Karen Highland’s Blog

HUD has reissued its rule to ban seller-assisted downpayment assistance programs and the charitable organizations, like Nehemiah,

It never ceases to amaze me, the break in the logic loop when these sweeping changes are made by judges and legislatures.  They start by increasing FHA limits,

because they realize that home prices have gone up and the limits on the loans to purchase these homes needs to be increased.  OK, I see a logical step. 

Now, when they get to the next step, the logic breaks down.  When the economy is in a downturn, gas is more than $4 a gallon, food costs have increased, in many 

places, taxes are being hiked…who in the world can put together the cash needed for a downpayment?   When sellers are willing to give some of their equity to help

a buyer choose their home, instead one of the other 1000’s on the market, lets not interfere!  Let the market work.  Let the buying and selling continue.

If you want to weigh in on the issue, here’s a link to sign a petition and send a letter to your congressmen:  http://www.rallyforhomeownership.org/
 

Financing Solutions with David Reed, my Guest Blogger

Five Year Increments

Which is better, a 30-year or a 15-year fixed rate mortgage?  A common and important question which, when answered, affects both the monthly payment and the amount of interest paid on a mortgage loan. While paying less interest over a shorter timeframe seems to be the obvious answer, the difference in monthly payment is surprising to some.

For instance, on a $300,000 note at 6.25 percent over 30 years, the principal and interest payment is $1,847 per month. Whereas on that same loan amount over 15 years at 6 percent, the payment jumps to $2,531! It’s easy to understand why most choose a 30-year loan over a 15-year loan; not only is the payment lower but it takes less income to qualify.

On the other hand, more money goes to interest on a 30-year loan compared to a 15-year loan. Using those same figures, the 30-year note yields $364,920 of interest, most of it in the first 10 years of the loan, while the 15-year loan only requires $155,580. That’s less than half the interest than that of a 30-year loan!

So, which is better? Maybe neither.   

While few lenders advertise this, there’s a compromise available to you. Loan payment periods can actually be acquired in five year increments. You don’t have to choose between a 30 and a 15-year loan! You can select a 10, 15, 20, 25 or 30 year mortgage. Some lenders even offer 40-year loans. Now it’s possible to both keep monthly payments manageable and save on interest charges.

Here are the payments for these additional amortization periods on $300,000:

Term(yr)                               Rate                            Payment

10                                        6.00%                         $3,330

20                                        6.25%                         $2,132

25                                        6.25%                         $1,979                                      

Since these five year increments aren’t advertised you’ll typically have to ask your loan officer for a quote. Don’t be shy, you’ll find out that you just might be able to have the best of both worlds: lower payments with reduced interest charges!

Written by David Reed, author of Mortgage 101 and Mortgage Confidential.

Short Sales are everywhere we look these days.  A few years ago they were unheard of, but now they make up as much as 30% of the market in some neighborhoods.  Now the majority of banks and lenders are negotiating and closing these deals. They allow a homeowner with a legitimate hardship to sell their property for less than the balance of their mortgages and avoid foreclosure.

You may have heard a lot of negative press about the short sale transaction.  Did you know that only 1 in 31 short sale listings even make it to settlement in Maryland?  The problem is 2-fold:  Lenders are not working well with Real Estate Agents, and RE Agents are not working well with Lenders.  (We speak Greek, they speak Swahili:~)

Banks did not expect the volume of Distressed Properties that they are getting, and were not prepared. They are simply overwhelmed. A lender from Countrywide told me they are getting packages for short sale applications at the rate of 3000 a week!  The issue is that the banks want the right type of deal with exactly the right paperwork and most agents are completely unaware of what the banks want.

We are trained and certified in Distressed Properties, with the Nationally recognized CDPE certification.  We know how to package the deal and speak the lender’s language. 

If you or someone you know are currently having trouble making your mortgage payment, give us a call or shoot us an email.  Or visit our website.  We may be able to help you avoid foreclosure or worse.

If you are a buyer and think you might find yourself taking advantage of one of these good deals, and purchasing a short sale property, give us a call.  We can help you present the best offer so that you increase your chances of winning in a competitive situation.

Frederick County Market Statistics have just come out for the Month of June.  I love numbers, they don’t lie; and they tell you more than the obvious when you study them closely…

• As of June, we have 11 months worth of inventory in Frederick County.
• Total Active Listings:        2323                       Last Year:     2440
• Average List price:           $338,195                               $361,207                        -6.4%
• Average Sale price:             310,917                                345,473                        -10%
• Avg time on market:            131 days                            101 days                         +29%
• Total number sold:              -40%                                  -28%

One bright spot:  41% of the houses sold last month sold in under 60 days, 39% sold in over 120 days.  This tells me that sellers are getting the message; they are pricing their homes correctly, and/or getting them in the right condition. 

The prize(?) for the slowest and lowest goes to Mount Airy. Things have slowed to a crawl there, sad to say:

• Overall sales are down 78%,
• Avg. sold price is down 15%,
• Number of Units sold is down 75%.

The winner this month was Brunswick with an astounding number of sales:

• 5.  Don’t be fooled, this was 66% higher than last years June number of 3.
• The total dollar volume was up 120%,
• the average sold price was up 32%,
• but…it took 387% longer to sell those 5 houses. 

Hey, it looks like the boom is in Brunswick, congratulations!

To look for homes for sale, go to my website.

I recently ran accross this website with 75 tips for living more frugally.  Thought I’d share it.

75 Tips to Survive a Down Economy …   from frugaldad.com

We bought 2 new computers this week, and are updating our home office. 

This really doesn’t have a lot to do with real estate…

but maybe many of you can relate!  This says it all…

At least half of the homes I’m showing are Short sales or Bank-owned properties.  Its a great time for buyers to take advantage of the Fed’s 203K Renovation Loan program.

