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Looks like I spoke too soon… HUD has approved first time home buyers and lenders (mortgagees) using the up-to-$8000 first time home buyer tax credit as a down payment, to pay closing costs and/or buy down the interest rate. The official HUD letter with guidelines was released yesterday. Here it is (if you can’t see the document, click here)…
The next step is for banks/lenders to come up with a system internally that will allow them to offer this to borrowers. This could take a few days to a several weeks. Check with your lender to see if/when they have a system in place for you to take advantage of this program.
P.S. This “use your tax credit as a down payment” program is set to expire this November. The up-to-$8000 first time home buyer tax credit as a whole is set to expire December 1, 2009.
Hat tip to Dulles Association of Realtors (DAAR) for breaking the story.
On May13, HUD Secretary Shaun Donovan said that the Federal Housing Administration (FHA) is going to permit its lenders to allow first time home buyers to use the $8000 tax credit as a down payment (aka “monetize” the tax credit).
The next day, May 14, the Office of Management & Budget told the FHA to hold off on implementing the program because it was only a “proposal” (aka “sike!”).
Since then, consumers, agents, lenders and others have been waiting (impatiently) for a final and real answer to if/when the first time home buyer tax credit will be “monetized”.
Well, here’s the latest. According to an article in the Wall Street Journal,
“The FHA says that the rumors about the program’s demise were flat-out wrong and that the program will be rolled out soon. Some industry analysts say that the memo may have been pulled because the program, which uses a tax credit established in February’s stimulus package, needed an OK from the White House budget office.”
If the program is approved, it would only be available through November of this year so time is a ticking…
I’ll keep you posted as more becomes available.
“What do all these real estate terms mean?!”, you ask. Well, here is a glossary of commonly used real estate terms compiled from a variety of sources. If you run across a term that’s not on the list, just let me know and I’ll add it.
AVM: An automated method of valuing real property. Currently very inaccurate. For examples of AVMs and how they work, click here.
Acceptance: The date when both parties, seller and buyer, have agreed to the terms of an offer and/or addendum. NOT to be confused with ‘Ratification”.
Adjustable Rate Mortgage (ARM): A mortgage that permits the lender to adjust the mortgage’s interest rate periodically on the basis of changes in a specified index (i.e. Libor). Interest rates may move up or down as market conditions change.
Amortized Loan: A loan that is paid in equal installments during its’ term.
A.P.R. (Annual Percentage Rate): A term used in the Truth In Lending Act. It represents the relationship of the total finance charge (interest, discount points, origination fees, loan broker, commission, etc.) to the amount of the loan.
Appraisal: And estimate and opinion of real estate value usually issued to standards of FHA, VA and FHMA. Recent comparable sales in the neighborhood is the most important factor in determining value. This should be contrasted to the Home Inspection.
Appraiser: An individual who is licensed to perform an appraisal. Not to be confused with an AVM.
Appreciation: An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Assumable Mortgage: Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage. Not a common way of securing a property due to a common lenders’ clause stating that a sale of the property requires immediate payment of remaining balance by the borrower.
Bank-Owned Property (aka “REO” or “foreclosure property”): A property that is owned by a bank typically via foreclosure proceedings and via auction at the local courthouse steps
Bill Of Sale: Document used to transfer title (ownership) of PERSONAL property.
Broker Price Opinion (BPO): An agent’s/broker’s opinion of a property’s market value used by a bank when determining the market value of one (or more) of their foreclosure/bank-owned properties
Buyer’s Agent/Broker: A real estate agent who represents only the buyer in a real estate transaction.
Closing Costs: A general term used to describe the fees associate with the purchase of property such as lender and settlement agent fees, title insurance, the appraisal and survey fees, etc. Closing cost are typically 2 to 5% of the loan amount, but vary by region.
Closing Statement (HUD-1): A financial statement rendered to the buyer and seller at the time of transfer of ownership that gives an account of all funds received or expended.
Cloud On Title: Any condition that affects the clear title to real property.
Common Grounds: Those grounds owned by the Home Owner’s Association and/or by a small fraction by every home owner in the development.
