Brian and Diane Hagarty | Northern Virgina Realtor

Insider Tips on How to Win the Competitive Edge When Buying a Home

2012-02-10T12:11:00.000-08:00

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With our all-time low interest rates and prices so low it’s no wonder that buyers are lining up trying to take advantage of the great deals out there right now. But if you are one of those buyers that are finding it tough to deal with the competition, what can you do better to make sure you get the home of your dreams? There are a few things that many buyers, under the guidance of their savvy agents, are doing to stand apart from the rest. Here we’ve shared them with you to make your real estate buying endeavors both fruitful and as seamless as possible!

Be Prepared In Advance and Know What to Expect

Too often when prospective homeowners walk into a new property, they do not take into consideration the all-important fact of how much they can actually afford. It’s one thing to have a ballpark figure in mind but it’s another to have an actual preapproval letter from your bank. Buyers that have a preapproval are taken far more seriously by sellers than the buyers that express an interest in the home but then have to start from square one.

Know what the market holds when you go to make an offer on a property? Many times a buyer will not have studied the area’s market trends and as a result ends up suffering the consequences. For example, in a strong market where there are good homes at desirable prices, buyers find themselves competing against others in what ends up to be bidding wars. Being prepared in advance and being willing to offer more than the asking price is sometimes what is necessary to get you that dream home. Keep in mind that eventually, the market will experience an upswing so you will see some return on your investment. By focusing on what you are getting now with the best of what the market has to offer, you will end up with a winning transaction.

Adding a Personal Touch To Appeal to Sellers

The transaction of buying or selling a house can be very impersonal at times but it does not have to be that way. One of the best ways that highly successful real estate agents succeed in helping their clients get their dream properties is to add a personal touch – especially when it comes to communication with the sellers. An example is sending a letter introducing the family that is vying for the property, with details about them, why they love the house, or what makes them the perfect fit for the home. When sellers come across this type of thing, it gives them a warm glimpse into the people that could be moving into their home – a home that they are undoubtedly very attached to and would like to see go to only the perfect new owners. Another thing that works well is complimenting the sellers on how they have maintained the home or on other aspects of the house you find very appealing.
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At the end of the day, if the house is meant for you it will likely become yours but not without you and your agent doing the best possible to stand out from the rest. For a customized consultation on how we can help you buy the perfect home, we invite you to visit us soon!

5 Things You Should Do When You Move Into a New Home

2012-01-31T06:48:00.000-08:00

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1. Change locks

Unfortunately, you can’t assume the keys you’re holding are the only keys to your home that could exist out there. Play it safe and have all the locks changed as soon as you can.

2. Re-program garage door opener

Again, it’s better to be safe than sorry when it comes to the security of your new home. Most garage door remotes have a reset button that you can hold down to reprogram the opener. If you want more concise instructions, note the make and model of the opener and contact the company to walk you through the steps.

3. Replace furnace filter

Most manufacturers recommend that a furnace filter be changed once a month during the heating season to ensure the most efficient performance. While there are higher-quality filters that may not require monthly replacement, it’s still a good idea to check the filter monthly and, of course, replace it when you move into a new place.

4. Install new batteries in smoke alarm and carbon dioxide detector

You have no way of knowing when the batteries were last changed and if the home has been unoccupied, it’s probably been awhile. Test the alarm and detector and put new batteries in each. This investment of time and a few dollars is well worth it, given the stakes.

5. Replace toilet seat covers

We probably don’t need to go into specific details, but most people insist on swapping out toilet seats.

What’s In Store for Real Estate in 2012?

2011-12-27T12:09:00.000-08:00

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It has definitely been a rollercoaster ride – one that seems to keep going up in some areas and down in others as we continue to rifle through the aftermath of the big mortgage meltdown of 2007. But as 2011 comes to an end and we have a new, refreshing start ahead of us – what can we expect to happen in our real estate market?

We examined some of the numbers of the past and projected some foreseen market performance in the future and here is what we have come up with:

Buyers Will See More Competition

Though the market will remain heavily leaning toward the buyer’s side, there will be far more competition on the table when it comes to deals they are trying to close. Homeowners will receive multiple offers, meaning that the edge buyers had recently will begin to soften. What this means is that buyers will have to be seriously ready to compete against other serious contenders for the property of choice – a situation that has not been as prevalent in 2011. Nonetheless, interest rates continue to be at all time industry lows and the low housing prices reflected in the most recent housing index report will provide buyers continued fantastic opportunities and renewed excitement to get in on the house of their dreams for the price of a lifetime!

Sellers Will Enjoy Stabilizing Prices

For the first time that we have seen in three or four years, sellers will finally enjoy prices that will be stabilizing again. After months and months of uncertainty, sellers will be able to sell more confidently – especially beneficial given the state of our economy as it remains today. In some pockets, we will see housing values increasing. Our prediction is that in 2012 housing values will come up as much as five to eight percent from their current levels in those areas. When you consider that in 2006 prices had dropped as much as 26%, the news of a projected incline in home values is fantastic news! The coming year will be the best time to sell for many sellers in a long time – and finally – we are going to see happy sellers at the table in addition to the myriad happy buyers out there.

