What Improvements Will You Get Back on Resale?

Home improvements that boost resale value
When deciding which home improvements to make, many homeowners consider the amount of resale value the improvement may or may not make and compare that against the cost of the renovation. Homeowners concerned with making home improvements that will pay off when it’s time to sell the property, should consider the following tips.

Making sense of the story

• The first improvement/repair homeowners should consider are those that impact the home’s basic structures and systems. Potential home buyers generally do not want to face expensive repairs, and if items such as the foundation, roof, air conditioning, water heater, or other basic structure need to be fixed, the property will be considered a fixer-upper and its market price will be discounted accordingly.
• Some minor replacements will produce big results for minimal cost. Replacing and coordinating bathroom and kitchen hardware and fixtures are generally inexpensive, but tend to make a big difference. The same can be said for getting rid of any dated finishes, such as old wallpaper and brass light fixtures.
• Homeowners who don’t know when or even if they will be able to sell their home are advised to choose home improvement projects carefully. Unless the home is located in an upscale neighborhood and the property already is immaculate, owners can skip expensive upgrades – such as remodeled bathrooms – and focus on the fundamentals.

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Alameda County Housing Statistics

October 2008

The continued decline in home sales prices throughout most of southern and eastern Alameda County has increased housing affordability and inspired buyers to act. Sales activity remained strong in the Central County and Tri-Cities regions in October 2008 fueled by modest month-to-month price drops. Sales, on average, dropped 9% in the Tri-Valley markets.

Sales prices proved once again the variability between real estate markets.

Prices actually increased in specific communities from September to October.Central County (Castro Valley, Hayward, San Leandro and San Lorenzo)Castro Valley was the notable exception in the Central Valley by showing a 10% increase in median sales price from September to October. However, units sold slipped by 20% in Castro Valley. Active listings were also down an average of 4% throughout the Central County communities - a trend that's consistent with decreasing inventory throughout Alameda County. Pending sales increased an average of 9% month-to-month. In terms of actual units listed and pending sale, the pace of home sales has remained steady since August 2008.

Tri-Cities (Fremont, Newark and Union City)Union City showed positive growth in all market indicators this month. Units Sold shot up 76% from 21 units in September to 37 units in October; pending sales were up 13% and active listings increased 7%. The median sales price increased 7% from $480,000 in September to $511,500 in October. Newark did well last month, too. A modest 2% increase in sales prices, a 13% increase in units sold and a 7% increase in active listings. However, it was the only Tri-City community to post a decline in pending sales. Median prices slipped 16% in Fremont from $685,000 in September to $573,000 in October. Sales activity was virtually the same with only two fewer units sold in October.

Tri-Valley (Dublin, Livermore and Pleasanton)All Tri-Valley communities, but Danville, saw a drop in sales prices in October. Livermore prices decreased 16% from $499,950 to $420,000 while prices in Dublin, Pleasanton and San Ramon dropped 8% and 4%. In terms of actual dollars, the prices in each community are still well above both the state and county median prices. The pace of home sales and pending sales also slowed throughout the region with the exception of Livermore which saw a 10% month-to-month increase in actual units sold. Meanwhile, with the exception of Pleasanton, active units increased across the rest of the Tri-Valley

Information is deemed reliable but not verified

More Info About the Isle City of Alameda

Central Alameda

Even though I was born and raised in Alameda it always amazes me on how it has grown so much. Here is a little information about Central Alameda. The only way to access the main island is to cross either of our 4 bridges or the tube.

The island of Alameda was originally a peninsula connected to Oakland. Much of the peninsula was low-lying and marshy, but on the higher ground, the peninsula and adjacent part of what is now downtown Oakland were home to one of the largest coastal oak forests in the world and the area was therefore called "Encinal", Spanish for "Oakland". "Alameda" is Spanish for "grove of poplar trees" or "tree-lined avenue.” This name was chosen in 1853 via popular vote.

