Home Financing

2016 Real Estate Forecast

Forecasts for the 2016 housing market are starting to trickle in; analysts are predicting that next year’s market will be a picture of “moderate, but solid growth.”

Several real estate pundits are predicting about a 3% year over year growth in housing prices with price increases being dampened by predictions of mortgage rates increasing to 4.65% for a 30-year fixed by the end of 2016.

Total sales of existing and new homes will reach 6 million for the first time since 2006; new home starts will increase 12 percent and new home sales will grow 16 percent, but it will take continued growth in both the gross domestic product and the job market to get there.

The U.S. economy in 2016 is expected to power forward at a steady, reasonable pace. Surveys of lenders continue to show that credit is becoming more available for homeowners, aided by new jobs for millions more people now working.

Lawrence Yun, chief economist for the National Association of REALTORS® expects a moderate annual increase in sales of existing homes of around 7.3 percent in 2015, rising 2.9 percent in 2016. Even brighter is the outlook for new-homes sales, projected in 2015 to grow at 14.9 percent over 2014 levels, and 16.7 percent in 2016.

2015 may have marked the best year for housing since 2007, but the market will likely get even rosier in 2016, according to a recent real estate forecast by Realtor.com®. One of the main drivers behind the brighter 2016 is the projection that employment will continue to grow, which will add to consumers’ wallets and allow them to purchase their first home or upgrade to a new one.

Realtor.com® highlights the following housing predictions for 2016:

1. ‘Normal’ is coming.

Expect a healthy growth in home sales and prices – at a slower pace than in 2015. “This slowdown is not an indication of a problem-it’s just a return to normalcy,” writes Jonathan Smoke,Realtor.com’s® chief economist. New construction and distressed sales are expected to return to more historical levels, and home prices are expected to follow at “more normal rates consistent with a more balanced market.”

2. Generational buying trends shape up.

Young adults’ presence on the housing market has been largely predicted for years, but 2016 may finally be the year they make a move in a larger way. Millennials represented nearly 2 billion sales in 2015 – one-third of home-buyers. They are expected to continue to be a major buying pool in 2016 with the majority of buyers between ages 25 and 34 expected to be first-time home buyers next year.

But two other generations will also have a big presence in 2016: financially recovering GenXers and older baby boomers who are entering retirement, Realtor.com® notes. “Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers,” Smoke notes. “Gen Xers are in their prime earning years and thus able to relocate to better neighborhoods for their families. Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living.”

3. New-home construction focuses more on affordability.

Builders have been faced with higher land costs, limited labor, and concerns about the demand of the entry-level market. As such, they have shifted to constructing more higher-priced homes, which has caused new-home prices to rise significantly faster than existing-home prices. In 2016, they likely will shift to more affordable product to cater to the entry-level buyers.

4. Higher mortgage rates.

Mortgage rates will likely be volatile in 2016. But the recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher in the New Year than the historical lows they have been at for years. The 30-year fixed-rate mortgage will likely end 2016 about 60 basis points higher than today’s level. “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase,” Smoke says. “However, higher rates will drive monthly payments higher, and, along with that, debt-to-income ratios will also go higher.” The markets with the highest home prices will see the effects from the higher rates the most.

5. Rents to go up even higher.

Rental costs are skyrocketing, and the costs are likely to only go up in the New Year. More than 85 percent of the nation’s markets have rents that exceed 30 percent of the income of renting households. “Rents are accelerating at a more rapid pace than home prices, which are moderating,” Smoke says. “Because of this, it is more affordable to buy in more than three-quarters of the U.S. However, for the majority of renting households, buying is not a near-term option due to poor household credit scores, limited savings, and lack of stable income of the kind necessary to qualify for a mortgage today.”

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Kim Around the Web, Mortgage Information, Real Estate, Real Estate Closings, real estate news, Real estate trends by Kim Bregman
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Feds Lift Key Interest Rate

The Federal Reserve is raising interest rates after seven years of record lows. But it’s signaling that further rate hikes will likely be made slowly as the economy strengthens further and muted inflation rises.

The Fed’s move to lift its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent ends an extraordinary seven-year period of near-zero rates that began at the depths of the 2008 financial crisis. Consumers and businesses could now face modestly higher rates on some loans.

