I'm sure, by now, everyone has heard of the proposed plan to "right" our countries economic slump/recession/DEPRESSION. The President is proposing that the US government purchase the spoiled investments of some large corporations. While I think the President/congress want us to think that this is i the best interest of the tax-paying American public, I'm not sure that I agree. I recently received and email that suggested that the President give the billions to every tax paying American citizen over the age of 18. This would have figured out to be a very large sum of money to each person. The impact of this many people having this much cash would rectify the whole economic situation that we're in. While this is a novel idea, the reality is that this will never happen.
On the other hand, I myself am an independent contractor (self-employed), and right now with the real estate market the way it is, I may find myself upside down in a few financial situations. Do you think the government would listen to an email or letter sent from me asking for a freebie? I would have better luck getting my dogs to dig up gold in my back yard. The thought of rescuing a corporation from the poor decision making or their investors or multi-millionaire CEO's is ridiculous. The whole concept of our economy is the idea that companies or individuals who make poor choices or bad decisions will fall away and that will leave an opening for the next entity to fill the spot. Artificially preventing this could have long term effects that no one can predict, not to mention that there is no guarantee that the investments that the government is going to "babysit" will ever be worth what they pay for them.
The thought of all of this happening is really very depressing. There are thousands of people who are retired or close to retirement that have the bleak outlook of having their hard earned 401K plans or investments turn into nothing more than a write off. This proposed plan will do nothing for them or for you and I.
I think the whole idea should be voted on by those who will be footing the expense for this, the tax paying public. We have an election coming up in less than 45 days, this would be the best time to count our voices.
Friday, September 26, 2008
Thursday, August 7, 2008
FHA & DAP Changes
I wanted to update any buyer or seller who may be thinking of making a purchase or selling a house in the very near future. Over the past several months there has been much debate over the use of non-profit organizations contributing funds to a buyer’s closing expenses. There two thoughts that are shared on the use of these programs to get buyers additional funds to make a purchase. One thought is that it is a great tool and gives those, who might not otherwise been able to buy, the chance to buy a home. The other side of the argument is that the process of having the seller contribute funds to the non-profit and then the non-profit gifting them to the buyer is merely money laundering. While I see both sides, it doesn't take away from the fact that this is a legal method of getting buyers, who qualify for a purchase but just don't have the cash needed for closing costs/down payments, the resources to buy a home. Effective Oct. 1, 2008 the several down payment assistance programs that have been used for many, many years (much more frequently in the past 18 months) will be no longer allowed.
Now, FHA loan changes. The tightening guidelines of conventional loans and the increasing down payment requirement has allowed the lower required cash to close of the FHA program to become a great alternative. Well, as of Oct. 1, 2008 FHA loans will now require a 3.5% buyer investment into the purchase of a property; the previous amount was 3%. While this doesn't sound like a huge change, you must also consider that the way a lot of buyers were getting their cash for closing costs and down payment was from the non-profit grant programs. While this is not the best news for buyers, it is also not good for sellers who are looking to sell their homes.
There is still time to make a purchase and get into a home under the existing parameters; it just has to be underwritten by the lender by Sept. 30, 2008. So, if you have been thinking of buying or you have a house to sell, give me a call and I'd be happy to help you use this window of opportunity to maximize your buying or selling power.
Now, FHA loan changes. The tightening guidelines of conventional loans and the increasing down payment requirement has allowed the lower required cash to close of the FHA program to become a great alternative. Well, as of Oct. 1, 2008 FHA loans will now require a 3.5% buyer investment into the purchase of a property; the previous amount was 3%. While this doesn't sound like a huge change, you must also consider that the way a lot of buyers were getting their cash for closing costs and down payment was from the non-profit grant programs. While this is not the best news for buyers, it is also not good for sellers who are looking to sell their homes.
There is still time to make a purchase and get into a home under the existing parameters; it just has to be underwritten by the lender by Sept. 30, 2008. So, if you have been thinking of buying or you have a house to sell, give me a call and I'd be happy to help you use this window of opportunity to maximize your buying or selling power.
Friday, June 6, 2008
Another Low Offer!
