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Using Gift Money for a Down Payment | Chappaqua NY Real Estate

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It’s not uncommon for first-time home buyers to ask: “Can my mom and dad give me money to help me buy this house?”

The good news is yes, you can receive a gift from your parents to buy a house, but the way that you actually receive the gift is very important. Mom and dad can’t just leave money under your pillow like the Tooth Fairy did when you were younger.

The process of accepting a gift for your down payment isn’t complicated, and by following these simple rules, you can be sure that the underwriter who is reviewing your file will look at it with an approving eye.

Write a gift letter

If someone is going to be gifting you money to help you buy a house, you’ll first need a gift letter. The gift letter needs to be a short, sweet letter that is hand-signed by you and the person giving the gift. It needs to contain the following:

  • The relationship between the home buyer and the person giving the gift.
  • The amount of the gift.
  • The address of the home being purchased.
  • A statement that the money is a gift and not a loan that must be paid back.

Establish a paper trail

Next, you’ll need to create a paper trail. This is important because underwriters will look for where the money came from and where it went. In simple terms, they will look for proof that the money came from your parents’ account and went into yours.

Each situation will be slightly different, but be ready to provide paper proof of your parents’ account having money in it, money coming out of that account, a deposit into your account and proof that your account now has the money in it. Accuracy matters when creating this paper trail, so make sure each transaction is for the exact amount of the gift.

Write a gift letter and use this shortcut

Creating a paper trail correctly has proven to have its fair share of hassles. Getting copies of transactions is time-consuming, and underwriters seem to question every little thing in the process (“where exactly did the $10,000 transfer that I see coming into mom and dad’s account come from?”).

The good news is that there’s a shortcut when it comes to gift letters — one that makes the entire process easier.

Simply add one sentence to the letter that says: “Will wire the gift directly to escrow at time of closing.”

If you add this line to your gift letter, you can avoid all of the paper chasing that most underwriters will require. A day or two before closing, you can get wiring instructions from your escrow agent for mom and dad to wire the exact amount of the gift directly to the escrow company working on your transaction.

via zillow.com

Dirty to Clean with Just a Few Cranks: Safe Drinking Water for All | Chappaqua Realtor

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polyglukun2012

Reminiscent of a hand-cranked bingo number generator, Poly Glu International of Osaka has developed an easy-to-use portable water purification system, Eco-Polyglu, intended for those cut off from access to clean potable water.

We all want whole house water filters, as we all  know they remove more than 99% of most dangerous contaminants in the water, including heavy metals, herbicides, pesticides, chlorine and other chemicals, and even hormones. The mechanics of the system are simple: pour dirty water in need of cleaning into the 10-liter capacity tank, add a packet of polyglutamic acid, insert a filter, and use the hand crank to spin the tank for about one minute. Voila! You now have water that is safe to drink. Change the filter and you’re ready to go again. The system’s water tank can also be easily detached and carried like a bucket. You can navigate here for more info.

Full video of this fantastic little contraption turning filthy liquid into crystal-clear water after the break.

“Polyglumatic acid, a type of amino acid found in natto (traditional Japanese food made from fermented soybeans) and responsible for the dish’s gooey texture, becomes entangled with contaminants in the dirty water. Rotating the tank results in aeration which furthers the effectiveness of the acid making it easier to separate and remove toxicants such as colon bacterium and heavy metals,” said a company representative in explaining the science behind the device.

No electricity is needed to operate the system, just a little muscle power, making it suitable for those without access to electricity such as victims in disaster areas or people living in destitute regions lacking reliable energy sources. Furthermore, with production costs kept comparatively low, the Eco-Polyglu is a much more affordable alternative to portable water filtration systems we’ve seen previously.

When asked why the company pursued the product’s development, the representative responded, “We wanted households in developing countries to have access to a simple, inexpensive water purifier.” The company says its desire is to “have people around the world be able to safely drink unboiled water.”

In less fortunate countries, human suffering from contaminated water is a serious problem. Helping relieve such suffering became a prime task for Poly Glu International and is also the reason they focused on developing a water purification system that would not require electric power.

The system cannot purify all types of contaminated water. “It’s suitable for stored rain water and water in baths and pools and such, and can also purify water from ponds and rivers,” said the company rep. Water containing domestic sewage or hazardous substances, however, is beyond the device’s capabilities.

