Homebuyersacramento is your best source of information if you're selling a home in Sacramento or buying a home in Sacramento

Waldo Herrera
REALTOR®

Direct: (916) 717-8757
Fax: (916) 258-0162
Email: waldo@homebuyersacramento.com
License: 01873834

Yvonne Herrera
REALTOR®

Direct: (916) 743-9636
Fax: (916) 258-0162
Email: yvonne@yvonnerealty.com
License: 01708497

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Interested in Short Selling your home? Contact Yvonne Herrera, she specializes in Short Sales and Bank Owned Properties.

Be sure to check out our Resources tab! We have all kinds of information to help you through the buying process, from neat financial calculators, to a glossary of all these difficult terms, to tips on how to improve curve appeal or what to look for in a home. Go check it out!

A special thanks to Cascadian Landscape. Please visit them at www.cascadian.net to see their magnificent outdoor landscaping work!

Word of the Day

 

Thinking of Making an Offer on a Short Sale?

What You Need to Know

Are you looking to buy a new home in Sacramento? Are you thinking that now's a great time to find bargains? That's true, but it pays to know a little about the seller's situation before you make an offer.

If a home is being sold for below what the current seller owes on the property-and the seller does not have other funds to make up the difference at closing-the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You're a good candidate for a short-sale purchase if:

  • You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller's lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.
  • Your financing is in order. Lenders like cash offers. But even if you can't pay all cash for a short-sale property, it's important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.
  • You don't have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property-or you need to be in your new home by a certain time-a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you're serious about buying a short-sale property, it's important for you to have expert assistance. Let me do the footwork for you so you can concentrate on choosing the right home at the right price. Your best interests are my primary concern and if a short sale property comes up on your wish list, I'll make sure to keep you well informed about the risks as well as the benefits.

Some of the other risks faced by buyers of short-sale properties include:

  • Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you'll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.
  • Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you've already negotiated, which may not be agreeable to you.
  • No repairs or repair credits. You will most likely be asked to take the property "as is." Lenders are already taking a loss on the property and may not agree to requests for repair credits.

 

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

Remember, not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR's strict code of ethics. As a REALTOR® I am trained to ensure you are well taken care of during your home buying experience.

 

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA. 

Why You Should Work With a REALTOR®

Not all real estate practitioners are REALTORS®. The term REALTOR® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics.Here are five reasons why it pays to work with a REALTOR®.

1. You'll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Get objective information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They'll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.

4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn't sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner's contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

6. Real estate has its own language. If you don't know a CMA from a PUD, you can understand why it's important to work with a professional who is immersed in the industry and knows the real estate language.

7. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you've done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Buying and selling is emotional. A home often symbolizes family, rest, and security – it's not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they'll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.

Common First-Time Home Buyer Mistakes

1. They don't ask enough questions of their lender and end up missing out on the best deal.

2. They don't act quickly enough to make a decision and someone else buys the house.

3. They don't find the right agent who's willing to help them through the homebuying process.

4. They don't do enough to make their offer look appealing to a seller.

5. They don't think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com

Lender Checklist: What You Need for a Mortgage

1. W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.

2. Copies of at least one pay stub for each person signing the loan.

3. Account numbers of all your credit cards and the amounts for any outstanding balances.

4. Copies of two to four months of bank or credit union statements for both checking and savings accounts.

5. Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.

6. Addresses where you've lived for the last five to seven years, with names of landlords if appropriate.

7. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.

8. Copies of your most recent 401(k) or other retirement account statement.

9. Documentation to verify additional income, such as child support or a pension.

10. Copies of personal tax forms for the last two to three years.

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it's a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it's desirable to have more than one type of credit – installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Specialty Mortgages: Risks and Rewards

In high-priced housing markets, it can be difficult to afford a home. That's why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them "stretch" their income so they can qualify for a larger loan.

But before you choose one of these mortgages, make sure you understand the risks and how they work.

Specialty mortgages often begin with a low introductory interest rate or payment plan – a "teaser"– but the monthly mortgage payments are likely to increase a lot in the future. Some are "low documentation" mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home's value, but these mortgages can present a big financial risk if the value of the house drops.

Specialty Mortgages Can:

  • Pose a greater risk that you won't be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
  • Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
  • Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.

Common Types of Specialty Mortgages:

  • Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the "principal"). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
  • Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan's principal amount, causing the total amount you owe to increase each month instead of getting smaller.
  • Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
  • 40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.

