Limited Opportunity for Homeowners in Distress to Get No Interest Mortgage Payments!

We need more of our homes for sale to benefit individuals, not banks via foreclosure.  Foreclosures are putting banks in possession of too many properties being sold and those that once were homeowners become renters.  This decreases home values and increases rent everywhere and people still struggling to keep their homes are spending all their money on living expenses and not on other things which is what causes the economy to suffer.  So for all you homeowners that have fallen behind on your mortgage; HUD has a possible solution.

HUD’s program opening right now is called Emergency Homeowner’s Loan Program (EHLP).  I would call it H.E.L.P (Homeowner’s Emergency Loan Program).  They did it before earlier in the year but the deadline was in July; now they have decided to reopen the program and accept new applications until September 15, 2011 because HUD believes there are enough funds to help more people.  Funding comes from the Dodd-Frank Wall Street Reform and Consumer Protection Act.  You can read about it in this recent article in DSNews.com.

To be eligible you must be a homeowner who is struggling to pay due to involuntary loss of income, such as a lay-off, salary reduction, or a medical condition.  A list of required documents and instructions to apply can be found at FindEHLP.org or you can click on this link to the HUD site describing the program.  There are also HUD housing counselors that you can talk to for further help.

Hurry, because time is running out soon and it is a first come-first-serve basis.  We are lucky that Washington is one of the 27 states that is able to participate in this program.  This could be one more tool used to preventing more foreclosures and healing our economy.

~Stephanie Paz

Why Living Within Your Means Is So Important

Most of us have heard the term “housing bubble” and we know it has something to do with risky lending, contribution to the economy slump, and why the housing prices have dropped.  But do we really understand what it was, how it worked, and why it hurt us?  Here is the researched I have found.

So, actually this chart is from someone else’s research but I believe it to be pretty accurate considering the sources used.  As it clearly shows, the American income has been pretty stable for awhile, not growing but not decreasing either.  Notice, however, the constant increase in oil, an indicator to economy health.  If oil goes up, so does the cost of everything else we purchase in stores because the cost of transportation is higher.  Therefore, logically, we should not be increasing our expenses in other areas as well, but look again and notice that was not the case.  In fact it was the extreme opposite, thus the bubble.  More people buying more house than they can afford.

“It is bad for them (buyers), it is bad for the housing market and it is bad for the economy.  The extra money that is being used to pay for housing is not going to other areas of the economy…the underlying factor in your ability to repay is your income.” – BergenJerseyForeclosures.com

In order for the economy to get back on its own feet, our price-to-income ratios have to decrease to about 3/1, that is the home value is 3 times more than annual income, this has not been the case, and sadly still isn’t.  According to a recent study by Zillow noted in DSNews.com “Eighty-five of the 130 metros were still above their historic averages, while 42 were below.”

We are still in trouble, this is what we need to start doing… live within our means!  Just because someone will let us increase our debts and take on huge payments doesn’t mean we should.  We need to be smart with our money and budget because it affects our lives and our economy.

“I think it makes more sense to buy as much house as you need, keeping the conventional debt-to-income ratios as ceilings.” – GetRichSlowly.org.  Everyone should be able to pursue the American dream and own a home, and with prices still dropping, most of us actually could with a consistent income.  However, let’s stick with humble beginnings and just get what is affordable, not what is extravagant.

~Stephanie Paz

Awesome New Way to Search for Homes Provided by AOL

AOL has launched a new search tool for finding homes, market values, or even a place for rent!  AOL RealEstate has made it a goal to be “…a singular destination where users can be both inspired and empowered in their search for a new home.” – Jay Kirsch, VP of AOL Money and Finance in this article in DSNews.com.

I decided to check it out myself to see if it was really any better or any different than real estate search tools online.  The main ones I have used in the past are TheMLSOnline.com and Realtor.com, there are many others, many of which operate very similarly.  This one however, really impressed me.

First, I searched for property values in my area (by zip code).  It gave me a map with tags to almost every single home on the map indicating estimates of that property’s value.  If I clicked on a property it gave me basic stats and told me if it was on the market now or had been recently.  I even found my house with its proper value assessment at the price I paid and it was indicated that it was sold.  It even knew the date it was sold, something I had already forgotten.

Then, surprisingly it listed other houses in the nearby area that is for sale and I found a home up for auction with a starting bid at …..$25,000!  This is a 3 bedroom, 1 bathroom home with a two car garage on a lot the same size as mine and its starting bid is at $25,000.  Amazing!  If only this tool existed when I was searching for my home.  I actually had fun navigating around; the site is extremely user-friendly.  I encourage anyone who will ever move again to check it out, whether you are just curious about the market in a specific area or perhaps even looking to rent still, this site has it all.

Click here to see for yourself!