It sure is getting hot these days. Summer weather is officially here. The temperature is rising daily as is seller's blood pressure. The current market sees many homes still available, but homes are selling. What gives? Well, from my experience, the homes that are selling are the properly priced homes, whether newly listed or reduced prices. The homes that were over-priced to give the seller negotiating room are sitting. These sellers are not seeing the traffic that the newly listed and competitively priced home are seeing. What's the lesson here? Listen to your realtor and price your home to be competitive with the surrounding listings. An over-priced home will not draw the attention that a competitively priced home does and will become stagnant after a few weeks. Additionally, there are more points to negotiate over than just price. Ask your Realtor what you may have that could be used or become a point of negotiations. A colleague recently had a property under contract and the buyers requested a handful of repairs well after the deadline specified in the home inspection addenda. Not wanting to lose the deal for sticking to the agreed contract, the sellers offered to leave a swingset that was currently in the rear yard. The buyers were excited when they heard this and decided to drop the requested repairs. The swingset may have had a value of $300, while the repairs would have costed $500-$700 and would have taken time and effort to have them done. Oh, by the way, the sellers never intended to take the swingset anyway! While price is a main point of interest for buyers, there are several other areas where a compromise can be made. Don't just think because someone makes an offer that is lower than your asking price that the offer is horrible. Take the time to weigh all of your options and maybe even ask the buyer's agent what the buyer's other needs are. Maybe there is something that is of value to the buyer that you wouldn't mind negotiating on.
Wednesday, June 4, 2008
New Loan Trends
So, you're scared that your home will get foreclosed on? What if your mortgage company goes belly up, does that mean you'll lose your home? I've had clients ask me these things and it might sound silly, but these are things that sometimes prevent people from buying or selling a home. Let me say this, if you're a financially responsible person and you stay current on your mortgage payments, then you don't have to worry. Most of the foreclosures that are plaguing the current real estate market are because of two things: 1. Buyers over extended themselves when they purchased and now cannot afford the payments or 2. The loan program that the buyer chose, or was offered by the lender, has "adjusted" and now the payments are out of reach for the home owner. Either situation is very disheartening and pointing the finger doesn't change the circumstances.
There really isn't any point in going over the numerous loan programs that were created to get under-qualified buyers into over-priced homes. Sounds blunt, but that is the reality. The best thing to do is to consult with a trusted, reputable lender. Now lenders have come down from the euphoria of the not so distant market of 4% interest rates and 100% interest only loans and buyers are much more conservative when considering the amount they'd like to mortgage. Currently lenders are facing stricter guideline by the underwriters and investors who approve the loans and buyers who are applying for them. Conventional loans have recently required buyers to put 10% down on a property purchased! Wow, that's much different to the $0 down days of the last 2-4 years. With the average price of a home in Harford County being at $350,000, this means that a buyer would need $35,000 plus closing costs. That could push the total cash required to $45,000-$50,000! That's a lot of cash for a buyer to have on hand. Now, a first time buyer will more than likely be looking at a less expensive townhouse or condo($200K+), but that is still a lot of money, especially for a person who is more than likely just finishing school or just starting a family. Luckily there are alternative to conventional loans.
FHA is a very reasonable alternative to the conventional mortgage. FHA, or Federal Housing Administration, is a government entity that provides backing/insurance to FHA approved lenders. Also, the guidelines for FHA loans are less restrictive than those of other types of loans. There is much more flexibility in calculating a potential buyers household income or payment ratios. Most importantly, FHA requires much less than 10% down to close a loan. They only require 3% down.! Now, on a $350,000 home, which sounds easier, having $45,000 or $27,500? I still know what you're thinking, that is much better, but $27,000 is still a lot of money. Yes, I know, it still is a lot of cash, but think about it from the banks point of view. Why would a bank lend you close to a half of a million dollars if you haven't invested hard earned income into a property?
There is yet one more option to those who still can't seem to get the funds they need to purchase. FHA limits the amount of "help" a seller can contribute to a buyers purchase to 3% of the purchase price, so even if a buyer gave the maximum allowable contribution, the buyer would still have several thousand dollars of closing costs due. Well, there is a loophole of sorts available. There are two programs, that I know of, which allow the seller to contribute much more than the standard 3%. These programs are the NEHEMIAH PROGRAM and GENESIS PROGRAM. Both of these programs allow sellers to contribute either a percentage of the sales price or a flat dollar limit. Not only are these programs great for buyers, but advertising a sellers willingness to participate might just get a property to sell quicker! As always, check first with a trusted lender for full details of any loan program. And lastly, if it sounds too good to be true........
