Difference Between Short Sale and Foreclosure

Short Sale Benefits

Here are a few benefits for doing a short sale that may not have occurred to you:

• You are in control of the sale, not the bank.
• You may sleep better at night knowing who is buying your home.
• You will spare yourself the social stigma of foreclosure.
• Contrary to popular belief, you can be current on your payments and still effect a short sale.
• Your home sale will be handled like any other home sale.

Buying Again After a Short Sale

If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. Finding a lender who will fund that kind of loan is very difficult. If you are current on your mortgage, you can qualify for an FHA loan immediately as well, but lender requirements can be weird such as you have to move more than 600 miles away.
If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence. The wait for FHA is 3 years.

Buying Again After a Foreclosure

With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.
If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

Affects on Credit After a Short Sale

A short sale may be considered to be a derogatory mark on your credit even though credit bureaus do not show the word "short sale" on your credit report. It may say "paid in full for less than agreed" or "settled for less," among other categories. Some clients have reported negative FICO score drops from 50 points to 130 points.
Major point drops are typically due to being in default, meaning you have fallen behind on your payments.

Affects on Credit After a Foreclosure

Depending on your credit history and other guidlines, Myfico.com shows 2 examples in which a credit score could fall 105 points to 160 points after a foreclosure. Generally, a foreclosure will remain on your credit report in the tradelines section for 7 years.

Credit Reports After a Short Sale

All lenders report short sales differently, with many reporting "paid in full for less than agreed," and some report the short sale as a charge off. Negative credit, however, stays on your report for 7 years.

Credit Reports After a Foreclosure

If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record.

Deficiency Judgments After a Short Sale

Judgments are often negotiated between the seller and the short sale bank. In some cases, such as California, if the home is your personal residence and was financed through purchase money, there is no deficiency judgment.

Deficiency Judgments After a Foreclosure

Banks are generally unwilling to negotiate deficiency judgments with the homeowner after a foreclosure. In California, for example, according to the California Association of REALTORS, a deficiency judgment may be filed regarding a hard-money loan if the lender forecloses under a judicial foreclosure versus a trustee sale or if the second loan is a hard money loan and the sale takes place as a trustee's sale.

Loan Application Questions After a Short Sale

Loan applications do not ask questions about a short sale. You may report that you sold your home.

Loan Application Questions After a Foreclosure

You are required to answer the question: "Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years." If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.

Length of Time to Move After a Short Sale

If you've had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 2 to 3 months, or longer.

Length of Time to Move After a Foreclosure

Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.

Taxation After a Short Sale

A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions.

Taxation After a Foreclosure

Same as with a short sale. Except some lenders immediately send out 1099s, even if the owner is exempt.

For all of your Real Estate needs at the lake please call the Spouses Selling Houses team now. Untol next time! Ebbie :)

Spring Lawn Care Tips

When spring is finally in the air and the temperatures finally lift. When you're able to get outside and work, there are spring lawn care routines that can be done to ensure a healthy lawn all season long.

• Spend some time getting out the summer tools and supplies and put away the snow shovels and ice melt. Dig out the hoses, rakes, spreader, mowers and trimmers. If you put them away properly, everything should be clean and functional. 
• Walk the yard and inspect the lawn for weak or thin turf, insect damage, disease activity, like snow mold, or any other irregularities.
  
• Pick up any debris that may have accumulated over the winter. Winter toys, litter, branches, and especially last season's leaves, which can harbor disease and pests.
  
• Give the lawn a good raking. Get aquatinted all over again with some elbow grease and sweat behind a fan rake. A vigorous raking will have a de-thatching effect and help "wake up" the lawn for the season. For larger lawns, mechanical de-thatchers can be pulled behind a tractor or attached to lawn mowers. Cutting all the stolons and rhizomes, and cleaning out some thatch, invigorates the grass and improves water and nutrient uptake.
  
• How long has it been since you had the soil tested? Soil test results should dictate your inputs for the season and be the cornerstone of a long term lawn care program. It's a good time of year to lime the lawn if necessary.
  
• Bare patches will need to be repaired, and areas with winterkill or snow mold will need to be raked out, overseeded, and topdressed.
  
• Weeds (especially crabgrass) like to start early. Based on IPM, determine a tolerable weed threshold and have either an organic or chemical weed control program.
  
• It's a good time to inspect tree branches and prune if necessary. Try to allow for adequate sunlight and air flow while still maintaining the natural shape and integrity of the tree.

