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New FHA Guidelines – Coming Soon to Tucson

March 1, 2010

In an announcement earlier this year, HUD announced changes to FHA home loans.

Starting early April 2010:

• the upfront mortgage insurance premium will increase from 1.75% to 2.25% of the loan amount.
• seller contributions to buyer costs cannot exceed 3% of the purchase price, down from 6%.
• borrowers will need a FICO score of 580 or better to qualify for the 3.5% down payment.

FHA financing is incredibly popular with first time home buyers here in Tucson, though you don’t need to be a first time home buyer to get an FHA loan.  A lot of first timers have good jobs, decent credit, but don’t have the cash savings for larger down payment amounts.  Starting soon, those FHA home buyers are going to pay a bit more for the homes that they purchase.  I don’t think these changes are going to bump a whole lot of people out of the market – at least that’s my opinion given the first time home buyers I typically work with in Tucson.

The Mortgage Report Man Dan explains it in greater detail here (who can now lend in Arizona, by the way).

Think You’ll Never Pay Full Price in this Market?

January 22, 2010

“Well, in this market, I’d never pay full price.”

Not so fast there.  There’s a big difference between paying full price and paying full value for a home.  There’s absolutely nothing wrong with paying full price – or more – for a house if the value is supported.

Consider the list price to be a general relative indicator of value – we’ll assume when we first see a home that the list price is somewhere in the ballpark of true value.  Sometimes the list price is too high and sometimes it is too low.  Not every seller is overpricing their home.  Some are serious, ready to sell, and price their homes very well.

Be more concerned with value, and not hung up on price.  To find value, we’ll look at what other homes are selling for in the area, make adjustments for condition and location and amenities, make adjustments for the effects of the market in general over time. 

If we think a home’s value is greater than the price, well, you just might need to offer something over the list price in order to get it.  And you’ll very likely find yourself in competition for that home.

Think it doesn’t happen?  Fourth quarter of 2009, in Central Tucson – of the 267 sales, 127 were at or above list price.  That’s means 48% of the sales were AT or OVER the list price.

If you find yourself a great deal, priced under value, then move on that – and quickly.

FHA 90 Day Rule and First Time Buyers

September 28, 2009

I found a lovely house for some of my Buyer clients the other day.  It had been listed previously as a short sale and was under contract, but was suddenly withdrawn from the market.  Turns out, the property was foreclosed upon and bought at auction by an investor.

The investor put in new carpet, painted it, cleaned up the yard, installed new appliances, and put it back on the market within about 2 weeks, for only $5k more than it was listed last time.

So now, it’s a great house, in really good condition with some nice fresh upgrades at a really good price.

Except my clients can’t buy it.

Like many first time buyers, they’re using FHA financing to purchase their first home.  FHA financing lets them come in with a smaller down payment, and the credit score requirements are a bit more lenient than conventional financing.  It’s fabulous financing for first-timers who have steady jobs and a little bit of savings, looking to get into that first home.

But FHA says that the owner of the property has to have held it 90 days before any Buyer with FHA financing can buy it.  In fact, the offer itself must be dated on the 91st day or later.  Which takes this house completely out of the running because it sold on the first day it was listed, and I’m pretty sure they got more than the list price for it.

Of course, not every ‘flip’ is a great deal for home buyers, and certainly many are not well renovated, but it’s frustrating to watch a good one go by and not be able to compete.

Open Housing

September 21, 2009

I have a buyer client who absolutely LOVES going to open houses.  I can’t blame ‘em.  Open houses are fun to visit.  When else does the general public have an opportunity to randomly wander through other people’s houses, see what they look like inside, how it’s been decorated, what they did with the back yard. 

As a buying strategy though, there are more effective methods.  Trying to find the perfect home by driving around and visiting open houses is like firing randomly into the woods and hoping to hit a chicken. Or other woodland creature. 

Odds are not in your favor. 

Especially when we can search the Tucson MLS and know there are exactly 45 homes that meet your criteria and can go visit all of them together, on our own time, at our leisure, without anyone chasing us around the home.

They’re fabulous for getting to know a neighborhood though, to see examples of homes in the region.

$8000 Tax Credit for First Time Home Buyers – Expires Soon

August 26, 2009

I’ve talked about it a little in my Tucson real estate market reports, but for those that don’t know – there’s an $8000 tax credit for first time buyers that expires December 1, 2009. 

The home buyer tax credit is only for first time buyers, according to the IRS.  And those are people who have not owned a home in the last 3 years.  Excluded from the credit are first time home buyers who file taxes separately and whose income exceeds $95,000, those who file jointly and whose income exceeds $170,000.

There are a few other guidelines – mortgage guru Dan covers them well in this article.

BUT – you have to close on your home on or before December 1, 2009.