The inhabitants at the time of the arrival of the Spanish in the late 18th Century were a local band of the Ohlone tribe. The peninsula became part of the vast Rancho San Antonio granted to Luis Peralta by the Spanish king who claimed California. The grant was later confirmed by the new Republic of Mexico upon its independence from Spain.

Prior to the gold rush besides Native Americans there were also in modern Alameda French lumberjacks supplying lumber to the quickly expanding San Francisco and Chipman and Auginbaugh, as well as major Spanish descended landowners who founded the village of Alameda near the corner of Encinal Avenue and High Street in Alameda.

The city was founded on June 6 , 1853 . Originally three small settlements grew in town. "Old Alameda" referred to the village at Encinal and High, Hibbardsville was at the NorthShore ferry and shipping terminal, and Woodstock was on the west near the ferry piers of the South Pacific Coast Railroad and the Central Pacific . Eventually, the Central Pacific's ferry pier became the "Alameda Mole " while the Central Pacific itself became the Southern Pacific . The Alameda pier was the site of the first train across the Transcontinental Railroad into the San Francisco Bay Area. The terminus was moved to Oakland a few years later.

In 1917, an attraction called Neptune Beach was built in the area now known as Crab Cove. Often compared to Coney Island , the park was a major attraction in the 1920s and 1930s. The original owners of the facility, the Strehlow family, partnered with a local confectioner to create tastes unique to Neptune Beach. Though many do not know it, both the snow cone and the popsicle were invented at Neptune Beach. The Kewpie doll, hand painted and dressed in unique hand-sewn dresses, became the original prize for winning games at the beach - another Neptune Beach invention. The Strehlows owned and operated the beach on their own, even filling in a section of the bay to add an additional olympic-size swimming pool and an exceptional roller coaster which must have given riders a tremendous view of the bay.

Neptune Beach 's two huge outdoor pools hosted swimming races and exhibitions by famous swimmers like Olympian Johnny Weissmuller , who later starred as the original Tarzan, and Jack LaLane, who started a chain of health clubs. Unfortunately, the park closed down in 1939 because of the Great Depression , the completion of the Bay Bridge, people circumventing paying the admission price and in general, the rise of car culture. Once the Bay Bridge was complete, the rail lines, which ran right past the entrance to Neptunem Beach on the way to the Alameda Mole and the Ferry, lost riders in droves. People began using their cars to escape the city and the immediate suburbs like Alameda and traveling further a field in California. Alameda lost its resort status as more distant locations became more attractive to cash-rich San Francisco tourists. Youngsters in town became aware of ways to avoid paying the dime for admission to the park. Strong swimmers or even waders could sneak in on the bay side, just by swimming around the fence.

Some of the resort homes and buildings from the Neptune beach era still exist in present-day Alameda. The Croll Building , on the corner of Webster St. and Central Ave., was the site of Croll's Gardens and Hotel, famous as training quarters for the some of the greatest fighters in boxing history from 1883 to 1914. James J. Corbett, Bob Fitzsimmons, Jim Jefferies, Jack Johnson, and many other champions all stayed and trained here. Today this beautiful preserved building is home to Croll's Pizza and the New Zealander Restaurant. Neptune Court, just a block away on the corner of Central Ave. and McKay Ave., provides another glimpse of what resort life was like in Alameda in the 1920s. A short walk near Crab Cove will reveal many more historic gems.

Sadly, the vast majority of the Neptune Beach structures - the hand-carved carousel from the world-famed Dentzel Company, the ferris wheel, the roller coaster, and other rides - were auctioned off in 1940 for mere pennies on the dollar of their original cost. Today, an Alameda resident Michael Schiess looks to preserve some of the historic artifacts from the Neptune Beach era at the Neptune Beach Amusement Museum, specifically dedicated to the resort and all "amusement machines." While the existing and more general Alameda Museum has quite a few artifacts from Neptune Beach in its collection, this new museum will focus more on the games, rides and other machines that brought amusement to Alameda's bay shore.
As the Neptune Beach era faded and Park Street developed into the major thoroughfare of the city and the location of the main Alameda train station, residents of Old Alameda pulled up stakes and moved across town to the new downtown. The street's location was chosen by two landowners who wished to attract tenants and development to their land. As a result they designated their mutual border as Park Street.

