You Really DON’T Need a Big Down Payment!
CORRECTION 5/3/2013: One of my mortgage pros informed me that many good-credit buyers can get a 3% down conventional mortgage (not 5% like I first wrote here)
Stories of mortgages being hard to get are probably overblown today. I'm not going to tell you today's lenders give away mortgages the way they did in the early days of the bubble, but I have closed more than one sale with a 3.5% down payment. In some cases the seller also contributied ($4,000 in one case) to reduce the buyer's closing costs.
If you have a steady job and decent (not spectacular) credit scores, you can probably qualify for a mortgage – with a lower monthly cost than rent.
1) FHA loans are still available with 3.5% down payment. That's only $5,250 on a $150,000 home sale. These loans are probably the largest single type of mortgage being made today.
2) VA & USDA loans require no down payment at all ! If you're a veteran, this is almost certainly available to you. USDA has more to do with where the home is (the basic intent is in agricultural areas).
3) Conventional loans are now available with as little as 5% down. These will require a high credit rating, but they are being made every day.
How do you find these loans? Use a good mortgage broker who will take a look at your personal situation and show you the dollars and sense of the various loan programs available to you. No cost and no obligation. I know a couple of friendly mortgage pros who have worked for my clients. I'd be happy to give you their contact information.
In Some Portland Neighborhoods Average Days on Market is TWO !
Why get preapproved before you start home shopping?
Why be sure you AND YOUR REALTOR know EXACTLY what & where your desired home is?
Why use a Realtor who stays on top of the market where you want to buy?
Because Portland Real Estate Is
MOVING
In the Cleveland, Franklin, Grant School Dist. in the last 3 months the average days on market was
TWO
In the Grant School District the average days on market over the last 3 months was
SEVEN
This chart shows how long it would take, at the current rate of sale, to sell all the homes currently listed if no new for sale homes were added. Six months is an even buyer-seller market. Today is a very strong seller's market.
Would this be a good time to SELL your home?
Do you know what your home would sell for in today's hot market? Call me today for a free no-obligation estimate.
How Would a 1.0% Interest Rate Increase Affect Your Buying Power? How about 2.0%?
Today's interest rates are at historically low levels, which increases the buying power of all buyers (except all cash). But what if rates were to increase, say 1.0%? What if it were 2.0%?
How would that affect how much house you could buy? Less, of course, but how much less?
Even a 2.0% increase would leave rates around 5.5% and it wasn't too long ago that any mortgage rate below 6.0% was considered a prime deal.
My office's Windermere Mortgage Branch Manager, Tanya Elder, has provided some examples illustrating what happens to your buying power at different prices as rates increase. Click here
Portland Home Prices Up Over 50%
Sometimes it's tempting to compare today's Portland home prices with the top of the housing bubble in 2006 and think home values are down, but real estate has always been a long-term investment value.
From 2002 to 2006, average home prices in Portland went up nearly 90%, but current prices are only a little over 20% below that peak, and climbing again. So comparing 2002 to today, average home prices are up over 50%.
Here are the numbers:
Radon Testing: What and Why
I'm fresh from a Continuing Education class on Radon and brushed up my awarenes on this issue quite a bit. The short story is Radon is a radioactive gas that is naturally generated from the ground and can occur almost anywhere. It is the second leading cause of lung cancer, second only to smoking, causing an estimated 21,000 deaths per year in the US.
The good news is there's an accurate test for the presence and concentration of Radon in your home and standard protocols for mitigating if it's present at unacceptable levels.
A Citizen's Guide to Radon from the EPA is here.
Today's class was conducted by Portland's Environmental Works. Their web site also has some interesting information here
And my friend Dr. Orna Izakson of the Celilo Natural Health Center has posted a thoughtful blog entry and additional resources here
FHA Mortgage Fees Increase, Conditions Tighten April 1 – Another Reason to Buy Now
There are many reasons that this is the time to buy. We certainly have a "sweet spot" of low mortgage rates and low home prices. But prices are creeping up, and on April 1, FHA mortgage fees go up as well. FHA mortgages are well over half the total. Here's a synopsis from the Oregon Association of Realtors:
- Raising the annual premium by 10 basis points (or $13/month on average)
- Eliminating the ability to cancel the Mortgage Insurance Premium (MIP) when the loan reaches 78% LTV (Loan to Value)
- Raising DTI (debt to income ratio) for borrowers with low credit scores. FHA will require borrowers with credit scores below 620 to have a maximum DTI of 43%
- Raising the down payment for loans above $625,500 to 5%
- Greater oversight on borrowers who are trying to obtain a new FHA loan 3 years following a foreclosure.