What You Can Expect From Us in 2012

As we strive to continue to provide our esteemed and valued clients with useful and valuable information that can be implemented with our without our help, we promise to bring you more exciting topics, great ideas and insightful information that will help making homeownership or potential homeownership a wonderful endeavor for you and your family.

From our family to yours, we wish you a very Happy Holiday Season and a Happy New Year!

Ten AWESOME Reasons Why You Should List Your Home During the Holidays

2011-12-08T13:30:00.000-08:00

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Traditional school of thought dictates that selling a home during the holidays is a bad idea. People are busy celebrating with their families and will hardly go shopping for a home, right? Not so! There are numerous advantages to listing a home during this season and below are ten great reasons to put a home on the market now.

More serious buyers – Less time wasted

These are people who are interested in buying so there is a far greater chance of actually selling the property. Nothing is more promising to a seller than a motivated and qualified buyer that knows what they want and is actively seeking to get it.

Fewer Homes On the Market

The less competition there is, the higher the chance there is for homes on the market to sell. Where during the peak season sellers might be dealing with some interest from buyers on their home, nonetheless there is more selection for buyers to choose from and they can stray to another property.

In January Inventory Increases – Chances of Selling Decreases

With so many homeowners assuming the holidays is a taboo time to sell there is a plethora of new listings in January, resulting in a diminished chance of your home selling. Also, there is a risk that the price you may receive on the home can be less.

Decked Halls Look Great!

Homes are very appealing to prospective buyers when they are decorated for the holidays. With all the festive décor, lights, greenery and added beauty of the season – the home shows very well and attracts buyers faster than if shown during other times of the year.

More Time To Browse Homes

Buyers have extra time off from work and are on vacation, which translates to a more aggressive buying pattern and more chances of your home being viewed.

Tax Advantages That Benefit the Buyer

Some buyers need to buy a property before the year ends so that they are able to claim a particular credit or exemption on their tax return. The biggest tax benefit is filing for homestead. This requirement means that they are going to seek out a home and definitely purchase it prior to the New Year.

Show The Home With Flexibility

Sellers that have their home listed prior to the holidays have the added advantage to be able to “pause” the process so they can celebrate the holidays, essentially not showing the home during a period of time during the break. When the festivities die down, things can pick up again and the seller has not only managed to save potentially lost time but can also jump right back into the market.

Sell Now For More Money Then Delay Closing

Extended occupancy can be negotiated, leaving both parties the leniency to get through the holiday season and past the New Year so that all sides can rest assured the deal is done but it can follow through at a more convenient time. For sellers this option is great because they are able to secure a higher selling price on the property before the market is inundated with new listings come January when the selling values drop.

Enjoy Non-Contingent Buyer Freedom

With the home sold, sellers can enjoy non-contingent buyer status during the rest of the slow season and take advantage of the market when there is a flood of new listings upon the New Year.

Fewer Foreclosures On the Market

Many banks will suspend foreclosure listing during this time of year, especially on properties where there are still families occupying the home. As a result of this, some of the competition that arises for sellers from low-priced foreclosures can be avoided during the holidays.
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Keep in mind that the idea of your home’s value increasing significantly over the next several months is a myth. The truth is that housing values likely only go up when consumer income rises. Pay rates increase at a rate of three to five percent each year and that is about the maximum yearly increase we can expect to see in a home as well. So if you are wondering whether or not to put your home on the selling market now, or to wait – one important factor is that waiting will not provide much benefit.

You Can REALLY Learn Some Important Things Just By Doing Your Homework About Interest Rates

2011-04-06T08:08:00.000-07:00

Like anything else that consumers tend to buy, a home is available under a variety of different plans and packages – only in this case it’s usually packaged in the form of mortgage rates instead. With choices there will be decisions and before you can make a sound decision regarding the purchase of your new home, you need to be armed with as much knowledge as possible. Knowing what to look for in this scenario is key and we’ve put together some important tips that will help you move forward.

Look Beyond the Interest Rates

From the moment you decide you want to purchase a home, the excitement mounts. You’ll start asking and telling your friends, family and colleagues. You’ll begin looking at houses everywhere you go and think about the house from an entirely different perspective now – a buyer’s perspective. And you’ll be thinking about dollar signs. How much will it cost? Will I be able to afford the monthly payments? What all is entailed in the home buying process?

When you do start answering those questions, remember that what’s usually the first thing to consider, interest rates, is not necessarily the most important. Even though you may be able to come away with the “lowest mortgage rates of the season” if you’re not careful, you could also suffer the “highest fees” too. Depending on the entire package, a low interest rate package may not be all that it’s cracked up to be, so it’s important to be full aware of all the facts.

All Lenders Are Not Created Equal

When you are new to the industry, you may not realize the plethora of choices available, including when choosing a lender. Depending on your specific needs, your qualifications and expectations, you can tap into several avenues when considering financing for your home.