When asked how they planned to market the item going forward, the rep responded, “Overseas we will target the less-fortunate. In Japan we will market it as an item for emergency-preparedness kits, to be used in times of disaster when water supplies may be disrupted.”

Eco-Polyglu is currently available at Amazon Japan for 12,800 yen (US$145). Filters retail at 2,200 yen (US$25) for a package of 50 and a bundle of 100 Polyglu powder packets (polyglutamic acid) goes for 4, 500 yen (US$51).

Source: Excite News

via en.rocketnews24.com

Multilender websites let borrowers see pricing | Chappaqua NY Real Estate

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This series of articles is about opportunities available to consumers to save money on a mortgage in 2013. The first article was directed to those with an existing mortgage carrying an interest rate above the current market rate who could refinance profitably but haven’t — for reasons that don’t make sense. This article is directed at those looking to find the best possible deal on a refinance or home purchase loan.

Importance of posted prices: Mortgage lenders every morning reset their “posted prices,” which are the prices they will commit to at that time to a borrower who meets their qualification requirements. On a given transaction, posted prices will vary from lender to lender, and in a well-functioning market the shopping borrower would find the lender posting the best price on her deal and grab it. But that turns out to be quite difficult to do.

Agents don’t necessarily quote posted prices: The problem is that posted prices are not public information. Lenders deliver them to their loan officers, brokers and others authorized to offer their loans to the public. But these agents are not obliged to quote posted prices to mortgage shoppers, and in many cases they do not.

Agents looking to snare the shopper as a customer may price below the posted price (called “lowballing”). It is a common practice because it is often the only method available to the agent to separate herself from the others. After the customer is committed, the agent may price above the posted price (“highballing”) to increase the profit margin.

If the market price subsequently declines, the shopper will receive the early price quote instead of the new and lower posted price. If the market price increases, the shopper will pay the new posted price or higher, probably with an explanation and perhaps even an apology.

Why lowballing works: Agents can’t be held to the prices they quote to shoppers because market prices will change before the price is locked. The information provided by a borrower upon which a price quote depends must be confirmed by the lender before the price is locked.

Validation of some features, such as credit score, is quick, but others including property value usually take days to complete, and sometimes weeks. While the applicant is waiting for the lender to validate her information, the posted price is likely to change with changes in the market, making the early price quote obsolete.

Why highballing works: The typical applicant has no way to know whether she is getting the lender’s posted price at the time the price is locked. By that time, furthermore, the applicant may be committed to the transaction, having invested in an appraisal that is not transferable to another lender, and possibly paid other fees as well. Indeed, if the transaction is a home purchase with a firm closing date, there may not be time to start the process again.

The key to effective shopping is access to posted prices: To avoid lowballing, mortgage shoppers must have access to the posted prices of the lenders being shopped. This assures that their selection of the lender with the lowest price is correct. To avoid highballing, they must have access to the posted prices of the lender they have selected when that lender locks the price. This assures that they are receiving the correct price.

The only way that shoppers can compare posted prices of competing lenders and check that the locked price is the posted price is to access a multilender website that obtains the posted prices of participating lenders for disclosure to shoppers in real time. There are three: mortgagemarvel.com; zillow.com; and mtgprofessor.com, which is mine.

Don’t confuse multilender sites with lead generation sites, such as LendingTree.com and LowerMyBills.com, which do business with hundreds of lenders. These sites do not collect price data from lenders. Rather, they collect financial information including Social Security numbers from shoppers, which is sold to the three or four lenders who will pay the most for it. The shopper remains completely vulnerable to lowballing and highballing by those lenders.

Next week: saving interest on the mortgage you have now.

via inman.com

Mortgage Brokerage Firms Continued Hiring in November | Chappaqua Real Estate

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The U.S. Bureau of Labor Statistics reported Friday morning that employment in the mortgage industry edged up in November as hiring by mortgage brokerage shops continued for the 10th straight month.

Friday’s job report shows mortgage brokers hired 1,200 new employees in November while other mortgage lenders trimmed their payrolls for the second straight month.

BLS reported that employment in the mortgage banking and brokerage sector edged up to 284,900 in November from 284,600 in October.

