1st Dominion Realty

Buying a Home

What do I do to assist people who want to purchase a home? What kind of services are helpful?

If lately you have applied for a mortgage loan, or know someone who has, you’ll be aware that getting a loan has become a lot more challenging than it was in the past.  In some respects, that is good, as a big problem that helped bring on the big economic crash of several years ago (and that we still live with today) was lenders making home loans to people who did not have the ability to make their loan payments.
 
Starting sometime in 2013 getting a home loan will become even more difficult.  Stricter lending guidelines called Qualified Mortgage (QM) and Qualified Residential Mortgage (QRM) will come into effect.  The idea is to set standard guidelines to be followed by lenders and to be met by borrowers in order for the loan to be warranted and/or sold to Fannie Mae and Freddie Mac.  In other words almost all lenders will follow the QM and QRM guidelines as they will not want to ‘eat’ the loan in the event the borrower fails to make payment.
 
In a follow up email I’ll try to explain the issues surrounding QM and QRM, but perhaps the main one for home owners hoping to sell their current home is that borrowers are going to have a harder time getting a loan. 
 
How will this affect the just beginning economic recovery?  How will the shadow inventory of ‘foreclosed’ homes the banking industry has not released to the market yet, but eventually will, affect recovery?  We’ll find out. 

I received this blog from Bill Tucker, well known Charlottesville area real estate attorney.  Please read it.  If you have purchased a home recently or know someone who has, this message may prove important to you.

Tip 39-2012:  New Scam for Purchasers – “Deed Processing Notice”

 

There is a new scam targeting Purchasers of real estate which usually occurs several months after the closing.  A questionable organization, which goes by “Secured Document Services”, “National Processing Center”, etc., with a Washington, D.C. address is sending new purchasers a “Deed Processing Notice“.  This notice recommends that the property owner needs a copy of their recorded Deed from their respective Clerk’s Office.  The notice contains data from the local public records about the purchase (“Property Profile”).  To make it even easier to scam you, they include a prepaid addressed envelope. 

 

All the homeowner needs to do is pay “Secured Document Services” $85.00 for this fantastic service.

 

WHAT A RIP OFF!!

  

First off, the attorney or settlement company performing the closing will usually give the Purchaser a copy of the Deed being recorded.  Secondly, the Clerk’s Office will usually send the recorded Deed to the homeowner after the Clerk’s Office is finished processing the Deed.  This will normally occur within one to two months after the closing.  (Just ask your settlement attorney to give the Clerk a self addressed stamped envelope to return the actual recorded Deed directly to the homeowner.) 

 

Finally, the Deeds recorded in the Clerk’s Office are public records.  Anyone can get a copy of any recorded Deed for as little as 50 cents to one dollar per page (usually no more than two or three pages).  This is a clever scam.  Please warn your clients and we will, too.

 

PS – Click here to view a sample “Deed Processing Notice”.

 

Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions, or visit our blog below for previous tips.  Thank you for allowing us to send you this email.    

 

Please share this tip on your social media sites (buttons above.)

       

  

William D. Tucker, III   

Tucker Griffin Barnes P.C.  

Photo Gallery – VideosFirm Brochure

Charlottesville, VA 434-973-7474 | Lake Monticello (Palmyra, VA) 434-589-3636  

Once again LeRoy Houser has a great blog entry about credit scores and short sales (as in, how a short sale affects a person’s credit).  Here’s the article and follow the links for more detail.

Credit Scores Are Nothing To Sneeze At

Crumpled rejected loan applicationMost states now have a pre-licensing course for those seeking a license to sell real estate (usually called Principles of Real Estate or something similar). The subject matter covers everything from how to measure the square footage of a home to how to write a sales contract. However, most of the agents I’ve had in my Short Sale & Foreclosure classes over the past several years have had no or very little knowledge about credit scores, which can make or break a real estate deal in a nanosecond—even at the closing table.

There’s also a lot of confusion about the effect of a short sale transaction and/or a foreclosure on a person’s credit score. I’m convinced that many of those who sell their homes short are shocked to discover that the effect on their credit score was the same as if the property had been lost to foreclosure. I’m not an expert on credit scores, but I know who the experts are—so the objective of this blog is to introduce you to two invaluable sources of updated information that you can pass along to your customers and contacts.

