Category — Blogs

Fannie Mae is offering 3.5% of the purchase price in closing help for buyers on all HomePath properties.  HomePath homes are foreclosures which sometimes have been updated with fresh paint and carpeting.  Other incentives are:

• only 3% down
• no appraisal fee (savings of up to $450)
• no mortgage insurance (savings of approximately $240 on a loan amount of $250,000)

This program is available only for a limited time:

• offer must be submitted on or after April 11, 2011
• settlement must occur on or before June 30, 2011
• only available to buyers who will be living in the home – owner/occupants

The following 3 mental roadblocks are identified and addressed by Dan Steward, President of Pillar to Post Home Inspections.  Regarding roadblock #2 I would like to add that in the central Maryland housing market, many areas are experiencing a “balanced” market in terms of inventory.  This means that the number of available homes is equal to the number of homes sold or sale pending.  What the market has right now is fewer homes that are priced to sell and in good condition.  Those two factors (price and condition) almost guarantee a fast sale – of course, location, location, location will effect salability – but price cures any “location” issues.

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#1 – I know my house is too big and expensive to maintain, but it’s filled with good memories.

A lot of people, specifically in their 50s and 60s and beyond, are reticent to sell a home, because it’s where they raised their kids. At holiday time, that pull becomes even more powerful, when family comes back to visit. While memories are extremely important, they can keep people in a home that’s too expensive to maintain and too large for them, for too long. And, what’s worse, sometimes young adults pressure their parents to hold onto a home. If you’re one of those folks who’s just left the nest and you suspect that your parents are hanging onto the home just for memory’s sake, a little conversation goes a long way. Let your parent or parents know that you want the best for them, and if that’s a newer, easier-to-maintain home, that’s OK by you. Often, giving a parent gentle encouragement to move on, frees them up to make the decision they know they should make: to sell and downsize.

#2 – There’s so much inventory out there. Who’s even going to stop to look at my house?

It’s true: in this market, there are a lot of options out there for buyers. But sellers who lament a flurry of potential competition often use this as a bad excuse not to sell. Many real estate professionals these days know a lot about preparing a home for sale, including conducting a home inspection to clearly understand the condition—and value—of your home. Speaking with a real estate professional can give you inspiration and ideas that you never imagined regarding how to distinguish your property. That’s the thing about selling your house: you don’t have to go it alone. In the best case, you can enlist a team full of great ideas.

#3 – The housing market’s down.

The Federal Reserve recently noted that after losing ground in the spring, Americans’ wealth grew 2.2% throughout July-September, and household net worth rose to nearly $55 trillion. But despite this, the value of real estate holdings sank 3.7%. It’s true, the real estate market truly hasn’t fully recovered, and it would be disingenuous to sugar-coat it and say that you’ll easily get your ideal asking price in a week if you sell. But still, too many people read the second statement above—home prices are down—without taking it in stride with the first: things are improving overall. A lot of us focus on bad news without looking at the good. Home values have not fully rebounded. But the increase in Americans’ wealth means there are more people with cash freed up to buy. Also, these figures don’t take geographical areas into account. Your area might be doing better than the national average; values aren’t depressed in every single market. The best way to know what’s best for you is to ask a trusted real estate professional. Communication is the key to success, rather than hiding when you see a negative headline.

By Dan Steward , President of Pillar To Post Professional Home Inspections.

If your taxes are high, as they are in many areas where home values have seen a drop in the past two years, consider appealing your assessment.  Maryland assesses property over three year cycles. Out-of-cycle appeal deadlines are December 31st for properties entering the 2nd or 3rd year of the cycle.

If you are in the 3rd year of your cycle you will receive a new tax assessment in January.  Appeal deadlines are within 45 days of issuance of new notices (January) at the beginning of a new cycle.

Not only will higher than necessary taxes effect your monthly payment, they will make it harder to sell your home.  If you need some recent sales in your neighborhood to support your appeal, please contact me and I would be happy to help you out.

Fannie Mae has a great program that is worth considering if you are thinking of purchasing a home before the end of the year.  

Check out these incentives:

• 3.5% toward buyer’s closing costs
• loans up to the jumbo conforming limit (which varies by region)
• 3% downpayment for owner-occupied homes
• downpayment can be from your savings; a gift; a grant; or a loan from a nonprofit organization, state or local government or employer
• no appraisal fees (lowers your closing costs)
• no mortgage insurance (lowers your monthly payment)
• available for investors (10% down payment)
• eligible for HomePath Renovation mortgage
• credit scores as low as 620 FICO
• fixed or adjustable rate options

This program is only for HomePath approved properties.  To search for a HomePath home, visit http://www.homepath.com.  If you see something that you like, just give me a call - I’ll be happy to show you any HomePath or other property you are interested in.

Federal and State guidelines for lead paint in homes are extensive and carry stiff penalties if not disclosed in a real estate transaction – hence the many places that it comes up in residential purchase contracts.

Even radon has become the “worry du jour” with all buyers getting their homes tested for a hazard where the EPA standard is a guess at best and many scientists are still arguing over the studies that point to it as a health hazard.

Asbestos, at least at the Federal level and State of Maryland level is almost a footnote in a general disclosure form, yet asbestos is potentially a greater threat to home occupants than lead or radon!  We know for a fact that airborne asbestos particles cause cancer in humans.  In industry they make a very big deal about asbestos abatement and adhering to mandated detection, air quality sampling and removal guidelines.  Nevertheless, the concern is almost non-existent when it comes to our homes.

