FSBO « Creative Mortgage Solutions

Archive for the ‘FSBO’ Category

Everett Mortgage: FSBO – the Good, the Bad and the Ugly

Monday, December 7th, 2009

Yes you can sell your home yourself but do you really save money?

Yes you can sell your home yourself. And yes you can save money doing it that way, sometimes.

There are many services available to help you sell your home yourself. Sites such as ForSaleByOwner.com, Owners.com and Fizber.com offer good exposure for reasonable prices. This exposure doesn’t come free but you can save money this way.

The typical real estate commission is made up of 2 parts. One is the listing commission. This part is for the agent who lists your home and does the marketing for you. Marketing a home can be expensive in a down market. Most experts recommend using online marketing as opposed to newsprint advertising. Newsprint is very expensive and no longer as effective as it once was. Online marketing is much more effective these days as almost everyone starts home shopping there.

The second part of a real estate commission is the selling commission. This is paid to the agent who brings a buyer to the transaction. Offering a good selling commission is essential to a quick sale. Buyers’ agents are “force multipliers” in that each one brings, usually, several buyers with him. By offering a good commission you enhance your chances of a sale. Here’s a note to remember: Almost all buyers hire a buyers’ agent to represent them in a purchase. If the commission on one home is higher than another’s which do you think the agent will show?

Typically both commissions are 3% for a total of 6% of the selling price. REMEMBER commissions are negotiable.

In the past For Sale By Owners’ (FSBO) homes have averaged about 15% of the market. That figure goes up and down during different markets. In a good market where it’s easy to sell FSBO’s go up to about 20% of closed sales. When the market is bad, like right now, the FSBO share can go as low as 5%.

Now lets cover some of the online FSBO sites available. ForSaleByOwner.com offers several plans starting for $81 per month to a full blown plan for $809. Owners.com offers a simple plan for free and then better plans up an agent assisted plan for $695. Fizber.com offers the same very basic plan for free and then better plans up to $495.

Last year was a very tough year to sell any home. Last year the median sale price for a for-sale-by-owner property was $153,000, while it was $211,000 for sellers who used an agent, according to the National Association of Realtors.

So maybe you can save a buck or maybe you might be better off negotiating with a good real estate agent. Remember you have to do all the work. You will also have the expenses and hassles of making flyers, installing yard signs, installing ground signs and open houses. Everything depends on how much time and experience you have. Good luck.

All comments are welcome.

Jim Johnson

Posted in FSBO, Homes for Sale Everett, Mortgage Everett | No Comments »

Everett Homes for Sale: HVCC Finally Under Review

Saturday, November 7th, 2009

HVCC is under attack and it deserves it. Does the HVCC affect FHA mortgages? What exactly is the HVCC and how does it affect homes for sale in Everett. HVCC means Home Valuation Code of Conduct and applies to how appraisals of real estate are done. This really has crippled the real estate business. It has consistently brought in low ball values on homes. Finally a few in congress realize what damage it is doing our economy. These few congressmen are trying to force a review and postponement of enforcement of the HVCC. HVCC was created to cut down fraud.

This has crippled the refinance business, just when we need the ability to refinance adjustable rate mortgages whose rates are going thru the roof. Because of the low ball appraisal a home will have no equity for the closing costs associated with a refinance. Most home owners don’t have $6000 to $8000 to pay out of pocket. With an interest rate hike this forces home owners into foreclosure when they didn’t have to go.

In the case of a sale when a willing buyer and a willing seller make a deal a low ball appraisal screws it all up. An appraiser doesn’t make a market. Assuming a knowledgeable buyer and a knowledgeable seller make a deal, that is the market.

And no HVCC doesn’t affect FHA mortgages or VA mortgages at this time. Although it is being considered for future usage in FHA mortgages. There are many complaints about HVCC. HVCC appraisals are being done in some cases by non professionals. Also many times an appraiser from outside the area is called in to value a home. For refinancing and purchases this can be a disaster. Without proper knowledge of the local area many valuations come in so low as to make transactions impossible. Many believe that HVCC is holding the real estate market down and slowing the over all recovery of the economy of the entire US.

HVCC was designed to stop fraud but it hasn’t. Fraud for October 2009 is up almost 50% over the month of October 2008 just one year ago.

Currently HVCC is used only for conventional mortgages. But HVCC has killed the conventional mortgage business. Almost all loans are now FHA mortgages or VA mortgages. This is because they don’t have to use the HVCC guidelines. Another problem for the future becomes the huge liabilities HUD takes on because they are the only agency making loans. It is far better to spread the risk around. Spreading the risk is a lesson we should have learned from the mortgage bubble.