Comparable Sales (Comps): Recent sales of similar properties typically within the same neighborhood used as a tool to establish market value or for appraisal purposes.
Condominium Association (Condo Association): The association which governs the condominium community usually comprised of owners within that community.
Contract: An agreement to do or not do a certain thing. In the case of real estate, when an offer for purchase and sale of property has been ratified and all contingencies have been removed.
Consideration: Anything of value to induce another to enter into a contract (i.e. money, services, a promise).
Contingency: A condition specified in a purchase contract, such as a satisfactory Home Inspection.
Counter Offer/Counter: An offer by a seller back to a buyer’s original offer with a different price and/or terms than the original offer made by the buyer.
Credit Score: Your credit report contains a history of how you’ve paid your bills, how much open credit you have, and anything else that would affect your creditworthiness. Your credit score boils down all of that information into a three-digit number. Scores vary from 300 to 900. Though there are several scoring systems, the one used most commonly used by lenders is known as a FICO (Fair Isaac and Company).
Deed: Written instrument, which when properly executed and delivered, convey title to real property.
Depreciation: A decrease in the value of a property due to changes in market conditions or other causes. The opposite of appreciation.
Direct Lender: A lender who approves and supplies funds for their loans directly from the bank or financial institution which they are a part of. They do not receive final approval or funding from a third party (i.e. another bank).
Discount Points: A loan fee charged by a lender to increase the yield on the investment (aka lower the interest rate to the consumer). One point equals one percent of the loan amount.
Dual Agency: A practice by which an agent represents both the seller and the buyer in a real estate transaction. Neither the seller’s nor the buyers’ best interests can be put before the others. The agent is merely a facilitator of the transaction.
Earnest Money Deposit: A deposit or promissory note from the buyer held in escrow by an agreed upon party which illustrates the buyer’s commitment to purchase a property. In the event of default by the buyer(s), the earnest money deposit may be withheld by the seller as damages.
Easement: The right to use the land of another (i.e. utility company easement on your lot in order for them to run cable underground).
Encumbrance: Anything that burdens or limits the fee title to property, such as a lien, easement or restriction of any kind,
Equity: The value of real estate over and above liens against it. It is obtained by subtracting the total liens from the value of the property.
Escrow Payment: That portion of a mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.
Fannie Mae: Nickname for the Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by Congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.
Federal Housing Administration (FHA): An agency of the U.S. Department of Housing and Urban Development (HUD). Its’ main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting, but does not lend money or plan or construct housing.
FHA Insured Mortgage: A mortgage insured by the Federal Housing Administration according to its’ regulations.
Fixed Rate Mortgage: A loan that has a set interest rate at a prescribed rate for the entire duration of the loan.
Foreclosure: Procedure whereby property pledges as security for a debt and is sold in the event of a default. If you don’t pay the mortgage, the bank takes the property back via foreclosure.
Freddie Mac: Nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.
Graduate Payment Mortgage: Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its’ life. NOT to be confused with an Adjustable Rate Mortgage (ARM).
Grantor’s Tax: A tax in Virginia paid by the seller at the time the property is sold (typically settlement date). The current tax rate is $1 per $1000 of the sales price or assessed value, whichever is higher.
Hazard Insurance: This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.
Home Inspection: An thorough inspection of a property by a qualified third party who is typically hired by the purchaser(s).
Home Owner’s Association (HOA): The association which governs the community of homes usually comprised of owners within that community.
Home Owner’s Insurance: The general term for insurance on real property.
Improvement: In real estate, typically refers to any permanent structures on the property. Also refers to changes to the overall property which affect value.
Investor: The holder of a mortgage of the permanent lender for whom the mortgage banker services the loan. Any person or institution that invest in mortgages. Also known as an individual or institution that purchases one or more properties for investment purposes, not as a primary residence.
Lease Option: A contract which gives one the right to least property at a certain sum with the option to purchase at a future date.
Lease Purchase Agreement: An agreement to the future purchase of a property with the right to lease the property for the interim.
Lender: An bank or financial institution which lends money.
Lender Letter: A letter from the lender stating that a buyer is approved for specified financing contingent upon a ratified contract, satisfactory appraisal, underwriting approval and/or other conditions. Unlike a pre-approval letter, the lender will have processed all the necessary paperwork and ran a credit check making a lender letter much stronger than a pre-approval letter.
