Guide To Henderson

How to Buy a House with (Little or) No Money Down

How to Buy a House

with (Little or)

No Money Down

Can I Afford a Home?

Many people never buy a home because they don’t think they have enough money for the down payment.  They’ve been told that they need 10-20% of the purchase price in order to buy a home.  This isn’t true.

So, why have so many real estate companies told them this?  It’s simple.

Selling homes to people with 10-20% down is easier than selling homes to people who have little or no money for a down payment.  Most agents prefer the easy sale.

I have a different mission:  To help people.  That’s why I created this special report and sent it to you with no obligation.  This information is for people with good credit and income, but no money for a down payment.

Option 1:  FHA Loans – Best Bet

Although this isn’t a “No Money Down” option, the FHA loan is by far one of the best alternatives for people who want to buy a home and don’t have much money to put down.  With an FHA loan, you could put down as little as 3%.  Plus, FHA loans are easier to qualify for.

While you can’t borrow the 3%, you can get a “gift” from a family member, borrow from your 401k, or sell some “stuff” you have lying around.  At the end of this report, we’ve included a special section with great ideas for raising this small amount required for an FHA loan.

FHA loans do have requirements and restrictions:

·         Not all townhomes and condos qualify.

·         There is a maximum loan amount. 

Option 2:  Special Loan Programs

Special loan programs come and go quickly.  Loan One:  Allows the seller to provide the 3% down payment required for a home loan.  That means no money out of your pocket if you know how to negotiate with the seller!  Loan Two:  Requires only 2% including closing costs – wow!  That’s practically the same as no money down!

So, how do you find out what type of loan programs are available for you right now? 

The best way is to work with a great mortgage broker who keeps up to speed on these special programs.  If you don’t know of one, we work with at least three such mortgage professionals, and we would be happy to refer you.

Option 3:  Owner Financing

Owner financing means exactly that:  The owner (or seller) finances a portion of your home purchase.  For example, you might borrow 80% of the value of a home from a lending institution, and “borrow” the other 20% from the owner.  In this situation, the owner “carries back” a second mortgage.

Owner financing can be advantageous, especially to investors who buy up properties and then rent them out.  For the average homebuyer, however, owner financing is difficult to find and requires some tricky negotiating.  Even after successfully negotiating a deal, it requires some detailed work by qualified attorneys in order to protect the interests of all parties involved.

While you shouldn’t rule out owner financing, keep in mind that by looking for someone who is willing to help finance your purchase, you severely limit your choices.  There are a lot of houses for sale today, but not a lot where owner financing is an option.

Option 4:  Lease-to-Own

With a lease-to-own, you essentially lease a home, but make larger payments in order to begin accumulating a down payment.  For example, if a house would normally lease for $800, you might lease it for $1,000/month, with $200/month going into a special account.  At the end of a specified period, you buy the home using the money in that special account as your down payment.  However, if you decide somewhere along the line not to purchase the home, all of the money in the special account then goes to the seller.

Think of this option as renting with a forced savings account.  If you can find someone willing to do this, it’s not a bad option.  However, most people who are selling their homes need their money out of it in order to buy their next home, so finding someone who is willing to lease to you may prove more difficult.

Where to Begin

Now that you have four good options for buying a home for little or no money down, where is the best place to begin?

Get pre-qualified. 

I’ll Do More Than Help You Get Financed!

I am dedicated to helping you through the entire process, delivering world-class service all along the way.  I can help you find the right home, negotiate the right terms, and then make sure that you actually get to the closing table. 

Simple Ideas for Raising Money for a Down Payment

1.  Have a garage sale.  You’ll be surprised how much money you can raise this way, especially if you’re willing to give up the junk you’ve been hoarding for years.

2.  Raid your savings.  Even if you’ve been trying to keep a little stashed away, this is important.  If your kids have a savings account, ask them if you could borrow from theirs as well.

3.  Borrow from your retirement fund.  Many retirement funds (401k, IRA, etc.) have provisions for you to borrow from them for important reasons.  This counts as an important reason!  Check with your plan administrator or your financial advisor about this option.  The nice part about this is that as you repay your loan, you pay the interest to yourself.

4.  Ask your family.  This is probably the hardest thing for some to do, but you might be surprised at how willing a family member would be to help you buy a house, even if they’ve said “no” to you before when you tried to borrow for other things.  If you do this, you’ll need a form for your banker stating that this is a gift and not a loan.  (Yes, you can still repay your family member.  It just can’t be a formal loan.)

5.  Sell something.  If you look around your house, you might find items that have value, but that you haven’t used in a long time:  An old coin collection, an old musical instrument that no one plays anymore, an extra freezer you don’t really need, a second (or third) car you could do without.  Often, the cash from selling these items can add up quickly.

6.   Win the lottery.  Somebody’s going to win – it might as well be you!

Summer Fun in San Diego

We took a nice little vacation with the family to Mission Beach. Here are some photos.

                                                                              

                                                                                               

Buying A Short Sale

Buying A Short Sale

As a buyer watching the real estate market, you are undoubtedly aware that there are more "short sale" properties on the market, at least in many areas. A short sale is a home where the market value of the property is LESS than the loan amount owed to one or more lenders. Note that there may be state or regional differences in the requirements and paperwork - ask your agent.

