Posted on Friday, February 27, 2009 8:06:50 PM by free-n-TX
February 26, 2009 - President Obama released his budget proposal this morning. A small section of the sweeping budget plan has the potential to become a major impediment to a recovery in real estate markets across the nation. NAR is 100% opposed to the provision that modifies the Mortgage Interest Deduction and is prepared to use its formidable array of resources against its enactment.
As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will set of a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved.
As you read this NAR is launching a multiphase plan of action to eliminate this provision from the budget plan. In the next 24 hours, NAR will be expressing our concerns directly to President Obama, to all members of the United States House of Representatives and the Senate, placing advertisements in the publications read by Washington, DC decision makers. Additionally, NAR will be forming a coalition with other groups affected by this proposal.
Every time you watch the news, open your homepage on the computer or read a newspaper, we're told home sales are declining and that last month was even worse than the previous month which was the worse in thirty-odd years. There is still no end to falling prices and even amazing rates, like 5% mortgages are not getting people to sign on the dotted line. Then on Thursday, President Barack Obama announces in his proposed budget, that the most sacred of tax deductions, (the mortgage interest deduction) will be reduced for certain homeowners.
The timing of this proposal couldn't be worse. I believe we need every incentive available for people to make a home purchase. So, Joe Jones, down the block, is making $209,000 a year and wants to purchase a house, thereby supporting the economy, the real estate industry and the construction industry and you're going to penalize him by allowing him a smaller deduction on his taxes? We need as many people buying homes as possible. If it takes incentives, LOWER tax rates, or one-percent loans (with no adjustable rates to go up or balloon payments) or prices to finally bottom-out, so be it. Let's not penalize Joe Jones for being "rich" (and when did that become a dirty word?!?).
I realize that President Obama's proposal must pass Congress and even with an approval rating hovering about 12%, I hope cooler heads in Washington will prevail and the mortgage interest reduction remains as is.
And don't even get me started about lowering the deductions for charitable contributions!
With all the recent financial troubles daunting many American families, we've seen a huge increase in listings called "Short Sales." While short sales can represent a "sweet deal" for the buyer looking to buy a bargain - in many cases, they can be more trouble than they are worth.
WHAT IS A SHORT SALE?
A short sale is when a homeowner is unable to sell their home for enough money to pay off their mortgage. (This is either because they have been loaned more on the home than the market will bear, or because values in the area have decreased substantially.) Therefore, the bank agrees to accept less than the mortgage payoff in order to avoid foreclosure proceedings (which can cost the lender up to $60,000).
BEWARE - THE ASKING PRICE IS THE AGENT'S "BEST GUESS"
When a home is listed as a short sale, it is extremely rare that the lender has already been consulted in order to approve the list price. The listing agent will attempt to estimate an amount far enough below market value to attract buyers, which is still high enough to receive approval from the lender. For that reason, the asking price that attracts the buyer in the first place may not be the amount the bank will accept. In addition, it's not only unusual to negotiate less than the agent's estimated short sale price, but also fairly common to end up being asked to pay more than that price.
THE HOME WILL BE SOLD AS-IS
Before a buyer begins negotiation on a short sale home, it is important to know that the lender (who is paying all the fees in the transaction) usually will not make any repairs (including pest inspections or treatment, and home warranties). This means that any questionable items that come up as a result of a home inspection are for the buyers' knowledge only. However, it is imperative to go through with the inspection process, and leave this contingency as a "loophole" in case serious issues come to light.
THE CLOSING DATE IS ANYONE'S GUESS
It can take 2-6 weeks just to receive an answer from the lender on the original purchase offer! If there are two lenders involved (a "first mortgage" and a "second mortgage"), those two entities have to agree on how to split the loss - so it can take even longer to reach an agreement. In addition, the short sale closing process takes an indefinite amount of time. It is extremely unusual to close in 60 days or less - and pretty common to take several months before finalizing the sale. So buyers in a time crunch may not be able to coordinate a closing fast enough to meet their needs.
