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7 Tips for Improving Your Credit

Posted on by Daniel Andrade

By: G. M. Filisko

Here’s how to clean up your credit so you get the least-expensive home loan possible.

Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.

1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax (http://www.equifax.com), Experian (http://www.experian.com), and TransUnion (http://www.transunion.com). Access all three versions of your credit report at www.annualcreditreport.com (http://www.annualcreditreport.com). Review them to ensure the information is accurate.

2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.

3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.

4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.

6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.

Other web resources
How FICO scores are calculated (http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Answers to frequently asked credit report questions (https://www.annualcreditreport.com/cra/helpfaq)

G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Q-A Series – FIRST STEPS

Posted on by Daniel Andrade

Q. WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN

The first step in securing a loan is to complete a loan application. To do so, you’ll need the following information.
– Pay stubs for the past 2-3 months
– W-2 forms for the past 2 years
– Information on long-term debts
– Recent bank statements
– tax returns for the past 2 years
– Proof of any other income
– Address and description of the property you wish to buy
– Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

Q. HOW DO I CHOOSE THE RIGHT LENDER FOR ME

Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor the status of your application and ask questions. Plus, it’s beneficial when the lender knows home values and conditions in the local area. Do research and ask family, friends, and your real estate agent for recommendations.

Q. HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender’s actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

Q. HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it’s important to verify its accuracy. Double check the “high credit limit,”‘total loan,” and ‘past due” columns. It’s a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

CREDIT REPORTING COMPANIES
Company Name Phone Number
Experian 1-888-397-3742
Equifax 1-800-685-1111
Trans Union 1-800-916-8800

Q. WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY

Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.

Q. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM

A credit bureau score is a number, based upon your credit history, that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

Q. HOW CAN I IMPROVE MY SCORE

There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

What if They Accept the Offer?

Posted on by Daniel Andrade

Congratulations, your offer has been accepted!

Over the next 30 to 60 days, your purchase will be pending and you will begin the escrow process. Typically, an offer will have several contingencies. Contingencies are terms and conditions written into a contract by the buyer or the seller, which must be met within specified timelines in order for the sale to be completed. Know this, contingencies are a homebuyer s best friend. When contingencies are not met, the sale is cancelled and your deposit money may be refunded.

Some common contingencies include proper financing being in place and conducting a home inspection. Without proper financing in place, you ll have a tough time paying for your new house! In addition, conducting a home inspection can re-open negotiations to pay for hidden problems the house may have  or terminate the sale entirely if truly serious problems are found.

There are many other contingencies that can be attached to the sale of a particular piece of property depending on the different needs of buyers and sellers. Again, a good real estate agent will suggest the contingencies that you should make as part of the offer.

During the sale pending period, you will also be provided with a number of disclosures relative to the sale of your new home. These disclosures run the gamut from information about the business relationships between your real estate agent and your lender, to natural hazards that may exist in and around your new home.

Two of the most important disclosures you will receive include:
Real Property Transfer Disclosure Statement This disclosure is completed by the seller. It tells you the physical condition of the property and potential hazards or defects that may be associated with it. While the seller is principally responsible for the disclosures presented in this document, the agent is also responsible for conducting a visual inspection of the property and disclosing any readily observable defects detected in the process. This document also discloses any special taxes, assessments and other factors that may have a material effect on the value or desirability of the property.

Agency Relationship Disclosure Your real estate agent is required to provide you with a written disclosure stating whom he or she represents in the transaction. The agent may represent you as the buyer exclusively, or the seller exclusively, or be a dual agent representing both you and the seller. You should carefully review and understand this disclosure as it has a material effect on the level of responsibilities that your agent owes to you.

Attaching excessive contingencies to an offer or sale in a hot real estate market can easily kill a deal. There may be several other buyers waiting in line with a shorter list of needs.

Home Buyer Hint
Depending on the location, age and other factors involved with the residential property that you are purchasing, additional disclosures may be required. If you have questions about disclosures, ask your real estate agent.

Short Sales And Credit Scores – Short Sale Education

Posted on by Guest
A couple of months ago, I wrote the blog “Bankruptcy, Foreclosure, or Short Sale? What happens to my Credit Score?” This month, I’d like to give an update on Short Sales and Credit Scores.

