The Federal Housing Administration (FHA) has extended its 90-day “no flip” rule on recently rehabbed properties for another year. The ruling, which allows investors who acquire foreclosed properties at below-market value to be exempt from waiting the customary 90 days before reselling them, was set to expire at the end of January 2011. Vicki Bott, deputy assistant secretary for single-family housing at the FHA, said that first-time buyers have responded overwhelmingly to the opportunity to buy “turnkey” renovated homes with low down payments and they have performed well on their mortgage obligations.
The 90-day waiting period originally was put in place to protect FHA borrowers against predatory practices of flipping where properties were quickly resold at inflated prices to unsuspecting borrowers. Bott said that while the FHA is concerned about flipping in general, they have not seen any of the fraud problems, defaults and re-foreclosures that cost the agency millions in insurance payouts in earlier years.
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FHA “ANTI-FLIPPING” RULE EXTENDED
Wednesday, February 9th, 2011Four Reasons Buying A Home Now Presents The Opportunity Of A Lifetime
Friday, October 15th, 2010If you are looking to take advantage of the opportunity of a lifetime, now is the perfect time to get off the sidelines. Playing by your own terms may be the name of the game today. Ask for price reductions, improvements, closing costs—whatever—and sellers, who seriously want to sell, are very likely to work with you. If all the pieces are in place—you’re qualified to buy a home, the purchase makes sense for your situation and you’re prepared to live in the home for at least five years the following reasons should be motivation enough to get you back in the market.
1. You have a large inventory to choose from?In many places it is taking months to sell a home, which is creating a lot of inventory for those looking to buy. A large selection of homes on the market gives buyers more choices and drives down prices as well.
2. Builders are offering big discounts?Homebuilders are getting even more aggressive with their pricing today. Look at completed new homes first because builders are offering steep discounts. Plus, you’d have a warranty not only on the home itself, but also on the home’s appliances, he said. Walk in with a preapproval for a mortgage and make an offer. Chances are a builder will consider that offer rather than let a potential buyer get away.
3. Mortgage rates are historically low?It’s not just the price of the home that will affect affordability; mortgage terms will also affect your monthly payments. Rates on the popular 30-year fixed-rate mortgage came in at 4.54%; 15-year fixed-rate mortgages were down to 4.00% and 5/1 ARM mortgages were as low as 3.78%. You’ll still need good credit, a substantial down payment and a willingness to document your income in order to qualify for these great rates. In addition, low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. This allows new homeowners to have a little give to absorb any ups and downs as housing market continues to gain traction.
4. Houses are in move-in condition?Many homeowners have decided to wait out to the market and instead stay in their current home and take care of home improvement projects to make the home feel like new again. Because of this, many homes coming onto the market today are in good condition and ready for buyers to move in.
If all the pieces are in place—you’re qualified to buy a home, the purchase makes sense for your situation and you’re prepared to live in the home for at least five years the following reasons should be motivation enough to get you back in the market.
The Myths About foreclosure
Thursday, October 14th, 2010Beware of blanket assumptions about what leads to foreclosure—such as financial mismanagement. Statistics from the National Foreclosure Mitigation Counseling Program, a housing counseling service administered by NeighborWorks America, which supports affordable housing and community revitalization efforts nationwide, paint a picture of foreclosure you might not expect.
Myth: Most people facing foreclosure overextended themselves.
Reality: Only 6% of those counseled by NFMC cited poor budget management skills.
Myth: It’s all the fault of ARMs.
Reality: Only 5% of those counseled by NFMC report an increase in loan payments. And fewer than half of NFMC clients said they held ARMs.
Myth: Greedy people made bad bets on investment properties.
Reality: 82% of foreclosures have been on primary residences, not investment properties, according to a recent Center for Responsible Lending study. In fact, the main reason for default is a change in income due to a job loss, according to 58% of those counseled by NFMC.
Indeed, the loss of job and a reduction in household income are the top causes of personal residence foreclosure, says Austin A. Frye, a certified financial planner in Aventura, Fla., who’s seen such tragedies firsthand.
Some Ideas To Help With Credit Fitness To Take Advantage Of Low Interest Rates
Monday, October 11th, 2010Many home buyers now and into the foreseeable future will face tight lending standards and the need to improve their credit score to get pre-qualified or pre-approved for mortgages. START NOW with the following steps for some speedy credit repair to gain lender approval and the best possible rates:
Credit Card Wisdom
-Paying revolving credit cards down is generally more beneficial than, for example, paying down student loans, mortgage or auto loans.
-Always leave a 30% or higher gap between what you owe on the card and the card’s limit. Lenders look for this minimum gap.?-Use cards with care even if you pay off balances each month because depending upon statement dates, the lender may see big balances.
-Pay down the cards closest to their limits first for speedier credit repair. The lending bank will then see the “gap” it wants to see.?-Do not ask a creditor to lower credit limits. Generally, carrying smaller balances on several cards is better than one large balance on one card.
-Check your credit card limits to make sure the report is correct. Limits may not be reported on all cards.?-Never make a late payment on credit cards or any loan.
