Posts Tagged ‘reo’

  • 3 programs to help you buy a house if you can’t get a mortgage.

    Sold Home For Sale Sign in Front of New House
    I think that there are still challenges in today’s real estate market in either buying or selling a house. Suffice it to say that there are  a lot of folks who owe more than what their home is worth (“underwater”).  There are enough people who have credit problems because of the recession that started in 2007.  Lots of recent  college graduates are strapped with student debt and no jobs and living at home. The economic “recovery” has begun but it is taking forever. And certainly the banks and mortgage companies have not eased up that much on underwriting criteria for buyers. An average credit score to get a conventional mortgage is still almost in the mid 700s. FHA  and VA  are still options but I think we  need to do a better job in spreading the word on those programs and how they work. Plus there are concerns regarding FHA continuous funding. FHA mortgage insurance premium is the highest of any program and never goes away until you finally sell.

    I would speculate that with the uncertainty of the economy, that customers are just reluctant to take the risk in owning.

    I’ll offer a few alternatives that you might consider in getting  into the housing market. I mean you have to live somewhere. Might as well be a place of your own. Here are three for your consideration.

    1. Rent with an option to buy. Probably the most well-known and popular. However it can be the most misunderstood program. An “option” is exactly that. You enter into a  lease to rent a home and you agree with the owner that at some point in time you will, or will not, exercise the option to buy the house at an agreed upon price. You may or may not have put up any money toward that option at the lease signing. You and the landlord may have decided that a portion of the rent goes toward the purchase price or the option. Just remember if you don’t exercise the option, you just remain a tenant and have no ownership rights. Whether you get any money back is determined  by the terms of the option agreement.

    2. Lease purchase , land contract or installment contract.  Buyer and Seller enter into an agreement of sale for the purchase of property. The sellers maintain the title to the property during the term of the contract and the buyers have an equitable interest.  A note of caution here to both parties. If the seller has an existing mortgage on the property there may be and probably is a “Due on Sale ” clause in the mortgage documents. This will indicate that if any transfer of equity occurs then the entire loan will become due in full immediately. Depending on the size  of the existing loan, this could cause some major problems for both buyer and seller. Any real estate agent worth their salt will check all recorded documents before proceeding with a proposal. A good real estate attorney needs to be involved for each party. If there is no mortgage , then the owner can act as the bank and transfer title to the buyer . Depending on any down money and credit obligations the equity build up is subject to negotiations at the time of the offer. Again I would recommend a good real estate attorney get involved with any preparation for both buyer and seller.
    One nice benefit of this type of transaction is that the buyers can get the tax benefits of home ownership.

    3. New program. Just heard about this one. A company buys the home for you and the client enters into an agreement of sale to purchase the property within a certain period of time, i.e 5 years. You put up a down payment of 5 or 10% and pay a 3% admin fee to the company at the time of occupancy. You get the house and its yours to live in as a renter at an agreed upon monthly rent and purchase price. The big difference between this and the rent with option is if you do not get a mortgage by the end of the term you get your down payment back. They keep the 3%. You also agree to a 2-3 % annual rent increase during the term. Again this program is for people who have not been able to qualify for a normal mortgage because of unusual catastrophic circumstances.  Lost a job, unusually high medical bills, and then lost a home through foreclosure or just had some hard times and are trying to work yourself back.  That’s why you agree to a 5+ term. And of course if you can a mortgage sooner, there is no prepayment penalty. There are some additional features. Give me a call and we can discuss some additional details.

    A  few “options” to think about. Just leave me a comment. Contact me via Facebook, Linkedin or Twitter or the old fashion ways of email, salvatoreruta13@gmail.com or cell phone 6107372310

     

  • And the question is?

    MP900390083[1]
    Haven’t played Jeopardy in a while or watched it on TV. But I always thought that the premise was a good one. Give someone the answer and see if they can come up with the right question.  It occurred to me that I am usually walking around with what I think are  all the right answers to all kinds of questions. I guess  I might now recognize that I am somewhat pretentious in my conclusion.  I guess I need your help. How about I give you some answers and you give me what you think are the right questions. Hopefully, I can learn something with you and become a better agent.

