When thinking of doing a short sale, be prepared with documentation the banks will request.

Simular to when you purchased a home, negotiating a short sale is like a reverse purchase and requires certain documents.

Have the following information ready:
– Bank or Lending Institution and Loan #
– Last 2 years of tax returns
– Lastest 2 months of bank statements
– Latest 2 paystubs

Create a filing system so that you can continue to add to the file, as the banks will request updated information during the short sale process. Keeping a good file system in place will remove some of the stress of finding documents when needed.

If you have any questions about the Short Sale process, we provide FREE confidential consultations. Don’t hestitate to contact us.

Rivera/Mueller Team
Al Rivera @ 602-750-7141
Brigitte Mueller @ 480-620-8593

Let’s face it, there are many of us struggling on a day to day basis to stay on top of our monthly bills. The rate of unemployment climbs, the rate on our mortgages climb, and many of us have fallen behind.

The so-called Loan Modification programs out there have not saved those in trouble. The percentage is so low and the reality is that it does not resolve your problem. It may give you temporary relief, if that, and while you are waiting for the banks to modify your loan you are falling further and further behind. It’s a known fact that you cannot short sell your home when you are in the loan modification cycle, and by the time you find out you don’t qualify for the modification – you are so far behind there is no hope of catching up.

The sad truth is that many of us must give up our homes, but think twice before you go to foreclosure. Foreclosure may not be the best solution for you.

While selling your home may be a tough decision, the dream of homeownership is NOT dead. A typical homeowner can purchase a new home within 2-3 years after the short sale of their current home, while a foreclosure prevents you from purchasing for 7-9 years on average.

We offer FREE private consultation to help answer your questions about the option of a Short Sale.

Give us a call.

Rivera/Mueller Team

Brigitte @ 480-620-8593
Al @ 602-750-7141

By Danielle Hale, NAR Research Economist

Buy a home and you get a tax break! As part of the Housing and Economic Recovery Act of 2008, a First-time Homebuyer Tax Credit is now available. However, this limited-time tax break ends in mid-2009. A homebuyer tax credit has been available for first-time homebuyers in Washington, D.C. for many years, and now first-time homebuyers nationwide can take advantage of a similar benefit. In this commentary, I’ll give a quick overview of the credit-something every Realtor® should know.

Who is Eligible?
First-time homebuyers who purchase a principle residence on April 9, 2008 and before July 1, 2009 are eligible for the credit. A first-time homebuyer is someone who has not owned his/her principle residence for a 3-year period before the date of purchase, and someone who has never taken advantage of the DC first-time homebuyer credit. In the case of married couples, both must be first-time homebuyers. For other groups purchasing a home, the statute is unclear. Purchasers should consult a tax advisor.

How does it work?
The credit directly reduces the total amount of taxes owed and is refundable. When the buyer files his/her taxes, for the year he purchased his home (2008 or 2009), he will be able to subtract the amount of the credit from his Federal income tax liability, increasing his refund or reducing the amount he owes.

How big is the tax credit?
The tax credit is equal to 10% of the purchase price of the home up to $7,500. The full credit is available for single buyers whose adjusted gross income is less than $75,000. If the buyer’s adjusted gross income is greater than $75,000 and her home purchase qualifies her for the full credit, the credit phases out according to the chart below.

For married couples filing jointly, the credit begins to phase out at an adjusted gross income of $150,000 per this chart.

What about Repayment?
The tax credit is not completely free money for buyers to keep. It has a payback provision that makes it similar to an interest free loan. Two years after the credit is claimed, buyers begin repayment so that the credit is paid back in full over the course of 15 years. For those qualifying for the full credit, the payback amount is $500 per year. Those getting less than the full credit pay equally over the 15 years (which is a rate of 6.67% per year). If a qualifying home is resold before the credit is repaid, the seller will have to immediately pay the outstanding balance of the credit. If the home is sold at a loss, then nothing more is owed.

What’s valuable about a credit you have to repay?
Money today is worth more than an equal amount of money in future, which economists call the time-value of money. First, money loses its purchasing power over time due to inflation. Second, you can use the money today to earn interest and repay the principal later-all the while keeping the interest for yourself. For this reason, multimillion-dollar lottery winners prefer taking a lower lump-sum amount than the multimillion dollar amount spread out over many years. Real examples in the PDF will help you illustrate this point to potential buyers.