HIRE AN AGENT WITH SHORT SALE EXPERIENCE
Once a buyer has decided to pursue a short sale "eyes wide open" - it's very important to have a Realtor on their side that is familiar with the short sale process. Although buying any given short sale home is never a "done deal" until closing - having the right agent can literally make or break the deal. A great deal of communication, understanding of the process, and follow up is necessary to give a short sale its best chance for success.
While buying a short sale home can represent a great "deal," there are many potential stumbling blocks along the way. It is important to know just what you're getting into going in, so you're prepared for the possible pitfalls you may experience during the sale. Most of all, hire a Realtor with experience in all kinds of sales (short, foreclosure, traditional, etc.) so that he or she can help you explore your options, and choose the best route for you.
If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
Here is an overview of some benefits of the Economic Stimulus Plan for 2009 and the Homeowner Affordability and Stability Plan that may impact you.
Stimulus Plan - Tax Credit for Homebuyers
The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, first-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.
It's important to remember that the $8,000 tax credit is just that... a tax credit. The benefit of a tax credit is that it's a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.
Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying "homes" include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.
While details are sketchy - we will expect to get some clarity soon as to an additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans would be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
Homeowner Affordability and Stability Plan
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify.
(Posted with thanks to Barry Allen of First Federal Bank of Missouri.)
If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
I've heard it time and time again - my house appraised for $x, so that's what I am going to list it for. While it's great to know the approximate value of your home before listing it for sale - many sellers are misled (albeit unintentionally) by appraisals. Many times, the "appraisal value" a seller receives can vary significantly from the true "market value" of a home. Here's why...
IF THEY WORK FOR YOU THEY WANT TO DELIVER GOOD NEWS
When you hire a private appraiser, that company is working for you - the seller. Therefore, they want to earn your money, make you happy, and provide you with the highest possible value for your home. The typical private appraiser who comes out will likely use the "Cost Approach" method. This means he or she will estimate the amount it would cost to replace the home with all the improvements, minus depreciation - then add the approximate value of the land. While this method is a handy tool for getting an approximation of the value of your home - to satisfy curiosity, for instance - no sales comparison is used. Therefore, the value determined by the appraiser could be much higher than the market value of your home.
IF THEY BUY UGLY HOUSES IT'S GOING TO BE BAD NEWS
When you call one of the many investment companies out there, it's their goal to make money - not make you money. Therefore, when determining the "value" of your home, they will likely use what's called the "Income Approach" method. This involves estimating what an investor would pay for your home, based on the money he/she would put into it, and what they'd likely profit either by re-selling it, or in monthly rents. SO, if you call 1-800 WE BUY ANY HOUSE IN 10 DAYS - it's true you may be able to sell your house quickly. However, you will likely be given a value that is much less than the market value of your home - and end up "leaving money on the table" at closing.
ONLY A REALTOR WILL TELL YOU WHAT YOUR HOME IS "REALLY" WORTH
When you call a Realtor to do a Comparative Market Analysis (CMA) for your home, he or she will use the "Sales Comparison Approach" to determine the value of your home. This method will help you determine the current and actual market value for your home, as it involves comparing several properties similar to yours that have sold recently. While you could still receive a wide value range if you interview several Realtors, this approach is still your best bet for determining the current value of your home. (Tip: If you do interview several Realtors, look closely at the comparable properties they use to value your home. The more properties the better - and the more recent the sales the better. One or two properties that sold 9-12 months ago really have nothing to do with today's market!)
As you can see, appraisals are more of an art than a science. There are so many factors and methods involved - that it can be difficult to obtain a "true value" for your home. So - the first thing to ask yourself is - why do I want to know the value of my home? If it's because you are thinking of selling - CALL A REALTOR! That is your best bet for getting a current - real market value for your home. After all, Realtors only make money if they SELL your home, whereas appraisers make money just to visit - and investors make money by paying as little as possible!
