Figuring What You Can Afford

In addition to your monthly mortgage payments, there are many things to factor in when determining how much you can afford, or even if you can afford to buy a home at all. There is a down payment for the loan, closing costs, moving expenses, plus purchases and maintenance for the new home. Generally, your annual gross income multiplied by 2.5 will give you an approximate amount for the price of home you can afford. It could vary depending on how much you have as a down payment, your debts, financial situation, and credit history/rating. Your debts, including alimony and child support, should not be more than 30 to 40% of your gross income.

Monthly Mortgage Payment
Lenders want to make sure you have the ability to pay your loan. As a general rule of thumb, you can figure that your monthly mortgage payment should be equal to or less than 25% of your gross monthly income. This also will vary depending on circumstances.

Amount of Money Needed
You will need money for a down payment and closing costs, plus any move related expenses and maintenance or repair costs for your home.

» Down Payment – Your down payment is a percentage of the property value and is usually from 3 to 20%, or more if you want a lower loan amount. This can vary by the type of mortgage you obtain. Also, if your down payment is less than 20%, you may be required to pay mortgage insurance (PMI or MI).

» Closing Costs – these are settlement costs involved in purchasing your home. They range from 2 to 7% of the property value and include such things as points (a percentage paid for securing a particular interest rate), financing fees, taxes, title insurance, pre-paid and escrow items, and your down payment. You will receive an estimate of these costs prior to closing.

For more information visit me on Facebook or my website http://www.janeloveday.com

Jane Loveday
DRE # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com
http://www.facebook.com/realestatesandiego
http://www.twitter.com/sdrealestate
http://www.linkedin.com/in/janeloveday

Did you buy a home last year? Here’s 9 Documents you WILL need when filing your Taxes this year!

1. Mortgage Interest Statement – IRS Form 1098

This allows you to deduct 100% of the mortgage interest you paid in a year – including prepaid interest or points you might have paid at close of escrow. You should have received in the mail a Form 1098 and if you itemize your taxes and claim a mortgage interest deduction, you must include this form with your taxes when you file.



2. Property Tax Statements

You are eligible to deduct the property taxes you pay to your local city, county and/or state. You can’t deduct such items as waste management or local assessments for street lighting, libraries etc., have your property tax statement at hand and make sure you’re only deducting what’s allowed.



3. Uniform Settlement Statement – HUD-1

Right after closing you should have received a form called the HUD-1 Settlement Statement, this form documents a number of items which may help you at tax time including again the prepaid interest, prorated property taxes and closing costs like origination fees and discount points.

If you can’t find a copy contact your escrow company for one.



4. Moving Expense Receipts

These are tax deductible IF you moved at least 50 miles away from your full time workplace, check with your tax preparer for full details.



5. Cancellation of Debt Statement – IRS Form 1099

If you lost a home to foreclosure or short sale you may receive some version of this form from your lender showing income in the amount of the mortgage debt that has been cancelled. This is classified as income and is taxable.



6. Utility Statements for your Home Office

If there is a part of your home you use exclusively and regularly used for business you may be able to deduct some of your home utilities and or repairs, again check with your tax preparer to determine which are legitimate or not.



7. Income and Expense Statements from Rental Properties

If you own rental property your tax situation is a little more complicated, you’ll need to have complete income and expense statements and once again your tax preparer can advise you on correctly ascertaining the depreciation of the property you can claim.



8. Contractor Receipts from Energy Efficient Home Improvements

If you installed any energy efficient improvements – new insulation, dual paned windows and furnaces for example, you may be eligible for a tax credit of 10% of the cost of the upgrades, up to $500 ($200 for the windows).



9. Mortgage Credit Certificate (MCC)

If you bought using a Mortgage Credit Certificate issued by a local housing authority it can apply as long as you live in the home and have a mortgage on it, but they only help defray taxes you actually owe, no good for an actual refund. The deduction is based on a percentage of the mortgage interest you paid, on top of your mortgage interest deduction.



You should always consult a professional tax preparer when you own your home or income property or if you have lost a home due to foreclosure or short sale.

Jane Loveday
DRE # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.linkedin.com/in/janeloveday
http://www.twitter.com/sdrealestate

5 First-Time Homebuyer Mistakes!

When thinking of purchasing your first home, the primary place to start is contacting a lender to determine how much you can afford. The lender will run your credit report and go through your monthly bills, this is very, very important as most first-time homebuyers are often afraid to get the prequalification, you fear the lender may tell you that you don’t qualify for a mortgage as high as you may want. However this way you’ll make a financial decision rather than an emotional one.



Here are the 4 other things to consider before you start shopping for your mortgage:



If you are thinking of changing your job in a year or two, or may have to move for your job, think twice, ideally picture yourself living in your new home for at least 5 – 7 years.



Make sure you have enough cash/savings to cover closing costs associated with obtaining a new home, including property insurance, taxes, homeowners association dues, any maintenance required immediately, and your new electric and water bills (all usually higher if you are currently renting).



Chose a reliable and reputable Realtor, if you are referred from a friend or family member, ask the agent for references from previous buyers, the same goes for loan officers or mortgage brokers. Often dealing with the actual listing agent, and not your own agent, can pose difficulties as the agents obligations to you may be affected by his/her obligations to the seller also.



