Short Sale Question: Who Owns the Loan?
Posted: 29 Apr 2013 04:00 AM PDT
The short sale process can be very complex. Every bank and investor has a slightly different program and set of guidelines they follow. Since each investor has different rules and guidelines, it can help you considerably to find out who the investor is before starting the process.
Whether you are a homeowner in need of help with a short sale or an agent trying to help a homeowner, one of the best things you can do is to understand the situation you are getting into. A key piece of this short sale puzzle is finding out who actually “owns” the loan not just who services the loan.
To understand short sales, you need a basic knowledge of the back-end process of the mortgage market. A few years ago, when the market was booming, mortgages would be originated by a servicer such as Wells Fargo and then sold between the big mortgage investors like Fannie Mae and Freddie Mac. Today, in most cases, you are dealing with a servicer like Wells Fargo or Bank of America that “service” the loan but do not actually own the loan. The bank who originally lent the money is unlikely to still own it unless it is a small community or regional bank. In fact, Bank of America and Wells, the two biggest servicers, only own about 8-10% of their portfolio. The rest of their inventory is made up of loans they service for other investors. The investor guidelines ultimately determine whether to provide relocation money on the short sale, if there will be a debt release on the sale and also define a slew of other details.
1.) First, you can look on your mortgage statement. If the loan is FHA backed it will have an FHA MI line-item on your statement that usually says” FHA insurance”. You can also look at your original Deed of Trust, as it will have your FHA case number on it. If you want to see if your property is owned by Fannie Mae or Freddie Mac, you can also find it directly under the loan look-up tools available on their websites. Here are the links:
Fannie Mae Freddie Mac
2.) If your loan is not owned by one of these three entities you can ask the servicer of the loan who owns it – though they will not always tell you verbally. You could also research it by getting the title pulled. Chain of title will not always be conclusive either. However, in many cases, it has helped make it easier to “track” down the investor. In some cases, it could also be owned by the servicer; Wells Fargo could be the servicer and also the investor on the loan. This is called a “portfolio” loan. You can also request for your servicer to disclose in writing who the investor is if they will not verbally disclose that information. This is called a “qualified written request, or QWR”. On its website, the U.S. Department of Urban Housing and Development (HUD) provides a sample QWR and gives a brief explanation of this process.
3.) Another way to find out who owns your loan is through the Mortgage Electronic Registration System, Inc. (MERS). MERS is a company that was created by the mortgage banking industry. It maintains a database that tracks mortgages for its members as they are transferred from bank to bank. You can look up a loan to see if they have the investor information here.
The three biggest mortgage investors in the country are Fannie Mae, Freddie Mac, and FHA. VA is another big investor but does not have a portfolio nearly as big as the other three mentioned. With the exception of FHA/VA (because they insure their own loans), there also could be a mortgage insurer who provided insurance on the loan. The reason this is important to understand is that, when there is a servicer, investor and mortgage insurer on the loan, all three of them have to agree to the terms of the short sale. It is very important to find out from the very beginning of the process the identity of the actual end-investor on the loan. An FHA-backed mortgage has a totally different process for a short sale compared to a Fannie Mae loan.
Every investor has a different set of guidelines they set for short sales and foreclosure procedures so you have to understand that ultimately it is up to the end investor-not the servicer. The servicer has their own guidelines but they do not make the final decision. It is important that you know who the investor is because there will be times when you may have an issue with a servicer and you have to go to the investor to get it resolved.
There have been many transactions where the servicer and I disagreed on a particular issue and I went to the investor and got the approval. So make sure going in to this situation you know everyone involved and go to the servicer’s and the investor’s website to get familiar with their guidelines and any specific documents they may require.
Attention Agents:
On your third party authorization letter (the letter that gives you permission to speak to the bank on the homeowners’ behalf) always put the investor as well as the servicer so that if later you have to reach out to the investor you already have permission from the seller to do so. This also puts the servicer on alert that you know what you are doing and have already researched finding out who the end-investor is.
   
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Housing Trends eNewsletter - April 2013 Issue
Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.
Please click on this link to view the Housing Trends APRIL - 2013 Newsletter http://philweir.housingtrendsenewsletter.com
The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.
Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports.
If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:
http://philweir.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0
Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.
Sincerely yours,
Phil Weir
Western Slope Real Estate Group
1010 Grand Ave Glenwood Springs CO 81601 970-948-5522 philweir@comcast.net
to unsubscribe. philweir@comcast.net
The KCM Blog - FSBOing: This Time It Was Embarrassing
FSBOing: This Time It Was Embarrassing
Posted: 22 Apr 2013 04:00 AM PDT
With the housing market beginning to heat up, we are afraid some sellers may consider trying to sell their house as a For Sale By Owner (FSBO). This week we will post the reasons that we believe trying to sell on your own may be a mistake. Here is an article we have run before which sellers should consider. – KCM Crew
 This blog prides itself on the quality of real estate information we deliver each and every day. We try to gather empirical evidence to validate the positions we take. We do not use just an anecdotal story to make a point. We also do not get caught up in the sensationalism. However, today will be different.
We can’t resist commenting on the story which appeared in the Wall Street Journal a while back regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and lifelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do.
After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sambrotto has been espousing for over a decade. Let’s look at two of those myths:
Myth #1 – You Will Pocket More Money Selling on Your Own
Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale?
From the WSJ article:
“The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.
By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”
Myth #2 – The Internet Alone Can Sell Your Home
Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet?
From the WSJ article:
“Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling success’ and switched to a broker because many buyers were so reliant on brokers.”
Bottom Line
There is a reason the real estate industry has been around for centuries: it performs a valuable service.
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Different Generations See the Value in Homeownership
Different Generations See the Value in Homeownership
Posted: 18 Apr 2013 04:00 AM PDT
Our founder, Steve Harney, occasionally asks to do a personal post on what he sees as important to our industry. Today is one of those days. – The KCM Crew
During an online chat with other real estate professionals last week, the question of the true value of homeownership was raised. My son, Bill, and I each chimed in unaware of the other’s response. It was interesting how the different generations valued homeownership for slightly different reasons. Below, are both responses.
Bill’s Response:
I want to weigh in as a 20-something who recently purchased a home for the first time.
While the financial reasons (wealth-building, not wanting to throw away rent payments every month, that owning is actually cheaper than renting in many markets right now) certainly had an impact on our decision, I think there are too many that are quick to dismiss the non-financial reasons that my peers and I discuss more often than people think.
There’s a very good reason why my wife and I host more parties than my friends who live in apartments (space). There’s a reason why we get more compliments about our house than our renting friends (freedom to choose our own stuff). We have the greatest dog in the world, while I hear “I can’t wait to get a house because I’ve always wanted my own puppy but I can’t right now”.
 As a “young” buyer, do I want to make a smart decision? Of course. Do I want to understand the numbers and feel confident with the purchase? Sure. But that’s not what I woke up dreaming about 2 years ago. I woke up dreaming about the house that my wife and I can raise a family in; the house where we’re going to have barbecues with all our neighbors.
We woke up talking about the house that finally allowed my wife to get the dog she’s wanted since she was a kid (and that I fell in love with). We started picking out bedroom colors for our future babies.
You want advice for helping more young buyers? Ask them what their dreams are. What are their goals? What do they wake up talking to their partner about? Help them realize this and you only have to show them that the financials make sense (we’re not looking to make a quick buck on the house we’re living in).
Isn’t this what real estate is about anyway? Helping people realize their dreams? That’s what it was always about in my house growing up (thanks Steve). That’s what my wife grew up thinking. That’s what my friends (all in the first time home buyer range) think. Why not talk to them about this?
Sorry for the rant everyone. Figured I had a spot for the voice of the young buyer to be heard by the industry’s elite and I couldn’t pass that up. Thanks for reading.
My Response:
Do I think that homeownership is right for everyone? No, I don’t.
Do I think people who can’t afford a house should buy one anyway? No, I don’t.
However, I do believe for the majority of families that homeownership is important. Instead of giving you the links to the numerous studies I have that delineate the benefits of homeownership, I’ll give you one anecdotal story – my own.
 Guess where I got the seed money to start my real estate company? My home.
