Pros and cons of down payment assistance options

You know it's in your best interest to put down 20 percent on the home you want to buy. If you can scrape together that kind of down payment, you'll wind up with a loan on the best terms, without paying private mortgage insurance (PMI) or the FHA equivalent of PMI, also known as MI, or a higher monthly interest rate.

But even as housing prices moderate somewhat in various areas, coming up with that kind of cash is tough. Most first-time buyers don't have 20 percent to put down on a home. They're looking to put down just 3 to 10 percent in cash.

While getting a 100 percent loan (no down payment necessary) is still possible, it's tough to find a good lender who will do it at a reasonable cost. So, scraping together as much of a down payment as possible is important.

In addition to saving every cent you can for 3 to 4 years, there are a few possible sources for down payment assistance. I've outlined the positives and negatives associated with each option:

Borrowing from a 401(k). If you work for a company that offers a 401(k) plan, it's in your best interest to fund it to the maximum allowed for your income. Not only will you be able to tap into the power of compounding (and have your money work harder for you), but you'll be able to more quickly build a sizeable nest egg for your retirement. When it comes to borrowing from a 401(k) plan, not every company allows it. Check with your plan administrator to see if your company will allow you to borrow, if there are limitations on what you can do with the cash, and what the interest rate will be on the money you borrow. You should also be aware that you'll typically need to repay this cash within 5 years. But if you should leave the company, or be fired, you'll need to repay the cash within 60 days, or it will be considered a withdrawal (and you'll owe federal income taxes on that money along with a 10 percent penalty, if you're under the age of 59 1/2).

Withdrawing up to $10,000 from an IRA. If you have an individual retirement account (IRA), the IRS allows you to withdraw up to $10,000 for the purchase of a first home. (For those of you who have purchased a home before but haven't owned a home in the last 3 years, you're considered to be a "first-time buyer" for this specific purpose and can make a withdrawal). When you withdraw cash at any time from a tax-deductible, tax-deferred IRA, you'll owe federal income taxes on the amount you're withdrawing at your current marginal tax rate. However, if you're withdrawing for the purchase of a first house, you will not owe the 10 percent under-age penalty if you're less than 59 1/2 years old.

Community Development Block Grants (CDBG). Federal money sometimes filters down into state programs known as CDBGs. This cash can be made available to first-time buyers and home buyers purchasing homes in blighted communities. The funds may be structured as down payment assistance grants, which might match the funds that you have saved for your down payment. Or, the funds might be offered in the form of a below-market interest rate on a loan. To find out more about CDBG funds, check with your local housing authority, or nonprofit housing agency.

Gifts. If you're buying a house, your parents, siblings, other relatives or friends can give you a gift of funds to be used toward your down payment. However, for a lender to accept that this is a gift, and not a loan, you'll need your friends and family to sign a gift letter that states that this cash is a gift and does not need to be repaid. That letter will become part of the documents that you provide to the lender who will be approving your loan.

Rent-to-own or lease/options. If you don't have enough cash in your IRA or 401(k), and you can't get your lender to give you a 100 percent loan, you might put your plans to purchase on hold for a year or two and find a seller who is willing to do a rent-to-own or lease/purchase arrangement for his or her property. Often, the seller will provide down payment assistance by giving you a credit for a portion of your monthly rent payments. In a year or two, you can easily build up a 5 to 10 percent down payment, depending on how much of a rent credit you're given. For example, if you pay $1,000 per month, and the seller gives you a 20 percent credit, $200 per month will accrue toward a down payment on the property. After a year, you'll have $2,400 for your down payment. If you're going to go down this path, be sure to work with a real estate attorney who can help you negotiate the fine print. You may want to negotiate the purchase price of the property upfront, and you will definitely want to include the down payment credit terms as part of the lease.

