The Liz Moore Market Watch

Would You Like to Lower Your Monthly Mortgage Payment?

Many people don’t realize that once certain conditions are met, mortgage insurance can be dropped, which can effectively lower a homeowner’s monthly costs by several hundred dollars.

First, you should understand what mortgage insurance is, and why you have it.  If you have a conventional mortgage on your home, and you borrowed more than 80% of the sales price when you initially purchased it, the investor (you may have heard of Fannie Mae or Freddie Mac) required your lender to insure the loan against default.  Lenders pass those premiums along to the borrower, via both up front and monthly payments.  The premiums vary depending on how much down payment you make.

Once your principal balance drops to 78% of the original value of the property, your conventional mortgage insurance will automatically cease. What most people don’t realize is that in certain circumstances, the lender will allow you to cancel the ongoing premiums early, which can save you a lot of money.  Here are the circumstances where that is possible, and the guidelines for dropping your MI:

1. Once your principal balance drops to 80% of the original value of the property, a borrower can request that mortgage insurance be dropped.  Your payments must be current, and it is up to the lender to assess the risk and make a decision.  There is no appraisal required in this scenario, and no cost to you to process the request.
2. If you believe that your home has appreciated in value to the point where your loan-to-value is 80% or less, you can call the lender (servicer of your loan) and request an appraisal.  If an independent appraisal substantiates your request, the lender may cancel your ongoing premiums.  There are “seasoning” periods that must also be met in this situation; if your new loan-to-value ratio is 75% or lower, you must have a track record of 2 years of on time mortgage payments.   If the new loan-to-value is 75.01%-80%, then you must have demonstrated on time payments for 5 years or more.
3. If you have made significant home improvements since your purchase that have increased the value to a point where your loan to value is less than 80%, you can call the lender (servicer of your loan) and request an appraisal.  If an independent appraisal substantiates your request, the lender may cancel your ongoing premiums.  In this case, there are no seasoning requirements.

Although the process can be a bit cumbersome, it’s likely financially worth your time and trouble.  Your REALTOR can help you determine your potential loan-to-value ratio before you go to the expense of investing in an appraisal.  Questions?  Give me a call at 757,645.4106 or email me at liz@lizmoore.com.

Technorati Tags: dropping mortgage insurance,lowering mortgage payment,80% loan-to-value

Are You Behind in Your Mortgage Payments?

Are you behind in your mortgage payments? Have you received a notice or warning from your mortgage lender that they are initiating foreclosure proceedings?  If the answer is yes, don’t be ashamed, and don’t panic. In the current economic climate, many homeowners in Hampton Roads are facing the same or similar circumstances. There are lots of reasons: job loss, serious illness, divorce…and, sometimes just a job relocation given the current market conditions can cause true hardship, and put you at risk of foreclosure.

The economic downturn has led to many homeowners being what we call “upside down” in their properties, essentially meaning that they owe more on their outstanding balance than the property will bring in the current market. This makes a traditional refinance virtually impossible.

Foreclosure is not inevitable. Depending on your circumstances, there are a number of alternatives out there, and it is very possible that there is a solution for your scenario that will not take such an extreme toll on your credit.

In order to maximize your chances of an effective work out, the most important advice we can give you is NOT to ignore your lender’s notices. It is critical to open a dialogue with your lender, and to reassure them that you are willing to work with them on finding a workable solution.

It helps to recognize that your lender would prefer an alternative other than foreclosure. They can incur significant losses through the foreclosure process. As a result, if there is a sensible alternative, they are generally willing to at least consider it.

This is also the ideal time to meet with your tax advisor if you have one, and a short sale specialist from Liz Moore & Associates. Our short sale team is specifically trained to assist in these situations, and they can help you explore and evaluate your options.

Loan Modifications

A possibility of which few folks are aware is what we refer to as a “loan modification.” Your lender may be open to modify the terms of your original loan, whether that means reducing the principal, lowering the interest rate, extending the period that the loan is amortized over (which effectively lowers your monthly payments), or other creative strategies to avoid foreclosure.

