Take time to choose the right broker when selling your home

When preparing to sell your home it is important to find a real estate professional that will best suit your needs.  A warm handshake and a friendly smile is all well and good but if you want to sell your home pick a broker that is experienced and knowledgeable, someone that will do the best job for you.  When selecting your real estate agent here are a few things to keep in mind:

Data.  Get a prospective Realtor to bring in a copy of what they have listed and closed.  They can present you with an MLS report that displays their inventory.

References.  Get references from a potential Realtor and call them.  Find out what other people’s experience with a particular Realtor has been.

Price.  Get an evaluation of your property.  A solid real estate professional will be able to detail what has been selling and for what price.  He will be able to evaluate your home and your location, giving you a value for your home that will help sell it not deter people from looking at it.

Plan.  What does your Realtor plan to do for you in terms of marketing, sales, listing, etc.  Make sure he has a plan for your house and find out what he is willing to do to get it sold for you.

Real estate is often a person’s most valuable asset.  Do your legwork and choose the best broker for your home.  He or she should be a salesperson.  If they can sell themselves to you perhaps they are halfway to selling your home for you as well.

Are you a teacher, fireman, EMT or police officer looking to purchase a new home?

If so, you can qualify for HUD’s Good Neighbor Next Door program and save 50% on the purchase of your home!.
WHAT IS THE GOOD NEIGHBOR NEXT DOOR PROGRAM?
• The Good Neighbor program is specially designed to help full-time firemen,
EMTs, police officers and teachers (pre-K- 12th grade) purchase affordable
homes in their community
• HUD will offer a 50% discount off of the purchase price of the home
• Home financing is available through FHA
HOW DOES THE PROGRAM WORK?
• The subject property must be located in a HUD revitalization area and be
listed for sale through the Good Neighbor Next Door program.
• The homebuyer can not have owned a home for a period of not less than
one year prior to submitting an offer
• The homebuyer must commit to living in the home as their primary residence
for three years
• HUD will subsidize the sales price of the home by 50% through a “silent”
second mortgage, which requires no payments or interest (provided the
homeowners fulfills the three year occupancy requirement)
• At the end of the three year period, the second mortgage is forgiven and the
homeowner keeps all equity in the home

Call Ed @240-375-2871 if you would like more information

Urgent Tax Issue Affecting Short Sale Transactions

This article was featured in Business Week. At first the headline seems very to be a very insulting statement! But the writer, Mark Roth, uses this dramatic title to get your attention to make excellent points for those who are on the fence. Namely those interest rates are at an all time low, in fact, the lowest in 40 years. He noted that in the late 70s, rates hit a high of 18%! Can you even imagine buying a house at 18%? I bought my second house with a 14% interest rate in 1985 and that was a “good” Rate. I have since refinanced that home a couple of times and now have a 5.5% rate. Generation X’ers probably would never dream of purchasing a home above 7% given all they have ever known are super low rates hovering between 5-6%. Mr. Roth points out the history of previous interest rates as well as the impact of rates on one’s purchasing power. I happen to agree with his prediction that as the economy becomes more stable; interest rates WILL rise to hedge inflation. My prediction has been that by this time next year, rates will have risen 1-2% at a minimum. With prices down and interest rates at historically lows, this may be the best time in our lifetime to buy a home.

If You Don’t Buy a House Now, You’re Stupid or Broke

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth

By Marc Roth

Well, you may not be stupid or broke. Maybe you already have a house and you don’t want to move. Or maybe you’re a Trappist monk and have forsworn all earthly possessions. Or whatever. But if you want to buy a house, now is the time, and if you don’t act soon, you will regret it. Here’s why: historically low interest rates.

As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com —shows, is the lowest the rate has been in nearly 40 years.

In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.

And it is exactly that, based on what the graph shows us. Let’s look at the point on the far left.

In 1970 the rate was approximately 7.25%. After hovering there for a couple of years, it began a trend upward, landing near 10% in late 1973. It settled at 8.5% to 9% from 1974 to the end of 1976. After the rise to 10%, that probably seemed O.K. to most home buyers.

But they weren’t happy soon thereafter. From 1977 to 1981, a period of only 60 months, the 30-year fixed rate climbed to 18%. As I mentioned in one of my previous articles, my dad was one of those unluckily stuck needing a loan at that time.

Interest Rate Lessons

And when rates started to decline after that, they took a long time to recede to previous levels. They hit 9% for a brief time in 1986 and bounced around 10% to 11% until 1990. For the next 11 years through 2001, the rates slowly ebbed and flowed downward, ranging from 7% to 9%. We’ve since spent the last nine years, until very recently, at 6% to 7%. So you can see why 5% is so remarkable.

So, what can we learn from the historical trends and numbers?

First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.

Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.

Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.

Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let’s assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.
Loan Costs

Stay with me now. We are at 5%. As you can see by the graph above, as the economy stabilizes, it is reasonable for us to see 30-year fixed rates climb to 6% within the foreseeable future and probably to a range of 7% to 8% when the economy is humming again. If every quarter of a point is worth $12,000 per $200,000 borrowed, then each point is worth almost $50,000.

Let’s put that into perspective. You have a good stable job (yes, unemployment is at 10%, but another way of looking at that figure is that most of us have good stable jobs). You would like to own a $240,000 home. However, even though home prices have steadied, you may be thinking you can get another $5,000 or $10,000 discount if you wait (never mind the $8,500 or $6,500 tax credit due to run out next spring). Or you may be waiting for the news to tell you the economy is “more stable” and it’s safe to get back in the pool. In exchange for what you may think is prudence, you will risk paying $50,000 more per point in interest rate changes between now and the time you decide you are ready to buy. And you are ignoring the fact that according to the Case-Shiller index, home prices in most regions have been trending back up for the last several months.

If you are someone who is looking to buy or upgrade in the $350,000-to-$800,000 home price range, and many people out there are, then you’re borrowing $300,000 to $600,000. At 7%, the $300,000 loan will cost just under $150,000 more over the lifetime, and the $600,000 loan an additional $300,000, if rates move up just 2% before you pull the trigger.

What I’m trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.

Marc Roth is the founder and president of Home Warranty of America, which touches just about every part of the real estate industry since it sells through builders, real estate agents, title companies, mortgage companies, and directly to consumers.

The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency’s finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades.

These measures are designed to increase the amount borrowers invest in the homes they buy, thereby making it less attractive for them to default on loans and walk away from properties, as many people have done during the current housing crisis.

Housing and Urban Development Secretary Shaun Donovan is scheduled to announce the agency’s policy changes when he testifies Wednesday before the House Financial Services Committee.

The FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market unraveled. Currently, the agency backs about 30 percent of all loans for home purchases and 20 percent of refinancing. In the past, the FHA has resisted raising down payments or insurance premiums for fear of shutting out qualified borrowers and stunting the housing market’s slow but steady recovery.

But Donovan plans to tell the House committee that the exploding volume of loans the FHA is now handling requires stricter risk controls than the previous administration had in place, according to a copy of his prepared testimony. A recent audit shows that the FHA’s financial cushion already has eroded below the level required by law.

“We’ve learned from recent history that the market is fragile, and we have to plan for the unexpected,” Donovan’s prepared statement says. “That uncertainty is complicated by an organization we inherited that, to be honest, was simply not properly managing or monitoring its risk.”

By requiring that borrowers bring more cash to the table, the agency is seeking to ensure they have “more skin in the game and a stronger equity position in their loans,” Donovan says. But he does not specify the size of the proposed increase. FHA officials said they have yet to determine how much cash will be required.

“There are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective and consistent with our mission,” Donovan says.

Up-front cash can include down payments as well as other payments. For now, FHA borrowers can put down as little as 3.5 percent, a level that many FHA critics say is too low. One lawmaker has introduced legislation that would boost the minimum down payment to 5 percent.

As for seller concessions, the agency now allows sellers to kick in 6 percent of the home’s value. Donovan said he wants the maximum permissible level to be lowered to 3 percent, in line with industry norms.

Agency staff are reviewing whether to increase the monthly insurance premiums charged to borrowers, officials said. These payments come on top of insurance paid up front.

The current up-front premium is set at 1.75 percent of the value of the loan. FHA may decide that an increase in that premium is needed also, officials said.

To protect itself against the riskiest borrowers, the agency has decided “for the time being” to raise its minimum credit score requirements for new borrowers. Again, FHA staff are still analyzing what the new threshold should be, Donovan’s prepared testimony says.

The minimum credit score requirement is now so low — 500 out of a possible 850 — that it’s basically irrelevant. Many lenders that make FHA-insured loans impose much tougher restrictions. The concern is that if FHA does not toughen up, abusive lenders will get away with financing risky, poor credit borrowers already rejected by more reputable lenders.

Most of the new initiatives do not require congressional approval. Many have previously been suggested by critics and even supporters of the agency.

These measures are meant to build on other actions the FHA has taken to curb its risk and beef up its eroding cash reserves.

An audit released last month found that the agency’s cash reserves have shrunk to a level far below what is required by law, and the agency could need taxpayer funding if worst-case scenarios play out.

The audit, designed to measure the agency’s financial health, examined the excess cash the agency must set aside to deal with unexpected losses and found that those reserves were at about $3.6 billion as of Sept. 30, a drop from the $12.9 billion available a year earlier. The current total represents 0.53 percent of all outstanding single-family-home loans insured by the FHA, well below the 2 percent threshold set by law. This is the first time reserves have fallen under that level since 1994.