BANKS AND MAJOR LENDING INSTITUTIONS
Borrowing from regular to large lending institutions has its advantages but can bog you down too. Not particularly known for their flexibility, it can become difficult when trying to accomplish smaller, more specialized services that may be possible through smaller institutions. Further, there is additional overhead that is rolled into the end figure, something passed on directly to you.

CREDIT UNIONS
This is a favorite option for many prospective homebuyers since credit unions offer excellent values and top-notch service to go along with the regular transactions you would experience anywhere else. The downside, however, is that credit unions only serve their members – and obviously not anyone else.

MORTGAGE BROKERS
By opting to go through a broker, homebuyers can avail any number of rates and products but the cost ends up being higher since the middleman nature of a broker results in additional costs incurred after having to deal with several lenders to get that variety of rates and products. The other ‘ding’ is that brokers earn from selling higher interest rates to the end-consumer.

When in Doubt, Check the GFE Out

Lenders are required to provide home buyers with a Good Faith Estimate, completely outlining important aspects of the sale and pending transaction. With key information about costs, from expenses to closing and other fees – as well as an idea of your expected average monthly payment, the document is a good source of preparation for you. It’s important to study the contents carefully and if possible have a lawyer review it for any glitches or hidden clauses that may hurt you in the long run. The opportunity to thoroughly question anything that doesn’t seem right is there and should be availed if you’re unsure of anything like how certain fees are structured, for instance.

Negotiate Your Way To More House for Less

First-time home buyers often do not realize the potential for successfully negotiating lower interest rates, among other things. Large financial lending institutions with their long processes and industry jargon tend to be intimidating, but at the end of the day the transaction boils down to the purchase of an item, through funds obtained as a loan. While the paperwork can seem daunting, as long as you keep your eye on the bigger picture and keep in mind the simplicity of the transaction, you should be able to negotiate a better deal than the one that is offered originally. Using the services of an experienced industry regular, like your Realtor, is very useful during times likes these, when banks can be intimidating.
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With a little bit of industry savvy, coupled with the knowledge of where to look for the information that will help you, your home buying process and the bottom line can be exactly what you want it to be. With interest rates as historically low as they are these days, by playing your cards right you can easily get into a home that just six months ago would have valued at as much as $40,000 less! With things changing on a daily basis, it’s important to have all your information lined up and ready.

And if you’re a seller, the super low interest rates work in your favor because that means more buyers can potentially qualify for your home.

Everybody wins!

"D.O.M." Your Way to better Value When Buying a Home!

2011-03-14T14:06:00.001-07:00

Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that I said “generally speaking.” I put in that disclaimer because there are several reasons a home might be on the market for a long time.

One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.

However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! I can provide you with that expertise. Contact Brian & Diane today!

Ride the Magic Carpet of Increased Home Value!

2011-03-01T12:53:00.000-08:00

Your carpet. Maybe it's full of dirt tracked in by the kids and pets. Maybe you're exasperated because it's hard to maintain. Don't despair! You just need to realize that your carpet is… FULL OF MONEY!

No, I'm not kidding; it really is! And here's the simple "magical" proof - when you clean your carpet or replace an old one, you can increase the value of your home by as much as 10%! How can that be? Well, you know the old saying, "You only get one chance to make a good impression?" That's doubly true when buyers come to look at your home!

When they see a dirty or worn carpet, they think, "Oh, wow, there's an expense I don't need. What else is wrong with this place?" Ouch!With one 10-second glance, your home's value has fallen off a cliff! It's not fair, is it? But, the good news is that you can "magically" get things headed in the opposite direction of increased value by taking one of two simple steps!

Clean the Carpet!

Okay, you have two choices here. You can shampoo/steam clean/dry clean that magic carpet of yours by yourself. There are all kinds of rental systems available to you. The dry system (Oreck, for example) dries almost immediately and kills almost all mold and bacteria. These methods are cheap because you supply all the labor.

The second choice is to hire a professional carpet cleaning service (Stanley Steemer, etc.). If your carpet has a lot of bad stains, we recommend you use one of these professionals. They're experts at it, and their equipment is much more high powered than anything you can rent. It'll be more expensive, but the results will be worth it! Like magic, your carpet will look like new and have a great impact on visitors!

Replace the Carpet!

I know, I know - your first reaction is, "Wow, that's going to be expensive!" Yes, but this initial outlay has the potential to make you money in the long run. How can that be?

Well, let's assume you want to sell your home in the future. A $4,000 investment in new carpet can make a $10,000 difference in the sale price! In other words, by investing $4,000 in a new carpet, you may end up adding $6,000 to the value of your home! Now that's some financial magic that makes you look at your carpet in a whole new way, isn't it?!

So, what are you waiting for? Clean or replace that carpet right now and let your house soar upward with increased value!

P.S. If you've never called anyone on the carpet, now's the time to do so!

Stay Within Your Means to Get the Best Value When Buying a Home!