HAMP and HAFA

As part of the recent stimulus package, the U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure. These programs are HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternatives) program for short sales and deeds in lieu of foreclosure. To see if your lender is participating, visit www.MakingHomeAffordable.gov.

Short Sales

Short Sales are becoming one of the fastest-growing foreclosure alternatives. Many lenders will allow a home to actually sell for less than the amount of the loan, which is commonly called a “Short Sale.” This is attractive for lenders because they lose less money than in a foreclosure. Also, Short Sales generally take less time than foreclosures, so the banks don't have to carry the properties on their books as liabilities.

It's attractive for homeowners because the impact on their credit is far less than in a foreclosure. You may be able to buy another home in as little as two to three years after a Short Sale, compared with a typical seven-year wait after a foreclosure.  Short Sales are paperwork-intensive, and there are many details involved. If you're considering this option, it's critical to work with a trained real estate agent who knows all the steps required to successfully complete a Short Sale.

Technorati Tags: foreclosure avoidance,loan modifications,HAMP,HAFA,short sales

Our First $1 VA Move In Closing!

There is no better feeling in real estate than when a sale is successfully negotiated for a first time buyer.  In this case, it’s even better than usual!  The James, active duty at Fort Eustis, came into our Williamsburg office last month looking for rental property.  Charlotte Turner, agent on duty, was on her game, and shared with the James all of the benefits of home ownership, and the opportunities available to them at our $1 VA Move In program.  She showed them property, and they chose Susan Krancer’s listing – a brand new home in Stonehouse built by T. Snow. 

Today was closing, and the James are now proud homeowners of this fabulous new home!  Thanks to Kaja MacDonnell at Townebank, they secured a 4% VA loan (4%!  Wow!!), and have now begun their journey toward the American Dream!  We have lots of other listings participating in the program…check them out at www.OneDollarVAMoveIn.com!

 

Technorati Tags: VA loans,no money down,VA $1 Move In

Got One Dollar? You May Be Able to Buy a House!

Liz Moore & Associates is excited to launch the VA $1 Move-In Program. Participating Liz Moore sellers have partnered with 5 of our preferred lenders and Lytle Title to pay all of the buyers closing costs and prepaid items, including a survey and owners’ title insurance. What does that mean for VA eligible buyers? That you can put one dollar down as an earnest money deposit, and move in after closing with no more money out of pocket!

For example, you can buy a $300,000 home with 0 down will have a monthly house payment of $1530 (principal and interest only), for a 30 year loan with a fixed interest rate of 4.375% (APR 4.567%).  Hurry – rates may change! In this example, the seller will pay $6,700 of costs on your behalf, enabling you to move in for a dollar.

How do you learn more about the program, see if you qualify, and check out which listings are participating in the campaign? Just visit www.OneDollarVAMoveIn.com or call a Liz Moore office at 757.873.2707 (Peninsula) or 757.645.4106 (Williamsburg) for details!

Technorati Tags: no money down,va financing,seller paid closing costs

3.25%!

Wow!  I can honestly say I never thought I would see rates this low.  I have been bragging for a year when I refinanced my personal home at 4.5% that we wouldn’t see it lower!   And, it seems that the significance of the low rates is getting lost in the blur of such a volatile real estate market.

If you’re not in the market to buy a new home right now (move up, down size, or just try something different), then you should be seriously considering a refinance.  With a good credit score, you can get a fixed rate, 30 year loan at 4.25% for no points, and an adjustable rate at 3.25%!

Why consider an adjustable rate?  This particular program is fixed for 5 years at 3.25%, and then has a cap that would max it out at 8.25% only if interest rates continued to escalate over the second 5 years.  So, if you think you may only be in your next home for 5 years or less, it’s a great option!  Also a terrific option to help a college age get into their first home with a really affordable payment.

If you plan to be in your home longer than 5 years, than a low interest fixed rate is definitely the way to go.

If you can swing a 10 or 15 year loan, interest rates are 3.75%!!  The rule of thumb is that if the new interest rate is one point below your current rate, and you’re going to be in the home for at least 2 more years, and the fees are reasonable, then it makes sense to refinance.