Guess where I got the money for Bill’s college education? My home.
Guess where my younger son, Steven, moved to when he couldn’t find gainful employment after college? My home.
Guess where my older son, Bill, and his wife (and cat & dog) moved to when Sandy ravaged their house? My home.
Guess where I got the down payment for a winter getaway in South Beach for my wife and me? My home.
The home I struggled to buy over 20 years ago has financed my business, put two sons through college and enabled me to buy a winter escape in Florida. And during that whole time, it also allowed me to provide my family shelter during their times of need.
Do I firmly believe in the value of homeownership? Yes, I do!!
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5 Tips for First-Time Home Buyers
5 Tips for First-Time Home Buyers
Posted: 17 Apr 2013 04:00 AM PDT
 Buying a first home can be a scary, confusing and stressful process. Many would-be buyers are understandably nervous at the prospect of making the largest purchase of their lives. Rather than diving in and hoping for the best, you should prepare carefully before you begin the house search.
Following some useful tips will help you turn an overwhelming and intimidating experience into an exciting search that yields the right home!
1.) Establishing a Realistic Price Range
A common mistake among first-time home buyers is purchasing more house than they can afford. You should not rely on banks to determine what you can comfortably spend on a new home. Banks are adept at determining the amount of monthly debt in the form of mortgage, insurance, credit card, student loan and auto loan payments. They have no way of knowing, however, what you spend each month on groceries, entertainment and utilities.
You should make a list of all monthly expenses, excluding rent or your current mortgage payment. Whatever is left after monthly expenses is the amount available for a mortgage payment and housing expenses such as taxes, insurance and home maintenance. Carefully consideration of your budget saves time by weeding out homes that you cannot afford and guards against overspending.
2.) Seeking Pre-approval
Getting pre-approved for a mortgage prevents a deal on a dream home from falling apart due to failure to obtain financing. You should compare loans from several lenders to see which one best suits your needs. A pre-approval letter will give you some power to negotiate on a home’s price because the seller will view a pre-approved offer more favorably than an offer that comes without lender pre-approval.
Keep in mind that pre-approval is different from pre-qualification. During pre-qualification, the lender estimates what you can afford. Preapproval is a more involved process in which the lender looks at your credit report and performs an extensive financial background check. At this point, you will get a good idea of the mortgage interest rate as well.
3.) Setting Priorities
You should compile a list of what you need and want in a house. Needs might include the number of bedrooms, square footage, high-quality schools and commute time. These needs are aspects of the house that either cannot be changed or cannot be changed without substantial cost to you.
Wants, on the other hand, are something you would like and that can be changed. Wants may include a pool or hot tub, landscaping, finished basement or hardwood floors. Making a list of wants and needs helps you focus on what is really important in a house, narrowing the list of prospective homes. Ideally, the new house will include all of the needs and a few wants.
4.) Choosing the Right Neighborhood
Crime statistics, insurance rates, property taxes and school quality are important considerations for you. Because the neighborhood makes up a large part of a home’s value, take your time to find exactly what suits your needs. You should also consider job commute, traffic during rush hour and proximity to amenities such as shopping, churches and libraries.
Driving through the neighborhood at various times during the day and night will provide a more complete picture of the location. Don’t forget to talk to potential neighbors, who can be a good source of information regarding the neighborhood and residents in the community. Take note that bad neighbors can bring down the value of a house.
5.) Finding the Right Home Inspector
You will also need a professional home inspection. Even new houses may present costly problems evident only to a home inspector.
You should talk to several inspectors before hiring one. You should ask about the inspector’s qualifications, scope of the inspection, how long it will take and the nature of the report you will receive at the end of the process. Main areas covered by the inspection should include quality of construction, integrity of the foundation and condition of plumbing, electrical, heating and cooling systems. If the inspection uncovers serious issues, such as cracks in the foundation, you may decide to back out of the contract or ask the seller to repair the problem.
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Investment Home Sales in 2012
Posted: 16 Apr 2013 04:00 AM PDT
 The American desire to invest in real estate is alive and well!
Investment purchases of residential real estate remained elevated for a second consecutive year, according to the National Association of Realtors (NAR)’s 2013 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2012.