The need for expanded shipping facilities led to the dredging of a canal through the marshland between Oakland and Alameda in 1902, turning Alameda into an island. Most of the soil from the canal was used to fill in nearby marshland. The area of Alameda called Bay Farm Island is no longer an island, but is attached by fill to Oakland. In his youth, author JackLondon was known to take part in oyster pirating in the highly productive oyster beds near BayFarmIsland, today long gone. The Alameda Works Shipyard was one of the largest and best equipped shipyards in the country. In the 1950s, Alameda's industrial and ship building industries thrived along the estuary, where the world's first-ever; land-based, containerized shipping crane was used. Today, the Port of Oakland across the estuary serves as one of the largest ports on the West Coast, using the shipping technologies originally experimented with in Alameda. As of March 21 , 2006 , Alameda is a "Coast Guard City," one of seven in the country.

In addition to the regular trains running to the Alameda Mole, Alameda was also served by local steam commuter lines of the Southern Pacific (initially, the Central Pacific) which were later transformed into the East Bay Electric Lines . Southern Pacific's electrified trains were not streetcars , but full-sized railroad cars which connected to the mainland by bridges at Webster Street and Fruitvale (only the latter bridge survives today). The trains ran to both the Oakland Mole and the Alameda Mole. In fact, one line which ran between the two moles was dubbed the "Horseshoe Line" for the shape of the route on a map. Soon after the completion of the Bay Bridge , Alameda trains ran directly to San Francisco on the lower deck of the bridge, the ferries having been rendered unnecessary.

In the 1930s Pan American Airways established a seaplane port along the fill that led to the Alameda Mole. This was the original home base for the famous China Clipper . With the advent of World War II , a vast stretch of the marshy area southwest of the Alameda Mole was filled and the Naval Air Station Alameda established. This major Naval facility included a large airfield as well as docks for several aircraft carriers . It closed in 1997

Buying or Selling, I am here to help!

Jean 510.908.9002

Some Banks are Withdrawing Equity Line of Credit From Homeowners!

Homeowners Losing Equity Lines
As House Values Fall, Some Banks Withdraw Credit

(By Susan Biddle -- The Washington Post)