Credit Score:Drops score approximately 60-100 points
Length of Time on Credit Report:7 years
Buying Another Home: Qualify for a mortgage with a decent interest rate after 18-24 months

Note: There are several caveats when it comes to a short sale because short sales are relatively new and credit bureaus are still trying to figure it into their credit risk modeling. In fact, in the future, it has been analyzed that some lenders may look at a short sale the same as a foreclosure.

Above states an 60-100 point hit for a short sale and this hit does depend on how many payments were missed prior to the completion of a short sale

For a short sale, it has been reported that a credit report will show Satisfied with a note that states “Creditor settled for less than the amount due”. If you are lucky, you will just get “Paid In Full”. This does not happen often. Most likely, a short sale will show as a charge off or a settlement

Lenders using the Fannie Mae and Freddie Mac mortgage approval system will see mortgage payments that are 120 days late or receipt of a Notice of Default the same as a foreclosure

Many lenders may not consider a short sale unless the homeowner is late, but more are considering a short sale even if the homeowner is not late with a convincing and full proof of a hardship

Homeowners who have a mortgage under water are more inclined to try a short sale ”short sale” before throwing their hands in the air and going to foreclosure or go through bankruptcy. In 2009, the National Association of Realtors estimated that about ten percent of all sales last year were short sales and it is expected to increase this year.

With Obama’s HAFA program, lenders are provided incentives to perform short sales and so are homeowners because under this program they would receive $1500 for relocation costs.

There is still a lot of confusion around how a Short Sale Secrets will affect a borrower’s credit score. It really depends on how many lates a homeowner has had on their mortgage and how the lender decides to report it to credit agencies, Experian, Equifax, TransUnion.

The main point that homeowners should realize is that if they are successful on doing a short sale to get out of their situation, the road to credit recovery is shorter than if they went to foreclosure. Protecting ones credit score will help to minimize the amount of interest a borrower pays on credit cards an loans.

It has been reported that a homeowner would be able to buy a home after 2-3 years, given they continue to work on their credit after a short sale. If they went to foreclosure, they would have to wait as long as 7 years.

Many homeowner are frustrated on figuring out how to resolve their mortgage being underwater and many are just walking away but this is a mistake. A homeowner can ask for a short sale even if they are not late on their mortgage, but the reality is that a lender has no incentive to allow a short sale if payments are still being made on time.

There are some states that do not allow lenders of 1st mortgages to pursue a seller for the unpaid balance. But in all states, second liens and equity credit lines can pursue the seller unless an agreement has stated otherwise. Borrowers will have to pay tax of any unpaid mortgage balance unless they meet IRS’s home exclusion or insolvency rules. Owners of second or investment properties do not qualify for the home exclusion rules.

Look out for our future blogs/articles from our Short Sale Leadership Series content.To view our blog updates, visit www.whbsolutions.com/blog.

Article Source: http://www.articlesnatch.com

About the Author:
For more information on becoming a Short Sale Education Leader in your community, join WHB Solution’s community of Short Sale Success and join short sale experts at www.whbsolutions.com/members