The Fed’s action reflects its belief that the economy has finally regained enough strength 6½ years after the Great Recession ended to withstand higher borrowing rates. But the statement announcing the rate hike said the committee expects “only gradual increases” in rates going forward.

Rates on mortgages are not expected to rise much soon. The Fed’s benchmark rate doesn’t directly affect them. Long-term mortgages, for example, tend to track 10-year U.S. Treasury yields, which will likely stay low as long as inflation does and investors keep buying Treasurys.

But rates on some other loans, like credit cards and home equity credit lines, will likely rise, though probably only slightly as long as the Fed’s rate hikes remain modest.

For months, Chair Janet Yellen and other Fed officials have said they expected any rate hikes to be small and gradual. But nervous investors have been looking for further assurances.

The central bank’s target for the federal funds rate – the interest that banks charge each other – has been at a record low between zero and 0.25 percent since December 2008. At the time, Fed officials led by Ben Bernanke were struggling to contain a devastating financial crisis that triggered the worst recession since the Great Depression.

The recession officially ended in June 2009. But unemployment kept rising, peaking at 10 percent before starting to fall. The jobless rate is now at a seven-year low of 5 percent, close to the Fed’s target for full employment.

Some analysts expect the Fed to raise rates at every other meeting in 2016, for a total of four quarter-point moves. Others think that after Wednesday’s hike, the Fed could wait until June before raising rates again.

While Fed officials want to move slowly, an acceleration in inflation could force them to raise rates more quickly.

Filed under: Blog, boomerrang homebuyer, Exclusive Buyer Agent, First Time Homebuyers, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, Mortgage Information, Real Estate, Real Estate Closings, real estate news by Kim Bregman
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10 Reasons Why Another Real Estate Crash is Unlikely Today

How concerned should investors and homebuyers be that we’re headed for another real estate crash as we approach the 10-year anniversary of the infamous 2006-2007 housing bubble? Not at all.

Although buyers are paying spectacular prices for commercial properties and trophy homes, just as they did then, this time price increases are being fueled by foreign investors seeking diversification and a haven for their funds, as well as investors on the hunt for a low interest-rate environment.

Real estate is still a favorite life raft for nervous investors, who are seeking safety amid market volatility.

This has led to record real estate prices, which some have interpreted as a sign that the U.S. real estate market is once again climbing into bubble territory and headed for another crash. But a repeat of the 2009 real estate implosion that followed the collapse of the equities market in 2008 is highly unlikely this time.

Here are the top 10 reasons why:

1. Most Americans Have Refinanced to Fixed Rate Loans

Most Americans who could refinance to a fixed-rate mortgage have already done it. As a result, the impact of interest-rate shock when short-term ARMs re-adjust will be minor, compared with what happened in 2008-2009. During that period, many Americans could no longer afford their new mortgage payments and defaulted.

2. Bank Repossessions are Flushing Out Old Distressed Properties

Bank repossessions recently rose to the highest levels in more than two years, signaling that banks are dealing with properties in default and flushing out old distress, rather than ingesting more. Foreclosure activity continues to fall.

3. Loans in Foreclosure Are at the Lowest Level Since 2007

Despite an increase in bank repossessions, the percentage of loans in foreclosure nationwide is just 2.1% — the lowest level since 2007, according to the Mortgage Bankers Association.

4. There’s Less Risk of a New Mortgage Bubble

The market is no longer fueled by a surge in new housing loans based on loose credit standards. Tighter requirements for loan approvals that followed the 2009 mortgage meltdown reduced the number of foreclosures nationwide to a 10-year low. This tempers the number of real estate bubbles that can pop and, if the market slows down, there may be a contraction, rather than a pop. New TRID requirements are further evidence of guarantying a healthy mortgage market.

5. Interest Rates Are Likely to Remain Low for the Foreseeable Future

The likelihood the Federal Reserve will raise key interest rates recently lessened, following the economic disruption coming out of China. As a result of recent market volatility around the globe, rates have not climbed as expected and the risk of higher rates has diminished for the foreseeable future. It’s also important to mention that China’s slowdown could also positively impact U.S. property values, as global funds seek relative stability in the U.S. real estate market.

6. First-Time Buyer Assistance Programs are Luring New Buyers into the Market

New initiatives have been put in place to assist prospective first-time homebuyers. At the beginning of 2015, the Federal Housing Administration (FHA) moved to reduce annual mortgage insurance premiums by up to $900 per year. This move could push home sales up to 5.6 million — the most seen since 2006- and it could introduce as many as 140,000 new buyers to the market, according to the National Association of Realtors. The FHA’s program aims to transition millennials and others from renting to owning a home.