    You know, years ago when I first got into the Real Estate business, I had a Broker who told me “Sam, you don’t sell real estate, you solve people’s problems”. That’s stuck with me and I think I have done a pretty good job in asking the right questions to solve those problems. But I think its time to get the customer’s take on this and get you to ask some questions. Anyway, lets see where we go with this and work together. I’ll give you the answer. You let me know what the questions should be. I’ll look at your questions and post them later to get some other folks to chime in if they think you are right wron.  Let me give you an example. 3.5% down payment  is the answer. The question might be,” What is an FHA mortgage ? ” Okay, lets give it a try.

    1.  Seller Assist is the answer. What is the question? This is the format which I won’t repeat every time. You’ll get the drift.
    2. No down payment required
    3. 28%/36%
    4. Buyer’s Agent
    5. Seller’s Agent
    6. Multiple Listing Service
    7. Escrow
    8. Radon Gas
    9. Short Sale
    10. Transunion, Experian, Equifax
    11. Title Insurance
    12.Prepaid Items
    13. 2 years worth of tax returns
    14. A real estate agent
    15. Purchase offer

    Okay, that’s enough for now. Give it a shot. Either comment below with your questions or email me if you like. The more I think about it there can be several different questions for the answers. In addition here is  a podcast that will explain how one might go about purchasing a multi family home where you can  live in and collect rent to help pay for your mortgage. If you would like to pursue that let me know. It can be challenging , but it can  be the start of a pretty good investment portfolio.

    Contact me at 610-737-2310 or email me at salvatoreruta13@gmail.com. Appreciate it.

  • So what’s the deal with the Stock Market? Gimme the House instead.

    Businessman Bouncing Over Stock Chart

     

    I don’t have a clue.  Used to be  able to gauge the housing market by what’s going on in the Stock Market.
    I gave up on that comparison a long time ago. To me it makes absolutely no sense. How can a barometer of the economy change so fast. I mean really, up 200 points one day, down 225 the next. I saw a pundit on a business show the other day that said traders are now using computer programs that make changes in a nano second. How is that possible? They buy, sell  and set the tone for the market before you or I even have a chance to act before our first cup of coffee. Crazy….  There is a thing called “Penny Stocks”. Companies that are looking for money and issue stocks that are worth literally  less than a penny a share. Okay……  I’ll buy a hundred shares for a dollar? Still sounds like a night at the Casinos to me. Kinda like playing the penny slot machines. Maybe I’ll hit it big and get a 1000% return.

    Wall street might be a dead-end for the average family.  But then there is the housing market. The great banking debacle of  2007 seems like a generation ago. Mention to a millennial that their grandparents actually had double-digit interest rates when they bought their first house, they look at you like  you have two heads. But it’s 2014 and there is a zero point 30 year fixed rate at 4.875%.  Pretty good.  The values of homes are rising again and home owners are looking at  increased equity. Buyers are coming out of hibernation but are still a little unsure of how to go about that purchase. One thing that is  a must, is that both buyers and sellers have to be reasonable in negotiating.
    Credit is still a concern but there are programs to address the buyer with as little as 580 credit score. How can that be? I have always said that there are only a few ways that banks can make money. The  main way is to lend it. The refinance boom is over for lenders. That means they have to go after purchasers of homes who need mortgages. Now is a great time to be a buyer and negotiate with a lender for a great rate.  For a really concise explanation of the current market and what you might need for a down payment and minimum credit scores  for  potential buyers, listen to this podcast.

    There is no getting away  from the financial trauma we all experienced over the last several years, but the housing market is coming back and there is no better investment for the average family. The volatility of the stock market is something that a lot of us just don’t want to risk, at least not right now. There’s something about an”Inverted Yield Curve” that leaves me wondering what it all means. Call me for housing info at 6107372310. Or email me at my new email address salvatoreruta13@gmail.com

  • Coming out of a coma…

     

    I don’t know, I just kind of gave up last fall. When someone told me it was hard to keep a blog up and have a fresh ideas day after day, I knew it was hard but I didn’t think I would go into brain freeze almost permanently. Well I did. I thought to myself I have to become more aggressive  and try to get some reaction from folks who read this stuff. Well that didn’t happen and I thought I might as well get on to bigger and better things.  I really don’t know what that means either.

    In the final analysis I guess I had to ask myself the question; was I doing  a blog for you or for me. For me, because at one time I thought I actually enjoyed writing . For you because I hope I could drum up some business while giving you some helpful information.