Listing Agent/Broker: – An agent/broker who represents only the seller(s) in the sale or rental of real estate
Loan To Value (LTV): The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (i.e. An appraised value of $100K and a mortgage loan principal of $80K equals an LTV of 80%).
Mechanic’s Lien: A lien filed by an individual or company that has made an improvement on the property, but has not been compensated to their satisfaction (i.e. payment dispute). Also known as Contractors Liens and Construction Liens.
Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.
Mortgage Broker: A company that does not make final approval or fund the loan directly rather, sells the loan to a third party bank or lending institution. In essence, they are a “middle-man”.
Mortgagor: The borrower of money of the giver of the mortgage document.
Note: A written promise to pay a certain amount of money.
Offer/Purchase Offer: An offer of price and terms by a buyer to purchase property from a seller. The seller may accept, reject or counter the offer with a different price and/or terms.
Origination Fee: A fee paid to the mortgagee (i.e. lender) for paying the mortgage before it becomes due. Also known as a prepayment penalty or reinvestment fee.
Paid-Out-Of-Closing (POC) Items: Any item paid for prior to or outside of settlement. Such items may included a Home Inspction, Radon Inspection and Appraisal.
Personal Property: Property other than the real property (i.e. furniture, TV, computer, appliances). Often called movable property which can be moved from one location to another.
Pre-Approval Letter: A letter from a lender that a buyer is potentially approved for specified financing, but an application nor paperwork has been submitted nor has anything been verified by the lender. Much weaker than a lender letter and may get rejected by a seller as an approval for financing.
Private Mortgage Insurance (PMI)/Mortgage Insurance Premium (MIP): The amount paid by a mortgagor (borrower) for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower’s default on a loan. It is typically charged is the Loan To Value (LTV) is higher than 80%.
Promissory Note: A written contract containing a promise to pay a definite amount of money at a definite future time.
Radon Inspection: A determination of whether the amount of radon gas is below, at or above the EPA’s acceptable level (currently at 4.0 ppl).
Ratification Date: The date of final acceptance in writing of all the terms of the Offer and delivery to all parties as agreed upon in the Offer.
Real Estate Agent: An individual who has a state license to represent a buyer or a seller in a real estate transaction in exchange for a commission. Most agents work for real estate brokers.
Real Estate Broker: A party who acts as an intermediary between sellers and buyers of real estate and attempts to find sellers who wish to sell and buyers who wish to buy. Also the name for an individual who has a state license to supervise one or more real estate agents working out of the same office as the broker.
Real Property: A legal term encompassing real estate and ownership interests in real estate (immovable property). It is a type of property differentiated from personal property.
Rent With Option: A contract which gives one the right to least property at a certain sum with the option to purchase at a future date.
Second Mortgage/Second Trust/Junior Mortgage/Junior Lien: An additional loan imposed on a property with a first (primary) mortgage. Generally, a higher interest rate and shorter term than a first mortgage. An alternative to obtaining financing above an 80% Loan To Value (LTV) and paying a Mortgage Insurance Premium (MIP or PMI).
Settlement: the process of exchanging the consideration (i.e. real estate) for financial instruments (i.e. money) once a deal has been executed.
Settlement Agent: An individual or company which perform settlement duties for the purpose of sale and purchase of real property.
Short-Sale: A situation in which the proceeds from the sale of the property are less than what is owed to the lender(s)/creditor(s). If the seller can not come up with the difference, the lender(s) may be asked to forgive the difference or take a Promissory Note in lieu of immediate payment in which case the lender(s) must “approve the short-sale” in order for it to actually settle. Short-sale negotiations take an average of 90 days and there’s no guarantee that the creditor(s) will approve the short-sale.
Survey: The process by which a parcel of land is measured and its’ area ascertained.
Tax Assessment: The value set on taxable property.
Tax Assessor: An official who evaluates property for the purpose of taxing it.
Tenants In Common: Ownership by two or more persons who hold an undivided interest without the right of survivorship. In the event of a death of one owner, his/her share will pass to his/her heirs, NOT the other owner(s).
