Real Estate Blog
Thursday, August 04 2011
When you sign papers to buy a new home, your thoughts might immediately drift to what you’d like to buy to turn it into your perfect place. New appliances, new furniture, it all adds up. Before you pull out the credit cards you may want to consider the advice of Tuval Mor, a broker with Keller Williams in New York City, New York who cautions new home buyers about spending during the ‘quiet period:’
Ah, the thrill of purchasing your dream home can inspire you to go out shopping for the perfect living room set with matching drapes, before the closing. If you planned on doing that with credit, best to wait till after the closing. Due to high foreclosure rates throughout the nation, Fannie Mae has instituted a new Loan Quality Initiative which requires that any lender determine that “borrower liabilities incurred up to, and concurrent with, closing are disclosed and evaluated in qualifying the borrower for the loan.”
This period between the approval and the closing is usually called “the quiet period.” Lenders can vary in how they enforce this new initiative that just came into effect, but in many cases what this means is a second credit report pull right before closing. Did you buy a new professional cookware set for your new kitchen on a new Sears’s card that the cashier talked you into for the 10% discount? Well if you use the entire $1000 limit on your purchase, this seemingly innocuous purchase could throw your debt-to-income ratio off.
Fannie Mae and others have done studies and found consumer behavior patterns correlating with mortgage losses and as a result have incorporated sophisticated new credit surveillance systems into the mortgage industry. It is important for home buyers, and also those looking to refinance their mortgage, to be aware that unlike the boom years, today every action that pertains to their credit will be considered until the closing, and that credit splurges during the quiet period are a clear no-no in today’s mortgage environment.
The good news is that if you put those credit cards on ice until your new home is really yours, you should have a smooth closing. And with all the thousands of dollars you’ll be saving with these historically low interest rates (around 4%), you can afford to splurge on the perfect furnishings and accessories… just wait a little bit, until after the mortgage is closed!
Read more: Hold Off On Big Purchases For Your New Home During The 'Quiet Period' | REALTOR.com® Blogs
Tuesday, March 29 2011
Home buyers and -sellers alike often bristle with anticipatory irritation at the mere thought of all the paperwork they expect they’ll have to come up with to do their transaction, above and beyond the basic loan application, contract, disclosures and closing docs. And these worries start way in advance; it’s as though, before they even start visiting open houses, buyers begin to visualize - and dread - spending hours upon hours in the dank catacombs of the Vatican (à la Da Vinci Code) combing through ancient files, seeking some rare and precious artifact documenting their childhood dental history or genealogy.
In some respects, this vision of the experience of obtaining a home loan might not be far off - there are oodles of hoops through which to jump and, occasionally, the loan underwriter requests something sort of bizarre. But more commonly, there’s a pretty finite universe of documents you’ll really need to scrounge up to get your home bought - or sold. Here they are:
- ID (e.g., driver’s license, state-issued ID, passport). Who must produce it? Buyers and sellers. Why? Uh, hello!?! Lender wants to know that you are who you say you are, buyers, and the title insurance company wants to make sure, sellers, that you actually have the right to sell the home. Funny enough, this commonly goes unrequested until you get to the closing table, when the notary requests to see it before signing, but some mortgage brokers and even some real estate brokers and agents may ask to see it earlier on.
- Paycheck Stubs. Who must produce it? Any buyer financing their purchase with a mortgage. Sellers, usually only in the case of a short sale. Why? Buyers’ purchase price ranges are determined, in part, by their income. And short sellers have to prove an economic hardship.
- Two months’ bank account statements. Who must produce it? Buyers getting financing; sellers selling short. Why? Buyers’ lenders now require proof of regular income and proof that the down payment money is your own. Short sellers? It’s all about the hardship.
- Two years’ W-2 forms or tax returns. Who must produce it? Mortgage-seeking buyers and short selling sellers. Why? Banks want to see a stable, long-term income. They also limit you to claiming as income the amount on which you pay taxes (attn: all business owners!). And in short sales, again, they want documentation of every single facet of your finances.
- Updated everything. Who must produce it? Buyer/mortgage applicants. Why? Because things change, and because the time period between the first loan application and closing can be many months - even years! - on today’s market. During the time between contract and closing it’s not at all unusual for underwriters to demand buyers produce updated mortgage statements, checks stubs, and such - and its quite common for them to call your office the day before closing to request a last minute verification of employment!
- Quitclaim deed. Who must produce it? Married buyers purchasing homes they plan to own as separate property. Married sellers selling homes that they own separately, or joint owners selling their interests separately. Why? With the Quitclaim Deed, the other spouse or owner signs any and all interests they even might have had in the property over the the selling owner, making it possible for the title insurer to guarantee clear, undisputed title is being transferred in the sale.
- Divorce decree. Who must produce it? Buyers and sellers who need to document their solo status or the property-splitting terms of their divorce. Why? Again, to ensure that the seller has the right to sell. Recently single buyers might need to prove that they shouldn’t be held to account for their ex’s separate debts or credit report dings.