Interested in exploring options?  We are fortunate enough to work with several great local lenders.  The rates quoted here are from Sun Trust loan officer, Nina Efird.  I would be happy to hook you up….just give me a call!  Or, you can visit www.lizmoore.com, click on buying and then mortgage calculators (http://lizmoore.com/buying/mortgage/calcs/index.php), and check out our calculator to see how long it will take to recoup your savings.

Technorati Tags: is it a good time to refinance?

39 Liz Moore Agents Earn SFR (Short Sale Foreclosure Resource) Certification!

One of the things I have always loved the most about a career in real estate is that every year brings with it a new market, and a new challenge. Staying ahead of the curve means both constant innovation, and a continuous cycle of learning and personal growth.

The economic challenges that our country has faced over the preceding years have dealt a significant blow to the real estate industry and to homeowners alike. There is a light at the end of the tunnel, however. Whether or not you believe that we have “hit bottom” and the market has begun a slow correction, it is fair to say that the industry is finally making some positive steps to contend with the hand we’ve been dealt. Legislation has recently passed to standardize some of the short sale processes for those lenders who participate. Incentives have been put in place to encourage foreclosure avoidance.

We are fortunate in many parts of Hampton Roads that our foreclosure numbers are not as bleak as other parts of the country. But, for those local homeowners who are facing foreclosure, it is essential that they find experienced professionals who possess the specific skill set to advise them through this difficult time. Knowing how to help sellers maneuver the complexities of short sales, and to be able to educate on the alternatives available for foreclosure avoidance are not merely good skills to have in today’s market – they are critical.

And, although not for the faint of heart, understanding how to help buyers pursue foreclosure opportunities is also a specialty in increasing demand, as the number of foreclosure sales in our market continues to climb.

In order to provide a resource in both these areas, Liz Moore & Associates has embraced the requisite education to serve this niche. I am very proud that 39 of our agents (that’s half!) have recently obtained the “Short Sale and Foreclosure Resource” designation from the National Association of REALTORS, and several more are currently completing the coursework. This certification gives them a framework of understanding to negotiate successfully with lenders on behalf of a distressed seller, and to tap into opportunities for prospective buyers. So, if you’re a seller who may be upside down in your property and you would like to explore your options confidentially, call us today and ask for an “SFR” certified agent.

Additionally, our firm has recently launched a niche website for Investors, www.TheSavvyRealEstateInvestor.com, and is conducting a series of free monthly seminars on “How to Buy a Foreclosure” for first time or experienced investors. Interesting in attending a class? Just shoot me an e-mail at liz@lizmoore.com, and we’ll get you details on the upcoming events.

Technorati Tags: SFR,short sales,foreclosures,foreclosure avoidance

No Mortgage Payments. No Qualifying. Really!

As part of our weekly Advanced Training Roundtable series, we enjoyed a presentation last week by Donn Turner, a Reverse Mortgage Consultant at MetLife Mortgage.  It was absolutely fascinating!

Over the years, reverse mortgages have developed somewhat of a bad rap.  But, as I listened to Donn enumerate the many advantages of the new program, I realized that reverse mortgages are an under utilized opportunity for many older adults.

What exactly is a reverse mortgage?  Essentially, it’s a mortgage that enables you to tap into the equity you’ve built in your home.  You can take out a lump sum of cash, or take monthly payments (yes, I said “take” and not “make!”).  Unlike a home equity loan, with a reverse mortgage, you do not need to make monthly repayments.  All you pay is property taxes and homeowner’s insurance.

The loan does not have to be repaid until the last borrower permanently leaves or sells the home.  If the house is sold, the loan is repaid along with the accrued interest.  You or your heirs keep any remaining proceeds.  If for some reason the outstanding balance of the loan is more than the house is worth when it is sold, the balance of the debt is forgiven.  There is no recourse to you or your estate.

You can use the money from your reverse mortgage in a variety of ways: from covering monthly living expenses to fulfilling life long dreams.  The money is available to you as a lump sum, monthly income, a line of credit, or any combination of these.