Are there other conditions I should know about?
• Buyers cannot claim both the DC and the national First-time Homebuyer tax credit
• Purchases by non-resident aliens and purchases financed by proceeds from a qualified mortgage issue are not eligible.
• Any single family residence located in the United States that will be used as a principal residence is eligible. Generally, this is the place where an individual spends most of his/her time. This includes single-family detached housing, condos or coops, townhouses or any similar type of new or existing dwelling.
• The credit will not result in an individual owing additional federal taxes under the Alternative Minimum Tax.
• Home purchases between relatives and other gifts of residences are not eligible for the credit.
• Other tax benefits of homeownership are still in place. Mortgage interest deduction, capital gains tax exclusion, and property tax deduction are some well-known examples.
For more specific questions about the tax implications of the credit, please consult a tax professional.

There’s no denying it — remodeling, repairing and decorating your home can be an expensive undertaking. But with a little creativity and some wise shopping decisions, you’d be surprised at how much you can save on your next project!

Lumber: There are a number of different lumber grades available, and the higher grades also carry higher price tags. If you don’t need the increased structural capacity or better appearance of the higher grades, save some money by selecting a lower grade that’s appropriate for the intended use. Also, many lumber yards have piles of lumber that are culled out because it’s warped, split or otherwise unsuitable for sale at full retail. You can often pick this material up at sizable discounts, and it’s perfectly good for jobsite uses such as blocking, temporary bracing, etc.

Beams: Another place to save some money is with the purchase of beams. Many structural-engineered lumber beams come in long lengths that are cut on site at the lumber yard, leaving drops that are too short for long spans. You can often pick these up cheap, and they can be used as headers for doors and small windows, or in other framing applications.

Large versus small packaging: Some construction items, such as nails, screws and other hardware, are available in both small and large packaging. Buying in larger packages saves you money on a per-pound basis, so long as you have a need for the items now or in the foreseeable future. If you only intend to use a few of the items, you’re better off buying the smaller packages — even though you pay a little more per pound, you don’t waste money on excess you’ll never use.

Bulk buying: Along those same lines is buying in bulk. Items such as sand, topsoil, gravel, bark, and other bulky construction and landscaping materials can be purchased in bags, but you really pay a premium on a per-cubic-yard basis for that convenience. If you have a pickup truck or a small trailer, picking these materials up yourself in bulk will save you quite a bit of money. For even larger quantities, paying a small fee to have them delivered will still result in a sizable per-yard discount over bagged material.

Concrete: For small jobs such as setting a fence post, you can’t beat the convenience of bagged concrete mix. But once your project gets up around a quarter of a cubic yard, bagged concrete becomes a whole lot harder on both your wallet and your back. Many towns have small-yardage concrete companies that are much more economical, and you can also have a full-size concrete truck deliver the wet material for a very reasonable “short-load” fee.

Small pieces of plywood: Many home centers and lumber yards have smaller, precut pieces of plywood and other materials, and you can save yourself some money if you only need a small piece for a one-time project. However, these small panels are quite expensive on a per-square-foot basis, so if you have a future need for the plywood and a place to store it, you’re definitely money ahead by buying a full sheet and cutting it yourself.

Tools: When a home-improvement project calls for a particular tool that you don’t currently have, consider how often you might use that tool in the future. If it’s a basic item, such as a circular saw or even a paint brush, that will see a lot of use over the years, then buy the best you can afford. It’s safer, easier to use, and its long life will more than pay for itself when compared to cheaper tools that require periodic repair or replacement. A tool you might only use a few times could be a lesser expensive model, so long as it’s safe. If the tool will more than likely be a one-time use, consider renting instead of buying.

Sweat equity: Got a little more time than money? If you’re having work done on your home, talk with the contractor about what things you can reasonably do — and the key word is reasonably — to save some money. Perhaps you can do your own painting, or scrap things out and clean up the site at the end of each day. But whatever your agreement is, get it in writing!