Tenants By The Entirety: Only possible when the joint owners are husband and wife. Tenants by the entirety provides for a common law right of survivorship. The property goes automatically to the surviving spouse. No Will, probate or other legal action is necessary. One spouse can not use a Will to leave an interest to someone else.
Title Company: A general term for a company which performs settlement duties for the purpose of sale and purchase of real property.
Title Insurance: An insurance policy which protects the insured (purchaser or lender) against a loss arising from defects in the title. Lender’s Title Insurance is mandatory for almost every lender while Owner’s Title Insurance is optional, but recommended.
Dislcaimer: These definitions may vary by jurisdiction, region, state and country. I am not a lawyer. These definitions are not intended to be legal definitions nor legal advice. Please double-check all information contained herein.
So you’re thinking about buying a home, but you’re not quite sure what all it involves. Well, here’s a “Home Buying Timeline” that outlines the various steps to buying a home…
1) Get Pre-Approved – This step involves contacting a lender to find out what types of financing options are available to you and what amount you qualify for in order to purchase a home. The lender should discuss with you different loan programs and how these loan programs fit your needs. Be sure to tell the lender and your Realtor if you qualify for a VA or FHA loan. You will then receive a letter that states the amount of a loan you qualify for (aka “approval letter” or “lender letter”). Important: This letter does not guarantee you a loan and is why you always include a financing contingency in your offer (more on this later). Also important: Make sure you work with a direct lender, not a mortgage broker.
2) Find a Realtor – It is best to get your own representation when buying a house. Be sure to discuss agency with your Realtor. Be sure that the person who is showing you homes is a Realtor, not just a licensed salesperson; yes, there is a difference. Make sure that you are confident that the Realtor you have picked is working in your best interest. Interview several Realtors that specialize in the area(s) you’re looking in and don’t hire someone as your Realtor just because they’re a friend or family member - this is business and involves hundreds of thousands of your dollars so make a good business decision. Tell your Realtor what you are looking for and get them to provide you with active listings that fit your specific needs. This can help narrow down your search and weed-out any homes that you are not interested in.
3) Look at Houses! – You may want to prepare a “Want List” prior to looking at homes. List things that you do want and things that you don’t want. Having said that, keep an open mind. Many Buyers end up purchasing a home that has many of their original “Don’t Wants.” The more information you give your Realtor, the better they will be able to sift through all the “noise” and narrow down the playing field to the homes that best suit your specific needs.
4) Prepare an Offer – in our area, the purchase agreement addresses issues that may arise when purchasing a home. These issues include financing, home inspections, appraisal, default, earnest money deposits and settlement. It is very important that you understand these terms and their significance. Once a contract is ratified (all parties agreeing, in writing, to the terms listed in the contract) the contract is legally binding. This agreement must be in writing to be enforceable. Be sure you understand what you are signing. Keep in mind that your Realtor is not an Attorney; they can not offer you advice or interpret the contract.
5) Contingencies – Basically, contingencies protect you in case you cannot perform or choose not to perform on a promise to buy a home. If you cancel a contract without having built-in conditions and contingencies, you could find yourself forfeiting your earnest money deposit and potentially facing liquidated damages. Common contingencies are Home Inspections, Radon Inspections, the Sale of the Purchaser’s Home, Appraisal Contingency and Full Loan Approval (aka Financing Contingency). These items are included in your purchase agreement, but are not addressed until after ratification. These items can help you discover more information about the home and you can use that information in helping you make your decision to go through with the purchase. These contingencies do not mean that the Seller has to renegotiate the sales price if you are unhappy with information you have received. They do mean that the Buyer and Seller can come to terms on how the information should be addressed. If the Buyer and Seller can not come to terms in the allotted amount of time, the contract can be voided. Sometimes the Seller may elect to offer money to the Buyer in lieu of fixing a problem discovered during a contingency period. Be careful with this, not all lenders allow a Buyer to receive money from a Seller over a certain amount. If the Seller has already agreed to give you closing cost assistance, you may not be able to accept any more money from the Seller. Lowering the price of the home may not be a good solution either. It is best for all parties to get the Seller to fix the problems before Closing.