Once you have obtained your pre-approval, and taken into account the above, please don’t go our and charge your credit card with major purchases, computers, cars, etc., as your credit score WILL BE RUN AGAIN prior to your loan funding and you definitely don’t want that score to drop even one point.



GOOD LUCK, this IS the time to buy, with interest rates at or BELOW 4%, mortgages are more affordable than ever, and if you are renting, stop paying your Landords’ mortgage and start paying your own!


Jane Loveday
DRE Licence # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.linkedin.com/janeloveday
http://www.twitter.com/sdrealestate

 


Top 3 things to consider when deciding to own or rent in California


Is your employment stable enough for the next 3 years?

Given the current economic state, knowing you have a job that is secure is very important, also prices are not going to rise much, if any over the next few years, so there is unlikely to be any equity gain in a home you purchase now.

If you are going to purchase a home with 10 – 20% or more down, and find you have to sell within a couple of years there should be no problem, however if you are going to use an FHA loan with just 3.5% down, then you may find yourself upside down if you have to sell.

Obviously if you are planning on staying in your home for many years, then current interest rates and prices make it extremely opportune.

Are you single, or already married with children?

A 1-bed condo doesn’t really fit a family, although it is perfect before you meet your significant other, so bear in mind that size really does matter. Can you afford to look at single family homes or larger condos, if so then do so, it will be a much better return on investment down the road.

Is it really cheaper to own than rent?

Depends on your neighborhood but with interest rates down around 4%, and you factor in taxes and mortgage insurance, you are looking at approximately $600 per $100,000 BORROWED. 2-bedroom condos are renting an average of $1500-$1800 around town right now, if not more, and you can easily find a 2-bedroom condo within the metro areas of San Diego priced UNDER $200,000, in fact over 100 are currently available, making your mortgage payment significantly LESS than a rent payment.

For more information about mortgages, contact Scott Schang, Broadview Mortgage Company - http://www.broadviewmortgagecorp.com/EmployeeDetail.aspx?groupid=430&EmployeeID=12444&

Food for thought, let me know if you need more information, I AM HERE, I CANHELP!


Jane Loveday
Licence # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.linkedin.com/in/janeloveday

Real Estate Market Update - San Diego

 

Here's the latest real estate update for the city of San Diego as of October 5th, 2011.

Over the past two weeks we have had 326 single family homes and 225 condos/townhomes newly listed.  The average price of the single family homes is $525,823 with $290 per square foot, the highest listing is priced at $2,495,000 and the lowest is just $95,000.

The highest priced home is not actually a home, but a lot in the Santaluz development of Fairbanks Ranch, with complete plans and permits to build a custom 6,850 sq ft home with 4 bedrooms and 4.5 bathrooms, the lot has panoramic views and is .7 acres.  Now the lowest home is down in the Imperial Avenue area just west of City Heights, it's a contractor special so cash only please, has a new foundation but not much else!

We hae had 225 condos/townhomes newly listed also in the past two weeks, the average price is $358,994 with $296 per square foot, the highest listing is $5,500,000 and the lowest just $49,000.

The highest priced is a penthouse at the top of the Harbor Club downtown, 360 degree views, private elevator and entrance, 3 beds, 5 baths, 4,170 square feet, and your monthly HOA bill will be $2,117.00!  At the other end of the scale we have a small 1 bed, 1 bath short sale fixer in City Heights, $250 HOA dues per month.

For your own personal market update just give me a call or email me, it is all completely free!



Jane Loveday
Licence # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
janealoveday@gmail.com
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.twitter.com/sdrealestate
http://www.linkedin.com/in/janeloveday

Home Prices Dropping ... Why is that Good?!



Economists are predicting a FURTHER 2.5% drop in home values for 2012 - they further predict that this will be followed by an anemic growth rate of only 1.1% through 2015...


So why do I bring you such dire news??? And why do I find it exciting???

Because for everyone that is 'waiting for the market to recover' before they list their home OR you are refusing to reduce their price because they say 'I don't have to sell' ... remember that if you do nothing, it will take you until 2016 just to get back to where values are TODAY!

Granted, each sub-market is different but even with the assumption that we Southern Californians are 'better-off', you have to consider that the rest of the nation will act as an anchor - slowing down our own recovery...

Remember also that all news can be interpreted two ways - I see this as creating an opportunity, whether thinking of buying or selling - you should also!


Jane Loveday
Licence # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.linkedin.com/in/janeloveday

How does 3% of your purchase price granted back to you sound?

 

Attention First Time Homebuyers !!!  Did you know there is a program specifically for you from the State of California that offers 3% of your purchase price which can be applied toward your downpayment or closing costs.  It's like a 0% interest loan which does not need to be repayed until you sell or refinance your home down the road.

You could potentially purchase a home for a s little as 1% of the purchase price using this program, however there are restrictions (of course) !  You must live in your home for at least 3 years, and there are income restrictions depending on how many are in your family, the restrictions currently in San Diego are from $63,400 up to $119,600 currently.

However as an option in this economy, it's a great program, check with my buddies at http://www.homeownershipuniversity.com/ for more information and eligibility status.  Here's to helping you obtain the American Dream of homeownership!



Jane Loveday
Licence # 01439083
Pacific Sothebys International Realty
619-519-1615 Cell
http://janeloveday.com/
http://www.facebook.com/realestatesandiego
http://www.linkedin.com/in/janeloveday

http://www.twitter.com/sdrealestate