Recent Freddie Mac guidelines have changed regarding "flip transactions". A "flip transaction" is generally defined as a purchase transaction for property that has been recently acquired (in the last 12 months) by the seller and is being re-sold at a higher price. The transaction is not considered a flip if the seller is a financial institution or government entity who acquired the property through foreclosure.
Here are new guidelines for conventional financing:
1) Purchase of a primary or second home only
2) If seller has owned less than 90 days, minimum down payment is 20%
3) If owned between 90 days and 1 year standard down payments are acceptable
4) If the increase between seller's purchase price and new sales price is greater than 15%, 2 appraisals are required
5) If increase is less than 15% an appraisal must be ordered to validate the original appraised value
6) Property must be exposed to the open market through MLS, traditional auction, developer marketing (etc.)
7) Buyer and seller may not be represented by the same agent
8) No more than 1 title transfer in the last 12 months, other than financial institutions or government entities (a company hired to handle foreclosure and short sales by a lender would not count)
These guidelines apply to conventional financing. FHA guidelines are different.
Don't hesitate to ask if you have additional questions!
Friday, December 18, 2009
Wednesday, December 16, 2009
To Rent or not to Rent - That is the Question
Renting definitely has benefits that cannot be overlooked. You can usually walk away from a rental at little to no cost with a 30 days notice. Renting costs also appear to be less per month. And you may not have to deal with the cost of utilities breaking or mess with mowing the lawn and keeping up the flowerbeds.
However, renting has deficits. In the end, you will have nothing but receipts to show for the money you poured into renting. Rent payments also elevate with inflation, where mortgage payments are fixed. Your redecorating and renovating options are limited when you rent, and even if changes are made, the landlord is the one that benefits. Your fear of not being able to pay the mortgage bill equally applies to renting because a lack of money in either situation means no roof over your head. Either way you have to pay someone for a space to occupy. And even if you have the money to pay rent, your landlord may ask you to leave for any given reason; after all, he has the ability to kick you out.
Even the thought of purchasing your first home can be overwhelming for renters. But the old saying remains true, “When you’re renting, you’re just throwing your money away.” The largest part of your paycheck will either go toward your mortgage or to your landlord. Maybe the time has come for you to start investing your hard earned dollar into a home. Think about it this way, buying a home is like putting money into a savings account.
The three main factors that you need to take into consideration when deciding to buy or rent are monthly expenses, rate of the property’s appreciation, and length of term that you plan on staying in that home.
First, realistically choose an option that you could rent and an option that you could buy. Then, sit down and list the expenses you will have for renting. Do the same for buying so that you can compare them objectively.
Next, find the appreciation rate of your desired home to try and determine what the home’s value will be in the future. This will help you see how your money is truly being invested. Check Case Schiller for the tables that show changes of house prices in your region.
And the last major factor that only you can determine is how long you plan on staying in that residence. Six months? Six years? 40 years? The longer you desire to hold a home, the less appreciation you need in order to beat renting.
What are the Advantages of Buying a Home?
On average, home prices have gone up 7% over the last 30 years, making home buying a great investment.
Your mortgage interest and real estate taxes are tax-deductible. So before the government takes taxes out of your paycheck, your house payment is subtracted, allowing them to only tax what remains. This saves you a lot of money.
Your mortgage payment is fixed, rather than following inflation like renting.
Interest rates are the lowest they have been in thirty years, making now the ideal time to invest.
You will be able to enjoy the sense of ownership.
You have the freedom to renovate and decorate as you wish.
Over time your mortgage balance decreases and equity builds.
You have stronger property rights, which gives you more privacy and control over who enters your home.
Don’t Have Money for the Down Payment?
There are programs available for first-time homebuyers that meet all sorts of needs and offer incentives. Some programs offer down payment or closing cost grants. Others give discounts on monthly house payments, which can save you thousands of dollars. There are also programs that offer money for the down payment at zero interest, allowing the homeowner to pay off the owed balance when they sell the house.
However, renting has deficits. In the end, you will have nothing but receipts to show for the money you poured into renting. Rent payments also elevate with inflation, where mortgage payments are fixed. Your redecorating and renovating options are limited when you rent, and even if changes are made, the landlord is the one that benefits. Your fear of not being able to pay the mortgage bill equally applies to renting because a lack of money in either situation means no roof over your head. Either way you have to pay someone for a space to occupy. And even if you have the money to pay rent, your landlord may ask you to leave for any given reason; after all, he has the ability to kick you out.
Even the thought of purchasing your first home can be overwhelming for renters. But the old saying remains true, “When you’re renting, you’re just throwing your money away.” The largest part of your paycheck will either go toward your mortgage or to your landlord. Maybe the time has come for you to start investing your hard earned dollar into a home. Think about it this way, buying a home is like putting money into a savings account.
The three main factors that you need to take into consideration when deciding to buy or rent are monthly expenses, rate of the property’s appreciation, and length of term that you plan on staying in that home.
First, realistically choose an option that you could rent and an option that you could buy. Then, sit down and list the expenses you will have for renting. Do the same for buying so that you can compare them objectively.
Next, find the appreciation rate of your desired home to try and determine what the home’s value will be in the future. This will help you see how your money is truly being invested. Check Case Schiller for the tables that show changes of house prices in your region.
And the last major factor that only you can determine is how long you plan on staying in that residence. Six months? Six years? 40 years? The longer you desire to hold a home, the less appreciation you need in order to beat renting.