7. Job Creation Indicates the Economy is Getting Stronger

The United States has added jobs at a steady rate over the past five years, and many of the jobs that were lost during the recession have been brought back. Additionally, the quality of jobs being created has improved as the economy has recovered.

8. Average Residential Home Prices Have Risen at a Slow, Steady Pace

Unlike the high-end, luxury market, prices for average residential homes have risen at a slow, steady pace. According to the S&P/Case-Shiller Composite 10-Home Price Index, residential home prices remained 15 percent below their April 2006 peak as of July 2015.

9. New-Home Construction Has Not Recovered from the Downturn

The supply of existing homes for sale today is lower than it was in 2000, although the population has grown more than 14%. New, single-family starts are 60% below the 2006 peak and roughly 25% below the average for the past 15 years.

10. Commercial Real Estate Remains Below Peak Levels

Commercial real-estate fundamentals are similarly healthy, and although commercial real estate prices have increased steadily since the crash, they still remain below peak levels. Vacancy rates are at or near all-time lows for apartments and warehouses, and are at their lowest post-crisis point for office and retail properties.

Commercial real-estate development also remains more than 25% below its pre-recession peak, which has led to improved property fundamentals, with both occupancy rates and rents rising.

The real-estate market today has a stronger foundation than it did in 2006, thanks to more disciplined and conservative credit underwriting of debt and a market that is much healthier than it has been at any point during the past decade.

Nearly 10 years after the bubble began, the message to investors is clear: Rest assured you are looking at a chastened and more disciplined market in which to participate — not another looming bubble.

By Chris Leavitt, Contributing Writer for The Street

Filed under: Blog, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Home Maintenance, Homebuyer Advice, House Closings, Kim Around the Web, Mortgage Information, Real Estate, Real Estate Closings, real estate news, Relocation, western north carolina real estate by Kim Bregman
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Residential Real Estate Closing Costs and Fees

In addition to a down payment, you will also have to have sufficient cash on hand to pay for closing costs. The person purchasing the home pays usually closing costs, but with some mortgages (VA for example) the seller can pay closing costs. A little-known fact is that a big part of costs and fees actually go to third parties who process the mortgage, as well as local governments as taxes.

The average closing costs percentage is usually about 2-5% of the purchase price. But all cash buyers may end of paying less and high risk buyers getting a loan may end of paying more.

As an informed mortgage customer, you should make your mortgage banker walk you through each cost, and explain in detail what you are paying. Lenders are required to give you a Good Faith Estimate.

It is advisable that you fully understand the total cost of purchasing a home in advance of finalizing a contract. State laws and fees will vary depending on the practice and real estate law within the state. Here’s a breakdown of the most common closing costs and fees with a rough estimate of average cost:

Appraisal :($200-$600) – This is paid to the appraisal company to confirm the fair market value of the home.

Buyer’s Attorney Fee: (not required in all states – $400 and up)

Lender’s Attorney Fee: (not required in all states – $150 and up)

Escrow Deposit for Property Taxes & Mortgage Insurance: (varies widely) – Often you are asked to put down two months of property tax and mortgage insurance payments at closing as a requirement by the lender.

Credit Report: (up to $50) – A Tri-merge credit report is pulled to get your credit history and score. You cannot supply your consumer pulled report and the scores pulled form the internet from any place other than myfico.com are not real scores nor are they accurate.

Closing Fee or Escrow Fee :(generally calculated a $2.00 per thousand of purchase price plus $250 – $500) – This is paid to the title company, escrow company or attorney for conducting the closing. The Title Company or escrow oversees the closing as an independent party in your home purchase. Some states require a real estate attorney be present at every closing.

Home Owners Association Transfer Fees – The Seller will pay for this transfer which will show that the dues are paid current, what the dues are, a copy of the association financial statements, minutes and notices. The buyer should review these documents to determine if the Association has enough reserves in place to avert future special assessments, check to see if there are special assessments, legal action, or any other items that might be of concern. Also included will be Association by-laws, rules and regulations and CC & Rs. The fee for the transfer varies per association, but generally around $200-$300.

Title Company Title Search or Exam Fee (varies greatly) – This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.