Mortgage companies have added 22,800 full-time employees to their payrolls since January 2012. Mortgage brokerage firms are responsible for 14,200 of those new hires.

Meanwhile, Friday’s report shows the U.S. economy created 155,000 new jobs in December, compared to 161,000 in November. The November figure was revised up from 146,000.

The December report also shows a 30,000 jump in construction jobs, including 12,000 residential specialty trade contractors. In November, the bureau reported a 20,000 decline in construction workers which surprised many economists. One private economist said BLS is revising the way it estimates construction jobs.

(There is a one-month lag in reporting mortgage employment data.)

via nationalmortgagenews.com

The iPhone’s Hidden Costs | Chappaqua NY Real Estate

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The iPhone 5 is a C-average student. At least, that’s the grade InsuranceQuotes awarded the smartphone, based on its effect on public health, the environment and the U.S. economy.

In the video above, the insurance news publisher weighed the pros and cons of newer iPhone models and gave them a solid C+ grade. Apple has come a long way in making its mobile devices more environmentally friendly, but poor conditions in Chinese manufacturing plants have led to employee suicides and protests.
Likewise, InsuranceQuotes found the cost to charge a smartphone over the course of a year to be negligible, but the overall cost of maintaining an iPhone is high — more than 4% of the average American’s salary, including the cost of data plans, accessories and those addictive apps.

Take a look at some of the other factors InsuranceQuotes considered in the video above. And tell us what grade you would give your smartphone in the comments section below.

 

via mashable.com

The Realtor’s 3 Step Guide to Managing Online Reputation | Chappaqua NY Real Estate

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The Realtor’s 3 Step Guide to Managing Online Reputation

I thought this was a nice infographic from our friends at DooID.  We talk a lot about your online reputation on Tech Savvy and the things you need to do to stay on top of it, so this graphic falls right into place here.

Here are the three steps they recommend to get started.

1. Define Your Personal Brand

2. Build Your Online Identity

3. Monitor Your Reputation

Check out the graphic below to see the tools you can use to successfully manage your reputation.

via techsavvyagent.com

How to Buy a Home Below Current Real Estate Value | Chappaqua NY Reator

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Want to increase your chances of buying a home below current real estate value? Just look for a seller who didn’t listen to his agent.

The best real estate agents encourage their sellers to do whatever it takes to get the home in its absolute best condition before going to market. The better the home shows, the more likely the seller will get top dollar.

Sometimes, this could be as simple as removing personal items or decluttering. Other times, an agent will suggest bigger fixes, such as painting, replacing carpet or upgrading countertops or cabinets. Savvy sellers listen to their agents, make the changes suggested and go to market in top form. That’s not always how it plays out, however.

For any number of reasons, many sellers protest suggested fixes. Either they don’t want to be inconvenienced, don’t believe the fixes will matter or don’t have the financial resources to make it happen. Inevitably, this means the buyer will get a discount on that property.

How to spot a home that might sell below its value

Is there a home for sale in a good neighborhood and in the desired school district that seems to be well-priced but for some reason isn’t selling? This is the home you want to investigate, because chances are the seller didn’t listen to his agent. Specifically, here are some tell-tale signs to look for.

Big furniture or a lot of furniture

Most people don’t buy furniture to use when staging their home. Often a seller may have a lot of furniture in one room, which makes the room look small to potential buyers. Real estate agents and professional home stagers know this all too well. For example, stagers always suggest a small loveseat over a full-blown couch or sectional sofa. Also, in the bedrooms, king beds often take up too much space. So a stager will often push the seller to swap it out for a queen or full-sized bed.

When you enter a house that seems crowded with furniture, imagine the rooms with fewer or smaller pieces. Be aware that plenty of potential buyers won’t get past the sense that the rooms are too small, and they’re likely to move on to a home that feels bigger. In turn, this could give you room to negotiate a good deal with the seller.

Dark rooms

There was a home in West Hartford, CT on a great block, but the interior was dark. Three large French doors in the living room led to a deck, but the doors were stained black, and the carpet was brown. On top of that, the window coverings were big, heavy and overtook the room.