    At this point I’ll just try to write about some things I am passionate about, which is cathartic for me. Maybe you will join in and let me know how you feel, but if you don’t that’s okay too. Because now I don’t feel the pressure to perform for anybody else but me.

    So here goes….. Since I last wrote we have had the reelection of the President, the murder of 26 folks, 20 of whom were kids, a Pope resigned, avoided a Fiscal Cliff, did not avoid a Sequester,  watched the rebound of the housing market begin, (which by the way I still don’t trust), QE infinity courtesy of the Fed and saw the Unemployment rate drop to 7.9%

    Maybe its the Jesuit training in me but its smoke and mirrors to me. How the heck can we have an almost $17 trillion dollar deficit and growing each day, printing money like its drug to an addict and 1-2% Interest rates set for the next several years, and listen to all of those folks in Washington saying things are getting better. Who is going to pay for all of this insanity? You and me folks and our kids and grandchildren. That’s because the boys and girls in DC can’t get along. The cost of servicing that debt will eventually eclipse the total GDP of the entire country.

    One thing is for sure. Regardless of your feeling of the housing market, the freaking mortgage rates are at an all time low. A $100,000 mortgage at 3.5% not including taxes and bank fees will cost  $449 a month. Try renting for that kind of monthly payment.

    Foreclosures are down, that’s good. Short sales are up, that stinks. No matter what the banks tell you, they still take months   and I have had more than one buying client walk away. Because foreclosures are down and short sales take a while, we have a decrease in available housing. So Buyers beware, the sellers that are not underwater are going to start raising their prices. It’s already happening. And if Uncle Ben ever stops buying bonds and mortgages,  rates will go through the roof.

    Anyway, I feel better, that was a good start. It’s like when I talk to myself in the shower. It’s probably the most creative time for me.
    I just need someone to  turn up the temperature of the water.

  • Buy an investment property? Now is a great time thanks to FANNIE MAE.

    Well lets see, I can sit around thinking about the Presidential election and come up with some esoteric, ideological baloney that no one will believe anyway or actually give you some interesting real estate investment information that might even make you a couple of bucks if you act to buy some property.
    Well I picked this up from our friends at the National Association of Realtors. Seems like Fannie Mae is going to give a break to so called “Mom and Pop” Investors. You can now purchase up to 20 properties now and get a Fannie approval. The underwriting for those mortgages…. well that is a whole separate article that we can discuss later and that I would place under the heading of “Miracles in La La Land”. Oh ye of little faith. But what the heck. Give me a call if you have any questions. Good stuff.

    Visit houselogic.com for more articles like this.

    Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®

  • 5 things you can do to make sure you don’t miss the home buying opportunity of a life time.

     

    Well we have six months under our belts for 2012. What happened and what is going to happen? Prognostication has always been fun, but after 30 plus years in the Real Estate Sales business, I think I can at least spot some trends that are critical.  Recognizing those trends might give you a leg up on the competition for the purchase of your home.

    1. Sales are up. It’s good news and bad news. More sales mean more sellers are getting rid of those houses they can’t handle any more. Bad news, the inventory is shrinking. That includes foreclosures and God help us, short sales. I have heard several cases of multiple offers on a single property and buyers being very disappointed.
    So the first thing you should do is to  get a good real estate agent to work with. Tell he or she that you definitely want to buy and you are motivated to move quickly. Tell them that it is incumbent upon them to keep you informed as far as what is available and be ready to see it fast.  Let them know that you will work exclusively with them if they preform.  If you are going to shop with other agents, most of them will put you on the back burner and you will not find the deals.

    2. Get pre approved for a mortgage ahead of time so that you can move fast when you find the home you want. Your offer will be much stronger if you can indicate that your mortgage approval is conditioned only upon an appraisal for a home.
    Mortgage companies and banks in some cases are no longer willing to give you this service because of cost and risk. Have your real estate agent help with his or her contacts. Or start with your own bank and put the squeeze on them.