~Stephanie Paz

Like the House, Love the Community

Guess what could be better than buying a home that you can live with and on a loan you can afford,… being in a new community that you love.  I just have to take a moment and appreciate my family’s new neighborhood and community.  I like the school district my son now attends.  I like the new library system we utilize, KCLS, which has a branch conveniently located within walking distance of our house.  I like the nearby shopping centers and the clean parking lots everywhere I go.  I like that people are comfortable to go for a walk with their dog after dark and that neighborhood kids can run around and play in our very low traffic street.  I even like our neighbors!

Initially when we looked at this house to buy we just saw the house.  It was not until we were in the process of buying that we explored the Des Moines area and found out that every store we like is minutes away in our car, and many other area features we love are nearby.  We live about two minutes and two turns away from Redondo Beach Drive where we walk along the boardwalk at least a couple times per week after dinner.  My husband only works about five minutes away from home at a job to which he used to commute.  Now he has an additional 25 minutes before he needs to leave the house everyday and is home much earlier than he used to be.  Our new home purchase has not only changed our immediate living arrangement, but has affected our lifestyle as well.

Living in a neighborhood and community that enhances your way of life rather than complicating it or taking away from it is so huge to a person’s happiness.  Family has even noticed that my six year old seems happier since the move.  So, consider this when looking around: be sure to really look around and imagine yourself in the community, not just in the rooms of a house.

~Stephanie Paz

5 Tips on Selecting a Realtor

As a new home owner I have had the recent experience of working with a realtor.  I found him on accident.  He helped us write multiple offers before one finally stuck, and walked us through the entire closing process.  Although closing was a near nightmare, working with our realtor was not.  I understand that not everyone always such an experience with their realtor, making it hard for some to know how to choose.  I have now compiled this short check list for you to use when selecting a realtor.  We are all careful when choosing doctors, attorneys, even insurance agents, why not be selective in the one professional that helps us with the most important purchase of our life?  Check out this clip that is a near perfect example of what to avoid and then follow these few tips.  Trust me, you may laugh.

  1. It’s okay to call around.  Most don’t answer the phone, they are usually busy.  A good realtor is supposed to be busy so don’t get too turned off by this.  Instead, leave a message on a few voicemails and see who calls you back.  The timeliness of a return call is key.  This is how I found Don.
  2. Be sure you and your significant other feel respected.  The realtor should be very respectful of your needs and desires, listening to your questions and concerns, unlike the agent featured in this video clip.  Our realtor heard what we said we wanted and was able to make suggestions that benefited us without pressuring us, which leads me to my next tip…
  3. Don’t be pushed around.  Your realtor should give you time, time to think and discuss any decisions that need to be made without putting you on the spot.
  4. Honesty is the best policy.  If you feel the realtor isn’t being honest, or is being vague about any situation, ask for better clarification.  A good realtor will be eager to answer questions and help you understand the process.  Also, with the market changes and rules continuing to change, remember that no one can know everything.  Click here to view a funny example of what you don’t want.  A good realtor should be experienced and knowledgeable, yet honest with you when there is a question that they simply don’t have an answer to, his or her experience should be well enough to find the answer quickly.
  5. A good personality goes a long way.  This may not be a factor when selecting some other business professionals you will work with, but buying a house is personal, also you will be spending quite a bit of time with this person as they get to know your personal desires for your new living arrangement.  Therefore, you want to feel comfortable and that your personal traits work well together.  Some traits you will most likely want is patience to talk to you like you are a human and not another prospect, flexibility to take you house shopping on your days off, and understanding when you turn down a deal you don’t like.

I wish you luck as you begin shopping around for both your new realtor and new home.  Please keep these tips in mind when working with someone and if you decide to do it the easy way, just call Don!

~Stephanie Paz

In Which Box Is My Life Packed?

I don’t know about most people’s thoughts or experiences, but my idea of moving my family into a our first house was a little different than reality.

It has been three weeks since we moved into our new home but instead getting all cozy and well organized (a necessity for the tiny sized space we have) it has been a little more like chaos.  I suspected it would be like this for first few days, didn’t realize it would last for weeks, and counting.  Just to give you all an idea of what I’m talking about here’s portrayal for you.

Here’s what I imagined…

 

And here is more like my reality…

 

Even though I was sure I organized all our boxes and had a system, somehow my system failed or fell apart.  My days have been spent digging for clothes out of boxes because we can’t find all our hangers, preparing a lot of frozen dinners because I haven’t time to do real grocery shopping or organize the dishes, and reusing the same plastic container for leftovers because the box of our other plastic dishes is lost, and pulling out toys to distract the baby from playing in the half unpacked box of bathroom toiletries.