Protesting Items
-Protest any unjust negatives, such as late payments, collections that are not yours, and any items not reported as “paid as agreed,” if you paid on time and in full.
-Protest items listed as unpaid that were included in a bankruptcy, and items older than seven years (10 for bankruptcy).
-Focus first on the larger, newer negatives listed on the report.
It is important not to worry about smaller items like incorrect address information or an old employer listed as current. This is, of course, unless there is the possibility of identity theft or the file is mixed with someone else’s.
Any increase in credit card balances or other credit purchases (car, motorcycle, RV, boat, furniture, etc.) can change your credit score and will increase your monthly debt. Your total monthly debt is used to determine your ability to qualify for a loan. A higher monthly debt will lower the amount of your loan qualification.
Hud Loan modification Scam Alert
Friday, October 8th, 2010Scams aren’t always easy to spot – but it helps if you know the warning signs to look for. Here are six red flags to indicate that you may be dealing with a loan modification scammer:
1. A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.
2. A company/person guarantees they can stop a foreclosure or get your loan modified.Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.
3. A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.
4. A company pressures you to sign over the deed to your home or sign any paperwork that you haven’t had a chance to read, and you don’t fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.
5. A company claims to offer “government-approved” or “official government” loan modifications.They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.
6. A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.
What Is An Appraisal?
Monday, October 4th, 2010An appraisal is an experts opinion of the value of the property.
Simply put, an appraisal is an informed estimate of the value of a property. It’s the number lenders refer to when deciding how much money to loan on a specific property.
The seller of a home will probably have a real estate agent, who will use a CMA (Comparative Market Analysis) to determine a realistic asking price for the home. While the information is useful, the lender will look to a specialized, local third-party professional to provide the “official” home valuation report. And that professional is… you guessed it …the appraiser.
Arriving at that final appraisal figure is no easy task — to be accurate, an appraiser needs an educated, trained perspective and understanding of all of factors that have to be carefully weighed with respect to the state of the real estate market in that specific area.
The type of area: Is it part of a development? Or is it stand alone acreage?
The recent sales prices of comparable homes located nearby
The average sales time of this type of property in that area
The proximity to desirable schools and public facilities
The appraiser will tour the home as a potential buyer would tour the home. Clean, updated, well-maintained homes will appeal more to buyers – and chances are, they’ll appeal more to the appraiser as well.
First impressions aside, for his analysis the appraiser will generally consider only permanent fixtures and real property — that is, property that’s permanently dug into, or set upon, land. So, a building is real property — a couch is not. Added touches, like sconces or other added fixtures, are nice but do not count toward the appraiser’s assessment.
After taking stock of the real property, the appraiser estimates the square footage of the home. GLA (Gross Living Area) is calculated by measuring the exterior of the home. The appraiser will note the GLA and then will look to calculate actual living area space. So that means he deducts the measurements of non-living areas, such as garages or covered porches. (Although, surprisingly, finished basements are calculated separately from the above-ground GLA.)
All said and done, depending on the size of the property, an appraisal should take anywhere from 15 minutes to 2 hours. Buyers (and lenders) can typically expect a report within a few business days.
And who pays for the appraisal? Although the Lender arranges for the Appraisal, the buyer pays the bill. For an average home, that’s usually around $300 to $500.
Reverse Mortgages Yeahs and Nays
Thursday, September 30th, 2010Some parents are warning their kids not to bank on inheriting the homestead. Why? Because some parents are considering a reverse mortgage. Such mortgages may not be beneficial for everyone, but their popularity is definitely on the rise.
Reverse mortgages are based on the home’s current value, borrower’s age and existing interest rates. Borrowers can choose to receive loan proceeds in a single, lump-sum payment, as periodic predetermined payments, a line of credit or both.
Possible YEAHS of a Reverse Mortgage
•A reverse mortgage has no fixed due date.
• No repayment is required as long as the home remains the borrower’s principal residence.
• Loans become payable upon death, sale, ceasing to live in the home or failure to keep taxes, insurance or maintenance current.
• Borrowers cannot be foreclosed on.
• Reverse mortgages are nonrecourse loans. The amount owed can never exceed the selling price.
• Borrowers continue to hold title to the property.
• There are flexible payment options.
• Loan proceeds are not taxable.
• Underwriting and approval do not depend on the borrower’s current income or employment status.
• Would-be borrowers are required to meet with an independent financial counselor prior to getting a loan.
• The lender’s lien on the property is removed if the lender fails to make loan advances according to the agreement.
Possible NAYS of a Reverse Mortgage
• Homeowners must be at least 62 years old, own their home outright or have high home equity.
• Reverse mortgages provide around 65 percent of the home’s value. Loan-to-value ratios as high as 80 percent may be available to older homeowners, but higher closing costs and fees and shorter life expectancy offset some of this advantage.
• When the borrower dies, the loan and all accrued interest and costs become due and payable, typically necessitating the sale of the home. Heirs wanting the house must repay the entire amount due, which could be greater than the home’s value at the time. Inheritance planning is tricky.
• Relatively high up-front costs mean borrowers need to stay in the home longer (at least ten years) to make the loan financially attractive. This disadvantage has been offset by some lenders eliminating origination fees, setting aside service fees or both.