Survey Fee (varies greatly) – This fee goes to a survey company to verify all property lines and things like shared fences on the property. This is not required in all states but will be required if you are getting a loan. The cost will depend on if an existing survey exists, if there have been additions or deletions to the property since it was last surveyed, the size and complexity of the property, et. al.

Courier Fee (up to $50) – This covers the cost of transporting documents to complete the loan transaction as quickly as possible.

Lender’s Policy Title Insurance: (Calculated from the purchase price off a rate table. Varies by company) – This is insurance to assure the lender that you own the home and the lender’s mortgage is a valid lien. Similar to the title search, but sometimes a separate line item.

Loan Application Fee: (Varies by lender) A fee charged to process an application for a loan, such as a home mortgage from a lender or mortgage broker.

Owner’s Policy Title Insurance: (Calculated from the purchase price off a rate table. Varies by company) – This is an insurance policy protecting you in the event someone challenges your ownership of the home.

Transfer Taxes :(varies widely by state & municipality) – This is the tax paid when the title passes from seller to buyer.

Recording Fees: (varies widely depending on municipality) – A fee charged by your local recording office, usually city or county, for the recording of public land records.

Processing or Loan Origination Fee :(varies by lender) – This goes to your lender. It reimburses the cost to process the information on your loan application.

Underwriting Fee: (varies by lender) – This also goes to your lender, covering the cost of researching whether or not to approve you for the loan.

Loan Discount Points: (often zero to two percent of loan amount) – “Points” are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan.

Pre-Paid Interest :(varies depending on loan amount, interest rate and time of month you close on your loan) – This is money you pay at closing in order to get the interest paid up through the first of the month.

Private Mortgage Insurance: If your down payment is less than 20%, the lender may require that you purchase this insurance to protect them from repossessing and selling the home for less than the loan value.

Property Taxes: proration depending on what has been already paid or is owed by the Seller:

Wood Destroying Pest Inspection and Allocation of Costs: – If required by the lender or buyer, the inspection generally runs up to $125.00

Last, but not least, you probably will get your own home inspection to verify the condition of a property and to check for home repairs that may be needed before closing. These inspections can include general inspection, RADON testing, seawall, pool and roof inspections, Chinese drywall, mold and more.

Closing costs and fees are part of a mortgage, and knowing what they are and how much they should be is a good idea. This will put you in a position to challenge a cost or fee that seems exorbitant. Even if everything is correct, you have the right to ask, and your mortgage company has the duty to explain — in detail — each and every closing cost and fee.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Real Estate Closings, Relocation by Kim Bregman
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TRID: What it means for you as a Homebuyer

On November 13, 2013, the Consumer Financial Protection Bureau issued a rule regarding changes to current early disclosure and closing documentation used on mortgage loan transactions. Anyone in the real estate or mortgage industry should understand that new regulations called TRID (TILA/RESPA Integrated Disclosures) and how they will have an impact on the timing and notifications required throughout the closing process.

But what does TRID mean for you as a homebuyer? If you have previously bought or sold a home, you’ll see two main changes: forms and closing deadlines.

Forms. The Truth-in-Lending Statement and Good Faith Estimate will be replaced by a new Loan Estimate. The Final Truth-in-Lending Statement and HUD-1 documents will be replaced by the Closing Disclosure.

These forms have been changed to provide the buyer with a clearer picture of the costs involved with mortgage financing, and to give the buyer more time to review and accept these terms. These changes originate from the CFPB (Consumer Financial Protection Bureau) as part of the Dodd-Frank Act. The standard real estate contacts are changing as well to reflect the dates and timing of obtaining a loan.

What is most important is the impact on the time it may take to schedule a closing under these new rules. Buyers must receive and acknowledge their Closing Disclosure at least 3 business days prior to the closing. This will require more coordination and communication between agents, closing attorneys and lenders to ensure this takes place. It is very important to make sure you are working with an informed team of agents, closing attorneys and lenders in order for the process to go as smoothly as possible.

Keep these three primary areas in mind while preparing yourself for the home buying process if you are planning on getting a mortgage:

The old forms are out.

The homebuyer will be receiving new disclosure forms from lenders explaining the loan estimate and loan closing. The Loan Estimate form combines the Good Faith Estimate (GFE) and the Truth in Lending Disclosure into a shorter form that should be easier to understand and explains the mortgage loan’s key features, costs and risks at the beginning of the mortgage process.