NAR Chief Economist Lawrence Yun noted an ongoing investor presence:
“Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals. With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years.”
Here are the key findings from the report:
Raw Numbers
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Investment home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011. These sales had been well under a million during the market downturn
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Investment sales accounted for 24% of all transactions in 2012, down from 27% in 2011, marking the second highest share since 2005
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47% of investment homes purchased in 2012 were distressed homes
Buyer Profile
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Investment-home buyers in 2012 had a median age of 45
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Earned $85,700
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35% of investment buyers purchased more than one property
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47% of investment buyers said they were likely to purchase another investment property within two years
Reasons for Purchasing
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55% of investment buyers said they purchased for rental income
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30% wanted to diversify their investments or saw a good investment opportunity
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20% wanted to use the home for vacations or as a family retreat
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16% purchased the property for a family member, friend or relative to use, often for a son or daughter to use while attending school
Flipping
Property flipping modestly increased in in 2012 but was different than past practices. Yun explained:
“This isn’t flipping in the sense of what took place during the housing boom. Rather, investors generally are renovating and improving properties before placing them back on the market to resell at a profit.”
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Investment buyers plan to hold the property for a median of 8 years
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6% of homes purchased by investment buyers last year have already been resold, up from 5 years in 2011
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8% are planned to be sold within a year, the same as 2011
Location
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Investors bought a home that was relatively close to their primary residence – a median distance of 21 miles, although 29% were more than 100 miles away
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36% of investment property purchases last year were in the South
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28% in the West
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20% in the Northeast
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16% in the Midwest
Financing
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The median investment-home price was $115,000 in 2012, up 15% from $100,000 in 2011
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The median down payment for investment home buyers was 27 percent, the same as in 2011
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All-cash purchases remain common in the investment-home market. Half of investment buyers paid cash in 2012
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The KCM Blog - Vacation Home Sales Rise in 2012
Vacation Home Sales Rise in 2012
by The KCM Crew on April 15, 2013 · 1 comment
The American desire to own a second home as a vacation home is alive and well!
The National Association of Realtors analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes in the U.S. Their 2013 Investment and Vacation Home Buyers Survey shows vacation home sales improved in 2012.
NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales:
“We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw.”
Here are the key findings from the report:
Raw Numbers
•Vacation-Home sales rose 10.1 percent to 553,000 from 502,000 in 2011
•Sales accounted for 11% of all transactions last year, unchanged from 2011
•The median price was $150,000, compared with $121,300 in 2011, reflecting a greater number of more expensive recreational property sales in 2012
•35% of vacation homes purchased in 2012 were distressed homes
Buyer Profile
•The typical vacation-home buyer was 47 years old
•The median household income was $92,100
•Buyers plan to own their recreational property for a median of 10 years
•29% said they were likely to purchase another vacation home within two years
•78% of all second-home buyers said it was a good time to buy (compared with 68% of primary residence buyers)
Reasons for Purchasing
Lifestyle factors remain the primary motivation for vacation-home buyers:
•80% want to use the property for vacations or as a family retreat
•27% plan to use it as a primary residence in the future
•23% plan to rent to others
•23% wanted to diversify their investments or saw a good investment opportunity
Location
•45% of vacation homes purchased last year were in the South
•25% in the West
•17% in the Northeast
•12% in the Midwest
The vacation home buyer purchased a property that was a median distance of 435 miles from their primary residence
•34% were within 100 miles
•46% were more than 500 miles
Financing
•46% of vacation-home buyers paid cash in 2012
•The median down payment was 27%, the same as in 2011
Tomorrow, we will cover the findings on investment properties.
About The Author
We at The KCM Crew are pursuing our mission of building a home for real estate information. We are truly dedicated to helping real estate professionals by supplying all the tools and resources they need to be seen as industry leaders in their marketplace. See how we can help you become an industry leader in your marketplace, and be sure to check out our page on Facebook and follow us on Twitter.
The KCM Blog - Millennials: Not Destined to be Lif
The KCM Blog - 3 Reasons to Sell Your House Today!