2011-02-18T09:27:00.000-08:00

Before you make any kind of investment in a home, check your financial "pulse" to make sure you're financially healthy and able to comfortably afford both the down payment and the monthly payments. Below are common-sense guidelines to follow in this regard:

Guideline 1: Check your credit rating!

One of the first things lenders will check before loaning you money is your credit rating. If it’s good to excellent, your chances of borrowing money for a mortgage are very much improved. Currently, depending on circumstances, you need a credit score of at least 620 and the money for a down payment (the percentage varies with the type of loan).

If you have a credit score below the 620 benchmark, then additional documentation (and more time) will be required to prove to the lender that you're worthy of a loan - and even then there's no guarantee that the mortgage will be granted. So, as you can see, it's important to know what your credit score is before you approach a lender. You can find out this information from one of the "Big Three" major credit reporting agencies shown below:

• Equifax (exquifax.com)
• Experian (experian.com)
• Transunion (transunion.com)

If you're wondering exactly what such agencies do, the best explanation is that they act as a clearinghouse for lenders. That means they collect financial information. They then sell it to banks, credit card companies, mortgage companies and other lending agencies. In essence, lenders use that information to decide if you’re a good financial risk.

So, if you have a credit score of 620 or better, no problem! But what if that score is below 620? What can you do then? Follow the guideline below.

Guideline 2: Reduce or Eliminate Debt!

The only method of raising your credit rating is to pay off credit cards or any other kind of debt you have. Now, no matter what you hear or see on television, radio or the Internet, there's no "magic bullet" for reducing or eliminating debt. It has been and always will be a matter of personal discipline on your part! You can accomplish that discipline by taking the following steps:

Step 1: Pay your bills on time—all the time.
Step 2: Don’t open unneeded credit card accounts to increase available credit.
Step 3: This is the most important step. You must figure out where you stand financially by budgeting. In other words, you have to reduce unnecessary expenditures so you can apply saved monies to your debt and improve your credit score.

In this step, you must analyze your current financial situation. The first question to ask yourself is, "How much debt is too much?"There’s an easy formula for coming up with an answer to that question. It’s called the debt to income ratio. It’s a simple method of measuring your net monthly income against your debt.

For purposes of illustration, let's assume the following: Your net monthly income is $2,000. Your monthly debt payments are $500. Divide $500 by $2,000, and you’ve calculated your debt to income ratio:

500÷2000 =.25 (25%)

Financial experts generally agree that debt expenses should be 25% or less of your income. A ratio of 10% or less is great. Anything above 25% waves a red flag in the face of lenders in general. In that case, you definitely need to reduce or eliminate debt. So, what is your debt to income ratio?

Answer that question by doing the following:

• Review last month’s bills. Add up all the fixed expense items (rent, mortgage, car payments, child support, loan payments, etc.)

• Review your credit card bills. Add up the minimum payments owed on each card.

• Figure your monthly take-home pay (net salary).

• Now divide monthly fixed expenses by monthly income.

What percentage did you get? If it’s 25% or greater, then it's time to take action to reduce your debt. It’s time to budget!Okay, let's assume that your credit rating is in the good to excellent category and you have the money for a down payment on a house. That's great news!

But, you still need to stay within your means! So, upfront decide what you want in a home (two bedrooms, attached garage, etc.) and then stick to those guidelines!

Don't get swayed by an ultra-beautiful home with, say, four bedrooms and a state-of-the-art kitchen. If such a house is beyond your means, it won't look very beautiful when you can't make the monthly payments!

The best approach to take is to tell your Realtor upfront about your guidelines and ask him or her to show you only homes that meet them.

Believe me, I or any other Realtor love to work with customers who know what they want! It not only helps you but us as well because we can locate such properties faster and easier and get you into a new home that much more quickly!Please contact me so I can answer any more questions you might have about buying a great new home within your means!

Are Bi-Weekly Mortgage Payments Worth the Time and Effort?

2011-01-31T13:28:00.000-08:00

In most cases, yes! It’s essentially a process by which you make extra payments on your mortgage. That way, you save interest costs and pay off the loan faster.

How Does It Work?

You make a payment to your lender every two weeks instead of once a month. This means that each payment is equal to half of the monthly amount due. The result – you’re paying the equivalent of 13 full payments rather than the usual 12.

It gets even better! The full amount of the extra payment is applied toward the principal. And because the principal balance is the amount on which interest is calculated, paying down principal results in a reduction in accrued interest!

Let’s look a traditional payment monthly schedule vs. a bi-weekly schedule so you can see exactly how it works.

Example 1: Traditional monthly payments

Let’s assume you have a loan balance of $250,000 with a 6 percent interest rate and a 30-year loan term. In this example, your monthly payments are $1,498.88. So, over the life of the loan, you’d pay a total interest of about $289,595.

Example 2: Bi-weekly payments

Using the same loan balance and terms described above, the difference would be the following:

• $749.44 paid every two weeks

• About $225,490 paid in total interest

• This results in a savings of more than $64,000 in interest!

