One of the single most important factors in determining someone’s capacity to borrow is the verification of income via their income tax returns.  Even though the 2106 mileage deduction may be legitimate we all know that the primary purpose of this deduction is to reduce your tax liability and/or increase your tax refund.  However, the days of what we know to be true are long gone.  Simply put, if you take this deduction be certain that this amount will also be subtracted from your gross income and your chances of qualifying for a loan will be dramatically reduced!

For example, let’s say your gross income for 2011 was $72,000 or $6,000 per month.  Now let’s factor in a 2106 deduction that equates to $20,000.  Your gross income now has just been slashed to $52,000 or $4,333 per month.  Even though this 2106 expense is usually just a paper deduction it has now become a very unfortunate realization… a silent killer per se.  The $1,667 reduction in monthly income will reduce your purchase/refinance power by approximately $150,000.  Now that’s a BIG difference!

A CPA’s job is to save their client the most amount of money, but at what cost?  Many of us are unfamiliar with the many different tax schedules and the consequences of such particular filings.  Before you plan on buying or refinancing your home please contact me, Brian Delbenes, so that I can determine how much you can “really” afford which will ultimately save you a lot of time, money, and headache down the road!

Making sense of the story:

Many economists are forecasting that mortgage rates will rise again later this year as the American economy gradually improves and as more global investors turn to the U.S. as a safe haven for money.  The average rate on a 30-year fixed-rate mortgage averaged 3.71 percent the week of June 14. The rate had averaged 3.9 percent three months earlier and 4.5 percent a year earlier.

According to one economist, rates could possibly fall further, perhaps as much as a quarter of a percentage point, but it is more likely that they would start a “slow drift” upward.  Borrowers with rate locks, with a built-in deadline, often receive priority treatment from lenders, because the borrower is telling the lender that he or she is serious about closing soon.

Read the full story

http://on.car.org/MFQZp1

Making sense of the story:

Under this same guideline, Fannie Mae and Freddie Mac also must respond to initial requests for a short sale within 30 days of receiving the buyer’s submission.

According to one analyst, expedited sales as a result of the new directive will benefit the entire housing market. They could also remove some risks for buyers – many of whompreviously had to wait months for a decision and then ended up not getting the house they wanted.

Lenders favor short sales because they are less costly and more efficient than foreclosures. Yet the homeowners, trying to exit as gracefully as possible, never know how long the process will take or how badly their credit will be hurt.

Although short sales have a reputation for being easier on credit scores than foreclosures, Experian says that is a “fairly common misperception.” If there is a difference in impact, according to Experian, it is slight.

Both short sales and foreclosures remain on the credit report for seven years, but foreclosures don’t appear until the legal paperwork is filed, and that could take months.

The effect was measured by an analysis by VantageScore, a provider of credit scores used by lenders. The higher the credit rating a consumer has, the more points he or she would lose in a short sale.

If consumers started with an 830 score, they would most likely lose 100 to 110 points from a short sale, 120 to 130 points from a foreclosure. But a homeowner with a 625 score, who is behind on his mortgage and some credit card payments, would lose 15 to 25 points from a short sale and 10 to 20 points from a foreclosure.

Read the full story

http://on.car.org/KNL8fK

Find out more about the app at: http://opower.com/company/news-press/press_releases/50.

Pending home sales:

C.A.R.’s Pending Home Sales Index (PHSI)* declined from a revised 138.9 in March to 128.0 in April, based on signed contracts.  The index was up from the revised 114.4 index recorded in April 2011, marking the twelfth consecutive month that pending sales were higher than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“Inventory constraints could be a contributing factor to lower pending sales,” said C.A.R. President LeFrancis Arnold.  “The tight inventory we’ve been experiencing in the distressed market over the past several months is now spreading to equity properties, essentially affecting the supply conditions of both the distressed and non-distressed markets.”
Distressed housing market data:

• The share of equity sales – or non-distressed property sales – compared with total sales increased to its highest level since July 2008 rising to 58 percent in April, up from 54.5 percent in March.  Equity sales made up 52.3 percent of all sales in April 2011. • Conversely, the total share of all distressed property types sold statewide decreased in April to 42.0 percent, down from March’s 45.5 percent and from 47.7 percent in April 2011. • The share of short sales continued to decline in April.  Of the distressed properties sold statewide in April, 19.4 percent were short sales, down from March’s share of 21 percent and only slightly higher than last April’s share of 19.1 percent. • The share of REO sales hit the lowest level in four years, declining in April to 22.3 percent, down from March’s 24.1 percent and down from the 28.3 percent recorded in April 2011.

http://www.car.org/newsstand/newsreleases/2012releases/aprilphs

By JONATHAN LANSNER

Placentia or Yorba Linda: Which home market’s in better shape?