3 Reasons to Sell Your House Today! (Part III)
Posted: 10 Apr 2013 04:00 AM PDT
This week, we are going to look at the three reasons to sell your house now instead of waiting: demand is strong, supply is low and new construction will soon be your competition. – The KCM Crew
Part III – New Construction Will Soon Be Your Competition
 Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. As an example, the National Association of Realtors revealed, relative to last year, year-to-date new home sales are up 19%.
These ‘shiny’ new homes will again become competition as they can be an attractive alternative to many of today’s home purchasers.
Here are the numbers regarding new construction about to come to market from the Census Bureau:
BUILDING PERMITS
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Single-family authorizations in February were at a rate of 600,000.
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This is 25.5% above February 2012.
HOUSING UNDER CONSTRUCTION
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Single-family housing starts in February were at a rate of 618,000.
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This is 18.5% above February 2012.
HOUSING COMPLETIONS
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Single-family housing completions in February were at a rate of 574,000.
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This is 32.9% above February 2012.
As we mentioned, new construction can be strong competition to a seller of an existing home. It may make sense to list your home before this new inventory makes its way to market.
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The KCM Blog - 3 Reasons to Sell Your House Today!
3 Reasons to Sell Your House Today! (Part I)
Posted: 08 Apr 2013 04:00 AM PDT
This week, we are going to look at three reasons to sell your house now instead of waiting: demand is strong, supply is low and new construction will soon be your competition. – The KCM Crew
Part I – Demand for Real Estate is Much Stronger This Year
When selling anything, owners can only hope there is a strong demand for that which they are selling. The great news for today’s home sellers is that the current housing market is experiencing a stronger demand than we have seen in some time.
The spring housing market of 2013 is projected to be one of the best in years.
Home Sales
The National Association of Realtors (NAR) reports monthly on both pending sales (houses going into contract) and existing home sales (actual closed sales).
In the first quarter of 2013, pending sales have consistently outperformed the numbers reported in 2012. Contract activity has been above year-ago levels for the past 22 months. Before this year, the last time the index showed a higher reading was in April 2010, shortly before the deadline for the home buyer tax credit.
NAR also revealed that closed home sales have been above year-ago levels for 20 consecutive months and sales are at the highest level since the tax credit period of 2009-2010.
Impact on Sellers
This increase in demand has created bidding wars for properly priced homes across the country. This has resulted in two favorable changes for home sellers:
1. They are receiving offers closer to (if not greater than) the list price.
2. The average days it takes to sell a home has dropped by over 20% from last year.
If you are thinking about selling your home, don’t miss out on the strong demand that exists in the current spring market.
Tomorrow, we will look at the supply of housing inventory that is available.
4 Mind-Over-Money Strategies to Manage ‘Price Rang
4 Mind-Over-Money Strategies to Manage ‘Price Range Creep’
 When the market heats up and inventory shrinks down, like is happening right now in many parts of the country, a peculiar phenomenon begins to infect home buyers, sometimes taking on epidemic proportions: price creep. Agents, mortgage brokers and even experienced real estate consumers are well aware of this tendency for buyers to start house hunting with a particular price range or point in mind, then to “creep” upwards by tens or even hundreds of thousands of dollars, over the course of their house hunting experience or even during the negotiations for a particular property.
Price creep isn’t always devastating. Sometimes it just reflects a buyer’s shift to a more realistic understanding of what can be had for the home-buying dollar in a given real estate market. It’s especially harmless in cases where the buyer was house hunting in a price range well below what they can truly afford in the first place.
In other cases, though, price creep can cause buyers to give their other financial goals short shrift, overextend themselves on their mortgage, or foul up a home’s appraisal. Here are some action items for keeping price creep under control in your own house hunt:
1. Run your own numbers. Traditionally, house hunters would save up for their down payment, work on their credit then go to a mortgage broker to ask them how much they could afford to spend - how high would the bank let them go. Smart buyers avoid problematic price creep by running the process in reverse, running their own monthly budget numbers before they ever meet with a mortgage broker then telling their mortgage pro what their own personal monthly housing cost maximum is.
