808 Oahu Realtor (Ryan Riggins) License #RS-74740

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Which Filter to Use?

A dirty air filter decreases the effectiveness of your HVAC system because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.

The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life.   Too often and you’re wasting money and not often enough and your increasing the operating and maintenance costs.

Fiberglass panel filters are inexpensive and easy to find but they’re not very efficient and they allow most dust to pass through.  They were popular years ago but there are much better products available currently.

Pleated air filters are available in MERV ratings from 5 to 12. As these filters collect dirt and other particles, they become less efficient to the point of impacting air flow.  Allergy sufferers can benefit from this type of filter.  These should be changed every two to three months based on local conditions.

HEPA filters stand for High Efficiency Particulate Arrestance. They are very efficient and more expensive than previously described filters.  Since they are very efficient, they require changing more frequently; possibly, every month.

Electrostatic air filters are permanent and washable. They generally cost more initially but the savings will be based on how long they last.  This type does not add to landfill issues or produce ozone.

Improperly maintained filters will lower the quality of the air in the home, have a negative impact on air flow, cause it to use more electricity and eventually require maintenance to the systems.

In an attempt to easily compare filters, a rating system was created called MERV, an acronym for Minimum Efficiency Reporting Value.  The rating from 1 to 16 indicates the efficiency of a filter based on standards set by ASHRAE.  Higher ratings indicate a greater percentage of particles are being captured in the filter.

To create a system to remind you when to change your filters, set a reminder on your electronic calendar to recur for whatever frequency you determine is best for you.   Be sure to keep a supply of filters on hand to be ready to change them out when the time comes.


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Should I Short Sell My Home? – Truths and Myths About Short Sales

If you’ve talked to any real estate agents recently, you’ve probably heard about the increase in short sales currently taking place. Surprisingly, there are people who short sell their home and are able to buy another home soon after. How can this happen?

If you’re finding yourself “underwater” in your mortgage, meaning that you owe more than what your home is worth, you’ve probably asked yourself the question – “Should I short sell my home?”

Short selling your home may be a difficult decision to make since it may affect your credit and potentially prevent you from getting another loan for several years. However, if you decide to short sell your home it may be the best time to do so now.

As a homeowner, who bought a home before the housing bubble burst, I’ve been doing a lot of research in terms of options available to people like me, who are underwater. Unfortunately AND fortunately, I’m not in a financial hardship and there aren’t many options for those of us who can make the house payments but want to sell their home due to other circumstances (new job).

I’ve worked hard on having a good credit score, after all, credit is everything nowadays. So, not making my mortgage payments is not an option for me. A loan modification seems not to be an option either, unless I’m late on my payments or in a financial hardship. So, my only option left is trying to short sell my home.

After speaking with several other real estate agents, I learned about some facts and myths that are out there about short sales that I wanted to share.

Myth: I won’t be able to buy another home for several years after short selling.

Truth: You may be able to buy an FHA-approved home after a short sale only if you’ve never been late on your payments and your new home is cheaper than the one you’ve just sold.

According to a letter by the Department of Housing and Urban Development (HUD) issued in December 2009, Borrowers are considered eligible for a new FHA-insured mortgage if 1) they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and 2) the proceeds from the short sale serve as payment in full.”

It’s also important to note that a person who is interested in short selling their home in order to buy a new one, will need to buy a smaller and cheaper home if they’re interested in buying soon after the short sale took place. Also, keep in mind that if you decide to buy a home right after a short sale, you’ll most likely have to pay a higher interest rate than someone who has never defaulted on a debt.

Guidelines are different for each lender. For example, Fannie Mae will not allow you to buy another home for a minimum of two years, even if you’re current on all your payments.

Myth: I will need to pay income taxes on the forgiven mortgage debt.

Truth: According to the Mortgage Debt Relief Act of 2007, if you’ve sold your home for less than what you owe, you won’t have to pay income taxes on the difference. (There are certain restrictions.)

According to the IRS, if you sold your primary home (you’ve lived in this home for at least three out of the last five years) through a short sale, you may not owe any taxes on the canceled debt. However, this act expires in December 2012. So, if you decide to list your home on November 2012 but your home doesn’t sell until February 2013, you won’t be covered under this act and you will most likely owe taxes on the difference.

