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Earnest Money Deposit- A.K.A. Good Faith Deposit

by Masha Halpern

When you are buying a home, condo or other real estate you are most likely going to be asked to make a good faith deposit.  The purpose of this deposit is to establish that you are serious and have the financial ability to complete the purchase.  Now, do not confuse a good faith deposit with a down payment. 

How much do you need to deposit?

That amount is all dependent on the agreed sale price of the property.   Deposit amounts vary and can range anywhere from 1 to 3 percent of the sale price, but there is no set requirement. 

The amount of the good faith deposit is dependent upon the agreed sale price of the real estate. Deposits vary and typically can range anywhere from 1 to 3 percent of the sales price but, there is no set requirement. You typically want your deposit to be large enough that your offer is taken seriously, but you don’t want to give so much that you put your buying power at risk. Chances are there will be no problem, but the smaller amount you have tied up and at risk in a deposit, the better.

Who gets the money?

Typically the earnest money deposit should be made to a reputable third party such as a well-known real estate brokerage, legal firm, escrow company or title company.

As a buyer, be aware that if you allow earnest money to be held and deposited by a seller or by a builder or developer for use in construction, you risk that they will not be able to return it to you in the event the transaction does not close for whatever reason. Most buyers prefer to have real estate agents or attorneys hold the earnest money deposit as  they are licensed by the state and required to deposit the money in a trust or escrow account, this reduces the risk that the monies will be improperly used. To avoid the loss of your deposit, follow these tips.

• Never give an earnest money deposit to the seller.

• Verify that the third party will deposit the funds into a separately maintained trust account.

• Obtain a receipt.

• Ask how the money will be returned if necessary. Do they hold the check until it clears or return it?

Is the money refundable?

Your real estate contract will indicate if your deposit is refundable, so be sure to review this document very carefully. It is advisable that you consult a real estate attorney who can help ensure that your offer is written in a manner that protects your rights to the deposit.  Do your research to get the facts about state law and even local customs on refunds of deposits before your earnest money leaves your hands. Even if your money is refunded, you may not receive the entire amount. Often, third party fees are paid out of earnest money deposits. For example, if an appraisal has been completed on the property then the appraisal fee is going to have to be paid before money can be released to either of the parties. Check the laws in your state  as some states have laws requiring the buyer and the seller to agree on the disbursement of these funds before they are refunded, which can lead to further problems and legal action.

A good faith deposit is a lot like an insurance option for a seller. The escrow process can take 30-60 days, and this can cause the property to already be off the market.  The deposit ideally compensates the seller for this time in the event the buyer is not able to follow through on the purchase of the real estate.  The good faith deposit assures the seller that you are serious about purchasing their home.

 

 

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Taste a New Wine Selection Every Week

by Masha Halpern

This weekend, make plans to relax and enjoy some wine! Take a walk down Weaver Street Friday evening from 4:30 to 6:30 pm and sample some very delicious wine. You can also get all your wine questions answered! 

Just stop by the Weaver Street Market at 101 East Weaver Street in Carrboro Friday, February 25th and have a taste!

 You don't have to be a wine connoisseur to enjoy this event! These in-store wine tastings are a great way to learn about wines and to taste before you buy. Pick up a bottle for dinnner, grab one for a hostess gift, or just stock your cellar with wines you know you like.

Do you prefer white or red?

 

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First-Time Homebuyers - Best Tips to Buying Your First Home

by Masha Halpern

Buying your first house is likely to be the greatest financial commitment you will ever make. While buying your first home is an exciting experience, it can also seem overwhelming and can leave you asking lots of questions.  There are many things to consider, from budgeting to choosing the house, and getting financing you want to make sure you have all the information you need to make smart decisions. Here are a few easy steps to get started!  

How Much Can You Afford?
Before you can start actually looking for a home, you need to set some basics, such as how much can you actually afford. There are two major factors that you need to consider, how much you can borrow and how much of a monthly payment you can realistically afford.  Keep in mind you will most likely be pre-qualified for an amount that may be unaffordable to your budget. As a general rule of thumb, your annual mortgage payment, taxes and homeowner's insurance shouldn't exceed 28% of your gross income.  Use this home buying worksheet to help you figure the costs.

In addition, you will also need to determine your closing costs, which can add up to 3% to 5% of your total home's value. This closing cost estimator will help to give you a better understanding of the costs.

Do Your Homework-Start Your Search Online
Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, yours can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes.   With detailed knowledge about neighborhoods, school districts or any other factors that are important to you, you can narrow your search to find your perfect home even before you step foot outside!

