Protecting Your Smartphone

The current era of technology that we live in is amazing; we are able to do things we previously never thought possible. The capability of smartphones rivals that of the 3rd and 4th generation desktop computers. We are able to surf the web, continuously interact with friends and co-workers, play games, and keep track of all our sensitive information. And we can do all of this on the run. Incredible!

However, there are still those people out there that want to exploit these wonderful devices. That being said, we have to make sure to take the simple precautionary steps to protect ourselves.

Step #1 – Turn on the screen lock functionality. Just do it!

- While you make think it’s tedious to unlock your phone every time the screen shuts off. You are preventing others from accessing your personal information. Also, they have time options so that it will only lock if the screen has been off for 5, 10, or even 15 minutes.

- This can be done through the settings menu on your phone.

- Do it!

Step #2 – Remember to turn off the GPS and Wi-Fi when you don’t need them.

- Unless you want to share your location on social media apps like Facebook and Twitter, this functionality really isn’t necessary.

- Also many location-tracking apps use them to figure out where you are. Most of the time it is for their statistics to figure out how to make their apps better.

- But better to be safe than sorry. If you want someone to know where you are just call them and tell them. You can turn these options off in the settings menu.

Step #3 – (Only for Non-Apple Products) Download a 3rd-Party Virus Protection Application.

- For all the Android users out there, you have the ability to download virus protection software for your phone due to the fact that Google’s developer platform is completely “open”. Everyone with an iPhone or iPad; you just have to trust Apple with your phone’s security.

- Many of the anti-virus apps for Android can be run in the background, just like similar software for your computer. They will scan your phone from time to time and help you remove any files that may be harmful.

- ** However, be careful! There are a lost of free apps out there posing to be security apps and they actually will allow hackers to control your phone.** “Downloader Beware”

Step #4 – Enable The Anti-Theft Settings

- These settings allow you to track, locate, or even erase a stolen or lost phone.

- Options like this have been available on Apple products for sometime now and are just being released on Androids.

- They also help if you misplace your phone.

That’s it for now. Just be wary of putting confidential information on your cell phone, you never know who might find it. Unfortunately, it’s not likely to be a person who will friendly enough to return it.

Short Sale vs. Foreclosure

Q: What is the difference between a short sale and a foreclosure?

A: A short sale involves the sale of an “under water” property, whereby the proceeds of the home sale will be LESS than the total mortgage balance and the owner cannot afford to pay the balance of the debts against the property. Purchasing such a property requires that the bank agree to accept less than the amount owed on the property, releasing the lien on the property. According to realtor.org, ” A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan”

Houselogic.com explains foreclosure as “The process whereby a lender, such as a bank, seeks to repossess a property where the owner has failed to comply with the terms of the mortgage or promissory note, such as not making a payment. Once the property has been foreclosed, the bank can then sell the house, using the money to pay its costs.”

AOL Real Estate offers an explanation to help distinguish one from the other, in that,  “Short sales can also be referred to as ‘pre-foreclosure sales’ which, as the name implies, precedes the home being officially repossessed or foreclosed on by the lender. That is, the property is sold much earlier than the months it typically takes to reach foreclosure, allowing all parties to move on from the transaction sooner.”

Q and A: How is my Credit Score Determined?

Q:   I know how important a good credit score is, especially since I’m interested in buying a home.  But how exactly is my credit score determined?  What matters the most in maintaining a good score?

A:    A good credit score is usually in the mid-700s or higher.  Your credit score is determined based on 5 different factors.

1.  Payment History

Accounting for about 35% of your overall score, this is the largest portion of your credit score.  To keep this piece of the puzzle at its highest, pay your bills on time–any payments that are made over 30 days late will be damaging to your score.

2.  Amounts Owed

Second to your payment history, the amount you owe represents 30% of your credit score.  Having some debt is completely acceptable, as long as you are not overextending yourself financially.  For example, owing more than 50% of the total credit available on your credit cards will bring your score down here.

3.  Length of Credit History

About 15% of your credit score is determined based on the length and consistency of your credit history.  The longer you can show you’ve been borrowing responsibly and making payments on time, the more likely it is that a lender will feel comfortable lending money to you in the future.  Tip: Try to avoid canceling old credit cards as that also deletes your credit history for that account.