    3.  Look at bank owned properties (foreclosures) , than conventional, then short sales.  Start with bank owned.  No need to go through a lot of  paperwork from the seller to the bank to you. By this time, they own it and they want to get rid of it.  Your chances of getting a good price here are strong since there is no emotion attached or mortgage to pay off.
    Then try conventional. If the owners are not underwater and there is equity and they have to move, the motivation will be strong to keep the  selling price at similar levels of foreclosures.
    Last, Go ahead and try short sales, but you have to be patient. Make sure your agent is familiar with the process as well as the listing agent. And by the way, do not agree to use a short sale negotiating company that wants to charge you a fee as the buyer.  This could literally add thousands of dollars to your closing costs. This should be the responsibility of the seller.
    If you are a seller and need to sell because you are underwater, my advice is to contact an attorney who is familiar with negotiating with creditors. In most cases that means finding a good Bankruptcy attorney. You do not have to file bankruptcy to use these attorneys. But they are used to doing deals with creditors and they know the paperwork. You will pay a fee but it might be worth it to  renegotiate a first or second mortgage to get the house sold if you have a buyer.

    4. Do it soon. Interest rates are not going to stay this low forever. Let me give you an example. A  $200,000  mortgage at 3.5 %  for 30 years will mean monthly payments of $898.  That same mortgage at 5% will cost $1073 a month. And these amounts do not include taxes or insurance.

    5. Regardless of the offer, don’t forget to ask the sellers to help you with closing costs. Sellers are motivated to sell. But,…. And this is a big But. Don’t insult the seller with a low ball offer and ask for closing cost help.  You will probably put yourself in a lousy negotiating position and also insult the seller. Be reasonable. In any negotiation, both parties have to feel like they won something.

    Now get out there and go buy or  sell  a house.

    If you want me to help, then call me at 610-737-2310 or email me at  samruta@yahoo.com

     

  • HUD HOMES, Can I buy?

    Here is a great primer for starting that search for the dream home. Info comes right off the HUD site. Need help? Give me a call at 617-737-2310 or email me at samruta@yahoo.com

     

     

    GETTING STARTED

     

    1. HOW DO I KNOW IF I’M READY TO BUY A HOME?

    You can find out by asking yourself some questions:

     

    - Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
    - Do I have a good record of paying my bills?
    - Do I have few outstanding long-term debts, like car payments?
    - Do I have money saved for a down payment?
    - Do I have the ability to pay a mortgage every month, plus additional costs?

     

    If you can answer “yes” to these questions, you are probably ready to buy your own home.

     

    2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?

     

    Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment (see Question 4 for help)? How much space do you need? What areas of town do you like? After you answer these questions, make a “To Do” list and start doing casual research. Talk to friends and family, drive through neighborhoods, and look in the “Homes” section of the newspaper.

     

    3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?

     

    The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

     

    Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

     

    4. HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT CAN AFFORD?

     

    The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, 4 should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

     

    5. HOW DO I SELECT THE RIGHT REAL ESTATE AGENT?

     

    Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide all the knowledge and services you need.

     

    6. HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN THE SEARCH?

     

    Your home should fit way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities – things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a ‘wish list.” Minimum requirements are things that a house must have for you to consider it, while a “wish list” covers things that you’d like to have but aren’t essential.

     

    FINDING YOUR HOME

     

    7. WHAT SHOULD I LOOK FOR WHEN DECIDING ON A COMMUNITY?

     

    Select a community that will allow you to best live your daily life. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community? When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood where you feel comfortable in.

     

    8. WHAT SHOULD I DO IF I’M FEELING EXCLUDED FROM CERTAIN NEIGHBORHOODS?

     

    Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD’s Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).

     

    9. HOW CAN I FIND OUT ABOUT LOCAL SCHOOLS?

     

    You can get information about school systems by contacting the city or county school board or the local schools. Your real estate agent may also be knowledgeable about schools in the area.

     

    10. HOW CAN I FIND OUT ABOUT COMMUNITY RESOURCES?

     

    Contact the local chamber of commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information. You may also want to visit the local library. It can be an excellent source for information on local events and resources, and the librarians will probably be able to answer many of the questions you have.

     

    11. HOW CAN I FIND OUT HOW MUCH HOMES ARE SELLING FOR IN CERTAIN COMMUNITIES AND NEIGHBORHOODS?

     

    Your real estate agent can give you a ballpark figure by showing you comparable listings. If you are working with a real estate professional, they may have access to comparable sales maintained on a database.

     

    12. HOW CAN I FIND INFORMATION ON THE PROPERTY TAX LIABILITY?

     

    The total amount of the previous year’s property taxes is usually included in the listing information. If it’s not, ask the seller for a tax receipt or contact the local assessor’s off ice. Tax rates can change from year to year, so these figures may be approximate.