Under TRID, a lender cannot impose any fee, except a reasonable fee for obtaining a consumer’s credit report, on a consumer until the consumer has received the loan estimate and has indicated intent to proceed. This should make it easier for a consumer to shop for and understand interest rates, but it might take lenders longer to preapprove someone because they are going to be extra careful when collecting and reviewing borrower information.

The Closing Disclosure form combines the final Truth-In-Lending statement and the HUD-1 settlement statement into a shorter form that should be easier for the consumer to understand and provides a detailed account of the entire real estate transaction, including terms of the loan, fees and closing costs.

This disclosure might transform the closing table from a nightmare experience with piles of documents to review for the first time into a more manageable, slightly bad dream of reviewing the information ahead of time.

With more information provided by the lender before the closing date, the various roles held by the lender and title company at the closing table might change. Stay tuned.

2. The disclosures must be provided within a specific time frame — or else.

Lenders must provide the Loan Estimate form to consumers within three business days of applying for a loan – which means three business days after the consumer provided the lender with their name, income, Social Security number, property address, property value estimate and mortgage loan amount sought.

The Closing Disclosure form must be provided at least three business days before loan consummation (the time the consumer becomes contractually obligated to the mortgage, which is usually at closing).

Any significant changes to the loan terms (the annual percentage rate (APR) becomes inaccurate, the loan product changes or a prepayment penalty is added) will restart a new three-business-day waiting period. Both the Loan Estimate and Closing Disclosure forms can be delivered in person, by mail or electronic delivery.

3. The closing process will be impacted this in the months to come.

The TRID rules apply only to loan applications received after Oct. 3. Lenders will be extra careful and hesitant after this date, while providing mortgages so as not to be out of compliance with the new rules. This will most likely translate to longer timelines to get a mortgage and will delay closing dates.

This, in turn, will impact the tight timelines around moving into a home while consumers are also coordinating assets, move-in dates, time off of work and so on.

Plan for extra time to close while everyone tests out the new system and becomes familiar with new regulations and how to work together and train staff. If you are a Buyer, look for agents, attorneys and lenders that are using electronic disclosures and e-signatures. This will dramatically shorten the loan process by almost two weeks as compared with those that are relying on the US Mail.

Many common real estate practices that you have experienced in the past will be more difficult or even impossible after October 3. Critical issues like dates per the sale agreement and how changes to the deal will impact timing may cause delays because of the three-day rule and the requirement that lenders now prepare the CD. The need for Title companies and real estate agents to submit information much earlier in the process will definitely add more hurdles to jump over to close a transaction.

In my opinion, CASH transactions, will carry a much higher level of negotiation leverage for the next several months until this process becomes the norm.

Filed under: Blog, boomerrang homebuyer, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Real Estate Closings, Relocation, western north carolina real estate by Kim Bregman
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2015 – The Year of the Boomerang Buyer

This year is already shaping up to be the year of the boomerang buyer, or the repeat homebuyer. As it is now seven years since the housing crash, there are many buyers who experienced a financial hardship in the recent past who are getting back into the market to purchase a home again in 2015.

There were several changes recently to the waiting periods when a buyer or homeowner can obtain a new mortgage and repurchase a home again after a foreclosure, short sale or bankruptcy. Borrowers today essentially have three options when it comes to obtaining financing to purchase a home. In fact, more than 9 out of 10 mortgages are either funded by Fannie Mae/Freddie Mac, the FHA or VA. So, if you are looking to purchase and need financing, it is more than likely you will be using one of these three financing options and it is important to know the current waiting periods when you can repurchase after a hardship.

After Foreclosure:

Conventional: Seven years. If you included the foreclosure in a bankruptcy, you can qualify after four years instead of seven years.
FHA: Three years. FHA buyers can qualify again after just one year if they experienced an economic event.
VA: Two years.

After Short Sale:

Conventional: Four years.
FHA: Three years. If the FHA buyer did not have any late payments before their short sale, they are allowed to automatically qualify again for FHA financing. There’s also a fantastic FHA program called the FHA Back to Work Program. If a buyer experienced an “economic event” whereby their household income fell by 20 percent or more for a period of at least six to 12 months, the agency has now reduced the waiting period to only one year.
VA: Two years.