4.   New Credit

Ten percent of your score will look at any new accounts you may have opened or applied for.   Without a long credit history, for example, it might look suspicious if you open multiple accounts in a short amount of time.  Every time you apply for a credit card or have your credit score pulled too much in a certain amount of time will also damage your overall score.

5.   Types of Credit in Use

The last 10% of your credit score is determined based on the types of debt you have.   If you have debt, this portion of your score will remain high as long as your debt is spread out between various types of loans.  Owing a large amount of money only on credit cards will damage your credit more than if you owed only some money on credit cards and the rest on student loans, car loan, a mortgage, etc.

To find out how you stack up, you can order a copy of your credit report from any number of online sources, like Equifax.com or Freecreditreport.com.  Go over your transactions and history, make sure everything is correct, and dispute anything that isn’t.  As long as you stay on top of your credit activities.  improving and maintaining your score can be easy.  Regardless of how you may score, it’s important to know where you stand and what is affecting your credit score.

HOA: Fact or Fiction

Many people deal, or have dealt, with an HOA Board in some way before, whether as a renter or a homeowner.   Realtytimes.com recently published an article by Richard Thompson, a nationally recognized expert on HOA management issues, addressing some commonly held beliefs about your HOA and how it should be working for you.

1. Homeowners dues and fees should be low.  

While it may seem more financially attractive to pay a lower monthly amount, cutting corners to save money now can end up costing you much more later.  Thompson says: “The board is elected to maintain the HOA assets properly. There is a big difference between being a good steward and a tightwad. Tightwads skip routine and necessary maintenance services which erode the value of the homes. It takes money to do it right and the board should spend the money necessary to accomplish the tasks.”

2. Since HOA Boards are volunteer operated, they aren’t held to the same standards as professional managers. 

Whether they are volunteers or professionals, the job is still the same.  HOA business should be conducted in an informed and professional manner by the board.  According to Thompson,  “This means taking care of things in a timely manner, planning ahead to anticipate problems, getting and acting on good advice.”

3. The HOA is small and so are the needs.

Keep in mind that the smaller the HOA is, the more costs and fees per owner increase.  For smaller associations, this means more careful planning and organizing by the HOA board.

4. The HOA is too small for professional management.

For the sake of a happy and peaceful neighborhood, for some things its better to let a professional take over: “In areas like financial management and rules enforcement, all homeowner associations should have outside professionals. Collecting money from neighbors and controlling their antisocial behavior is bound to cause problems for a volunteer doing it. It’s even worse when you live next to the offender. There are management professionals that do these tasks 24/7 and are paid for it.”

5. The board is elected to be the manager.

The HOA board is elected to: “Hire and supervise competent service providers.”  When organized, the job should demand no more than a few hours a month from its HOA board.

6. The board is entrusted with the most valuable asset most people own.

For many people this holds true.  As our HOA expert points out: “The responsibilities of an HOA board are not unlike those of any Fortune 500 company board. In both cases, there are physical and human assets entrusted to the board. Careful planning and effective communication to the stockholders (owners) is needed.”

You can find more info about HOA and HOA laws in California  here, or email us at debraandpat@bermankandel.com with any questions.

Financing 101: FHA

One thing we get a lot of questions about from buyers is FHA financing, so we thought we’d take the time to clarify some FHA basics.

What is FHA?

FHA (Federal Housing Administration) provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes.  FHA does not lend money.

How can FHA help me buy a home?

According the the U.S. Department of Housing and Development, FHA financing can be a great option for some buyers and homeowners:

FHA insured mortgages offer many benefits and protections that only come with FHA:

  • Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
  • Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.
  • Low Down Payment: FHA loans have a low 3.5% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don’t allow this.
  • Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA loan with other loan types.
  • Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.

With some programs requiring as little as 3.5% downpayment, FHA financing can offer many people the opportunity to buy who may not have qualified otherwise.   For those who do chose FHA mortgage insurance, borrowers should expect to pay an insurance premium upfront, as well as monthly insurance premiums that are added to the regular mortgage payment.

