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Zero Down!

February 21, 2012 By Leave a Comment


*Article written for and distributed by Extention Matters Magazine .  Author Joshua A. McGrath, Broker-Owner, Real Estate Central, LLC*

A guide to home ownership with little or no down payment

    There is a common misconception in today’s real estate market that a 20 percent down payment is necessary to purchase a home. Actually, this could not be further from the truth. There are several avenues that would-be homeowners can consider even if money for a down payment is slim to non-existent. From government programs to banks to grants, this article explores some home-buying options of which you may not be aware. We’ll also break down the presumably complicated home-buying process so you’ll know what to expect if you choose to take the plunge this year.

Government Programs

    The government agencies have provided opportunities for first time home buyers. These include the Federal Housing Administration (FHA) and the United States Department of Agriculture (USDA). These programs can afford first time home buyers a home loan with zero to 3.5 percent down, many with interest rates in the four percent range.

    The USDA also has a loan program of which many buyers, agents and even loan officers are unaware. The USDA Direct Loan allow buyers with less than perfect credit to buy a home with ZERO down and ZERO in closing costs and may even afford some buyers assistance with the monthly payment and interest rates as low as one percent. As with any program, stipulations do apply. For instance, the property must be located in an eligible rural area as defined by the USDA (USDA, 2011).

Bank Programs

    Given recent media attention, it would seem that banks are very strict presently, with it being nearly impossible to get a home loan. However, this is another misconception. Banks have actually let loose of the purse strings a bit, with some banks offering loans to borrowers with a credit score as low as 580. Fifth/Third Bank, for instance, has loans available with 100 percent financing for doctors and residents so long as they have a letter of intended employment.

Grants

    Grant money is also available. If you are a first-time home buyer and have served in the military or reserves, the Dream Maker program from the PenFed Foundation will provide you a 3-to-1 match up to $5000 with no repayment requirement (PenFed Foundation, 2011). The details on the Dream Makers program can be found at www.PentagonFoundation.org. You can also apply for the grant right on the website. This is a great way for the brave men and women who have served our county and protected our freedom to experience the freedom of the “American Dream.”

The Home-Buying Process

    The home-buying process is nothing to be scared of yet many buyers are afraid of the entire process and continue to pay rent for years, wasting time and money that could be building equity in a home of their own. The buying process is not simple; however, if you work with an experienced realtor, they will help guide you through the entire process.

    So where do you begin? Start by meeting with a realtor to see what the local real estate market is doing and what options they feel might be best for you and your situation. Then you will want to meet with a mortgage loan officer to determine your ability to purchase. They will be able to provide you with a letter of loan approval which will give you the competitive edge when you find that perfect home. If they are unable to provide you with an approval, most will give you the information you need to get on the right track and to ensure that you’re working toward the ability to own your own home.

    Once you have been approved and found the perfect home be sure to get it inspected. This is most likely the largest investment you will ever make and you need to be sure it is a sound one. Having a home inspection will help give you peace of mind that the home you found is in fact the “perfect home.” We all know there is no such thing as perfection, so be prepared for the inspector to find some issues that will need addressed. This is, after all, what you are paying him to do. Once you have received the report back from the inspector, go over it in detail with your agent and comprise a list of your major concerns, assuming there are no concerns that are so cost prohibitive to make that the seller would not be willing to consider them. Once you have your list the realtor will get it to the seller and hopefully all parties can agree on a repair plan.

    The next step is the appraisal which is ordered by the lender. The lender will have this completed to protect their interest, and in most cases this is a prepaid expense that you will have to pay. Most appraisals run between $300 and $500. Assuming that the value of the property is determined to be equal to or more than that of the purchase agreement then the loan process will continue through final underwriting and then to a successful closing.

    And then, you are a homeowner! Hopefully your agent negotiated for the seller to provide you a One-Year Home Warranty. If not it is recommended that you purchase one. They run around $500 for the year and cover items such as the washer, dryer, kitchen appliances, electrical systems, HVAC and so much more. These are renewable every year and can be purchased on your current home.

    While all real estate transactions are vastly different, and not all are smooth, at the end of the day being a homeowner is an amazing feeling and part of the American Dream. As 2012 gets under way, perhaps this could be the year that dream comes true for you.


References

PenFed Foundation. (2011). Dream Makers. Retrieved November 28, 2011, from http://www.pentagonfoundation.org/site/PageServer?pagename=dream_index.

USDA. (2011). USDA Rural Development. Retrieved November 28, 2011, from http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.

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Kill the Clutter, Not the Sale.

January 30, 2012 By Leave a Comment


I’ve been in many different homes over the years. Some were immaculate showcase quality homes, while others needed a hazmat suit to enter. Regardless of circumstances, all homeowners and Realtors want the same thing – The home sold quickly and for top dollar. However, I am finding myself faced with a constant and reoccurring problem, clutter. Cluttered homes take longer to sell and sell for less than their competitors.

The meaning of clutter has different interpretations to different people.

