First Time Home Buyer's Seminar - California State University, Northridge

First Time Home Buyer’s Seminar

Buying a Home in Today’s Market Wells Fargo Home Mtg. Encino CA. 10/30/2012

Homeownership Works! Homeownership may be the single most important investment you’ll make in your lifetime. that’s still true today! 34

Building Long-term Financial Security A home is an investment in personal and financial well-being Homeownership isn’t a get-rich quick scheme -- it’s a sure and steady way to build wealth over time It’s critical to get the financing right That’s why you should work with Wells 35 Fargo

And add to that. . . significant tax advantages* for homeownership Interest paid on mortgages is deductible for most homeowners. Property taxes are deductible for most homeowners. For most homeowners, there are no capital gains taxes when a primary residence is sold. *See your tax advisor 36

Compare Apples to Apples Every interest rate is associated with an origination fee. When comparing rates, get the whole story -Compare rates with the same origination fee charged. 37

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Get pre-approved for your loan first – before house-hunting This determines the upper of your price range limit Borrow only as much as you feel comfortable borrowing 40

Questions to ask What is the term of the loan? What is the interest rate? Is the rate fixed or adjustable? When are the payments due? What happens if I make a late payment? Are taxes and insurance included in my monthly payment? What will my closing costs be? What’s included? Wells Fargo will work with you to ensure you understand the answers to these questions. 41

Key Qualifying Components Credit Income Assets 42

Credit Normally good for 120 days. 3 Bureaus – 3 Scores Scores range from 300-870 Score based on many things Payment history Length of credit history Newly established credit Outstanding revolving balances Inquiries 43

Credit Helpful Tips Revolving balances below 50% of the available limit. Bankruptcies need to be at least 2-4 years past the discharge date. Limit unnecessary inquiries. 44

Income Documentation 1 month of paystubs 2 most recent w-2’s Salary or Hourly? Commission or Bonuses? Self-Employed? 2 Years Personal and Business returns 45

Income New job may require additional documentation. Written VOE Job Offer Letter Gaps in employment? Declining or inconsistent income? 46

Assets 2 Months of bank statements. All pages Large deposits? Insufficient funds/bad checks? 47

Assets Use of non-liquid accounts Retirement accounts Stocks Need terms of withdrawal or proof of liquidation of funds. Gifts. 48

Union Plus Mortgage Program provided by Wells Fargo Home Mortgage Exclusive benefits designed for union families Jeff Neistein Branch Manager 818 808-1038

Down-payment Assistance Programs DAPS NHS Platinum – 3-5% Grant CALHFA – 3% Loan LIPA – up to 60k. MCC – 15-20% Federal Tax Credit 50

We’re happy to answer your questions. . . Thank you for attending! 51 Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. 2010 Wells Fargo Bank, N.A. All rights reserved.

Aspects of Property Disclosure and Taking Title PRESENTED BY: MORGAN M. HALFORD, ESQ. CARLSON & COHEN, LLP

Disclosure Obligations in Sales of Real Property Sellers have affirmative obligation to disclose material facts about property to buyers Agents have affirmative obligation to both discover and disclose material facts about property to buyers

Eaton v. Strassburger (1984) 52 Cal.3d 90 Court held that real estate agents have duty to disclose facts that are known, as well as facts that should be known to buyers Agent has affirmative duty to conduct reasonably competent and diligent visual inspection of property and disclose all facts materially affecting the value of the property

Civil Code § 2079, et seq Mandates agent conduct “reasonably competent and diligent” visual inspection Defines standard of care owed by real estate brokers to buyers Also provides that buyers have duty to exercise reasonable care to protect themselves (reasonable inspection) Applies to residential property

Written Disclosures Sellers must provide buyers with written disclosures of known property defects Civil Code § 1102 Transfer Disclosure Statement (TDS)

California Association of Realtors Forms Statewide Buyer and Seller Advisory Buyer Advisory Form Agent’s Visual Inspection form (conforms with Civ. Code §2079) Mold Disclosures Buyer’s Inspection Elections – Covers 30 separate areas which should be examined by buyer during due diligence Termite Inspection, water heater, smoke detector forms

California Association of Realtors Forms Septic Inspections, Property Monument, New Construction Compliance Forms Natural Hazard Disclosure Statement Megan’s Law Database Disclosure Buyer’s Inspection Waiver Buyer’s Inspection Advisory

How Do You Protect Yourself?