To stop the financial erosion, the FHA has focused in part on weeding out abusive lenders. This year, the agency has suspended business with seven lenders, including the now-defunct Taylor, Bean and Whitaker. It has withdrawn FHA-approval for 270 others, including Lend America. On its Web site Tuesday, Lend America said it has ceased its loan origination and operations, effective immediately.

The FHA is currently working on a new rule that would require banks it does business with to have up to $2.5 million in capital that they can use to repay the agency for losses if they were involved in fraud. Now, they are required to hold only $250,000.

On Wednesday, Donovan will ask Congress to grant the agency more authority to close down abusive lenders.

Real Estate data indicates that the overall housing market is slowly improving

Price declines are getting smaller, sales volume is getting larger and the overall real estate market appears to be mending.  October sales were up for pre-existing home sales, 23.5% up compared with October of 2008.  Homes sales for October were predicted to be 5.70 million, but the sales volume turned out to be 6.1 million.

Encouraging words are being spoken about real estate by NAR’s chief economist who stated that, “Existing home sales have already bottomed. Home prices are almost there. We are seeing less of a decline in house values.”

Approximately one third of home sales in October were made by first time home buyers taking advantage of the first time home buyer tax credit.  The median home price fell 7.1%, still affected by distressed properties which accounted for 30% of October’s home sales .

In addition, inventory of homes for sale has dropped slightly, indicating that the housing market is indeed recovering slowly.  Tax incentives, low mortgage rates and decreasing home values continue to make their mark, helping real estate sales to increase.  The housing market’s recovery will hopefully seep into the minds of consumers, giving a bit of peace and spurring on recovery in other sectors.

Click here for a Yahoo Real Estate article about real estate sales.

Whether real estate has hit bottom yet or not, there is no mistake that it is a buyer's market

The biggest question hovering around these days is, have we hit bottom?  Whether this question be a general question regarding the recession or the real estate market, we have to ask does it matter?  Whether we hit bottom a couple of months ago or are going to hit it a couple of months from now, we can all agree that we have had better times and better times are in our future.  Whether we have hit bottom or not there is no mistake that it is a buyer’s market when it comes to real estate.

That being said, if we haven’t hit bottom then the bottom must be close.  Wouldn’t it be better to buy near the bottom than miss it entirely?  Across the Country there are markets that are on their way down, markets that have stabilized and markets that are on their way back up.  Whether the market hit bottom a couple of months ago, is at the bottom now, or will hit the bottom in a couple of months, the top of the market is far away.

It is a buyer’s market out there.  Whether you are looking for a primary residence or a second home it is a great time to invest in real estate.  Property values are lower than they have been in years, interest rates are still hovering at 30 year lows and some tax incentives make buying real estate today more affordable than it has been in years.  For all we know the real estate market might be more affordable today than it will be for many years to come.

Tax Credit for Homebuyers (First Time and Previous Home Owners)

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today. In addition, you may be able to benefit from additional housing related provisions, including the following:

Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy

Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUDsponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

On Friday, President Obama signed the Expanded Tax Credit Bill, it’s offical!!

On Wednesday the senate passed an expanded tax credit.  The First Time Home Buyer Tax credit has been seen as a huge

What is new and improved with the extended and expanded tax credit?  The new and improved tax credit is still for first time home buyers but will also include home buyers who have owned their current home for 5 years or more.  The credit is up to for $6,500 for these current homeowners and remains at up to $8,000 for First time home buyers or home buyers who have not owned a home for the past three years.  The tax credit  is income restricted, an individual cannot make more that $125,000 annually and a couple cannot make more than $225,000 jointly.  A home must be  a primary residence and valued at $800,000 or less.  Buyers must have a property under contract to purchase by April 30, 2010, and the property must close by June 30, 2010.

The passing of this extended, expanded tax credit is good news on the real estate front and is expected to be the last tax credit offered for a long time to come.

There is a LOT of misinformation out there right now as regards the status of NAR’s efforts to extend and expand the homebuyer’s tax credit.  Between inaccurate reports in the media and the speculative discussions around the office water cooler and through various social media networks, the variation of stories continues to grow.

As of 2:30 p.m. this afternoon, here is the latest word directly to me from our NAR lobbyists on the Hill:

“We expect the Unemployment Insurance bill with the Homebuyer Tax Credit Extension included to pass the Senate this evening.   It will then be brought up in the House, possibly as early as tomorrow.  From there, it will go to the White House for the President’s signature.   The new unemployment figures are going to be released on Friday, so we would not be surprised if the President signs the bill Friday also.
First time buyers will continue to get an $8000 credit; move up buyers will get a $6500 credit.   Income limits will now be $125k for a single filer and $225k for joint filers.  The sales price of the home purchased may not exceed $800k.

The credit will be extended until April 30th.  A purchaser must have a signed contract by April 30th and then settle by June 30th to be eligible.