6) “AS-IS” Contracts – So, you’ve decided to write on an “AS-IS” house. This means you are either getting a really good deal from a Seller, you are writing on a house that has an “estate” as a Seller, or you are writing on a Short-Sale or Foreclosure/Bank-Owned property. All of these types of contracts are a little different from a regular sales contract. The main difference is the “Seller” has no obligation to fix any items that need repair in the house. This includes the treatment and repair of termite damage. There are safeguards that can still get you out of an “AS-IS” contract, but you and your Realtor need to write them into the original offer. Most of the time you can still do a home inspection on an “AS-IS” home, but the home inspection will be for informational purposes only. It is extremely important that you thoroughly understand the Short-Sale and Foreclosure process. Ask questions and make sure you are comfortable with the risks.
7) Offer is Ratified – Congratulations, you have a Ratified Contract on a house! – Again, Ratification is when all parties have come to an agreement to the terms of a purchase contract, the agreement and associated paperwork has been signed by all parties and all paperwork has been delivered to both the seller and the buyer.
Formal Application to Lender – A Buyer has 7 days from the date of ratification to make formal application to the lender. This means that the first thing you should do after the contract has been ratified is contact your lender and provide them with a copy of the ratified contract.
9) Home Inspection/ Radon Inspection/Lead Based Paint Inspection – These are a few of the Contingencies discussed while writing the Offer to Purchase. Each of these Contingencies has a time deadline that the Buyer set while writing the Offer to Purchase. It is very important that you adhere to this timeline. If you neglect to give the Seller the Addendums regarding these Contingencies, you could be forfeiting your right to void the Sales Contract based on the findings. It is best to order these inspections and tests as soon as the contract in ratified. If you don’t know of any contractors/companies that do these types of inspections/tests, ask friends who have bought a home before or ask your Realtor for a list of Home Inspectors, Radon Inspectors and other vendors. Be sure you choose someone who is reputable, licensed, bonded and insured. (P.S. This is not the time/place to try to save a buck - it’s extremely important that you hire the best inspectors/contractors you can for these inspections/tests)
10) Appraisal – This is a professional estimate of the current market value of a home. The lender will call out an Appraiser after you make formal application for a loan. The Appraiser works for the Lender, not the Buyer and not the Seller. Typically, the Buyer pays for the appraisal. You need to ask your lender for a copy of the appraisal. However, they may not give it to you until after closing. If the appraisal comes in low, there are several options for the Buyer all of which are listed in the Contract. The Seller may choose to lower the sales price to the appraised value; but if you have asked for closing cost assistance, you may lose that assistance. The Buyer can choose to come up with the extra money to buy the house if the Seller does not want to lower the sales price. The Buyer and Seller could come up with a suitable sales price. Or the Buyer can void the contract.
11) Home Owner’s Insurance – Home Owner’s Insurance (aka Hazard Insurance or Property Insurance) is mandatory as part of your financing. Call around and get rates for Home Owner’s Insurance. You need to give your lender this information in advance of the settlement date so do this as soon as possible. Home Owner’s Insurance has become difficult to obtain in some cases. You may want to get your Realtor to ask the Seller who they have as an insurer.
12) Loan Approval – The lender will send a letter, when requested, that states that all conditions of the loan have been met and that the loan is ready to close. Essentially this means that you can buy the house! Your Realtor needs to get a copy of this letter to the Listing Agent within the specified amount of time (part of your Financing Contingency), which you determined when you wrote the Offer to Purchase. This letter may not be ready until the day of closing, or it could be ready weeks in advance. It is important to stay in contact with your lender and ask questions!
13) Termite Inspection – Many lenders require a termite inspection in order to approve a loan. Who pays for this inspection is addressed in the purchase agreement. If the home is being sold “AS-IS,” the Purchaser typically pays for the termite inspection and the Seller may not be responsible for treating a termite infestation. Talk to your Realtor about “AS-IS” houses. The termite inspection must be performed within 30 days of settlement. This means that it is usually not ordered until 2 weeks before closing, just in case closing is delayed. I always recommend that the Buyer pay for their own termite inspection to insure that a reputable pest company is employed. The Seller is still responsible for the cost of treatment and repairs if termites are found, unless it is an “As-Is” contract.