There really isn't any point in going over the numerous loan programs that were created to get under-qualified buyers into over-priced homes. Sounds blunt, but that is the reality. The best thing to do is to consult with a trusted, reputable lender. Now lenders have come down from the euphoria of the not so distant market of 4% interest rates and 100% interest only loans and buyers are much more conservative when considering the amount they'd like to mortgage. Currently lenders are facing stricter guideline by the underwriters and investors who approve the loans and buyers who are applying for them. Conventional loans have recently required buyers to put 10% down on a property purchased! Wow, that's much different to the $0 down days of the last 2-4 years. With the average price of a home in Harford County being at $350,000, this means that a buyer would need $35,000 plus closing costs. That could push the total cash required to $45,000-$50,000! That's a lot of cash for a buyer to have on hand. Now, a first time buyer will more than likely be looking at a less expensive townhouse or condo($200K+), but that is still a lot of money, especially for a person who is more than likely just finishing school or just starting a family. Luckily there are alternative to conventional loans.
FHA is a very reasonable alternative to the conventional mortgage. FHA, or Federal Housing Administration, is a government entity that provides backing/insurance to FHA approved lenders. Also, the guidelines for FHA loans are less restrictive than those of other types of loans. There is much more flexibility in calculating a potential buyers household income or payment ratios. Most importantly, FHA requires much less than 10% down to close a loan. They only require 3% down.! Now, on a $350,000 home, which sounds easier, having $45,000 or $27,500? I still know what you're thinking, that is much better, but $27,000 is still a lot of money. Yes, I know, it still is a lot of cash, but think about it from the banks point of view. Why would a bank lend you close to a half of a million dollars if you haven't invested hard earned income into a property?
There is yet one more option to those who still can't seem to get the funds they need to purchase. FHA limits the amount of "help" a seller can contribute to a buyers purchase to 3% of the purchase price, so even if a buyer gave the maximum allowable contribution, the buyer would still have several thousand dollars of closing costs due. Well, there is a loophole of sorts available. There are two programs, that I know of, which allow the seller to contribute much more than the standard 3%. These programs are the NEHEMIAH PROGRAM and GENESIS PROGRAM. Both of these programs allow sellers to contribute either a percentage of the sales price or a flat dollar limit. Not only are these programs great for buyers, but advertising a sellers willingness to participate might just get a property to sell quicker! As always, check first with a trusted lender for full details of any loan program. And lastly, if it sounds too good to be true........
Harford County Real Estate Down, BUT....
I don't have to tell you that the real estate market in Bel Air, Forest Hill, Abingdon or any other town in Harford County is down from the trends we saw in the past few years. Wow, what a surprise, right? Did anyone really think that the incredible appreciation that sellers benefited from could continue? I don't think anyone who had any time in the market actually thought that the trend of 10-50% gains in a 12 month period would realistically continue. We all were fooling ourselves. It was great for some, but for others it really was the starting point of a downward spiral. Lots of home owners began to depend on the increasing values as a way to supplement their incomes. Does this seem right to you? As you can imagine this hasn't panned out for a large number of households. The banks and any other entities in the real estate business just rode the wave. Well, unfortunately, earlier this year that wave came crashing down. Home prices across the county are lower than a year or two ago, BUT prices are still up over the past 5 years. Hmmmm, so what this tells me is that home owners who have actually lived in their properties for 3-5 years shouldn't be as effected as the investor who wanted to make a quick dollar or the home owner who has grown tired of his house after 18 months. Surprise!
I'm saying all of this to get to my point. Yes, there are circumstances where families or individuals have to buy/sell in a short period of time, but this has historically been the exception. Historically people have purchased properties to live in them. How many homes have your grandparents lived in? The average real estate market can absorb the military relocation or the estate sale or the many other cases where a home is bought and sold sooner than expected, but when thousands begin to follow suit and it becomes the rule rather than the exception, then there will be consequences.
The banks that provided the "exotic" mortgages, that got buyers into homes they knew they shouldn't be able to afford, or that got an investor a property and that investor would walk away from settlement with thousands of dollars in his pocket, were just capitalizing on the current situation. Were they right in doing it? Well, when you're faced with the option of a customer using your services or that customer going down the street, or on the Internet, and getting the same services from someone else, you'd probably choose have the business rather than handing it off to someone else.
Where does this leave all of us? Are we all going to continue to feel the pain of a multitude of bad decisions? I don't think so. Right now, homes are selling. Everyday someone is looking for their first home, or down-sizing, or relocating. This is what makes the market go 'round. Right now, interest rates available are still at 30 year lows and responsible buyers are able to get reasonable loans.