With a Renovation Loan, you can borrow up to $35,000, (minimum of $5000) to do either of the following:

Buy a home as-is and remodel or update it, or,

Refinance the existing mortgage on your home and remodel or update it.

Here are some of the repairs that are acceptable under this program:

• Repair/Replace Roofs, Gutters and Downspouts.

• Repair/Replace all Flooring including Carpet, Linoleum, Hardwood, etc…

• Minor Remodeling of Kitchens and Baths

• Purchase and Installation of Appliances including Free-Standing Ranges, Refrigerators, Washers/Dryers, Dishwashers and Microwave Ovens.

• Repair/Replace/Add Exterior Decks, Patios and Porches.

• Basement Finishing and Remodeling.

• Septic System and/or Well Repair or Replacement.

If you find a foreclosed home that is priced well-below market, it might be advantageous to use this loan program, you could end up with a beauty of a home with built-in equity.

Look for homes for sale , including foreclosures, on my website.

From My Guest Blogger:  Mike G. with M&T Mortgage

Market commentary:

“The market has been showing some signs of optimism.  There appears to be more buyers/lookers surfacing the last couple of months.  It has not yet resulted in a surge in sales, but it is a good sign of potential future business.  On the downside, foreclosures and short sales continue to be a market driver.  This is serving to further depress prices.  Most of the areas are still listed in “declining markets” however Fannie/Freddie have repealed their “Declining market” policies which required a 5% reduction to maximum financing.  What that means is 95% loans are again available for purchase loans, however borrowers must have a 680 FICO score to qualify for the mortgage insurance(required).    FHA is still the product of choice for many buyers with small amounts cash to available.  There are some minor changes coming in July to FHA regarding mortgage insurance.  It will now be risk based upon LTV, meaning some borrowers will pay slightly more and some slightly less than the current system. 

Rates have risen approximately .50% in the last 6 weeks.  current conventional rates are fluctuating from the mid to high 6’s, with 0 points.  They can still be bought down to 6 and below with points.   

Please contact me with any questions.        

Have a Happy and safe 4th! God Bless America!!”           

D. Michael Giampietro                         
AVP/Branch Mgr
M&T Bank/Mortgage Division
195 Thomas Johnson Dr., Frederick,MD 21702
301 846-2063 office    301 846-2097 fax
301 639-3968 cell  800 380-2193 x2063 toll free

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   Attention all Buyers of Real Estate:  Get a buyer’s agent.  It’s paid for by the commission split with the listing agent, and really benefits you.  When you are buying from a builder, you might think you don’t need a buyer’s agent…but you do.

Here’s my latest story* about a buyer, call him Bob.  I was working with him, sending him listings, and he was waiting for his rental lease to be up.  One beautiful fall day, he and his fiancee stumble into a model home at a beautiful golf communty and are smitten…love at first sight.  They write a contract on the spot.  Oh well.  He calls to tell me, I say congratulations, keep in touch.  I know the builder, secretly, I’m really sorry. **

Fast forward to May.  The townhouse was supposed to be done in March, it’s not.  The interest rate goes up a bit, Bob is now uncomfortable with his payment, but there is nothing he can do about it.  He calls me to see if he can get out of it, but I doubt it. Thanks for remembering me, though.

June 22nd, I get a call from Bob.  At the walk-through, they were horrified.  Things like 1/2″ of space between the drywall and the window mouldings…The carpets don’t meet the wall by more than 1/2 inch…  Cabinets that are not hung straight.   Well, they walked away from their $5,000 deposit.  I feel so bad for them, but what can I do. 

Thursday, Bob is back in my car, in good spirits.  We’re hunting a house that he can feel good about.  He can smile when he writes the mortgage check, and be happy to come home every night after a hard day’s work.  And I will make sure that when its time to sell in a few years, he won’t be saddled with something that is hard to get rid of.  Bob’s a nice guy, I want to do the right thing for him, and help him get a home that’s right for him.

* I hope Bob’s little story is instructive and inspiring…and again, I say, get a buyer’s agent!

** In no way am I saying that all builders are like this one.  We have had great experiences with builders, and I think the majority are good business people with integrity.  Like most industries, there are very few bad apples, they just stink a lot!  

   MD Legislature passes The Real Property-Maryland Mortgage Fraud Protection Act

The Maryland Legislature passed several laws in April to help homeowners who are at risk of losing their homes, and to prevent future homeowners from doing becoming at risk for losing their homes. 

From a realtor’s point of view, the most notable issues are the changes to the lending industry: 

* Lenders will now be required to be licensed, and all mortgages must contain the license number of a mortgage originator or mortgage lender.  This would allow regulators to track which mortgage providers have the highest foreclosure and default rates. 

* Changes in the number of days until several steps of the process take place:  The foreclosure sale cannot occur sooner than 135 days after default. 

* SB218/HB 361 establishes requirements for a foreclosure consultant.  All of the details of this professional will be fleshed out in the future.  Suffice it to say, the foreclosure consultant will be trained and probably licensed, not a real estate agent or bank representative.  The consultant will have a fiduciary responsibility to the homeowner, similar to a RE agent, and will counsel the homeowner in all the aspects of the process.    They will work on commission, but limited to 8% or less of the sales price.

* The third bill passed establishes stricter penalties for anyone engaged or intending to engage in mortgage fraud.

Overall, I think these are some great steps toward preventing further fraud and helping homeowners in trouble.  I especially like the licensing of lenders.  It will make it possible to track fraud and actually find the people who are initially responsible.  The inability to hold lenders accountable has been a huge hole in the ability to prosecute fraud. 

We have a couple of lenders we have had relationships with for years.  If you ever need a good lender, check out our website.