I am still trying to figure out how to prioritize between house cleaning, meal planning, budgeting out our new expenses, unpacking a box, hanging up clothes, and finding my sanity.  For future reference to anyone who has not moved in a long time, or has to move a family household for the first time, just remember to relax amongst the chaos every now and then, and someday you will remember where you put that thing you were looking for.

~Stephanie Paz

I Wish I Could Buy But…

Someone said to me “I wish I could buy a house right now but I don’t know how to get the down payment saved up and I don’t think I have the credit, plus renting just seems easier”.  I used to think the same thing until one day circumstances forced me into re-evaluating new living situations and I learned I could buy… and then I did!  However, I know the key factor that helped me to get the buying power I needed was good credit.  That was no easy feat but well worth the efforts and discipline it requires.

As far as the renting versus buying debate, CNN Money surveyed cities around the country to see which option made the most financial sense, and in the Seattle area, they found that renting truly is like throwing money out the window and buying is, of course, a better investment.  If you need to know where to start, it’s with discipline in your budgeting and spending.  Seriously, bad credit is typically a reflection of irresponsible spending, or just poor financial decisions, and can almost always be avoided if you follow the credit rules, regardless of income.  If my husband and I could do it on our limited income and with two layoffs in less than a year while we were repairing our credit, then I believe you can too.

  1. Carefully calculate and negotiate: This means that you must sit down with a pile of bills and receipts/bank statements from the last couple months and add up how much you spend.  Put everything into categories like bills, food, fuel, etc.  Then add into your expenses how much needs to be going out to your debts every month and that totals your expenses.  Then subtract your income (your expenses + debt payments are in many times more than your income) and this is the number of dollars that you need to cut out of your spending.
  2. Save for an Emergency: After you cut out as much as possible from your unnecessary spending, even cutting down on unnecessary bills (like cable TV?) then you set a plan to set aside a small amount for savings every month.  You only do this long enough to get $1,000 in the bank.  This is for emergencies only, and seems to be the common amount financial advisors suggest.  Also, once it is accomplished you will feel motivated and encouraged to keep going and then…
  3. Pay off your debts: Now that you have had practice paying all your bills on-time and setting aside a little every month, you can add that extra amount ($10-100 whatever it was you put into savings) on top of the minimum payments for your debts.  This will help get your balances paid down and if your car breaks down, you can use your emergency savings, not a credit card, to fix it.
  4. Continue to save: Once your balances are significantly reduced and you’re in the habit of working a monthly budget, not using credit but paying off your credit, the money that was going to all your debts can be applied to your savings account. This time you won’t just be setting aside $20 like perhaps you were at first, it’s now going to be 10 times that amount because you’ll have that plus all the money that was being distributed to your minimum monthly payments that are now paid off.
  5. Watch your credit score and bank balance soar: Be sure to take advantage of your free credit check every year.  It does take a few years to pull it all off, but you’ll be busy learning to manage your money and creating budget plans every month that before long you’ll have “rock star” credit.  If the market stays close to where it is, then there will still be programs around that let you buy with smaller down payments and no closing costs so your savings may not have to be as much as 20% like it used to be.

For some more helpful tips check out these sites I dug up and good luck turning things around!

Top 7 Tips for Creating a Budget from SweatingTheBigStuff.com

How and Why to Start an Emergency Fund from GetRichSlowly.org

Debt Tsunami: The Ultimate Method to Pay Off Debt from ManVsDebt.com

How to Buy a House by Michael Bluejay

~Stephanie Paz

Small Livable Spaces

Have you wished you could downsize your clutter?  Ever wondered what life would be like without so much stuff and just neat clean space to live?  Look no further, perhaps you are in the market for a pocket sized home.  Here are a few examples of what I am talking about in this article on Zillow.com featuring these tiny yet trendy homes around the country, one of which is here in Seattle.

Most people agree that a great way to de-clutter is to move because it forces you to pick up each individual item you own and evaluate what to do with it.  If you don’t have the desire to find a box and neatly pack it then you probably don’t need to take it with you.  Also, a change of perspective on space may be the key to making the home feel more open and less cluttered.  One good idea is to look at the wall space you have and use that for storage by adding shelves and hooks. Use boxes and baskets to put things in that are already in a corner or piled into a shelf.  It looks less messy and more decorative.  I use these organization ideas from these tiny homes and apply to my own.  On a side note, down-sizing your home with a growing family including two young children is both unconventional and challenging, yet owning our first home is still ever rewarding.

If you are still frustrated with the lack of space you have here is a clip I’d like to share with you about a home that makes the most of its cubic feet rather than just its square feet.  It sure makes me feel better about the 1065 square foot rambler I recently bought.  I introduce to you the 12 cube house.  Living here is one way to force the clutter right out of your life, and the energy bill is way low with much less to clean!