Given a typical escrow is 30-45 days in Tucson – let’s use 45 days just to play safe – if we count backwards, that means you need to have a home under contract by October 16th.  Throw in a couple of days for negotiating, and you need to be making offers probably by October 10th, at the absolute latest.

Which is in 46 days. 

If you think you may qualify for this program and want to take advantage of it, it’s time to get moving.  Get thee to a lender to get pre-approved, and get thee home shopping.

If you’ve got questions, send me an email.  Happy to help where I can.

Measuring Up

July 7, 2009

I like to be helpful when I can, whether small scale or large.  One of my favorite little things I do that is helpful is to always carry a measuring tape.  And I do, in the glove compartment of my car.  I can’t tell you how often that little guy has helped one of my clients determine if their couch will fit in a living room, or if the side yard is big enough for their RV, or if the garage is deep enough for their truck, or just generally to measure out room or yard dimensions.  So if we’re working together and you’re wondering how big a room is – just ask!  We’ll grab my tape and get an answer.

I know, it’s just a little thing.  But I think it’s kinda nice.

photo via Flickr, courtesy of padsbrother

Will Higher Loan Costs Hit Today?

January 12, 2009

News on the mortgage front from people I trust – Fannie Mae’s new fee structure is about to work its way through the system, and some have predicted your rate and closing costs will be higher starting today. 

Remember, it’s for Fannie Mae backed loans only – no FHA or VA, jumbo, or niche/portfolio loans.

So what’s this increased costs all about?  Dan Green of The Mortgage Reports explains further here.

In a nutshell, Fannie Mae introduced risk-based pricing and it is about to come into effect.  If they think you’re a bigger risk, you have to pay more to get the loan.  More or less.  So if you’re looking at a lender’s published rates, they may or may not apply to you because the lender now has to assess your risk level and adjust pricing for Fannie Mae loans. 

Might be a good time to call your lender and check those rates and fees if you’re looking to buy a home and have a pre-approval in hand.

Rising HOA Fees

December 1, 2008

I was showing a few luxury condos here in Tucson the other day and got into an HOA fee discussion.  After doing a little research, we discovered condo community where the fees have more than doubled over the past 3 years, from the low $100s to the high $300s.  Which isn’t an insignificant increase over such a short duration on very new units. 

There are many HOAs that are trying to raise fees right now.  Those in foreclosure or otherwise tight budgets often let the HOA dues slide first.  When you buy a home with a homeowner’s association, you’re usually supposed to receive copies of the most recent financial report and reserve studies and copies of the operating budget.  Typically, you’ll get these on a disk in the mail, and you really need to check those things out.  I don’t get copies, only you.  So make sure you’re looking into the financial stability and dues history of homes in an HOA.

Falling in Love with the First One

October 2, 2008

Buying a home is a series of choices – and after you’ve decided what you want and need, and have your financing ready to go, we’ll head out and start looking at homes, so you can pick the right one for you.

 

Occasionally, I have a client who falls in love with the first home we see, but doesn’t trust that choice, thinking, how can I know if it’s the right one if I haven’t seen everything else?

 

Here’s what I know after showing thousands of homes, in every part of Tucson, to many, many home buyers: Not everyone has that "A-HA!" moment right when they walk in the door.  Chances are, you’ll have a good attitude when you walk in, and like what you see.  And that feeling grows as you tour the rest of the home.  But because there was no flash of light, no sudden insight the minute you stepped into the house, you’re not sure if this is the right one. 

 

So here’s what we do: we go see a couple more homes.  And then we’ll go back to the first one.  And if it feels right, if it feels comfortable, if it seems even better after seeing the others, chances are, you’ve got a winner.

 

And on the plus side, I’ve likely already checked out a good portion of the homes that meet your criteria, so we’re hopefully only seeing the best of the best to start with.  So it’s okay to fall in love with the first home, and it’s okay to be unsure about that.  Getting you to a place where you can make comfortable decisions is what I do – and we can get there.

The Junkmail Deluge

September 30, 2008

One of my recent first time home buyers called me the other day, asking about the mounds of refinance, home equity lines of credit, and credit card offers piling up in her mailbox, whether they were important or not.

 

Usually – not important.

 

In Pima County, home sales are public record, which means that companies can take a feed of those records, see that you just bought a house, for how much, and send you a bunch of junkmail, offering you loans or refinances and whatnot.  By and large, you can ignore this stuff.

 

However – it’s worth at least a quick look to make sure that the mail is really junk and not your existing lender telling you that they’ve sold your loan to some other company.  Many times, the company you make your monthly mortgage payment to changes fairly quickly after you buy a home, so you need to watch for a letter from your existing company, and a letter from the new loan servicing company with your payment coupons.

 

Because you don’t want to be digging through 3 days of trash to find that payment coupon you ripped into pieces without even opening the envelope, so that you can tape it all back together and mail in your mortgage payment to the new loan servicing company when you realize your loan has been transferred.  Not that I’d know from experience or anything.

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