Questions to Consider Before Choosing a Specialty Mortgage:

  • How much can my monthly payments increase and how soon can these increases happen?
  • Do I expect my income to increase or do I expect to move before my payments go up?
  • Will I be able to afford the mortgage when the payments increase?
  • Am I paying down my loan balance each month, or is it staying the same or even increasing?
  • Will I have to pay a penalty if I refinance my mortgage or sell my house?
  • What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?

We will work with you to discuss different options and address your questions and concerns!

Learn about the NATIONAL ASSOCIATION OF REALTORS® Housing Opportunity Program at www.REALTOR.org/housingopportunity. For more information on predatory mortgage lending practices, visit the Center for Responsible Lending at www.responsiblelending.org.

5 Property Tax Questions You Need to Ask

1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller's tax bill to help you determine this information.

2. How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.

5. Does the current tax bill reflect any special exemptions that I might not qualify for? For example, many tax districts offer reductions to those 65 or over.

6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can't participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you're in good financial standing, with a strong income and little other debt.

8 Tips to Guide for Your Home Search

1. Research before you look. Decide what features you most want to have in a home, what neighborhoods you prefer, and how much you'd be willing to spend each month for housing.

2. Be realistic. It's OK to be picky, but don't be unrealistic with your expectations. There's no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender and get prequalified for a mortgage. This will save you the heartache later of falling in love with a house you can't afford.

4. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.

5. Decide your moving timeline. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area? All of these factors will help you determine when you should move.

6. Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you'll buy as well as the type of mortgage terms that will best suit you.

7. Insist on a home inspection. If possible, get a warranty from the seller to cover defects for one year.

8. Let us help you. We are real estate professionals who specialize in buyer representation. Unlike a listing agent, whose first duty is to the seller, a buyer's representative is working only for you. Buyer's reps are usually paid out of the seller's commission payment.

10 Questions to Ask Your Lender

1. What are the most popular mortgages you offer? Why are they so popular?

2. Which type of mortgage plan do you think would be best for me? Why?

3. Are your rates, terms, fees, and closing costs negotiable?

4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you've acquired a certain amount of equity by paying down the loan.)

5. Who will service the loan – your bank or another company?

6. What escrow requirements do you have?

7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?

8. How long will the loan approval process take?

9. How long will it take to close the loan?

10. Are there any charges or penalties for prepaying the loan?

Used with permission from Real Estate Checklists & Systems, www.realestatechecklists.com.

Loan Types to Consider

Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

Mortgage terms. Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.

Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan's interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years.

Balloon mortgages. These mortgages offer very low interest rates for a short period of time – often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.

Government-backed loans. These loans are sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.

Get Your Finances in Order: To-Do List

1. Develop a household budget. Instead of creating a budget of what you'd like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

2. Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt – car loans, student loans, and revolving balances on credit cards – down to between 8 and 10 percent of your net monthly income.

3. Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You'll probably spot some great ways to save, whether it's cutting out that morning trip to Starbucks or eating dinner at home more often.

4. Increase your income. Now's the time to ask for a raise! If that's not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.

5. Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it's possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.

6. Keep your job. While you don't need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

What You Can Do to Improve Your Credit

Credit scores, along with your overall income and debt, are big factors in determining whether you'll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.

2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.

3. Don't charge your credit cards to the maximum limit.

4. Wait 12 months after credit difficulties to apply for a mortgage. You're penalized less for problems after a year.

5. Don't order items for your new home on credit – such as appliances and furniture – until after the loan is approved. The amounts will add to your debt.

6. Don't open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, Knowing and Understanding Your Credit, visit www.homebuyingguide.org.

5 Things to Know About Homeowner's Insurance

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you'll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner's insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.

5 Things to Know About Title Insurance

Title insurance protects the holder from any losses sustained from defects in the title. It's required by most mortgage lenders. Here are five other things you should know about title insurance.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person's name or an inaccurate description of the property.

2. It's a one-time cost usually based on the price of the property.

3. It's usually paid for by the sellers, although this can vary depending on your state and local customs.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

7 Reasons to Own Your Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don't rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Use the "Buy vs. Rent" calculator on our Calculators tab to see whether buying is the best financial option for you.

10 Questions to Ask Home Inspectors

Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:

1. Will your inspection meet recognized standards? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group's standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI's Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you? Ask how long inspectors have been in the profession and how many inspections they've completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date? Inspectors' commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What's the cost? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide? Ask to see samples to determine whether you will understand the inspector's reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector's refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org.

