2012 Reflections

As we near the end of the year (where has the time gone?!), I wanted to try to put down some of my thought about 2012. I'm going to gloss over my precious Yellow Jacket's sub-par season so far and just focus on real estate.  =)

 This past June marked one full year at my new office, RE/MAX Around Atlanta, and it has been my most successful year to date!  Andrew and I have loved working with our new brokers and getting to know all the new agents in our office.  In particular, I have found that their systems for processing paperwork and managing listings has helped me make my business run more efficiently so I can spend more time focusing on the important stuff: my clients.

Speaking of my clients, they are the BEST!  I have had the pleasure of working with some fantastic new folks while also helping out many returning clients.  I have now been a Realtor for 5 years so many of my clients that I worked with in the first few years are starting to cycle back through as they expand their families, change jobs, and begin new life experiences.  There is nothing as gratifying to me as when a past client comes back to me to help them with their real estate needs again.  It validates that I am doing my job correctly, providing great service, and making lasting relationships.

Over the past several years I have experimented with various technology and marketing systems to help my clients, and I feel that in the past year I have really honed in on the most effective techniques.  I am using the most current and state-of-the-art technology available to make sure my sellers have the very best visibility on the web, while also providing a fantastic tool for following up after showings to get invaluable feedback from other agents and their clients.  For my buyers, I now provide access to their very own website which allows them to search all the available listings using much better search criteria and much more current data than what is available to the general public.

Historically, my listings sell in just 86 days and for over 96% of their list price (the Atlanta average is 6+ months). With my new systems in place, those numbers have gotten even better!  My last two listings were both previously listed with another agent for over 6 months, with no offers.  Once I took over, they both sold quickly (one in 35 days, one in just 3 days!) and for almost full price.  The combination of the services I provide, along with my experience and dedication to getting the very best deal for my clients, is truly unparalleled and it shows in my results!

The media has been touting a lot of doom and gloom with regards to the real estate market over the past year, but I say, “What bad market?”  There has never been a better time to buy with prices still low and interest rates rock-bottom.  But this is also a great time to sell: inventory is dropping and there are a lot of buyers out there!  If you – or any of your friends or family – have been thinking about buying or selling, please give me a call, I would love to help!

My daughter is keeping hope alive for the season!

UNDER CONTRACT!

Under Contract in under a week!  

This adorable ranch has been beautifully maintained and is walking distance to Smyrna Market Village!

FAQ: I had my inspection and I'm afraid the house is falling down!

One of the most stressful parts of the buying process for a first time buyer is the inspection. Everyone is afraid that the house they have fallen in love with has some sort of hidden Major Problem that will either kill the deal or create a long-term money pit.  Obviously it is critically important to have an inspection done to uncover precisely those situations. That being said, the vast majority of the time the seller's have done their due diligence before putting their home on the market and addressed any truly serious items. 

It is just as important to make sure you have a great inspector, one who goes the extra mile and doesn't miss a thing.  However, hand in hand with a great inspector is the fact that they are going to find stuff.  A lot of stuff.  If an inspector it doing his job properly, he is going to come away from your inspection with a substantial list of items, regardless of how great of shape the house is in.  My best of example of this is when my (amazingly thorough) inspector did an inspection on a new construction home for one of my clients.  The home was brand new, had never been lived in, and had just received the Certificate of Occupancy from the City inspectors.  He still came away with a list of about 30 items that the City and builder had not caught.

What I try to prepare my buyers for is this: the inspector is going to come away with a list of items, anywhere from 30 to 130 things, and that is 100% normal and not a reason to panic.  Included in the inspection reports are items that do not meet today's building code (the building code changes every year or so, so 99% of homes on the market will have a bunch of items that don't meet today's code, nor are they required to), items that simply need clarification or possibly future maintenance, and a long laundry list of very typical and minor items that come up in every inspection.

My job is to lend my knowledge and experience to filter through the report and discern which are the normal, typical, minor items - and which are not. There are literally a bunch of items that come up in 99% of the inspections I do.  They are completely normal.  Just about any home you were interested in purchasing would have the same items.  

Then there is the group of items which are not quite as typical but still very minor.  Items that either a homeowner could fix themselves or pay someone else to do relatively inexpensively.  Often these are things that are good to know about but do not need to be repaired in order to live safely in the home.