14) Settlement – You will choose a settlement date at the time you write your Offer to Purchase. It is very important that you actually close on the loan on this date. If the Buyer is unable to purchase the home on this date, the Buyer can be found in default and the Seller may be able to keep the Buyer’s earnest money deposit and/or sue for liquidated damages. If the settlement date needs to be changed for any reason, get it in writing and have all parties sign off on it! The Buyer needs to bring an ID with photo, down payment, and closing costs to the Settlement table. All funds from the Buyer must be certified – no personal checks are allowed, no exceptions. You can also wire the money to the Settlement Company. You may not find out how much money you need to bring until the day of closing, so leave enough time during that day to get certified funds. And remember – don’t be late to your closing!
Congratulations! You made it through the process and you now own a home! There will be bumps in the road during this process. The best advice I can give is to ask questions. The only stupid question is one that goes unasked. Your Realtor should help you avoid some of these bumps and should also help you deal with them once they occur.
If you’re wondering how long the process takes from start to finish, check out this article over at Loudoun Foreclosures entitled, “The Type of Property You Can Buy May Depend On the Time You Have”
It’s Memorial Day weekend. That means that we have officially entered BBQ season. Therefore it is important to refresh your memory on the etiquette of this sublime outdoor cooking activity . When a man volunteers to do the BBQ the following chain of events are put into motion:
(1) The woman buys the food.
(2) The woman makes the salad, prepares the vegetables, and makes dessert.
(3) The woman prepares the meat for cooking, places it on a tray along with the necessary cooking utensils and sauces, and takes it to the man who is lounging beside the grill – beer in hand.
(4) The woman remains outside the compulsory three meter exclusion zone where the exuberance of testosterone and other manly bonding activities can take place without the interference of the woman.
Here comes the important part:
(5) THE MAN PLACES THE MEAT ON THE GRILL.
(6) The woman goes inside to organize the plates and cutlery.
(7) The woman comes out to tell the man that the meat is looking great. He thanks her and asks if she will bring another beer while he flips the meat
(8) THE MAN TAKES THE MEAT OFF THE GRILL AND HANDS IT TO THE WOMAN.
(9) The woman prepares the plates, salad, bread, utensils, napkins, sauces, and brings them to the table.
(10) After eating, the woman clears the table and does the dishes.
And most important of all:
(11) Everyone PRAISES the MAN and THANKS HIM for his cooking efforts.
(12) The man asks the woman how she enjoyed ‘ her night off ‘, and, upon seeing her annoyed reaction, concludes that there’s just no pleasing some women.
***Hat tip to Jeanette for sending this my way.
Brambleton’s Sizzlin’ Summer Concert series is right around the corner… The concerts will take place at the Brambleton Town Center Plaza in front of Fox Cinemas on various Thursday nights throughout the summer.
Here’s the line up:
July 2 – Jah Works (reggage) I’ve seen Jah Works several times and they’re great. They play all over the DC metro area including the eastern shore during the summer months and have a huge following.
July 16 – Doug Segree (rock/modern rock)
July 30 – Crowded Streets (Dave Matthew tribute band) I’ve seen them once before and it’s hard to believe you’re not listening to the real Dave Matthews band
August 13 – The Reflex (80′s cover band)
August 27 – Junk Food (alternative rock cover band)
The concerts are fun and a great way to spend a Thursday night. And don’t worry…they’re not too crazy so it’s safe to bring the entire family (or not if you want to do a date night).
The 1st Annual Dulles Home Fair, presented by the Dulles Area Association of Realtors, will offer free classes to consumers on a variety of real estate related topics. Some of the topics being taught/discussed are:
- Keeping Score: How to Monitor and Fix Your Credit
- Homeownership 101: How to Buy a Home
- County Housing Opportunity Programs
- The Legal Pitfalls of Foreclosures
- Staging your Home for Resale
- The State of the Housing Market
- Finding and Working With a REALTOR®
The classes are free as part the Dulles Home Fair Consumer Day on Saturday, June 13, 2009. Doors open at 9:00am and the event goes until 4:00pm. The Dulles Home Fair is being held at the Embassy Suites Hotel Dulles North, 44610 Waxpool Road, Dulles, VA 20147.