What are the Advantages of Buying a Home?
On average, home prices have gone up 7% over the last 30 years, making home buying a great investment.
Your mortgage interest and real estate taxes are tax-deductible. So before the government takes taxes out of your paycheck, your house payment is subtracted, allowing them to only tax what remains. This saves you a lot of money.
Your mortgage payment is fixed, rather than following inflation like renting.
Interest rates are the lowest they have been in thirty years, making now the ideal time to invest.
You will be able to enjoy the sense of ownership.
You have the freedom to renovate and decorate as you wish.
Over time your mortgage balance decreases and equity builds.
You have stronger property rights, which gives you more privacy and control over who enters your home.
Don’t Have Money for the Down Payment?
There are programs available for first-time homebuyers that meet all sorts of needs and offer incentives. Some programs offer down payment or closing cost grants. Others give discounts on monthly house payments, which can save you thousands of dollars. There are also programs that offer money for the down payment at zero interest, allowing the homeowner to pay off the owed balance when they sell the house.
Tuesday, December 15, 2009
Why Buy a Home When You can Rent?
Renting a home has its advantages: you can move without selling a home first; you don’t have to make the repairs, nor do you have to pay property taxes. But something is missing. You lack a sense of security and ownership, or maybe it’s just the simple fact that the money you work hard to make is thrown into the wind as rent payments each month.
Whatever the case, you’re now in a spot where you want to take a step away from renting. But, you also wonder if there really are advantages to owning a home. Let’s explore the advantages.
Home Ownership Has Tax Advantages
You may be able to exceed the standard yearly deduction, since the U.S. government permits tax incentives for homeowners. Check to see if your state offers that benefit.
You receive a tax deduction for the yearly interest on your primary and vacation home – equaling a large amount of your total payments for the first several years.
You can deduct the total amount of your yearly property tax bill.
If you choose to refinance in order to consolidate other debts, your home equity loan interest is tax deductible.
Homeowner’s Cost of Living Is More Stable
If property taxes and insurance go up, your monthly payments may as well, but the increases happen gradually.
Renting fees can often be more unpredictable.
Your Investment Appreciates
Most real estate increases value over time. If you carefully select your home and treat it well, your home will be worth considerably more in just five years.
Your first investment in the house may be small, even three percent or less, but as the home appreciates in value, you are the one who benefits – not the bank, nor your landlord.
Each Month Your Equity Grows
Even if the first few years of monthly house payments primarily cover interest, you are also paying more towards the principal amount each month.
You Have Control
The house is yours.
You can paint and decorate it as you wish.
You can put nails in the walls and hang pictures and artwork wherever you desire.
You can have a pet without consulting anyone else.
Stay tuned for our blog post tomorrow... To Rent or not to Rent?
Whatever the case, you’re now in a spot where you want to take a step away from renting. But, you also wonder if there really are advantages to owning a home. Let’s explore the advantages.
Home Ownership Has Tax Advantages
You may be able to exceed the standard yearly deduction, since the U.S. government permits tax incentives for homeowners. Check to see if your state offers that benefit.
You receive a tax deduction for the yearly interest on your primary and vacation home – equaling a large amount of your total payments for the first several years.
You can deduct the total amount of your yearly property tax bill.
If you choose to refinance in order to consolidate other debts, your home equity loan interest is tax deductible.
Homeowner’s Cost of Living Is More Stable
If property taxes and insurance go up, your monthly payments may as well, but the increases happen gradually.
Renting fees can often be more unpredictable.
Your Investment Appreciates
Most real estate increases value over time. If you carefully select your home and treat it well, your home will be worth considerably more in just five years.
Your first investment in the house may be small, even three percent or less, but as the home appreciates in value, you are the one who benefits – not the bank, nor your landlord.
Each Month Your Equity Grows
Even if the first few years of monthly house payments primarily cover interest, you are also paying more towards the principal amount each month.
You Have Control
The house is yours.
You can paint and decorate it as you wish.
You can put nails in the walls and hang pictures and artwork wherever you desire.
You can have a pet without consulting anyone else.
Stay tuned for our blog post tomorrow... To Rent or not to Rent?
Sunday, December 13, 2009
Should I put my home on the Market during the Holidays?
Recently, several folks have asked me if they should consider putting their home on the market during the Holidays. And my answer...
YES!!! Let's look at the reasons why:
1. Your home looks the most beautiful decorated for the holidays. The lights, smells, and cheer throughout the home are very welcoming.
2. If you have a buyer looking at your home during this time of year, most likely they are not a "lookie-lou". They are a serious buyer.
3. Supply and demand. When there is less inventory to compete with, you can tend to ask a higher price than when there is a lot of competition.
4. When the beginning of January rolls around, many homes get a flurry of showings. Buyers are done with the Holidays and ready to move on to their next item on their to-do list - buy a home!
YES!!! Let's look at the reasons why:
1. Your home looks the most beautiful decorated for the holidays. The lights, smells, and cheer throughout the home are very welcoming.
2. If you have a buyer looking at your home during this time of year, most likely they are not a "lookie-lou". They are a serious buyer.
3. Supply and demand. When there is less inventory to compete with, you can tend to ask a higher price than when there is a lot of competition.
4. When the beginning of January rolls around, many homes get a flurry of showings. Buyers are done with the Holidays and ready to move on to their next item on their to-do list - buy a home!
Showings can be worked around parties, families, etc. We have many tips for our Sellers who are on the market during this time of year.
Cheers!
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