If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
With all the changes in the mortgage industry in the past year, buyers have found it increasingly difficult to find the assistance they need to purchase a new home. In previous years, there have been several ways for buyers to buy with no money down - 100% loans being the #1 choice. But even with the elimination of most 100% loan programs and seller-paid down payment assistance programs, buyers can still get the help they need to overcome what is typically the biggest barrier in their paths.
100% LOANS ARE NOT JUST A THING OF THE PAST
While it's true that most conventional loans no longer allow a buyer to borrow 100% of the home's value - there are still options available! One option many people don't know about is the VA Loan. While you have to be active or former military to qualify - a large number of Americans can access this type of loan. It is the only true 100% value single-loan program out there - and interest rates are competitive. The only downside is the VA funding fee, which increases each time a veteran uses their VA certificate. However, this fee is minimal, and for most VA buyers, the benefits of getting into a home with no money down greatly outweigh the funding fee that is charged.
GIVE THE GIFT OF HOME OWNERSHIP
While it is no longer allowed for the seller of a home to participate in a down payment assistance program for buyers - closing costs can still be worked into the contract! Most loans still allow the seller to pay 3-5% of the purchase price in "concessions" - which can help reduce or eliminate the amount of money a buyer needs to pay for their loan fees and "pre-paids" (loan interest, insurance, taxes, etc.) at closing. In addition, most loans also allow monetary gifts from family members to help buyers with their down payment needs. With the combination of these two strategies, many buyers can come to the closing table with no money at all "out of pocket."
DOWN PAYMENT ASSISTANCE PROGRAMS ARE STILL AVAILABLE
The Missouri Housing Development Commission (MHDC) has just announced a new program which will allow home buyers to access their federal first-time home buyer tax credit at closing - rather than waiting until tax time. The tax-credit advance works in the form of a fixed-rate 30 year "second mortgage." Buyers can access up to 6% of the purchase price of the home (with a maximum of $6,750), and the money is used to cover down payment and closing costs. The home buyers then file for their federal tax credit, and use the refund to repay the MHDC tax credit advance. If the loan is repaid before the deadline (June 2010), no interest is due, and only a negligible funding fee is charged. If the loan is not paid in full before the deadline, then principal and interest payments to repay the loan over 10 years automatically begin.
Although mortgage lending standards have been tightened, and many programs previously available to buyers have been eliminated - buyers can still find help! With several great financing options, and fantastic mortgage rates - now is a great time to buy! If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
You have probably heard over and over "It's a buyer's market out there." But, in hearing that, many are left wondering what does that really mean, and how will it affect me if I want to sell my home?
WHAT IS A BUYER'S MARKET?
Put simply, the term "a buyer's market" means that right now, that's who has the advantage in the real estate market. Because of these three factors: inventory is high, astoundingly low interest rates, and record-high availability of foreclosed homes; buyers are looking for nothing less than (and can certainly find) what they deem "a steal."
YOU CAN STILL SELL YOUR HOME!
However, this certainly does not mean you will be unable to sell your home! In fact, a buyer's market is a great time to sell your home - since there are so many buyers out there! But, just putting a sign in your yard and waiting for the buyers to stampede won't get the job done! Now - more than ever, you have to have a solid strategy to get your home sold.
STEP ONE: PRICING YOUR HOME RIGHT - THE FIRST TIME!
The homes that are selling right now fall into one of two categories: Perfect, move-in condition at a fantastic price; or Needs work, and is priced well below the neighborhood's "market value." Therefore, you need to make a decision before ever listing your home for sale: Spend some time and money to fit your home in the "Perfect" category, or show your house as-is, and price it in the "Steal" category (which means taking more money off the price than it would cost a buyer to "fix it up"). No matter which route you choose - use homes comparable to yours, in or near your neighborhood, that have sold in the last three months to help you establish the asking price for your home. These are not the days where a seller can risk pricing high to "see what they can get." Pricing your home effectively the first time will help you avoid extended periods of time on the market before a sale, and lost money at the closing table.