In Harford County there is about a 10-12 month supply of properties available for buyers to choose from. Is that bad? No! If you recall that in '05 buyers were putting offers in on properties and bidding 5%, 10% and sometimes 20% over the asking price because there were multiple parties interested in the same property. When making one of the most important purchases in your adult life, you shouldn't have to settle for what you were the first to stumble upon. Yes, as a seller it is frustrating having buyers offer prices well below what you're wanting to get for your home, but you don't have to take it. Also, if you're not being transferred, expanding your family or dealing with a situation that dictates that you sell, then DON'T SELL! But, if you are in a situation where selling your home is necessary, then a properly priced and marketed home is still selling in a reasonable amount of time.
Here in Harford County we have reasons to feel a little safer than some other areas. First off, we have neighbors, Baltimore City, Philadelphia, New York City and DC, that help with business and contribute to our economy. Next, we are one of the few local areas that offer affordable housing. That's right, affordable. Try Anne Arundle,Montgomery or Howard Counties and see what $350,000 gets you. Also, I'm sure you've heard of BRAC(Base Closure and Realignment Commission). BRAC is reportedly going to bring thousands of jobs to our area in the next 2-5 years. While I don't expect BRAC to be the shot in the arm that the local market needs, I do believe that it will help work through some of the inventory we have stockpiled and help get us back into a more stable local real estate market.
The real estate market is one that is cyclical in nature. There are ups, downs and flat times, but one thing is for sure, there are buyers and sellers in every market. Make sure you have a professional who is in tune with the local conditions and knows the current inventory.
I'm saying all of this to get to my point. Yes, there are circumstances where families or individuals have to buy/sell in a short period of time, but this has historically been the exception. Historically people have purchased properties to live in them. How many homes have your grandparents lived in? The average real estate market can absorb the military relocation or the estate sale or the many other cases where a home is bought and sold sooner than expected, but when thousands begin to follow suit and it becomes the rule rather than the exception, then there will be consequences.
The banks that provided the "exotic" mortgages, that got buyers into homes they knew they shouldn't be able to afford, or that got an investor a property and that investor would walk away from settlement with thousands of dollars in his pocket, were just capitalizing on the current situation. Were they right in doing it? Well, when you're faced with the option of a customer using your services or that customer going down the street, or on the Internet, and getting the same services from someone else, you'd probably choose have the business rather than handing it off to someone else.
Where does this leave all of us? Are we all going to continue to feel the pain of a multitude of bad decisions? I don't think so. Right now, homes are selling. Everyday someone is looking for their first home, or down-sizing, or relocating. This is what makes the market go 'round. Right now, interest rates available are still at 30 year lows and responsible buyers are able to get reasonable loans.
In Harford County there is about a 10-12 month supply of properties available for buyers to choose from. Is that bad? No! If you recall that in '05 buyers were putting offers in on properties and bidding 5%, 10% and sometimes 20% over the asking price because there were multiple parties interested in the same property. When making one of the most important purchases in your adult life, you shouldn't have to settle for what you were the first to stumble upon. Yes, as a seller it is frustrating having buyers offer prices well below what you're wanting to get for your home, but you don't have to take it. Also, if you're not being transferred, expanding your family or dealing with a situation that dictates that you sell, then DON'T SELL! But, if you are in a situation where selling your home is necessary, then a properly priced and marketed home is still selling in a reasonable amount of time.
Here in Harford County we have reasons to feel a little safer than some other areas. First off, we have neighbors, Baltimore City, Philadelphia, New York City and DC, that help with business and contribute to our economy. Next, we are one of the few local areas that offer affordable housing. That's right, affordable. Try Anne Arundle,Montgomery or Howard Counties and see what $350,000 gets you. Also, I'm sure you've heard of BRAC(Base Closure and Realignment Commission). BRAC is reportedly going to bring thousands of jobs to our area in the next 2-5 years. While I don't expect BRAC to be the shot in the arm that the local market needs, I do believe that it will help work through some of the inventory we have stockpiled and help get us back into a more stable local real estate market.
The real estate market is one that is cyclical in nature. There are ups, downs and flat times, but one thing is for sure, there are buyers and sellers in every market. Make sure you have a professional who is in tune with the local conditions and knows the current inventory.
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