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Ways Buyers Can Save Money at Close

Wednesday, January 9, 2008
by Group One Realty Team - Real Estate One

Seller Concessions:

Percentage of purchase price towards allowable costs (percentage depends on program and downpayment, see chart below).

 

In addition to concessions, sellers can pay for the following:

1. Seller can waive tax pro­-rations from the buyer on the purchase agreement.

2. Disburse Use and Occupancy fee's (if any) to Buyer at clos­ing.

3. Pre-­pay association fee directly to the association. By giving the buyer a paid receipt allows this cost to remain off the final HUD.

Conventional

Down Payment

Allowable Concession

0 - ­10%

3%

11 - ­24%

6%

25% or more

9%

FHA and Non­-Conforming

Down Payment

Allowable Concession

3%

6% for costs/3% for down­payment (through 3/31-­2008)

VA

Down Payment

Allowable Concession

0%

6%

Investment Properties

Down Payment

Allowable Concession

All down payments

2%

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Why Your First Offer is Usually Your Best Offer

Monday, October 15, 2007
by Group One Realty Team - Real Estate One
There’s an old real estate rule of thumb that the first offer you receive is usually the best one. I’ve run into this with several listings where the seller received an offer early on, made a stiff counteroffer back to the buyer and the buyer headed for the hills. In some cases, as much as 18 months and several price reductions later, another offer finally came in only to be significantly lower than the first buyers’ offer.

While your first offer may not be what you were hoping for, it is a good idea to consider several things when choosing how to respond to that offer. Length of time on the market, time of year, initial asking price compared to the price recommended by your agent, and current competition should all be taken into account when determining whether to accept, reject or counter the first offer you receive.

It may be tempting to hold out for a better price, especially in the first few weeks that your Home is on the market when there is a high volume of showing activity. However, that activity typically wanes after about three weeks, at which point the buyers who have been waiting for "just the right house" will have already considered your property. Buyers rush to see new listings, and if it’s the best thing they have seen they will probably make an offer. Most of these buyers have been at it for a long time and know the values very well, in some cases understanding market realities in their price range even better than realtors who have been tracking a broad market. Therefore, an offer received in the first few weeks on the market is probably appropriate to current conditions and worth serious consideration. Comparing the offer to your realtor’s initial price recommendations can help you decide what action to take.

After the first several weeks, the activity that remains is buyers just entering the market. Since they are at the beginning of their house hunting, they generally have more time to look and are less motivated to act quickly. They are less educated about the market than those who have been shopping for a long time and will err on the side of caution when making their offers, especially in a buyer’s market. Consequently, offers will more likely be lower than early on.

Time on the market erodes value as well. The longer a house is listed for sale, the less interested buyers and Realtors are in the property. People will begin to wonder what is wrong with the property, and even if they like it will offer a lower price so they won’t lose money if they end up having to sell.

Be sure to consider the opportunity costs. While your first offer may be lower than you had hoped, every month you keep the property is another month you must pay mortgage, taxes, utilities, and insurance for a home you are hoping to leave. These costs can add up quickly and end up costing you more in the long run.
Time of year is another factor that can affect the offer. Your offer in March or April will most likely be much higher than in September or October. Sellers who were optimistic in the spring will be lowering their prices quickly to try and sell.

The bottom line is that you are never in a better position to get the best price for your home than when it is fresh on the market. Even if the offer and subsequent negotiations are less than you are hoping for, don’t kick yourself months or even years later wishing you had taken the offer. That real estate rule of thumb stays true: your first offer is usually your best.
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Struggling with your ARM mortgage payments?

Wednesday, September 19, 2007
by Group One Realty Team - Real Estate One

SUBJECT:    The FHASecure Initiative

                       

 The Federal Housing Administration is pleased to announce an initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently “reset.”  This mortgagee letter describes how lenders and homeowners may refinance mortgages that, due to the increased mortgage payment following the reset, have become delinquent.  The mortgagee letter also reiterates guidance to lenders about making objective decisions regarding the underlying collateral in declining markets. The FHASecure initiative, which is a temporary program designed to provide refinancing opportunities to homeowners and to increase liquidity in the mortgage market, requires that the loan application be signed no later than December 31, 2008.

 

Refinancing Non-FHA Adjustable Rate Mortgages Following Resets 

 

FHA is currently doing a significant business in refinancing non-FHA mortgages for borrowers who are current under their existing mortgage.  This mortgagee letter extends eligibility to borrowers who became delinquent under their current mortgage following the reset of the interest rate. 

 

FHA recognizes that many lenders are engaged in a variety of loss mitigation activities to keep borrowers in their homes, and applauds these efforts.  This mortgagee letter explains credit policies for refinance transactions involving non-FHA adjustable rate mortgages where the homeowner’s mortgage payment history during the 6 months prior to the reset showed no instances of making mortgage payments outside the month due.

