Why a FHA loan could cost you the house….

Again, I struggle with our governments need to meddle in things they really don’t understand.  While I like the idea that somewhere there is a ‘parent’ with the capabilities of taking the keys to the car when things get out of hand – the problem is that, usually, by the time the keys have been confiscated the car, bike, boat, motorcycle, and any other vehicle has left the building.  The ‘parent’ I am referring to is the government.

Today we have programs that have been instituted by the government that are supposed to help home buyers purchase properties with lower down payments.  FHA loans are one of those such plans.  The premise of an FHA loan is that a borrower can purchase a home for 3.5% down rather than a conventional loan that requires a higher down.  Unfortunately, by the time the borrower pays the slightly higher interest rate, PMI and other fees, payments can be much higher than other type of loans.

In addition, the truth is, no one wants to deal with an FHA loan if they can help it.  In a multiple offer situation, often, the Agent will go with offers that do not have an FHA component.  Part of the reason for this is the additional ‘help’ the government offers by sending out an Appraiser/Inspector to notate problems that the house has that must be completely repaired in order to fund the loan.  These Appraiser/Inspectors look for things like chipped paint, a hole in the wall, cracks in a block wall, and many other, mostly cosmetic, things.  Once the FHA Appraiser/Inspector finds these minor things they make a note on the appraisal that the bank views and those things are usually called out by the bank and made a repair requirement before the loan is funded.  Sometimes, there is even a ‘recheck’ which costs the buyer an additional $25.00-$50.00 to get the appraisal signed off that the repairs required were completed.  It is a terrible system and makes those that need the help to afford a home the ones that have to suffer.

We often tell our clients that they should consider a 5% down and go conventional, if at all possible, rather than the 3.5% that FHA offers.  We try to help them come up with the extra funds by suggesting we write the offer to finance closing costs or see if the seller will pay the buyer’s closing costs so the buyer can put more money down on the deal and get out of FHA requirements.

With Santoro And Sons Real Estate you get the whole package – we help you with getting the best rate and loan out there, finding the best value for your dollar when you are ready to buy, and then we negotiate like crazy to get you the best deal possible.  For our sellers, we are just as aggressive and know your market.  We know what you can get for your house and we know how to get it for you!

Ask us for some of our client testimonials – they speak for themselves!  We are proud to say we have 100% client satisfaction.  Come on over to our team and I know you will be glad you did!

In today's totally screwed up government - it is clear that we are out of money.  California is no exception - with a GDP that ranks us in the top 10 in the world, we cannot manage our resources well enough to have good cash flow.  There is something terribly wrong with this.  As such, the state has done a stealthy job of taking away things that we don't really see.  Not like raising the sales tax rates or raising income tax - they have slowly and methodically taken away benefits in programs like Prop 13, Prop 60 and Prop 90.  I think everyone in California knows what Prop 13 is - but for those that don't - it was a grass roots movement to help homeowners keep control over the rising costs of property taxes.  It was passed in the 80's and is still in place today.  Introducing Prop 60 and 90 later allowed people to move to another county within California and take their Prop 13 tax basis with them.  This allowed homeowners to purchase a property for equal or lesser value in another county.  Fast forward to today and you can see that most of the receipients of Prop 13 are Seniors. 

The problem is that only 9 counties accept the Prop 13 transfer from another county.   So if a Senior wishes to move to another county to live closer to their family - they are not always able to because their property tax basis is not accepted in that new county. 

We need to be aware and careful with our legislators and make sure, what appears to be small things that they remove to balance the budget, don't end up really being big things to segements of our population.   

Be Prepared for Emergencies!

I was reading an article published by The Burbank City Water and Power Dept., that highlighted some of the reasons we have power outages caused by things besides weather.   Things like Mylar balloons caught in power lines and vehicles hitting utility poles – are just some of the non-weather related ways we can experience a power outage.  They are requesting that citizens have enough water and other resources to be self sufficient for three to seven days.    THREE TO SEVEN DAYS?????  What?  Do we live on a remote island or out in the boon docks?  3 to 7 days???  I could not even imagine how my hair would look in 3 days, much less 7 days, without a blow dryer.