In one brief phone call, Nancy Corazzi's lender yanked away what was left of the $95,000 home equity line of credit that she and her husband took out five months ago.
The lender informed her that her Howard County home had plummeted in value and the company did not want the risk that she would owe more than the house was worth.
"I got off the phone and I was shaking," said Corazzi, who was using the money to pay preschool tuition for her twins ."I was near tears. We needed this credit line to get us through some tough times."
Several of the nation's largest lenders, along with smaller ones, are shutting off access to home equity lines in areas where home values are declining. It's an unusually aggressive move as the industry grapples with fallout from the mortgage crisis that began unfolding last year.
Now that home prices have dropped in many parts of the country, lenders are nervous that they may never collect the money that they extended to borrowers. They are responding by freezing or lowering the credit limits on home equity lines, leaving thousands of borrowers like Corazzi in the lurch.
"Nearly all the top home equity lenders I know of are doing this or considering doing this," said Joe Belew, president of the Consumer Bankers Association, which represents some of the nation's largest home equity lenders. "They are all looking at how to protect themselves as real estate values go down, and it's just not good for the borrowers to get so overextended."
Countrywide Financial, the nation's largest mortgage lender, suspended the home equity lines of 122,000 customers last month after reviewing their property values and outstanding loan balances. The company, like others, has an internal automated appraisal system that tracks values.
The company declined to disclose how many of the affected borrowers lived in the Washington area. About 381,000 borrowers in the region had home equity lines at the end of last year, according to Moody's economy.com.
USAA Federal Savings Bank froze or reduced credit lines for 15,000 of its customers, including Corazzi, and will not reconsider its decisions until "real estate values improve substantially," the company said in a statement.
Bank of America is starting to do the same and is contacting some borrowers, said Terry Francisco, a bank spokesman.
"We know this can cause hardship to our customers," Francisco said. "If they used the credit to make payments that are in the pipeline, we will work with them to make sure the payment goes through."
The appeal of home equity lines has always been their flexibility
They operate like credit cards, with the home as collateral. Borrowers can use the money when they want, up to a limit, then repay it over time. The limit depends on the amount of equity they have in the house. Home equity lines, which grew popular in the late 1980s, have typically attracted educated borrowers with above-average incomes and job stability who tend to repay what they borrow in a timely manner, industry studies show.
Since the crisis in the housing and mortgage markets started, however, delinquencies on home equity lines reached 0.84 percent in the third quarter, the highest level in a decade, the American Bankers Association said.
Because missed payments are often a precursor to foreclosure, lenders are spooked. Companies that hold credit lines typically recoup little, if any, of their money in a foreclosure, hence the retreat on home equity lending.
Larry F. Pratt, chief executive of First Savings Mortgage in McLean, said most mortgage documents he has seen give lenders wide latitude to suspend or freeze credit lines.
"A layperson would not recognize the language because it's not that blatant," Pratt said. "It talks about deterioration of the value of the asset or the value of the collateral. . . . It's not boilerplate language by any means."
Maggie DelGallo did not realize that when she took out a home equity line a few years ago on her home in Loudoun County. Her lender recently froze the line.
DelGallo, a real estate broker, has used some of her credit line over the years. Had she known the freeze was coming, "I would have drained it," she said. "I would have taken every dime and possibly placed it in a money-market vehicle."
DelGallo said she does not think she is in dire straits. "It's more like a huge disappointment," she said. "I have this line of credit attached to my home that's useless."
Last year, 34 percent of borrowers said they used their home equity lines to pay off other debt and 29 percent used them for home renovation, according to a survey of lenders by BenchMark Consulting International. Another 31 percent used them to pay for other things, such as medical bills, weddings or vacations.
Corazzi initially used her line to consolidate debt. She and her husband took out the credit line in October because they thought her job was in jeopardy.
It was. In December, her salaried position as a loan-processing manager at a local mortgage bank changed to a commission-only job.
Given the slowdown in the industry, Corazzi has collected only one paycheck since then. Her husband, Ron, sells large-format copiers and printers to builders, and his salary alone cannot support them and their four children, ages 4 to 8.
By the time their lender called, the couple had $45,000 remaining unused on the credit line. Ron Corazzi is now looking for a second job, and his wife is hoping to pick up work as a substitute teacher.
Meanwhile, they are trying to open a new home equity line elsewhere, but chances are slim given the change in Nancy Corazzi's job status and the drop in their home's value. Five months ago, the Ellicott City house was appraised at $560,000; the lender says it is now worth $469,100.
"I told them, 'You guys are wrong,' " Nancy Corazzi said. "They said, 'Sorry, this is what we're doing in the entire area.' "
Corazzi said she was blindsided by what's happened. "I didn't know they could do that. I thought I was too smart to have something like this happen to me."

A Buyers's Transaction!

Where do I Start?
For many, beginning the homebuying process can be overwhelming. You may be uncertain about taking the initial steps. I hope this guide will help clear up some of those uncertainties by providing you with some useful information about the homebuying process.

When is the right time to start talking to a professional, and who do I choose?