However, it’s always wise to consult your tax advisor before making any tax-related decisions. A real estate agent familiar with short sales will also be able to give you more information about the Mortgage Debt Relief Act.

Myth: My credit will be ruined if I short sell my home.

Truth: Your credit score will suffer as a result of a short sale but the impact is different for everyone.

There isn’t a sure way to know exactly how much your credit score will suffer if you short sell since there are many factors that determine your score. Generally speaking, if you’ve never been late on a payment (credit card, mortgage or car payment, for example), then your credit score will decrease as a result of a short sale but not as much as if you had missed payments.

Also, the way that the bank reports the short sale to the credit bureaus will make a difference in the severity of the impact on your credit score. This is why it’s very important that you understand the lender’s terms BEFORE you agree on how the mortgage loan will close and be reported to the credit bureaus. If your mortgage lender reports that your mortgage has been “paid in full,” then your score won’t be hurt as much as if it was reported as “settled for less than full balance.”

Myth: I won’t be able to short sell my home unless I’m late on my payments.

Truth: You may still be able to short sell if there are other circumstances that prevent you from keeping your home, such as relocating for a job.

It’s true that lenders will give more consideration to homeowners that are late on their payments since it shows a hardship. However, if you are able to explain to your lender in your “hardship letter” why you need to sell the house (e.g. lost your job and had to relocate to another area to find another job), your lender may approve your short sale.

All these guidelines mentioned above could change at any time. Consulting a tax advisor, real estate agent and an attorney before making a decision will help you make a more educated decision.

We hope that this article helps you come up with questions to ask as you determine whether a short sale is for you. If you have other questions feel free to let us know.

 

Aloha


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What Is a Short Sale?

As missed payments and mortgage defaults continue to rise, many homeowners are looking for a way out, hoping to avoid foreclosure along the way. One such way is with a “short sale.”

So what is a short sale anyways?  Well, in short, it’s a carefully agreed upon sale of a property for less than the amount of the mortgage balance, executed as a means for both a homeowner and a mortgage lender to essentially cut their losses.

Although not normally a common practice, short sales have surged in popularity as a result of the most recent mortgage crisis. Typically, short sales are reserved for extreme cases when the bank or lender decides that it is in their best interest to take an early loss instead of enduring costly foreclosure proceedings. Yes, foreclosures cost banks and lenders money too.

If you’ve missed a few mortgage payments, and recently received an NOD, or Notice of Default, you may be seeking out foreclosure alternatives. But if your existing mortgage balance is greater than the value of your property (underwater mortgage), and you don’t have the ability to make your mortgage payments in full, you could have few places to turn aside from foreclosure.

The reason foreclosures weren’t an issue in the preceding few years was due to appreciating home prices. Even if homeowners fell behind on payments, their homes would be worth more than what they bought them for, so a standard sale would be possible because they gained equity in their home beyond the mortgage balance.

Nowadays, with home prices moving sideways or dropping, homeowners aren’t so lucky. That’s why many borrowers who got into negative amortization loans or even high loan-to-value loans are finding themselves with a mortgage balance that exceeds the value of their home. Even if you put 20% down and made all your payments on time, you may have just purchased a home at exactly the wrong time, which eventually pushed your loan underwater.

Let’s look at an example where a short sale isn’t necessary:

2003 Property Value: $500,000
Existing mortgage balance: $490,000
2012 Property Value: $600,000

In the above situation, though very little of the mortgage has been paid off, there is still $110,000 in home equity, so a short sale is not necessary, as the owner could sell the home and cover the cost of the mortgage with plenty of room to spare.

The homeowner in this example may have pulled cash out or opened a home equity line of credit, but because they didn’t fully tap out their equity, they’ve still got breathing room to avoid a short sale if they’re unable to make payments.

Here’s an example of when a short sale may make sense:

2006 Property Value: $650,000
Existing mortgage balance: $675,000
2012 Property Value: $655,000

In this example, though the home appreciated ever so slightly, the borrower was making 1% payments each month via an option arm, thus tacking additional interest on top of the existing loan balance. The result is a mortgage balance greater than the value of the home, making the situation ideal for a short sale if the borrower falls seriously behind on payments.

Of course, even those who made fully-amortized mortgage payments each month have found themselves upside down on their mortgages thanks to the precipitous drop in home prices over the past few years. This was mainly due to the zero down mortgages that were popular just at the height of the housing boom.

