Generally, this is true, but for first time home buyers (who will someday become sellers as well), there is one assumption you want to make—a FHA assumable loan. 

What does it mean to have a FHA assumable loan? It means that when an FHA homebuyer of today is prepared to sell his home later on, a qualified purchaser can “assume” the loan at the interest rate given to the original buyer. 

It is likely that interest rates will rise to more of a “normal” range (between 6.5% and 7%) in the next few years. When you assume a mortgage, the mortgage terms remain the same. In other words, a buyer five or ten years from now can take advantage of the 4-4.5% rate you got now rather than the 6.5%-7% rate of the future. Since interest rates greatly effect how much house a homebuyer can afford, this makes your house even more marketable to the buyer of the future.

As an example, a $300,000 loan at 4% today carries with it a $1,432.25 principal and interest payment on a 30 year fixed mortgage. If offered for sale in five years, the purchaser could assume the $271,858.56 balance with the same $1,432.25 payment and remaining term of 25 years. The total payments over the 25 years would be $429,675.

Compare that to a new $272,000 loan at 6.5% for 25 years, which would carry a monthly payment of $1,836.56 (over $400 more a month than the assumption and more than $120,000 more over the 25 year term).

At 6.5% for 25 years, to wind up with the same payment as the assumed mortgage, our borrowers would only be getting $212,000…$60,000 LESS!

Basically, when interest rates do rise, those homes with assumable mortgages will have more value and will sell at higher prices in the future because they will be more affordable at the lower interest rate. An even greater bonus? Closing costs on houses with assumable mortgages are significantly less. 

As is the case with any loan, the borrowers must have strong credit and be approved for the financing, but the same qualifications would apply if they were trying to get a new, non-assumable mortgage as well.

FHA mortgages offer a ton of benefits (low down payment requirements, extended income ratios, lower credit scores, and easier sourcing of funds). Now, you can add the loan’s ability to be assumed to that list of benefits!

Know any first time homebuyers (or second, or third time home buyers) that need some assistance? Give us a call today. We are committed to helping you and those you know Buy. Sell. Live. SMART!

Seth & Alyce

Hartman, Dean. “The Power of Assumability.” The KCM Blog. Ed. The KCM Crew. 12 Jan. 2012. Keeping Current Matters. 12 January 2012.

Super Bowl Sunday is over, and, even though we didn't get to watch OUR favorite team this year (SO CLOSE!), we did enjoy the entertainment, fun, food and fellowship that the Super Bowl provides.

Since most of us are still in the "football" team mindset, we thought we'd give you some football analogies about the team members in the home buying process.  Enjoy!

Head Coach (Your Real Estate Agent)—Your real estate agent should be the Head Coach.  After careful analysis of your wants and needs in the home buying process, this is the person in the best position to help you create your game plan.  They can counsel you on the geography, the competition and the best ways to negotiate your way to your own personal “touchdown.”  Agents know the playing field (the inventory and the market).  If you hire them to represent you, they can disclose the weaknesses of your competition (the seller).

Offensive Coordinator (Your Loan Officer)—Your loan is your offensive coordinator.  They evaluate your income, credit and assets in order to help you play to your strengths and minimize your weaknesses.  Your loan officer can discuss the economic realities of home ownership, while listening to your quality of life concerns (How often you’ll be able to eat out or vacation, for example).

Offensive Line (Your Attorney, Accountant and Financial Advisors) – Your attorney, accountant and financial advisors are your offensive line. They are there to protect you from the blitzes that come from outside (sellers, title issues, tax consequences, and protecting your assets). Not the glamour positions, but vital to any success you are going to have.

Running Backs and Wide Receivers (Your Friends and Family) – Your friends and family are the running backs and wide receivers. They often receive the glory and attention, but honestly, if everyone else doesn’t do their job, they rarely ever see success. Bad game plans, weak play calling, poor execution on the offensive line or by you, as quarterback, leave them merely as names on the roster.

As with any team, communication is the most important component to getting the desired results. Being the center of the action on the field, the quarterback (you) needs to honestly talk with your coaches and coordinators, so they can help direct you on the proper play calling. Simultaneously, you need to heed the feedback from your offensive line, running backs, and receivers to filter wise advice from emotion. Be the quarterback of your own home-buying process and you’ll be more likely to realize your dreams (and not the dreams of someone else).