Anytime you have questions you want answered is the right time to start. You can begin with either a Realtor or a lender. A Realtor can help you assess your financial picture, counsel you through the entire homebuying process, find a home that suits you and introduce you to a lender who can work with you on a financing package that meets your needs. A Realtor will work through all the intricacies of the transaction until close of escrow. A lender will work with you on the loan process and can preapprove you for a loan before you even begin house-hunting.

If it happens that you are not ready for any of this, both professionals will be happy simply to provide you with information.

How do I choose a Realtor?
In today's market, finding and purchasing a home can be a very involved and a complicated process. It is essential to find a Realtor who is qualified and dedicated to providing you with the best representation. It is best that you hire a Realtor who is a Broker. A Broker has more education, knowledge and skills than a Realtor who only has a Sales license. Always check the Department of Real Estate to see how long the Realtor has had a license and if they are in good standing. You can go to: www.dre.org . Once you have found that the Realtor is experienced and a full-time professional who knows the market in the area in which you are interested, determine if they know the available inventory in your location and price range. Ask for and check for references.

Your Realtor should have the time and energy to devote to you and your search for a home. Perhaps most importantly, choose an agent with whom you have a personal rapport.

Buying a home is an intimate type of business transaction. Trying to go through the process with someone you can't relate to will not work. Find a qualified Broker who you like, one who matches your personality and meets your individual needs. This will make the home purchase experience much more enjoyable.

What happens after I have chosen a Broker Realtor and spoken with a lender?
Given your price range, decide what kind of home you want and need. Think about size, location, special features such as fireplace and garage.

Begin looking at properties with your Realtor Broker so you have a good basis for making a final decision. Assess whether the home you can afford to purchase is the right home for you. If this is not the case, you may be unrealistic in your expectations and may need to adjust them to suit your budget.

When you find the home you like, make an offer to purchase. Your Realtor Broker's knowledge of the market and market values will assist you in making sure the price you offer represents good value for the property.

I've found the home I want. I've made the offer. What happens next?
The seller may accept your offer, reject your offer, or make a counter offer. If your offer is rejected, you can make another offer or look for a different house. If the seller makes a counter offer, you can either accept that offer or counter with yet another offer. Negotiations may continue back and forth until you and the seller agree to a final purchase price and terms of the contract. When this agreement is reached, the offer is "ratified". Your Realtor will now be required to deposit the specifed amount as per your contract, into an escrow account with a Title Company. During the escrow period, which is usually 30 to 40 days, certain conditions ("contingencies") specified in the contract must be met or waived within agreed-upon time periods.

These conditions typically include: having a professional inspection of the property, obtaining formal loan approval from the lender, and reviewing the seller's disclosures.

When Will I Actually Own The Home?
You will own the home when all conditions of the contract are met and escrow closes. The following are some of the conditions commonly found in home purchase contracts:

Finding a loan for the amount and at the terms stated in the contract. You should have a pre approved loan with a lender prior to submitting an offer to purchase the property.
Receiving a satisfactory report on the condition of the home by a professional home inspector, and a termite inspector. Obtaining any other inspections you deem necessary. If major problems are discovered, you do not have to buy the home or you can renegotiate the contract.
Conducting a title search and ensuring the property is free of any legal claims against it. You will also have to buy title insurance for yourself and the lender, in case a problem with the title arises after you purchase the house.
Purchasing homeowner's or hazard insurance is required by the lender.
Asking and receiving satisfactory answers to any and all questions you have about the property.
Obtaining disclosures from the seller informing the buyer of any fact which the seller is aware of that would materially affect the value of the property.
The seller must make any repairs to the home which are agreed upon in the contract, you may purchase property in its present condition or ask the seller to credit money in escrow for repairs.
Just prior to close of escrow, your loan becomes effective (it "funds"). The escrow officer will explain the closing documents which you must sign. One of these is a HUD-1 settlement form from the lender. This form, required by federal law, itemizes the services and costs to the buyer and seller. You will also be required to pay the closing costs and the rest of the downpayment, either wired or by a cashier's check, to the title company at least 2 days prior to closing escrow.
The title company formally records the new deed of trust, and you go "on record" as the new owner. You get the keys to your new home and, it's yours!
How important is my credit?
In addition to verifying income, a lender will want a credit report showing that a borrower has repaid monthly debts on a timely and regular basis. It would be a good idea to examine your credit history prior to submitting a mortgage application. If you discover any discrepancies, be sure to notify the credit bureau to correct them, because any unexplained credit delinquencies can be a basis for a disapproval by a lender.

