Monday, September 20, 2010

The ABC's of home buying

Carla Hill, writing for Realty Times, discusses the questions and terminology confronting first time home buyers.

Here’s the full article:

As a first-time buyer, you have a lot of questions. There is terminology you don't understand. And there are expenses you need to anticipate. Here are some explanations of just that, to help you on your way to homeownership.

First, what costs should you expect? After you have become "pre-approved" for a mortgage, you will know how much you can spend (aka your "budget"). Pre-approval is done by the bank or lender who will be writing your mortgage. It is accessed by your: credit history, assets, employment history, and financial status. And it guarantees you a loan.

Being pre-approved can quicken the time it takes to close, as well as give you an advantage over buyers who are not pre-approved, should a home garner multiple offers.

Next, figure out how much money you'll need to put down. Are you looking at an FHA loan with 3.5 percent down? Or are you planning on putting 15 to 20 percent down? Financial expert Suze Orman recommends that in today's troubled market, you put at least 20 percent down on a house.

Closing costs are what are paid, well, at closing. You should expect to pay for an appraisal, title services, title insurance, transfer taxes, inspections, loan origination, private mortgage insurance, and homeowners insurance, among a host of other charges. The average closing costs are paid, yes, by the buyer. And they average around 2 to 4 percent of the total purchase price of the home. You can, of course, negotiate payment of closing costs with the seller. This is especially true in a market which favors buyers.

What is mortgage insurance? Mortgage insurance, also known as private mortgage insurance (PMI), protects your lender, should you default on your loan. And it can be required when you have made only a small downpayment. It costs around 1 percent of the total loan. According to the Federal Reserve Bank of San Francisco, "Under [The Homeowner's Protection Act of 1998], mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan."

What is escrow? With a purchase as large as this, it is important that one party doesn't run off with all the funds! This is where an escrow account comes into play. All necessary and agreed upon funds are put into a third party account. When all terms have been met, then the funds are released to the appropriate parties. [Escrows, in the sense the term is used here, is not a New Jersey custom.]

What is an offer? When you have found a home you like, you'll discuss with your agent what a reasonable price pay is. This will more than likely be less than the price the seller is asking. And it will be based on the condition of the home, the price of home's in the neighborhood, as well as current market conditions. Remember, your offer is the price you are willing to pay for the property. You have signed the offer and, if accepted, you will be expected to follow through with the purchase of this home!

What are property taxes? Welcome to homeownership! Property taxes are paid each year to your local government at the county level. Some areas of the country charge much higher taxes than others, and the price is a percentage of the value of your property. That means that more expensive the house, the more expensive the taxes.

As a first-time buyer, it is highly recommended you work with a local real estate agent. They not only can answer any questions you may have, but their wealth of knowledge and experience will help guide you in a positive direction for this important transaction.

You can read the article on-line.


For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Thursday, September 16, 2010

Homebuyer Tax Credit Extension for Contracted Homebuyers Only

A reminder from Realty Times about the Homebuyer Tax Credit -
The extension on filing for the homebuyer tax credit is available only to those who had already contracted to buy a home by the end of April.
Closings must occur no later than September 30, 2010.
The extension applies only to homebuyers who had sales contracts in place as of April 30, 2010, but have not yet closed.
 Military personnel still have until April 30, 2011 to contract a home sale and June 30, 2011 to close the deal. Those dates for the military are unchanged by the new legislation.
 Read the full article - Realty Times - Homebuyer Tax Credit Extension for Contracted Homebuyers Only

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Wednesday, September 15, 2010

This and that to save you money

As any good American or human for that matter, we like to save money. So, here are some news and article blurbs that may help you do that:


New York Times, Sept. 12, 2010
Bucks: Finding Banks That Don’t Charge A.T.M. Fees
By Jennifer Saranow Schultz

Banks have different policies when handling fees for A.T.M. use. “Here are a few banks with more generous A.T.M.-fee policies as well as resources for finding other banks with similar policies.”

The article also contains links to other money saving sites.


New York Times, Sept. 10, 2010
Your Money: In Using Software to Write a Will, a Lawyer Is Still Helpful
By Tara Siegel Bernard

“Four wills, written using four different computer programs, point up some strengths and some surprising weaknesses.” Our attorney clients will be happy with this article. And those of us in the title insurance industry can testify to the botched estates caused by self-drafted wills.

Read the full article here.


New York Times, Sept. 10, 2010
Health: Getting a Guide for the Jungle of Individual Health Policies

By Lesley Alderman

“Health insurance brokers, who are paid a commission by insurance companies but are free to consumers, are busier than ever.”  I didn't know that, did you?

Read more about what you and I don't know.


For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-227-4724 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Tuesday, September 14, 2010

A sign of the economy - Nervous Americans want easy access to their cash

From the Associated Press:

Nervous Americans want easy access to their cash
By Pallavi Gogoi

NEW YORK — Americans want to be close to their cash.

People are bailing out of bank certificates of deposit and parking their cash in checking and savings accounts that earn little or no interest but also don't exact penalties for early withdrawal.