1. Check out this recent article that appeared in the Washington Post, written by Kenneth Harney, entitled “Short sellers may take a big hit on their credit scores, fairly or not.” It’s one of the best articles I’ve read on the effect of a short sale on a seller’s credit score and about who does and doesn’t control what goes into a credit score calculation. Take a read: http://www.washingtonpost.com/realestate/short-sellers-may-take-a-big-hit-on-their-credit-scores-fairly-or-not/2012/09/06/b3e49cc0-f6ad-11e1-8398-0327ab83ab91_story.html

2. FICO (Fair Isaac Corporation) is a leading source of helpful information for both real estate agents and their customers, and I believe that including the source of this information in a newsletter or on a website could have a positive impact on an agent’s professional reputation. There are many myths about credit scores that are dispelled on the FICO website, along with much helpful information regarding how to improve and maintain credit worthiness. FICO’s Credit Education page can be accessed here: http://www.myfico.com/CreditEducation/FactsFallacies.aspx

The role of a real estate agent has gone from being the source of homes for sale to the source of all real estate information—and this customer wants more information from us than most customers we’ve had in the past. They can find the home to buy on the Internet, but they want to know how to buy it and help with decisions and problems. The information we present on websites and social networks and in newsletters extends our reach to people we’ve never met via those who pass along the material to help someone they know. The source of the information truly becomes the source of the sale, so the more information you give to the right people, the more sales you will make.

LeRoy

 

Open House, Sunday 6/17, 1-3 PM. 

209 Surrey Road, Charlottesville, VA.    Dir:  from Barracks Road Mall take Barracks Road going west just a very short distance.  Turn left on Surrey Road.  This home is almost in the cul de sac.

Ready to move in! This spacious home has 4 roomy bedrooms and a large finished basement. Very close to UVA and 3 county schools, minutes to downtown C-Ville, easy walk to Barracks Rd Mall. Open kitchen with granite counter tops and family room w/fireplace are perfect for entertaining. Screened porch, basement office w/fireplace. Dining room and living room with built-ins. New in 2009: windows, front & screen door, heat pump, house wrap and siding. Roof new in 2005. Great Neighborhood!  Check out the Visual Tour:  http://www.visualtour.com/show.asp?T=2711519

 

Open House, Sunday, 6 May, 1-3PM

3640 Echo Valley Road, Barboursville, VA.  From Charlottesville take Rt. 20 (Stony Point Road) northbound.  After 8 miles or so Echo Valley Rd will be on the right hand side.  Go about 1.5 miles to home on right.

How Green My Valley

Craftsman-like cottage, beautiful wood floors & accents, unique & efficient hot water heating system, central A/C, updated windows, custom kitchen by Blais Gaston. Magical location flanked by Southwest Mt Rural Historic District’s 31,000 acres of preservation & within Blue Run Ag District. Separate studio/office has electricity & heat. Peace & Nature Supreme. Near end of Echo Valley Rd, off Rt. 20 north, Barboursville. Contact me for more information.

 

Just a few thoughts on the home buying process. 

I’ve helped a number of people purchase homes this year.  In almost every case there were delays in closing caused by the lender, even though my purchasers were well qualified to borrow.  I think this is the situation with virtually all lenders.  They are being very careful and plodding in closing the loan, verifying, reverifying, asking for the same information over and over again.  I do not blame them for being careful, but the delays cause anxiety for both purchasers and sellers.  Some of my purchasers came to believe they were not going to be granted a loan and started calling other lenders.  Some of the sellers came to believe the purchaser’s loan was being denied, even after provisional approval, and were getting pretty angry that their property had been off the market for a month or more waiting for a settlement they no longer believed would happen.  In every case, after a good deal of anxiety and stress, the loans did close and the property did transfer ownership.  The delays in closing spanned from a couple days to more than a month.  Fortunately none of these purchasers had a moving truck parked outside their intended home, and none of the sellers were buying another property that they needed to close on in order to move out of their current home.  My point:  plan for delay.  With luck you will close as scheduled or at least close to your planned settlement date.  But if not planned for, delays can cause you big problems and cost real money.  Hang in there!

THINKING OF BUYING A FORECLOSURE?

Foreclosure, foreclosed property, REO, bank owned…  Pretty much all the same thing.  It means that a property owner/borrower stopped making the monthly loan payment on his/her home loan and the lender or their representative took back ownership by various legal means (depending on the State the property was located in).  By the time the lender has taken back the property it has been vacated.

The lender does not like doing this.  It doesn’t want the inventory of homes that it needs to turn around and sell.  Given the current state of the economy and the real estate market, there is a huge inventory of foreclosed homes.  Not all are on the market.  When on the market they tend to be priced below what market value should be for their location, thereby causing neighborhoods and the real estate market itself to decline. 

