Check them out www.waterbobble.com

What it is:  Upromise has partnered with online retailers, major brands and restaurants.  The business gives a percentage of what you buy back to upromise for your child’s college account.

How it works: An example, I love Sephora.  I make sure to buy 90% of my makeup, lotions and potions through them because they donate 3% of what I spend back to Upromise for my son.  This is stuff I would normally buy.  Any household cleaning product, toothpaste etc.. I try to do through drugstore.com because they donate 5% back.   You can also sign up your grocery cards and credit cards for additional savings. There are a lot of great stores and most offer free shipping. 

Same great products and prices and cash back for college.  It is a no brainer.  Also, you can help other family members save.  There is no annual fee or start up fee.  It is truly a great website. Don’t let free money get away, check it out today.

My favorite stores hooked up with Upromise:

APPLE, MACYS, OVERSTOCK, SMART BARGAINS, BLUE FLY, BARNES AND NOBLES, EBAY, TARGET, NIKE, RALPH LAUREN, 7FOR ALL MANKIND..the list is growing every day.  See below, there are way too many to list

http://shop.upromise.com/mall/all-stores

Let’s look at the math for a 30 year fixed FHA loan at 4.875%

Current rules FHA Cost:

Purchase Price: $400,000

3.5% down: $14,000

2.25% upfront fee: $9000

Total Loan Amount: $394,685

Principal and interest: $2088.71

Taxes (estimated): $322

Insurance (estimated): $80

Mortgage Insurance: $175.70

Total Monthly payment: $2667.33

NEW AS OF OCTOBER 4TH FHA Cost:

Purchase Price: $400,000

3.5% down: $14,000

1% upfront fee: $4000

Total Loan amount: $389,860

Principal and interest: $2063.17

Taxes (estimated): $322

Insurance (estimated): $80

Mortgage Insurance: $287.52

Total Monthly payment: $2753.61

Although the monthly payment is higher for the first 5 years (You have to pay mortgage insurance for 5 years) with the new rules if you keep the loan for the full 30 years you will actually save about $2485.  Where this will become an issue is with “cusp” borrowers.  Borrowers who were max qualified at a certain amount will now qualify for less.

Written by Jennifer Ready www.Readybell.com

1) Does this property have prior short sale approval?  If it does that is great news because it means the bank has already approved the sale once which means they may approve it again with you quicker.  Buyers get tired of waiting for shortsales all the time and drop out.  Inevitably 2 days later shortsale approval is issued and that is where you come in.  You cannot just take over the approval.  It is a process but certainly a faster process than starting from scratch.

2) How much do they owe? If the seller owes $700,000 and is selling it for $300,000 good luck.  However if the seller only owes $325,000 that is good. It is easier for a bank to agree to taking a smaller hit. Less management gets involved.

3) Which bank is the loans with?  Wachoivia is known for being super easy and fast to work with.  Some of the other banks are a bit tougher to get to agree to a shortsale.  Ask your Realtor what they think the odds are.

4) Are there tenants and when will they be evicted? Check out yesterday’s article as to why this is so important.

5) How many loans are there and who are they with?  The more loans with various banks the longer it takes basically because more negotiating needs to be done.  Often the 1st and 2nd lien holders (mortgages) make it impossible if they cannot agree with each other on the terms.  The 1st will often short what the 2nd will get and the 2nd sometimes will not agree to that.

6) How many shortsales has the listing agent done? There are Realtors in the SF bay area that do nothing but shortsales all day long.  They have worked with every bank and know the drill and sometimes have relationships at the banks.  If the listing Realtor is a shortsale guru that is a good sign.  It does not guarantee that it will go through but it does push the odds up.

7) Has a notice of default been filed…when? A notice of default basically means the bank is gearing up to foreclose. If the seller only became interested in selling via a shortsale after the notice of default had been filed you may have a staller. Be cautious. If you are nervous that you may be dealing with a staller once the seller accepts your contract have your agent ask to see if you can come in and check on the house with  them there of course.  Perhaps a once a month visit.  If they do not want to do this beware.  Any normal, nice person selling there home would let the patient buyer check out the home once a month.

Tip:

1) Have your lender pull a property profile.  This will have who has been on title for the property.  Your lender needs to check to make sure that the seller you are buying it from is in fact on title.  With a normal transaction this is handled in the first few days however with a shortsale there is a lot of waiting before anything gets done and surprises after 7 months of waiting are not good.  They should also look for recent title changes.  There are scams taking title away from homeowners and selling the properties out from under them and your lender needs to be on the lookout.

Questions/comments Jready@mmcdcorp.com  www.ReadyBell.com

Nuts and Bolts: A home buyer cannot make their payment and owes more than the house is worth. They list the house with a Realtor for sale.  A buyer makes an offer and the seller accepts.  The Realtor now has to convince the bank/banks that is owed the money to accept less than what they are owed.

Reality:  Shortsales are rarely short and the outcome is often unpredictable.  In an ideal situation the short sale is agreed upon and the buyer gets the home. The bank gets less money then they are owed but they avoid the cost of foreclosing on the home and they avoid the risk of the market declining further and getting less than what a shortsale would net them.

As with anything in life people have figured out how to exploit the shortsale in order to put more $ in their pockets. Unfortunately, it is the buyer who suffers for this.

Buyer Beware #1:  The Stall Tactic

In many cases you can stall a foreclosure by attempting to do a shortsale.  If the bank is getting ready to foreclose and suddenly an offer on the home appears in many cases this can buy the homeowner additional time in the house.  What we are starting to see is homeowners who truly have no intention of actually selling the house but instead list the home as a shortsale in order to buy time. The next step in the stall tactic  is Bankruptcy. 