Calculators provided by: MortgageLoan.com

Pick from the left scrollable column what type of calculation you wish to perform, for example, Mortgage Payment to determine what your payments would be, etc. On the right, the proper form will load. Enter all the necessary information and follow the buttons to get your final result. Some of us are not really good at math, so be sure to click on "Switch to Plain English" at the results to get a more understandable explanation. Want to see how much you could save on the length of your loan? try Standard vs Bi-Weekly. Ever wonder which is better, to rent or to own? try Rent vs. Buy. Have fun!

This tool is provided to give you approximations. Values will vary depending on the real information of your situation. Always consult with your financial advisor.

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Local Stores and Suppliers

Premier Landscape Contractor servicing the Sacramento and surrounding areas. www.cascadian.net

Ask The Builder - Great DIY video instructions site for any home improvement projects. www.askthebuilder.com

Here are some Google Maps quick links to the store locations. You will be sent to the Google Maps page, not the store page.

A

Accrued Interest - Interest earned but not yet paid.

Adjustable Rate Mortgage Loans (ARM) - Loans with an interest rate that fluctuates in relation to an index (e.g., treasury bill rates). Due to this fluctuation in the interest rate, the payment on the loan will rise and fall. An interest rate "cap" will limit the amount by which the rate can move.

Agreement of Sale - Contract signed by buyer and seller that outlines the terms under which a property is sold. Also referred to as a sales contract or purchase agreement.

Alternative Documentation - A process by which a loan is documented using documents/information that a borrower is more likely to have immediately available vs. waiting for traditional verification documents. Example using pay-stubs instead of sending a verification form to an employer.

Amortization - Repayment of a loan with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time.

Annual Percentage Rate (APR) - The cost of borrowing expressed as a yearly percentage. The APR is usually a different percentage than the interest rate on the loan because it considers the amount financed, the finance charges and the loan term.

Application - See loan application.

Appraisal - A written evaluation of the property's current market value completed by an individual with strong knowledge of real estate markets/values ("the appraiser").

Appraisal Fee - The fee charged by the appraiser to complete the evaluation of property and assign a market value.

B

Balloon Mortgage - Loans that have fixed monthly payments for a set number of years (e.g., 5, 7 or 10 years) followed by one large payment to pay off the remaining balance (the "balloon").

B & C Paper Loans - Mortgage loans that do not meet Fannie Mae or Freddie Mac credit standards. These loans will carry a higher interest rate than conforming loans.

Borrower - The individual who receives the loan. In a mortgage transaction, this person is also referred to as the "mortgagor".

Buy-Down Mortgage - A mortgage loan with a below-market rate for a period of time.

C

Caps (Interest) - Limits on the amount that an adjustable rate mortgage can change. There are period caps and lifetime caps. A period cap limits the amount the rate can change during an adjustment interval; a lifetime cap limits the amount it can change over the life of the loan.

Caps (Payment) - Limits on the amount the monthly payment on an adjustable rate mortgage arm can change. Unlike an interest rate cap these caps do not limit the amount of interest and can result in an increase in the loan amount owed. (see negative amortization)

Cash Out - The cash back to the borrower if they refinance their current mortgage for a higher loan amount than currently owed based on the equity built up in the house. The cash out amount is calculated by subtracting the sum of the remaining old loan and fees from the new mortgage loan. Example: new loan amount $140,000 - owed on old loan $120,000 - loan fees $2,000= cash out of $18,000

Certificate of Eligibility - The Veterans Administration issues these to qualified veterans who are eligible for a VA guaranteed loan.

Certificate of Title - A title company's or attorney's written opinion of the status of title to a property. The certificate does not serve as insurance.

Certificate of Veteran Status - Form filled out by the Veterans Administration to establish a borrower's eligibility for a FHA vet loan.

Chain of Title - The chronological order of conveyance of a property from the original owner to the present owner.

Closing (or Settlement) - The final step in the mortgage process. It includes the signing of the legal documents, distribution of funds and, in the case of a home purchase, transfer of ownership.

Closing Costs - Costs, paid at closing/settlement, for services completed to finalize your loan. Examples include title fees, and recording fees.

Collateral - Assets (such as your home) pledged as security for the debt (money owed on the home).