This enables the mortgage pro to tell you what purchase price range will create a total monthly mortgage, tax and HOA payment that lines up with your budget. Many buyers who run their own numbers end up purchasing homes less costly than the upper limit the bank would set for them. Your mortgage broker might still go ahead and have the bank approve you for a higher loan limit, in order to allow you the leeway to inch your house hunt range or offer price point upward, if you decide to do that down the road.
Given the dynamics of the current market, it’s not a bad idea to ask your mortgage broker to provide you with a written set of loan scenarios at the outset of your house hunt. These scenarios should include the principal, interest, taxes, insurance and total monthly obligation that would correspond with 3 or even 4 price points, so that you can make informed, reasoned decisions about your house hunt price range(s) over time.
2. Start your house hunt lower than your top dollar. On today’s market, many areas are seeing homes sell (a) with multiple offers and (b) above the asking price. Ask any buyer who has ever fallen in love with a home then had to compete for it: the temptation to blow your budget to win a bidding war for your “dream home” is extremely tough to resist.
One way to set yourself up for success is to house hunt in lower price ranges, to start. This gives you the freedom to aggressively bid and even counteroffer if you find a home you love without overextending yourself, financially speaking.
This might seem like obvious advice, but it’s advice many a buyer resists. Some think they should get as much home as they can possibly eke out the dollars to afford. And most buyers overestimate their negotiation skills, pinning their hopes on the idea that they’ll be able to bargain their eventual home’s owner way down.
Your agent can help reality-check you on this score and set up a smart starting price range for your house hunt by showing you the data on list price-to-sale price ratios in your area. If homes generally sell for 15 or 25% over the asking price, you can use that information to back into a price range that will allow you to be a successful buyer/bidder without breaking your bank.
3. Have your mortgage pro do a last-minute budget check before you write. I’ve seen buyers do all sorts of things before they submit an offer, from saying a prayer to sleeping on it; to consulting an almanac, compass or feng shui chart. Whatever other elements you include in your pre-offer submission rituals, make sure you don’t miss this one: ask your mortgage pro to run a last-minute budget check on the precise purchase price you’re offering.
This allows her to give you a precise idea of:
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the monthly mortgage payment and property taxes
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combined with the precise HOA dues for that property (if applicable)
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and a narrower estimate of the dollar amount you’ll need to bring in for cash to close (down payment and closing costs), based on your estimated close date. (Note all close date and closing cost estimates are just that: estimates. They are never precise to the penny until closing day - and often, not even then - so don’t start spending your surplus savings until after you move in.)
You’ve probably received most of this information before, but it might have been for a lower price point - the price point at which you started your house hunt. Also, And this information allows you to do a final gut and budget check before you submit your offer - the sort of last-minute check that can keep you out of overspending territory.
4. Think of your house as the launch pad for the rest of your life. Your house is NOT your life. It doesn’t define who you are, nor is it the cornerstone of your value as a human being - no possession is. The home you are buying now should be put in its rightful place in your value system as the launch pad or backdrop for the rest of your life.
Keeping your home in this perspective can help you avoid overspending, as being “house poor” (spending so much on your mortgage that you cannot afford much else) will render you unable to afford the experiences that make up a rich life, like travel, entertaining friends and family members or other activities you and your family enjoy.
House poverty is also extremely stressful and dangerous, financially speaking. It often serves as a source of chronic anxiety, for those who live in it unless the prospect of large raises or other increases in income are realistically on the near-term horizon.
In the same vein, this perspective shift can remind you to avoid being so financially overextended on your mortgage that you can’t afford to do things like:
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make the fixes to the property that will make it an enjoyable place to live
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save and invest for the future
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handle unexpected expenses like medical bills and car breakdowns, interruptions in income and the other “emergencies” that are part of our daily lives.
Buyers: What strategies have you employed to keep your house hunt in your price range?
Discussing Real Estate with Your Client
Discussing Real Estate with Your Client
Posted: 04 Apr 2013 04:00 AM PDT
We’re honored to have Brentt Taylor from MortgageLoan.com share with us his knowledge and insights. – The KCM Crew
 In order to remain competitive in today’s market, real estate professionals must be armed with up-to-date and relevant information. A strong knowledge of the mortgage market can make or break a deal. As a real estate professional, you can’t give prospective buyers any “outs” when trying to make
a sale.
