Thinking of buying your first home? There is nothing more exciting and yet more scary.  But here is the best part:

It doesn't have to be hard, and:

We will be there to help and advise you every step of the way.  The most important thing to understand is that the FIRST STEP must be to get PRE-APPROVED.  Being pre-approved is a formal loan application process.  We look at your credit, your income documentation, and your assets.  This is very different than just being "pre-qualified," which is just an informal discussion with a loan officer about your finances.  A "pre-qualification" in today's world is next to worthless, and no seller or REALTOR^® will ever rely on it to help you purchase a home.

Still nervous? - Read "Are You Going To Be A Lifetime Renter? and "What Buying Could Mean To You." They will make you more comfortable.

So, if you are ready to be fully prepared for your home purchase adventure, please CONTACT US today and fill out the easy to use form, and we will call you shortly to discuss your specific needs and scenario.

More 1^st Time Home Buyer Resources

IF NOT, here is what the two top real estate investors in the United States, DONALD TRUMP and JOHN POULSAN, both had this to say recently about buying a home in today's market:

 

DONALD TRUMP (The largest real estate investor in the U.S.) - "Listen ladies and gentlemen , I don't know this 100% for sure but, if you buy a house now, 10 years   from now you are very likely to think back and say, "Boy, am I glad I listened to Donald Trump and bought a house in 2011."

JOHN POULSAN (often called the smartest real estate investor in the world because in 2006 he made billions by betting against the real estate market and for the past 5 years has remained negative-until now) - "You want to know about the residential housing market? Here's my advice.  If you don't own a home now, buy one.  If you own one, buy another.  If you own two, buy a third.  Oh, and by the way, lend money to your family so they can buy one too."

The reasons that both Mr. Trump and Mr. Poulsan are so bullish on residential real estate are:

 

• Interest rates remain near their 50 year lows
• Home prices are incredibly reasonable
• The affordability index is at an all-time high
• Rents are rising and are expected (according to CNN Money) to increase 10% this year and next
• In many places in the Bay Area, it is less expensive to buy than rent.
• It is impossible to pick the bottom of any market be it real estate, stocks, gold etc.  Fortunes are made by taking action, not by waiting until the market is already on the way up.

 

So, the answer to the question of whether the time to buy is today is a resounding

 

YES!

 

P.S. Warren Buffet is famous for saying: "Be fearful when others are greedy and be greedy when others are fearful." No truer words may be spoken about real estate today.

This past year, the real estate landscape is incredibly different.  For the first time in 50 years in the Bay Area, it can actually be less expensive to buy than rent.

Example of what a 25 year old first-time buyer with okay credit making $30,000 per year could qualify to purchase:

• $160,000 sales price for single family home (just closed one in Hayward).

• Total Cash Invested: $5,600 (3.5% down payment).

• Total PITI: $1,140 (30-Year Fixed at 5%).

Buyer lives there for one year and decides to move on.  He can rent the house out for $1,800 per month.  Positive cash flow is $660 per month. If you take the $660 and put it into an investment account for the next 29 years and assume an average rate of return of 5%, this would grow to $519,797.  Of course, the rent would likely be increasing over the 29 years but there would be vacancies, maintenance costs, and potential management fees so the $660 per month would represent a conservative monthly contribution.  Also, it does not account for any tax benefits.  Fast forward and our buyer is now 55 years old.

Now the home is owned free and clear.  Let's assume rents are at least $2,500 at that time so now the monthly investment would grow to $2,200 per month (after taxes and insurance) and over the next 10 years the net accumulation would grow to $1,199,155.  Our buyer is now 65 years old.  The home purchased 40 years ago for $160,000 would represent a net worth of $1,940,000.  Now the borrower can move back into this property as owner-occupied and take out a reverse mortgage.  Assuming a loan amount of $625,000, he could take out approximately $315,000 in cash with no mortgage payment for the rest of his life and live in the home payment free, or he could elect to take a monthly income of $2,020 the rest of his life and live payment free until he dies (based on today's rates and guidelines).

