Aaron Kelly - North Orange County Realtor

In Orange County the new FHA limits were raised from $417,000 to $729,750. This is good news for first time home buyers in Orange County because the FHA loans have special programs for first time home buyers. If you have any questions about down payment assistance programs contact me or visit www.homerealtymanual.com

Another important thing to know about FHA loans is the method of determining your eligibility is factored at a higher debt to income ratio than non conforming loans.

Feel free to contact me about homes for sale on the market right now in Orange County that will qualify for a first time home buyers program.

Aaron Kelly - REMAX of North Orange County

www.homerealtymanual.com

I recently had a client send me an email with the question below:

Hi Aaron,

Can you tell me what is the difference between a bank owned foreclosure and a short sale?

That is a great question. The number of Bank Owned Foreclosures and Short Sales are increasing in Orange County, especially in Anaheim. A bank owned foreclosure is sold in "as is" condition, but the process of the sale is very similar to a traditional sale by a seller who owns the property. You are allowed to negotiate a price and terms of the sale just like a traditional sale. The nice thing about purchasing the property with an agent is the fact that after the offer is made; I will speak with the bank and come to an agreement by phone before they put the counter offer on paper. If we agree to the terms, we will then have a couple of days to do a property inspection and decide if you really want to purchase the property in the present condition. The banks will rarely do any repairs, but at least you will have a couple of days to decide if you really want to go forward with the deal or not.

A bank owned foreclosure auction is more risky because you have no time to do a property inspection and you must put a larger than usual deposit up front (sometimes 5% or more) plus you have the pay the auction agency a commission (2% to 5%). This is something that you do not have to pay when you use a buyer's agent.

A short sale is a much longer process. It requires 3 to 4 weeks to get bank approval just to agree on the price, but after that it will become the same process as a traditional sale. The reason it takes longer is because the bank has to agree to take a loss on the sale and they need to evaluate whether it's to their advantage to take a $40,000 to $50,000 loss or just go into the foreclosure process (which ends up costing them around $40,000 to $50,000 anyway). The decision is based on how much the previous owners still owe on the property and how much the sales price will be.

I hope this answers your questions. Let me know if you have any other questions.

Sincerely,

Aaron Kelly - RE/MAX

www.homerealtymanual.com

FHA raised the loan limits. But is this good for Southern California.

For the first time in years first time home buyers have felt hope that houses may be priced low enough that they could afford to buy a house. $417,000 seemed to be a magic number for numerous houses in Anaheim that haven't been this low in more than three years. Many loan officers I have spoken to think that the FHA loan interest rates will increase because now Fannie Mae and Freddie Mac will be taking on more risk with the increased loan amounts. Do you think the increased FHA amount will cause home prices to stabilize? What about the low interest rates? Perhaps Jumbo loan interest rates will come down and coforming loan interest rates will go up? Any predictions on how this is going to effect the housing market?

Anaheim foreclosures and short sales are causing Brookhurst Village Condominiums in Anaheim to plummet (Address 1250 S. Brookhurst St., Anaheim, CA 92804). I remember showing the 2 and 3 bedroom condos for sale in the complex last summer and there were many properties for sale between $275,000 to $360,000.

Now, just 6 months later, there are 31 condos available, most of which are priced around $165,000 to $240,000!!!! That's a 40% drop in 6 months!!!!

Right now is the time to buy! With interest rates very low and sellers' willingness to pay for closing costs, you could break even compared to renting in less than one year. Contact me, Aaron Kelly of REMAX of North Orange County, to see some of these great opportunities throughout North Orange County. Check out the breakdown below courtesy of the real estate website at www.homerealtymanual.com :

Your home purchase breaks even after 0.8 years.

This is based on your home's equity minus a 5.00% sales commission paid to brokers or real estate agents when you sell your home. It also assumes your home will appreciate at 5.00% per year and you have an income tax rate of 25.00%. If you cannot remain in your home for at least 0.8 years you should consider continuing to rent.

We calculated your breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand. We also accounted for differences in your monthly rent and house payments. If your rent payment is less than your net house payment, we add that monthly savings to your investment. If your house payment is less than your rent payment we subtract that amount from your investment. You may notice that on the schedule at the bottom of this report the investment value can be reported as negative. This happens if your house payment is significantly lower than your rent payment. It illustrates that if you continue to rent the extra cost of renting would, in effect, use up your cash on hand.

Loan Information

Your total monthly payment was calculated as $1,420.37. Your down payment was calculated as $10,000 and you had a home price of $165,000. This is for a 30 year mortgage at 5.750% in the amount of $155,000. Total closing costs for this loan are estimated at $0.00.

Your current monthly rent is $1,425. The expected inflation rate of 3.10% annually was used to estimate future rent and property taxes. The rate of return use for investments was 7.00% per year after taxes.

For the best Blueberry muffins in Anaheim check out DK's donuts on Euclid just south of La Palma (Address is 821 N. Euclid Anaheim, CA 92801. Ask them to warm it up. It's very sweet on the top and very soft in the middle. Maybe a little too sweet for many because the top is somewhat glazed.