Commitment - A promise by a lender to loan the money under certain terms and conditions.

Conforming Loan - A mortgage loan that can be purchased by the Fannie Mae and Freddie Mac, government sponsored agencies. The agencies are currently allowed to buy loans with a maximum loan amount of $240,000 for a one-unit property.

Contingency - A condition of a contract that must be satisfied before it can become legally binding.

Contract of Sale - The agreement between the buyer and seller on the purchase price, terms, and conditions of a sale.

Conventional Loan - A mortgage not insured or guaranteed byFHA and VA which conforms to the guidelines established by Fannie Mae or Freddie Mac.

Conversion Clause - A provision that allows a borrower to convert an adjustable mortgage (ARM) to a fixed-rate loan. This provision is usually not allowed until the first adjustment period. The new rate will be set at the current rate for fixed loans.

Convertible Arms - An adjustable rate mortgage (ARM) that has the option to change to a fixed rate loan during a specific time period.

Conveyance - The document used to effect a transfer, such as a deed, or mortgage.

Cost of Funds Index (COFI) - An index of the weighted-average interest rate paid by savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank District. COFI can be an index used for arm loans.

Credit Report - A report that outlines the potential borrowers credit history. This history helps the mortgage lender determine the likelihood the borrower will re-pay the mortgage.

D

Deed - Legal document by which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing. Sometimes called the warranty deed.

Deed of Trust - The legal document that conveys title to real property to a third party. The third party holds title until the owner of the property has repaid the debt in full. Sometimes called a mortgage.

Default - Failure to meet legal obligations in a contract, including failure to make payments on a loan.

Delinquency - Failure to make payments as stated in the loan agreement.

Discount Points (or Points) - Fee paid at closing to the lender in exchange for a lower interest rate. A point is equal to one percent of the loan amount.

Down Payment - The amount of your home's price that you pay in cash up-front. The loan amount is the difference between the home price and the down payment and is usually expressed as a percentage. (e.g., a $100,000 home with 20% down would mean a $80,000 loan amount).

E

Earnest Money - The money deposit that a buyer puts down when the purchase agreement is signed to show good faith. This money goes towards the down payment on the house.

Effective Rate - The effective rate, like the APR, takes into account the costs and fees along with the interest on a loan. However, unlike the APR, the effective rate only takes into consideration the time you expect to be in the house (the APR factors in the whole life of the loan.)

Equal Credit Opportunity Act (ECOA) - Federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity - The difference between the current market value of a property and the outstanding loan amount. On a new mortgage loan, the down payment would be the equity.

Escrow - A transaction in which an independent third party acts as the agent for seller and buyer, or for borrower and lender, in handling legal documents and disbursement of funds.

Escrow Account - An account (often required by mortgage lenders) used to pay taxes, hazard insurance, and mortgage insurance premiums. The amount of escrow paid monthly is determined by taking the yearly bill for taxes and insurance and dividing by 12. This monthly escrow amount is then added to your monthly principal and interest payment to create your total mortgage payment. Also known as impound account.

Escrow Agent - A person with fiduciary responsibility to the buyer and seller, or the borrower and lender, to ensure that the terms of the purchase/sale or loan are carried out. Often the escrow agent is from the title company.

F

Freddie Mac - This government-sponsored agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

Federal Housing Administration (FHA) - A federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans.

Fannie Mae - This government-sponsored agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

Fee Simple - Absolute ownership of real property.

First Mortgage - A mortgage which has priority over all other liens. In the case of a foreclosure, the first mortgage will be repaid before any other mortgages.

Fixed-Rate Loans - Fixed-rate loans have interest rates that do not change. This results in the monthly payments remaining constant over the life of the loan. As the loan amount pays down, more of the monthly payment will got to repay the loan; less will go to make the interest payment. Fixed-rate loans typically have 15-year or 30-year terms.

Flood Insurance - Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance and required in flood areas.

Forbearance - The act by the lender of refraining from taking legal action on a mortgage loan that is delinquent.

Foreclosure (Repossession) - A legal process by which the lender forces a sale of a property because the borrower has not met the terms of the mortgage.

Free and clear - A property that has no liens.

FSBO - For sale by owner. A property for sale that is not listed with a real estate broker.

Fully indexed rate - The fully indexed rate=value of the index + margin. See ARM.