Finally, there is the group of items which are out of the ordinary, could be big-ticket repairs, or are vital to making the home safe to live in.  These are the things we are looking for.  Normally there are very few of these (if any) that come up, but it is critical that we identify them and determine if it is something that is reasonable to ask the seller to repair, or something so major that it is a deal-breaker.  In my experience, there are only a few deal-breakers: serious structural problems and extensive interior water damage (which typically goes hand in hand with structural issues), or completely non-functional systems come to mind.  

My job is to help the buyer determine what those issues are, and what makes sense to ask the seller to repair.  99% of my inspections have a laundry list of electrical items, a lack of insulation based on today's standards, some exterior water damage, minor mold, structural settling, and evidence of past termite damage.  These are normal and not deal-breakers.

All this being said, I know it freaks buyers out when they get that loooong report from the inspector and leads them to panic and fear the worst.  Don't worry!!!  This is normal, I promise.  I will work with you to figure out what is *really* a problem and what is totally typical.  No house is perfect, especially if it is an older home.  They all have issues, even if they are brand new.  It's my job to help you determine if those issues are serious and what to do about them.  I promise I'll do my absolute best to make sure you don't buy a money pit.   =)

I do have a caveat: there are, of course, things that can get missed.  By having a great inspector, you are drastically decreasing your chances of that happening.  However, part of home ownership is that eventually stuff breaks.  And it may be that when you have your inspection done, all the plumbing & drains are functioning perfectly.  And then a month after you close, a pipe bursts.  There is nothing an inspection can do to predict that kind of thing.  It is just bad luck, and it is part of owning a home.  But by covering all your bases and truly doing your due diligence, you are putting yourself in the best possible situation to succeed. 

Good luck!

Things you WISH you could say to your borrowers but, can’t:

A little bit of fun from one of my lenders.  Unfortunately it is funny because it is so often true!


10. After reviewing your tax returns...is your company hiring?

9. Unfortunately, we just cannot use the $20,000 you have stored in your gun safe to cover the cash you're short to close.
8. Listen, there’s been a red dot outbreak at my office. I’ll have to call you back tomorrow.

7. Let’s just say that if I ruled the world, I’d certainly loan you $417,000 without bothering to check your credit or verify your income!

6. Sure, take as long as you want to think about my offer of 3.5% with no points. In the meantime, I will ask the markets,(US and abroad) to suspend all trading until you decide.

5. Since you only have $6 worth of verifiable liquid assets, I will need more of an explanation regarding the four $3000 non payroll deposits. Right now, it looks like you're collecting income from the meth lab in your rented garage.

4. At what point when I was talking about the importance of NOT moving money did you decide to pay off $20,000 in student loans?

3. It’s a little hard to believe these “tax liens” and “mortgage lates” on your credit report are the “first you are hearing of this.”

2. It took you three weeks to get me your documents. I will need a little more than 5 minutes to get your docs out.

1. No, we don't really need all of your tax returns– just the random pages that you feel like sending.
~ by David Lettermen 

Conforming vs. Jumbo Loans

What Is A Conforming Mortgage "Loan Limit"?

A "conforming mortgage" is so named because its loan traits -- quite literally -- "conform" to the loan rules set forth by Fannie Mae or Freddie Mac.  Fannie's and Freddie's mortgage guidelines are dense, covering thousands of home loan traits, but there is one over-reaching rule -- neither Fannie Mae nor Freddie Mac will securitize a mortgage that's considered "too big" for its books.

Defining "too big" is an annual decision-making process based on the economy and home price data. The debate results in a "loan size limit"; the maximum amount of mortgage that Fannie and Freddie will allow, per their respective home loan guidelines.  Loan sizes up to these maximum amounts can be conforming mortgages. Loan sizes beyond the conforming loan limit are considered "jumbo".

2012 Conforming Mortgage Loan Limit : $417,000 (Or More):

2012 conforming loan limits are the same as in from 2011, 2010, 2009, 2008, 2007 and 2006.

Home prices are lower today as compared to 6 years ago, but maximum loan sizes are not; and this makes more homes eligible for Fannie Mae/Freddie Mac financing. For home buyers, this is a good thing because Fannie Mae- and Freddie Mac-backed loans are often the "cheapest" form of financing in terms of monthly mortgage payment.

Loan limits staying steady is good for existing homeowners, too, because, should conforming loan limits ever fall, scores of households would be immediately "loan-sized out" from the refinance market.