This is the routine for early spring. Depending on specific conditions, the timing could vary from early March to late April. We hope this information helps in providing you with a beautiful lawn for your home. if a home at the lake is in your future, please call the Spouses Selling Houses team. Until next time!! Ebbie :)

Getting Started on Buying a Home

Let's say one morning you wake up and realize that, yes, buying a home is the right thing to do for yourself. You're tired of throwing away money on rent and figure that it's time to get into a home of your own. But you have reservations.
After all, if it's your first time, you've got questions. You might be a little nervous that you'll mess up, and it's normal to feel that way. You are probably spending hundreds of thousands of dollars and making the most important financial purchase of your life.
You will find that being an informed individual about the home buying process is empowering for you. Lucky for you that you came to the right place. So let's get started buying your first home!

Consider if Buying a Home is For You

Many people harbor secret fears about buying a home, and some of those fears are justified. Not everybody is cut out to own a home, and if you're one of those people, it's better to find this out now than when you're under contract. Ask yourself some questions:

• Renting vs. Buying
  You might decide that renting is better for you than buying, because buying a home has its drawbacks.
• Reasons to Buy
  On the other side of the coin, there are many more benefits to buying. Keep these reasons in mind if you start to get cold feet.
• Should You Buy a Home Before Getting Married?
  
  

Before Buying a Home, Get Your Finances In Order
Line up your financing, set aside a down payment and study the loan programs available. By doing your homework, you will know exactly how much you can pay and what it will cost you.

• Order a Free Credit Report
  Give yourself time to clean up a credit report that contains mistakes. Dispute errors. Try to reduce your monthly debt obligations now by paying down those loan balances.
• Find a Lender
  Check out places to get a mortgage and compare rates and fees. Start with your own financial institution, then interview a few mortgage brokers and choose a loan product you completely understand.
• Determine a Down Payment
  The more you put down, the lower your monthly mortgage payment.
• Consider FHA Loans
  FHA loans carry competitive interest rates, come with minimum down payment requirements and allow sellers to pay some or all of your closing costs.
• Get a Preapproval Letter
  Showing the seller you are already preapproved for a loan gives you an edge during offer negotiation.

Pick a Real Estate Agent to Help With Buying a Home

With so much information available online, you might wonder why you need an agent at all. But all local markets vary from one another, and a good agent can guide you by giving you information based on experience and market knowledge.

• Why Hire an Agent? An agent with experience can help you to avoid making mistakes such as choosing the wrong home or offering too much.
• Find a Real Estate Agent! Start by asking your friends and family member for referrals. Make sure you are comfortable with your agent before committing to work with that person.

Learn How to Avoid Home Buying Mistakes
The best way to avoid making a mistake it to learn from the mistakes others have made. Buying a home in a desirable location is your best defense. Remember: location, location, location.

• First-Time Home Buyer Tips
  Start your search online, and don't rely on print because most homes are not advertised in the newspaper.
• Preview Homes for Sale
  Ask your agent to look at homes before showing them to you, and tour only those that fit your parameters.

Make an Offer and Negotiate Like a Pro

Although buying a home is not like buying a car, for example, you can still negotiate to get a good price.

• Top Three Negotiation Tips
  Price isn't the only consideration. Sellers sometimes accept lower-priced offers for other considerations.
• Facing Multiple Offers
  If you really love the home, chances are another buyer will want it as well. Make a realistic offer and get the deal closed
• Dealing with Counter Offers
  It's common for sellers and buyers to negotiate back and forth through counter offers.

Get a Home Inspection and Read Disclosures

Never buy a home without getting a home inspection. Most states have laws about the types of disclosures you are entitled to receive.

• Find out what a Home Inspection Covers
  Go through this list and make sure your home inspector doesn't miss anything crucial.
• Material Facts
  Besides disclosing lead-based paint, which any home built before 1978 can contain, sellers should notify you of major defects.
• Do a Final Walk-Through
  Always do a final inspection a few days before closing to make sure the property is in the same condition as when you agreed to buy it.

Closing on Your Home

Transactions generally close within 30 to 60 days after your offer has been accepted. Remember to reserve movers or a moving truck early because many people move at the end of the month.

• Home Insurance
  Shop for insurance rates carefully. Often, the company that insures your automobiles may offer you the best policy rates.
• Title Insurance Policy
  You might think you don't need a title policy, but it's the cheapest form of insurance you can buy, and you pay the premium only once.
• Home Buying Closing Process
  Talk to your Agent about covering every step of the home closing process, from the beginning to the end.

Of course we would love to help you find your perfect home. Call the Spouses Selling Houses team. Until next time! Ebbie :)

A Couple of Inexpensive Decorating Ideas

When it comes to cheap home decorating ideas, one of the biggest hurdles that you may face is finding the right idea to beautifully decorate the walls of your house. Since your goal is not only to create a warm atmosphere with the design of your choice, your mission is also to find the most cost-effective ways to create the design changes you wish to make..