After Bankruptcy:

Conventional: Chapter 7, four years; Chapter 13, two years.
FHA: Chapter 7, one year; Chapter 13, one year.
VA: Chapter 7, two years; Chapter 13, one year.

What if you don’t fit into these rules?

There are new mortgage options available for borrowers who do not fit these more traditional mortgage options above. Portfolio lenders are stepping in to provide mortgage options for buyers who cannot qualify for conventional, FHA and VA financing, and with terms much better than private financing.

There are lenders who will provide financing for buyers less than six months out of a foreclosure, short sale or bankruptcy. Of course, this does not come without a price. You need a larger down payment and rates will be higher than traditional loans.

Another part of the puzzle to helping you get in a position to repurchase again is ensuring you have also started to re-establish your credit since the financial hardship.

For example, even though the required timeline of say two or three years may have passed so you can qualify for conventional or FHA financing again, it is important you have also started to rebuild your credit and have the required credit scores to qualify again for financing. The FHA and VA only require a 580 credit score to repurchase again.

The first step is to get a copy of your credit report to verify if the financial hardship or discharge is reporting correctly and to also see what your scores are.

You can go to www.annualcreditreport.com to get a free copy of your credit report (consumers are allowed one free credit report per year).

Then the next step is to start rebuilding your credit scores.

Filed under: Blog, boomerrang homebuyer, Down Sizing, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, Real Estate, Relocation by Kim Bregman
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Why Use a Real Estate Attorney

For most people, buying a home is the largest and most significant purchase they’ll ever make. Hiring a real estate attorney early in the process will protect you against the unexpected, and ensure a smooth and low-stress closing. Every state and sometimes regions within states have differing requirements. Some states leave that as an option open to the buyer and seller while others mandate it as a necessity. Your local real estate agent should be able to advise you what the protocol is in the area in which you are buying.

A real estate lawyer will protect your rights and interests in the transaction…unless you are using an Exclusive Buyer Agent; they are the only party truly “on your side”. Hiring a real estate attorney is a smart choice. A real estate attorney takes over after the selling price contract terms have established and all parties have signed. They will review the contract itself, negotiate repairs based on the home inspection report, and collaborate with the title company.

A real estate lawyer has the experience and training to handle the unique issues regarding real property, and the problems most people can’t anticipate. They see a lot of contracts and know the local customs, and can help cut through roadblocks. In most states a real estate agents cannot draft changes to the contract or give legal advice and very few transactions fit into a “boilerplate” contract. In addition, most Realtor form contracts are drafted to the benefit of the Seller; an attorney will add language to further protect a buyer’s interests.

Your lawyer will review the purchase agreement during the contract review period and will check the fine print of the Conditions, Covenants and Restrictions (CC&Rs) in common interest developments like condominiums, coops, country club communities, developments, and townhome projects.

Your attorney works with your mortgage loan officer, the other party’s attorney and agents to make sure that dates are set for attorney approval, home inspection, title search, mortgage commitment and other contingencies are reasonable and achievable.

Your attorney will also review important documents, including legal descriptions, mortgage loan documents, the property survey, and the title and title insurance policy, and deed.

The attorney will inspect important documents for common mistakes such as typos and misspelled names, including the legal description of the home.

The bill of sale may be another important part of the transaction that categorizes and inventories any personal property, such as appliances or furnishings, that are to be included as part of the deal.

They are also extremely helpful in negotiating for unpaid prorated expenses due to you from the seller, such as: property taxes, condominium assessments, and utilities

In most states, attorneys can change legal language in a purchase contract and void a purchase contract under state laws. You might need this in case an inspection comes back with serious red flags such as mold, plumbing, or foundation issues.

Your attorney attends the closing, to ensure the process moves along efficiently and effectively. In the case of problems/issues, the attorney will counsel and represent you.

Your attorney has no direct emotional involvement in the transaction, and no conflict of interest. You’ll appreciate a levelheaded counselor by your side if the situation becomes difficult.

You’ll receive something of great value: peace of mind!

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings by Kim Bregman
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Adjustable Rate Mortgages: The Pros and Cons

Adjustable rate mortgages are loans with variable interest rates that change according to the market rates, as opposed to fixed rate mortgages, which guarantee a set rate for the entire period of the loan. ARMs may seem like a great idea some years, but in other years, you may wonder what you were thinking when you agreed to the loan.