How Long Will The Home Meet Your Needs?
When you do find some homes that you are seriously considering, ask yourselves these questions. What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has what you'll need. For example, if you are a young couple with no children just starting out and you found a two-bedroom home that you love, it may be perfect now. However, if you start a family, you will quickly outgrow the space. Best advice is to consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

What To Look For In First Time Home Loans
Because there are several different mortgage programs available for as a first time home buyer, it can be confusing and difficult to decide what is best for your when faced with many different loan types. Use this list  to help you narrow down the choices to what is best.

In addition, here are a couple of tips and guidelines:
1. Flexibility - Make sure you get a program that offers a monthly payment you can really afford. Be honest with your mortgage broker if your payment seems out of reach. You may be able to obtain a three or five year ARM mortgage with a lower interest rate and lower payments or an interest only loan to get you into your home without giant mortgage payments.
2. Down payment assistance. If you are unable to pay a down payment there are programs available to help you.  Down Payment Assistance Programs  are loan programs designed to assist first-time home buyers with the required down payment and closing costs.
3. Long Term Goal - Are you planning on staying in this home forever, for three years, for five years? Communicate your goals to your lender because in situations like these they may have several mortgage options from which you can choose

Purchasing your first home does take research and work, but buying a home is the American dream and you can fulfill your dreams. While it can be exciting to look at different types of homes, don't be tempted into excess when first time home buying. Don’t purchase a home that is really more than you can afford and you need to be strong and stay within your budget. For more information on all the aspects involved in purchasing a home from start to finish, click here.

Owning a Home Equals Tax Breaks

by Masha Halpern

Becoming a homeowner means you not only gain a home, but also a lot of tax advantages.  Many of your home-related expenses can be deducted for any type of home: mobile, single-family, townhouse or condos.  Be sure to consult your tax advisor so that you can be sure to find out which deductions apply to you and your home, so that you don’t miss out on any!  Here are some common ones that may be beneficial to you.

Deducting Loan Points Paid on a Purchase or Refinance

The points you pay on a loan for a home purchase are tax-deductible for the year you made the purchase. You can deduct the points you paid as well as those a seller paid on your behalf if you meet the following criteria:

  • The loan is secured by your primary residence
  • The loan was used to buy, improve or build the home
  • Paying points is a common practice in your geographic area
  • The points are calculated as a percentage of the loan principal
  • The points are clearly outlined on the settlement statement; and the amount of cash you put into the purchase of your home (down payment,   closing  costs  etc.) is at least equal to the amount you were charged for the points you paid on the loan.

Deducting Real Estate Taxes

Real estate taxes are deductible in the year they were paid. They are generally reported on Form 1098, Mortgage Interest Statement, the annual statement from the financial institution holding your mortgage, or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are not always included on Form 1098, but may be itemized on your real estate closing statement.

Casualty or Theft Loss

If your home is damaged from a sudden, unexpected event such as a fire, a storm, vandalism, or theft, the loss that is not covered by insurance is deductible subject to a $100 reduction and a 10% of adjusted gross income limitation. A deductible casualty or theft loss reduces the cost basis of your home by the amount claimed as a deduction. The deductible loss is calculated using Form 4684, Casualties and Thefts, and carried to Schedule A as an itemized deduction.

Going Green Means Tax Benefits

Homeowners who make their homes more efficient with energy-conscious purchases may be eligible for tax benefits. A recent tax law change provides a tax credit to improve the energy efficiency of existing homes. The law provides a 10 percent credit for buying qualified energy efficiency improvements. To qualify, a component must meet or exceed the criteria established by the 2000 International Energy Conservation Code (including supplements) and must be installed in the taxpayer’s main home in the United States.

The following items are eligible:

• Insulation systems that reduce heat loss/gain

• Exterior windows (including skylights)

• Exterior doors

• Metal roofs (meeting applicable Energy Star requirements)

In addition, the law provides a credit for costs relating to residential energy property expenses. To qualify as residential energy property, the property must meet certification requirements prescribed by the Secretary of the Treasury and must be installed in the taxpayer’s main home in the United States. The maximum credit for all taxable years is $500 – no more than $200 of the credit can be attributable to expenses for windows. Read more from the IRS on how you may be eligible to receive this tax break.

Each case is different and it is possible you will actually qualify for other deductions you were unaware of, so check with your tax professional so they can help you get the best return! For information on taxes and being a homeowner, visit the IRS where you can learn more about Tax Information for Homeowners.

Tax season is here, as a homeowner you taking advantage of any tax breaks this season?