     

    13. WHAT OTHER TAX ISSUES SHOULD I TAKE INTO CONSIDERATION?

     

    Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities,

     

    14. IS AN OLDER HOME A BETTER VALUE THAN A NEW ONE?

     

    There isn’t a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn’t mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don’t want to worry initially about upkeep and repairs.

     

    15. WHAT SHOULD I LOOK FOR WHEN WALKING THROUGH A HOME?

     

    In addition to comparing the home to your minimum requirement and wish lists, use the HUD Home Scorecard and consider the following:

     

    - Is there enough room for both the present and the future?
    - Are there enough bedrooms and bathrooms?
    - Is the house structurally sound?
    - Do the mechanical systems and appliances work?
    - Is the yard big enough?
    - Do you like the floor plan?
    - Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to better answer these questions.)
    - Does anything need to repaired or replaced? Will the seller repair or replace the items?
    - Imagine the house in good weather and bad, and in each season. Will you be happy with it year-round?

     

    Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.

     

    16. WHAT QUESTIONS SHOULD I ASK WHEN LOOKING AT HOMES?

     

    Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

     

    17. HOW CAN I KEEP TRACK OF ALL THE HOMES I SEE?

     

    If possible, take photographs of each house: the outside, the major rooms, the yard, and extra features that you like or ones you see as potential problems. And don’t hesitate to return for a second look. Use the HUD Home Scorecard to organize your photos and notes for each house.

     

    18. HOW MANY HOMES SHOULD I CONSIDER BEFORE CHOOSING ONE?

     

    There isn’t a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you’re looking for. It will help avoid wasting your time.

     

    YOU’VE FOUND IT

     

    19. WHAT DOES A HOME INSPECTOR DO, AND HOW DOES AN INSPECTION FIGURE IN THE PURCHASE OF A HOME?

     

    An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs,that are needed.

     

    The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

     

    It’s a good idea to have an inspection before you sign a written offer since, once the deal is closed, you’ve bought the house as is.” Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an ‘out” on buying the house if serious problems are found,or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

     

    20. DO I NEED TO BE THERE FOR THE INSPECTION?

     

    It’s not required, but it’s a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you’d I like to purchase and it is a good time to ask general, maintenance questions.

     

    21. ARE OTHER TYPES OF INSPECTIONS REQUIRED?

     

    If your home inspector discovers a serious problem a more specific Inspection may be recommended. It’s a good idea to consider having your home inspected for the presence of a variety of health-related risks like radon gas asbestos, or possible problems with the water or waste disposal system.

     

    22. HOW CAN I PROTECT MY FAMILY FROM LEAD IN THE HOME?

     

    If the house you’re considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based point. It’s important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently.

     

    23. ARE POWER LINES A HEALTH HAZARD?

     

    There are no definitive research findings that indicate exposure to power lines results in greater instances of disease or illness.

     

    24. DO I NEED A LAWYER TO BUY A HOME?

     

    Laws vary by state. Some states require a lawyer to assist in several aspects of the home buying process while other states do not, as long as a qualified real estate professional is involved. Even if your state doesn’t require one, you may want to hire a lawyer to help with the complex paperwork and legal contracts. A lawyer can review contracts, make you aware of special considerations, and assist you with the closing process. Your real estate agent may be able to recommend a lawyer. If not, shop around. Find out what services are provided for what fee, and whether the attorney is experienced at representing homebuyers.

     

    25. DO I REALLY NEED HOMEOWNER’S INSURANCE?

     

    Yes. A paid homeowner’s insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low.

     

    26. WHAT STEPS COULD I TAKE TO LOWER MY HOMEOWNER’S INSURANCE COSTS?

     

    Be sure to shop around among several insurance companies. Also, consider the cost of insurance when you look at homes. Newer homes and homes constructed with materials like brick tend to have lower premiums. Think about avoiding areas prone to natural disasters, like flooding. Choose a home with a fire hydrant or a fire department nearby.

     

    27. IS THE HOME LOCATED IN A FLOOD PLAIN?

     

    Your real estate agent or lender can help you answer this question. If you live in a flood plain, the lender will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Work with an insurance agent to construct a policy that fits your needs.