I have seen two instances recently when once the shortsale got approved the seller filed for Bankruptcy a few days before the short sale was set to close.  This is DIRTY.  Once they file bankruptcy the bank cannot go through with the shortsale and the seller buys more time in the house.  The good, patient buyer who waited for the short sale to be approved is left out in the cold.  The bank cannot move forward with the shortsale until the bankruptcy is discharged. 

Buyer Beware #2: The Double Escrow lives on Shady Lane

There are many investors buying short sales at below market prices and then immediately selling them for higher prices.  Some investors have Realtors that are actually trying to do “double escrows” and sell the buyer the home while the investor is in escrow on the short sale.  That way the investor never really puts out any money.  Stay away from this. This is SHADEVILLE.  When you buy a home the person selling it needs to own it.  This seems like common sense but to many it is not. 

We have also seen Realtors try to sell the contract.  What I mean by this is, let’s say Joe the investor is in contract to buy 123 main street in a short sale.  The short sale gets approved by the bank so Joe’s Realtor is willing to sell you Joe’s contract for lets say a fee of $5000, under the table of course.  They will “assign” the contract to you.  You are paying Joe for the opportunity to buy the home.  Great for Joe.

Buyer Beware #3 Tenants that will not leave

As a rule of thumb you generally do not want to buy a short sale that has tenets.  The reason is that often the owner does not evict them properly and then you are in an awkward situation because you now have to research California tenants laws to see if you will ever get to live in your dream home.  Landlords generally do not serve eviction notices the day they list their house as a short sale.  Many wait until they have short sale approval. If they are still getting rent they want that money.   Short sale approvals generally do not last for over 30 days and most the time the eviction law requires more time than that. This means you get the house and tenants.  If you are buying the property as an investment and the tenants are paying great but if you plan to live in the house this can be trouble.

There are a lot of bitter tenants.  They have been making their rent payments faithfully for 2 years and they are now getting kicked out.  It is not unheard of for a tenant to trash the property or refuse to leave.  There are also tenants who have not been making their rent payments because they found out their landlords was not paying their mortgage.  They have no incentive to leave because they have been living rent free.  If the shortsale does not go through it will generally take at least another 3 months before the bank boots them out.  That is 3 more “free” months and the bank will pay them to leave.  Cash for keys anyone?

If you do find your dream home and it has tenants in it make sure your Realtor and the selling Realtor has a game plan on moving them out.  You generally want them out at least a week before you close so that you can make sure the house is not trashed and that they are actually leaving.

 Shortsales can be fantastic, wonderful, experiences where all involved win and they are worth looking at.  Just keep your eyes open.

Questions/Comments: jready@mmcdcorp.com or www.Readybell.com

1) Keep all balances on credit cards below 30% of available credit

2)  Never pay late.  If you are disputing a cell phone bill; pay and then dispute.  Cell phone companies report to collection companies fairly quickly and this can hit your score fast and hard.  Better to pay the $30 then pay higher interest rates for 7 years.  Even if they agree you are right, getting a collection off your credit is not easy task. Utility companies and medical billing companies report quickly too so beware.

3) Do not close credit cards and do not open credit cards you do not need. Opening a new line of credit for 10% off is not worth it.

4) Be on top of your credit.  Check it once a every 4 months with one bureau.  Through the free credit you can check it with each bureau once per year.  If you check one bureau in January and the next in May and then in October you will monitor your credit for free for the year.  Look for credit cards you do not recognize and new addresses.  If your address is wrong alert the bureaus.  That is the first sign of ID theft.

5) Check out www.optoutprescreen.com   This website, developed by the credit bureaus, gives consumers the opportunity to opt out of receiving credit offers in the mail.  Signing up (it is free) can bump your score a few points and it eliminates credit card offers in the mail which cuts opportunites for ID theft.

If you are purchasing or refinancing a home with a loan (not FHA)

DO NOT BUY ANYTHING WITH YOUR CREDIT CARDS.

As of June 1st Fannie Mae is requiring lenders to check the borrowers credit right before funding.  If anything changes on your credit your loan that you already have signed loan documents on could be denied.   In order to protect yourself

1) DO NOT BUY ANYTHING WITH YOUR CREDIT CARDS OR OPEN NEW LINES OF CREDIT.

2) PAY YOUR CREDIT CARDS ON TIME

3) DO NOT ALLOW ANYONE TO RUN YOUR CREDIT.

By following the three above rules you will have no problems.  If you decide to go against any of the above you could be setting yourself up for disaster.

I suggest coming prior to 5:30 so that you can ensure parking and a good viewing spot. Bringing a chair and a snack is suggested.

There are two issue with this. 

#1 misrepresenting income or continuance of income is fraud.  Mortgage fraud is very serious and carries severe penalties.

 #2 the bank would find out because every single lender verifies employment right before the loan funds.  If the lender finds out there is no longer a job and the borrower does not qualify without it the buyer loses the loan and generally their deposit as well.

There are 3  ways employment is verified on every loan.

#1 Current paystubs and w2′s

#2 The loan processor requests a written or verbal verification of employment before the loan is submitted to underwriting.  They contact your employer directly for this

#3 Verbal verification of employment at Funding.  They will not fund the loan unless your employer verifies you are still working there.

If you are leaving your job and do not have another job lined up you should not be using that income to qualify for your loan.  If you switch jobs in the middle of the loan you need to tell your lender so that they can adjust the transaction.  Many people think that if they get through underwriting and they sign loan documents they are in the clear.  You are not in the clear until the loan closes and the house has recorded./  Honesty is the best policy.  If you are working with a lender that is encouraging you to misrepresent yourself leave that lender quick.  Mortgage fraud is serious and no house is worth it.