Anyone who thinks the government can help is blind to these facts. Barney Frank, Chris Dodd and Andrew Cuomo are responsible for this fiasco. So far almost everything the government has done has hurt the consumer. Why doesn’t that surprise me?

Have you ever heard of the Law of Unintended Consequences? Remember this the next time some government hack wants you to support another big government takeover. It never works as planned. In fact it never works at all.

The fools running our government have made our country a huge debtor nation and screwed up our economy so badly that it may take generations to work off the debt.

In business if you fail you go bankrupt. In government if you fail you get reelected. The foxes are in charge of the hen house.

So anyone, FSBO or professional real estate agent with a home for sale in Everett should consider the HVCC and it’s impact on your transaction.

Posted in FHA Mortgage, FSBO, Homes for Sale Everett, Mortgage Everett, Real Estate Agents | No Comments »

Homes for Sale Everett Mortgage

Saturday, November 7th, 2009

New First Time Home Buyer Credit signed into Law Today

The President has signed this bill today November 7, 2009. This is now law. This bill will impact how homes for sale in Everett are marketed. Because prices are so low I think some sellers will increase their prices by the amount of the credit, maybe even more. If I had a home for sale in Everett I would probably up the price by $10,000 just because. Because the credit is refundable and will almost cover the entire down payment for a home priced up to $250,000. If you go with an FHA mortgage you only need 3.5% down. Working backwards you find that if the home costs less than $228,571.43 I actually get in for ZERO down. Smart sellers will see that and up their prices. To smart buyers this also means I can cover most or at least ½ of the down payment up to about $450,000. Whether this promotes sales for just hurries a sale that would have taken place remains to be seen. What our economy really needs are jobs.

Here is how the new bill will work and effect homes for sale Everett. The new rules will take effect today November 7, 2009.

1) The first time buyer’s credit will stay at 10% of purchase price with a max of $8000. This is a refundable credit which means you get if even if you paid no taxes. By the way 41% of all workers don’t pay federal income taxes.

2) The definition of a first time buyer is no principle home ownership in last 3 years.

3) If you are a current home owner and are buying another principle residence you can qualify for up to $6500 in a new credit.

4) The definition of a current home owner is having lived in a principle residence for 5 consecutive years out of the last

5) The credit is extended to all purchases signed by April 30, 2010. The deal must close by July 1, 2010.

6) Income limits are increased to $125,000 single and $225,000 married.

7) Cost of home no more than $800,000. Thought how you can afford an $800,000 home on $125,000 per year is beyond me.

8) To cut down on fraud you must attach a copy of the closing document (HUD-1) to you tax return.

Knowledge of the provisions of this new law can help if you have a home for sale Everett. Because a FSBO usually doesn’t have a realtor behind them they really need to know this stuff.

Just a couple of comments aside here. This has only tangential value but it illustrates what the government is doing to the American economy and the real estate industry in particular. Just like the tax credit here HVCC was designed with the highest intentions. But the law of unintended consequences has taken hold. I wonder what will happen because of this credit .

1) HVCC was created to cut down fraud. HVCC means Home Valuation Code of Conduct and applies to how appraisals are done. This really has crippled the real estate business. It has consistently brought in low ball values on homes. This has crippled the refinance business just when we need the ability to refinance ARM’s that are going thru the roof. This forces homes into foreclosure when they didn’t have to go. I have a blog post on HVCC on my web site.

2) HVCC was designed to stop fraud but it hasn’t. Fraud is up almost 50% over the same month one year ago.

3) HVCC has killed the conventional mortgage business. Almost all loans are FHA mortgages or VA mortgages. This is because they don’t have to use the HVCC guidelines.

Some FAQ’s for the new First Time Buyers Credit law sign today.

Q: Must the new home cost more than the old one.

A: No, So a current home owner can sell down and still qualify for the $6500 credit.

Q: I am a first time buyer but made more money than the “old” credit allowed. My contract will close November 20, 2009. My income now qualifies can I get the credit?

A: Yes. The new law is retroactive with all facets of the law now signed.

Q: I owned a home for 10 years and lived there the whole time. I sold it 2 years ago and have rented since. If I buy can I qualify for the new $6500 credit?

A: Yes if your income qualifies. Also you stated that you had lived in the home at least 5 consecutive years out of the last

If you have a home for sale Everett or you are a FSBO take note that this law should help you. I hope this answers most simple questions.