​We are committed to cheering on YOUR team in the home buying process.  Give us a call today to help you Buy. Sell. Live. SMART!

Seth & Alyce

P.S. Need some additional "team" members?  We can refer some great loan officers  to be your "Offensive Coordinator" in this process.  Give us a call!

"Who's the Quarterback?" The KCM Blog. Ed. The KCM Crew. 02 Feb. 2012. Keeping Current Matters. 02 February 2012.

"Thank you so much for endorsing Seth and Alyce Dailey as residential real estate ELPs. They were the best teachers we could have ever had as we approached buying our first home. Instead of just walking us through homes, they sat down with us for several hours and talked to us about our understanding of real estate, financing, location, and risks involved with purchasing. Thanks to Seth and Alyce, we have decided to wait on purchasing a home instead of getting in over our heads. We are so thankful that they took the time to teach us instead of just trying to sell a home."

If you or anyone you know would benefit from our services, give us a call today.  

​We are committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

Let’s face it, gas prices are not going down any time soon. With this in mind, some home buyers are looking not only at how many bedrooms and bathrooms a house has, but they are also looking for neighborhoods that are more pedestrian friendly.  Buyers want to know what is in and around the neighborhood of their future home.  

We’ve found a pretty cool tool to help you assess how “walkable” your neighborhood is. Click HERE to visit the website and type in the listing address. After you click on the “Go” button, you will receive a “walkscore” and get a detailed report about nearby restaurants, shopping venues, banks, public transportation, libraries, schools, etc. complete with a map and distances. Keep in mind that the information may not be 100% accurate, but it does still give you a snapshot of the neighborhood and its local businesses.

Have any additional questions about your “walkscore?” Give us a call today!

We are committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce Dailey

​Image courtesy of http://www.pedbikeimages.org/DanBurden

As you are looking at your list of New Year’s Resolutions, perhaps you are debating that same old question AGAIN: “Do I rent or do I buy?” 

We don’t have the same answer for every renter on this one. In fact, this is a decision that only you can make based on your unique circumstances. In 2012, we do encourage you to make one resolution related to this dilemma: MAKE THE DECISION (and if it is to buy—start saving). In some markets, it is actually cheaper to own a home than to rent.  Mortgage rates are at record lows, and there are many competitively priced homes on the market to choose from. If you live where there is a strong buyer’s market, and you are ready to buy, NOW is the time to start preparing for that move (for tips on how to prepare, see our blog, “A Buyer’s New Year’s Resolution”).

Saving up for a home takes time, and so does looking for a home to purchase. If you decide to buy, start saving for the down payment so that you are better able to make that offer when you find a property you like. How do you do this? Look at your budget and find areas where you can cut your spending so that you can save as much as possible until you reach your goal. Look into setting up a separate “Home” savings account that remains off limits so that you can watch it grow and so that you can remain inspired to meet your goal.

If it looks like 2012 is the year that you decide to buy, give us a call today. Whether you are a few days or a year or more out from pursuing that goal, we’d love to sit down with you and help you strategize so that you can meet that goal. 

We are committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

Information courtesy of:

“4 Real Estate Resolutions for 2012.” Real Estate Reality Check: Tara-Nicholle Nelson’s Blog. Ed. Trulia. <link>.

Today we want to focus on one resolution for how you can LIVE SMART in 2012: Get right-side up.

Over a quarter of homeowners in America owe more than their home is currently worth. While getting “above water” on these “underwater” properties is a lot easier said than done, we have some tips to help you stop treading water and start floating.