  

 

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Take a Late Winter Walk at Mason Farm

by Masha Halpern

From 1961 to 1968, naturalist John Terres explored the roads and trails of the Mason Farm Biological Reserve, day and night. The resulting journal of his adventures, 'From Laurel Hill to Siler's Bog: The Walking Adventures of a Naturalist,' remains a classic of natural history writing.

 This weekend take a loved one, a friend or the whole family for a nostalgic stroll in the Reserve in the lingering days of winter. Pre-registration and a fee are required. It all begins at 1:30 pm and goes until 4:00 pm.  Call (919) 962-0522 or visit NC Botanical Gardens at 100 Old Mason Farm Road in Chapel Hill.

Have you read this classic book of literature?

 

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The Four "C's" in Mortgage Lending

by masha halpern

Having good credit and a steady job just does not seem to be good enough in today’s credit world when it comes to getting your home loan approved.  You need to make an impression.  Below are some great tips I would like to share with you. 

Today’s lenders are a picky bunch when it comes to the loan approval.  Even well-qualified borrowers are expected to jump through some pretty high hoops to qualify for financing.
Have no fear. The tips below and suggestions can help you make the best possible impression on the lender of your choice.
Just as job hunters may wonder what top employers want to see on a resume, prospective borrowers may be curious about what lenders look for on a loan application.

The four C's

The answer may be summed up with a mnemonic called "The four C's,"

•    Capacity, which refers to the adequacy of the borrower's income to cover the interest and principal due on the loan, plus property taxes and homeowners insurance.
•    Character, which refers to the borrower's track record of paying debts, as evidenced by his or her credit history and credit score.
•    Capital, which refers to the borrower's down payment (or equity) as a percentage of the current value of the home.
•    Collateral, which refers to the safety and soundness of the home and the value of the home as determined by an appraisal relative to the agreed-upon purchase price.

Today’s mortgage broker might use a quadrant with "income," "credit," "assets" and "property" in the four corners, but his point is the same as that of the four C's:  What lenders like to see is strength and stability in all four areas.

Maybe your credit score has some dings or you need a stated-income loan.  Borrowers who are qualified but whose down payment will be less than 20% of the purchase price of the home must withstand a second level of scrutiny. That's because mortgage insurers also have to approve such loans, and they have "completely different qualification ratios”. Borrowers in this situation should discuss their options with a loan officer who is familiar with lenders' and insurers' guidelines.

Have paperwork in order

Lenders rely not on the borrower's say-so but on a pile of paperwork to verify and document the borrower's financial position. At a minimum, most borrowers are required to submit the following:

•    One month of paycheck stubs.
•    Two years of W-2 forms.
•    Three months of bank account statements.

Additional paperwork also may be required:

•    If you're self-employed or earn more than 25% of your income from commissions or bonuses, you'll need to hand over two years of income tax returns.
•    If you're divorced, the lender will want a copy of your settlement to ascertain how much alimony or child support you're obligated to pay or are entitled to receive and the duration of those payments.
•    If you've filed for bankruptcy protection within the past seven years, you'll need to show your bankruptcy papers.
•    If you've deferred repayment of student loans, you should provide your deferral agreement as well.
"If (borrowers) have student loans that are going to be deferred for at least 12 months, that may help them qualify, so they would want to bring the account numbers for those loans.  Student loans are counted as debt, but deferral of repayment may strengthen the borrower's application.

Learn Ways to Make Your Home Affordable

by Masha Halpern

If you’ve never heard of this amazing website launched by the federal government, you better go check it out!  Making Home Affordable is a website that offers a variety of online tools that will help today's homeowner determine if they are eligible to participate in the “Making Home Affordable” loan modification and refinancing program.

This site will show you how this program works and who is eligible for assistance. This is the same $75 billion program you may have heard about in the media. To see if it can help you, first have this information in front of you:

* Information about your first mortgage, such as your monthly mortgage statement.

* Information about any second mortgage or home equity line of credit on the house.

* Account balances and minimum monthly payments due on all of your credit cards.

* Account balances and monthly payments on all your other debts such as student loans and car loans.

* Your most recent income tax return.

* Information about your savings and other assets

* Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.

* It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable.

There are many programs out right now including the energy tax credit, $8000 tax credit for first time home buyers, and long term interest rates lower than 5%. There is something for everyone it’s just a matter of knowing where to look.  

Check out these opportunities and see if any of them can help you or contact me to discuss your current situation.  Together we can find a solution to your real estate needs.

What are you concerns about home affordability in this real estate market?