So, if a 25 year old simply made this one decision to purchase a starter home property in the Bay Area today and made no other plan for retirement, he would have an excellent income stream and retirement in place.

According to a recent survey by the Federal National Mortgage Association, 84% of all

renters feel that they would be better off owning a home.  Because homeownership offers

significant tax advantages, it pays to find out in dollars and cents just how much of a benefit homeownership would be for you.  See the example below:*

Loan Information		Cost of Homeownership
Sales Price	$410,000		Monthly Payment:	$2,061
Down Payment	$  20,500		Property Taxes, Insurance, Other	$   755
Loan Amount	$389,500
Interest Rate	4.875% (APR. 5.076%)
Monthly Payment:	$   2,061		Total Monthly Cost:	$2,816
			Monthly Tax Savings:	$   739
			Net Monthly Cost of Homeownership	$2,077

 

Tax Savings		Homeownership vs. Renting
Annual Interest Paid:	$  9,408	Your Current Rent:	$2,745
Annual Property Taxes:	$   5,125	Net Monthly Cost of Homeownership:	$2,077
Total Deductions:	$ 14,533	Cost of Renting versus Homeownership:	$   668
Your Tax Bracket:	.39
Annual Tax Savings:	$    8,865
Monthly Tax Savings:	$       739

 

 

 

BEST CHANCE OF GETTING THE OFFER ACCEPTED:

* With so many sellers being large banks due to short sales and foreclosures, offers are only accepted from buyers who have a legitimate pre-approval (an automated underwriting acceptance).

* These demanding sellers put very short timeframes for closing and for removal of financing contingencies on the contracts.  If a buyer hasn't been fully pre-approved, these deadlines may not be able to be met.

BE SURE OF YOUR QUALIFICATION:

* Due to the financial meltdown, mortgage investors do not want or need another foreclosure on their hands.  Consequently, they scrutinize every aspect of a buyers application with a fine tooth comb.

Credit:

*A responsible loan officer will assist a buyer in attaining the highest credit score possible in order to save the buyer as much money as possible.  Low credit scores can be very costly today.

*A buyer with credit issues needs to work on the problem now, not after they have an accepted offer.

Qualifying Ratios:

*A buyer needs to know what price home they qualify for BEFORE wasting their time looking.

Income:

*Investors are highly sensitive when it comes to declining income, or an interrupted earnings pattern.  The loan officer will provide guidance if a buyer has these issues.

Job Tenure/Stability:

*This is another area of high investor concern and needs to be examined carefully.

Down Payment:

*A buyer needs to know exactly how much money they will need to purchase the home they actually are qualified to buy.

*The paper trail of money and assets is critical to qualifying today, and the loan officer will make sure you have or can obtain the proper documentation.

*ELIMINATE STRESS - Ever since the financial debacle, obtaining a mortgage loan has become a lot more stressful, especially if the buyer tries to do it after they've signed a contract to buy a home.  Getting pre-approved beforehand eliminates that stress because all conceivable problems associated with a loan will have been taken care of ahead of time.

GET PRE-APPROVED - IT'S FREE!

925.474.1105

jbails@ccmclending.com

 

IT IS CRITICAL in today's real estate market that you get PRE-APPROVED for a loan before you shop for a home because:

1. You may be a great buyer, but without a pre-approval (notice of loan approval) the seller of a property doesn't have a clue how good you really are.

2. Top Realtors^â don't want to waste time with prospects who don't have a pre-approval.

3. With a pre-approval you are as good as a cash buyer and hence have better negotiating leverage with the seller.

4. If you are competing with other people on the same property, a pre-approval can help get your contract accepted.

 

PRIOR TO FINDING A PROPERTY

This is the way a loan works:

1. Pre-approval consultation:

you meet with me to review your income, assets and credit.  You will determine from this consultation:

A. What the maximum loan you can qualify for is.

B. What loan program is right for your long and short term financial goals.

C. Your documentation is submitted to an underwriter.  Once approved you will receive a pre-approval that will arm you with the power of a cash buyer when you look for homes.