Don't be scared off by these properties as they may turn out to be a great deal for you. But you need to know a few things:

• A seller must disclose if the home either IS a short sale or likely will be due to the market value.
• A short sale MUST be approved by the lender. Even though a seller might accept your offer, it will be subject to approval by the lender
• Lender will (likely) send out an appraiser to evaluate the property in light of recent sales
• Lender must receive hardship letter and other required documents from the seller in order to approve a short sale
• Lender will likely have a checklist of requirements and paperwork required for the short sale process
• Lender will likely request that the sale be "as is" and due to hardship will probably not approve any credit for repairs
• Be prepared for a short sale to take more time (total time may be 60 days +/-)

If you are making an offer:

• Make sure you make the offer contingent on the short sale being approved by the lender and set a time frame for approval
• An addendum form is advised to outline the short sale contingency terms and conditions (this is a optional state form here, but there may be other requirements elsewhere in

  California

  and in other states)
• A letter to the seller is also advised requesting written confirmation that the lender has received the hardship letter and other documents as part of the short sale application
• There is a good chance there will be more than 1 offer
• It is still prudent to conduct a home inspection even though the lender will probably require an "as is" sale
• It is possible the seller will not be able to do any Section 1 repairs resulting from the Wood Destroying Pest Inspection (e.g., termites) due to hardship of funds

Be sure to discuss issues and questions with your agent before proceeding, preferably someone who has some experience with short sales.

How to Calculate Your Property Tax

To calculate your property tax we have to have the taxable value of your home. Using the assumption of $234,000 and the home is located in tax district #570

1. Figure the “assessed value” by multiplying the taxable value by the “assessment ratio” of 35% (this ratio is set by law)……In this example:

$234,000 x .35= $81,900

2. Locate the “property tax rate” for tax district #570 (I did this for you). In the 2004-2005 column tax district #570 has a property tax rate listed at 2.9471 or $2.9471 for each $100 of assessed value.

3. Finally, just multiply the “assessed value” by the “property tax rate”.

$81,500 (assessed value) x  .029471= $2,401.89

The annual property tax is $2,401.89 per year!

Please keep in mind this is the formula that the assessors use.

Why Parents Drink

To my friends with Children: Why parents drink 

The boss wondered why one of his most valued employees had not phoned in sick one day. Having an urgent problem with one of the main computers, he dialed the employee's home phone number and was greeted with a child's whisper. " Hello ? "

"Is your daddy home?" he asked.

" Yes ," whispered the small voice.
May I talk with him?"
The child whispered, " No ."
Surprised and wanting to talk with an adult, the boss asked, "Is your Mommy there?" " Yes ."

"May I talk with her?" Again the small voice whispered, " No ."

Hoping there was somebody with whom he could leave a message, the boss asked, "Is anybody else there?"

" Yes ," whispered the child, " a policeman ".

Wondering what a cop would be doing at his employee's home, the boss asked, "May I speak with the policeman?"

" No, he's busy ", whispered the child.

"Busy doing what?"

" Talking to Daddy and Mommy and the Fireman ," came the whispered answer.

Growing more worried as he heard a loud noise in the background through t he earpiece on the phone, the boss asked, "What is that noise?"

" A helicopter " answered the whispering voice.

"What is going on there?" demanded the boss, now truly apprehensive.
Again, whispering, the child answered, " The search team just landed a helicopter ."

Alarmed, concerned and a little frustrated the boss asked, "What are they searching for?"

Still whispering, the young voice replied with a muffled giggle... " ME ."

You’ll appreciate your real estate investments most at tax time

Fortunately, the government is smart enough to realize that private property owners make better landlords than it does. When you own real estate and make it available to renters, you are performing a very valuable service for your community, and the government rewards you with some impressive tax benefits.

Even with recent tax law changes, real estate is still one of the best, if not the best, tax-sheltered investments you can own. But it’s not the gravy train it was before the 1986 tax law revisions. In its heyday, people used real estate to shelter incomes in excess of a million dollars a year and paid no federal income tax.

Unfortunately, those glory days are over, but the remaining benefits make real estate one of the most lucrative assets you can own. Before I go any further, let me make it clear that I’m not a tax adviser, just an investor willing to discuss the benefits I have experienced firsthand. For guidance on your personal situation, you would be wise to consult a professional tax adviser.

Look at your paycheck stub and you will notice a deduction for Federal Insurance Contributions Act. Not only do you pay this tax, but your employer must match, too. Earned income is subjected to the FICA tax, and there’s no way around it until your income surpasses a certain amount. Both the tax rate and the amount subject to the tax have been steadily rising.

On the other hand, rents you collect from real estate, no matter how large they grow, are considered passive income and are exempt from both the employee and employer share of FICA taxes. Just this tax break alone is a tremendous reason to own real estate.