Be Proactive!!

This is likely the single biggest purchase you will make in your life! Now is the time to pay attention, ask questions, and take steps to protect your investment!

Take an active role in conducting due diligence inspections

Home Inspections Always insist on conducting your own home inspections during due diligence period Check inspector’s credentials! CREA Certified Be present at inspection MAKE SURE YOU REVIEW THE REPORT!!

Beware – Anyone can call themselves a “home inspector”! Many inspectors are members of a trade association but often many do not have insurance or limit their liability to the amount paid for home inspection, which may be as little as 200 or 300.

Pay Attention! Pay attention to the details of the property during due diligence period Check out property lines, settling, cracks on the side of the house or in the foundation Drainage issues Location of fences Location of trees and their roots

Pay Attention! Physical characteristics of roof, gutters, chimneys Open cabinets, check for stains Look at ceilings, walls Open closets, look inside It doesn’t necessarily take a trained eye to see a problem, or to some extent, a cosmetic cover-up

But, often the most expensive problems cannot be seen by a visual inspection

Mold is the most specific and difficult type of problem that can cause many thousands of dollars in damage but which may not be visible. Be attentive to any water damage, and if there’s damage, hire a mold inspector!

Planned Development Disclosures (Condominiums) When you are buying into a planned community, the property is likely governed by documents and statutes which dictate the operation of the Homeowner’s Association

Conditions, Covenants & Restrictions (CC&Rs) CC&Rs are recorded in County Recorder’s office Sellers must make CC&Rs available to buyer CC&Rs govern the use and many aspects of the property HOA board adopts rules and regulations pursuant to CC&Rs HOA financial information – including assessments – both regular and special Any pending litigation, insurance claims, status of prior settlements

Homes from Builders – New Homes New Construction leads to potential difficulty by the buyer Inspecting new home requires careful eye to details Qualified home inspector

Lender’s Duties After Foreclosure Generally lenders re-selling property after foreclosure are exempt from disclosure laws Often buyer does not receive documents (such as TDS) Home Inspection property very important

Anything that Affects the Value or Desirability of the Property

Deaths on the Property Any death occurring on the property within the past 3 years must be disclosed Statutory requirement under Civ. Code § 1710.2 The fact of the death must be disclosed to the buyer

Anything that Affects the Value or Desirability of the Property Noise Neighbors Airports Rapid Transit Chicken coop down the street Toxic dumps

Limitations on Seller’s Liability Those areas which the seller knew or should have known If seller doesn’t know about the condition, it is difficult to hold seller responsible

Limitations on Seller’s Liability Those areas which the seller knew or should have known If seller doesn’t know about the condition, it is difficult to hold seller responsible

Avoid Unpleasant Surprises!!

Relationship with Agent Agent representing someone has fiduciary duty – highest duty imposed by law Agent representing the other party has duty to disclose what they know Must respond truthfully to inquiries by either party

What Should You Do if You Discover A Problem? Immediately contact agent!

Remedies Mediation Arbitration Broker’s Involvement Litigation

How to Take Title

Married If married and property is community property best way is to take title as spouses as community property with right of survivorship Property passes automatically “A married man / woman” means formerly married “A single man / woman” means never married

Joint Tenancy The automatic passing to the surviving joint tenant Tenants In Common Each individual owns an individual interest in the property and the property does not automatically pass to the tenant in common on death Portion passes to heirs In Trust “Trust” part of the estate plan

COMMON WAYS TO TAKE TITLE 1. Married 2. Single Person 3. Two or More Individuals (Not As Married Couple) 4. As Trustee of Family Revocable Trust Community Property with Right of Survivorship Married as Sole and Separate Property Unmarried Man/ Woman (Divorced) Single Man/ Woman (Never Married) As Tenants in Common or as to % Undivided Interest

Statewide Buyer and Seller Advisory Buyer Advisory Form Agent's Visual Inspection form (conforms with Civ. Code §2079) Mold Disclosures Buyer's Inspection Elections -Covers 30 separate areas which should be examined by buyer during due diligence Termite Inspection, water heater, smoke detector forms