• In addition, the loan is paid off in 24 rather than 30 years

Bi-monthly payments are still a good strategy if you’re an individual who doesn’t plan to keep your house for 24 or 30 years. Why? Because bi-weekly payments still reduce principle, even over a short period of time.

For example, in the first year, the principle is reduced by nearly $1,600. And, at the end of the fifth year, the principle amount has been reduced by about $9,000!

How Do I Arrange Bi-Weekly Payments?

The first task is to contact lenders to find out if they do offer a bi-weekly payment schedule.

If they offer one, ask what the participation requirements are. In typical situations, lenders require you to have payments automatically withdrawn from your bank account since they dislike processing checks every two weeks.

Often, it’s the case that a one-time fee is charged for this service. The fee can be minimal or be in the several-hundred-dollar range, depending on the lender.

So, after all these benefits, how can there possibly be disadvantages to bi-weekly mortgage payments?

Well, the first disadvantage relates to a situation I mentioned above - the lender’s fee is very expensive for the service provided. In such a case, the costs may outweigh or cut down your overall savings.

A second disadvantage occurs when paying bi-weekly is too hard on your budget. Upfront, you need to make sure that you have the money available for the increased payments.

The final potential disadvantage relates to the length of time you plan to stay in your home. That can affect your overall savings on interest.

I recommend that you weigh the pros and cons of bi-weekly mortgage payments by using one of the many online calculators. Just enter your numbers and the calculator will give you a comparison.

If you’d like the assistance of an expert on the subject, contact us immediately!

What Are FHA Loans and How Do They Benefit Me As A Consumer?

2011-01-04T07:32:00.000-08:00

The Federal Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose is to provide mortgage insurance for Americans to purchase or refinance a principal residence.
To put it another way, the mortgage loans are funded by private lending institutions (mortgage companies, banks, savings and loan associations, etc.), and those mortgages are then insured by FHA/HUD.

The Benefits of FHA Loans

If you qualify as a prospective homeowner, these loans have three great benefits. First of all, your down payments are lower. Second, closing costs are also lower. And, finally, it’s easier to qualify for credit.

Who Qualifies?

FHA has programs for:

• First-home buyers
• Seniors
• Fixer uppers
• Manufactured housing and mobile homes
• Energy efficiency, etc.

If you’re a first-time home buyer, a FHA loan can be a good deal for you. See the eligibility requirements below. Later, I’ll cover the fixer-upper category requirements. Check with the FHA on other programs.

First-Home Buyer Programs

These programs have the following eligibility requirements:

• You must meet standard FHA credit qualifications (judged by the individual’s credit record).
• You’re eligible for approximately 97% financing.
• You’re able to finance the upfront mortgage insurance premium into the mortgage.
• You’re also responsible for paying an annual premium.
• Within this category, the eligible properties are one-to-four unit structures. As of this writing, the highest maximum FHA mortgage is $362,790 while the lowest maximum amount is $200,160.

The 203(k) Program for Fixer-Uppers
The 203(k) program issues loans to allow you to buy or refinance a property. In the loan, you can also include the cost of making the repairs and improvements.

The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home.

The down payment requirement for an owner-occupant (or a nonprofit organization or government agency) equals about 3% of the acquisition and repair costs of the property.

There are several steps to obtaining such a loan:

• You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor.
• The contract should state that you’re seeking a 203(k) loan. It should also state the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.
• You then select an FHA-approved 203(k) lender and arrange for a detailed proposal showing the scope of work to be done. The proposal should include a detailed cost estimate on each repair or improvement of the project.
• The appraisal determines the value of the property after renovation.
• If you pass the lender's credit-worthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs.
• The amount of the loan also includes a contingency reserve of 10% to 20% of the total remodeling costs. It’s used to cover any extra work not included in the original proposal.
• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.
• The mortgage payments and remodeling begin after the loan closes.

You can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it’s estimated to take to complete the rehab.

• Escrowed funds are released to the contractor during construction through a series of draw requests for completed work.
• To ensure completion of the job, 10% of each draw is held back; this money is paid after the lender determines there will be no liens on the property.

Whew, somewhat complicated, isn’t it? Well, we’re dealing with a government program! But, FHA loans can be a good deal for you, and I’m available to guide you throughout the entire process. Just give me a call today!

How to Be a Wise House-Shopper in a Great Buyer’s Market!

2010-12-14T08:23:00.000-08:00

There’s no doubt about it – there are a great many bargains in the real estate market today if you’re a person looking for a new home. However, we highly recommend that you don’t get dazzled by all the opportunities and make a potentially expensive and poor decision. To that end, I’d like to offer you some common-sense guidelines to follow.

Guideline 1: Pay Attention to Your Budget
Before beginning your search for that new home, sit down and come up with a monthly payment you can handle with ease and then look for the house that fits that budget.

Guideline 2: Save Up for a Down Payment
Due to the “mortgage meltdown,” lenders are currently much more cautious about giving out money. Depending on the situation, they may insist on a minimum down payment of 10% or one that’s all the way up to 25%. So, start saving!