• Take advantage of the many federal underwater refinance programs such as HARP or Hardest Hit Funds (a program designed specifically for houses located in one of the states on this list.
• Be assertive and try to get a loan modification. Even if you have already tried to get a loan modification and have been rejected, and even if you require the assistance of a non-profit credit counseling program such as NACA’s Home Save Program, try to get a loan modification. Be a “squeaky wheel” and keep trying until you are able to get the assistance you need.
• Consider getting a second job or renting out a room in order to pay down your balance or catch up on payments.
• If all else fails, put your home on the market as a short sale (but talk to us first!). Don’t forget that the federal income tax exemption on mortgage debt that is forgiven through a foreclosure or a short sale will expire on December 31 of this year. Consequently, banks are taking about 2 years after the first missed payment to foreclose on properties.  When you list your property with an agent as a potential short sale,  the possibility of avoiding the income tax implications that come with walking away from a home is increased. 

Still looking for other ways to help get “Right-side up?” Give us a call today. We are committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

​Information courtesy of: “4 Real Estate Resolutions for 2012.”  Real Estate Reality Check: Tara-Nicholle Nelson’s Blog. Ed. Trulia.

How are those New Year’s Resolutions coming? If you’re like most people, you probably work really hard to accomplish your goals in the beginning and gradually begin to slack off.

The good news is that if one of your resolutions is to sell your house in 2012, the effort you put into it in the beginning will pay off, AND it won’t require as much upkeep as some of your other resolutions! Below are three resolutions for selling your house in 2012.

Resolution #1: Price it Right!

A common misconception is that if you overprice your home, you will get more money for the transaction. This couldn’t be anymore incorrect. The truth is that by overpricing your house, you are providing all of your competition the opportunity to sell more quickly while your house sits like stale bread on the market. You are also opening yourself up to the possibility of lowball offers as well as having to lower your price beyond what you may have originally received so that prospective buyers don’t begin to question why your house has sat on the market for so long. The moral of the story? Price it right the FIRST time. Do this by checking out your neighborhood’s comparables, visit local Open Houses that are similar to your property and get the opinion of multiple agents before you decide on a fair selling price for your home.

Resolution #2: Clean It Up!

Curb appeal goes a long way—especially when there is other competition on the market. Buyers are more likely to view your property if the outside is maintained. Staging on the inside is helpful as well, but if the buyers are not even entering your house due to poor curb appeal, then any efforts you make to stage the inside will be lost. Making your curb appeal more attractive does not have to cost a lot either. It can be as simple as adding shrubbery or flowers or painting the exterior trim, doors and eves. It is also helpful to keep up with everyday home maintenance such as repairing driveway cracks or re-hanging fallen shutters.

Resolution #3: SELL IT!

Need expert help with this resolution? That’s whey we are here to help. We would love to assist you in the home selling process. Give us a call today if you or someone you know is planning on selling in 2012.

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

Information courtesy of: “4 Real Estate Resolutions for 2012.” Real Estate Reality Check: Tara-Nicholle Nelson’s Blog. Ed. Trulia. 05 Jan. 2012.

• Work out three times a week
• Eat healthier
• Spend more time with family

​​If buying a house in 2012 is on your list of resolutions, then we have another resolution to add:

• FIX UP FINANCIALS SO THAT I CAN BUY A HOUSE

With lending practices growing tighter, we have some tips for how you can come prepared when it is time to buy a house. 

• As you’re preparing your 2011 paperwork for tax season, set aside the paperwork necessary to get the home buying process started.  This includes items such as your past two years’ federal tax returns and W-2s; pay stubs from the last two months, and bank statements and statements from other accounts (such as investment and retirement accounts).  In some cases, it is also helpful to have documents such as marriage and divorce certificates readily available as well as any statements from student or auto loans and credit cards that you hold.
• Begin keeping a running file of your new pay stubs and bank statements.  When you are ready to buy, your lender will want the most updated versions of all of these documents. 
• Continue saving up your cash to close.  You’ve probably already begun saving up—or you have a plan ready to access a down payment.  Prior to the home buying process, meet with your broker and your agent and double-check how much cash you will need for a down payment and closing costs for the price range you are shopping.
• Make yourself aware of time requirements for “sitting money.”  In other words, prior to your home purchase, some lenders like to see the money sitting in an account for some time, or they require specific documentation outlining how the money appeared in the accounts.  Be aware of these requirements and make sure that your money has been sitting long enough where it needs to sit.
• If you are planning to buy this year, you’ve probably already checked your credit report, but have your broker or banker pull it again because this is the report your lender will use to qualify you for a loan.  Pulling it ahead of time allows you the opportunity to check it for errors and issues and take action to correct any issues that may be present.