~Stephanie Paz

Time To Buy

Where have all the buyers gone? Sales are falling to a yearly low for 2011 and there are fewer first-time buyers on the market according to this article in the Seattle Times.  People who have not owned a home before have amazing opportunities to do so now, so why are there still so many homes on the market, some which sit for months at a time before someone takes interest?  Perhaps after the recent lending fiasco and everyone losing their homes younger families that typically make up the first-time home buyer is more cautious and even nervous about signing up for such a financial commitment.  This is understandable, but be rest assured that now is definitely a “buyer’s paradise!”

Here are a few reasons why a first-timer can buy with ease and confidence according to recent news in the Seattle Times.

  • Lenders are foreclosing fewer homes than before.  This means that not as many people are losing their homes these days as in four to five years ago.  Part of this is because the banks are so back-logged that they simply don’t have the time, but it’s also partly because of this next reason buyers can relax.
  • Fewer homeowners are underwater on their mortgages.  The number of people who are behind on payments are declining.  This is mostly due to smarter loans that have stricter rules about how much house a buyer can actually get. With a responsible lender, a buyer is more likely to receive a loan that is better proportionate to their income.
  • Mortgage rates are flat-lined after dropping to yearly low.  If you have good credit then now is definitely the time to get out there and make an investment.  With loan rates available this low and the market being the way it is, monthly mortgage payments are like paying rent, if not cheaper in some cases.

There may never be a better time for buyers.  There are great incentives being offered for first-time buyers and investors that have not been offered before, check out Fannie Mae for example.  Housing process are continuing to drop, but won’t be for long as fewer foreclosures hit the market.  Interest rates may never be this low again, and lenders are more responsible now to give a loan that fits your wallet.  This is the perfect recipe for a solid investment.  In many foreclosures, where the home being sold at 20% less than its value, maybe even lower, all the home needs is a slight make over and someone to live in it for a short while and it becomes instant equity.  So come on out you leery buyers, and feel the water, the temperature is great!

~Stephanie Paz

Going Broke While Saving Money

A ten dollar off coupon at the hardware store and a ten percent off discount for new carpeting, there are plenty of ways to trim costs for moving into a newly purchased home.  But none the less, moving is expensive.  And moving into a home you are buying, is even more expensive than if you were renting.  Renting requires first and last mont

A ten dollar off coupon at the hardware store and a ten percent off discount for new carpeting, there are plenty of ways to trim costs for moving into a newly purchased home.  But none the less, moving is expensive.  And moving into a home you are buying, is even more expensive than if you were renting.  Renting requires first and last month’s rent, plus the deposit.  Expensive yes, but typically the space is move-in ready.  However, when buying a home, as exciting of a venture it may be, its cost can be daunting especially since you can’t tell how much you are going to spend by the end of purchase and the home is not always move-in ready.  After the down payment, closing costs, moving costs and possibly even needed repairs if you have an FHA loan, you may be broke before you have a chance to get new furniture and paint!

Many of us might be aware that for first time home buyers there is an FHA loan available which is one way the down payment could be reduced, there is also the possibility of having the closing paid by someone else.  For example, a foreclosure owned by Fannie Mae is eligible for 3.5% closing cost to be covered by Fannie Mae.  The buyer does not have to be a first time home buyer, but they do need to be purchasing the home for the purpose of residing in it.  Also, this offer is for a limited time and expires in October of 2011.  For more info check out the Homepath.com website, you’ll find other special promotions offered by Fannie Mae as well as Fannie Mae foreclosures.

As for the cost of everything else to move, borrow a truck or trailer from a friend or family, what are friends for anyway?  Unfortunately, if you are buying a foreclosure with the new FHA loan, like myself, it’s not enough for the buyer to qualify, the house has to meet FHA living standards as well.  In today’s market with there being more foreclosures than the banks know what to do with and prices dropping, many banks owning these properties are not willing to fork out the expenses to make the house move-in ready or to even make the needed repairs to meet the FHA requirements.  This leaves the buyer with the additional cost making such repairs, and shall we mention the fee charged by the bank for not closing on time?  That is an issue that should be addressed when signing the sale agreement after an offer has been accepted.  Be sure that there isn’t a clause in the contract supporting a fee for not closing on time, and if there is, be sure that all parts of the transaction will work out smoothly or else you will be stuck paying a significant amount more than anticipated at closing, your down payment plus $100 per day after closing until you finally sign. Your realtor may be able to help you request an extension but even that is by the bank’s approval and not a guaranteed loophole.

In the whole process of things, the buyer saves money with a reduced down payment, a deduction from closing costs, coupons at the hardware store for paint and supplies, and simply offers to pay friends gas for their truck rather than renting a truck, and the buyer is moving in with a drained savings account.  At least the buyer knows that it is all going into an investment… a long term investment.

~Stephanie Paz