Archive for March, 2014

Spring cleaning / get ready to sell

Monday, March 24th, 2014

Whether you will be selling this spring or simply own your own home, spring is the time to do some cleaning. Open those windows for some fresh air. Dust, clean and wash the windows, doors, walls and floors. Make a list of repairs needed. Do the ones you can handle and locate reputable contractors to do the other projects. In many cases, a few dollars spent today could save thousands of dollars later. Do you have rotted wood near windows and doors? Gutters that are coming loose? Small cracks in concrete floors or walkways? If you are not sure where to start, here is a nice website with an organized list: Spring Cleaning Checklist. Countless times I have heard from home owners telling me they plan to sell. Then after doing their spring cleaning and repairs, their home looks so good they decided to stay. Either way, selling or staying, you need to keep up with the maintenance of your property.

Say good-bye to the 4% mortgage rate

Friday, March 21st, 2014

Get ready to hear a lot about Janet Yellen, new chair of the Federal Reserve. After five years of pushing interest rates lower by purchasing fixed income instruments, like mortgages. The Federal Reserve announced early this year they would start to reduce the amount purchased each month. This week, Janet Yellen, spoke and said that rates would start to increase sooner then expected. By the end of 2014 the Federal Reserve will need to make a new decision. Do they start selling the security instruments they own or hold them until they mature. Either way, rates are going higher. It will depend on the inflation outlook. If inflation stays low, they will simply hold. If inflation increases, they will sell, sell, sell. That selling would drive interest rates up very quickly. How quickly? Just look at history, the period between 1975 to 1981, see below. As a suggestion, go to any mortgage calculator to see what your monthly payment is at 4%, 5% and 6%. Then multiply by the 360 payments you would be making over the next 30 years. The difference between 4% and 6% on a mortgage of $200,000 for 30 years is over $87,000. Monthly inflation data:

JAN FEB MAR APR MAY JUN JULY AUG SEPT OCT NOV DEC AVE.
1975 11.8 11.2 10.3 10.2 9.5 9.4 9.7 8.6 7.9 7.4 7.4 6.9 9.1
1976 6.7 6.3 6.1 6.0 6.2 6.0 5.4 5.7 5.5 5.5 4.9 4.9 5.8
1977 5.2 5.9 6.4 7.0 6.7 6.9 6.8 6.6 6.6 6.4 6.7 6.7 6.5
1978 6.8 6.4 6.6 6.5 7.0 7.4 7.7 7.8 8.3 8.9 8.9 9.0 7.6
1979 9.3 9.9 10.1 10.5 10.9 10.9 11.3 11.8 12.2 12.1 12.6 13.3 11.3
1980 13.9 14.2 14.8 14.7 14.4 14.4 13.1 12.9 12.6 12.8 12.6 12.5 13.5
1981 11.8 11.4 10.5 10.0 9.8 9.6 10.8 10.8 11.0 10.1 9.6 8.9 10.3

President Obama to sign new Flood Insurance bill

Monday, March 17th, 2014

The Homeowner Flood Insurance Affordability Act of 2014 has passed the Senate and President Obama is expected to sign it into law very soon. There are 5.6 million households in a flood plain as mapped out by FEMA, mostly in Texas and Florida. These property owners have been able to purchase insurance direct from the Federal Government since 1968 through the National Flood Insurance Program.  In 2012 a new act, the Biggert-Waters Flood Insurance Reform Act, became law. It was designed to allow premiums to rise to reflect the true risk of living in high-flood areas. This new law ordered FEMA to stop subsidizing flood insurance for second homes and businesses. The consequences of this act in 2012 was primary residence flood insurance began to jump. Plus FEMA re-mapped many areas and these properties in the new flood zones saw their insurance dramatically increase. Stories of insurance premiums going from $500 to $4,000 and other stories of premiums as high as $20,000. For many reasons, one being that homes purchased with a FHA mortgage (80% of all sales the past few years) in a flood zone are required to have flood insurance. So now, the Federal government runs the risk of people walking away from their homes because they can not afford the insurance and the Federal  Government would be back in the property ownership business. They really do not want this to happen. So, after realizing the situation, the bill quickly passed both house and Senate to rein in the Biggert-Waters bill. This new legislation 1. delayed most flood insurance increases for four years 2.sets limits of 15 percent per year for each of the nine property categories listed by FEMA. 3. provides refunds of premiums for people who purchased homes 4. requires the Federal Emergency Management Agency (FEMA) to obtain input from local communities prior to changing their maps.

Flood

The buyer is your customer, so treat them nice

Friday, March 14th, 2014

Some old business sayings to be successful: “the customer is always right”, “give them want they want and they will buy”, “facts do not cease to exist because they are ignored”, “there is a brick wall between the seller and buyer that needs to be removed”, etc. To successfully sell your property you need to think of all buyers as customers. What do you they want? When do they want it? Is the price justified? Are their needs satisfied? Some of the first things the buyers want is: 1. the address 2. asking price 3. photos 4. showing instructions 5. any negative facts. If you are advertising FSBO, this information needs to be readily available for the buyers. If you are not getting very many calls, maybe the buyers don’t have enough information to move forward and call you. With FSBO.com, you have the ability to put all of this information in front of the buyer.  Here is what the buyers do with this information: 1.map it, to see location compared to where they work, go to school and shop. 2.check the Internet for tax and price information 3.look at photos to cross your property off their list if they see something they don’t like 4.schedule their time to see the property 5.investigate all facts on their own. Remember, there is a ‘wall’ between you and the buyer to get to closing. You need to take down this ‘wall’ brick by brick. The sooner to take down the bricks, the sooner you will sell.

Northern thaw means larger inventory of homes

Thursday, March 13th, 2014

It is obvious to those that live in the north. It has been a long cold winter. How cold? Here is some evidence. First, 88% of the Great Lakes—Superior, Michigan, Huron, Ontario and Erie—are now frozen over. The largest freeze since 1994. Chicago and Detroit have had the highest snow fall in over 125 years. In New York and the northeast, it’s been the 5th snowiest winter ever. And Atlanta, well, don’t drive there if it snows over 2 inches in one day. Couple this with the fact Americans on average have lived in the same house for over 12 years. That average is double the historic average of the past 50 years. With the price of homes higher then in the past five years, it’s time to move. As soon as the weather warms up you can expect a large number of properties going on the market. Keep in touch with this blog for spring tips to sell your property fast.

Great Lakes

What is Federal Mortgage Insurance Corp?

Wednesday, March 12th, 2014

After costing taxpayers hundreds of billions of dollars, Fannie Mae and Freddie Mac will be rolled into a new government agency called the Federal Mortgage Insurance Corp. according to the plan established by the U.S. Senate Banking Committee. This bipartisan measure bill to replace current US backed mortgages with government bond insurance that would kick in after private capital losses of 10% plus would require minimum 5% down payment from the borrowers. Housing finance reform has been discussed for the past five years.

Secondary mortgage market allows local mortgage brokers & banks to lend money to home buyers, they package the loans, then sell them on the secondary market. They take the money they receive and make more loans. Prior to 2008, 40% of all mortgage loans were sold to FNMA & Freddie Mac. Today, and for the past few years, over 75% of all loans were sold the FNMA & Freddie Mac. Obviously, they play a very important roll in having a smooth real estate transaction. How will this change effect the real estate market in the future? Time will tell.