Guideline 3: Improve Your Credit Score
A good credit score is a great way to make the whole process easier when you apply for a loan. Today’s lenders scrutinize such scores more closely today than in the past. If you don’t have a good score, work hard to get it up into an acceptable range. It’ll save you money on interest charges and down payments in the long run!

Guideline 4: Get a Pre-Approved Mortgage Loan
If you’re a first-time home buyer or simply a buyer who wants to make sure you stay within your means, it’s a wise idea to get a pre-approved mortgage.This is simply the process of applying for a mortgage and getting approval for the loan prior to buying a home.

A “pre-approval” is an indication that the lender is ready to extend a mortgage to you once you’ve located the right property. And it has several benefits. First of all, it saves time and energy. Once you have a pre-approved loan amount, you’re required to stay within the limits of that loan in terms of the price you’ll pay for a house.

First, when working with a realtor, ask him or her to limit the choices to those stated in the loan. This prevents the agent from showing you properties which are out of your range. By the way, they’ll really appreciate those parameters because it’ll help them zero in on properties with the best chance of sale!

Second, you can spend more time looking at homes you really like and, simultaneously, not wasting time on houses that aren’t within your budget. This allows you to focus on the details of the homes you do like in order to make sure you select the right one; for example, kitchens, baths, garages, etc.

Third, you can bargain more effectively with sellers once they know you’re pre-approved. In the current market, that’s a great relief for many sellers because they realize they have a reasonable certainty of selling their property when working with a pre-approved buyer.

Fourth, you can close faster with a pre-approved loan because there’s no time lost in the usual processing period for loans. For example, an appraisal can be ordered right away, and you have the potential to cut a 30-day closing to two or three weeks.

Finally, the seller will prefer to deal with you, particularly if he or she needs to move quickly.

Now, you have some common-sense guidelines to follow when seeking a new home in today’s market! You can learn even more by contacting us today.

How Do I Find the Property Value Trends in My Area?

2010-11-29T13:21:00.000-08:00

Knowing property value trends can be very helpful to you as a buyer, seller or investor. As a buyer, you can pinpoint bargains in areas that are trending upward (or downward) in price. As a seller, you can use the information as part of the bargaining process to get the maximum price from the sale. As an investor, you can use the latest forecasts and trends to determine whether you want to invest, when you want to invest, and how much to put into a property.

Remember, the trends are not guarantees of future performance; they're an educated guess as to which way the market is moving.Whatever your real estate goals, you want the latest and best information, and you want it from experienced professionals. In terms of your neighborhood and/or city, your local real estate agent is the best source for weekly and monthly trends. After all, it's their job to stay on top of such trends in the markets they serve.

Other organizations provide state, regional and national forecasts. They're often updated on a monthly or quarterly basis. Sources of Information Thanks to the Internet, there are many, many sources for data on real estate property value trends.

For state trends, go to the Federal Housing Finance Agency website (http://www.fhfa.gov/Default.aspx?Page=215). Click on your state to get the Housing Price Index (HPI).

If you're wondering exactly what the HPI measures and how it's calculated, here's what the site says: "The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or re-financings on the same properties.

This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975. The HPI serves as a timely, accurate indicator of house price trends at various geographic levels. Because of the breadth of the sample, it provides more information than is available in other house price indexes." So, if you want property value trends for Nebraska from the FHFA site, click on "State HPI Summary" and scan down the list of states until you find Nebraska. The handy table gives rankings and trends in quarterly, 1 year, 5 year and "Since 1991Q1" columns.On the same site, you can also click on "Research and Analysis," and you'll get a list of government and industry sites which will provide you with information on property trends. Note: The FHFA site doesn't provide predictions; it simply reports data. To get analysis and predictions, try the respected RealtyTimes.com. It reports on current market conditions and provides advice to consumers as well. Another site for information on residential properties is Zillow.com.

To find local information, fist click on the "Local Information" tab. That takes you to the page where you'll find the "State," "City," and "Nearby Neighborhoods" tabs. Click on the appropriate names, and you have local information! There are many, many other websites from which you can gather property value information.

I don't have the space to list them all, so here's a partial list of major industry and governmental agencies:

- National Association of Realtors = Freddie Mac
- National Association of Home Builders
- Census Bureau

Of course, the network, cable, and satellite channels report many of the finding from the sources listed above on a national basis. But, if you want local information, I recommend you work with your local real estate agent! He or she is best positioned to give you the latest information on property value trends.

To see what I can do for you in that regard, please contact me today!

What Are Pre-Foreclosures in the Real Estate Market and How Can They Benefit Me As an Investor?

2010-11-15T08:46:00.000-08:00

A foreclosure is a formal legal process. Lenders begin the process when home owners fail to live up to their mortgage obligations. As a result, the lenders want the property back and, depending on the state, file a law suit or a notice of default.