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source: mortgage101.com

Rent rebate sought after evacuation

Q: We live in an apartment complex in the San Diego area, for which we pay $2,400 per month. During the fires of October 2007, the authorities ordered all of us to evacuate on Sunday the 29th, and we spent five days at a shelter. Fortunately, the building wasn't damaged. We think we're owed a retrospective rent rebate from our landlord to compensate us for the time we couldn't live in the apartment, but she disagrees, saying that the wildfires were hardly her fault. Still, the 20 of us who live here paid for apartments that we couldn't use. Who's right? --Bill L.

A: Your question would warm the hearts of law professors and law students everywhere. At the risk of arousing their ire, here's my take: Let's suppose that the wildfires had destroyed the building instead. According to the laws of many states, in that situation the tenants would not be entitled to a rebate of rent already paid, but the lease would terminate. In your case, I assume you had paid the rent for October, and spent the last two days of that month in the shelter. It would seem logical to apply the rule described above, even though the cause of your inability to use the apartments was a civil order, not destruction by fire (the common element is that you couldn't use the apartments and the landlord was blameless).

But what about the three days in November that you also couldn't get back in? Here, you may have a stronger case, since the landlord was expecting full rent on Nov. 1 for apartments she knew she couldn't deliver. In this situation, even though she's not responsible for the problem, she cannot expect full rent, and should have charged her tenants for 27 days instead of 30.

Whether you're going to prevail in court is another matter -- a judge may look at this differently. And, it may not make sense for one person to sue over such a relatively small sum (you'd be asking for $240). But the picture changes if you and your fellow residents sue in small claims court, each asking for their respective amounts and requesting that the cases be consolidated before one judge. If you decide to sue, be sure to approach your landlord first and try to resolve the matter informally.

Q: Last weekend, my roommates threw a party that got out of hand. The neighbors complained and the landlord went nuts, throwing us all out. I wasn't even home that weekend, and I feel it's unfair to blame me. I want to stay, but the landlord refuses to talk about it. What can I say to change his mind? --Hank L.

A: You may not have been there to enjoy the party, but unfortunately you're going to suffer the post-party. Your landlord is taking advantage of the old legal principle of "joint and several liability." It simply means that the mistakes of one roommate will indeed justify a reaction against all of you. It also means that the landlord can legally require any one of you to pay the entire rent (how you divide it up among yourselves is up to you). Chances are your lease has a clause that recites this legal rule, but even if that's missing, the rule is available should the landlord want to apply it.

Now then, was your roommates' "out of hand" party so bad as to justify terminating your lease? That depends on the circumstances. If it was an isolated event, in a building not otherwise known for sedate living, if other parties never provoked the same response, and if the revelers put a lid on things after being told to quiet down, perhaps not. On the other hand, if you (or any of your roommates) have thrown several such parties, receiving numerous complaints and warnings, your landlord may be on solid ground. In that case, the landlord will probably rely on a clause in your lease in which you agree not to cause disturbances or interfere with the "quiet enjoyment" of other tenants or nearby residents. Even if you don't have such a clause in your lease, many states impose the same requirement on you by law.

If there's no legal ammunition available to you, don't give up. Ask for a meeting and go into it with equal parts contrition, humility and a plan for better behavior. Consider talking to the neighbors first, and after you apologize, ask them if they'll support you in your plea for a second chance. Good luck!

Q: I'm about to move out of my flat, which I've occupied for four years. My landlord has just announced that he's keeping my entire security deposit, claiming that the carpet will have to be replaced. It wasn't new when I moved in, and I haven't left any particular tears or stains. I don't think it's right for him to refurbish the flat using my deposit; isn't replacing the carpet part of his overhead? --Jennifer G.

A: Your landlord may legally use your deposit to pay for replacements only when your use of an item went beyond normal use. If a new carpet has a useful life of five years and you happen to be the tenant who moves out at the end of those five years, the landlord shouldn't use your deposit to replace the rug.