When you are selling your home, clutter takes on a whole new meaning with potentially unwanted and substantial consequences. To Realtors and homebuyers, clutter means one thing…too much stuff. It means that the seller has too many possessions and the real character and space of the home cannot be seen. One of the last things a Realtor or seller wants to hear about their home is that “it doesn’t show well”. That’s a stigma that can be hard to shake.

Homebuyers are very savvy nowadays and they expect more.

They do not go into homes wearing blinders either. Even though you may live in the home, and all of your possessions are important and have meaning to you, they don’t to buyers. They do not want to see a garage full of car parts, boxes, or lawn equipment. The garage is for cars, and buyers want to see how much space they will have for their vehicles, not how many boxes of Christmas decorations will fit in there. They probably will not appreciate the spare room with the thousands of Hummels that you have worked so hard collecting the past 60 years either. After all, that room is supposed to be a bedroom right? And let’s not forget about the 15 pieces of furniture that you have in the family room, or the hundreds of family pictures that cover the walls. Buyers cannot get an idea of how their furniture will look in the space, or how their wall art may compliment the room, when all they see is your stuff.

I know it may be hard, and I appreciate the sentimental attachment that sellers have to their belongings. I myself have items that I really should part with…kids toys they no longer use, clothes they have out grown, purses, shoes, and don’t get me started on my junk drawers. Notice I said DRAWERS. I have 3…ok maybe 4 of them. However, I am not selling my home. I am living in my home. When you sell your home, it needs to look less lived in and more staged for selling.

So what happens if you don’t cut the clutter?

Well, when a seller’s home is too cluttered, it may be used to help spring board the sale of a competing home. The buyers will go on to view similar homes, and even though they may not have as much space, character, or features…chances are, they will buy one that is not yours. So if you can’t cut the clutter, the next step is to cut the price.

But I don’t want to cut the price!

Great…neither do I!! Have a yard sale. Give some items away to charity. Share your collections with your family. Donate items to your church. Whatever is left…box up and store. Put things in the attic, or hide things under the bed. If you still have a lot of stuff, you may want to consider renting or purchasing a storage unit. However, remember that you are moving. So the more stuff you keep the more stuff that will have to be moved. So if you are down- sizing, or perhaps combining households, are you really going to have enough room in the new home?

Moving can be stressful, selling your home should not be. I do not like telling my sellers that they have too much stuff. I don’t like reducing the price. I do not like delivering negative feedback to my homeowners. But I have to. It’s part of my job. As a seller, you can make things easier on yourself, and your Realtor, by just eliminating some things that you do not HAVE to have for your daily routines. Besides, if you don’t before you sell….I promise you will when it comes time for packing and moving. J So do you want to sell your home, or just live in it and list it?

For additional tips:

http://www.suzettebaileyrealtor.com/2011/10/sell-your-home-with-great-staging/

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WV Helps Lead the Nation’s Housing Recovery

January 23, 2012 By Leave a Comment

A boom in farm prices has caused many Midwest cities to emerge as leaders for some of the strongest predictions for housing appreciation in 2012. Kansas City, Kan., came in the top spot in HousingPredictor’s annual survey, forecasting an appreciation of 5.8 percent for this year.

“The recovery is starting in housing with these cities and will eventually spread to other communities throughout the nation as the U.S. recovers from the worst collapse in real estate since the Great Depression,” according to HousingPredictor.

Here are the top cities expected to have housing appreciation in 2012 and by how much, according to HousingPredictor’s latest report:

1. Kansas City, Kan.: 5.8%

2. Topeka, Kan.: 4.7%

3. Charleston, W.V.: 4.5%

4. Oklahoma City, Okla.: 4.3%

5. Minot, N.D.: 4.2%

6. Overland Park, Kan.: 4.2%

7. Wichita, Kan.: 4.1%

8. Huntington, W.V.: 4%

9. Wheeling, W.V.: 3.9%

10. Bismarck, N.D.: 3.6%

11. Casper, Wyo.: 3.5%

12. Lake Charles, La.: 3.4%

13. Rapid City, S.D.: 3.2%

14. El Paso, Texas: 3.2%

15. Cheyenne, Wyo.: 3.2%

Source: “Best Housing Markets 2012,” HousingPredictor (January 2012)

Read More:
15 Cities Where Listing Prices Are Rebounding

This article was written and distributed by the National Association of Realtors  http://realtormag.realtor.org/daily-news/2012/01/03/several-housing-markets-head-for-appreciation-in-2012

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WV Slashes Taxes on Businesses

January 9, 2012 By Leave a Comment


The Charleston Regional Chamber of Commerce has been on the ground floor of tax reduction, working diligently to make the state more attractive to businesses.

On Jan. 1, the state’s corporate net income tax rate decreased from 8.5 percent to 7.75 percent. In 2013, it will continue its descent to 7 percent. By 2014, that rate will tumble to 6.5 percent.