You can also deduct all expenses associated with investment real estate to reduce the amount that is taxable. You can deduct things like interest expense, management fees, taxes, insurance, repairs, homeowner’s dues, utilities, legal and accounting fees, and any other expenses incurred from owning and renting property. You even get to deduct a portion of the purchase price each year in the form of depreciation.

If, after taking all of the allowed deductions, your income is zero or you show a loss on paper, you will pay no ordinary income tax and, under limited circumstances, may be able to apply some or all of the loss to offset taxes on your salary. Here’s where a professional tax adviser may help.

The interest deduction plays an important role, especially when you’re just getting started and cash flows are tight. Most investors finance as much as possible in the beginning; interest is most likely their largest expense. Over time as the mortgages pay down and rents increase, the interest deductions will decline but the cash flow will increase. When the mortgage is paid off, although there may be some tax to pay, investors will get to keep a substantial part of the income because they won’t be paying interest.

There are so many additional tax benefits to real estate it’s hard to do justice to all of them in this limited space. There are ways to sell properties and defer taxes on the profits if you if you reinvest them in additional properties. Even if you don’t reinvest them, if you have owned the properties for at least a year, the profits are taxed at a very favorable capital gains rate, which can be less than half the rate for ordinary income. Under the current Internal Revenue Code, you can avoid paying taxes altogether on profits up to $250,000 from the sale of your personal residence and can do it again every two years. (Double that if you’re married and filing jointly.)

courtesy of Mike Summey

Ryan's Story

April is Autism Awareness Month

Our family and many of our friends are aware that we have a child who is Autistic. Fran and I thought what better way to share Autism Awareness Month than with our own personal story.

A Brief History Of Our Journey

Ryan was born a beautiful typical baby boy. There were no indications that he had autistic symptoms. As he turned 2 years old things began to change. He was not responding to his name or to external stimuli that typical children would respond to.

At that time there wasn't the amount of information available or the awareness in autism as now. We knew we had to do something. We had his hearing checked through an audiologist which came up negative. Our pediatrician initially said he would grow out of it and for us to read to him more but after repeated visits and being misdiagnosed he kept assuring us that it still wasn't autism.

We were told that we could get an assessment by the school district and that he was entitled to receive services based on the findings. After waiting months for the complete assessment and losing more time, the school district assessed him as Developmentally Delayed.

We placed him into an early childhood school program. After two years and still not seeing any progress after he was shifted from program to program, we got more and more concerned and very frustrated! The school district did not guide us towards any outside resources or interventions. He was continuously being placed in inappropriate classes and not getting the services he was entitled to.

We had him assessed by a neurologist who told us he had PDD (Pervasive Developmental Delay) but that the prognosis was good and that he will grow out of it. Being very frustrated we uncovered through the internet symptoms that seemed to match what we were observing with Ryan. The term was called Autism. We finally got a diagnosis of Autism from an expert out of state.

By this time we could see that Ryan was as frustrated as we were. He would stand in front of the refrigerator and cry because he couldn't articulate his wants and needs. We felt helpless and lost and felt like our child was being taken from us by this nightmarish disease. The early childhood program the school offered at that time was woefully inadequate.

During this period of time we found out about a behavioral intervention for children with autism called ABA (Applied Behavior Analysis). We started the program on our own with two therapists who came from New York and had experience with teaching ABA. They worked with Ryan one on one for many hours. We saw immediate results. He was learning as fast as we could teach him new skills and went from no speech to saying words within the first couple weeks of his programming. We didn't have accredited supervision but immediately saw more positive results from those early intensive one on one sessions than we had in the past two years of school programs.

We read more and more about Ryan’s rights and realized that every child in this country was entitled by law to receive FAPE which stands for a Free and Appropriate Public Education We also realized that Ryan was entitled to services from the school district under the Children with Disabilities Act.

When we asked for the school to provide ABA we ran into resistance. Ultimately we were forced to mediate and then file due process so that Ryan could get the services that his disability required. We filed due process with the school district and prevailed unanimously at the local level and then state level when the district appealed the first decision.

Ryan has had an ABA home program since he was 5 years old and is now 13 years old and currently has an ABA program with The Lovaas Center a highly accredited provider for children with autism. He is progressing very well but we feel that had he been able to get his diagnosis earlier and started his home program at an earlier age there is no telling what gains he might have made.

We wish we could tell you that Ryan was miraculously cured but unfortunately that is not the case. He will always need some type of care as he enters adulthood.

We can tell you that Ryan is now a delightful young man who loves surfing the internet, playing video games, going to movies, Disneyland, the beach, riding a bike, telling us what he would likes for dinner or what he doesn't like for dinner. He is in Junior High with other kids and does very well. We could go on and on about his skills but it wouldn't exist without his ABA program, his hard work and the loving dedicated people that work with him consistently!

We still have challenges with the school district but we will never stop advocating for him. We ask ourselves how much is a word worth? How much is being independent enough to brush your own teeth and get ready for bed like a typical child? There is no price tag that you can place on giving a child a chance to live in our world and our rules so they don't feel as much of an outcast as others make them feel. This is to all of the parents, advocates, teachers, aids, tutors, therapists, and others who touch a child’s life, Fight the good fight for our children!

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