Posted in FSBO, Homes for Sale Everett, Mortgage Everett, Mortgage Fraud, VA mortgages | No Comments »

Is the benefit of the housing tax credit overstated

Wednesday, November 4th, 2009

If the credit could be applied the down payment this would make more sense.

Many think the credits benefit is exaggerated. Instead I ask which comes first the mortgage or the down payment? Congress is close to extending the credit. In fact they are considering extending the credit to existing home owners. That new credit would be up to $6500. But that might not work because many of those buyers are locked into a home that has lost value and may not be salable right now. If that credit is allowed for investment property then you might again accelerate sales. The senate has proposed the extension of the $8000 first time buyer’s credit until April 30, 2010. If the credit is extended over the winter just how much will it affect sales? That is the slow time of the year for real estate. Will the credit improve sales at the slowest time of the year? Does the credit simply accelerate purchases that were going to take place anyway? That was the criticism of the “Cash for Clunkers” program. I think that the cash for clunkers was a major bust. Most of the cars purchased were foreign made. It really didn’t help domestic production.
The way the first time buyer’s credit is set up really doesn’t help create sales. The only way it could do that would be to have the credit function as the down payment. Consider this: To buy a big ticket item you have to save up the down payment. Most of the users of the credit are using FHA mortgages. The FHA mortgage requires a 3.5% down payment. There are 2 valid schools of thought here. One thought is that in order for the buyer to value the home they need “skin in the game”. By that they mean money out of their own pockets. The other idea of stimulating the economy wants to create home sales. If you allowed the tax credit to be used as part of the down payment I think you would actually create sales. The trick is the mechanism used to equate the credit into the down payment. Since the credit is refundable that should be easy. By refundable I mean you can get the credit even if you didn’t pay any taxes. Since the credit exists many FHA mortgage applicants are getting “Gifts” from family members. I think that many of these gifts will be repaid from the tax credits, I don’t want to look in that horse’s mouth.
OK we have had 4 months in a row of increasing home sales. Is that connected to the credit? Nobody knows. “Failure to act now could derail the fragile housing recovery even before it takes root,” said Jerry Howard of the National Association of Home Builders. He said this to congress Wednesday urging them to stretch the tax credit out even longer than presently considered. Howard estimates that the credit has helped to create 200,000 jobs, helped drive home sales up, stem foreclosures and stabilize prices. I will just bet he thinks the credit is better than hot and clod running water too. Howard’s claims seem exaggerated to me. Some economists think as I do that the credit’s impact is overstate.
Recently a report was released stating that a huge amount of fraud was connected to the credit. I question the timing of the release of this report. I also think the government’s incompetence is the real problem. If the federal government can’t run the economy, social security, Medicare, Medicaid or the VA hospitals what makes everyone thing they can run this? I will not go off on a rant about government incompetence but really think about this in that light.

In the end the tax credit will cost the US Taxpayer far more than the actual dollar amount of the credit. Fraud and waste and incompetence will double or even triple the cost to you and I. It just might create more bad FHA mortgages out there that you and I have to pay for.

More thoughts and ideas on my web site.

Posted in FHA Mortgage, FSBO, Homes for Sale Everett, Mortgage Everett, Real Estate Agents, VA mortgages | 1 Comment »

Tax benefit to buying a home with an FHA mortgage

Tuesday, November 3rd, 2009

True or False: There is a tax benefit to buying a home with an FHA mortgage

Things a Real Estate agent or FSBO should know.

Well the answer is yes, no and maybe. Oh yeah how can that be? Is there more benefit to having a conventional or FHA mortgage? Just so you know that I’m not blowing smoke. I used to be an Enrolled Agent that meant at one time I could practice law in tax court. I no longer practice tax law or preparation. But I still retain a bit of working knowledge. So now in the first year of an FHA mortgage or any mortgage for that matter there are extra deductions that make for greater tax benefits. After the first year tax benefits from an FHA mortgage are much easier to calculate. And since you will probably keep your mortgage for more than one year let us project tax savings for the second and subsequent years. The second thru fifth year of a mortgage will have similar tax benefits.

OK now that I got the lawyer crud out of the way some assumptions. Yes, yes I know what assumptions do. A single person and married couple are buying a home. The loan amount is $300,000 with annual property taxes of $2800. Terms are 30 years fixed at 5.5%, so the monthly payment (P & I only) is $1703.37. OK we have Jane Single (clever, how he slips a single gal in) and Jim Couple and Mary Couple married kids. Both make the same money (proving that women actually do make more than guys) $70,000 and this is taxable income.