Clearly this was a deadly combination for even the most responsible of homeowners, which explains why short sales and foreclosures have become so prevalent.

Short Sales Are Complicated

So are short sales the answer? Before you think you’ve got the magic bullet, think again. Short sales are complicated, just like foreclosures. They take a lot of time and work, as well as cooperation from a number of interested parties, including the bank or lender, a home buyer, real estate agents, and you.

If you’ve missed multiple mortgage payments and are facing foreclosure, the bank or lender won’t automatically offer a short sale. You need to prove that your situation merits a short sale, which typically involves providing documentation that proves you are indeed in dire straits (not the band) with no other viable options. And even if your situation fits, the bank or lender must still decide if your particular situation works for them financially.

As the ailing homeowner, you’ll need to find a prospective buyer for your home. And as you already probably know, selling a home takes time, especially in today’s market. Couple that with the complicated process of assessing comparable sales in the area and the fact that the lender must decide if the price is right, and you’ll realize that things could take a while.

Short Sales Are a Last Resort

Though short sales can be a blessing to some homeowners, as they don’t do nearly as much credit score damage as a foreclosure (assuming you do them right), they should still be treated as a final option before foreclosure. Do you really want to lose your home and have difficulty buying another one in the future?

There are other options out there to stop loan foreclosure, such as a short refinance or a loan modification, and if you speak with the bank or lender servicing your loan, they’ll likely point out other alternatives first.

Ultimately, banks and lenders want to cut their losses, and they’ll do whatever is in their financial interest, first and foremost.

So if you do decide to pursue a short sale, you’ll need to make a strong case for yourself or you’ll likely be denied. Though the volume of short sales is picking up, it won’t always be an option. Make sure you consider all of your alternatives before making the huge decision to sell your home.


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What Homeowners Insurance Does Not Cover

A homeowners insurance policy offers basic protection from the most common disasters. But because it’s built with the average American household in mind, your policy might not account for some risks associated with your location or cover all your possessions.

Floods

Flood insurance is mandatory when you have a mortgage on a home in a high-risk flood area. Even if you live outside a high-risk area, don’t make the mistake of assuming you’ll never experience a flood. In fact, nearly 20% of flood insurance claims come from areas of moderate to low risk, according to the National Flood Insurance Program. Whether it’s a flash flood or just a few inches from a storm, water can cause massive damage to your home and belongings. If you’re not financially prepared, the effects can be devastating. The National Flood Insurance Program has joined with insurers to offer flood insurance. Premiums, which vary depending on where you live, start at just $129 a year.

Earthquakes

Basic homeowners insurance policies don’t offer earthquake coverage. Fortunately, in many states, special earthquake coverage can be added to your policy.

Anyone who has seen the aftermath of an earthquake understands the devastation one can cause. The extensive shaking and cracking can demolish entire buildings, destroying your home and possessions. If you live in an area prone to earthquakes, consider strengthening your policy with this coverage.

Home Businesses

Your homeowners policy provides limited coverage for business equipment. Also, you are not covered for liability related to your home business — if, for example, someone gets food poisoning through your catering business or if a student visiting your home trips and breaks an ankle while leaving a piano lesson. If you run a business from home or have expensive office equipment, you may need additional coverage.

Valuable Personal Property

Homeowners policies can offer sufficient coverage for most personal property, but there are limitations. Valuable personal property insurance can take over where homeowners policies leave off. VPP insurance can provide coverage for losses due to fire or theft. It also covers damage or if an item gets lost — say a stone falls out of a ring or the ring falls down the drain. If you own valuable items such as artwork, jewelry, musical instruments, firearms, furs or silver, consider obtaining a VPP policy.

Broader Personal Liability

Homeowners policies offer limited coverage for liability protection. Given the litigious world we live in, an umbrella insurance policy can provide additional peace of mind. An umbrella policy helps protect you and your earnings if someone, such as a baby sitter or handyman, is injured at your home. It also helps provide protection if you (or a family member) are found liable in a serious automobile accident.

This type of insurance can provide extended liability coverage beyond your home and auto policies. Consider shielding your personal financial assets with additional liability insurance.


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THE MIRACLE HOUSING MARKET: Why today is a great time to sell, and a great time to buy.

rudy lira kusuma real estate broker

After years of hearing nothing but doom and gloom about the real estate market, it’s hard to believe that today all of the news is about the “housing market rebound” and “why now is a great time to buy or sell a home.” The housing market has recovered much faster than anyone imagined, and it’s taking people by surprise.