In addition, the state also continues to phase out its business franchise tax, which will be completely eliminated in 2015. The tax decreased from 0.034 percent to 0.027 percent on Jan. 1.

It was 2007 when the Charleston Chamber worked closely with then Gov. Joe Manchin and his “Tax Modernization Project” to reduce the state’s business franchise tax and corporate net income tax. It was a pivotal year.

The administration of current Gov. Earl Ray Tomblin has continued to mold policy that has produced the strong fiscal state that West Virginia presently enjoys.

As the next legislative season approaches, the Charleston Chamber will continue to speak out for the policies and reforms that drive profitability for your business, growth for our communities and enhancement in our quality of life.

“This is the time to become aggressive about economic development. This is the time to think big,” said Chamber Chairman Mike Basile. ”The 2012 Chamber initiatives check both boxes. This session promises to be both exciting and productive.”

Find out more about the Chamber’s 2012 agenda at the annual Issues & Eggs breakfast on Wednesday, Jan. 11. The event offers an excellent opportunity for you to hear directly from your representatives on the issues that matter to you and your business.

It will be held at the Charleston Marriott Town Center from 7:30-9 a.m. To register for the event, click here.

Written and distributed by the Charleston Regional Chamber of Commerce.

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Pending Home Sales Rise Again in November, Highest in a Year-and-a-Half

December 29, 2011 By Leave a Comment

Washington, DC, December 29, 2011

Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for December will be reported January 20 and the next Pending Home Sales Index will be released January 25; release times are at 10:00 a.m. EST.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.

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I Want to Buy a Foreclosure Too!

December 15, 2011 By Leave a Comment

So you want to buy a foreclosure in West Virginia. Or at least you THINK you want to buy one. Maybe you are thinking about “flipping” it. Perhaps you would just like to get a great deal on a home. This may sound great, but in reality, things are much different than what most people expect.

What’s so great about a Foreclosure?

The answer to that is PRICE, but that can be a misconception. Most foreclosed homes are priced below market value. At least that is the public perception here in WV. However, our market is different than the rest of the country. We do not have an abundance of foreclosed homes saturating the housing market and weighing down prices. Typical WV homes actually appreciate in value.

But they are cheaper right?

The simple answer, yes. But they are cheaper for a reason. Often those that are unable to make their housing payments are also unable to afford the necessary maintenance, and the home condition becomes distressed. Or, the previous home owners became disgruntled and purposely damaged the house. There are even situations where significant damage to, or failure of, the home has occurred and the owners “just want out”. Issues such as flooding, fire, foundation failures, etc. all can be expensive problems that can make a homeowner feel trapped.

Good Price, but lots of work.

So yes, foreclosures in WV can be a great deal, but most come at a price – work, construction, updating, and lots of it. Thinking to yourself “That’s ok, work doesn’t scare me”? Great, but it does your bank. The fact is many foreclosed homes will never qualify for a loan. Even if the property did qualify, chances are cash buyers are interested in the home as well, and cash trumps a loan every time.

Dealing with the banks

Foreclosures are typically owned by a bank and they want rid of these “toxic assets” ASAP. As such, they will always take the best offer for them. So what would be the best offer for them? Simple – a reasonable cash offer, which will close in less than 2 weeks, with no inspections, and no seller’s concessions (closing cost assistance, repair money, etc.). This IS NOT optimal for the average buyer. For a typical purchase, you want a home inspection. You want to ask for needed repairs. You may even want the seller to help pay your closing costs. So who usually is able to submit the best offer? Cash investors. The bank gets rid of a bad asset, the investor gets a good deal, and the average home buyer is spared the trials of major renovations to the home (and any other unforeseen issues).

So are you really ready for a Foreclosure?

If you think you may be, ask yourself a few questions.

  1. Are you able to pay cash?
  2. Are you a licensed contractor, or have access to one?
  3. Are you able to pay for unexpected costs, which sometimes can be painfully expensive?
  4. Do you have the funds to renovate and repair problems?
  5. Do you have the knowledge and patience to act as a foreman or project manager?
  6. Are you willing to buy the house without any inspections?

If you answered yes to all of these questions, then you are definitely ready. If you answered yes to most, then you still may have a chance. If you answered No to most or all, then you may want to reconsider what you are about to get into.

Do I even have a chance at getting a foreclosure?

Yes, but the ones that would be available are very few and far between. There are several government entities that actually give first priority to non-investors to their foreclosures. Rarely a lender may even be willing to do necessary minor repairs in order for the home to qualify for a bank loan. Some lenders even offer rehab mortgage loans that can help get the foreclosed property into acceptable living conditions. So there are exceptions to every rule, but they are not the norm.

Things on TV may look good and are great entertainment, but that doesn’t mean just anyone can do it. You can watch open heart surgery on TV, but are you going to pick up a scalpel and start cutting? Just be mindful of what you are getting yourself into, and set realistic expectations. That alone can put you one step above the competition. And finding a good foreclosure is just that, a competition.

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