Cheap home decorating idea #1: On your main wall, try to avoid the common mistake of just 'filling up space'.

For those of us that are not exactly 'trained' for interior design but are doing our best to come up with cheap home decorating ideas, try to avoid the natural tendency to fill up space on the walls of your home with anything you can find. Trust me, it's perfectly natural to do so, especially on a tight budget, however, there is a better way to do this that will look more appealing.

Instead, using tape or even an imaginary line, create a triangle in any spot on your wall. Start with the main wall in the very first room that your guests enter when they come inside. This wall should be considered the main area that you're looking to fancy up a bit.

The next step is very simple: fill the inside of this imaginary triangle with works of art that you find appealing. These pieces can consist of picture portraits to hang on your wall, artwork that you find soothing, or even uniquely designed clocks that have a touch of color to them. Remember, your goal is not to clutter the entire wall up with your displays, but instead only place these items inside your triangle. Once finished, step back, and appreciate this one simple cheap home decorating idea that has helped you accomplish your goal and cost next to nothing.

Cheap home decorating idea #2: Make life easier by displaying one large piece on your main wall.

If our first idea of creating a centerpiece with multiple wall decorations does not appeal to you, then perhaps you may want to try something much simpler. What is the idea? Find just one thing, yes - just one item - and hang it in the very center of your main wall. In fact, you can do this in every room of your house and create a very structured, yet appealing design to your wall. You're probably thinking that it is extremely expensive to purchase a large painting, and it can be! However, you do not have to run out and spend hundreds of dollars to do this.

If you look hard enough and enjoy shopping around, you will be surprised at just how many bargains you can find in your local newspaper, flea markets, and even garage sales on the weekends. On the other hand, one of my favorite items to use for wall displays is a colorful rug or a quilt.

We hope you find these simple tips helpful and of course we want to be your Realtors of choice here at the Lake of the Ozarks. Call the Spouses Selling Houses team. Until next time! Ebbie :)

Condo or Townhome?

If you’re a first time home buyer, you may want to consider a couple alternatives to the traditional, single-family home that is surrounded on all sides by its own expensive lawn or driveway. Many people start their property buying progression with a condominium or townhouse, but which is right for you?

An increasing number of families are turning to these shared-wall options, mainly to stretch their budgets and cut down on outdoor maintenance. According to the Community Associations Institute, in 2006 57 million Americans were living in 23.1 million units in 286,000 association-governed communities nationwide, up from just 2.1 million in 10,000 communities in 1970.

The biggest advantage of both condos and townhouses is price. Sure, there are plenty of luxury high-rises and high end townhomes. But you can save a lot of money by not buying a big yard.
You’ll get more living space for your money, but you may be surprised to learn that your maintenance fee for both condos and townhomes counts toward your monthly housing expense. That’s not true with all your expenses that go into a single-family home—basically because you can skimp on expenses if you’re going it alone, but you can’t cry poor to the condo association. So you may be allowed a smaller loan.
A big selling point on both is that you don’t have to take care of a big yard. Your association handles most things outside your home. In a condo you may own a portion of the common space. In a townhouse, you’ll own your small yard, but you may or may not have to manage it.

The downside to either option is that you’ll have to live under the rules of the association. They may be anti-dog or have rules about landscaping or renting out. Harsh restrictions may make it harder to live there and more difficult to resell one day. Alternatively, if the renting rules are lax, you may find yourself not living among your fellow owners, who you’d like to think would be more responsive and responsible. Still community living has its benefits, such as amenities likes a pool or gym that you couldn’t afford on your own.
The advantage of a townhome over a condo is that you are living more independently. You’ll have a little bit of yard. You will enter through your own front door. You can probably grill out back. You may only share one wall with your neighbors—not the many walls, hallways, floors and ceilings that can create strife and noise complaints in a condo. And you may have your own parking space or garage—not a free-for-all parking lot.

The other advantage is that for financial purposes, a townhouse is still considered a single family home—even though there may be other single family homes pressed up against it. There are more issues with condos. If more than half of the owners don’t live there—and are using it just as an investment they rent out—it will be harder to get certain loans.
Condominiums have traditionally been considered not as sound of an investment as a house—basically because they catered to a limited slice of the potential market. But as more people consider condos, that may be changing.

Some people choose a condo, however, because it offers complete liberation from outdoor work. Condos do tend to offer more attractive locations. In some neighborhoods in a city or a suburban downtown, condos may be all you can find. Ultimately, it’s mostly a lifestyle choice: would you rather live in an apartment or a house? How close do you want to be to your neighbors? Both condos and townhouses force a little bit of community living on you, but townhouses offer a little more independence and condos offer more citified living. if we can be of help finding your perfect condo or townhome at the lake, please give us a call. We are the Spouses Selling Houses. Until next time! Ebbie :)

10 Tips for Buying a Home

1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months.

