Tuesday, July 7, 2009

What to Do When the Sale Price Leaves You Short

If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.
1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if:
• Your property is worth less than the total mortgage you owe on it.
• You have a financial hardship, such as a job loss or major medical bills.
• You have contacted your lender and it is willing to entertain a short sale.
2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest. A qualified real estate professional can:
• Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
• Help you set an appropriate listing price for your home, market the home, and get it sold.
• Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
• Ease the process of working with your lender or lenders.
• Negotiate the contract with the buyers.
• Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include:
• A hardship letter detailing your financial situation and why you need the short sale
• A copy of the purchase contract and listing agreement
• Proof of your income and assets
• Copies of your federal income tax returns for the past two years
4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:
• If you have only one mortgage, the review can take about two months.
• With a first and second mortgage with the same lender, the review can take about three months.
• With two or more mortgages with different lenders, it can take four months or longer.
When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)
5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:
• You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
• Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
• Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

With Affordability Up and Interest Rates Down, Home Buyers are Starting to Return

Thanks to record low mortgage rates and declining home prices, 55 million families – or half of all U.S. households -- can afford today’s median-priced new home, according to figures released by the National Association of Home Builders (NAHB).
"That’s an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We are now seeing the first signs that home buyers are returning to the marketplace."
Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.
"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom," said Robson.
Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.
Single-family permits were up 11 percent in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority – 78 percent – said that now is a good time to buy a home. Of those responding to an online poll, 68 percent said that now is a better time to buy than six months ago.
Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March, 1.5 million visitors logged on to NAHB’s consumer Web site, federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20 percent of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.
"With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5 percent, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market," said Robson.
Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.
Construction of an additional 500,000 single-family homes – the difference between today’s anemic construction rate and one that would move closer to meeting the underlying demand for housing – would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade, and service sector jobs, he noted.
Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations. Clearly, housing will be central to any economic recovery we experience in the months ahead.
If you would like a detailed sales report on your specific property type or neighborhood, or would like to ask a lake real estate question, contact Michael at 877.365.cme1 (2631) or cme@yourlake.com View all lake area listings at www.cme1st.com You can also log your opinions on Michael’s real estate blog, www.AsTheLakeChurns.com

With Affordability Up and Interest Rates Down, Home Buyers are Starting to Return

Thanks to record low mortgage rates and declining home prices, 55 million families – or half of all U.S. households -- can afford today’s median-priced new home, according to figures released by the National Association of Home Builders (NAHB).
"That’s an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "We are now seeing the first signs that home buyers are returning to the marketplace."
Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.
"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom," said Robson.
Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.
Single-family permits were up 11 percent in February, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority – 78 percent – said that now is a good time to buy a home. Of those responding to an online poll, 68 percent said that now is a better time to buy than six months ago.
Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March, 1.5 million visitors logged on to NAHB’s consumer Web site, federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20 percent of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.
"With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5 percent, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market," said Robson.
Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.
Construction of an additional 500,000 single-family homes – the difference between today’s anemic construction rate and one that would move closer to meeting the underlying demand for housing – would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade, and service sector jobs, he noted.
Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations. Clearly, housing will be central to any economic recovery we experience in the months ahead.
If you would like a detailed sales report on your specific property type or neighborhood, or would like to ask a lake real estate question, contact Michael at 877.365.cme1 (2631) or cme@yourlake.com View all lake area listings at www.cme1st.com You can also log your opinions on Michael’s real estate blog, www.AsTheLakeChurns.com

Spring Market Showing Increasing Activity

April has shown a great increase in the number of potential buyers looking to make a purchase in time to enjoy the 2009 Summer Season.
If you would like a detailed sales report on your specific property type or neighborhood, or would like to ask a lake real estate question, contact Michael at 877.365.cme1 (2631) or cme@yourlake.com View all lake area listings at www.cme1st.com You can also log your opinions on Michael’s real estate blog, www.AsTheLakeChurns.com

1st Time Homebuyer Credits and Low Interest Rates

If you haven’t owned a home in the past 3 years, I advise you to consider getting back into home ownership. With the 1st Time Homebuyer Credit at $8,000, interest rates at an historic low and am ample selection of homes to choose from combined with motivated sellers there may not ever be a better time to buy.

The homebuyer’s credit is available on purchases made from January 1, 2009 to November 30, 2009 and actually reduces the amount of taxes due by the amount of the credit. If you owe less in taxes than the credit, you will receive a check for the difference. Many people don’t realize they are eligible for this credit or what the details are. If you would like me to send you a copy of NAR’s frequently asked questions guide, please call or email.

Daryl Weatherman, long time lake area builder and developer has recently chosen me to market his newest development, Pointe Royale Resort Community. Located at the 3.5 mile marker of the Big Niangua and on State Route EE at Greenview, this development is perfectly situated to take advantage of quiet water and roads but is just minutes to activities, dining and shopping.

Daryl has secured 4.875% 30 year fixed rate financing with NO points for buyers. Take advantage of this along with the 1st Time Homebuyer Credit and you’ll have a great value! Prices range from $128,900 to $192,850 for 2 and 3 bedrooms units. The quality of construction provides low maintenance, excellent sound proofing and fine upscale details usually found in higher end custom homes.

I’ll be glad to send you a full information packet for Pointe Royale or you can stop by the decorator model 10 a.m. to 4 p.m., 7 days a week. For a virtual tourvisit us 24/7 at www.PointeRoyaleCondominiums.com

If you would like a detailed sales report on your specific property type or neighborhood, or would like to ask a lake real estate question, contact Michael at 877.365.cme1 (2631) or cme@yourlake.com View all lake area listings at www.cme1st.com You can also log your opinions on Michael’s real estate blog, www.AsTheLakeChurns.com