2. Pre-contract period:

During the time you are shopping for a home I will stay in contact with you to:

A. Answer any questions you may have.

B. Keep your paperwork updated.

C. Refer you to a great Realtor if you don't have one.

YOU'VE FOUND A HOME

 

1. We get the purchase contract from the Realtor and order the appraisal on the property.

A. The Realtor orders the appropriate inspections and the preliminary title report.

B. You shop for home-owners insurance.  (We may be able to help).

2. Underwriting - once the appraisal preliminary title report and any additional paperwork are received, the loan processor submits the loan to underwriting for final approval.

3. Loan Approval - Congratulations!  You've been approved for the loan you've requested.

4. Loan Documents: As soon as we receive your loan approval, our closing department draws the loan documents you will need to sign.

5. Closing:

1. Loan documents are sent to the title company.
2. You sign the papers.
3. The title company returns the loan documents to CherryCreek.
4. Cherry Creek wires the funds to the title company.
5. Recording - within 24 hours of receipt of funds the loan records in the appropriate county.

 

 

CONGRATULATIONS!

Contact us to make your dream come true!

 

There are many things you can do to prepare to be able to qualify for a mortgage.

Preparing:

• Do not change jobs unless it is in the same line of work
• Arrange how you are going to pay for the down payment and closing costs
• Do not buy or lease a big ticket item like a car before you have been pre-approved because your qualifying ratios may be driven too high for you to qualify
• Declining income is a huge red flag these days so be sure to talk to a mortgage consultant if your income has dropped from last year
• Do not apply for credit because it will trigger an "inquiry" on your credit report, which can lower your credit score
• Do not dispute any items on your credit report
• Do not max out or close your credit cards
• Do not pay off any collections or charge offs because it may lower your credit score
• Tell the whole truth - your loan officer can't help you unless he/she knows everything

Things not to do after applying for a loan:

CREDIT -

• Do not dispute any item on your credit report
• No new inquiries on your credit report
• No new debts (furniture, car, truck etc.)
• No late payments on any accounts
• Do not pay off collections or charge off accounts
• Do not consolidate your debt into one or two credit cards or close credit cards
• No increases in balances on credit cards or lines of credit, which would increase your minimum monthly payment
• Remember that a new credit report will be ordered prior to closing.  If your score has dropped, your loan may be declined

INCOME -

• Do not change jobs become self-employed or quit your job without notifying your loan officer
• Notify your loan officer immediately if your income goes up or down

ASSETS -

• Every dime of the money you are going to be using for the down payment and closing costs must be accounted for
• Do not make any out of the ordinary deposits (especially cash) because all deposits other than payroll must be documented and accounted for
• Do not make any large cash purchases which result in lowered verified bank balances
• Do not change banks or bank accounts
• Follow every instruction your loan officer gives you to the exact degree if you are using a gift.  Failure to do so may result in your loan not closing.
• You must get a homeowner's insurance quote from an agent of your choosing immediately after application because a higher premium than on the good faith estimate may affect your qualifying

The tips above are the best advice we can give you so that your loan will close, will close on time and without unnecessary difficulties.

 

Use the following checklist to be sure that you bring everything you need to make sure that your loan application transpires as an easy, hassle-free experience.  Remember that in the current loan environment overkill of documentation is what we are dealing with.  It is critical that your loan officer know everything right up front.