10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Of course we would love to help in this exciting search. Please give the Spouses Selling Houses a call. Until next time!! Ebbie :)

Reasons To Consider a 2nd Home Now!

If you already own a house, you probably have a pretty good idea about the rights, responsibilities, and financial obligations of homeownership. And if your experience as a homeowner has been a generally positive one, you might have toyed with the idea of buying a second piece of property.

Why should you consider buying a second home? Four reasons spring to mind: finances, fun, family and the future.

A rental property can boost your finances, giving you cash flow each month. A vacation home can be loads of fun, serving as a nice getaway spot for you and your loved ones. Many people buy property for family members, too, including investment buildings that are rented out and later sold when their heirs come of age. Lastly, you can buy a second home for your golden years, locking in your future retirement home at today's prices.

Oh, and there's one other reason to purchase a second home sooner rather than later: With the soft real estate market nationwide, right now you can get a real bargain on a home.

According to the National Association of Realtors, in June 2010, the median national price for an existing home averaged $183,700.

"Buyers can still take advantage of today's low interest rates and competitive prices to get a home they may not have been able to purchase just a few years ago," says Bob Jones, chairman of the National Association of Home Builders.

Location, Location, Location

We've all heard the real estate maxim that location is everything. Well, that truism is especially important when it comes to buying a second home.

Nobody buys property with the expectation that it will decline in value. Unfortunately, however, that's a fate that can happen if you're not selective about where you purchase. To increase your odds of having great resale value, stick to properties in popular areas, like near beaches, lakes or mountains.

It's a Pity It's Not Just PITI

Of course, cost is a major consideration when contemplating a second home.

Mortgage interest rates are at historically low levels. However, interest rates on second homes typically run about half a percentage to a full percentage point above rates for your principal residence. Insurance costs can be higher too, particularly if you buy a vacation property in a hurricane-prone locale, such as Florida.

The most important cost consideration, however, is one that most people probably never think about. It's the overall true cost of owning and maintaining a second home. Don't make the mistake of underestimating the real cost of homeownership for a vacation property, or even a piece of rental real estate.

Common wisdom tells you to think about PITI – Principal, Interest, Taxes and Insurance – when purchasing a house. With a second home, however, you'll need to think well beyond those parameters. An additional home could mean that you'll have to pay for some, or all, of the following:

• Advertising for renters
• Appliances
• Carpets, flooring and rugs
• Chimney servicing
• Fees to a landlord or professional property manager
• Furniture
• Gardening supplies
• Home improvements (additions, renovations and upgrades)
• Lawn care
• Lighting fixtures
• Maintenance
• Moving costs
• Repairs
• Supplemental insurance (earthquake, flood, hurricane or tornado coverage)
• Utilities
• Window treatments

This laundry list of costs represents hidden expenses that all contribute to the true cost of homeownership. You'd be wise to set aside money in a Home Expense Fund each year. Stash away at least 2 percent of your home's value in order to pay for the items above without going into debt.

Don't Forget the Tax Man

When you rent out a second home, you'll have to adhere to strict IRS rules in order to reap the biggest possible tax benefits from your real estate investment. Tax laws concerning second homes are complicated, so you'll definitely want some professional advice in this area. However, you don't need an accountant to teach you the basics.

First off, there's the capital gains exemption. With your primary residence, you are allowed to exclude up to $250,000 in capital gains when you sell your house. The exemption is even larger ($500,000) if you are married. Unfortunately, that same capital gains exemption doesn't apply when you sell a vacation home. To get the tax break, you'd have to make that vacation property your primary residence for at least two years.

Then there's what I call the "14 day rule." This refers to the number of days that you rent out a second home. If it's 14 days or fewer, you don't have to report that rental income to the government; thus you don't pay taxes on that income. The downside, though, is that you can't write off any expenses you might incur for renting out your property.

If you rent out a second home for more than 14 days, you are legally permitted to deduct expenses. Your deduction is limited if you use the home for personal reasons for more than 14 days a year, or if at least 10% percent of the total rental days are for personal use.

As with most things tax-related, IRS rules can get complex, so be sure to enlist the services of an accountant to minimize your tax burdens – and stay on the right side of the law.

Armed with this information, and the above-mentioned financial tips, you can enjoy the benefits of not just your current home – but a second home as well.

Of course if the Lake of the Ozarks is where you wish to find that perfect 2nd home, just give us a call at the Spouses Selling Houses team. Until next time!! Ebbie :)