It's another signal of how nervous Americans are about their finances as the U.S. economy struggles. Consumers are stuck with few options to make their money work. The Standard & Poor's 500 is down 0.5 percent for the year, one big reason why people have pulled a net $145.3 billion out of mutual funds in the first eight months of the year, according to Lipper Inc.
Why? "At times of uncertainty, there is a natural human tendency to stay liquid and have money easily accessible," says Dan Geller, executive vice president at financial data analysis firm Market Rates Insight.

A CD commonly carries an interest rate for a fixed term ranging from three months to five years. Depositors typically pay a penalty if they withdraw their money prior to the end of the CD's term.

"Interest rates on short-term instruments like CDs are so low, why bother when you can leave money in the bank?" says Martin Feldstein, professor of economics at Harvard University.

This is not a stand-alone phenomenon: As American households spend less, chances of higher economic activity and a healthy recovery continues to diminish. It's no surprise that overall deposits in U.S. banks fell for two consecutive quarters for the first time in two decades.

Read the full article and make up your mind whether you want to stay in certificates of deposit.


For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-227-4724 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Monday, September 13, 2010

A Downside of Short Sales

We’ve previously written about short sales. Their numbers are growing as more homeowners sell in a down market. (As a refresher, a short sale occurs when the sale price is less than the amount of outstanding mortgages and expesenses of sale and the lender agrees to accept less than full payment for its mortgage.)

Short sales are subject to abuses that can amount to fraud. The most usual case is the broker who arranges the short sale and does not disclose that his buyer will resell the house at a higher price immediately after the short sale occurs. Title companies are one the lookout for these types of deals and refuse to insure them.

The Sunday New York Times discusses this problem in a column by Bob Tedeschi. Here’s the column

A Downside of Short Sales
By Bob Tedeschi

STRUGGLING homeowners have found some refuge in short sales, in which lenders allow borrowers to escape foreclosure by selling a home for less than what is owed on the mortgage. Government programs offering incentives to both parties will push the number of short sales to 400,000 this year from 100,000 in 2008, according to CoreLogic, a financial consulting firm.

But the jump in short sales has also given rise to a new form of fraud — which, as a recent study by CoreLogic suggests, could undermine the burgeoning practice.

Fraudulent short sales take many forms, but Frank McKenna, the vice president for fraud strategy at CoreLogic and one of the report’s authors, says one arrangement is more common than others.

An agent for the borrower negotiates with the lender to obtain a low selling price for a property, then sells it to a “straw buyer,” or someone with whom the agent is affiliated. The agents are sometimes real estate agents, or employees of businesses that advertise as “foreclosure rescue” specialists, Mr. McKenna said. As the agent negotiates with the lender — and unbeknownst to the original homeowner or the lender — the agent arranges to resell the property at a higher price. The new buyers may not know that they could have obtained the property for a lower price. Or, even worse, they may be victims of identity theft, unaware that their financial information was being used to buy a home.

In other fraudulent transactions, a borrower might purposefully default on a mortgage he or she could actually afford. The borrower arranges to transfer the property to a friend or relative through a short sale, and the original borrower can remain in the home. The new owner can also transfer ownership back to the original owner through a quitclaim deed, Mr. McKenna said.

He estimated that only about 2 percent of the short sales completed in the last two years were fraudulent, but said fraud was becoming more frequent. “It’s happening a lot more in this market because there are so many more short sales,” he said. “There’s more opportunity to go after the quick buck.”

CoreLogic does not track the actual number of fraudulent short sales. Rather, it estimates the figure by identifying short-sale transactions in which the house was quickly sold or “flipped” to a new buyer, or resold for a vastly higher price. The company obtains and analyzes publicly available sales and financial information on most of the nation’s home purchases.

Florida, California, Texas and Arizona had the greatest number of suspicious short sales, according to the CoreLogic report. New York ranked fifth, with roughly 5.5 percent of all short sales falling into the “suspicious” category. New Jersey ranked eighth, with about 3.3 percent of short sales categorized as suspicious. In Connecticut, the percentage of suspicious short sales was close to zero.Mr. McKenna said the rising number of suspicious short sales could undermine the use of these transactions as a foreclosure alternative. That, he said, would be unfortunate, since borrowers and lenders have only recently reported some momentum in successfully completing short sales.

But John P. Bonora, a vice president of the Fairfield County Bank in Ridgefield, Conn., said he did not expect this to happen. Noting that CoreLogic also sells fraud prevention services to lenders, Mr. Bonora theorized that its report might overstate the threat of fraudulent short sales.

“I’d forward the report to my folks and say you should have some of these things in the back of your mind,” he said. “But I don’t think this report would deter us from doing a short sale.”

Still, Mr. Bonora said, the report makes him more suspicious of real estate agents who market themselves as foreclosure specialists.

“They’re probably speaking with borrowers on a daily basis about foreclosures,” he said. “And people are opportunists.”

The story can be found on-line here.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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