What are the eligibility requirements for FHA financing?

Most people living in the US, who are of legal age and have a valid social security number are eligible to apply for FHA financing.

FHA’s mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts. Using FHA guidelines, lenders will make a credit determination based on the merits of each case.

To find an FHA approved lender in your area, click here.  For more information about FHA financing, visit the FHA resource center.

Inspection Basics

While the majority of real estate sales and purchases include a  physical inspection, it can be a gray area for many people.   Whether you are buying/selling a rehabbed bungalow in Venice, a brand new home in Playa Vista, a tear-down oceanfront home on the Marina Peninsula, there’s a few basics to keep in mind when it comes to your home inspection.

What is it and why do I need one?

According to the California Real Estate Inspection Association (CREIA): “An inspection is a visual examination of the structure and systems of a building.”

As a buyer, it’s important to make sure your agent includes an inspection contingency clause in the real estate contract, which will allow the buyer to proceed based on what the inspection reveals.  As a seller, it can help identify potential problems that were previously unknown.   As the CREIA points out, “Many problems frequently encountered after the buyer moves in, are a routine discovery for a qualified home inspection.”

At the very least, the inspection is a key part of what should be an informed real estate process for everyone involved.

What does it include?

According to the CREIA:

A complete inspection includes a visual examination of the building from top to bottom. The inspector evaluates and reports the condition of the structure, roof, foundation, drainage, plumbing, heating system, central air-conditioning system, visible insulation, walls, windows, and doors. Only those items that are visible and accessible by normal means are included in the report.

What happens if there are problems?

Depending on the type and severity of any discovered problems, the buyer may or may not decide to request that the seller make repairs, and the seller may or may not agree to make them.  For some buyers, its enough just to know what types of maintenance to expect in the future.   Other buyers might feel that the potential maintenance might be too much of a financial burden and opt not to buy the property after all.

Do I need an inspection even if the house is brand new?

A home inspection, advises CREIA, is always a good idea, even if the home is brand new.  As they point out:

No home, regardless of how well it is constructed, is totally free of defects. The construction of a house involves thousands of details, performed at the hands of scores of individuals. No general contractor can possibly oversee every one of these elements, and the very nature of human fallibility dictates that some mistakes and oversights will occur, even when the most talented and best-intentioned tradespeople are involved.

What can I do to maintain my home?

One of the best things homeowners can do to ease the inspection process and minimize property damage is through regular maintenance.    The CREIA offers a number of excellent tips for cost effective home maintenance:

  • Clean both rain gutters and any roof debris and trim back excessive foliage from the exterior siding.
  • Divert all water away from the house (for example, rain-gutter downspouts, sump pump discharge locations, and clean out garage and basement interiors.
  • Clean or replace all furnace filters.
  • Remove grade or mulch from contact with siding (preferable 6-8 inches of clearance).
  • Paint all weathered exterior wood and caulk around trim, chimneys, windows, doors, and all exterior wall penetrations.
  • Make sure all windows and doors are in proper operating condition; replace cracked windowpanes.
  • Replace burned out light bulbs.
  • Make sure all of the plumbing fixtures are in spotless condition (toilets, tubs, showers, sinks) and in proper working order (repair leaks).
  • Provide clear access to both attic and foundation crawl spaces, heating/cooling systems, water heater/s, electrical main and distribution panels and remove the car/s from the garage.
  • And finally, if the house is vacant make sure that all utilities are turned on. Should the water, gas or electric be off at the time of inspection the inspector will not turn them on. Therefore, the inspection process will be incomplete, which may possibly affect the time frame in removing sales contract contingencies.

You can find more commonly asked questions on the FAQ page of CREIA’s website.  For more information about inspections and what to expect, visit CREIA’s Homebuyers/Sellers page, or email us at debraandpat@bermankandel.com.

Short Sale 101: HAFA

One option for sellers facing a short sale situation is the Home Affordable Foreclosure Alternatives (HAFA) program.

“What is HAFA?”

HAFA is a government sponsored program that sets certain standards for the short sale process and provides financial incentives to lenders that participate.

“What are the requirements for HAFA?”