STEP TWO: YOUR HOME MUST SHOW WELL - EVERY TIME!
It is imperative that the buyers who see your home get a great first impression. This means don't show your house before it's ready! Listing your home with a disclaimer that "some work still in progress" is a terrible idea. A buyer cannot envision the work that "will be done", nor are they likely to come back later to see what you've done. There are too many homes on the market right now to risk letting your buyers leave your home with a less-than impression. Among the most important factors to ensure your home sells well are: great smells, no clutter, and clean, clean, clean!
STEP THREE: EXCELLENT MARKETING IS KEY!
No matter where your home fits on the "price scale," you MUST get the word out! It is imperative to use all available resources in marketing your home - in order to reach the highest possible number of "ready-to-act" buyers. This means that you (or your agent!) must utilize the latest, cutting edge technology to syndicate information about your home via the internet - to reach buyers both in & out of town, within real estate offices throughout the city (as 97% of buyers work with professional Realtors), and to your neighborhood and to your entire circle of friends and family (leaving no stone unturned!).
While it's true that there is a lot of "competition" out there - if you follow the above three rules - there is no reason your house can't sell! If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
For more than a year, the media has reported down real estate markets, rising foreclosure rates, decreases in home values, and crisis in the lending world. Because of this - many would-be buyers are left sitting on the fence - counting all the things that could "go wrong" if they make the move today, rather than tomorrow.
While much of what has been reported is based in fact, so much of it has been overblown, that it's caused a panic in the real estate world - with buyers & sellers - and even some Realtors.
GOODBYE HOUSING GLOOM AND DOOM
Well I, for one, am ready to stop hearing all this gloom and doom - and want to do what I can to set the record straight. The truth is that there are so many reasons to buy a home (especially vs. renting) in ANY market. The unique market in which we live today presents even more opportunities for brave buyers willing to take the plunge.
BUYING A HOME IS THE BEST LONG-TERM INVESTMENT... ANY TIME!
No matter what the economic forecast, buying a home is hands-down the best long-term investment there is. After all, you cannot live in a 401k, and you can't raise your children in a CD. People will always need a place to live - and paying off someone else's mortgage instead of your own just doesn't make sense!
In the long term (which is what every buyer should be looking at anyway!), as long as you buy in a good area, with good schools - your home WILL appreciate in value. According to the National Association of Realtors, a home's value nearly doubles every ten years. When you weigh the amount of money it takes to get into the home, and the amount of each monthly payment that goes toward the principal of your loan - the long-term payback cannot be beat!
In addition to the money you will "make" on your home - there are so many tax incentives for homeownership that are not available to a renter. In most cases, the interest you pay is tax-deductible, which helps greatly to offset any money you might owe at tax time. In some cases, it may even help net you a refund! With the recent Economic Recovery Act of 2008, there is an additional $7,500 tax credit available for first-time buyers who purchase a home before July 2009.
LOW INTEREST RATES WON'T LAST
Thanks to the difficulties our economy has faced in recent past - interest rates are at a decade low. Reports that there is "just no money to lend" are simply untrue. While standards have been raised, you do not have to have a "perfect" credit rating in order to get a home loan. In fact, if you have just a 620 credit score, you have an excellent chance to receive great rates on financing a home today. The better your score, the better your rate will be! While these low rates are likely to last a little while - no one knows just how long. One thing is for sure though - these rates will not be here forever! The difference of just 1% on a home loan can save buyers thousands of dollars per year.
Great rates, in combination with the many great deals on homes out there, make it possible for buyers to afford so much more house, for so much less money. It is actually thanks to the housing slump (and the large number of sellers ready to sell today), and high number of foreclosures (owned by banks who just want to make back their investment) that it's a great time to buy.
So, despite all the "bad news" out there today - now is actually an excellent time to buy! If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