____ ____	Sales Contract (On the purchase of your new home) W-2's for ________________________
____	Original Pay Stubs For Last 60 Days (Showing year-to-date earnings, name and Social Security Number)
____	Most Recent 2 Years Tax Returns (With all schedules and signed in blue ink)
____ ____	Year To Date Profit and Loss Statement and Current Balance Sheet (If self-employed only) Information on Employment History (for the last 2 years - addresses, dates and phone numbers)
____	Information on Residence History (For the last 2 Years - addresses and dates)
____	Coupon Book or Most Recent Statement on All Outstanding Loans and Credit Cards
____	3 Months Bank Statements for All Accounts (If any recently opened accounts or sizeable deposits, bring documentation to providing proof of the source of the funds)
____	Transcript, Diploma or Military Discharge Papers
____	Addresses, Loan Information and Any Leases on Real Estate You Currently Own
____	Current Landlord's Name, Address and Phone Number or 12 Months Cancelled Checks (If you currently rent)
____	Copy of Sales Contract (If you are selling your present home)
____	Certified Copy of The Closing Statement (On the sale of your present home)
____	Complete Divorce Papers Including the Interlock and Final Decree of Legal Separation Agreement (If you pay/receive child support or alimony)
____	Relocation Agreement (If you are being transferred into the area)
____	Bankruptcy Papers Including Schedule of Creditors and Discharge Papers (If applicable and relevant)
____	Award Letter and Copy of Most Recent Check (If you receive Social Security, retirement or disability income)
____	Pink Slip(s) on Car(s) (If cars are 5 years old or less)
____	Copy of Driver's License and Social Security Card (FHA only)
____	Original Certificate of Eligibility and DD214 (VA only)
_____	You will be expected to pay up front for your credit report and shortly after the application on a real purchase

 

 

 

 

 

CREDIT -

• Do not dispute any item on your credit report
• No new inquiries on your credit report
• No new debts (furniture, car, truck etc.)
• No late payments on any accounts
• Do not pay off collections or charge off accounts
• Do not consolidate your debt into one or two credit cards or close credit cards
• No increases in balances on credit cards or lines of credit, which would increase your minimum monthly payment
• Remember that a new credit report will be ordered prior to closing.  If your score has dropped, your loan may be declined

 

INCOME -

• Do not change jobs, become self-employed or quit your job without notifying your loan officer
• Notify your loan officer immediately if your income goes up or down

 

ASSETS -

• Every dime of the money you are going to be using for the down payment and closing costs must be accounted for
• Do not make any out of the ordinary deposits (especially cash) because all deposits other than payroll must be documented and accounted for
• Do not make any large cash purchases which result in lowered verified bank balances
• Do not change banks or bank accounts
• Follow every instruction your loan officer gives you to the exact degree if you are using a gift.  Failure to do so may result in your loan not closing.
• You must get a homeowner's insurance quote from an agent of your choosing immediately after application because a higher premium than on the good faith estimate may affect your qualifying

 

The tips above are the best advice we can give you so that your loan will close, will close on time and without unnecessary difficulties.

"It always amazes me when a potential buyer says that they aren't going to use a realtor.  In my mind there are ZERO reasons for a buyer not to work with a realtor.  Let's talk for a few minutes about why you should use a good REALTOR'S services if you are looking for a home."

The REALTOR^® doesn't cost you a penny.  The only person who compensates a realtor is the seller.  The REALTOR^® does all the legwork of finding a property and handles the paperwork at no cost at all to you, the buyer.