If you or anyone you know is planning on purchasing a home in 2012, give us a call.  We’d be honored to assist you or those you know in the home buying process!

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

​

Information courtesy of:

“4 Real Estate Resolutions for 2012.”  Real Estate Reality Check: Tara-Nicholle Nelson’s Blog. Ed. Trulia. 05 Jan. 2012. http://www.trulia.com/blog/taranelson/2012/01/4_real_estate_resolutions_for_2012?ecampaign=cnews201201A&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2012%2F01%2F4_real_estate_resolutions_for_2012.

​PREDICTION NUMBER 5:  GREAT AGENTS WILL BE VERY SUCCESSFUL!

Real estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets. 

At The Dailey Group, we work hard to remain informed and educated experts in the market.  We thrive off of your referrals, and we are committed to giving you the best service possible!  

​Want to work with a successful agent today?  Give us a call!

Committed to helping you Buy. Sell. Live. SMART!

​Seth & Alyce

"5 Real Estate Trends to Look for in 2012." The KCM Blog. Ed. The KCM Crew. 03 Jan. 2012. Keeping Current Matters. 03 January 2012.

PREDICTION #4:  SHORT SALES WILL INCREASE

As mentioned in yesterday's post, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity.

Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations.  If this happens, there could be an increase in the number of foreclosures.  However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

If we can assist you or anyone you know in the home selling process, give us a call today.

Committed to helping you Buy. Sell. Live. SMART!

​Seth & Alyce

"5 Real Estate Trends to Look For in 2012." The KCM Blog. Ed. The KCM Crew. 03 Jan. 2012. Keeping Current Matters. 03 January 2012.

PREDICTION NUMBER 3:  PRICES WILL SOFTEN

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:  

• They will eat up some of the buyer demand in the market.
• ​They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

​The good news is that these foreclosures are not YET on the market. There is still time to sell before these prices soften! Give us a call today.

Committed to helping you Buy. Sell. Live. SMART!

​Seth & Alyce

"5 Real Estate Trends to Look For in 2012." The KCM Blog. Ed. The KCM Crew. 03 Jan. 2012. Keeping Current Matters. 03 January 2012.

​The "shadow" inventory of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market.  Distressed properties sell at discounted prices.  They will impact the housing values of the non-distressed homes in the area.

Concerned about how this "shadow inventory" may impact your chances of selling?  Give us a call today. We'd be honored to serve you (or anyone you know).

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

"5 Real Estate Trends to Look For in 2012." The KCM Blog. Ed. The KCM Crew. 03 Jan. 2012. Keeping Current Matters. 03 January 2012.

PREDICTION #1:  BUYERS WILL RETURN

In 2011, lack of consumer confidence in the overall economy dramatically impacted the housing market.  Buyers were hesitant to make a purchasing decision on any big ticket item.  By the end of 2011, consumer confidence began to grow, and sales increased.  Economic conditions will continue to improve throughout 2010, and consumer sentiment will solidify.  Once this happens, home buyers will realize that NOW is the time to buy.

If you (or someone you know) is one of these buyers, we'd love to help you in the home buying process.  Give us a call today!

Committed to helping you Buy. Sell. Live. SMART.

Seth & Alyce

"5 Real Estate Trends to Look For in 2012." The KCM Blog. Ed. The KCM Crew. 03 Jan. 2012. Keeping Current Matters. 03 January 2012.

Committed to helping you Buy. Sell. Live. SMART!

​Seth & Alyce

What is the most important thing a seller should look for when hiring a real estate agent to sell their house? We are often asked this question. Is it the size of the company they are licensed with? Is it their marketing program? Their years experience in the business? Should you choose the agent who suggests the highest listing price?

There are many things that should be taken into consideration when hiring someone and giving them the responsibility for selling your home. In our opinion, the most important question you can ask a potential listing agent is a simple one:

Do you truly believe that now is a good time to buy a home?