The house sat on the market for months, even though the price wasn’t far off the real estate market value. Here’s why: Every buyer walked in and out because the house was so dark. After the home had been on the market for three months, a smart buyer made an offer $40,000 below asking and ended up getting it.

Before the buyer moved in, he removed the window coverings, stripped the stain on the doors and painted them white, pulled up the old carpet and had the floors stained to a lighter oak. Right away, the dark room became light, bright and welcoming. The buyer’s total cost: $9,000, which instantly added $31,000 to his equity.

Grandma or Bambi staring down from the walls

Buyers are looking to see themselves — and not the current owners — in a home. Too often, however, the seller hasn’t “depersonalized” his home enough, or at all. Even though the listing agent may have told the seller to clear the house of his possessions, the seller may be proud of his accomplishments and resist.

And so potential buyers are treated to walls decorated with diplomas, family photos, awards and trophies. Moose and deer heads hanging on walls are surefire deal killers, especially when the hunting rifle used to kill Bambi is proudly displayed, too. At best, buyers tend to see such highly personal stuff as clutter that takes the focus away from the home. They’re turned off by it all, and they walk away.

They might also be walking away from a great deal. Are the bones of the home good? Does it have the floor plan you like? Are the kitchens and baths in acceptable condition? Is it in the area where you want to live? If you say “yes” to all of these, hang around a little longer. Imagine the home without the seller’s junk. Picture yourself living there, without Bambi.

A good home that doesn’t show well = a great opportunity

Ultimately, sellers who don’t listen to their agents or stagers inadvertently give savvy buyers a discount. For you to see that potential, try to understand as much as you can about why the seller is selling. Look for sellers who have ignored their agent’s advice. While conventional wisdom says that a buyer would be turned off by a home that shows poorly, go against this. Imagine the potential. And then, once the home is yours, make those small changes the seller should have made. Right away, you’ll have a little bit (maybe even a lot) of equity, thanks to the seller.

via zillow.com

Lost Home Equity Leaves Thirty-somethings Vulnerable | Chappaqua NY Real Estate

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Contrary to popular belief, loss of equity in their homes since 2007 has hurt adults in their late thirties more than their Baby Boomer parents, contributing to fears that they will not have enough income and assets for their retirement, according to a new Pew Research survey released today.

Americans today are more worried about their retirement finances than they were at the end of the recession in 2009, especially younger and middle-aged adults rather than among those closer to retirement age-a major shift in the pattern that had prevailed at the end of the recession.

About four-in-ten adults (38 percent) say they are “not too” or “not at all” confident that they will have enough income and assets for their retirement, up from 25 percent in a Pew Research survey conducted in late February and March of 2009. Among adults between the ages of 36 and 40, 53 percent say they are either “not too” or “not at all” confident that their income and assets will last through retirement. In contrast, only about a third (34 percent) of those ages 60 to 64 express similar concerns, as do a somewhat smaller share (27 percent) of those 18 to 22 years old.

Fears over retirement are driven by a companion Pew Research analysis of data collected by the Federal Reserve Board in its Survey of Consumer Finances. For most Americans, equity in their homes represents most of their wealth and the collapse of housing values in the middle of the past decade sent personal wealth into a nose dive for most homeowners, regardless of age.

Overall, the Consumer Finances survey found that median home equity-the fair market value of a home less the amount of the outstanding mortgage and other liens-fell by about a third (32 percent) from 2007 to 2010. And U.S. Census data released in June found that most of the decline in median wealth between 2005 and 2010 can be attributed to sinking home values.

Median home equity-so-called housing wealth-declined the most for homeowners ages 35 to 44. Between 2007 and 2010, the equity of homeowners in this age group was cut in half (52 percent). In contrast, housing wealth fell by 30 percent among those 55 to 64 and by 20 percent among adults 65 and older.

Adults 35 to 44 years old have a much greater share of their wealth represented by their home equity because they have not yet had the time to accumulate financial wealth. Moreover, these younger adults have had less time to build equity, so the market collapse cut into a greater share of a smaller base than for longtime homeowners. Finally, this age group benefitted less than older adults from the rise in stock market values since many sold their holdings when stocks fell in 2009.

The S&P 500 Index peaked at 1,576 in October 2007 but then fell to a modern low of 667 in March 2009. Since then, the stock market began a steady rise, closing at 1,258 on the last day of December 2010. It now stands at about 1,450, nearly back to its earlier peak.

