Virginia Real Estate and Musings

The $8000.00 first time and move-up homebuyer tax credit will extend through May 2011/ with a closing by July 2011.

This is for members of the uniformed services or Foreign Service and employees of the intelligence community.

To qualify, the borrower must have been on a qualified official extended duty outside the United States.

This duty had to be at least 90 days, serving on at a duty station, during the timeframe of January 1, 2009 and May 1, 2010, and needed to be either at least 50 miles from their primary residence or living in Government Quarters under Government orders.

VHDA, The Virginia Housing Development Authority has developed a loan program called Homebuyer Tax Credit Plus.  

VHDA designed this program so homebuyers could take advantage of the $8,000 First-time Homebuyer Tax Credit to finance their closing costs and down payment.

How does the program work?  VHDA provides a first mortgage with a 30-year fixed rate at a competitive rate.  The Homebuyer Tax Credit Plus loan program offers a built-in second mortgage that allows borrowers to receive up to 5% of the home's sales price to help cover down payment and/or closing costs.  The second mortgage offers no payments and 0% interest for the first year.

There are 3 options from which borrowers may choose to repay the 2nd mortgage:

1.  paying it off with the first time homebuyer tax credit funds they receive after closing and after they file for the credit.

2.  paying it off over 29 years (after the first year of no interest and no payments is up)

3.  making principal payments during the first year to pay down the balance which will then be adjusted to fixed payment loan after the first year

Beginning with the 13th month, the second mortgage will have the same fixed interest rate as the first mortgage.

Time limit:  loan must close no later than November 30, 2009

Borrowers must meet the federal Firsttime Homebuyer Tax Credit eligibility requirements as well as VHDA's requirements.  Maximum househole income limits apply.  Minimum credit score of 620.  FHA qualifying ratios for payment and debt-to-income apply.  Borrowers must have a minimum of 1% of the sales price of their own funds in reserve or contributed to the purchase.  VHDA homeownership education class is required (can be taken online or in-person).

For more information, visit VHDA.com or contact Justin Williams:  757-692-3464 email:  justin.williams@prosperitymortgage.com

Great information from Marilyn in the First Time Homebuyer Tax Credit!

Dear Mr. Buyer,

Thank you for taking the time to write an offer on this property.  In our market, the seller is grateful to have received an offer on their home; even at well below the asking price.  I'm sorry to tell you that the seller is not accepting your offer.  He's just not that into you.

Why, you ask?

First of all, you aren't a strong buyer.  You aren't making a down payment and you are requesting the seller to pay all of your closing costs.  While you provided a pre-approval letter, low/no-downpayment financing is difficult to get right now and you are asking the seller to take their house off the market for a loan which has a good chance of never being approved.  Without any money to put down, there aren't any other options if your loan ratios end up being a few dollars off (except for the seller spending even more money to buy your rate down). To take their home off the market and await the close of escrow will cost the seller a few thousand dollars...are you willing to risk the same amount to buy this home?

So, let's add this all up.  Your offered price is well below the asking price (by the way, the asking price is very much in line with recent sales).  You aren't offering a decent amount of earnest money.  You need every dime of closing cost assistance out of the sellers and aren't a strong candidate for a mortgage.  You are requesting a home inspection (which is expected), but being that you are cash-poor, will probably nickel and dime the seller on any repairs the inspector finds.  Because your loan is a greater risk to the bank, the appraiser & underwriter will be more stringent on the condition and value of this property.

I'm sorry.  The seller just doesn't feel you are worth the risk of taking their home off the market.    Try saving up some money and being better prepared to own a home.  Better yet, try working with a buyer's agent who is familiar with the art of negotiation.

Tina in Virginia

Jenny and Joe Colon with Shaffer Title came to our office today to bring us a wonderful lunch and give us a refresher on title insurance.

Did you know the first title insurance policy was issued in 1876?  How about  that the dollar value of claims on one of the "big five" title companies has risen from $500,000 in 2002 to over $20 million in 2008?

We all know there are 2 types of title insurance:  lenders and owners and they protect the financial interest in real property against loss to title defects, liens or other matters.

Unlike what many buyers believe, lender's title insurance does not benefit the owner in the event of a claim.  ONLY owner's title insurance can protect the owner.

How does owner's title protect the owner?

• Legal defense - if it is necessary to enter legal defense, the title insurer will employ legal cousel to defend the owner's rights under the policy or in any suit or proceeding adversely affecting the title.
• Compensates for loss - if a loss is sustained, the owner is protected up to the full amount of the policy (purchase price).

A title search is not enough to protect an owner against defects in title!

Examples of Hidden Risks:

• Marital status or owner incorrectly given.
• Will is misinterpreted.
• Undisclosed heirs.  Remember the rules of intestacy - if a person dies without a will, the court must decide who the rightful heirs are.  Even then, a court's decision is not binding on an heir who was not notified of the proceeding.
• Mental incompetence or Minors.  To be valid and binding on a minor or incompetent, a transfer of property must be made by the guardians or one appointed by the court.  If a deed or release was executed by a person who was a minor or under mental disability at the time, the transaction may be voidable or invalid.
• Fraud and forgery.  Owner is impersonated; recorded documents may be forgeries.
• Defective deeds.  For example:  deed is delivered without consent of owner or after owner's death, document may be execited under an expired power of attorney, grantee's name may have been inserted in the deed after delivery, officer of a corporation may not have property power to act.
• Confusion due to similar names.
• Errors in records or clerical mistakes.  Examples:  document may be missed in title search, entries or indexing may be erroneous, names are misspelled.
• Unpaid estate, inheritance, income or gift taxes.

Does a buyer REALLY need to get an owner's title policy?  Here are a few instances I have dealt with where title insurance was needed:

1. Deed 3 transactions back was written and recorded incorrectly.
2. Legal description was incorrect (and had been written incorrectly for the past 2 transactions) and the seller didn't own all of the land the house was sitting on.
3. Unreleased deed of trust from 1982.
4. Power of attorney revoked an hour before closing and no one knew until after transaction had been recorded.

Like any insurance policy, you hope title insurance is never needed, but isn't it better to have it than not?

How to save money on title insurance????  Ask for a re-issue rate!  If the seller has owned their home for only 5-7 years and purchased an owner's title policy, the buyer can get a 30% discount on their title policy.

Tina in Virginia