuff.

My name is Kelly Wixom. I have been a resident of Orem-Provo, or Provo-Orem, since 1994 and a Realtor since 2008.  I was born in southern California and grew up in Long Beach/Los Alamitos with my Mom, Dad, younger brother, four cats, four Rhode Island Red chickens, and a pair of ducks that took up residence in our front yard for a couple of summers.  And here's the shocker - I have never been surfing.  :-)

After high school my best friend moved to Provo to go to BYU and when I visited her I realized I was a mountain girl, not a beach girl.  It wasn't long after the visit that I made Utah my permanent home.  My first job here had me outside in the 108 degree August sun!  I soon got an inside job where I eventually met my husband.  We have been married for 15 years and have three very energetic boys.  Not quite sure if they add to my youthfulness or rob me of it daily!?

My love of real estate started when I was 9.  Many nights my family would go on evening walks together and when we would pass beautifully landscaped homes I wished I could go inside.  I bombarded my mother with questions ranging from interest rates to escrow.  Even though I didn't have a clue what all of it meant I knew I wanted to be a part of it.  In 2008 I had the opportunity to make my dream come true and I have loved every minute.

I specialize in everything related to residential real estate.  Whether it's a standard residential sale, short sale, bank owned, 1031-exchange, investment, first-time home-buyer, up-sizing, or down-sizing I can help you.