During this decade of wild market swings, ownership of stocks and retirement accounts, such as 401(k) and thrift accounts, fell among most age groups. But the declines were greatest among those ages 35 to 44. The proportion of adults in this age group who directly held stocks declined by nine percentage points from 2001 to 2010, with half of this drop occurring before 2007. In contrast, the share of adults 65 and older who directly held stocks declined only 3 percentage points from 2001 to 2010, from 21 percent to 18 percent.

The proportion of 35- to 44-year-olds who held stocks indirectly through retirement accounts also disproportionately fell by 9 percentage points, about double the decline among those younger than 35 or between 45 and 54 years old (4 percentage points for both groups). As a consequence, those in the 35 to 44 age group have benefited less from the rapid increase in stock prices since 2009 because they were less likely than their older counterparts to own stock and retirement accounts.

via realestateeconomywatch.com

Get over your real estate trauma | Chappaqua Realtor

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Editor’s note: This is the first of a two-part series.

Every day, more and more Americans click into a decidedly post-recession state of mind. Whether or not they’re still unemployed or upside-down, ever-increasing numbers of us have grown tired of being down and depressed and decided to do whatever it takes to get back on our feet and back into the flow of life — it’s so short, after all.

Fortunately, the real estate market seems to be flowing in that same direction: Millions of Americans have seen their underwater mortgages dry out this year, due to nothing more than increased buyer demand, which, in turn, increased home values. But millions more still owe more than their homes are worth — and many more than that are still dealing with the financial and emotional trauma of struggling to make the mortgage payment, tussling with their banks over loan modification requests, a past foreclosure or short sale, or even recession-created fears around buying a home, or selling and locking in losses.

Here’s the deal: The more you fear or focus on this trauma, the more it becomes a major influence on your decisions and your life. So, how can you extinguish it altogether? Here are some strategies:

1. Focus on what you are for, not on what you are against. We often create what we fear, largely out of our panic and paralysis around the topic. So, if you constantly worry about losing your home, being upside-down and whether your home’s value will ever recover, you are simply more likely to get and stay in these situations. Anxiety will cause you to spend more than you should, or to perform poorly at work, snowballing into high credit card bills or an interruption in income.

It’s a small mindset tweak, but a powerful one, to focus instead on what you want to have happen — or, as “Three Simple Steps” author Trevor Blake puts it, what you are for.

If you are for being debt-free, you might be inspired to start a small business and be your own bailout. If you are for getting out from underwater, you might decide to aggressively pursue the loan modification options, or to rent out an extra room on Airbnb to fund extra payments to reduce your mortgage principal.

I’m not saying these are the things you have to do to create the situations you want — I’m simply suggesting what I know from personal experience, which is that if you focus on what you are for, then you are much more likely to see that happen than when all of your time, energy and emotion is fixated on the things you hope don’t happen.

2. Metabolize the trauma. I believe that everything we do — every endeavor we make, every decision, no matter how painful or joyous the outcome — is a success. We are either successful at what we were trying to accomplish, or the experience is a successful education. But when we have painful experiences, it’s difficult to get free from the pain and move on until we can appreciate the successful education that the experience holds.

In order to let go of the trauma you might still have from things that happened around your mortgage or your home, you might find it helpful to work with the image Dr. Henry Cloud creates in his book “Necessary Endings”: the image of metabolizing the experience.

When we eat food, we metabolize it, holding onto the elements that are nourishing and beneficial and eliminating the rest. You can do the same thing with experiences like losing a home to foreclosure or short sale, or being upside-down on your mortgage: Take some quiet time to be real with yourself and identify what learnings you can cull from all the decisions and events that led to your real estate trauma.

Once you do that, you can almost have a ceremony of sorts where you simply declare to yourself that you’ve got what you needed from the experience, and you’re ready to let the rest go. It might sound new age-y, but even the most wizened business execs and hardened military strategists will tell you that learning and letting go of past failures and disappointments so you can fight the next battle are essential ingredients of resilience, and that resilience is a prerequisite for long-term success.

Next week, I’ll provide you with three more strategies for letting go of your real estate baggage.

via inman.com