Funding And Closing A Short Sale

Posted on by Guest
The Trustee is the owner of the property, not the Trust itself.
The Beneficiary has the power to direct the Trustee to deal with the title and proceeds of the property. They also have the right to manage, possess, use, control, sell, rent or mortgage the property. The beneficiary has an economic interest in the property.
When a homeowner puts a property into a land trust they convey fee simple absolute ownership to the Trustee. The land trust will state that legal and equitable title is vested soley in the Trustee with the homeowner named as the beneficiary.
The beneficiary can direct the Trustee to manage the property. Any liens remain in place but do not get paid off at this time. The land trust protects the property from other creditors by making sure no more liens are placed; this is good information for the short sale lender to know.
The homeowner will also sign a purchase agreement with the investors company as the buyer. The trustee is not named as the buyer. Once the trustee owns the property, a purchase agreement can be signed with the Trustee as Seller. Once the contract is accepted, the buyers lender will order a title search and find that the Trustee is the owner of the property and has the right to sell. This is the part of the process that typically stops the transaction. It all boils down to how the underwriter interprets the FHA guidelines.
Lenders (notably FHA and nonconforming) instituted an underwriting requirement that title must be seasoned for varying lengths of time (3 months etc). The rationale is based upon an observation that where properties were sold multiple times, within a short period of time, the loans had a higher default rate and tended to have artificially inflated appraisals and various other forms of loan fraud. Thus, the seasoning requirement was born. Note the key term “sold”, not transferred. The transfer of the property from the Seller to the Trustee is without consideration and constitutes a mere change of identity and therefore, does not reset the title seasoning clock.
Transferring the ownership of the Land Trust is akin to a corporation selling its shares to someone else, while selling some property that it holds title to – it has no bearing on the transaction contemplated between the Trust itself and the bona fide purchaser for value. Nor is there any reason why a personal transaction, that does not affect title to the premises, would be presented to the purchaser’s Lender. Again, it is the Trustee who holds legal and equitable title and is empowered to convey the premises not the beneficiaries who merely have a beneficial interest in the land trust – personally not realty. New York State, for instance, considered such interest to be an economic interest in real property thereby creating a blend of the two interests – a quasi real estate interest that does not rise to a fee simple interest – so that it may collect transfer taxes upon the transfer of such interest.
Once financing is in place, a qualified real estate attorney can help you proceed to purchase the beneficial interest in the property. Beneficiaries have economic interest in real property; therefore, transfer tax returns must be filed and transfer taxes paid when the interest is transferred to a new beneficiary.
This type of closing should always be performed by a real estate attorney who is familiar with land trusts. He will prepare the HUD-1 as if you were purchasing the property; the short sale lender is paid off at this time. The land trust stays in place; the trustee remains the same. Now the property can be sold to an end buyer with no problems.
The process can vary slightly from state to state and should only be done with a qualified real estate attorney who is familiar with the process. Proper structure with attention to the treatment of the beneficial ownership of the land trust is critical.
Due to the increase in real estate fraud and scams, many states have enacted stringent legislation concerning distressed assets. A qualified real estate attorney who has experience with short sales and land trusts will know what you can and cannot do concerning pre-foreclosed homes.
Jodi Funke is the founder of http://www.cashforshortsales.com a company who specializes in short sale transactions. Jodi is a transactional lender who provides funding for the investor to purchase a property on a short sale and sell the property for a profit the same day. Their team of real estate professionals, attorneys and title companies are experienced at handling these transactions while working at the highest level of integrity.

Article Source: http://www.articlesnatch.com

About the Author:
Jodi Funke is a transactional lender who understands this dilemma. “Lack of funds is the number one reason most real estate investors cannot close a short sale deal,” said Jodi. “We provide one-day funding for the investor to buy the property and our nationwide team of closing professionals, attorneys and title companies are experienced in doing back-to-back transactions so the investor can fund the deal and resell the property the same day. It”‘s a win-win deal for all parties involved.” Learn more about wholesale funding at http://www.cashforshortsales.com

Read more: http://www.articlesnatch.com/Article/Funding-And-Closing-A-Short-Sale-/747172#ixzz1hJXXUSXX
Under Creative Commons License: Attribution No Derivatives

Downpayment Assistance Program (CHDAP)

Posted on by Daniel Andrade

We had some new changes to the mortgage loan that Prospect offers

California Homebuyer’s Downpayment Assistance Program (CHDAP)

The CHDAP provides a deferred-payment junior loan – up to 3% of the purchase price, or appraised value, whichever is less, to be used for their down payment and/or closing costs. This program may be combined with a CalHFA or non-CalHFA, first mortgage loan.

Review the sections below to find out more about the CHDAP program.

Program Eligibility | Borrower Contribution | Interest Rate | How to Apply

(CHDAP program)

PROGRAM ELIGIBILITY

Am I eligible to apply for this program?
Review the guidelines below for both “Borrower” and “Property” Requirements to determine if you may be eligible to apply for the CHDAP program. (Our Eligibility Calculator is also availalbe to easily determine program eligibility.)

Borrower Requirements

  • Whether you are using CHDAP with a CalHFA or non-CalHFA first mortgage, you must still meet all borrower eligibility requirements of CalHFA.
    • Conventional loans must follow CalHFA’s Cal30 borrower requirements.
    • Government-insured (FHA loans) must follow CalHFA’s FHA borrower requirements.
  • Your income must be less than the allowable CHDAP income limits.

