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FUN DAYS in NOVEMBER!

VOTE!  November's BIG Day!

Prior to these past 1-2 years, it has been a long time since Appraisers have had to deal with appraising homes in a declining market. Lenders really hate it when we mark the dreaded declining market box or the oversupply box or note that the days on market is over 6 months . But we are checking those boxes more and more these days.

As for how we define declining markets, well that may differ from appraiser to appraiser or location to location. We define declining market when we look at the sales prices of the same or similar homes in the prior year and see that they sold for more than they are selling for in the current year, this is considered a declining market.

 

Some appraisers note a declining market if they see a decline in the sales prices over the past 2 quarters of that same year. But it is important to make sure that this decline is not just a CORRECTION in the market. Big difference here.

When the neighborhood has experienced increases over the past several years, many of the current listing prices reflect this annual appreciation. However if the homes are not selling and the sellers reduce their listing prices to prior year list prices and they wind up selling for the same or similar price as the prior year, then we define this as a STABLE market, not a declining market.

As you likely know, if lenders see that the property is in a declining market they will not approve the loan. If the amount of the down payment is significant, then they may approve the loan. So you need to know how they are handling loans in a declining market before you waste your time finding a home for your client. While YOUR CLIENT may qualify for the home loan...the HOME does not qualify for the loan. In the "old days" the banks figured the homes would appreciate, so the qualifying process was pretty loose, but not anymore, both the borrower and the home are under great scrutiny.

 

 

 

Another thing to be aware of is condition. Lenders DO NOT like to see Average-(minus) on an appraisal report. So if you have a seller that has a home that needs to be cleaned up, painted, landscaped, etc. make sure they do this before the appraiser arrives or their deal could be killed by the appraisal report. As you well know, now more than ever these homes have to be neat as a pin to even compete in this market.

Another important thing to be aware of: If the home has been listed in the past 12 months this information must be reported on the appraisal as well as details of the listing, days on market, etc. also  the past 36 months of sales history for the subject property must be noted on the report. So if you have a home that was listed 6 months ago for $150,000 and the appraisal comes in at $170,000 without any renovations or additions having taken place, the underwriters are going to kick this one back big time wondering how in the world the home appraised for $20,000 more than it was listed for just 6 months ago, especially now.

Some lenders will not even approve a REFINANCE loan if the home was recently listed and most will not approve a loan at all if it is currently listed. So people need to think twice about listing their home, just to test the market because if the market fails them and now they want to refinance, they may be out of luck.

The best thing you can do for your clients is to get them prepared for all contingencies on the buying and selling side. The last thing they or you like is surprises!

I know it is very tough in this market  to make things happen and get to the closing table, but as long as you know all of the obstacles upfront, the better prepared you are to handle anything that comes your way.

Good luck to all of you and may this market turn around soon!

 

 

 

 

FREE SEMINARS for ADULT CHILDREN & THEIR AGING PARENTS

at Williamsburg Landing

MORE COMMON MLS ABBREVIATIONS

IN

WILLIAMSBURG VIRGINIA

ARMY COMMUNITY SERVICE (ACS) Financial Readiness Classes

 

The Bad News…DAPS Going Away

The Housing and Economic Recovery Act of 2008 eliminates seller-funded down payment assistance programs (DAPs) as an acceptable source of funds for FHA loans for all lenders.
Officially, the Act eliminates seller-funded DAPs on FHA loans with final credit approval issued to the borrower on or after Oct. 1 2008

But There is Good News… FHA Alternatives

• FHA Cash to Close Savings Plan
• FHA Sweat Equity
• FHA Bridal Registry Account
• 1st Time Home Buyer Tax Credit
• City Free Grants / Municipal Programs
• State Programs / V.H.D.A
• USDA Rural True 100% Loans
  

FHA Cash to Close Savings Plan

The FHA cash to close savings plan is a way to get pre-approved for a Construction loan being built without having the liquid assets at the time of application.  This is a great way to Buy Now & Save Later.

• Borrowers must provide a written statement as to how they intend to save the funds to close.

• A monthly savings plan that identifies the borrower’s savings plan for the funds needed for closing must be completed in its entirety.

