My New Blog

Come to this Open HOuse and fall in love with this great starter home: 3 bedroom ranch on quiet cul-de-sac. Owners gutted and rebuilt the home with new roof, sheetrock, re-done kitchen, 2 baths, hardwood flooring, crown moulding, new furnace, 2 zone how water baseboard heat, secluded lot, convenient to shopping and highway access

A GREAT STARTER HOME, NOTHING TO DO BUT MOVE IN

With the depreciation in home values created by the current market, those seniors that have taken out reverse mortgages should take the time to get their properties evaluated for current value so as to not put themselves into a negative position. I have experienced a situation this past year where the amount loaned led to deficit positions for the families of seniors that have passed with this type of mortgage.

The problem exposed itself, when the value of the property, when presented back to the bank after the senior had passed, was worth less than the amount the bank had loaned to the owner. With assets held by probate, the bank was first in line to recover their money, and the heirs were left with an under valued property to sell. This was done with an additional loss. 

A reverse mortgage is a special loan available to homeowners who are at least 62 years old. With the security created by the senior's home, reverse mortgages require no payments from the owner. Most owners receive monthly payments, or loans, from the lender. If they choose, they can receive a line of credit or a lump sum payment, or both. The owner continues to live in the home. Payments would continue until the owner moves from the residence or dies. At that point, the entire loaned amount, plus interest is paid to the lender. 

As many seniors had their homes appraised at the height of the market, some may also have chosen to refinance at the same time to consolidate an existing mortgage into the reverse. The most popular reverse mortgage is the Home Equity Conversion Mortgage, insured by FHA. As retirement investments have plunged, and work opportunities grow scarce, reverse mortgages have become a valuable retirement tool for older Americans. 

One downside to a reverse mortgage is it's cost. The costs to set up a reverse mortgage can be almost as much as the costs associated with selling a home. The largest single cost is for FHA mortgage insurance, with the next largest cost being the origination fee. As with a conventional mortgage, however, most of these costs can be rolled into the loan, but it will reduce the amount of equity available to the senior, and increases the repayable loan amount along with its added accrued interest. Another concern would be the potential affect the additional income would have on programs such as Medicaid.

If a senior is contemplating a reverse mortgage, they might do well to contact an independent HUD counselor to get help in understanding the process, risks, and fees. Information from HUD can be found here

An article I saw over the weekend in the newspaper indicates that we are going to see a big jump in foreclosures soon, and this wave could last a while. Here In Connecticut, foreclosure filings increased in the 3rf quarter, but are rate of increase is still below the national trend. That, however, could change in the next few months as a new wave of Variable-rate mortgages reset.

Third-quarter fillings increased by 10% in Connecticut, over the same period a year ago. Foreclosure filings in this state increased 69% in the third quarter compared with the second quarter.

In our state, approximately 1 in every 281 households received a filing during the three-month period. Connecticut, which had the eight highest foreclosure rate in the nation in January of 2008, is now ranked 25^th.

Nationally, foreclosure filings jumped to 937,840 during the quarter, a 23% increase from the third quarter of the previous year. Across the nation, one in every 136 households received a foreclosure notice during the third quarter.

Across the country, the states of Arizona, California, Florida, Illinois, Michigan and Nevada accounted for 62% of the nation’s foreclosure activity in the third quarter with 579054 filings. California led the way with 250,054 foreclosure filings, accounting for nearly 27% of the country’s total.

Experts expect the numbers to get worse in the coming months because many of the variable-rate mortgages taken out in the past 5 years have yet to encounter their first interest-rate reset period, which in many cases occurs only after the first three to five years. The majority of the first wave of mortgage defaults were caused by variable-rate mortgages that reset after being fixed for two years, resulting in severe shock for a lot of borrowers. Now we will be seeing mortgage rates reset on the sub-prime loans that had fixed rates for a three to five year period.

Over the next few months, we are going to see the start of a new wave of variable rate mortgages resetting, in combination with an economy that has a lot of people either losing their jobs, losing their overtime, or getting their hours cut.

Why Are You Pricing Your Home Like Clothing at the Mall?

Sellers who really want to sell their property NOW so that they can move on, are more involved with analyzing their price point than ever before.  It seems that most sellers want to price their property with something that ends in '99'--$299,000 or $499,900, etc.  Here's what I ask them:

"You're about to move to Prospect and your Realtor® has set up a search for you through his/her MLS.  Can you tell me what your price parameters are for that search?  When you're searching online at night for homes in the Prospect(or Middlebury or other city of choice), what price points do you use in your own search?"

They'll say, "We're moving up a bit so, we enter $300,000 - $400,000."

"What if you were searching from $300,000 to $400,000  here in Prospect?  You would completely MISS this home in your search!  Had you priced it at an even $300,000, you would capture buyers from both the $300,000 - $400,000 AND the $400,000 - $500,000 ranges.  Setting the price at $399,000, will cause you to lose an entire group of buyers for your home!"

They look at me for a minute and my analytical-minded clients have an ah-ha moment!  Then, they completely agree with me!

Try it, it WORKS!  I recently listed a townhome in a complex that had 23 townhomes on the market when we listed.  We priced the property at an "even" price and we were under contract in 10 days--last one on the market, first one off!  If you searched MLS for the even number, either way (least price or highest price) you would catch this listing!  When you look at the others, every one of them were 'off-beat' numbers and were missed by 1/2 of their prospective buyers.  

Stop pricing your homes as though they were sale-price clothing at the mall!  Use those 'round' numbers and see how it works for you.  You'll instantly expand your pool of buyers!  

Your sellers will love you!

This is a repost of a blog by Dede MAxwell on Active Rain modified for our local markets.

 

Yesterday the House of Representatives unanimously voted to extend the $8,000 first-time home buyer tax credit to active military personnel, foreign service and intelligence officers.  HR 3590 extends the existing tax credit to this group until November 30th, 2010.  The bill now goes to the Senate, and is expected to pass with the same ease.

The bill was introduced by Rep. Charles Rangel (D-NY) because it was thought that military personel serving oversees this year did not have the same opportunity to take advantage of the tax credit.  If the original qualifications are met, the extension applies to military personnel who spent at least 90 days of the current calendar year oversees.  It also does not require borrowers to payback the tax credit if they are deployed after receiving it.  The current tax credit requires borrowers payback the tax credit if they do not occupy the home within three years of receiving the tax credit.

No word yet on whether the $8,000 tax credit will be extended for all eligible borrowers.