Why should this matter when hiring someone to SELL your home? Buyers are nervous about purchasing right now. They want to know they are making an intelligent choice. We believe, especially in today’s market, you need to hire someone who realizes that this is one of the best times in American real estate history to buy. If an agent doesn’t believe that, how will they be able to convince a potential buyer to buy your home?

When interviewing a real estate professional, ask them to explain why purchasing a home makes sense today. They should be able to explain it simply and effectively. See how many of the following facts (which should be shared with every potential purchaser) the agent knows:

The Wall Street Journal last week stated:

“With home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today.”

Donald Trump was just quoted saying:

“I’m pretty sure this is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say, ‘You know, I‘m glad I listened to Donald Trump’.”

John Paulson, a multibillionaire hedge fund operator and the investment genius who made a killing betting against housing a few years ago, is now bullish on residential real estate market. He recently said:

“If you don’t own a home, buy one. If you own one home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home.”

A recent Gallup Poll showed that 67% of American’s think that now is a ‘good time’ to buy a home. The Gallup Organization went on to say:

“Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys.”

The iconic financial paper in this country, the country’s most famous real estate investor, the most successful prognosticator of the housing market and 2/3 of all Americans say now is the time to buy a home. Shouldn’t your agent agree?

Bottom Line

Selling is nothing more than the transference of conviction. How can agents transfer that conviction if they themselves are not convinced? Find a listing agent who truly believes that someone should buy your home – TODAY! This is the single most important thing you should look for in a potential listing agent.

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

Today’s ever changing real estate industry has brought upon some very challenging questions from our clients. We as counselors, want to put forth the best, non-emotional advice that we can, in hopes that we can help our clients and their families navigate the rough waters of the short sale process.

The most prevalent question and one that continues to permeate the industry is:

“Why should a seller go through the short sale process rather than letting their house be foreclosed upon?”

While we cannot speak to every client circumstance, we can say one thing with complete conviction. In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider:

Example A -- Short Sale

Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000.

The transaction closes and is final. Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0. Mr. Smith is now on the road to financial recovery.

Example B -- Foreclosure

For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property. The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly. Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO.

Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability.

On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but now has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed.

The Best Option is Clear

While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriff’s order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!

​If you or anyone you know is looking for advice on short sales and foreclosures, please do not hesitate to contact our team.

​Committed to helping you Buy. Sell. Live. SMART.

​Seth & Alyce

* Thanks to our friends at KCM for this great information.

What do you think?  What IS the first question you should ask us? Post some of your responses and visit us again tomorrow to get an answer to this question.  You might be surprised by the answer!

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

According to Standard & Poors Third Quarter 2011 Shadow Inventory Update, we can expect the following things:

1.  Shadow Inventory is DECREASING in many parts of the country as banks are starting to release distressed properties to the market. 

“We estimate that it will take 45 months to clear the national shadow inventory. This is seven months below our peak estimate but three months longer than our estimate a year ago. Twelve of the top 20 MSAs recorded declines in months-to-clear during the quarter, while eight reported increases.

​2.  The inventory will continue to mount and be a hindrance to a housing recovery.

​3.  The inventory will be placed on the market and impact prices.

​According to the report:

“Despite the recent stability of our months-to-clear estimates and liquidation rates, these distressed loans continue to loom over the housing market and threaten to further depress home prices. Though fewer additional loans are currently defaulting, the overall volume of distressed loans remains huge. Low liquidation rates over the past two years allowed the shadow inventory to grow as distressed homes have remained tied up in foreclosure proceedings.

The shadow inventory will continue to jeopardize the housing market’s recovery until servicers are able to improve liquidation times. However, if and when that happens, an influx of homes will likely enter the market, increasing supply and driving prices down further.”

Short term, we believe that the shadow inventory WILL impact housing prices, but as these properties are sold, the market will eventually recover again.

Still wondering if now is the time to buy or sell?  Give us a call today.  We'd love to help you in the home buying or selling process!

Committed to helping you Buy. Sell. Live. SMART!

Seth & Alyce

 

 

“Understanding the Impact of Shadow Inventory.” The KCM Blog. Ed. The KCM Crew. 23 Nov. 2011. Keeping Current Matters. 23 November 2011.