 

 
FHA Sweat Equity Making a Comeback

Believe it or not FHA Sweat Equity Program has been around forever.  The idea behind Sweat Equity is a way to have the Seller Credit for Purchaser's Down Payment through Labor or Materials being put forth into the house.

Labor performed or materials furnished by borrower before closing may be considered as the equivalent of a cash investment.  The idea behind this is:

1. Buyers to get with the Contractors after an appraisal is done to lend "LABOR" to compensate for "Credit" towards down-payment.
2. Buyers to paint the house or do some side jobs to help earn "Credit" for the "Labor"
3. The Sellers will pay for the credit and can raise the sales price in order to compensate for the credit.
   

• Sweat equity may be gifted subject to both gift requirements and additional requirements.

• Borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his/her ability to complete the work in a satisfactory manner.

• Delayed work (on-site escrow), clean up, debris removal, and other general maintenance cannot be included as sweat equity.

• There can be no cash back to the borrower in sweat equity transactions.

 

FHA Bridal Registry Account

HUD allows couples who are planning to get married to establish a bridal registry savings account to help them accumulate the down payment necessary to purchase first home together.
Bridal Registry Account is also available for other situations where an individual or individuals typically receive gifts.

• The borrowers must open an interest bearing savings account with a financial institution supervised by a federal or state agency

• The borrowers must provide a register showing the names of all donors and the dollar amount that has been deposited into the bridal registry account

• There is no requirement that the bridal couple be married prior to closing the mortgage loan

 
 
First Time Homebuyer Tax Credit

We all know about the First-time Home Buyers tax credit of $7,500 available for homes purchased on or after April 9,2008 and before July 1st 2009.

This can be used as leverage for Parents or Family Members to provide that extra kick in helping with the down payment.  This is a pretty much guarantee for a re-payment during tax time!

For extra assurance and comfort have your local title company write out a notarized agreement to re-pay back the loan from the family member during tax time to use the $7,500 tax credit.

 
 
Municipal Programs / City Grants DAPS

Every City has a local Grant and TRUE Down Payment Assistance Program to use with Home Buyers.  We have forgotten these lost gems due to the fact of the popularity of Seller Assisted Daps being used, now that they are gone the city grants are becoming extremely popular.

Why not use city grants? Its there for a reason and its FREE.  Below are examples of my local city grant in Virginia Beach.

• Up to 10% of Sales Price to provide the grant
• $63,000 income or less to qualify
• Up to $7,000 for First Time Home Buyer Grants

 

VHDA / State Programs

Check with your local state agencies to find the TRUE 100% financing, well actually 103% financing if you live in Virginia with the VHDA Loan Program.

The States have set aside money that goes hand in hand with city programs all reaching the end effect of helping new homeowners with down-payment and achieving home ownership. Check with your local Mortgage Expert on these programs to see if you qualify.

• VHDA - Virginia's Link http://www.vhda.com

 

 USDA Rural 100% Programs

Good News USDA Rural Loans got Re-approved for 2009.

The rural or Agriculture Loans are another true 100% Financing Loans.  You may be surprised that your local cities have pockets of RURAL areas that are zoned as Agricultural.

Call your local tax assessment office to find out which areas are zoned as Agricultural and "BAM" you get a nice 100% financing loan!

http://www.rurdev.usda.gov/

 

There you have it, Creative and New Alternatives to help Homeowners to provide down-payment assistance help and achieve higher than normal financing options!

Where there is a will there is way call your local mortgage expert today!

 

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Just-In-Time Loans - Mortgage Needs and Advice on Time. (757) 490-9200

 

SALUTE to VETERANS in COLONIAL WILLIAMSBURG

SALUTE TO VETERANS

on

NOVEMBER 11, 2008

(My birthday, yes a shameless plug!)

at 4:30p.m. or 1630 hours (for the Military-minded folks)

Will be held in COLONIAL WILLIAMSBURG.  The parade is open to ALL VETERANS.  The admission is free November 7 - 11 to Active duty military, reservists, retirees, veterans and their families, including families of currently deployed troops with appropriate I.D.

Tickets available only at on-site ticket sales windows.  

For more info, visit www.history.org

Great Places to RETIRE in WILLIAMSBURG

COMMON MLS ABBREVIATIONS

IN

WILLIAMSBURG VIRGINIA