What are the qualifications?  You must be age 62 or older, and own your own home (and use it as a principal residence).  That’s it!  No income or debt qualifying, no credit score issues.  And, the home must meet HUD guidelines and minimum property standards.

Reverse mortgages can also be used to move up (or down) to a new property.  Interested in whether or not a reverse mortgage may be a solution for you (or a parent or friend)?  Give me a call or send me an e-mail, and I’ll be happy to connect you with someone who specializes in this product!

Technorati Tags: reverse mortgage,senior specialists in real estate

Great Financing News for Hampton Roads Investors!

One of my agents on our new Investor Team, Verle Melz, advises that VA has recently announced the return of a popular mortgage product that will be welcome news to local investors in the Virginia Peninsula region.  The U.S. Department of Veterans Affairs’ (VA) has re-opened Vendee Financing to purchasers of Vendee eligible VA REO Properties. Not all VA owned properties are eligible, though (that determination is made by VA).

What is VA Vendee Financing? It’s a loan product offered specifically to help finance the purchase of VA Owned properties. It is offered both to veterans and non-veterans, although veterans do have preference.

Up to 6% in normal seller contributions are allowed, and both a 15 year or a 30 year term are available. Vendee mortgages are assumable (as long as the new buyer qualifies), and no appraisals are required for underwriting.

This is a great source of financing for investors, because in addition to being available for non-owner occupied purchases, they can be obtained with as little as 5% down. Investors may use 75% of anticipated rent (based on an appraiser’s estimate) to offset the monthly payment, as long as they have experience managing rental property.

VA Vendee financing is an ideal mortgage solution for investors because (1) property condition is not an issue, (2) there is no maximum number of investment properties allowed, (3) the ability to use anticipated rent for qualification purposes, (4) only 5% down payments are required, (5) no mortgage insurance is required, and (6) interest rates are low!

Want to learn more about great investor financing options?  Visit our newest virtual office, www.TheSavvyRealEstateInvestor.com today!

Technorati Tags: va vendee loans,investor financing,va foreclosures,reo properties

What is an EEM?

And how in the world does it help me?  E.E.M. is an Energy Efficient Mortgage, one of the new products that work in conjunction with an FHA or VA mortgage.

It allows you to finance into your mortgage additional costs for storm windows and doors, heating and cooling systems, solar heating, insulation, and some other energy efficient plans.

FHA buyers can get up to 5% of the sales price (even if it exceeds local FHA loan limits), and VA buyers can get up to $6,000 additional funds added to their base loan amount.

Interested?  I would be happy to hook you up with a great local lender who specializes in this program!

Technorati Tags: energy efficient mortgage,loan products,VA loans,FHA loans,mortgage options

Don’t Be Penny Wise and Pound Foolish!

Last week was a volatile week in the mortgage markets…we saw interest rates jump up over 1/2 % in a matter of days.  That was an unwelcome surprise to buyers who prequalified at one interest rate, but by the time they selected their new home and negotiated an offer, found themselves making loan application and locking in at a much higher rate.

One of the biggest mistakes I am seeing prospective buyers make in this market is assuming that they have all the time in the world to pull a trigger.  The media has sent so many mixed messages suggesting that we haven’t hit the “bottom” yet, that many consumers are left in a perpetual state of “wait and see.”

Unfortunately, there is a significant down side to waiting for prices to drop.  That is that at the same time, interest rates are on the rise.

Let me illustrate my point:

A $250,000, 30 year loan at 5.5% has a payment of $1419. If the buyer waits until that price falls to $240,000, but interest rates have edged up to 6%, then that payment becomes $1438. Waiting wasn’t too smart, in that case!

There are also still some good adjustable rate products available; VA and FHA, for instance, offer 3-1 and 5-1 arms, where the rate is “fixed” for the first 3 to 5 years, and then adjusts annually after that.  If you plan to be in a house for a shorter term, adjustable rates are worth considering.

Technorati Tags: interest rates,adjustable rates,mortgage market