From paragraph one above the part that is yes. If you happen to be single your tax benefits are pretty good. Without boring you to tears with numbers and such here it is. As a single person with taxable income of $70,000 you pay $11,513 in federal income taxes. When you deduct the $2800 in property taxes and the $16,399.19 in interest paid you lower your taxes to $8318 from $11,513. This is a saving of $3195 or $266 per month. So yes you do have a tax benefit.

Now the maybe or no part for M/M Couple. They have the same taxable income in fact the same everything. Before they get their mortgage their taxes are $6896 and after they are $5726. There is a tax savings of $1170 per year or all of $97.50 per month. So the benefit is there but you can definitely answer maybe or even no.

So Mr. FSBO or Ms. Real Estate Agent what do you tell your client. What do you say when the ask, “Is there a tax benefit when I buy a home with an FHA mortgage?’ Now you can definitely say, “Yes or No or Maybe.”
thefhaloanbuy@aol.com

Posted in FHA Mortgage, FSBO, Homes for Sale Everett, Mortgage Everett, Real Estate Agents | 2 Comments »

Mortgage Everett: How Is Your Credit Score Calculated Part 2 of 2

Friday, October 30th, 2009

Mortgage Everett: How Is Your Credit Score Calculated

Part 2 of 2

Debt (30%): Continued: If you made your payment before the reporting date that would give you the extra 3 points you would need fro that score. If you have old delinquencies it may not help you to make payments on them. This is because if you don’t pay it off completely the old late payments become current and now your scores get dinged because now it a current late. If you pay off old delinquencies demand a Letter of Deletion. A Letter of Deletion removes that line of bad credit completely from your credit report. Watch for old collections and the statue of limitations. If the debt is more than 7 years old (most debts but not all) it must be removed. A common practice of debt collectors is to try a change that date to when they bought the debt. This is illegal.

Length of Credit History (15%): You might think that opening up a new line of credit would help your score. Watch out it can actually hurt you a great deal. Say you have a 3 year clean history with one account. Today you open up another account at a local department store. You suddenly have a 1.5 year clean history because they will average your history over the total open accounts. That could cause you to drop 10-15 points in one moment.

New Credit (10%): Every time you shop for a better deal, say on a car, your score is dinged 2-3 points. If the dealer sent your deal to several banks then each one dings you 2-3 points. Just stopping at one car dealer can cost you 20-30 points in less than an hour.

Type of Debt (10%): They are looking for a good mix of all three types of debt.

The way the various parts play against each other creates a dynamic and that creates your scores. It is a complex system that can be used to improve your scores but I suggest you hire a good professional to do that. I have several professionals that I refer my clients to. Remember that the FHA mortgage is not score driven but the better your score the better chance you have of getting a loan. You will find more helpful tips on my blog at Everett Mortgage on Line.

Posted in FHA Mortgage, FSBO, Mortgage Everett, Real Estate Agents, VA mortgages | No Comments »

Homes for sale Everett: What is the best way to buy a home today

Monday, October 26th, 2009

Homes for sale Everett: What is the best way to buy a home today

In the “old” days a home buyer was required to have 20% for a down payment. Then in the 1950’s along came mortgage insurance offered by a company called MGIC. They pioneered the MI industry. If you had less than 20% down they offered a kind on mortgage insurance to insure the lender that if you defaulted the lenders loss was covered. The way it worked was simple. The less you put down the higher the insurance premium

charged. The buyer was required to keep certain ratios to qualify. This meant the buyer bought less of a home because part of the monthly payment was for MI. This was pure gold for the American dream. It allowed for the present liquidity in the real estate market. Without MI selling a home would take far longer because there would be far fewer buyers.

Fast forward to today. If you are a veteran you qualify for a VA mortgage. The VA mortgage is the only true ZERO down loan available today.

If you are not a veteran the next best way is an FHA mortgage. The FHA mortgage requires a minimum of 3.5% down. Currently the First Time Home Buyer Credit is 10% of the purchase price up to $8000. So you can actually buy up to $228,571 and have a ZERO down purchase. But there is a bit of a catch. You have to have the 3.5% first, buy the home and then file for the tax credit. The federal tax form you file is form 5405. The credit is refundable so even if you didn’t pay taxes you can still get the credit. In some states there are various funds where a qualified buyer can get a “loan” for the down payment and then buy. Check with your local mortgage broker to see if you live in a state when that option is available.

Currently the First Time Home Buyer Credit is set to expire after November 30, 2009. Senator Bill Nelson (D) a member of the senate finance committee says the credit will be extended for a limited time. But no extension has reached the floors of either house yet.