The 2012 conforming loan limits vary by property-type. With more "units" per property, conforming loan limits rise.  The classification "1-unit home" includes single-family residences of all types --  detached homes, row homes, townhomes, condos and co-ops.

• 1-unit properties : 2012 conforming loan limit of $417,000
• 2-unit properties : 2012 conforming loan limit of $533,850
• 3-unit properties : 2012 conforming loan limit of $645,300
• 4-unit properties : 2012 conforming loan limit of $801,950

Note that these limits are for conforming mortgages only. FHA loan limits -- including for the FHA Streamline Refinance -- use a different scale.

Rates at an all-time low! Now is the time to BUY!

30YF Rates are down to 3.5%!  It's a great time to save on a mortgage. With mortgage rates on a 15-month slide, the cost of homeownership has, truly, dropped to its lowest point in history. You'll never pay less mortgage interest in the process of paying down your home that you will right now.

What you save on mortgage interest, you can spend on other things.

The amount by which monthly payments have been cut should not be underestimated. Falling mortgage rates shift the principal-interest balance of a monthly mortgage payment, dramatically increasing the portion of each payment directed toward the original loan balance. In doing so, it also reduces the mortgage payment's interest portion.

Sometimes we forget that "mortgage rates" are mortgage interest rates. As interest rates fall, so do interest payments.

There has never been a better time to buy!  Prices are still at historic lows, there is a ton of inventory out there, and a mortgage has never been cheaper.  Contact me today to get into your dream home tomorrow!!!

FAQ: When Can I buy again after a Bankruptcy, Short Sale, or Foreclosure?

These guidelines have changed quite a bit over the past three years (becoming more strict) and are accurate as of the date of today’s post (March 9, 2012) –

2011 FHA Waiting Guidelines

• Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy. You may apply for an FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
• Foreclosure - You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
• Short Sale / Notice of Default – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
• Credit must be re-established with a 640 minimum credit score

2011 VA Waiting Guidelines:

• Bankruptcy - You may apply for a VA guaranteed loan TWO (2) years after a Bankruptcy
• Foreclosure - You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
• Short Sale - You may apply for a VA guaranteed loan TWO (2) after a short sale, unless it was a VA loan then restrictions apply
• Credit must be re-established with a minimum 620 credit score

2011 Conventional Waiting Guidelines (Fannie Mae):

• Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your bankruptcy has been discharged for FOUR (4) years.
• Foreclosure - You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure. Additional qualifying requirements may apply,
• Short Sale / Deed in Lieu of Foreclosure - UPDATED 12/16/11 Currently treated the same as a foreclosure with a waiting time of SEVEN (7) years before you can buy again using a Fannie Mae conventional home loan.
• TWO (2) Years up to Maximum 80% Loan to Value | 20% Down Payment
• FOUR (4) Years up to Maximum 90% Loan to Value | 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
• SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.
• Credit must be re-established with a minimum 660 credit score.
• Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Preparing to Buy Again after BK, Short Sale or Foreclosure:

You should begin re-establishing your credit again immediately after a bankruptcy, foreclosure, or short sale and start really looking at your credit at least six (6) months before you are ready to buy again. Quite often there are things left over on your credit report that can delay your ability to qualify.

With a little head start, you can get your credit in line, qualify for financing and buy again in the lowest priced real estate market that we have seen in years!

Thanks to one of my favorite lenders, Kim Jones with Brand Mortgage, for putting this together. Kim is one of the best in the business!

Warren Buffett says BUY HOMES NOW!

Click here to watch the video if you can't see it below.

From Frank Garay and Brian Stevens at www.TBWSDailyShow.com

Homestead Exemption 2012

If you purchased a home in 2011 as your primary residence, it is time to file for your Homestead Exemption!

A homestead exemption is a reduction in homeowners' property taxes. Once granted, this exemption is automatically renewed each year as long as you continually occupy the home under the same ownership. The home must be your legal residence for all purposes including the registration of your vehicles and the filing of your income tax. You cannot file for homestead exemption on rental property, vacant land or on more than one property.

Different counties have different deadlines for filing, but most are April 1st. CHECK YOUR COUNTY TAX ASSESSOR WEBSITE TO VERIFY YOUR DEADLINE AND FILING REQUIREMENTS.

Here are some links to counties in the Metro Atlanta area for your convenience:

Fulton County

DeKalb County

Cobb County

Gwinnett County

FAQ: I'm Under Contract! Now what?