G

Good Faith Estimate - A written estimate of the settlement costs the borrower will likely have to pay at closing. Under the Real Estate Settlement Procedures Act (RESPA), borrower must receive the estimate from the lender within three days of loan application.

Grace Period - Period of time during which a loan payment may be made after its due date without incurring a late penalty. The grace period is specified as part of the terms of the loan in the note. (e.g., by the 16th of the month)

Gross Income - Total income before taxes or expenses are deducted.

H

Hazard Insurance - Insurance that protects the homeowner from losses due to fire or other natural disaster.

Housing and Urban Development (HUD) - A U.S. Government agency established to implement federal housing and community development programs; oversees the Federal Housing Administration (FHA).

Hud-1 Uniform Settlement Statement - A standard form which breaks down the closing costs associated with purchasing a home or refinancing a loan.

Impound Account - See escrow account.

Index - A published rate used by lenders that serves as the basis for determining interest rate changes on ARM loans.

Initial Rate - The rate charged during the first interval of an ARM loan.

Interest - Charge paid for borrowing money, calculated as a percentage of the remaining balance of the amount borrowed.

Interest Rate - The annual rate of interest on the loan, expressed as a percentage of 100.

Interest Rate Cap - A limit on the amount an interest rate on an ARM loan can change over an interval or the life-of-the loan.

Investment Property - A home that you purchase as an investment. You will not live in this house but instead rent it out to others.

I

none

J

Joint Liability - Liability shared among two or more people, each of whom is liable for the full debt.

Joint Tenancy - A form of ownership of property giving each person equal interest in the property, including rights of survivorship.

Jumbo Loan - A mortgage larger than the $240,000 limit set by Fannie Mae and Freddie Mac.

K

none

L

LIBOR (London Interbank Offered Rate) - The interest rate charged among banks in the foreign market for short-term loans to one another. A common index for ARM loans.

Lien - A legal claim by one person on another person's property for security for payment of a debt. (e.g., to put a "lien against a house".)

Loan Application - An initial statement of personal and financial information required to apply for a loan. Commonly referred to as the 1003.

Loan Application Fee - Fee charged by a lender to cover the initial costs of processing a loan application.

Loan Origination Fee - Fee charged by a lender to cover administrative costs of processing a loan.

Loan-to-Value Ratio (LTV) - The percentage of the loan amount to the appraised value (or the sales price, whichever is less) of the property. (e.g., an $80,000 loan on a home worth $100,000 would have an 80% LTV)

Lock or Lock-In - A lender's guarantee of an interest rate for a set period of time (e.g., 60 days). The time period is usually that between loan application approval and loan closing. The lock-in protects you against rate increases during that time.

M

Margin - A set percentage that is added to your chosen financial index (on an ARM loan) to determine your new interest rate at the time of adjustment. (e.g., 1.5% over COFI)

Mortgage - See deed of trust.

Mortgage Banker - The person/company that originates and/or services mortgage loans.

Mortgage Broker - The person/company that arranges financing for borrowers but does not typically close or service the loan.

Mortgage Insurance - Insurance, paid by the borrower, that protects the lender if the borrower does not re-pay. With conventional loans, mortgage insurance is typically not required if you make a down payment of at least 20% of the home's appraised value. (Different rules apply for FHA and VA loans.)

Mortgage Loan - A loan for which real estate (the house/property) serves as collateral to provide for repayment in case of default.

Mortgage Note - Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The note is secured by a mortgage or deed of trust or other security instrument. Also called the note.

Mortgagee - The lender in a mortgage loan transaction.

Mortgagor - The borrower in a mortgage loan transaction.

N

Negative Amortization - A loan payment schedule in which the amount owed on the loan actually increases instead of decreases because the payments do not cover the full amount of interest due. The shortfall in payment is added to the unpaid principal balance of the loan. Negative amortization can occur on ARM loans with payment caps.

No Income Verification Loan - This is a loan not requiring any type of income verification. Typically, these loans require the borrower to have excellent credit and strong reserves. These loans carry a slightly higher interest rate, and are especially useful for people who are self-employed, are commissioned, or receive unearned income (i.e. investments).

No Ratio Loans - For a higher interest rate, no ratio loans are available which require no documentation of income or monthly debt. These loans do require excellent credit and substantial cash reserves/assets.

Note Modification - Changing the original terms of the mortgage note in any way. Note modification is frequently associated with ARMs and one-time close (construction) loans when they are converted to fixed rate loans.