Many financial experts advise home buyers to seek fixed rate mortgages. The set interest amount makes it easier to calculate monthly payments with no surprises. An adjustable rate mortgage can leave you with unpleasant surprises if the interest rates suddenly soar.

There are some pluses as well as minuses to adjustable rate mortgages. As with any financial decision, learn all you can about the topic and weigh the pros and cons carefully before choosing a loan type.

On the Plus Side…

ARMs may be good for buyers who plan to sell in a few years. If you know your job requires you to move every five years, an ARM may be worth the risk of interest rates rising, depending on the current rate.
Paying off your loan in a short time period may make an ARM better for some homeowners. For those who know they can repay the entire mortgage amount quickly but just need a short-term loan, ARMs may actually save them money.
Some ARMs offer a combination of adjustable and fixed rates. These may offer the best of both worlds, depending on market rates. For example, a mortgage may be fixed for five years, and then adjust annually.
On the Minus Side …

Interest rates may be low now, but that only means they’ll rise later. When interest rates rise, your interest rate rises too. Your monthly payments will increase. This may be a hardship for some people.
Adjustable rate mortgages may be saddled with a prepayment penalty. This means that if you suddenly come into a windfall and wish to pay your entire mortgage loan, you may actually be penalized for paying it off early.
ARMs can be difficult to understand. There are many variables, and you have to carefully read all the fine print to understand the nuances of a particular ARM. Fixed rate mortgages are a lot easier to understand: borrow this, pay that; it never changes.
Adjustable rate mortgages come in and out of fashion, but the truth is that you shouldn’t take out such a loan unless you understand the worst-case scenario and how it may impact your financial health. While they are not for everyone,

ARMs do offer some advantages, and those who can take advantage of these opportunities may find them useful. Talk to your lender about all the ramifications of an adjustable rate mortgage compared with a fixed rate mortgage.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Mortgage Information, Real Estate, Relocation, Uncategorized by Kim Bregman
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5 year Fixed Mortgage – A New Trend?

5 year fixed mortgage could be a new solution to those who want to avoid long-term loans. As traditional lenders advertise 30, 15, or 10-year mortgages, the new idea has been emerging in the credit union industry – it is a 5 year fixed mortgage. While banks and mortgage companies are limited by the laws and government regulations, credit unions are less tied up by these limitations and thus less restrictive.

5 year fixed mortgage would definitely have higher payments due to the shorter duration of the loan but it will ultimately help the homeowners to become debt-free in a very short period of time. It is something people nearing retirement might consider as well as the empty-nesters and those younger buyers who do not want to carry the burden of the loan for a long period of time. Not only will the buyers become debt-free in a short period of time, they will also pay only a fraction of the interest that accumulates on traditional 30 or 15-year loans.

Here is an example of total cost of the loan based on its duration in years: $150,000 mortgage at five percent would cost you a total of $289,883 in principal and interest on a 30-year-loan to pay it off, which comes pretty close to double the amount of the original cost of your home. When paid over 15 years, the total cost would amount to $213,514. If you paid it off in five years, the total cost would be $169,841. As you can see, it is only a little bit more than the original loan amount. The difference of course becomes bigger and bigger as the loan amount increases.

Additional advantage of the 5 year fixed mortgage is that, in general, the lower the term, in years, the lower the interest rate is which adds up to the total savings. It is also a great option for anyone who can afford to make the higher monthly payments. Refinancing to a shorter term is a great option for someone who’s been in a house a few years already or for people who have higher interest rates. It is also a great option for those who are conservative investor and would rather pay off their home mortgage and use the extra cash toward other investments. You should, however, take into account your current financial situation, and if, or how, the higher payment might affect your lifestyle.

It might not, however, be the best option for those who struggling financially or who have multitude of other financial obligations. There is an argument that you might be better off with a longer term loan because it will free up more money every month for other investments. If you can find a better investment that would give you a good rate of return it could be a viable option. There are, however, few investments that would either offer a good rate of return or come with any guarantees. Lower mortgage interest rate that comes with a shorter mortgage term is a sure thing, at least for the time being, so a 5 year fixed mortgage could be a thing to consider.