For FHA, the Los Angeles Income Limits for the Homebuyer’s Downpayment Assistance Program CHDAP
based on persons in the household
1 person $51,550
2 people $58,900
3 people $66,250
4 people $73,600
5 people $79,500
6 people $85,400
7 call me

*In the case of conflicting guidelines, the lender must follow the more restrictive.

Property Requirements

  • Whether you are using CHDAP with a CalHFA or non-CalHFA first mortgage, you must still meet all property eligibility requirements of CalHFA.
    • Conventional loans must follow CalHFA’s Cal30 property requirements.
    • Government-insured (FHA loans) must follow CalHFA’s FHA property requirements.
  • The sales price of the home can not be above the allowable CHDAP sales price limits.

*In the case of conflicting guidelines, the lender must follow the more restrictive.

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(CHDAP program)

MINIMUM BORROWER CONTRIBUTION

Is there a minimum contribution that I need in addition to this down payment assistance?
When using a CHDAP loan, a minimum contribution is required from your own funds.  The contribution must be 1% of the sales price or $1,000, whichever is greater.

Please contact a CalHFA loan officer for complete details.

*In the case of conflicting guidelines, the lender must follow the more restrictive.

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(CHDAP program)

INTEREST RATE

What is the interest rate?
Interest rates will vary depending on your financial circumstances, lender fees, and other factors. Interest rates can also change daily. We recommend that you check with a CalHFA-approved loan officer to receive an accurate rate quote for this program.

CalHFA does not lend money directly to consumers. CalHFA works through and uses approved private lenders to qualify consumers and to make all mortgage loans. CalHFA purchases closed loans that meet CalHFA’s requirements. The fees consumers pay could be different depending on the lender and the program. View the sample Truth in Lending disclosure here.

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(CHDAP program)

HOW TO APPLY

How do I apply for this loan program?
Since CalHFA is not a direct lender, our mortgage products are offered through private loan officers who have been approved & trained by our Agency. These loan officers can help you find out more about CalHFA’s programs and guide you through the home buying process.

Visit the Find a Loan Officer tab, to contact a loan officer in your area.

What documents should I have ready when contacting a loan officer?
When initially contacting a loan officer, you may want to have this list of documents and information available to help answer questions that they will ask you:

  • Pay stubs
  • Bank statements
  • Employment history
  • Previous tax returns

How to Read the Good Faith Estimate (GFE)

Posted on by Daniel Andrade

Good Faith Estimate (GFE)

You can grab the Full 49 Page HUD’s new settlement cost booklet (updated 1/6/2010 with corrections of minor detail)

The GFE is a three page form designed to encourage you to shop for a mortgage loan and settlement services so you can determine which mortgage is best for you.  It shows the loan terms and the settlement charges you will pay if you decide to go forward with the loan process and are approved for the loan.  It explains which charges can change before your settlement and which charges must remain the same.  It contains a shopping chart allowing you to easily compare multiple mortgage loans and settlement costs, making it easier for you to shop for the best loan. The GFE may be provided by a mortgage broker or the lender.  Until they give you a GFE loan originators are only permitted to charge you for the cost of a credit report.

In the loan application process, the loan originator will need your name, Social Security number, gross monthly income, property address, estimate of the value of the property, and the amount of the mortgage loan you want to determine the GFE.  Your Social Security number is used to obtain a credit report showing your credit history, including past and present debts and the timeliness of repayment.

Your GFE Step-by-Step

Page 1 of the GFE

Now let’s go through the GFE step-by-step. The top of page 1 of the GFE shows the property address, your name and contact information and your loan originator’s contact information.

Important Dates

The Important Dates section of the GFE includes key dates of which you should be aware.

Line 1 discloses the date and time the interest rate offer is good through.

Line 2 discloses the date “All Other Settlement Charges” is good through. This date must be open for at least 10 business days from the date the GFE was issued to allow you to shop for the best loan for you.

Line 3 discloses the interest rate lock time period, such as 30, 45 or 60 days, that the GFE was based on. It does not mean that your interest rate is locked.

Line 4 discloses the number of days prior to going to settlement that you must lock your interest rate.

Note: “Locking in” your rate and points at the time of application or during the processing of your loan will keep the interest rate and points from changing until the rate lock period expires.