 

 

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Ready for Some Weekend Comedy?

by Masha Halpern
The weekend is almost here and what better way to wind down than to enjoy some comedy and have a few laughs!
 

How To Avoid Foreclosure

by Masha Halpern

Facing foreclosure is frightening, and many homeowners are just not aware of how fast a foreclosure can happen. I’ve heard some heartbreaking stories in the last few months. The foreclosure process is painfully personal and can be painfully fast. Do you realize you and your family can lose your most precious asset in just a few short months?

So what happens in a foreclosure--and when? The U.S. Department of Housing and Urban Development has prepared an easy-to-understand foreclosure timeline. Just to emphasize how pressing foreclosure can be, I’ve put that timeline into very human perspective below:

You miss one payment. You get a call or note from your lender. Not so bad, right? You’re just juggling the bills a little right now--no problem. You’ll pay as soon as possible. Not to worry.

You miss two payments. Your lender calls again. Where are the payments? You’re still trying to convince yourself that everything is OK, but you still can’t make the payment, either. Things have to get better, don’t they? You’re starting to worry, but you do nothing.

You miss three payments. You get a scary “Demand Letter” or “Notice To Accelerate” from the bank that says you must pay all the missed payments in 30 days. If you don’t pay or negotiate different arrangements, the bank can start foreclosure. Now you’re really worried, but you’re hoping it’s a bluff. Foreclosure takes forever, doesn’t it? So you again do nothing.

You miss four payments. You still haven’t paid or made other arrangements within that 30 days. The lender turns you over to the legal team, and now you’re responsible for all the legal expenses, too. Once again you do nothing--because you’re overwhelmed and terrified.

You get notice that your home will be sold by the Sheriff--and you’re in foreclosure. But it’s only been just a few short months! You’re told you can save your home if you make all the missed payments and pay all the delinquency costs. But where will you get all that money, and why would the lender accept other arrangements now? So you again do nothing. It’s too late!

You get one last chance to save your home. You can still keep your home even after the sale if you pay all the missed payments and all foreclosure costs. You can’t do it.

Your home is lost. Why? Because you didn’t take action to save it.

Although foreclosure may differ by state, this gives you a good idea of how foreclosure works--and how fast it can happen. HUD notes that a housing counselor could have helped even after the fourth missed payment. Doing nothing if you’re facing foreclosure is the worst possible thing you can do.

Doing nothing is not an option if you want to save your home. HUD advises that you be honest with your lender as soon as you suspect you’re in trouble. You can also contact HUD to find a housing counselor who can help. You don’t have to face foreclosure alone, please contact me if there’s anything I can do, I’m always available to assist with all your real estate questions, even difficult ones like this. 

There are Alternatives to Foreclosure

by Masha Halpern

Foreclosures have increased dramatically the last three years as a result of the subprime lending disaster and a lot of people are wondering if they will be next. There are options for many homeowners, they just need to know what to look for and where to look for it at.

If  you find yourself struggling to make your mortgage payments, and you fear foreclosure may be in your future, the National Foundation for Credit Counseling (NFCC) has suggested a few possible alternatives. These options to fend off foreclosure include:

  • Repayment Plan
  • Reinstatement
  • Forbearance
  • Loan Modification

The Federal Trade Commission wants people to know that these alternatives may not work for everyone especially if you are already three or four mortgage payments behind.

Visit the NFCC's Homeowners Crisis Resource Center website for more information regarding the above alternatives. They can also assist you in locating a certified housing counselor to explore your options in an effort to fend off foreclosure.

 

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Photo of Masha Halpern - Boutique Real Estate Real Estate
Masha Halpern - Boutique Real Estate
Keller Williams Realty
101 Cosgrove Avenue, Suite 200
Chapel Hill NC 27514
Direct 919-951-1780
Toll Free 877-478-4669
Fax: 919-928-9030




Masha Halpern of Keller Williams Realty provides real estate services in the Chapel Hill, Carrboro and Durham, North Carolina area including real estate services for buyer, sellers and those relocating to the surrounding areas of Apex, Bahama,Cary, Efland, Hillsborough, Holly Springs, Mebane, Raleigh, and Wake Forest. Search for homes in Chapel Hill, Carrboro, Durham or the surrounding communities.  Request a market analysis for your North Carolina property.  I list and sell residential real estate, investment property, vacant land, lots for sale in Chapel Hill, Carrboro and Durham, North Carolina area.

Chapel Hill, Carrboro and Durham, North Carolina real estate and homes for sale in North Carolina - Masha Halpern & The Smart Move Team

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