A pre-foreclosure sale is one that takes place between the date when the lender files suit and when the property is scheduled to be sold at a public foreclosure action or a trustee’s sale. A pre-foreclosure is not a formal legal process; it’s an opportunity for you to help beleaguered home owners out.

Before I discuss the benefits of pre-foreclosures for you as an investor, let’s step back a moment and look at the reasons for foreclosures.

Beyond the recent “mortgage meltdown” due to the recession, there are many reasons that foreclosures occur. Often, people tend to think that foreclosures occur because of poor financial management by home owners and others.

While this certainly can be true, there are really many different reasons why foreclosures take place – personal problems (divorce, illness, etc.), the tendency of first-time buyers to overextend themselves, etc. Also, before the recession, foreclosures were caused by predatory lenders, lenient terms by all lenders, and low interest rates.

Now, let’s look at the benefits of making a living as an investor in the pre-foreclosure market.

What Are the Pros of Working in the Pre-Foreclosure Market?

If you’re a careful investor, the pre-foreclosure offers you many benefits:

- The ability to buy properties at a deep discount

- The ability to craft deals that cost you very little money.

- No complicated paperwork

- The ability to inspect properties (to avoid “money pits)

- The ability to structure sales agreements with favorable terms.

- The opportunity for personal and financial freedom (you can set your own hours, rules, etc. as an independent investor)

Now, as you know, every field has its disadvantages as well as advantages. So, let’s look at the cons next.

What Are the Cons of Working in the Pre-Foreclosure Market?

Perhaps the number one disadvantage isdealing with the owners of the properties. They’re not in a good situation, and, most of the time, they’re not happy about it.

That means you need to deal with their anger and frustration in a diplomatic manner and have a thick skin at the same time. The best way to do this is to approach the situation as a problem-solver; that is, you’re there to help them make the best of a bad situation and to help them avoid the embarrassment of foreclosure.

A second disadvantage is that there’s a lot of courthouse work to do to ensure any pre-foreclosure deal is profitable; for example, making sure there aren’t liens or other legal entanglements. You’ll definitely need to pay attention to all the details in these records.

The final disadvantage is that you’ll face some stiff competition in this market. So, you’ll have to stay on top of it at all times!

And if you have any questions or topics you'd like to discuss, contact us today!

Need to Avoid Foreclosure? Follow 10 Common-Sense Guidelines!

2010-10-28T14:21:00.001-07:00

Here’s a fact that may surprise you – lenders hate foreclosures almost as much as you do! After all, they’re losing money and have to follow a complicated legal process to take the property back. This tells you, if you’re facing the possibility of foreclosure, that it’s in your best interest to work with your lender.

So, if you’re having trouble keeping up with your mortgage payment, contact your lender immediately and inform them of the situation. Also, you can contact a HUD-approved Housing Counseling Agency or call them Toll FREE (800) 569-4287 or TTY (800) 877-8339

Now, if you’re unable to make your mortgage payment, I recommend you follow the guidelines below. They’re straight from HUD with some additions on my part.

Guideline 1: Definitely Don't Ignore the Situation!

With foreclosure, there’s a natural tendency to hope the whole situation will just go away if we ignore it. This is not a wise choice because the farther behind on the payments you fall, the more difficult it’ll be to re-instate your loan and the more likely it’ll become that you’ll lose your home. So, take the foreclosure “bull” by the horns and deal with the situation right away.

Guideline 2: Contact Your Lender Immediately!

As I said earlier, lenders hate foreclosure nearly as much as you do. So, most have options to help you through tough financial times. It depends on the lender, but such options may include:

• modifying the mortgage length or interest rate.
• waiving fees or penalties.
• deferring payments through temporary forbearance.
• increasing monthly payments to cover past due amounts.
• modifying an adjustable-rate mortgage to a fixed rate, etc.

Guideline 3: Open and Respond to All Lender Mail Right Away!

Normally, the first notices you receive from a lender will give you one or more of the options listed under Guideline 2. So, definitely open that mail immediately because those options can help you through a rough time. If you don’t open the mail or toss it out, you’re only making matters worse because they may include notices of pending legal action. And, believe me, foreclosure courts don’t accept any excuses regarding failure to open mail!

Guideline 4: Know Your Mortgage Rights!

Always learn the specifics of your loan documents so you know what your rights and those of the lender are under the terms of the contract if you can’t make the payments. If you don’t understand the contract provisions, talk to a counselor or a real estate attorney. Also, remember that foreclosure laws and time frames vary by state. This means you need to contact the appropriate state office to learn what’s involved in the foreclosure process.

Guideline 5: Understand Foreclosure Prevention Options!

HUD has free and valuable information on options for preventing foreclosure (also called loss mitigation). These options can be found on the internet at http://portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL.

Guideline 6: Contact a HUD-approved Housing Counselor!

HUD funds free or very low cost housing counseling nationwide. The counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

Guideline 7: Evaluate Your Spending and Budget. Budget, Budget!