Summary of Your Loan

The Summary of Your Loan Terms discloses your loan amount, loan term, the initial interest rate and the principal, interest and mortgage insurance portion of your monthly mortgage payment.  It also informs you if your interest rate can increase, if your loan balance can rise, whether your mortgage payment can rise and if there is a prepayment penalty or balloon payment.

In the example above, the loan amount is $200,000 which will be paid over 30 years. The initial interest rate is 5 percent and the initial monthly mortgage payment is $1,173 which includes mortgage insurance, but does not include any amounts to pay for property taxes and homeowner’s insurances if required by the lender.

In our example, the loan has an adjustable interest rate.  Since the interest rate can rise, the ‘yes’ box was checked, and the loan originator disclosed that the initial interest rate of 5 percent could rise as high as 10 percent.  The first time your interest rate could rise is 6 months after settlement which could increase your payments to $1,290. Over the life of your loan your monthly payments could increase from $1,173 to $1,842.

This example does not contain a balloon payment or a prepayment penalty.

NOTE:  A prepayment penalty is a charge that is assessed if you pay off the loan within a specified time period, such as three years.  A balloon payment is due on a mortgage that usually offers a low monthly payment for an initial period of time.  After that period of time elapses, the balance must be paid by the borrower, or the amount must be refinanced.  You should think carefully before agreeing to these kinds of mortgage loans.  If you are unable to refinance or pay the balance of the loan, you could put your home at risk.

Escrow Account Information

The GFE also includes a separate section referred to as ”Escrow account information,” which indicates whether or not an escrow account is required. This account holds funds needed to pay property taxes, homeowner’s insurance, flood insurance (if required by your lender) or other property-related charges.

If the GFE specifies that you will have an escrow account, you will probably have to pay an initial amount at settlement to start the account and an additional amount with each month’s regular payment.  If you wish to pay your property taxes and insurance directly, some lenders will give you a higher interest rate or charge you a fee.  If your lender does not require an escrow account, you must pay these items directly when they are due.

Summary of Your Settlement Charges

The final section on page 1 of the GFE contains the adjusted origination charges and the total estimated charges for other settlement services which are detailed on page 2.  You should compare the “Total Estimated Settlement Charges” on several GFEs.

Page 2 of the GFE

The price of a home mortgage loan is stated in terms of an interest rate and settlement costs.   Often, you can pay lower total settlement costs in exchange for a higher interest rate and vice versa.  Ask your loan originator about different interest rates and settlement costs options.

Your Adjusted Origination Charges, Block A

Block 1, “Our origination charge” contains the lender’s and the mortgage broker’s charges and point(s) for originating your loan.

Block 2, “Your credit or charge point(s) for the specific interest rate chosen.”

  • If box 1 is checked, the credit or charge for the interest rate is part of the origination charge shown in Block 1.
  • If box 2 is checked, you will pay a higher interest rate and receive a credit to reduce your adjusted origination charge and other settlement charges.
  • If box 3 is checked, you will be paying point(s) to reduce your interest rate and, therefore, will pay higher adjusted origination charges.

Note: A point is equal to one percent of your loan amount.

After adding or subtracting Block 2 from Block 1, “Your Adjusted Origination Charge” is shown in Block A.

In the example shown, the origination charge is $6,750.  No points were paid to reduce the interest rate. Instead, because of the interest rate chosen, the offer contains a $3,000 credit that reduces the adjusted origination charge to $3,750.

Your Charges for All Other Settlement Services, Blocks 3 through 11

In addition to the charges to originate your loan, there are other charges for services that will be required to get your mortgage.  For some of the services, the loan originator will choose the company that performs the service (Block 3). The loan originator usually permits you to select the settlement service provider for “Title services and lender’s title insurance” (Block 4).  “Owner’s title insurance” is also disclosed (Block 5).  Other required services that you may shop for are included in “Required services that you can shop for” (Block 6).

Block 3 contains charges for required services for which the loan originator selects the settlement service provider. These are not “shoppable” services and often include items such as the property appraisal, credit report, flood certification, tax service and any required mortgage insurance.

Block 4 contains the charge for title services, the Lender’s title insurance policy and the services of a title, settlement or escrow agent to conduct your settlement.

Block 5 contains the charge for an Owner’s title insurance policy that protects your interests.

NOTE: Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company.

Block 6 contains charges for required services for which you may shop for the provider.  Some of these items may include a survey or pest inspection.