According to MakingHomeAffordable.gov, you must meet the following in order to be eligible:

  1. You live in the home or have lived there in the last 12 months.
  2. You have a documented financial hardship.
  3. You have not purchased a new house within the last 12 months.
  4. Your first mortgage is less than $729,750.
  5. You obtained your mortgage on or before January 1, 2009.
  6. You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

In addition, California Real Estate magazine reports that to qualify for HAFA, you must also meet these conditions:

  1. The mortgage must be delinquent or near default
  2. The total monthly payment on the mortgage (including principal, interest, property taxes, hazard and flood insurance, condominium association fees, as applicable, and any escrow payment shortage amounts subject to a repayment plan) must be more than 31% of the gross income of all borrowers on that mortgage.
  3. The loan servicer must have already considered the borrower for a HAMP loan modification, and the borrower doesn’t qualify for a trial period plan, did not successfully complete a trial period plan, is delinquent on a HAMP modification by missing at least 2 consecutive payments, or has requested a short sale or a deed-in-lieu.

Unfortunately, there is a long list of eligibility requirements for HAFA .   It’s important to keep in mind also that loan servicers will also have their own written guidelines which will allow them to accept or deny HAFA applications based on such factors as severity of loss involved, local market conditions, the timing of pending foreclosure actions, and borrower’ motivation and cooperation.

For more information about HAFA, as well as other programs, please visit www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx.

Short Sale: 101

The latest edition of the CAR’s bi-monthly magazine, California Real Estate, is focused entirely on understanding the short sale process.  One article in particular, “Anatomy of a Short Sale,” did an excellent job of breaking it down.  

“With nearly 1 out of every 3 homeowners nationwide owning homes that are worth less than their mortgages, the number of short sales tatewide is expected to increase as owners and banks seek a solution to the underwater market dilemma.”

Navigating a short sale  can be daunting and time-consuming process.  As a seller, the right agent–one with exceptional negotiation skills, who is overly-attentive to paperwork, and whose patience never seems to end–can make a WORLD of difference.

Experts in the short sale process advise that it would be wise for sellers to seek a Realtor with short sale training, “on the issues, options, and solutions involved in handling these transactions, which are changing from minute to minute in today’s economy.”

Step 1: Is a short sale right for you?

The 1st step in the process is determining whether or not a short sale is even the best option available.  Sellers should speak with a CPA or attorney BEFORE listing their home with an agent to determine the right course of action for their particular situation.

Step 2: Who is the lender?

The process for a conventional short sale will be different at every bank, while FHA loans will use the same guidelines every time.  Negotiating a short sale with Wells Fargo will be different from Bank of America, or Citibank.

“Sellers may also qualify for the Home Affordable Foreclosure Alternatives (HAFA) program, a government-sponsored program that sets certain standards for the short sale process and provides financial incentives to lenders that participate. Requirements, however, are numerous. If a seller does not qualify for the HAFA program, short sale terms can still be negotiated with the lender outside of HAFA.”

Step 3:  Offer and Approval

In a short sale situation, the short sale involves the seller’s lender approving a loan payoff that is less than the balance owed.  Once the seller is presented with an offer that they subsequently accept, the offer and other paperwork–i.e. documentation of the seller’s financial hardship, status of their finances–are submitted to the lender to review.

“Unfortunately, that first offer is usually a teaser…The agent is forced to do this in order to find out what offer the bank will accept. If the bank counters with a price that’s higher than the buyer can afford, the agent will have to go through the process again, resubmitting all the paperwork with a new offer.”

As a Seller:

It is up to your agent to make sure that the bank receives all of your documents for submission.  Time is of the essence, and delaying at any point could seriously impact your short sale eligibility.  Ultimately, the sooner that you contact agents regarding a short sale situation, the better your position will be.

As a Buyer:

Waiting for a decision from the bank on a short sale can take a lot of time.  It’s not uncommon for buyers to continue seeing other properties even after the contract has been entered into.  In the interest of protecting the buyer,  the standard short sale contract will have a 45-day commitment clause, which allows the buyer to walk if, after 45 days, they see other opportunities.

You can find this month’s edition of California Real Estate in full here.