     

    28. WHAT OTHER ISSUES SHOULD I CONSIDER BEFORE I BUY MY HOME?

     

    Always check to see if the house is in a low-lying area, in a high-risk area for natural disasters (like earthquakes, hurricanes, tornadoes, etc.), or in a hazardous materials area. Be sure the house meets building codes. Also consider local zoning laws, which could affect remodeling or making an addition in the future. Your real estate agent should be able to help you with these questions.

     

    29. HOW DO I MAKE AN OFFER?

     

    Your real estate agent will assist you in making an offer, which will include the following information:

     

    - Complete legal description of the property
    - Amount of earnest money
    - Down payment and financing details
    - Proposed move-in date
    - Price you are offering
    - Proposed closing date
    - Length of time the offer is valid
    - Details of the deal

     

    Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just Making an offer.

     

    Other ways to lower ins-insurance costs include insuring your home and car(s) with the same company, increasing home security, and seeking group coverage through alumni or business associations. Insurance costs are always lowered by raising your deductibles, but this exposes you to a higher out-of-pocket cost if you have to file a claim.

     

    30. HOW DO I DETERMINE THE INITIAL OFFER?

     

    Unless you have a buyer’s agent, remember that the agent works for the seller. Make a point of asking him or her to keep your discussions and information confidential. Listen to your real estate agent’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home’s condition, how long it’s been on the market, financing terms, and the seller’s situation. By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.

     

    31. WHAT IS EARNEST MONEY? HOW MUCH SHOULD I SET ASIDE?

     

    Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

     

    32. WHAT ARE “HOME WARRANTIES”, AND SHOULD I CONSIDER THEM?

     

    Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.

     

    GENERAL FINANCING QUESTIONS:THE BASICS

     

    33. WHAT IS A MORTGAGE?

     

    Generally speaking, a mortgage is a loan obtained to purchase real estate. The “mortgage” itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.

     

    34. WHAT IS A LOAN TO VALUE (LTV) HOW DOES IT DETERMINE THE SIZE OF MY LOAN?

     

    The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay,$2,500 as a down payment.

     

    The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.

     

    35. WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES OF EACH?

     

    Fixed Rate Mortgages: Payments remain the same for the the life of the loan

     

    Types


  • Weighing 30 year vs 15 year mortgages.

    Weighing 30- and 15-year Fixed-Rate Mortgages

     

     By  Salvatore(Sam)Ruta

    Choice Properties

     

    Pod cast Perspective on Optimism

     

    In searching for Lehigh Valley Homes for sale,  one important decision home buyers face is whether to secure a 30-year, fixed-rate mortgage or go for a 15-year one, which carries a lower interest rate.

    “All things equal, a 15-year mortgage allows you to pay off your mortgage twice as fast while saving a significant chunk of money on interest,” explains Mark Crosby, a mortgage expert in Wilmington, Del. Still, “I think the 30-year mortgage is a logical choice for most people because it has more advantages.”

    For starters, mortgage payments are less expensive with a 30-year mortgage, enabling more consumers to qualify for home purchases. “With a 30-year mortgage you are almost always free to make additional principal payments necessary to pay off your loan [faster] without penalty,” Crosby says. “With the 15-year loan, you are committed to giving that extra money to your lender each month, whether you can really afford to at the time or not.”

    Higher payments that come with a 15-year mortgage make little sense if they keep you from building savings or contributing to a 401(k) plan, IRA, and perhaps your kids’ college funds, adds Dan Green, a loan officer with Waterstone Mortgage in Laurel, Md. “You could be needlessly tying up too much of your money into your house.”

    Green said another reason people favor a 30-year fixed mortgage is the tax benefit that can be achieved. “This is because the amortization schedule of 30-year fixed is back-heavy, with early-term payments big on interest and light in principal,” he explains. “By contrast, the 15-year fixed is always light on interest which lowers its taxpayer benefits.”

    While it’s true you gain more of a tax break from a 30-year loan, it shouldn’t be the main consideration when deciding on a term. The 30-year borrower pays less in yearly taxes because he or she pays significantly more in interest.

    So it all comes down to choice and circumstances. Choose the 15-year loan if you have the financial wherewithal to assume the payments. Your interest savings will be substantial and you’ll own your home faster. Opt for the 30-year loan for lower payments and greater flexibility. You can always choose to pay more on your mortgage when the money is available.

  • What is the Best Way to Finance a HUD Home?

     

    What Is the Best Way to Finance a HUD Home?

