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A rent to own or lease option is a solution for some buyers and sellers… not all.   Rent to own also known as a lease option is not always a well understood process.   Comprising of two main components:

• 1. Lease/Rental Contract
• 2. Option to Purchase

Loosely or poorly structured lease options can leave the seller, buyer or both in the middle of a misunderstood legal contract.

A properly executed lease option should consist of at minimum:

• 1. A Lease/Rental agreement that includes a rental price, rental period and who pays for and is responsible for upkeep, existing mortgages, taxes etc. during the rental period. It should clearly detail what amount of the rent, if any, is to be used as future credit against the purchase price or down payment and what happens to these funds if the buyer does not exercise the option. A reference to the separate Option Agreement.
• 2. An Option Agreement that clearly details the Option period, the amount of Option Fees and what happens to the fees if the buyer exercises the option or walks away. The option binds the seller to sell if the option is exercised. The buyer has the option to proceed within the time frame specified or walk and loose any option monies.

A detailed consideration of exposure is always in order with this type of contractual agreement.   In general both parties stand the potential of great up and down sides depending on the direction of the market. Lease options without a sales price, in an up market, are potentially one sided (in favor of the seller) and harmful to the buyer.

While in a down market, if the buyer walks, the seller could end up with an asset worth substantially less than when it was originally contracted in the option.

Careful consideration before entering into this type of contract is advised and the professional guidance of a real estate attorney highly recommended.

For more information see Rent to Own Pro-Con

For all of your High Desert Real Estate needs visit our web site.

As housing price have dropped in the High Desert real estate market loan amounts have decreased as well.   If you’re planning on taking out a loan on your real estate purchase for less than $75,000 you should be prepared to run into to some additional loan expenses (not interest) of approximately 2% of the loan amount.   Lenders have added these fees in order to cover expenses on lower returns for smaller loans.

If you need the names of some good lenders, let us know.   We are out there every day working with them and we know who the best ones are.

For all of your High Desert Real Estate needs visit our web site.

Since mortgage rates have decreased and have been hitting record lows throughout the High Desert, many people are considering refinancing  their mortgages. This can be a very beneficial  thing to do if you have all of the proper information.

For starters, you should always read through your current mortgage to find out if you will have to pay penalties for getting out of that loan early. Another useful piece of information to know, if you are contemplating a refinance, is it generally makes the most sense to refinance when you can lower your interest rate by two points. For example, going from 8 percent on a thirty-year fixed loan to 6 percent on a thirty-year fixed loan makes good sense.

The other most important consideration is how long will it take for you to recover the refinance fees in monthly savings on your “new” loan. You can calculate this by dividing the total costs of the refinance by your monthly savings. This number represents how many months you will need to live in the home to cover the costs of the refinance.

Finally, if your refinance is successful and you have lower monthly payments, it might be best to use that money to save, maybe  for a rainy day, towards a retirement plan or for a child’s’ college costs.

For all of your High Desert Real Estate needs visit our web site.

As foreclosure activity continue to intensify in the Inland Empire areas, fueled by job losses and the failure of high-risk mortgages made a few years back prices are likely to settle more before bottoming out sometime next year.   But as price eventually hit bottom The High Desert Region will provide some of, if not, the best prices found in real estate in California.   When the dust finally settles people are going to race faster than they are today to pick up a piece of California real estate at these prices.

For more information see:

Foreclosures Intensify

Decision to Move

For all of your High Desert Real Estate needs visit our web site.

Here is the scenario:

• 1. Federal First Time Home Buyers Tax Credit ends
        12/01/2009  (assuming it is not extended)
• 2. New Lender Rules Allow for a 3 Day Right of
       Rescission
• 3. Lenders are currently backed up and slow at closing
       loans

As we close in on the deadline for the tax credit of 12/1/2009 (see link above) keep in mind you will have to be in contract with a home by approximately the first part of October to close by 12/01/09, don’t expect the IRS to be benevolent if you close a day or two late.

With the new Lending rules you could end up with a 3 day delay if your lender makes any mistakes.

Most lenders are backed up and not closing loans on time due to myriad rule changes and short staff.

Because most lenders attempt to close at the end of the month we are forecasting a perfect storm that is going to cause a lot of home buyers a divesting blow due to late closings.

Our recommendation is for you and your real estate agent to ensure that your lender has disclosed everything properly and you loan in formally pre-approved well in advance, lock those interest rates as early as possible.  

Last and most important… Close early.   The last day of the month is November 30^th, that is a Monday, Thanksgiving is on Thursday November 26 and that is going to back up the entire week due to escrow and bank closing both Thursday and Friday.   We highly recommend that any closing should aim at Thursday November 19^th allowing for the avalanche of closings expected in the last week and any delays that could occur.

As Real Estate Brokers that are always on the lookout for the client we hope you will consider us.

For all of your High Desert Real Estate needs visit our web site.

All good things eventually end… as with the $8K tax credit time is running out.  

If you decide to purchase a home  in The High Desert by December 1, 2009, you will be entitled to an $8,000 tax credit. This amendment to the economic stimulus bill will be available to if you purchase your first home between 1/1/2009 and 12/1/2009. Home buyers will  be entitled to claim a total tax credit  of $8,000 or 10% of the purchase price, whichever is less.    

To avoid possible  abuse of this credit,  it is only allowed for  your primary residence  and will only have to be re-paid if said house is sold within two years of purchase. Keep in mind that you must close on or before December 1, 2009 to be eligible for the credit.

Most closings take about forty five to sixty days, so with that in mind you must go under contract by October 2^nd to 17^th, 2009 – this gives you sixty five days from today (July 28^th) to find your first home. If you manage to meet these deadlines, all you have to do to claim your credit is fill out I.R.S. Form 5405.

For more information about this credit  go to the IRS website

For all of your High Desert Real Estate needs visit our web site.