Not this year! The Senate Banking Committee, in an effort to wind down FNMA (Federal National Mortgage Association), does not have enough votes. What does this mean? More debate and conversation with the politicians in Washington. FNMA & FRED Mac now buy 80% of all new mortgages. This is up from 40% back in 2008 when the financial crisis hit. FNMA was blamed for much of it with their loose lending practices. Funny how that year the major banks received bailout money, now six years later, one by one the major banks are paying huge fines for selling fraudulent mortgages to FNMA. Since 2008, JPMorgan, BofA, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley have agreed to pay $67 billion in settlements and penalties. In addition, the National Association of Realtors have made ’saving FNMA’ their major issue. With PAC money in the millions, see Super Pacs, the Realtors use this money to support candidates that support their issues. The story of FNMA will continue and it’s hard to say what will happen next. Has anybody had good or bad luck once your mortgage was sold to FNMA or Freddie Mac?
Archive for April, 2014
From the book “How To Pre-Qualify Yourself For A Mortgage in 5 Easy Steps” by S.L. Kincaid. This book will show you the basic information that will be required from you and more importantly, how to do a preliminary analysis on your data to get an overview of where you stand. The goal is to de-mystify the process and put you in control. This new ebook is promo priced for a limited time at 99 cents (regular price will be $3.99) - www.amazon.com/dp/B00JCIOYVC .
The Five Action Steps:
# 1: Prove Who You Are
# 2: Prove You Have Decent Credit
# 3: Prove You Sufficient Income
#4: Prove You Have Assets
#5: Prove The Property’s Worth
Most serious buyers looking at several Open Houses in one day need move in condition and value. Your house needs to be de-cluttered, depersonalized and neutral decor. The buyer gets their first impression when they get out of the car. How does your lawn/landscape and exterior look. They get their second impression once the front door opens. If not impressed, they may walk right back out as they have other properties to look at. Remember, the buyer has a short period of time to drive around to look at several properties and they are trying to eliminate those that do not fit their needs. Avoid distractions during the Open House, such as; children, pets, TV’s, etc. Once in your house you need a sign in sheet. You have the right to know exactly who is coming through your property. Get name, telephone number and city they live in. Keep the same list as you do several Open Houses, this gives the buyer the idea that many people are looking at your property. To attract buyers to your Open House, make sure to note the Open House on websites, such as; Zillow.com, FSBO.com, etc. Have plenty of Open House directional arrows to lead the buyers to your property starting at the main entrance. You’ll notice each Saturday and Sundy this spring how many Open House signs you see as you are driving around. This is the main way to draw people to your property. Once in your house, make sure to have a brochure of your property with price and a price evaluation/appraisal to prove your asking price is fair. Next, let them know you are all set up with contracts, title company and closing agent. Have a casual conversation with them as they look at your property. Find out if they have a house to sell before buying and how soon do they need to move. Also, find out what other properties they plan to visit and the price range. Finally, on Monday evening call them and find out if they are interested plus what they liked and didn’t like.
Most real estate professionals have their opinion about having an Open House. Some say it is a waste of time and that serious buyers do not show up. Others say that it is how they sold their last house and that it works. I say, “if there was one best way to find a buyer, everyone would do it that one thing”. Sometimes buyers come to you from your yard sign, the Internet, a recommendation from a friend or neighbor, flyer’s, and sometimes from an Open House. Sellers need to do everything, not just one thing to find the buyer. Right now is the best time to hold an Open House. The buyers looking at areas spend most of the day driving around. Give them ample time to look at your property. I like doing them from noon - 5pm on Saturday and Sunday. Anyone calling you during the week, let them know that is when they can see your property. Some advantages are: 1.you only have to clean your house for the weekend 2.buyers get a sense there is competition and they should act quickly 3.you can gauge the market (are there buyers out there) 4.non serious lookers may actually know someone else that would be interested. 5.possibly an agent shows up with a buyer and you can negotiate a lower commission. Tomorrow I’ll talk about preparation for the Open House!
before the Internet and computers, there were contracts for real estate. Before typewriters and paper & pencils, there were contracts for real estate. A contract for real estate is a binding agreement between two parties and must be in writing. There is no law that stipulates the exact words or paragraphs needed, nor that a special form must be used. To simplify the process, there are blank contracts available, in which the parties fill in the blanks. In each state, real estate agents use a form provided to them. In each state, that form is different. For FSBO contracts you can obtain these at any office supply store, the Internet, your local title insurance company or attorney. We encourage the sellers to have these forms ready for the buyer to sign.
If you receive a written offer from the buyer, what next? You have three choices: Accept, Reject, or Counter Offer. To Accept, just sign your name on the signature page and both parties keep a copy. To Reject, write Rejected on the first page and initial. To Counter Offer (this is the most common next step after receiving a written offer), you cross out the words or numbers you do not agree to and write in what you want. Initial the changes, but do not sign the signature page until all parties agree. In some cases, you can use a Counter Offer form, basically an addendum with your counter offer. Once you counter offer, the buyer can either Accept, Reject or come back to you with a new offer. This is called negotiating and is very common. Be ready for this.
Some things to keep in mind. First, once you make any change to the original offer, this basically Rejects the original offer and the buyer can walk away at any time. Secondly, always put a time/deadline for the buyer to accept or reject your counter offer. Thirdly, never ever, try to counter offer in writing with more then one buyer at a time. If you receive two or more offers in a short period of time, pick one to negotiate with. In Real Estate, one of the worst things that can happen is that you end up Accepting an offer from two buyers.
Location, Location, Location! is the catch phrase in many real estate discussions. It is repeated three times to emphasize the importance of location when buying a home. It means identical homes can be worth more or less depending on the location. Do you have a scenic view from your deck or is there an industrial/commercial property right behind you? Are you the first home off the main road or you in the rear of the subdivision? Are you close to schools & shopping or is there an airport/nuclear plant near by? Can you bicycle to oceans/lakes/parks or are you many miles from everything? Distance to city centers are important. Recent surveys show that for every mile you are away from the city the property is worth $1000 - $2000 less. Taking advantage of the lower priced suburban homes has lead many workers to commute farther to work. The decision to buy a home is a big one, keep in mind the location because at some point you will probably be selling it and you want the location to be intriguing to buyers.
Banks have loosened their credit requirements this year. Whether you are refinancing or buying a new home, bank mortgage departments live for the points they receive at closing. As mortgage rates have moved up 1% in the past year, refinancing has dried up. To keep the money turning over, banks have lowered their requirements. For the past few years, buying a house required a credit score of 640 or higher. This limited the potential buyers in the market place and eliminated subprime borrowers (credit score below 600) completely. Now, Wells Fargo has dropped their minimum from 640 to 600. Carrington Mortgage Services has dropped their subprime from 600 to 550. As an example, current rates for credit score of 640 is 4.4%. Current rate for credit score of 550 is 7.5%. Make sure to interview at least three mortgage companies to get the best rate. Competition is increasing. Here is an easy place to search: current mortgage rates.