Further, these foreclosed properties are often ‘distressed’, either from deliberate trashing by the former owner or through lack of upkeep.  The lender frequently shuts off utilities, and this can be a disaster during the hot humid months of the summer when shut-up homes become habitats for mold.  The values of these homes continues to drop until they are priced so low they attract investors who buy them up cheap, do fix up, and either rents them out or ‘flips’ (sells) them. 

If you are thinking of buying a foreclosure there are some things to keep in mind:  your purchase offer needs to be very ‘clean’ and straightforward, and you need to be pre-qualified for the loan you plan to apply for.  Keep in mind that if you are going to use a conventional loan to purchase the home, the home itself will need to ‘qualify’.  It cannot be so distressed that the lender will refuse to make a loan on it.  You can buy a distressed property by using an FHA 203K loan, which has renovation funds built into the loan.  The 203K loan process requires patience as there are some hoops to jump through, but it does may possible purchasing a sadly distressed property in a good location for a great (low) price, and at the end of the process have a great home worth more than what you have into it.

Banks, their representative, HUD, the VA, Fannie Mae, Freddie Mac…  all of them are not interested in purchase offers that have ‘contingencies’ such as the purchaser needing to sell or rent their current home.  Make your offer very clean.  Some of these sellers, Fannie Mae in particular, sometimes offers to pay closing costs for the purchaser (depending on the agreed upon sales price) or to include renovation funding. 

Good luck!  This is a time of great opportunity for potential home buyers.  Home prices can be very low, interest rates are low, and there is a huge amount of inventory to choose from.  A few years from now a lot of people will look back at this time and think “Geez, I wish I had bought property back then when I had the chance.”

CONDO FINANCING

Many lenders in our market area will not make a loan on a condominium unit.  Clients of mine recently did secure financing and at advantageous terms.  They are getting 90 percent loan to sales price financing:  an 80% of sales price  loan at 4% interest rate with a 15 year term; and a 10% of sales price loan at 5% interest rate with a 22 year term.  To say the least, they will quickly pay off the smaller loan.  The larger loan at 4% interest rate is a terrific product, and they will save a great deal of money by paying off that loan in 15 years. 

There are loan products out there  that can finance the purchase of a condominium, it just takes a little scratching around to find them.  And as you can see, the loan terms my clients are getting are very good indeed.

Moving to Charlottesville, Virginia?

 

The City of Charlottesville is the crown gem of central Virginia. Home to the University of Virginia, Mr. Jefferson’s academic village, Charlottesville also hosts many other attractions. Good theaters, good restaurants, improving shopping. The downtown walking mall is the social focal point of this community sporting restaurants, small shops, businesses, street entertainers, and the amphitheater that hosts nationally known musical performers. Fridays After Five is a remarkable street scene with thousands of people crowding the mall to enjoy mall-side restaurant seating, the free concert at the amphitheater, or just to see and be seen. In fact there are always a lot of people on the mall most times of the week.

There are many neighborhoods that make up the fabric that is the City of Charlottesville. Starr Hill, Fifeville, Belmont, the Woolen Mills, Hog Waller, Greenbrier, Rose Hill, Meadowbrook Hills, and more. If you are moving here you will want to explore all these locations, especially if you are planning to purchase a home.

A lot of history took place right here in the city, some of it celebrated, such as the ride of Jack Jouett, and some of it shameful, such as the place at Court Square where slaves were sold. In the coming weeks I plan to write brief stories about the neighborhoods, the history and events, the famous and infamous, and the contemporary every day life of this remarkable city.

What is a Short Sale?
 
 
 

 

When a homeowner is no longer able to make the payments on the loan for his/her home and therefore sells it, but what they net from the sale of the home is not enough to pay off that loan. This situation is called a Short Sale, and because the price the home sells for does not cover the amount still owed, the lender can approve or disapprove the sale. In other words the lender gets to decide how much money it is going to lose as a result of the sale. A Short Sale can take a long time to get from contract signing to settlement, sometimes many months, and both purchasers and sellers need to be patient. After the sale, the lender may still seek recovery of the balance of the loan from the now former owner. In any event, the former owner’s credit record will be affected adversely.   What does this have to do with a home buyer?  Although a short sale will require patience and a little daring, the short sale price is likely to be LOW and a good deal for the home buyer.  Contact me for more information.