After the years of bad news, many people considering buying or selling a home gave up on the idea. For some, the housing market crash meant they lost all of the equity in the their home. Others found themselves underwater on their mortgage. The housing crisis also dissuaded many potential buyers, and the economic recession put buying a home out of reach for many more.

As the housing market recovery receives more attention, however, more and more people are realizing that today’s housing market provides amazing opportunities for both home sellers and homebuyers. Those looking to sell their homes are shocked to learn just how much equity they’ve gained back in their homes. Potential homebuyers are amazed by just how low interest rates are and how high home affordability is.

If you’ve been waiting to buy or sell a home, wait no longer. Today’s housing market provides unique opportunities that may not last. Let’s take a closer look at the reasons why now is a great time to buy or sell.

Why Now Is a Great Time to Buy

1) Home Affordability
For many homebuyers, the first question when looking for a home is “can I afford this?” Homes are more affordable today than they have been in decades. Home affordability is measured by the ability of a family earning the national median income to purchase a home priced at the national median home sale price. And according to the CoreLogic Case-Shiller Indexes Report, housing affordability was near a 40-year high at the end of the third quarter of 2013. High home affordability is placing homeownership within the reach of more and more people. However, home affordability is expected to take a hit as the year progresses and both home prices and interest rates continue to rise in 2014. So if you’re considering purchasing a home, it’s important to act sooner rather than later.

case shiller real estate index

2) Low Interest Rates
When the housing market crashed, mortgage rates plummeted along with it. In January 2013, the average mortgage rate was 3.41 percent compared to 6.22 percent in January 2007—a historic low for mortgage rates. Low mortgage rates have helped keep home affordability high and mortgage payments low. These record low interest rates, however, won’t last forever. Already in March 2013, the average interest rate increased to 4.28 percent, and rates are expected to rise by as much as a percentage point in 2014. So if you’re considering buying a home, act soon. Slight increases in mortgage rates can have a significant effect on the size of mortgage payments, so take advantage of today’s rates while they last.

low interest rate

 

3) Buying is Cheaper than Renting
Low interest rates and home affordability have made owning a home cheaper than renting one in all 100 large U.S. metropolitan areas. In fact, according to Trulia’s Rent vs Buy report, owning a home is 38% cheaper than renting. If you’re looking to buy a home, there’s no better time than now!

rent rise

 

Why Now Is a Great Time to Sell

1) Seller’s Market
As you can see from the previous section, now is a great time to buy a home. Low interest rates and high home affordability are attracting large number of homebuyers into the market. However, while demand rises, the number of houses on the market remains low. In January 2014, there were 1.90 million existing homes available for sale. This represents a 4.9-month supply, where a 6 to 6.5-month supply represents a balance between buyers and sellers. High demand and limited inventory has created a seller’s market. What’s more, slight increases in interest rates are driving buyers to act with urgency, making competition over the limited inventory common. These market conditions are allowing homeowners to receive more for their homes and make now a great time to sell a home.

sellers market in san gabriel valley by rudy lira kusuma

real estate sellers market in san gabriel valley
2) Home Prices Have Recovered
Homeowners who explore selling their homes are often surprised to find out how much their home is worth today. The same conditions that have created a seller’s market have helped drive home prices up. In January 2014, the median existing-home price was up to $188,900, up 10.7 percent from January 2013. Housing prices recovered faster than anyone expected. For many homeowners, it means having equity in their home for the first time in years. If you want to sell your home but have not been able, it’s important to reevaluate your situation. Your situation may have improved more than you think.

san gabriel home prices
3) The Number of Homes for Sale is Increasing
In 2014, appreciation has slowed slightly. While 2013 saw double-digit growth, CoreLogic predicts home prices to rise closer to 4.2% from January 2014 to January 2015.

2014 pending home sales in san gabriel valley

new home sales by rudy lira kusuma

The slowing of appreciation is attributed to many factors, but chief among them is an increase in the number of homes for sale. As demand continues to increase, more people are expected to put their homes on the market. Many homeowners have equity for the first time and years and are finally able to sell their homes. Others that have been waiting for the market to improve are beginning to realize that it has.