1. The properties that you will have access to without the help of a REALTOR^® is like the tip of an ice berg.  Realtors have access to the majority of the properties that are available for sale so you get the biggest choice of properties; MLS, Internet, FSBO's, Expired's, Soon to be on the market, Exclusive listings.  Also they can input your name into their computers so that when ever a new property comes on the market they will automatically be notified when they enter the MLS.
2. Often times if a property is priced very well, it will not even make it into the multiple listing system because a REALTOR^® hears about it and has a Buyer for it.  Also, price reductions are often announced before they are made or advertised.  In both of these instances, if your REALTOR^® is aware of what you are looking for they can get you the first shot at a very good deal.
3. Many times there are things about an area or a property that a REALTOR^® can tell you that you would not even know to ask about that may affect your decision on the value of a property; Assessments, Easements, Earthquake Zones, Fire Zones, Neighborhood problems, Future development, Subdivision construction problems..
4. Many years ago the typical purchase contract was less than a page long.  Now the standard contract is 8 pages and it still does not cover all the nuances of each transaction.  There are clauses in the contract that imply one thing but can mean another.  Also, there are numerous disclosures to be considered.  A good REALTOR^® can make the process fairly simple and relatively hassle free.
5. In addition to helping you locate the property that you want to buy and writing up the contract, a good REALTOR^® will negotiate the terms of the contract to obtain the best deal possible.  Unless you have a lot of experience negotiating big deals you will definitely benefit by using a realtor.
6. A REALTOR^® coordinates the numerous aspects of the purchase of a property that must occur for the sale to be completed and ownership to be transferred.  They will see that escrow is opened to confirm that the property that you are purchasing does not have any undesirable leans, easements or assessments.  They will advise, order and help you review whatever inspections and reports you or they feel are prudent.  If any problems arise for whatever reason, they can be very instrumental in resolving the problem.  They are like the supervisor of a job; they make sure that the escrow officer, pest inspector, and lender all have their assignments completed by a certain time so that the transfer of ownership can occur.
7. If you do not have a REALTOR^® yet, we work with some of the most reputable and caring REALTORS^® in the Bay Area.  Please contact us for a referral to a really good REALTOR^® you will enjoy working with.

• It is important that you work with a good REALTOR^®.  The difference between working with a good REALTOR^® and a mediocre one can mean thousands of dollars to you.  It is critical that the REALTOR^® be motivated to locate a suitable property for you in the shortest amount of time possible.  It is also critical that once the right home is found that the REALTOR^® is a strong negotiator  to ensure that you get the best possible deal.

1. Home acquisition mortgage loan origination fees. If you bought your primary or secondary home in 2009, you probably obtained a mortgage to finance the purchase.  That mortgage is called an "acquisition mortgage" because it enabled purchase of the residence.  If you paid a loan fee to obtain that acquisition mortgage, usually called "points", that loan fee qualifies as an itemized interest deduction.  Each point paid equals 1% of the amount borrowed.   2. Home improvement loan fees. Similarly, if you paid a loan fee to obtain a home improvement loan, that loan fee is fully deductible in the tax year it was paid.   3. Loan origination fees paid to refinance a home loan (or borrow against other real estate). If you refinance your existing home loan in 2009, or borrowed against other real estate such as an apartment building, any loan fee you paid must be deducted over the life of the mortgage.   4. When refinancing, deduct any loan origination fees that have not already been claimed. Thanks to low mortgage interest rates, many homeowners refinanced again in 2009, or borrowed against other real estate such as an apartment building.  Any loan fee you paid must be deducted over the life of the mortgage.   5. If you bought or sold property in 2009 remember to deduct prorated real estate taxes. A major tax deduction many real estate buyers and sellers overlook is the prorated property tax they paid at the close of escrow.  Even if the other party remitted the payment to the tax collector, but you were charged a prorated portion of the tax bill, be sure to deduct your share on your 2009 return.

6. Deduct prorated mortgage interest in the year of property purchase or sale. Similarly, if you bought a residence and took over an existing mortgage, don't forget to deduct your prorated interest share for the month of the sale.  Your closing settlement statement shows your prorated share of the mortgage interest.   7. Mortgage prepayment penalty. If you paid off an existing mortgage early and were charged a prepayment penalty by the lender, that prepayment penalty qualified as an itemized deduction.   8. Relocation Fees. If you were relocated, some relocation fees may be tax deductible.  Check with your tax consultant to see exactly what you may be able to write off on your tax return.   9. New Construction. If you built a new home in 2009, or are building one now, don't forget to deduct the construction loan interest paid.  It's deductible, if the construction period does not exceed 24 months before occupancy of your principal residence.   Deduct prepaid property taxes and mortgage interest. If you prepaid 2010 real estate taxes in 2009, as homeowners do to increase their tax deductions, or if you pay your January 2010 mortgage payment in December 2009, don't forget to deduct these extra mortgage interest and property tax payments on your 2009 income tax returns.   10. Mortgage Insurance costs may be deductible subject to income and time requirements.  Talk to your tax advisor for advice on this deduction.