Block 7 contains charges by governmental entities to record the deed and documents related to the loan.

Block 8 contains charges by state and local governments for taxes related to the mortgage and transferring title to the property.

Block 9 contains the initial amount you will pay at settlement to start the escrow account, if required by the lender.

Block 10 contains the charge for the daily interest on the loan from the day of settlement to the first day of the following month.

Block 11 contains the annual charge for any insurance the lender requires to protect the property such as homeowner’s insurance and flood insurance.

Total Estimated Settlement Charges

“Your charges for All Other Settlement Services”, Blocks 3 through 11, are totaled in Block B.  Blocks A and B are added together resulting in the total estimated settlement charges associated with getting the loan. These Blocks are carried forward to the bottom of page 1 of the GFE.

Page 3 of the GFE

Page 3 of the GFE contains important instructions and information that will help you shop for the best loan for you.

Understanding which charges can change at settlement

There are three different categories of charges that you will pay at closing: charges that cannot increase at settlement; charges that cannot increase in total more than 10%; and charges that can increase at settlement.  You can use this as a guide to understand which charges can or cannot change.  Compare your GFE to the actual charges listed on the HUD-1 Settlement Statement to ensure that your lender is not charging you more than permitted.

Written list of settlement service providers

A written list will be given to you with your GFE that includes all settlement services that you are required to have, and that you are allowed to shop for. You may select a provider from this list or you can choose your own qualified provider.  If you choose a name from the written list provided, that charge is within the 10% tolerance category.  If you select your own service provider, the 10% tolerance will not apply.

Even though you may find a better deal by selecting your own provider, you should choose the provider carefully as those charges could increase at settlement.  If your loan originator fails to provide a list of settlement service providers, the 10% tolerance automatically applies.

Using the tradeoff table

The “tradeoff table” on page 3 will help you understand how your loan payments can change if you pay more settlement charges and receive a lower interest rate or if you pay lower settlement charges and receive a higher interest rate.

The loan originator must complete the first column with information contained in the GFE.  If the loan originator has the same loan product available with a higher or lower interest rate, the loan originator may choose to complete the remaining columns. If the second and third columns are not filled in, ask your loan originator if they have the same loan product with different interest rates.

Using the shopping chart

You can use this chart to compare similar loans offered by different loan originators.  Fill in each column with the information shown in the “Summary of your loan” section from the first page of all the GFEs you receive.  Compare each offer and select the best loan for you.

After You Choose the Best Loan for You

After comparing several GFEs, select the best loan for you and notify the loan originator that you would like to proceed with the loan. Keep your Good Faith Estimate so you can compare it with the final settlement costs stated on your HUD-1 Settlement Statement.  Ask the lender and settlement agent if there are any changes in fees between your GFE and your HUD-1 Settlement Statement. Some charges cannot be increased, and your lender must reimburse you if those charges were illegally increased.

New Home Purchases

If you are purchasing a new home that is being built or has not been built yet, your GFE could change.  If the GFE can change, the loan originator must notify you that the GFE may be revised at any time up to 60 days before settlement.  If you get a revised GFE, look at it to determine if the loan and settlement costs it discloses are the best for you.

Changed Circumstances

If there are changes involving your credit, the loan amount, the property value, or other information that was relied on in issuing the original GFE, a revised GFE may be issued.  Only the charges affected by the changed circumstance may be revised.

TRANSFER OF SMALL ESTATES WITHOUT PROBATE

Posted on by Daniel Andrade

In certain circumstances, a decedent’s personal property may be transferred to the “successors” of the decedent without the need to open a probate with the probate court. The decedent’s entire estate must qualify as a small estate and must meet all of the requirements of sections 13100-13115 of the California Probate Code. The decedent’s successors may make their claims to the property and take title (assuming no conflicting claims) by presenting an affidavit which meets certain requirements to the holders of the property.

Title to real property may not be transferred under this procedure.

Specific Requirements

No Probate Proceeding or personal representative consents: The affidavit procedure may be used only if (a) no probate proceeding is currently pending or has taken place for the estate in California; or (b) the decedent’s personal representative consents in writing to transfer of the property pursuant to the affidavit procedure.

40-day Wait: The affidavit procedure may not be used until at least 40 days have elapsed since the date of the decedent’s death.
Estate may not exceed $100,000 in value: Personal property qualifies for the affidavit procedure only if the total current gross fair market value of the decedent’s real and personal property in California does not exceed $100,000.