- Gift letters. Who must produce it? Buyers using gift money toward their down payment. Why? The bank wants to be sure the gift came from a relative, and is their own money to give. They also want the relative to confirm in writing that it’s a gift, not a loan - a loan would need to be factored into your debt load.
- Compliance certificates. Who must produce it? Usually sellers, but sometimes buyers, by contract. Why? Some local governments require various condition requirements be met before the property is transferred, like some cities which require a sewer line be video scoped and repaired, cities which require a checklist of items be met before a certificate of occupancy be issued (usually relevant to brand new and really old homes, the latter of which are often subject to lead paint concerns) and energy conservation ordinances which require low-flow toilets and shower heads to be installed. Ask your real estate pro for advice about which, if any, such ordinances apply in your area.
- Mortgage statements. Who must produce it? Any seller with a mortgage. Why? the escrow holder or title company will need to use them to order payoff demands from any mortgage holder who has to get paid before the property’s title can be transferred.
Wednesday, February 23 2011
Home warranties can be attractive to home owners or buyers who are looking at purchasing a property. These service contracts can cover all of a home’s major systems, such as the furnace or air conditioner, and will cover needed repairs if the appliance breaks or damaged.
Some sellers are offering a home warranty to try to lure buyers.
But not all home warranties are the same. Experts say you should carefully weigh costs, policy allowances, and customer feedback before making a decision so that you ensure you’re getting the best deal. Home warranties cost about $250 to $500 a year.
Here are some more tips from experts in shopping for a home warranty:
▪ Find customer reviews. Web sites, such as homewarrantyreviews.com, provide reviews of home warranty companies. You also might check how each company is rated with your local Better Business Bureau.
▪ Check for extra fees. Will you have to pay a fee for service calls?
▪ Check the coverage allowance. Are there any exclusions to coverage? Will the allowance cover the entire cost of a broken appliance or just some of it? For example, if you have older appliances and mechanicals, will the policy cover the full cost of replacing it or just the depreciated value? If the policy only covers the depreciated value when a 20-year-old furnace dies, for example, the reimbursement may not be enough to buy a new one. Also, verify what appliances are all included in the coverage. Some companies will allow you to add coverage for swimming pools, while others won’t.
"The biggest thing is awareness of what the exclusions are," Greg McBride, a senior financial analyst at Bankrate.com, told the Chicago Tribune. "The mere presence of a warranty, by nature, tends to have exclusions. Being aware of that can aid in the decision-making process."
Source: “When Home Warranties Are Worth It,” Chicago Tribune (Feb. 8, 2011)
Friday, October 15 2010
Nearly eight out of 10 respondents believe buying a home is a good financial decision, despite ongoing challenges with the economy and housing market. That’s according to the 2010 National Housing Pulse Survey, an annual report released today by the NATIONAL ASSOCIATION OF REALTORS.®
The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in eight years of sampling, with 70 percent of Americans saying that job layoffs and unemployment are a big problem in their area; eight in 10 cite these issues as a barrier to homeownership.
“The real issue facing the nation’s economy right now is that many Americans can’t find meaningful work to support their families,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.
“While a job recovery is what’s needed right now to get the economy and housing market back on the right track, owning a home continues to be part of the American Dream and one of the best long-term investments in your future.”
Despite economic uncertainty, 68 percent of those surveyed still believe now is a good time to buy a home; while that number is down from last year (75 percent), it’s up from 2008 (66 percent) and 2007 (59 percent). Lower home prices and record-low mortgage interest rates may be attracting buyers to the housing market – more than one-fourth of renters said they are thinking more about buying a home than they were a year ago. Sixty-three percent of renter respondents said that owning a home is a priority in their future, and nearly 40 percent said it was one of their highest priorities.
Lower home prices have improved affordability. In fact, the percentage of renters who are worried that the cost of housing is getting so unaffordable that they will never be able to buy a home has decreased steadily since 2007, from 63 to 57 percent.
Despite improved affordability, 79 percent of respondents still consider having enough money for down payment and closing costs to be among of the biggest obstacles to buying a home. Another obstacle is a lack of confidence in their ability to be approved for a loan, reported by 73 percent of respondents.
The good news is that Americans are seeing more stability in the real estate market. Nearly seven out of 10 believe that home values have stabilized in their area; the same number expects home sales to remain about the same through the end of the year.
While more than half (51 percent) say foreclosures are a problem in their area, the rate of foreclosures is also seen as stabilizing; 51 percent say the rate is about the same as last year. Thirty-six percent of respondents cite the recession, loss of jobs and the poor economy as the main reason for the ongoing foreclosure problem. This has also led to a slight increase in the number of people who believe the federal government should take a more active role overseeing loans and mortgages (44 percent, up from 43 percent last year).
