“Is APR the best way to shop for a loan?”

Answer:

From my preferred lender, Robert Geiler of Rancho Financial:

“The APR was developed to show borrowers the true cost of getting a loan as an interest-rate rather than a dollar amount. It was supposed to make it easier for to compare rates because, theoretically, the rate should include the costs of getting the loan. Unfortunately, HUD (U.S. Dept of Housing & Urban Development) did not standardize all the fees that must be used to calculate the APR. Some lenders do not include certain fees that other lenders include, rendering the APR a useless rate to compare.

For example, escrows are not used in all states. Since most online lenders serve several states, they don’t include escrow fees when calculating an APR (though they’re supposed to). So an APR by a California-based lender will typically be higher than an online lender.

In addition, fees for processing, underwriting, notary, courier, emailed documents, tax service, sub-escrow, loan tie-in, etc., are all APR fees. But many lenders bundle those fees into areas that are not addressed in the RESPA guidelines specifically so their APR appears lower.

I could go on and on about treatment of FHA MIP premiums, VA funding fees, mortgage insurance premiums, monthly mortgage insurance, etc, but I think you get the point.

APRs are not the way to shop for a loan.”

Not sure if you got one of these emails:

“Another Obama Nightmare. Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home etc. When did this happen? It’s in the healthcare bill. Just thought you should know.”

Answer:

I’ve heard this from a few people. Love or hate the healthcare bill, this rumor is misleading… but with a bit of truth.

It sounds like it’s a tax specifically on home sales that applies to everyone selling a home. The truth is:

- It’s a tax on all investment income, be it from the sale of real estate or another investment

- For most people selling their primary residence, the first 250K (singles) or 500K (couples) of gain is tax-free

- The tax applies to singles earning over 125K/year and couples earning over 250K/year

Bottom line: it’s NOT a home sale tax per se, but some people WILL indeed pay additional taxes on their San Diego home sales.

For a more detailed explanation, see FactCheck.org or Snopes.com.

“My wife and I have been looking at San Diego homes and can’t believe how much of a mess some are. We went into one that had piles of old newspapers and junk stacked all the way to the ceiling. I’d never buy a home in the disgusting condition some are offered in. Do agents tell sellers how to get their property ready for showings?”

Answer:

Some agents don’t advise their clients. Others do, but the seller is unwilling or unable to take their advice.

But here’s a different perspective…

If you wanted to buy a car and saw one that screamed “Wash Me,” would you cross it off your list just because it was dirty?

The same goes for a house! A disgusting, filthy house full of junk could be a great opportunity for you.

If it just needs some cleaning, junk hauled away (that the seller would have to do, per contract), and a few other cosmetics… and …if you can get the home at a good price because other buyers who lacked vision crossed it off their list… then you might get what everyone wants:

A “good deal.”

So the next time you’re househunting, surprise your spouse: Act repulsed by the nice ones and get excited about the ones that make you wish you were wearing a hazmat suit.

“Are many owners carrying back notes nowadays? I almost never see it offered. With savings interest rates in the 1% range, you’d think it would be very common.”

Answer:

Good question.

I agree with you that many owners would benefit by “being the bank” and letting the buyer make payments on a first or second trust deed provided the buyer makes a sufficient down payment as security.

Additionally, many owners who would be paying tax on a gain would get some benefit by carrying a note.

However, most owners prefer the liquidity of just getting the cash and the clean break from the property.

So I rarely see “owner will carry” terms offered on San Diego real estate.

“A Realtor told me we can market our home “As Is” and not make any repairs. Is that a good idea?”

Answer:

No, for at least two reasons:

1. Marketing “as is” gives many homebuyers and agents a sneaking suspicion that your home has problems you don’t want to fix. This will lead to buyers making lower offers.

2. Despite the “as is” label, homebuyers will still ask you to make repairs if they find things wrong with your home.

So you get a lower price and still may have to make repairs. Sounds like you got some poor advice.