Although replacing carpet that's run its course is a cost of doing business, many landlords can't resist using that big pile of money (your deposit) to cover their overhead. If the landlord follows through with his plan, you'll have to take him to small claims court to get your deposit back. You'll need to convince the judge that the rug was a certain age when you moved in, that your use was normal, and that the rug's expected end of life coincided with your departure. On the latter point, try to get some information on the useful life of a carpet like the one in your apartment. If you can determine who made the rug, you might get some valuable information on the manufacturer's Web site. Take pictures before you leave so you can show the judge that the carpet was old and tired, but you didn't hasten its demise.

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source: mortgage101.com

Renter worried about handing out credit report

Q: I'm uneasy about providing my Social Security number on a rental application. Should I worry about sharing that information?

A: You are right to worry about providing personal credit information. In November, the Federal Trade Commission reported that 8.3 million U.S. adults had been victims of identity theft in 2005.

In response to consumer concerns, the federal government has focused its attention on the use and abuse of credit report information. The Federal Fair Credit Reporting Act regulates who may obtain your information, how it may be used, and what penalties can be levied against those who flout the law. The site can be accessed at www.ftc.gov.

Several sections apply to landlords, including the circumstances under which credit information may be collected. According to the FTC site, credit reports can be requested only for the purposes of extending credit; reviewing or collecting a debt; applying for employment; underwriting insurance; or in connection with some other legitimate business transaction.

A rental application is a legitimate business purpose, and landlords are allowed under the law to request a credit report. Do you have to provide your Social Security number on the rental application? No. But in order to run the credit request, the applicant's full name, current address and Social Security number must be provided to ensure the validity of the report.

On the plus side, new laws have turned the tables on those requesting credit information, requiring landlords to provide their own professional and personal data before dashing off and running credit reports on others. As a result, landlords calling for that credit report are held in closer scrutiny than ever before.

While all landlords have to belong to some sort of apartment owners' association or screening service in order to obtain credit reports, not all services interpret or comply with the FTC rules in the same way.

Last year, one of the largest apartment owners' associations in the country, the Apartment Owners Association of Southern California (AOA), set the standard by implementing new procedures to comply with the FTC law. AOA members, which include landlords and management companies, had to submit newly required documents to the AOA, including a service agreement that outlined the FTC rules. Members signing the service agreement also had to provide a legible photocopy of their driver's license and until they did so, credit reports were not processed.

Proof of member compliance varies, depending on factors such as type of property management business and credit providers, including TransUnion, Experian and Equifax.

Some credit providers require individual property owners to give solid proof of ownership, such as a copy of the county assessor's tax bill, grant deed or utility bill. Management companies and rental corporations are required to provide information that includes proof of formal contract with the individual authorized to use the credit information. Rental corporations must also pay a fee for an onsite inspection for the properties they wish to obtain credit reports for.

Other credit providers require individual landlords to provide completed and properly signed rental applications for each rental property. An annual physical inspection of each business may also be mandatory. Landlords can be asked to show proof of adequate security, such as locked filing cabinets to protect rental information.

What happens when a prospective tenant fills out a rental application? Generally, when a call is made by the landlord or his or her representative to the credit screening office, the operator asks for the specific information that identifies the account holder and name of the individual calling. If the numbers or information doesn't match up, the request may be rejected.

The only drawback? Not all landlords belong to a credit service that requires them to submit proper credit-use paperwork. How can you tell if that's the case? Simply ask. Whoever requests the credit report should know the answer.

Finally, always ask for a copy of the processed credit report. Not only is it free, but it provides proof it was actually run and includes the name of the person to contact if you have any questions about the report.

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source: mortgage101.com

Well Appointed Home Tallwoods Village Mid North Coast NSW

Property For Sale Tallwoods Village

This well appointed near new 4 BR residence occupies a peaceful setting in perfect harmony with its sought after coastal location. Impeccably presented throughout the stylish contemporary design features (upstairs) an enormous open plan living and dining area (Catherdral ceilings) encompassing the streamlined kitchen including island bench with granite top and European appliances. Warm timber floors lead to the Master BR with ensuite and WIR, plus 2nd and 3rd BR’s with full bathroom. Downstairs boasts a large living area with kitchenette facilities, private guest BR and 2nd full bathroom. Expansive timber decks are present on both levels and are perfect for outdoor entertaining whilst offering some coastal and rural views. A mere 3 hours from Sydney and a short 5 minute drive to pristine beaches and waterways.