Many delinquent or late payment accounts can be resolved by writing a detailed explanatory letter to the credit bureau. There are several national credit bureaus that provide credit reports for a nominal fee. Listed below are the credit bureaus commonly used by the lending industry.

Equifax Information Service
P.O. Box 740241 Atlanta, GA 30374-0241
(800) 685-1111 ($8.00 service charge)

TRW Credit Data
P.O. Box 749029Dallas,TX 75374-9029
(800) 392-1122
(1 free yearly)

When writing to the above agencies, provide your full name, present address, previous 5 year addresses, social security number, date of birth, and a verification of your name and present address (e.g. a copy of a billing statement).

How do I find the best loan?
Loans are available from a number of sources, including banks, mortgage companies, federal credit unions and financial companies. Your Realtor can be a good source of information about various lenders.

Assessing current needs and future objectives
You can simplify your search for the right loan if you start with a clear understanding of your plans for the property. Such an understanding requires some soul-searching on you part as to your personal and financial goals.

Ask yourself:

Are you looking to build equity quickly? Are you expecting increases in your income?
Is there a strong possibility of a career change or other situation which might cause you to have to move in the near future?
To what extent will the tax deductions from your home's interest payments affect your present and future tax situation?
Are you planning any major improvements? If so, how will they be financed?Before you start looking for homes, it is important to have a good idea of how much you can put down and how much you can afford in monthly payments.
Downpayment
You may intend to put 20% of the purchase price as a downpayment. There are loans available with as little as 5% down, although lenders may charge somewhat higher fees or interest on these. Also, a downpayment less than 20% often includes a requirement from the lender that you purchase private mortgage insurance (PMI) as a protection against possible default.

Monthly Payments
In addition to the downpayment, lenders want to determine if a borrower has enough stable income to make payments on a mortgage. Typically, they do not want a borrower's total housing costs, principal, interest, taxes, and insurance (PITI), to exceed 33 percent of his/her monthly income. The "33" is sometimes called a "top" ratio. Also, total housing costs plus other monthly expenses (car payments, student loans, credit cards, etc.) should not exceed 38 percent of the borrower's total gross income. These parameters are not absolute. Some buyers may qualify at a higher debt-to-income ratio

Types of loans
Today's borrower can choose from several types of loans. Some loans feature the same rate and payment amount for the duration of the loan (Fixed). Others are more flexible. Their rates and payment schedules can adjust to reflect changing economic factors (Adjustable). Still others offer a convertible feature, enabling you to convert from one type of loan to another after a period of time.

Fixed rate loans
Predictability is the key feature of a fixed rate loan. You can be certain that your rate and payment will never change as long as you have the loan. This makes it easier to plan and budget your finances.

Adjustable rate loans (ARMs)
ARM interest rates are tied to-and fluctuate to reflect changes in-a published financial index. When those index rates go up or down, ARM rates do too. By law, the index a lender uses cannot be controlled by that lender (e.g. a bank cannot use its prime rate as an index). Common indices include 11th District Cost of Funds, one-year T-note, and six-month T-bill. ARMs are easier to qualify for than fixed rate loans because the interest start rate is lower.

Glossary of lending terms
Annual payment capsAn annual cap limits the amount of change in payment that can occur. The maximum amount of change is usually 7.5% of the previous year's monthly payment. Payments cannot exceed that cap, no matter what the index rate does during the year. If, for example, your monthly payment is $1,000, it cannot go up by more than $75 per month the following year.