There’s a great article over at The Consumerist on 5 things you should avoid doing before buying a home. It’s a definite “must read” for all those considering buying a home.
Here’s an excerpt:
1) Don’t apply for new credit – When you apply for new credit, the creditor will do a “hard” inquiry (aka pull your credit). An inquiry will lower your credit score by as much as 5 points. The offer you just got in the mail or sitting in your inbox may be great, but it will cost you in the long run.
2) Don’t increase your debt – Taking on new debt will affect your debt-to-income ratio as well as your credit score. This translates into a higher interest rate.
3) Don’t accept any “same as cash” offers – “Same as cash” is basically a short-term or new loan as far credit scoring companies are concerned and will hurt your credit. Even if you save some money short-term (the “0% for 6 months” deal), you’ll pay a higher interest rate because your credit score is lower.
And I’d like to add a number 6…
6) Don’t forget to check with your loan officer first - Don’t restructure current debt, sell your car or move around large amounts of money between accounts, your spouse, family members, etc., without consulting your loan officer first. You’d be surprised at the impact something that you consider “logical” or ”small” may have.
The way appraisals are done and handled is changing dramatically thanks to the new Home Valuation Code of Conduct (HVCC). Rhonda Porter wrote a good post explaining the changes over at Rain City Guide. Here’s an excerpt:
In a nutshell, mortgage originators (if paid commission) will no longer have contact with appraisers for conventional mortgages. Appraisals will be ordered via an appraisal management company–oddly similar to what Washington Mutual used before New York Attorney General Cuomo investigated. Although this is effective for loans delivered to Fannie/Freddie on May 1, 2009 or later, lenders will adopt the Code well in advance in order to be able to deliver compliant loans.
The good and the bad of the new appraisal guidelines…
- Appraisers and lenders have distance put between them creating less opportunities for lenders to push appraisers to “hit the number” (aka inflate the appraisal price to meet overvalued sales prices).***
- This will create decreased risk for lenders which will help keep interest rates lower (in theory)
***Fannie Mae amended their guidelines in January of this year allowing appraisal management companies to be owned by lenders. (?!)
- There’s a lot of them – just read Kenneth Harvey’s article in the Washington Post, “New Appraisal Rules Comes With Costs”
- Though many of the changes will directly and immediately affect appraisers and lenders, things will trickle down and may start negatively affecting consumers as well.
Are you sick of having to pay a brokerage firm an extra $149 to $395 “admin fee” (aka “junk fee”) on top of the thousands of dollars in commission you’re already paying them? Do you think it’s a bit unfair?
Well, those “junk fees” may soon be illegal.
In a decision late last month in a class-action lawsuit, U.S. District Judge Virginia Emerson Hopkins in Birmingham, Ala., ruled that when a real estate firm charges clients an “admin fee”, for which no specific settlement services are performed, the fee violates federal law.
The case involved RealtySouth, one of the 20 major brokerage units of Minneapolis-based HomeServices of America, the second-largest realty firm in the country. RealtySouth was sued by home buyer Vicki V. Busby of Jefferson, Ala., when she was required to pay a $149 “ABC” fee — an administrative brokerage commission. The court found no evidence that the brokerage company performed any services beyond those covered by the commission, thereby violating a federal real estate settlement statutory ban against “unearned” fees.
Some brokerage firms say that the need this money to survive. For the sake of this post, let’s say I agree with that… The brokerage firm can charge their agents that “junk” fee, but why pass it along to the consumer? I understand if the agent is upset about having to pay that fee, but they shouldn’t take it out on consumers by passing the cost along to them – it’s not the consumer’s problem nor fault.
Warning. Shameless self-promotion coming…
I’m proud to say that the brokerage firm I’m a part of, Market Advantage Real Estate, LLC, doesn’t charge any such “junk fees”. And even if they did, I wouldn’t pass that cost along to my clients. I’m earning thousands of dollars in commission and don’t believe it’s fair for me to charge my clients any “junk fees” on top of that.