 

These instructions are designed to permit homeowners, who previous to their reset, demonstrated an ability to meet their mortgage obligations, an opportunity to refinance into a prime-rate FHA-insured mortgage.  In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. 

 

 

 

 

 

Eligibility Highlights of the FHASecure Initiative

 

·        The mortgage being refinanced must be a non-FHA ARM that has reset.

 

·        The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments, i.e., the homeowner’s mortgage payment history during the 6 months prior to the reset showed no instances of making mortgage payments outside the month due.

 

  • If there is sufficient equity in the Home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.  

 

·        Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2) either the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing if the indebtedness exceeds FHA prescribed LTV and maximum mortgage amount limits. 

 

·        Mortgagees must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

 

Additional Information About the FHASecure Initiative

 

·        Maximum FHA loan-to-value ratios 

 

The maximum loan-to-value limits are shown below and are applied to the appraiser’s estimate of value, exclusive of any upfront mortgage insurance premium.  

 

Maximum Loan-to-Value Ratios

 

States with Average Closings Costs At or Below 2.1 Percent of Sales Price

 

·        98.75 percent:  For properties with appraised values equal to or less than $50,000.

·        97.65 percent:  For properties with appraised values in excess of $50,000 up to $125,000

·        97.15 percent:  For properties with appraised values in excess of $125,000.

 

States with Average Closings Costs Above 2.1 Percent of Sales Price

 

·        98.75 percent:  For properties with appraised values equal to or less than $50,000

·        97.75 percent:  For properties with appraised values in excess of $50,000


Please let Tom know if you need a good lender referral.  Also, if you are wanting to list your home please contact our office at (734) 996-0000.  Or for those who need help with a property search click the link to get started. 
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How to Figure Out Income Property Return Numbers

Sunday, August 5, 2007
by Group One Realty Team - Real Estate One

I have to say, one of the smartest investments I have ever made has been to buy residential and commercial income property.  The earlier you buy it the better.  If you are not in a position to buy property on your own, I would suggest that you get together with family or friends and form a sub-chapter S corporation or LLC to purchase larger properties using your combined credit and purchasing power. Shares, estate planning or future transfers can more easily be accomplished without having to either cash out or divest of your investment property using these company investment shells.. 

So how does one get started finding and then selecting the best property available?  I have a rental worksheet that I have used for many years to help me reduce the prospective investment property to "bottom line" numbers.  This really helps in determining which is the best property for you.  I would suggest you download the form and make several copies of it.  Use the sheet while you are in the field looking at the subject property.  Fill it out as you walk through the property, asking questions, noting how many meters are present, who pays the utilities, and confirm what the current rental rates are for the different units.  If you have questions about terms like net operating income (NOI), internal rate of return (IRR), cap rate, gross Rent multiplier (GRM), sinking funds, vacancy factors, etc. please do not hesitate to contact me .  I also converted this rental worksheet to a excel file file as well should you want to use this medium later on.

So how do you get a list of the better properties?  Just click here to search for property and I can always help you find selections that have more potential for income and equity increase.  I most often find when doing a property search that whenever you can make a change in the subject's usage, you stand to increase your equity more that others without that option.  As an example, I once purchased a 4 unit apartment building that was made up of two bedroom units having their own private laundry rooms.  I converted the laundry rooms to bedrooms and was able to offer three bedroom units for rent at a greater monthly rental rate.  I spent about $3,000. to make the conversion and increased the buildings annual income $4,800. (100/mth extra x 12 mths x 4 units).   Using a 10% cap rate, my $3000 investment increased the value of the property $48,000 (4800. x 10%) and provided an equity increase of $45,000 ($48,000 less $3,000) so a good  management adjustment planned as part of the original property investment.  The numbers before this plan were only average which is why we have two sets of numbers on the property field sheet referenced above.  Contact me for more details because it is a Great Time to Buy!

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June Ann Arbor Area Realty Statistics

Wednesday, July 11, 2007
by Group One Realty Team - Real Estate One

Statistics can give us a decent picture of what happened in the real estate market. They can also act as a guide in what to expect in today’s market.

While June 2007 residential sales are down about 10% over June of last year, there is strong activity in the summer market. 364 residentila properties were sold in June this year, compared to 404 in June 2006.  Reflecting an increase of 5% in the number of units sold in June 2006, 93 condos were sold in June of this  year.

Current market conditions have created a great time to buy.  The average residential sale price in Washtenaw County was $267,571 in June.  buyers have a rare opportunity to obtain maximum value for their investment dollar.  Inventory is plentiful, interest rates are stable and sellers are ready to move.  The following statistics were provided by the Ann Arbor Area Board of Realtors. 

June 2007

June Report

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