No matter if you are a first time buyer or have owned 10 homes, with the ever-changing landscape of the lending world it is hard to keep up with how the home-buying process works. It seems to change on almost a weekly basis! One aspect that I think the majority of buyers are unprepared for are all the requirements and restrictions that the lenders currently have to adhere to. I find clients becoming frustrated as we get closer to closing and the lender keeps asking them for additional documentation, further explanations, and more and more copies of things.

So, in light of that, I want to provide a few notes on what to expect, a few key DO's and DON'Ts, and generally help set the expectations realistically up front so that you aren't frustrated down the road. I promise that the lenders are not requiring all these things arbitrarily! In most cases they are federally mandated to do so, and as annoying or redundant as it may seem, it is genuinely just part of the process to qualify for a loan in these crazy times.

The state of the lending industry and new Federal laws are making this much harder than it used to be! Here is an important point that will he help you through this process: Do not try to use common sense to understand this process, there is absolutely none of that in the lending industry at the moment. The mantra is “rules over risk” which means that they are not concerned whether your loan represents a risk or not, it is all about whether you are able to meet their guidelines.

The lender is going to ask you for a whole list of financial documents, ranging from tax returns to pay slips to bank statements. There is no getting around this: they must have all of them, and you need to get them to the lender ASAP after going under contract. If your closing gets delayed more than a few days (and closings get delayed all the time these days), there is a chance that they will need updated versions of everything.

The lender will have a bunch of documents (like the loan application) that they will need you to sign. Again, do this as soon as they ask and get it back to them quickly.

Once they have all these items, the loan will go into processing. The loan processor acts as a second set of eyes to make sure that they have all the documents and signatures they need. At this point if anything is missing, they will ask you for it.

Once it clears processing, it goes into underwriting. The underwriter has the final say in whether the loan is approved or not. Underwriters have an unpopular but crucial job. They keep lenders in business by ensuring they are complying with the thousands of pages of underwriting guidelines now required. Fannie Mae, Freddie Mac, FHA and VA all have gotten very, very strict. Underwriters have very little leeway to be discretionary with what documentation must be in a loan file. If they do not follow the rules they will lose their jobs. After they review what you have sent to them, they will typically approve the loan with “conditions”. That means that there are additional things that must be satisfied before the loan is fully approved or “cleared to close”.

• One example of a condition might be “a satisfactory appraisal”. If the lender turns in all your documentation, and there is nothing further needed from you, your loan might still be “conditionally approved” until the appraisal comes back for the underwriter to review and approve.
• Another example of a condition might be “explain the $2000 deposit into your checking account last month”. They are not being nosy or difficult, the guidelines clearly state that all large deposits that are not payroll must be explained and proven to be your own money (i.e. "sourced"). This is why we tell you not to move money around or make large deposits without speaking to us first during the loan process.
• Please be aware, that as information comes in regarding the conditions, this could create MORE conditions. For example, let’s say the underwriters ask for the source of a $2000 checking account deposit and you tell them it was transferred in from another savings account that you have. Let's also assume that you did not provide a copy of that savings account statement in the initial loan submission. They would now have to get a copy of that savings account statement to show the transfer of the $2000 into your checking account from this savings account. Finally, let's assume that the new Savings account statement shows the $2000 transfer that they needed, but on the same statement there is also a $4000 deposit. Now, the process starts all over again because now they have to "source" the $4000 deposit into your savings account! – That is crazy but it is the current state of the industry. This is also the part of the process that tends to frustrate buyers the most.
• This is where the work you put in up front pays off. If everything was complete in the "Gathering Documents/Processing" stage, then there are typically very few issues as described above. But, if you missed providing information in the beginning there can be a lot of back and forth and that gets stressful as closing starts approaching. When the lender sends you additional items they need from the underwriter, they need those back in 48 hours.

Once all Conditions To Close have been cleared, the loan is sent to the closing department so that they can create the Loan Package, which is what you sign at closing. The package is typically over a hundred pages and if there are ANY changes (i.e. closing is delayed by even a day), the entire package has to be re-done to reflect that. It takes about 48 hours to get a package through the closing department and out to the closing attorney with full approval.