After healthcare, your first priority should be keeping your house. So, that means you need to look at where your spending goes and “cut out the fat.” By that, I mean zero in on “optional” expenses – cable TV, memberships, daily trips to the coffee shop, eating out, etc. If you’re not careful, these expenses can tear the heart of your budget, and they’re easily avoided! All the money saved by foregoing these items can go to making your mortgage payment. Also, delay payments on credit cards and other "unsecured" debt until you’ve have paid the mortgage.

Guideline 8: Employ Your Assets!

You may well have assets that you can sell for cash and apply to your mortgage payments. These could include items like a second car, jewelry, a whole life insurance policy, etc. Also, if anyone in your household can get an extra job, it’ll bring in additional income. Even if that income isn’t great, the effort demonstrates to the lender that you’re willing to make sacrifices to keep your home

Guideline 9: Avoid Foreclosure Prevention Companies!

I repeat – avoid these companies! Some are legitimate; some are scam artists. In either case, you don’t need to pay them hefty fees for foreclosure prevention! Sometimes those fees can amount to two-to-three months’ worth of mortgage payments! Why do this when, for free, you can work with a counselor or with the lender?

Guideline 10: Don't Lose Your Home to Foreclosure Recovery Scams!

You may be contacted by firms claiming that they can stop your foreclosure right away if you sign a document appointing them to act on your behalf. If that’s the case, tell them to get lost! This is a scam where you end up signing over the title to your property and becoming a renter in your own home!

Never, ever sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD-approved housing counselor! Want to talk more about options for preventing foreclosure? Contact us right now at and we can provide you with that information!

"How Do I Shop For A LOW Interest Rate?"

2010-09-16T12:02:00.001-07:00

When you're in the market for a home, I'm here to help you find the best mortgage terms around. But I also want you to be a fully-informed consumer!

As you already know, buying a home may be the largest purchase of your life so you should go into it with eyes wide open! In this article, I'd like to provide you some proven and common-sense guidelines that can save you time, money and hassle during the mortgage-hunting process.

Guideline 1: Look Beneath the Surface of the Interest Rate!

If you're like most prospective home buyers, you call lenders or use the Internet to shop for the best interest rates. That's a good first step, no doubt about it! But, the mistake many buyers make is that they stop there and don't consider the fees that may be added on to the loan later by the cheapest lender.

In other words, it's the lenders' game, and they may want you to play by the rules you're not even aware of. The answer, of course, is to know those rules ahead of time so you know exactly what you're getting when you buy that mortgage. More on this subject later!

Guideline 2: Chose the Type of Lender That Works Best for You!

There are several different sources of lenders - banks, credit unions, mortgage brokers, etc. They all have their advantages and disadvantages in terms of the rates and services they can offer you. For example, credit unions often provide the best value and service, but, of course, you have to belong to one in order to receive their services.

Regular banks and "big lenders" (Bank of America, Citigroup, etc.) also provide competitive rates and services. Of course, they only offer products their companies provide. You can also use a mortgage broker. This person is a "wholesaler" who uses several lenders to give service to their customers. The advantage of a broker is that he or she offers a greater selection of rates and products. However, they also tend to be more expensive than regular banks and big lenders.

Brokers make money in two ways. One is origination fees ("yield spread" or "rebate"). Essentially, the origination fee is a commission paid by the bank to the brokers to encourage them to use their firm. The second way is by selling a higher interest rate to you. This means there's room for you to negotiate that interest rate down!

When a broker quotes you an interest rate, ask him or her to tell you what the origination fee, rebate or yield spread on that rate is. For a broker, a reasonable amount would be a total of 1% of the loan amount from yield spread, origination or combination of the two. Most brokers usually want to make at least 2%.

Tip: Don't pay an origination fee unless the broker informs you that he or she isn't getting anything on the back end of the deal.

The bottom line: you can (and should) shop among all these lenders to find the lowest rate. It can save you thousands of dollars over the life of the mortgage.

Guideline 3: Review the Good Faith Estimate with an Eagle Eye!

By law, lenders are required to provide you with a Good Faith Estimate or GFE. In essence, the GFE gives you a general summary of all the costs and expenses you'll incur at the time you close on your new home. The document should cover closing costs and the amount of cash you need to close on the agreement. It should also spell out which if any prepaid expenses must be handled and the average monthly payment you'll have to make in order to keep up with the loan.

Most lenders provide complete and straight-forward information on these forms; however, there's no reason for you to accept the GFE at face value. Comb through the information and if you don't understand a particular item or fee, ask for an explanation. If you still don't understand them, you may want a lawyer to review them for you so you have complete understanding.

Remember: A GFE is only an estimate. Changes may occur through no fault of the lender. A reputable lender will let you know if fees are going up substantially. In general, however, if those fees go up by more than approximately 16%, then a red flag should go up in your mind.

Guideline 4: Negotiate, Negotiate, Negotiate!

When confronted with the expertise and "prestige" of banks, we all have a tendency to think they know best, and we should, therefore, agree to their terms. Never think this way! Banks are like any business; you can and should negotiate with them!

Want more information on banks and other lenders? Contact us today!