While nearly seven out of 10 say it’s harder to sell a home in their area today than it was a year ago, it’s less of a concern from last year when the number was 10 percentage points higher. This is most likely the result of lower home inventories.
The 2010 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey was among 1,209 adults living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points.
NAR’s Housing Opportunity Program, www.realtor.org/housingopportunity, was created in 2002 to encourage local Realtor® associations to create initiatives that help increase housing opportunities available to consumers and make affordable housing more readily available in their communities.
Tuesday, August 10 2010
If you're planning to buy a house, rent a different apartment or relocate your family anytime soon, chances are you didn't think that moving could make you the victim of identity theft.
But during a move, homeowners and renters
alike are particularly susceptible to identity theft -- a crime which is especially prevalent during the summer, since half of all moves in the United States take place between Memorial Day and Labor Day.
So in addition to packing
and coordinating with the moving trucks
, you also need to safeguard yourself from fraudsters.
"Regardless of what people say, you can't prevent ID theft. But you can be a lot more aware and take some strong precautions," says Steve Schwartz, executive vice president of consumer services for Intersections Inc.
, an identity protection company.
Schwartz provided a rundown of simple steps that you can take to minimize your risk of identity theft and maximize your safety and security before, during and after a move:
Top 10 Safety Steps for Homeowners and Renters on the Move
1. Write everything down
Before you move, make a list of all the personal mail you routinely receive. Tell your banks, financial institutions, creditors and others of the move and redirect all correspondence, statements and sensitive mailings to your new address.
Be sure to notify:
a. Retirement accounts/banking institutions/credit card companies
b. Utility companies (electric, gas, water, cable, etc.)
c. Insurance companies (medical, property, renters, fire and auto)
d. Local government agencies, federal agencies & the IRS
e. Healthcare providers
g. Publications to which you subscribe (magazines, newspapers, etc.)
h. Clubs you have memberships in
Alternatively, consider switching to online statements. According to the 2010 Identity Fraud Survey Report
from Javelin Strategy & Research
, consumers with electronic statements needed less time to detect fraud and paid lower consumer costs ($116 vs. $274) than those monitoring paper statements.
2. Submit a change of address form to the U.S. Post Office
Once your form has been filed, double-check the confirmation from the Postal Service to make sure that they list your new address correctly. Your mail should start being delivered to your new residence within seven to 10 business days after you submit a change-of-address filing.
3. Shred all sensitive documents that you won't take with you
Don't leave behind any paperwork, including credit card offers, that con artists can use if they go through your trash. Instead shred them yourself. A good shredder will cost just $50 or so.
4. Thoroughly research your moving company
Mover fraud is on the rise nationwide. To thwart this crime, properly investigate local moving companies
by getting recommendations from trustworthy friends, family members, and real estate
agents. Also, check a mover's rating with the Better Business Bureau. Finally, only pick a mover that is registered with the Federal Motor Carrier Safety Administration (FMCSA) and that has a U.S. Department of Transportation (USDDOT) number. The most reputable ones will supply you this information on request.
5. Remain present during the entire move
This may not always be possible, but just being there with the movers
could help deter potential identity theft. Plus, you'll get to oversee any remaining packing or moving activities to make sure things are being handled properly.
6. Transport important physical documents properly
Transfer all sensitive documents – like wills, insurance policies, stock certificates or bonds – to a safe and secure place, such as a locked box, and keep these items with you personally during the move; don't hand them off to your moving company. You can also transfer sensitive documents to an online secure vault
7. Lock down your computer
Don't make the mistake of leaving your computers (desktops and laptops included) readily accessible to your movers. Instead, secure those items before the movers even arrive. Take all computers, hard drives and other external storage devices with you during the move.
During his last move, "I packed my computers myself and they went in my car," says Schwartz, adding, "That's not a box you want to go with the mover."
8. Monitor bank and credit card statements
After your move, watch for unexplained charges or suspicious activity on your debit and credit cards. But also be aware that credit-related fraud "accounts for only about one-third of identity theft," Schwartz says. Non-credit related problems actually make up the bulk of problems, with thieves stealing your personal information in order to open new cell phones or bank accounts, establish utility services, or even get payday loans and fake driver's licenses in your name.
9. Verify all mail, post-move
Use your previously-created checklist to make sure that everyone you notified about your move has, in fact, started sending your mail to your new address. If something is missing, follow up immediately to make sure mail isn't still being routed to your old address.
10. Create a secure zone
After your move, even though there may be loads of boxes and furniture everywhere, carve out a secure zone – preferably one that's off-limits to movers and others. This is where you'll store computer items, check your data files or do personal financial record-keeping, like balancing your checkbook or reviewing credit card statements.
Regardless of whether you're relocating across town or clear across the country, a move can be hectic and stressful. But by taking some or all of the steps above, you'll help ensure that one important thing – your identity – doesn't get overlooked during your busy transition.