The average home buyer has no idea where asbestos may or may not be lurking in the home they select.  Asbestos can be in ceiling tiles, textured ceilings, floor tiles, pipe insulation, paper backing on carpet, older furnaces, roof tiles and exterior siding.  Asbestos is only a hazard if it is disturbed.  So if you have textured ceilings (especially in homes built before 1990) and you decide to sand them down because you hate the texture and want to redo them – you are putting yourself at serious risk.

Asbestos test kits are available at hardware stores or can be ordered online – one source is www.prolabinc.com.  If you find that your textured ceiling does have asbestos, you will need to hire an asbestos abatement company to remove the substance and may even need to move out of your home while the work is being done.

DIY instructions for removing your popcorn ceiling – after you have made sure it doesn’t contain asbestos, of course – can be found at eHow.

For more information on asbestos, go to the EPA website at www.epa.gov and search for “asbestos in your home.”

So here you are a few days before settlement -the movers are scheduled, the utilities switched over in your name and the post office has the order to forward your mail – a call comes in from your lender: OOPS!  Your loan is not approved and that gorgeous home that you and your agent negotiated so hard to get at an awesome price slips away. . .

Unfortunately, this scenario will become more common with Fannie Mae’s new Loan Quality Initiative that requires lenders to run a borrower’s credit score a second time a few days before closing along with other last minute verifications before final loan approval is granted.  If there’s been a dip in the credit score (perhaps the borrower took out a new credit card) the lender will be required to delay closing, ask for more down payment, increase the interest rate, or at the worst – cancel the closing.

Many lenders have already been running these last minute verifications – the difference now is that Fannie Mae requires that all lenders do so.

Here are 7 tips for consumers who are in the process of buying a home and want to settle on time:

1. Don’t change your employement status

2. Don’t make major purchases (car, furniture, home theater, vacations, etc.)

3. Don’t increase your credit card debt or miss any payments

4. Don’t change bank accounts or make undisclosed large deposits

5. Don’t apply for a credit card, co-sign a loan, or make a credit inquiry

6. Don’t spend money you have set aside for closing – not any, not ever

7. Don’t delay in providing all paperwork asked for by the mortgage company

SDLP (Settlement Downpayment Loan Program) has received new funding, and will go live in July!

Not too many programs out there that give home buyers money for down payments:  The

This program provides for $15,000 to $40,000 (income dependent) in down payment and closing cost help to qualified buyers who are purchasing in Howard County.  Also, you don’t have to pay it back unless you sell or refinance.

Hurry and call now for a referral to a lender who can take your application for these funds – just like the last batch of money, this too will run out!   

Image by bredgur via Flickr

A few years ago banks would give a loan to just about anyone that applied for one – the rules were lax or non-existant.  You could get a loan by just stating your income and without verifying that was in fact what you earned!  Many other loans were made with no documentation from the borrower whatsoever.  While these types of loans were nice for the self-employed and others who have difficulty proving their earnings, they became known as “Liar Loans” because they almost asked the consumer to lie so they could qualify for a bigger, better house.

So now we’re seeing short sales and foreclosures everywhere.  People just got themselves in too deep to dig out.  If they needed to sell, prices dropped well below what they owed.  When they lost a job, all of a sudden that house payment was too much to handle.  Or sometimes it was an adjustible rate mortgage that adjusted to way more than they could pay.

What does all this mean to us today? It means that the underwriters who approve loans for mortgages have become very, very careful and the standards have tightened up to such a point even well qualified buyers can have difficulty getting financing, or conditions are put on loans at the last minute that delay settlement until they can be met.

Consider:

1. Credit Scores (FICO) – in 2006 you could get into a home with a 680 FICO score.  Today the magic number is 740.  Loans are made if credit scores are lower than this, but they come at a hefty cost in interest rate, or points.

2. Anything that looks “iffy” can send loan approval into a tizzy – underwriters are scrutinizing everything – each deposit into your bank account, withdrawals, and anything else that catches their eye.  Loan officers have to verify, re-verify and verify again.  Soon Fannie Mae and Freddie Mac loans will require the lender to run the borrower’s credit score 3 days before settlement – better hope that score didn’t dip too far in the 30-60 days from loan application!

3. Lending guidelines are changing so fast that lenders can’t keep up with them.  If a buyer was considering a particular loan a month ago, it may no longer be available, or the parameters have changed to a point they would no longer be able to get that loan.  Sometimes these changes happen the day of settlement – end result: no loan, no closing, no house!

4. Condos and any attached home (townhome, rowhome, duplex) that is part of a PUD (Planned Unit Development) that has an HOA or Condo Association has additional requirements that must be met before the loan is funded.  While all of this is certainly do-able, it just makes the process longer and more arduous.

5. Appraisals can be tricky after the Home Valuation Code of Conduct changed how appraisals are ordered and completed. Most lenders still use a company that employs appraisers who are knowledgeable in their region, however, once and awhile an appraisal will come in way under where it should be – for whatever reason – and that can derail a purchase.  Other times the appraiser will tag repair items in the home that must be completed before the buyer can get their loan (mostly with FHA and VA loans).

About now you’re probably thinking “no one can buy a home!”  But that isn’t true.  It’s definitely harder now and there are a few more hurdles to clear, but people get loans and buy houses all the time.  They have great credit (over 740 FICO), have a small amount of debt, have stable employment, and are bringing some cash to the table for the down payment.

But the most important thing they have is a good Realtor® to guide them through the hoops to home ownership.