  • Title to real property in the estate may not be cleared using the affidavit procedure. The affidavit procedure is limited to the transfer of the decedent’s personal property only. Nevertheless, both the decedent’s real and personal property in California must be considered in determining whether the total value of the estate exceeds $100,000.
  • Insurance policy or retirement plan proceeds payable to the estate as the designated beneficiary must be included in determining whether the total value of the estate exceeds $100,000.
  • The following property is excluded in determining whether the total value of the estate exceeds $100,000:
    • Vehicles and other state-registered property: automobiles, “nonmotor” vehicles such as trailers, mobilehomes, manufactured homes, commercial coaches, truck campers, floating homes and undocumented vessels;
    • Unpaid salary: any amounts due to the decedent for services in the armed forces and up to $5,000 in unpaid salary or other compensation (including compensation for unused vacation) owing to the decedent for personal services from any employment;
    • Joint tenancy interests, life estates, and property passing outright to surviving spouse: all property held by the decedent in joint tenancy, or in which the decedent had a life estate or other interest which terminated at death, or that passes outright to the decedent’s surviving spouse under Probate Code section 13500;
    • Multiple-party accounts: any multiple-party account to which the decedent was a party at death to the extent the funds pass directly to a surviving party, payable-on-death payee or beneficiary; and
    • Inter vivos trust assets: all property held in a living trust.

Questions to Ask When Choosing a REALTOR?

Posted on by Daniel Andrade

Make sure you choose a REALTOR who will provide top-notch service and meet your unique needs.

1. How long have you been in residential real estate sales Is it your full-time job While experience is no guarantee of skill, real estate  like many other professions  is mostly learned on the job.

2. What designations do you hold Designations such as GRI and CRS  which require that agents take additional, specialized real estate training  are held by only about one-quarter of real estate practitioners.

3. How many homes did you and your real estate brokerage sell last year By asking this question, you ll get a good idea of how much experience the practitioner has.

4. How many days did it take you to sell the average home How did that compare to the overall market
The REALTOR you interview should have these facts on hand, and be able to present market statistics from the local MLS to provide a comparison.

5. How close to the initial asking prices of the homes you sold were the final sale prices This is one indication of how skilled the REALTOR is at pricing homes and marketing to suitable buyers. Of course, other factors also may be at play, including an exceptionally hot or cool real estate market.

6. What types of specific marketing systems and approaches will you use to sell my home You don t want someone who s going to put a For Sale sign in the yard and hope for the best. Look for someone who has aggressive and innovative approaches, and knows how to market your property competitively on the Internet. Buyers today want information fast, so it s important that your REALTOR is responsive.

7. Will you represent me exclusively, or will you represent both the buyer and the seller in the transaction While it s usually legal to represent both parties in a transaction, it s important to understand where the practitioner s obligations lie. Your REALTOR should explain his or her agency relationship to you and describe the rights of each party.

8. Can you recommend service providers who can help me obtain a mortgage, make home repairs, and help with other things I need done Because REALTORS are immersed in the industry, they re wonderful resources as you seek lenders, home improvement companies, and other home service providers. Practitioners should generally recommend more than one provider and let you know if they have any special relationship with or receive compensation from any of the providers.

9. What type of support and supervision does your brokerage office provide to you Having resources such as in-house support staff, access to a real estate attorney, and assistance with technology can help an agent sell your home.

10. What s your business philosophy While there s no right answer to this question, the response will help you assess what s important to the agent and determine how closely the agent s goals and business emphasis mesh with your own.

11. How will you keep me informed about the progress of my transaction How frequently Again, this is not a question with a correct answer, but it reflects your desires. Do you want updates twice a week or do you not want to be bothered unless there s a hot prospect Do you prefer phone, e-mail, or a personal visit

12. Could you please give me the names and phone numbers of your three most recent clients
Ask recent clients if they would work with this REALTOR again. Find out whether they were pleased with the communication style, follow-up, and work ethic of the REALTOR .

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

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Daniel Andrade, REALTOR® DRE #: 01849983
Century 21 My Real Estate Co
7825 Florence Avenue, Downey , CA 90240
call today 323-215-9836
daniel@mynewhouses.com

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