• Borrowers are responsible for all other ownership costs.
• Homes can be foreclosed on if borrowers cease to live in them for 12 consecutive months or default on any obligation, such as maintenance, taxes or insurance.
• Borrowers may be targets for aggressive sales pitches for other expensive and potentially inappropriate products or services.
• Reverse mortgages are fundamentally different than forward purchase mortgages or home equity loans. Generally, reverse mortgages have more complicated terms and conditions.
Before making any decision regarding a reverse mortgage talk to a qualified and trusted mortgage and tax advisor.
Real Estate Market Offers Bright Spots
Monday, September 6th, 2010The end of the tax credit hit with full force in July.
Realtors’ association economist Lawrence Yun acknowledged the downturn, but also offered perspective. “Since May, after the April 30 deadline, contract signings have been notably lower,” he said, “and a pause period for home sales is likely to last through September.” Still, Yun said, annual sales are expected to reach five million in 2010 because of the healthy activity in the first half of the year. “To place that in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.”
In July, the nation’s median price rose 0.7% over July 2009, to $182,600. The median is the middle value; half the homes sold for more, half for less.
Yun insisted that record-low mortgage interest rates, now averaging 4.5% would encourage the wary to get back into the hunt.
In fact, rate-conscious buyers are active in the market these days. They waited for rates to dip, more eager to save thousands over the life of their mortgages than to snag a one-time tax credit available only to qualified buyers. Buying a house is a long-term investment, and finding the right property and great loan over 30 years may be more important than $8,000 up front
Spring Cleaning Clutter Tips
Tuesday, June 8th, 2010As another spring comes to an end it’s a good time to ask yourself “did I ever get around to spring cleaning this year?” If not, here are some ueful tips to implement before the BBQ season begins-
That kitchen drawer
Take the pizza rolling, slicing thing and all those other items you bought for less than $5.99 that you just knew you’d always use and put them in a cardboard box. Whenever you use one of the items, put it back in the drawer. At the end of the month—with the exception of the turkey baster—you need to ask yourself if you will ever use whatever is left in the box.
The bedroom closet
We wear 20% of our clothes 80% of the time, which means the vast majority of your closet is filled with—you guessed it, clutter. Walsh suggests the ‘reverse clothes hanger trick.’ Take everything on a clothes hanger and turn it around back-to-front. For the next three to six months, every time you wear something, hang it back the correct way after you wash it. Whatever is still hanging back-to-front, ask yourself if you will ever really wear the item. The reverse clothes hanger trick is an efficient, non-traumatic way to see what you wear and what you don’t.
Your shoes
To understand how many shoes you have, you have to release them from captivity. Find the largest room or hallway in your house and line them up. Every pair of shoes you have. Then sort the shoes by type—running shoes, sensible pumps, sandals and so on. Then give yourself a ratio such as 10-to-1 (for every 10 you keep, get rid of one pair), 5-to-1 if you’re or even 3-to-1 if you’re a true pioneer.
The car
Get in the habit that whenever you gas up the car, in those two minutes you declutter and throw out any trash. In addition, get milk crate-size containers, and put them in the way back. Whenever the kids bring something into the car—sports gear, book bags, etc.—it goes in their crate. Be sure to use the crates whenever you go shopping too. When you arrive home, make sure nobody leaves the car empty-handed—everyone has to carry their crate into the house.
The garage
Divide your garage into clear zones: one area for gardening equipment, one area for holiday decorations, one area for luggage and one area for tools. Establishing zones is a functional way of keeping the place organized and the volume of stuff in control.
You may actually need a bigger home and/or a 3 car garage. I can can help you find what you want. Visit www.robdennyhomes.com or email me at rdennyhomes@gmail.com today.
“Relax…I’ll handle the details”
Mortgage Rates Close in on Record Lows But For How Long?
Wednesday, June 2nd, 2010According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage averaged 4.78 percent for the week ending May 27, down from the week earlier when it averaged 4.84 percent.
Last year at this time, the 30-year rate averaged 4.91 percent. Rates have not been lower since the week ending December 3, 2009, when it averaged 4.71 percent.
“These low rates will help to elevate home-buyer affordability and soften the effects of the sunset of the home-buyer tax credit,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. “The credit substantially propelled home sales, as reflected in the strength of the April existing and new home sales, which were up 7.6 percent and 14.8 percent, respectively.”
However, Signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgages, said Stephen Stanley, chief economist at Pierpont Securities LLC. The evidence includes more consumers are paying their bills on time. Past-due accounts at American Express declined 34 percent compared to a year ago, and Target Corp. reported its lowest delinquency rate in two years during the second quarter. In another sign of economic improvement, fewer banks reported tightening lending standards this month, one reason consumer borrowing rose for the second time in three months. “If lending standards start to stabilize, that’ll be another reason to remove the emergency measures, including the zero rate,” said Jay Bryson, a senior global economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who formerly worked at the Fed in Washington.
How’s the market in North County San Diego? Go to my website http://RobDennyHomes.com and click on market trend charts. If you would like a detailed report for anywhere in San Diego County, please email me at RDennyHomes@gmail.com