Every mortgage loan is very important to me, so I handle each one personally. My background includes extensive knowledge of the real estate market, real estate finance and personal taxation. If you are looking to refinance or purchase real estate please give me a call or email. I will be happy to discuss all options with you. Currently I have access to 70+ lenders. I have access to 4 different credit repair agencies. My goal is to become your lifetime lender. thefhaloanguy@aol.com

Posted in FHA Mortgage, FSBO, Homes for Sale Everett, Real Estate Agents, VA mortgages | No Comments »

Homes for sale Everett: Shadow inventory of homes will delay recovery

Saturday, October 24th, 2009

Homes for sale Everett: Shadow inventory of homes will delay recovery

How will the shadow inventory effect homes for sale in Everett? First let’s define what a shadow inventory is. Shadow inventory is bank owned residential property that is not on the market. This is also called the REO (real estate owned) inventory.

Now some facts:

Zillow says the up to 31% of current home owners would sell if the market price came back. If all these homes were placed on the market right now they would depress the market prices all over the nation.

The Wall Street Journal and Bank of America say there are between 3-4 million homes held as REO property right now. With foreclosures up 12% over last year but inventories in the top 28 markets in America are down. Nobody really knows why.

It is estimated that 60,000 to 65,000 Option Adjustable Rate Mortgages will be coming due every month for the next 2 years. The Option ARMs are loans where the borrower can pay less that the full payment. Almost all of these homes will be upside down in equity. That means they will owe more than the home is worth.

Now for my speculation: What if the banks have used TARP money to avoid puting the REO inventory on the market? By putting the REO inventory on the market the bank must recognize the loss. It would depress the market for a while but in a little time the market would adjust and recover. I think many banks have used TARP money to pay bonuses and salaries and avoid painful loss recognition. Japan just went through 20 years of economic downturn because they woiuld not recognize the losses on the balance sheets of their banks. Recognizing the losses would have meant loss of face. Are the bankers of America doing the same thing but using tax dollars to fund this?

Posted in FSBO, Homes for Sale Everett, Real Estate Agents | No Comments »

Homes for sale Everett: FSBO sell your home faster, more money

Wednesday, October 21st, 2009

If your home is for sale in Everett you should look into the following tips. First be ready to “Stage” your home. That means many little things. Clean up the yard / pick up any trash on site and on nearby streets. If possible power wash the front of the home. If possible power wash the roof and clean gutters. Clean the windows nothing brightens up a room like clean windows. Remove all unnecessary furniture for the entry way. Same goes for entire home again if possible. Nothing makes a home feel small like to much furniture. If you have pets clean up the house and keep them outside as much as possible. Remember the buyer may not like pets and probably doesn’t like yours. The three main areas to watch are entry way / living rooms area, kitchen and main bathroom. In the living room / entry way area simply remove unnecessary furniture and vacuum. In the kitchen wash the cabinets and drawer fronts, refrigerator, stove and dish washer fronts. Scour the sinks and water fixtures. Clean the windows and light fixtures of all dirt and grease. In the bathroom you may want to really look at the walls and shower stall windows. Clean as necessary. Who knows maybe it may clean up so nicely that you may not want to move. More tips in the homes for sale Everett category.

Every mortgage loan is very important to me, so I handle each one personally. My background includes extensive knowledge of the real estate market, real estate finance and personal taxation. If you are looking to refinance or purchase real estate please give me a call or email. I will be happy to discuss all options with you. Currently I have access to 70+ lenders. I have access to 4 different credit repair agencies. My goal is to become your lifetime lender. thefhaloanguy@aol.com

Posted in FSBO, Homes for Sale Everett | No Comments »

Homes for Sale Everett; How to have the seller pay your closing costs

Tuesday, October 20th, 2009

In today’s real estate market the buyer is king. The only time the buyer can get seller concessions is when making the initial offer. Before you have a signed contract everything in a real estate deal is negotiable. Remember everything must be in writing to be enforceable. Once the terms are negotiated you can’t ask for more without mutual agreement. You have signed a contract and you could lose you earnest money if you violate the terms. The way to avoid this is have your real estate agent ask for money from seller proceeds to pay for your loan costs at closing. Basically you are asking the seller for a small piece of his proceeds to pay your out of pocket loan costs. The simplest way is to ask for a percentage of the sales price back at close. I always start at 4%. Loan costs are pretty much the same for a $250,000 mortgage or a $400,000 mortgage. When I am the loan officer in a transaction if there is any excess money I get my buyer a reduced interest rate. Look for more buying tips in my homes for sale Everett category.

Posted in FHA Mortgage, FSBO, Homes for Sale Everett, VA mortgages | No Comments »

Creative Mortgage Solutions