Annual percentage rate (APR)
APR is the effective interest rate over its projected life. It includes interest plus all other costs such as lender fees and closing costs (escrow, title insurance, appraisal fee, processing, etc.) Your loan's APR is a reflection of what you'll be paying annually for the loan and a good way to compare with other loans. Your lender is required by law to quote the APR when quoting an interest rate.

Closing costs
Expenses in addition to the price of the home incurred by buyers and sellers when a home is sold. Common closing costs include escrow fees, title insurance fees, document recording fees and real estate commissions.

Index
There are a number of them. Some move sharply over relatively short time spans. Others change more slowly over longer period of time.

Interest rate adjustment caps
ARMs that don't have an annual payment cap will usually offer an annual cap of up to 2% of interest rates adjustments.

Lifetime interest rate caps
This feature puts a ceiling on the rate to which an ARM loan can be adjusted over the life of the loan. If the rate ever reaches the lifetime cap, the borrower has a fixed rate loan at that rate until the index falls again, and the rate can be adjusted downward.

Loan assumability
Unlike fixed rate mortgages, many ARM loans can be assumed by a qualified borrower. This can be a valuable benefit when the time comes to sell the home.

Margin
The interest rate for an ARM loan reflects the index plus a fixed margin. The margin covers the lender's operating expenses and profit. The margin amount must be included in the loan document, and can not change once the loan is funded.

Negative amortization
Negative amortization can occur when the payment is not large enough to cover the full amount of interest due. The borrower can choose whether he wants to pay the additional amount or have it added to the loan balance.

No prepayment penalty
Most ARMs can be paid off either fully or partially with no penalty.

Points
One point equals 1 percent of the mortgage amount. Typically lenders charge from zero to two points. Loan points are tax deductible.

Locking in
Also called a rate-lock, this is a lender's promise to commit to a certain interest rate on a loan, usually for 30 to 60 days.

Deciding on a Lender
It is important to find a lender you can depend on to provide you a loan at a competitive rate. In addition, you want your application processed swiftly and accurately at reasonable cost. The lending institution's stability, experience and commitment should also be examined.

Your Realtor can help you find a lender with a financing package that meets your needs.

What is an escrow and why is it needed?
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.

People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed until the seller's requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.

An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds, and many other items using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves much time and facilitates the closing of the transaction.

Who may hold escrows
The escrow holder may be any disinterested third party (some states require escrow holders to be licensed). Escrow officers with established firms generally are experienced and trained in real estate procedures, title insurance, taxes, deeds and insurance.

Impartiality
An escrow officer must remain completely impartial throughout the entire escrow process.He or she must follow instructions of both parties without bias.

Escrow instructions
Escrow instructions are written documents, signed by the parties giving them, which direct the escrow officer in the specific steps to be completed so the escrow can be closed. Typical instructions might include: the method by which the escrow holder is to receive and hold the purchase price to be paid by the buyer; the conditions under which a lapse of time or breach of purchase contract provision will terminate the escrow without a closing; instructions on the payment of prior liens.

Closing the escrow
Once the terms and conditions of the instructions of both parties have been fulfilled, the escrow is closed and the safe and accurate transfer of property and money has been accomplished.

In summary
The escrow holder facilitates real estate sales or purchases by:

Acting as the impartial depository of documents and funds.- Keeping all parties informed of progress on escrow.
Responding to lender's requirements
Securing a title insurance policy
Prorating and adjusting insurance, taxes, etc
Recording the deed and loan documents
It's not always that simple
Every escrow is unique and most are more complex than explained here. If you have further questions, contact an escrow officer or attorney to provide more detailed information.