Once the attorney receives the closing package from the lender, they will draft up the final numbers for closing – commonly called the HUD-1 or Settlement Statement. THIS IS THE FORM THAT WILL GIVE YOU THE EXACT AMOUNT OF MONEY YOU NEED TO BRING TO CLOSING AND ALL THE FINAL NUMBERS. The lender cannot provide you with the final amount you need for closing until all the steps prior to this have been completed. Once the attorney/title company gets the Settlement Statement drafted they will send it to the lender to approve and then they will forward that to you for your review.

Now we are ready to close!

The most critical part of this to understand is that it is imperative that you get the lender every single item they ask for, as soon as they ask for it. In addition, ANY changes that are made to either your finances or the contract can mean a delay in the closing due to the need to document everything. So before you make ANY changes, check with your lender or Realtor to determine what the best course of action is.

Some examples I have dealt with of things that will delay closing and require additional documentation from you:

• you open a new account or credit card
• you run up the balance on an existing credit card
• you buy a car or new furniture
• your dad gives you a check for $1000 as a housewarming gift
• you change jobs
• you move money from one account to another
• you make a late payment on an existing account
• you switch an existing account at your bank to a different type of account that has a different account number
• you file your taxes for the year
• your parents pay off your student loans
• you pay off a credit card
• your credit score drops or you have new inquiries on your credit report (which can be from something as simple as applying for financing at Rooms To Go for the new furniture you want, EVEN IF YOU DON'T ACTUALLY BUY ANYTHING)

So, long story short: the lending process can be a headache, but it is necessary if you wan't to buy a home. The best scenario is to be as informed as possible so that you know what to expect, and I hope this has helped with that some. I'd like to thank one of my favorite lenders, Mark Moore with Home Lending Source, for helping put this together. I have said it before and can't say it enough: having a great lender who really knows what he is doing makes ALL the difference, and Mark is one of the very best in the business!

Buy vs. Rent: Why now is the time to buy!

Falling home prices have sent many would-be buyers to the sidelines. If all goes well, record low interest rates and rising rents may soon prompt some of them to take a second look at buying.

Unfortunately, that's a big "if," according to Paul Diggle, a housing economist at Capital Economics.

Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security.

But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice, according to Diggle.

Until recently, home ownership was no bargain compared to renting, according to his analysis. A 33 percent drop fall in home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.

But that analysis doesn’t include the total cost of owning versus renting. A full accounting includes closing costs, maintenance, insurance and property taxes, tax savings from mortgage deductions, gains or losses from home equity, among other factors. Renters have to think about broker fees and future rent hikes. Both have to make assumptions about future trends in housing prices and rents.

When you take those factors into account — which Diggle has done with a homegrown “calculator” — someone who plans on staying put for seven years would come out ahead by about $9,000 if they bought a median-priced home rather than being a tenant in a median-priced rental. Diggle’s calculation assumes that rents keep rising by about 3 percent a year and that house prices stay flat in 2012 and 2013 and begin rising in 2014 at about 3 percent a year.

If house prices fall further, all bets are off, said Diggle. In that case, the renters come out ahead.

“At the moment, (that) downside scenario is more likely to materialize than the upside one,” he said.

Even if Diggle's calculator were to signal a “strong buy” for home ownership, he doesn’t expect that would spark a buyers' stampede. Most first-time buyers or households who lost a home to foreclosure don’t have the 20 percent down payment many lenders are insisting on. They may also have trouble getting a mortgage without a credit score of 700 or more — a higher bar than the 650 score that was the norm for the past two decades.

“A large share of the population has dropped out of the pool of potential buyers,” he said. “Given that the choice between owning and renting a home is a luxury than many Americans simply do not have, the fact that this does appear to be the time to buy will have only a minimal effect on actual sales. Accordingly, we expect only a modest housing recovery over the next few years."

- By John W. Schoen, Senior Producer, MSNBC

Time to Get Off the Fence!

Here's some important news about interest rates that you really need to see:

As directed by the Federal Housing Finance Agency (FHFA), the mortgage agencies, Fannie Mae and Freddie Mac, are required to increase the guarantee fee charged for all new mortgages financed on or after April 1, 2012. What does this mean? Rates on all agency loans (Fannie Mae and Freddie Mac) will start to reflect the extra cost in higher interest rates as soon as February 1st. So if you’ve been waiting on lower rates, now is a great time to “get off the fence.” Waiting could cost you dearly!

Please give me a call or email to discuss your unique situation and so I may answer any questions you have.

- Kim Jones, Brand Mortgage