Notice of Default - Written notice to a borrower that a default has occurred and that legal action, including foreclosure, may be taken.

O

One-Time Close Construction Loan - A type of loan that combines the traditional construction loan needed to build a house and the permanent financing into one loan with one set of closing costs.

Origination Fee - Fee charged by a lender to cover administrative costs of processing a loan.

P

Payment Cap - See cap

Per Diem Interest - Per day interest. Depending on the day of the month on which you close your loan, you will have to pay interest from the date of closing to the end of the month. Your first mortgage payment will probably be due the first day of the following month. (e.g., if you close july 22, you will pay 9 days of per diem interest. Your first mortgage payment (interest & principal) will be september 1).

PITI - Acronym for principal, interest, taxes and insurance, the components of a monthly mortgage payment. pronounced P-I-T-I.

Points - See discount points.

Power of Attorney - Legal document authorizing one person to act on behalf of another. For a mortgage closing, a borrower who can not attend the closing could give the other borrower a "power of attorney" to close on their behalf.

Pre-Approval - The process of determining how much money a prospective homebuyer or refinancer will be eligible to borrow prior to application for a loan. A pre-approval includes a preliminary screening of a borrower's credit history. Information submitted during pre-approval is subject to verification at application. A pre-approval is more comprehensives than a pre-qualification since it does review credit.

Prepaid Expenses - Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

Prepaid Interest - Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

Prepayment - Full or partial repayment of the principal before the end of the mortgage term.

Prepayment Penalty - Fee charged by a lender for a loan paid off in advance of the mortgage term. It is important to determine if your loan has such a penalty.

Pre-Qualification - The process of determining how much money a prospective homebuyer will be eligible to borrow prior to application for a loan without pulling and reviewing credit. Information submitted during pre-qualification is subject to verification at application.

Primary Residence - The home you live in.

Principal - The amount owed on a loan, not counting interest.

Private Mortgage Insurance (PMI) - See mortgage insurance. "Private" means that it is insurance on a conventional (non-government) mortgage loan.

Purchase Agreement - Contract signed by buyer and seller stating the terms and conditions under which a property will be sold. Also known as sales contract.

Q

none

R

Ratios - Measurement (expressed as a percentage) that compares your monthly liabilities to your gross income. The housing ratio is your proposed mortgage payment divided by your gross monthly income. The debt ratio is all you monthly liabilities (including your mortgage) divided by your gross monthly income. Underwriters will use these ratios to see if your income supports the mortgage payment. Underwriters are usually more flexible on loans with higher down payments and less flexible on low down payment loans.

Real Property - Land and any improvements permanently affixed to it, such as buildings.

Reconveyance - The transfer of property back to the owner when a mortgage loan is fully repaid.

Recording - The act of entering documents concerning title to a property into the public records. The deed of trust/mortgage is typically recorded in order to establish lien position.

Recording Fee - The fee for recording the sale of a property into the public records. Refinancing

Reserves - The amount of money you have after closing to cover your mortgage payments. Reserves are often expressed as "months of payments". For example, if you had $10,000 after closing and your mortgage payment was $1,000 a month then you would have 10 months of reserves. Some loan programs require a minimum number of months' reserves.

RESPA - The Real Estate Settlement Procedures Act. RESPA is a federal law that gives consumers the right to review information about loan settlement costs once a borrower has applied. The borrower can review this info after application and again at closing. RESPA also makes it illegal for a business to give "kick-backs" to another business in exchange for a referral of business.

Right to Rescission - Under the provisions of the truth-in-lending act, the borrower's right, on certain kinds of loans, to cancel the loan within three days of signing a mortgage.

S

Second Home - A home that is not your primary residence. Second homes could be homes that you vacation at or that you bought for someone but don't rent. If you rent the home, then it is an investment property.

Second Mortgage - An additional mortgage placed on a property that has rights that are subordinate to the first mortgage.

Settlement - See closing

Settlement Costs - See closing costs

Settlement Cost (HUD guide) - Booklet published by HUD that provides an overview of the lending process, and that is given to consumers after completing loan application.

Survey - A measurement of land, prepared by a licensed surveyor, showing a property's boundaries, elevations, improvements, and relationship to surrounding tracts.

T

Tax Impound - Money paid to and held by a lender for annual tax payments.

Tax Lien - Claim against a property for unpaid taxes.

Tax Sale - Public sale of property by the government due to delinquent taxes.