This is also all the more reason why you need to be working with a sharp lender. Ask me for a recommendation.
Congress Extends Cancellation of Mortgage Debt Relief
I know, that sounds like a politician's tricky double negative but what it means is that if a lender forgives some portion of a homeowner’s mortgage in 2013, either as part of a short sale or foreclosure, or in a loan restructuring that reduces principal, the owner/seller will not be required to count that forgiven amount as income for tax purposes.
The provision had expired at year end 2012, but has now been extended through the end of 2013/
A Remodeling Project (or Two) will NOT Increase Your Home’s Value. Here’s the Proof.
The best reference I know (short of an actual bid from a local contractor) for remodeling cost and how it affects the value is Home Remodeling magazine's bi-annual issue on the subject, available free here.
It defines every remodeling job. For example a mid-range bathroom remodel is described as:
"Update an existing 5-by-7-foot bathroom. Replace all fixtures to include 30-by-60-inch porcelain-on-steel tub with 4-by-4-inch ceramic tile surround; new single-lever temperature and pressure-balanced shower control; standard white toilet; solid-surface vanity counter with integral sink; recessed medicine cabinet with light; ceramic tile floor; vinyl wallpaper"
Then it gives you an estimate of what that will cost, in every major metropolitan area of the county (the link is to Portland, OR), AND how much of that cost you will likely recover when you sell. In addition to Mid-Range, many projects also present an Upscale version.
You'll notice that not a single remodeling project will return more than its cost. The best is 91.5% return on a minor kitchen remodel. Of course the monetary return on investment is not the only reason to remodel. If your kitchen was top drawer by 1960 standards, you will get daily joy from one that's upgraded. If you're ready to sell, bringing a kitchen or baths up to date will also make your home sell faster, if not for more money than you put into it.
Take a look at the chart. I think you'll find some surprising numbers. Let us know with a comment on this post
What is a “Short Sale”? An REO?
A Short Sale is home for sale as a result of two conditions: 1) the seller is unable to continue making the mortgage payments, and 2) the home will sell for less than the amount due on the mortgage(s) (so the sale proceeds will be "short" of paying the mortgage). When a home is listed for short sale, the lender has the right to approve the terms of the sale, since they will be losing the difference between the amount owed on the mortgage and the net proceeds of the sale.
That is only important to a buyer because lenders typically take several weeks, and several months is not unusual, to respond. Six months is my longest personal short sale experience, six weeks is my best. Their response is not always "What a generous offer. We accept". They may reject an offer outright or may make a counter offer. If they do make a counter, it is generally non-negotiable, and the buyer can take it or leave it. So it's possible to make an offer, sit in limbo for six months and then find out you're back to shopping for a home all over again.
A short sale differs from a bank owned sale (known as an REO – an acronym for the entry on the bank's financial statements – Real Estate Owned). An REO home is one on which the lender has completed the foreclosure process and now owns the home outright. Those proceed mostly like any other sale, and mostly in a timely fashion.
Many people think they can buy foreclosures at substantial discounts from what a market price would dictate. That is not true. Bank owned homes may sell for, or above "market" price. Depending on the market they may also sell for as much as a five per cent discount, but not generally more, if that.
Stories you hear of substantial discounts usually neglect to include that the condition of the home is substantially worse than similar sized homes on the market, so they are not really "comparable" homes. Cash buyers can usually buy at 5-10% below list price (bank-owned or private), because a seller values the fact that a buyer's loan approval (or complications with) will not cancel the sale.
Who Pays The 3.8% Tax on Investment Income? Not Very Many of Us
I think I wrote my first post on the confusion around this new tax two years ago and there still seems to be a lot of misunderstanding/misinformation about it.
The National Association of Realtors has "Top Ten Things You Need to Know About the 3.8% Tax". Click here
For specific tax advice for your personal situation, always consult a tax professional.