Regardless, the list of items provided really are things that should be ‘at the ready’ in the event someone crashes into the utility pole down the street from you house and you lose power for 3-7 days.  You might want to have a ‘brief’ conversation with that driver –

·         Keep at least one working flashlight close by along with extra batteries.

·         Store at least one gallon of water per person per day.  Plan on having bottled water for at least three days.

·         Stock canned foods, dry mixes, and other staples that do not require refrigeration, cooking, water or special preparation.  Be sure to include a manual can opener.

·         Remember to pack food and water for pets.

·         Identify a friend or relative that can provide assistance, if needed.

·         Have a wireless phone on hand.

·         Consider investing in a portable, battery-powered radio or television and extra batteries.

·         First aid kit and manual.

·         Sanitation and hygiene items like moist towelettes, toilet paper, paper towels.

·         Matches in a waterproof container.

·         Whistle… (I assume this is for if you are stuck under some rubble – but then you wouldn’t have the whistle      handy would you?)

·         Windbreaker jacket, extra clothing.

·         Photocopies of credit and identification cards.

·         Cash and coins – don’t keep hundred dollar bills – probably most places won’t be able to make change.

·         Special needs items, such as prescription medications, eye glasses, contact lens solutions, and hearing aid batteries. 

·         Items for infants, such as formula, diapers, bottles and pacifier.

So the most important thing I read on this over, and over again?  EXTRA BATTERIES – that are full of juice so if you need the portable radio/TV you can actually use it.

It also said that we should stay away from downed power lines and poles, especially if they are crackling and buzzing….that should be a good indication that you will be electrocuted if you try to move one of those things.  Also they said we should stay away from downed trees and limbs because power lines can be wrapped up in those and we may not know it –

Oh my goodness – I am now very frightened and need to go to Ralphs and get as much of this as I can!  We need to be ready, People!!!!

We work hard so you don't have to - Isn't that the tag line for an insurance company?....I think it is Allstate.  That slogan, if it is meant and executed is a powerful one.  We feel, at Santoro and Sons Real Estate Group that 'We work hard so you don't have to' is very much our mission statement.  Our goal is to make your transaction a smooth one - and share with you the benefit of our years of experience and our experienced business partners.  From painting/cleaning and hauling, to packing and moving, we have some excellent resources for all.  We also negotiated a great new benefit through Fidelity Home Warranty company - when you buy a house, we negotiate a home warranty policy for you.  As part of the warranty plan, Fidelity has negotiated reduce pricing on appliances, CraftsMan Tools and other services provided by Sears.  So come on down and let us list your home or help you buy a home.  You won't be sorry - we work hard, so you don't have to!

Have a great week!

I just closed my first FHA transaction.  I represented the sellers - the buyers used an FHA loan to buy the house.  All I can say is .... Whew - glad that is over!  The process is flawed....as they say, "Hell is paved with good intentions" I think the idea behind the FHA product is a good one, but in application it can really hurt the buyer and seller. 

One of the biggest issues in closing an FHA loan/transaction has to do with the condition of the house.  Things that would not be an issue in a conventional loan situation can be called out by the FHA inspector/appraiser and require a hold on funding and a reinspection.  Even though the buyer pays for an independent inspection an FHA lender sends in an FHA inspector/appraiser to appraise and inspect the property.  They turn on the water, check the windows, check for a gas leak in the oven, look for cracks in the wall, cracks in the trim, cracks in the stucco - and then  make findings.   Their findings can hurt the sellers and make the transaction more costly than a conventional transaction for the sellers.

In our case, things that were not brought up in the buyers home inspection came up in the FHA inspector/appraisers report requiring my sellers to replace a good percentage of their block wall, repair wood trim, cracks in stucco, and a hole that a door knob made where it touches the wall when opened too hard.  After the repairs were made the reinspection took a few days so we had to extend the escrow period.

There was nothing that a conventional lender would have seen and been