Filed under: Blog, Exclusive Buyer Agent, Home Buyer Advice, Home Buyers, Home Financing, Mortgage Information, Real Estate by Kim Bregman
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How to Get Pre-Approved for a Mortgage

If you are hoping to become a homeowner, it is highly likely that you’ll need a mortgage. Before house-hunting ever begins, it is good to know just how much you can afford to borrow. All prospective homeowners must go through the process of getting pre-approved to see if they qualify for the loan and to determine how much you can afford to invest in a new home. New buyers can be understandably overwhelmed by mortgages in general, but knowing how to go about getting a mortgage before diving in is a good first step. Getting pre-approved is not as daunting a task as you might think.

Understanding your finances and the total cost of owning a home is key to determining your home budget. When figuring out what kind of mortgage payment one can afford, other factors such as taxes maintenance, insurance, and other expenses should be factored. Usually, lenders want borrowers having monthly payments exceeding more than 28% to 44% of the borrower’s monthly income. For those who have excellent credit, the lender may allow the payments to exceed 44%. There are many websites available to assist you in determining what the mortgage payment would be based on the amount borrowed and the interest rate. If you adjust the loan amounts and hit the search button, the monthly payment numbers will automatically update. Another factor in determining how much you can borrow is a direct function of how much cash you have to put down on the property.

Have you heard the terms “pre-qualified” or “pre-approved?” It’s important to know the difference. With a pre-qualification, the borrower and lender have discussed income, assets, and credit, but it is not formally verified. A pre-approval, however, is a formal review of the same things as a pre-qualification, as well as a review of the borrower’s full credit report. Having the pre-approval documentation is better because it is a true representation of the mortgage loan you are eligible for and is often required when submitting an offer on a home.

Through the credit report, lenders acquire the borrower’s credit score, also called the FICO score and this information can be acquired from the major credit bureaus TransUnion, Experian, and Equifax. The FICO score represents the statistical summary of data contained within the credit report. It includes bill payment history and the number of outstanding debts in comparison to the borrower’s income.

The higher the borrower’s credit score, the easier it is to obtain a loan or to pre-qualify for a mortgage. If the borrower routinely pays bills late, then a lower credit score is expected. A lower score may persuade the lender to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking on the borrower.

Many people have issues on their credit report, which they are unaware of. The first step in determining if you have any outstanding issues is to get a copy of your credit report. AnnualCreditReport.com allows you to see your credit reports from Experian, Equifax & TransUnion for free.

Next, it’s time for the paperwork. Gather and keep every piece of financial paper in the two months leading up to buying a house. That means pay stubs, bank statements for savings, checking and investment accounts, W-2s, tax returns for the previous two years, canceled rent checks and any mortgage or property tax statements for other property you own. Put these in PDF format to make it easier to send to your mortgage broker or bank.

In the months leading up to your home purchase, keep your hands off your finances. That includes moving money from a savings account into a certificate of deposit, or CD. It also means no cashing in investments from stocks, retirement accounts or CDs. Otherwise, you will create a huge headache for yourself as you try to show the bank the paper trail of where that money came from. In a similar vein, avoid paying off debts with savings because that could cause your lender to worry about how you will pay for closing costs.

Once you’re ready to start the pre-approval process, you’ll need to fill out the mortgage pre-approval application itself. Make sure you complete it as accurately as possible. The standard application asks for personal information such as financial account numbers and the desired borrowing amount, which is also called the target loan amount. It might seem unnerving to disclose your personal finance information and work history, but this is standard information that lenders use to assure you are financially responsible enough to undertake such a large loan. Working with a lender you trust will make sharing this information more comfortable. After you’ve completed and signed the forms, your lender will need to review and sign them and begin the loan approval process.

Once you get the Preapproval that means the lender will actually loan the money on a property based on your current financial situation after an appraisal of the property and a purchase contract and title report has been drawn up.

After you’ve finished your application and it is approved, you can begin to look for a home. Most mortgage pre-approvals are open for 60-90 days and after this time it expires. If your search extends beyond that, simply resubmit your application to refresh this term if you haven’t started the purchase process yet. Although getting a mortgage can sound like a lot of work, understanding what to do before starting your home search will only help ease the stress. The mortgage pre-approval may very well be the most important aspect of looking to purchase a home, as it helps define your price range. There are a few steps to the mortgage pre-approval process, so shopping around and working with a helpful lender you trust will only make the process easier and more productive for you.

Filed under: Blog, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Mortgage Information, Real Estate by Kim Bregman
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