Interest rates are low; however, lenders are not making it easy for borrowers to access money. Since many prospective home buyers require financing, real estate professionals must have an in-depth knowledge of the types of mortgages available, as well as the fees associated with closing.
Is the buyer qualified for a mortgage?
This question seems obvious, but many real estate professionals fail to do their due diligence and end up running clients all over town, only to discover that their prospective buyers are unable to qualify for any kind of mortgage. These scenarios create an extensive waste of time for all parties — prospective buyers, sellers, and real estate professionals.
Have the prospective buyer fill out a pre-qualification form and have a mortgage professional run the information through his or her system to catch any red flags before the real estate professional takes a client to look at homes. Pre-qualification also lets the client and real estate professional know the exact amount approved for the borrower; therefore, the real estate professional is able to show property that is in the approved range. In other words, prospective buyers need not be shown $350,000 homes when they have been approved for $150,000.
Understanding the mortgage and buyer fit
It is important for real estate professionals to have their clients understand the mortgage practices of different types of lenders, specifically, commercial banks and savings associations.
Commercial banks make both VA and FHA loans as well as conventional mortgage loans. Savings associations make VA and FHA loans too; however, they prefer to make conventional loans. Federal Housing Administration (FHA) loans are insured by the government in order to decrease lender risk and entice lenders to write a mortgage. Department of Veteran’s Affairs (VA) loans are backed by the government specifically to give incentive for lenders to give mortgages to veterans, their spouses, and active military personnel.
Real estate professionals need to ask their prospective buyers specific questions in order to obtain the correct mortgage fit. For example, a real estate professional who is showing houses to veterans and their spouses must be aware that the VA loan is a bit more liberal as far as criterion are concerned. Perhaps someone who is unable to obtain a conventional mortgage would qualify for a VA backed mortgage.
Conventional vs. non-conventional loans
Conventional mortgages may or may not be insured by the government through either Fannie Mae or Freddie Mac. Even if they are not backed by the government (conforming loans), these types of mortgages carry lower interest rates because they are underwritten following the same strict rules as if they are insured by Fannie Mae or Freddie Mac.
Non-conforming (also known as sub-prime) loans carry a higher interest rate and are underwritten in a casual manner. These mortgages are designed for those with poor or no credit; however, real estate professionals need to be up to date on these loans for that client with poor credit who really wants to buy that house.
Using points as an incentive:
Real estate professionals and many buyers know that lenders charge points. A borrower is able to lower his or her interest rate by paying a certain amount up front on a mortgage. Each point is equal to 1% of the amount being borrowed, and each point paid takes a quarter of a percent off the interest rate.
In order to sweeten the deal for a buyer, a real estate professional can offer to pay for the points on a mortgage by lowering the price of the original sale in order to cover the difference.
Conclusion:
It is important for any real estate professional to keep himself up to date on the rapidly-changing housing market. They should be able to put buyers into their dream homes without leaving any money on the table.
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WTH(eck)!?! More Crazy Real Estate Headlines
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We are often asked if the housing market can truly rebound if the all-round economy remains sluggish. We answer by explaining the housing market is not dependent on the economy but rather the economy is reliant on the housing market. Mark Zandi, Chief Economist at Moodys.com, addressed this issue in a recent report.
When the market heats up and inventory shrinks down, like is happening right now in many parts of the country, a peculiar phenomenon begins to infect home buyers, sometimes taking on epidemic proportions: price creep. Agents, mortgage brokers and even experienced real estate consumers are well aware of this tendency for buyers to start house hunting with a particular price range or point in mind, then to “creep” upwards by tens or even hundreds of thousands of dollars, over the course of their house hunting experience or even during the negotiations for a particular property.
Anyone in the real estate industry for any length of time realizes that the education required and the resources necessary to be a true industry professional have dramatically increased over the last two decades. In today’s volatile market, it is necessary to have a true real estate professional if you want to sell your home for the best possible price in the shortest amount of time – and make sure the deal gets to the closing table!
Number of Loans in Foreclosure Reaches a Three-Year Low