What protection does title insurance provide?
Title insurance protects against any matter affecting the past ownership of the property. Title insurance is issued after the title company carefully examines copies of the public record. However, even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge ad experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

Some common hidden risks that can cause a loss of title or create an encumbrance on title:

False impersonation of the true owner of the property
Forged deeds, releases, or wills
Undisclosed or missing heirs
Instruments executed under invalid or expired power of attorney
Mistakes in recording legal documents
Misinterpretations of wills
Fraud
Deeds by persons of unsound mind
Deeds by minors
Deeds by persons supposedly single, but in fact married
Liens for unpaid estate, inheritance, income or gift taxes
Title insurance will pay for defending against any lawsuit attacking your title problems or pay the insured's losses. For a one time premium, and owner's title insurance policy remains in effect as long as you or your heirs retain an interest in the property, or have any obligation under a warranty in any conveyance of it.

By combining expertise in risk elimination at the time of issuing a policy, and protection against hidden risks as long as the policy remains in effect, your title insurer protects against title loss.For more detailed information on title insurance, contact a title officer at your title company.

I hope you have found this information helpful. It is designed to be of general interest, and while the content is reliable, it is not intended as a substitute for the advice of professional lenders, accountants, escrow officers, attorneys, etc. Before acting on any matter contained herein, you should consult with your professional adviser.

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Californians Can Afford to Purchase a New Home!

Group says more Californians can afford to buy their first home
By ALEX VEIGA, AP Business Writer

(02-19) 12:13 PST Los Angeles (AP) --

Frustrated California renters take heed: A trade group says it's getting easier for people to afford their first home.

With home prices in a downward spiral in many once-booming areas, the percentage of California households that can afford to finance an entry-level home increased in the last three months of 2007 compared to the same period a year earlier, the California Association of Realtors said Tuesday.

The trade group for real estate agents calculates affordability based on the minimum household income required to make a 10 percent downpayment and secure an adjustable interest rate loan at 6.21 percent.

Some 33 percent of the households in the state met those guidelines in the fourth quarter — up from 25 percent in the same three months of 2006, the association said.

Buyers needed to earn $82,200 to afford financing of $411,170, the typical statewide price for an entry-level home during the quarter, the trade association estimated.

The monthly payment for such a purchase, including taxes and insurance, was $2,740, the association said.

An entry-level home was defined as one priced at about 85 percent of the median home price in an area.

The most affordable area of the state during the quarter was the desert north of Los Angeles, where some 54 percent of households met the association's $43,800 annual income threshold to finance an entry-level home priced at $218,880.

Sacramento County was next, with 53 percent of households within the income range needed to afford a home priced at $252,920.

The least affordable area was the Central Coast region of Monterey, where only 20 percent of households earned the $118,200 needed to finance an entry-level home at $591,200.

In Los Angeles County, 27 percent of households earned the $86,700 a year needed to buy a home priced at $433,200.

Some 46 percent of households in Riverside and San Bernardino counties, which have been hit particularly hard by rising foreclosures and falling home values, earned $57,600 a year, enough to finance a $287,330 home, the association said.

In the San Francisco Bay area, meanwhile, only 23 percent of households reported income of at least $132,300, the minimum to purchase a home priced at $660,660.

Compliments of:
California Association of Realtors: www.car.org

Critical Considerations When Purchasing a Home!

Thinking about purchasing a home of your own? Keep these critical considerations in mind:

*How long you plan to live in the home? If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home. The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 5 to 7 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true. *How long the home will meet your needs? What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

*Your financial health - your credit and home affordability. Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, some lenders may still provide you with a loan, but you may just have to pay a higher interest rate and fees. Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it's within your comfort zone. *To determine how much home you can afford, talk to a lender or go online and use a "home affordability" calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, its important for you to know your options. *Where the money for the transaction will come from. Typically homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

*The ongoing costs of home ownership. Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium or a townhouse, a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your Realtor and your lender aware of your desire to limit these costs. If you are still unsure and want buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

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