Seconds, roll ends and discontinued items: Many retailers have items such as appliances and plumbing fixtures that they sell at sizable discounts because they are slightly blemished, have minor scratches or are in the store because someone misordered them. Flooring companies often have “roll ends” of carpet and vinyl for sale at a fraction of their original price, and that are perfect for smaller rooms. Many paint stores will have sales on mismatched or mistinted paint, or wallpaper that was misordered. Tile stores often have a sizable inventory of discontinued tiles, stones, grouts and other materials at great prices. If you can be a little flexible and creative in your design thinking and are willing to do a little research, you’ll find there are bargains all around you!

Bush to unveil aid for at-risk borrowers
Noelle Knox
USA Today
Aug. 31, 2007 12:00 AM

Some homeowners with risky subprime adjustable-rate mortgages will be able to refinance before they lose their homes to foreclosure, with the help of steps President Bush will announce today, senior administration officials said Thursday night.

An estimated 80,000 homeowners with bruised credit and subprime ARMs they can no longer afford will be able to refinance their loans, which the Federal Housing Administration would insure.

The move will mark a historic expansion of the role of the FHA, a Depression-era agency that has traditionally served low- and moderate-income families and first-time buyers but not delinquent borrowers. Nearly 16 percent of subprime borrowers are behind on their ARMs, and an estimated 2 million subprime ARMs totaling about $600 billion will reset to higher rates through the end of next year.

To qualify for the new benefit, homeowners will have to prove they paid their loans on time before they reset to a higher rate. They also must have at least 3 percent equity in their homes.

The program, which doesn’t need congressional approval, should take effect early next year.

Arizona’ subprime-loan and foreclosure woes are mounting. The state ranks behind only Nevada for the most subprime loans in the country. Notices of trustee sales, which are precursors to foreclosures, climbed to 2,478 in metro Phoenix last month. That’s a five-year high.

“Homeowners are looking for help. It sounds like this plan is a start,” said Jay Butler, director of Realty Studies at Arizona State University’s Morrison School. “Many people who got subprime loans should have gotten FHA mortgages in the first place.”

Investors now make up as much as one-third of metro Phoenix’s home foreclosures. But there are many homeowners looking for help, and there is less to be found in the tighter lending climate.

Jay Luber, vice president of First Horizon Home Loans of Phoenix, said if government can loosen up any money for mortgages through the FHA or other programs, it will help people facing foreclosure who can’t refinance now.

Under current rules, the maximum loan the FHA can guarantee is $202,000 in most states and up to $362,000 in high-cost states such as California and New York.

The officials said Bush will also call on Congress to pass his proposal to reform the FHA, in part by raising those loan limits to $262,000 in most states and $417,000 in pricier areas. They spoke on the condition of anonymity because they weren’t authorized to speak on the record.

Bush also wants the FHA to be able to help other risky borrowers, beyond the 80,000, by broadening its lending criteria. To compensate for the added risk that the borrowers might default, the FHA would charge them higher premiums on the loans. Also, Bush wants to eliminate the 3 percent down-payment requirement, though borrowers would have to pay at least some of the closing costs to secure the loan.

The senior officials avoided using the word “bailout,” but the plan is sure to incite critics.

“If you’re going to help someone to refinance, you’re going to bail out the person who financed him in the first place,” Peter Wallison of the American Enterprise Institute said Thursday night. “This will only cause the problem to arise again.”

Wallison said the lenders who provided the financing in many of these cases likely knew that the borrowers couldn’t meet the financial obligations of the loan.

“If we’re going to allow (lenders) to be refinanced out, what we’re doing is saving them from their own greed. … It might be good politics, but it’s very bad policy.”

In another bold step, Bush will propose a temporary change in tax law. It would let homeowners avoid taxes on forgiven debt if a lender agreed to alter the loan terms.

Will a pool increase the value of your home?

If you put an in-ground pool, you can add some value to your home, but the conventional wisom is that swimming pools are not a good upgrade in terms of return on investment.

The National Association of Realtors says that adding a pool can increase your home value by about 7%. But 7% might not begin to cover the cost of a $30,000 in-ground pool. You might find it harder to sell your home, especially to parents of small children.

Above-ground pools may actually decrease the value of a home, but they are relatively easy to remove.

In the Phoenix metro area, that $30-$35K pebble-tec pool you put in may be wroth $12-$15K in re-sale value, at least accourding to most appraisers. Plaster pools are even less.
35% or more of the buying market don’t even want to have a pool for one reason or another.