New home starts are also up. In 2013, homebuilders started construction on slightly under 1 million homes, and even more new homes are expected this year. When these homes hit the market, they will add to the inventory, reducing the amount of leverage home sellers have in the market.

 

 


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Creating Summer Buyer Attraction

Creating Summer Buyer AttractionSummer is a great time to invest in outdoor upgrades and indoor options that make your home appealing to buyers. After months indoors, homebuyers respond quickly to outdoor amenities when scoping out homes to buy. Creating outdoor living areas and highlighting outdoor views give potential new owners the impression of both expanded space and bright, fresh access to nature.

Establish an inviting entry

Make sure your entry is bright and enticing. Set flowerpots to either side of the entryway. Make sure the door itself is clean of fingerprints and grime, or freshly painted a cheery color. Provide a doormat so guests do not track debris into your home.

Bring the outdoors in

In the winter, homeowners often cover windows with heavy drapes to keep out the chill air and drafts. When showing your home in the summer, remove heavy draperies so potential buyers can clearly see the outdoor views. Clean off fingerprints and smudges from windows and window frames and dust vertical or horizontal blinds and set them to allow both light and views.

Add colorful summer-weight throw cushions to living areas and beds, and add flowers to both your bed and bath areas. A bowl of bright seasonal fruits completes a summery look to your kitchen table.

Store away quilts and afghans. Clean ashes from your fireplace and clean the soot from fireplace glass to remove the last vestiges of winter. Set a floral arrangement or plant on the hearth. Use light, fresh scented beads or reed diffusers instead of candles. Use the same scent throughout the house to avoid competing odors.

Keep your home cool but not cold. If you have air-conditioning, make sure to set it to cool your home in plenty of time before your potential buyers arrive. If you use fans to move your home’s air, make sure they are dust free and running quietly. Be sure attic fans and other cooling devices operate correctly.

Extend the living area

Showing your home in the summer means potential buyers will check out the outdoors much more thoroughly than in the winter months. Set up seating areas, hammocks, picnic tables, or other patio furnishings to display the full range of your property. Add planters and box gardens with bright, colorful flowers. Keep the lawn and landscaping trimmed and neat. Take care of pests like wasps and ants that might scare a potential buyer away. Take care to trim bushes away from windows and doorways.

Make sure the exterior of the house is clean and fresh. Clean mold off vinyl siding and moss off brick and stone exteriors. Clear gutters and downspouts and make sure they attach to the structure correctly. Wash windows and screens, and touch up paint on doors, window frames, and trim.

Make sure to organize tools, hoses, and other yard and garden clutter. Protect visitors to your home from tripping over lawn toys or the garden hoe. Remember that buyers want to check out every nook and cranny, so keep garden sheds and storage areas accessible and organized.

Summer buyers want to know they can use the entire property for their own summer fun. If you need more suggestions on how to prepare your property for a summer sale, contact us today.


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Oahu’s USDA Loan – only has 4 months left for the current eligible areas

USDA_Rural_Zero_Down_Home_Loan

 

Chop! Chop! We have 4 months left with with the current eligible areas for the USDA Rural Loan Program. For your clients with little or no money for a down payment, this is the perfect loan program for them.

Files with accepted offers should be submitted on or by 09/01/2014 in order to make to USDA by 10/01/2014.

Below is the current eligible area and loan program information:

Eligible area until 10/01/2014:

Ahuiamanu, from the north north side of Haiku Road and all areas to Kahuku
Central Oahu from Whitmore Village, north to the North Shore and the Kunia Area
Ewa Beach
Kapolei
Makakilo
The entire North Shore
The entire Waianae Coast
Village Park and Royal Kunia subdivisions
Waikele
Waimanalo from Olomana Golf Course to Sea Life Park
Waipio Acres
Windward Oahu from Kahuku, south to Ahuiamanu

Loan Program Information:
100% Financing (No down payment)
2% Guarantee Fee can be financed into the loan (102% LTV)
Not limited to first time home buyers
Mortgage insurance does apply (estimated at $33 per month for every $100,000…example on a $300,000 MI would be $100 per month)
Mortgage Credit Certificate (MCC) can be applied (first time home buyer tax credit program)
Income restrictions apply – Household of 1-4 people: $118,450 and Household of 5- 8 people $156,350

It will be a privilege to assist you to home ownership. Please contact me for more information or any questions you may have.