Every two weeks, Orange County broker Steve Thomas publishes a report on the supply of local homes for sale. Here’s what the latest report — as of October 13 — has to say …
PLACENTIA

• 139 residences listed in brokers’ MLS system with 60 new deals opening in the past 30 days.
• By Thomas’s math, this community has a “market time” (months in would take to sell all inventory at current pace of new escrows) of 2.32 months vs. 3.14 months found two weeks earlier vs. 3.15 months seen a year earlier. Countywide, latest market time was 3.46 months vs. 4.12 months a year ago.
• So, homes in this community sell — in theory — in 33% less time than the countywide pace.
• Of the homes listed for sale in this community, 66 were either foreclosures being resold or short sales, where sellers owe more than the home’s value. So distressed properties were 47.5% of supply of homes for sale vs. 35.3% countywide.
• Homes for sale in Placentia represent 1.4% of Orange County inventory — and 1.9% of all the distressed homes listed for sale in Orange County. New escrows here are 2.1% of all Orange County’s new pending sales.

YORBA LINDA

• 312 residences listed in brokers’ MLS system with 86 new deals opening in the past 30 days.
• By Thomas’s math, this community has a “market time” (months in would take to sell all inventory at current pace of new escrows) of 3.63 months vs. 3.45 months found two weeks earlier vs. 5.07 months seen a year earlier. Countywide, latest market time was 3.46 months vs. 4.12 months a year ago.
• So, homes in this community sell — in theory — in 5% more time than the countywide pace.
• Of the homes listed for sale in this community, 107 were either foreclosures being resold or short sales, where sellers owe more than the home’s value. So distressed properties were 34.3% of supply of homes for sale vs. 35.3% countywide.
• Homes for sale in Yorba Linda represent 3.1% of Orange County inventory — and 3.0% of all the distressed homes listed for sale in Orange County. New escrows here are 3.0% of all Orange County’s new pending sales.

Compare these trends to countywide patterns:

• Cities with highest level of distressed properties among their listings? Portola Hills was tops — 70.0% — followed by Ladera Ranch at 63.9% of listings and Rancho Santa Marg. at 63.1% of listings.
• Fewest? Seal Beach was tops — 3.8% — followed by Corona Del Mar at 4.8% of listings and Newport Beach at 8.9% of listings.

Orange County broker Steve Thomas publishes every two weeks a report on the supply of local homes for sale and the share of that inventory that’s distressed properties — foreclosures and short sales. His latest report — as of October 13 — says …

• 3,544 distressed Orange County properties were listed for sale — 35% of the 10,044 listed overall.
• 1,509 new escrows were opened to buy distressed Orange County properties in the past 30 days. That is 52% of the 2,899 new pending sales countywide.
• Thomas calculated “market time” — a cross of supply and new escrows showing how long, theorhetically, it would take to sell inventory. Using that “market time” math, there’s 2.35 months worth of distressed properties on the market vs. 4.68 months worth of non-distrssed homes. So, distressed homes currently sell 2.0 times faster than non-distressed homes.
• 20% of the distressed listings were foreclosures being sold by banks.
• 80% of the distressed listings were short sales, homes sold by owners who owe more than the projected sales price.
• 48% of the distressed listings were attached homes; 52% of the distressed listings were detached homes.
• 81 of the listed distressed homes were price above $1 million — 2% of all distressed listings.
• 2,760 of the listed distressed homes were price$500,00 or less — 78% of all distressed listings.
• Chart summarizes trends in Thomas’ report, distressed counts and share of all listings (plus, pending sales and market time — demand divided by inventory.)

Thomas writes: “Since mid-July, the distressed inventory has dropped by 6%. For the remainder of the year, expect the distressed inventory to not change much.”