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source: aoreg.com

Real Estate Homes For Sale South Fremantle

Stunningly restored unique Victorian home with ocean views

“Baker House”

Circa 1900, Baker House is a uniquely classical Victorian home which has undergone a restoration and renovation to make it a jewel in the crown of the heritage homes in the Fremantle area. Baker House belonged to Mr Baker, the butcher, who had the home built at the turn of the century to reflect his business success: a chain of butcher shops and meat home delivery service.

The front of the house has a wrought fence with lion posts. The front of the home is fully tuck pointed front, with an oregan front door and two french doors on the two bedrooms. Inside, polished jarrah and Baltic pine floors greet the homeowner or their guests.

The restoration and extensions have seen the original house restored to its former glory, with an in-keeping extension comprising an upstairs living area, with a large balcony, and an expansive kitchen/dining area. A kitchen built for entertaining friends or work colleagues, or a quiet meal with the family.

With four large bedrooms plus a large lounge room and second upstairs living area, the house emanates character through its ornate ceilings and roses, colour schemes, ornate fireplaces, brass fittings and jarrah woodwork. A sweeping jarrah staircase leads to an upstairs entertainment room fit for royalty.

The kitchen has the classic French “Winckelmans” tessellated tile pattern and uses American cherry wood to blend modern appliances such as the fridge and dish washer into a by gone era. An antique style brass Ilve stove, with 2 rotisserie ovens, 4 gas burners, grill and long fish burner await the discerning buyer. A brass canopy, with restaurant size fans compliments the professional chef’s stove.

Two toilets and a bathroom with shower and claw foot bath. A bidet and old fashion pull chain toilet cistern

A wine cellar lies hidden under a trap door in one of the front bedrooms. Gorgeous sweeping views to Fremantle harbour and the sea await the visitor to the upstairs balcony.

Close to schools, public transport, shopping and other amenities. 5 mins walk to cafes and beach, couple mins drive to Fremantle,which is a thriving tourist port city. The home is a ½ an hour drive to the centre of Perth

The Coach house

The former stables have been converted to a 2 storey coach house. The coach house has its own old style but rustic atmosphere. Once again, there are lots of brass fittings and jarrah and other woodwork. Although the coach house uses an open plan, there is a separate kitchen, toilet and bathroom, dining and lounge area. An upstairs mezzanine has a lounge, come fold out bed. There are 2 separate fully furnished bedrooms.

The Coach House is suitable for use as a studio/gym or has the potential for accommodation/home office (subject to Council approval). There is a 2-car carport connected to the coach house, with an electric folding door and separate laneway door.

The Coach House balcony provides views of Fremantle harbour and the sea.

The gardens

The owners spent many years lovingly cultivating a garden of nooks and crannies. A retreat from the pressures of life, different levels and walls allow the explorer to discover a Japanese waterfall and pools with gold fish, a Victorian crypt with water cascading around a bronze Neptune, statures or figurines and secluded courtyards. A herb garden adjacent to the kitchen compliments the professional Ilve stove and top of the range G.E. fridge [ice maker], waiting for the budding chef.

The courtyards are attractive as well as functional. The first courtyard sits off the master bedroom and has an Italian feel and herb garden: a place to meet the morning sun. The second courtyard contains a natural gas barbecue [no gas bottles], shading trees and space to entertain or party. This inner courtyard has an inbuilt irrigation system and consists of small walkways, rock walls, sculptures, and water features with goldfish. The final courtyard complements the Coach house and is divided from the main house by a limestone dividing wall.

All the rear gardens are enclosed in high brick wall fences and both buildings have monitored alarm system.

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source: aoreg.com