Term - The period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due. (e.g., a 30 year mortgage term)

Title - Document showing evidence of ownership of a property. Also indicates the rights of ownership and possession of the property.

Title Company - A company that insures title to property.

Title Insurance - Insurance which protects the lender (lender's policy) or the buyer (owner's policy) against loss due to disputes over ownership of a property.

Title Search - Examination of municipal records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property. The goal of this search is to have "clear title".

Transfer Tax - Tax paid when title passes from one owner to another.

Truth-in-Lending Act - Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by a lender to a borrower after application. Also requires the right to rescission period.

U

Underwriting - Process the lender does to determine the likelihood that a borrower will repay on a mortgage and whether to lend the money.

Usury - Interest charged in excess of the legal rate established by law.

V

VA Loans - Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are designed to make housing affordable for eligible U.S. veterans. VA loans are available to veterans, reservists, active-duty personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to purchase a home with no down payment, no cash reserve, no application fee, and lower closing costs than other financing options.

Verification of Deposit (VOD) - Document signed by the borrower's bank or other financial institution verifying the borrower's account balance and history. VODs are considered traditional documentation. (Bank statements would be alternative documentation in lieu of the VOD.)

Verification of Employment (VOE) - Document signed by the borrower's employer verifying the borrower's position and salary. VOEs are considered traditional documentation. (Paystubs would be alternative documentation in lieu of the VOE.)

Walk-Through - A final inspection of a home to check for problems that may need to be corrected before closing.

X

none

Y

none

Z

Zoning Ordinances (or zoning regulations) - Local law establishing building codes and usage regulations for properties in a specified area.

 

Waldo & Yvonne Herrera
REALTORS®

As a dynamic husband and wife duo, we have combined our efforts to form a team of professionals who will devote themselves to providing you the best in services for your buying or selling experience. Both as registered REALTORS® have not only made an oath to our professional practice and ethics but have found the type of service work that makes us personally happy working together. We are long time residents of Elk Grove and have seen the changes in the Real Estate market. As repeat homeowners ourselves we have gone through the buying and selling process several times and have learned a lot of what is helpful as customers. We are dedicated and focused and feel that we can give back to our community by ensuring that our customers are well informed, protected and confident about their decisions.

 


 

Rico Rivera - Home Warranty / Senior Account Executive

You will appreciate my honest and plain dealing. I am 'straight to the point' I pride myself in giving great customer service, with over 9 years experience in the home warranty Industry, I have expertise you can trust. Your home warranty will be tailored to your needs.

An Old Republic Home Warranty Plan provides many excellent benefits for all parties in a real estate transaction!

As a Home Seller Our Home Warranty Helps You:

  • Sell Faster - by providing a competitive edge over other homes on the market.
  • Sell For A Higher Price - because when a buyer feels protected from unknown after-sale problems, it can discourage downward price negotiations.
  • Sell With Peace of Mind - knowing that after you have moved out, covered service problems will be taken care of - offering you additional after-sale liability protection.

 

As a Home Buyer Our Home Warranty Offers You:

  • Peace of Mind - knowing you're protected against unexpected repair or replacement costs.
  • Budget Protection - from the high cost of home repair.
  • Convenience - you can call us toll-free 24 hours a day, 365 days a year to request service. A local, qualified service technician will contact you to schedule a convenient appointment.

 

I have served the real estate communities including, being a Chair of the Young Professional Council for the Sacramento Association of Realtors 2009, and currently serving on the YPC Board (07-2010) for the Sacramento Association of Realtors. Besides my service to the community, another rewarding aspect of my business is helping children improve their lives by educating them and being a Board member at MVP (Moral Values Program of Sacramento).

Personally, my family and friends, and living and working from integrity are most important to me. I do community service with the MVP, YPC, Sacramento Latino Group, Mustard Seed, KW Cares, CanTree, SAR Scholarship Fund and the Loaves and Fishes program. I enjoy music and own my own DJ company ( Non-Stop Musik Ent.). You can find me at a local classic car show since restoring old classic cars is another one of my passions. You will receive the utmost respect and professionalism and will want to refer your family, friends, and associates knowing they will receive the same care.

 

 

How To Reach Us:

There is simply nothing better than face to face communication which is why we'll make our best effort to meet with you during the entire process. However, we all know that's not always the most efficient way to make things happen. So we provide several ways for you to contact us, depending on the circumstance:

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