     

    FHA financing is the best way to finance a HUD Home for most buyers.

     

    FHA has certain advantages over conventional financing:

     

    • The total down payment for an FHA loan is only 3.5% of the sale price. (This number may increase in the near future. The down payment amount may also change to reflect risk factors in credit score. Check with your loan officer for the most up-to-date information.)

     

    • Debt-to-Income Ratios  are generally higher with FHA loans. Buyers can qualify with 29%  Front End Ratio  and 40% Back End Ratio , compared with similar conventional products that limit borrowers to 33-36% on the back end. Borrowers have more borrowing power with an FHA loan.

     

    • Example (front end): Monthly Income x 29% = Maximum PITI (principal, interest, taxes, and insurance). For a monthly income of $3, 000, that means that $870 is the maximum mortgage payment for qualifying purposes.

     

    • Example (back end): Monthly Income x 40% = Maximum PITI (principal, interest, taxes, and insurance). For a monthly income of $3,000, that means that $1,200 is the maximum mortgage payment for qualifying purposes.

     

    • FHA lets the buyer negotiate a 3% seller assist toward closing costs. In many cases, a borrower needs no more than 3% of the total sale price as a total cash-out-of-pocket investment. There are other alliances and programs that will let the seller pick up the whole tab. Some of these plans are under close scrutiny by the U.S. Internal Revenue Service.

     

    • FHA is more lenient with credit issues than conventional lenders. Even bankruptcy discharges can work with FHA if good credit follows the discharge. FHA underwriters give much credence to letters of explanation about credit recitals.

     

    HUD Homes offered with FHA financing offer special incentives to buyers. HUD Homes eligible for FHA 203(b) financing have reduced closing costs because there is NO APPRAISAL fee. Lenders are required to use the appraisal that HUD has on file if the appraisal is less than 150 days old. (If you sell a HUD Home near the end of the 150-day window, you can make a written request to HUD to extend appraisal validity 30 days, to 180 days. That request must be in writing two weeks before the 150 day appraisal expiration date.)

     

    Keep in mind an important fact about FHA financing for HUD Homes:

     

    FHA will only finance a maximum loan amount that corresponds to HUD’s asking price. If a buyer is inclined to “bid up” a property and finance that property with FHA financing, he will have to make up the difference between the asking price and the bid amount with additional down payment monies.

     

    For instance: A buyer expects that there will be competing bids for a house at 123 Main Street. HUD’s list price is $85,000. The buyer is confident that the real value of the property is closer to $100,000. He bids $90,000. His down payment will increase from 3.5% of $85,000 ($2,975 down payment) to that amount PLUS an additional $5,000 ($6,912 down payment).

    I know that I mentioned this in my  last blog, but here is a good primer on searching for a loan for your new home. Click here for the video.

    Remember if you want a list of already approved HUD Homes or have in mind a conventional purchase using FHA financing, give me a call at 610-737-2310 or email me at samruta@yahoo.com.  Start your search on the right at the  Lehigh High Valley link.

     

  • Shopping for a Loan

     

    Can I Bid Online for a HUD Home?

    So you found the home of your dreams. Well you can finance it  a couple of ways; get a mortgage, ask the sellers to lend you the money or pay cash. Which one of these alternatives do you think you would use? I am not being a wise guy. A friend of mine who runs an upscale development told me yesterday that she has made 3 sales this month so far; all cash and all over $500,000. Maybe the market is coming around. What do you think?

    When you are ready to make an offer on a HUD home, that is, one that is owned by HUD, you need to use a Real Estate Agent.

    I don’t know where real estate buyers get the idea they can place a bid on a HUD Home without a real estate agent.

    Buyers cannot bid for HUD Homes online at HUDHomeStore.com

     

    The only way to place a bid is to work with a real estate agent who works at a HUD approved real estate brokerage. (Translation: That’s me!)

     

    Buyers are NOT able to submit bids on their own behalf.

    If you are going to make an offer on any  home but it is not HUD owned you do not have to use  a real estate broker unless it is listed by a real estate broker.

    A real estate agent will be glad to walk  you through the procedure in submitting a bid for your home.

    Here is another closed captioned video on Shopping for the loan.

    Don’t forget, If you want to find some homes to start your search, click on the link on the right side blog bar on “Finding a home in the Lehigh Valley.

    email me at samruta@yahoo.com or call me at 610-737-2310