Stuart Florida Real Estate » Home Buyers

Question of the Day: Should I lock in my mortgage rate?

Eric Slifkin — Mon, 14 May 2012 02:21:09 +0000

Q: Should I lock in my mortgage rate?

A: Because the interest rate market fluctuates constantly and is subject to quick movements without notice, locking in a mortgage rate with a lender certainly protects you from the time your lock is confirmed to the day it expires.

Lock-ins make sense in a rapidly-rising rate environment or when borrowers expect rates to climb during the next 30 – 60 days, which is typically the amount of time a lock-in remains in effect.

A lock-in given at the time of application is useful because it may take the lender several weeks to prepare a loan application. These days, however, automated loan practices have cut the time quite a bit.

Lock-ins are not necessarily free. Some lenders require you to pay a lock-in fee to guarantee both the rate and the terms.

If your lock-in expires before you close on the loan, most lenders will base the loan rate on current market interest rates and points.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Question of the Day: What is a lease option?

Eric Slifkin — Tue, 24 Apr 2012 12:56:27 +0000

Q: What is a lease option?

A: It is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property. The option only binds the seller; the tenant has a choice to make a purchase or not.

Lease options are common among buyers who would like to own a home but do not have enough money for the down payment and closing costs. A lease option may also be attractive to tenants who are working to improve bad credit before approaching a lender for a home loan.

Under this arrangement, the landlord agrees to give a renter an exclusive option to purchase the property. The option price is usually determined at the outset, but not always, and the agreement states when the purchase should take place.

A portion of the rent is used to make the future down payment. Most lenders will accept the down payment if the rental payments exceed the market rent and a valid lease-purchase agreement is in effect.

Before you opt to do a lease option, find out as much as possible about how they work. Have an attorney review any paperwork before you and the tenant sign on the dotted line.

Why Low-ball Offers Don’t Work Anymore

Eric Slifkin — Mon, 23 Apr 2012 20:00:37 +0000

Low-ball offers don’t work anymore!

WASHINGTON – April 23, 2012 – When the number of home sellers grossly outpaces the number of buyers, no offer can be ignored, even if it’s 25 percent or more off the asking price. But in today’s rebounding market, those low-ball offers don’t often work. Many times, the potential buyer finds that they don’t get a counter-offer. And, in many cases, another more realistic buyer gets the home.

A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.

When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.

Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.

Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.

Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.

In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.

Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”

Source: Ken Harney. Distributed by Washington Post Writers Group.

Palm City Neighborhoods: Meadow Run

Eric Slifkin — Tue, 17 Apr 2012 10:56:43 +0000

Meadow Run in Palm City

Meadow Run is a gated equestrian community situated on over 500 acres of pristine terrain.

Located in the Palm City Farms section of Palm City, the community’s 91 five acre parcels are surrounded by miles of bridle paths, yet is just minutes to shopping, highways and “A” rated Palm City schools.

Home sites in Meadow Run are an excellent value in today’s market, with resales being offered at less than half their 2005 price.

Working with a Realtor: Top Ten Home Buyer Expectations

Eric Slifkin — Sat, 07 Apr 2012 15:14:03 +0000

What should you expect from a buyer’s agent? Having served hundreds of buyers over my decade in Stuart, Florida real estate, I have found that most buyers share the same expectations when it comes to working with an agent. Here is what I have found to be most important to home buyers when working with a Realtor:

Help with finding the best home for them.
Help them understand the home-buying process
Provide geographic knowledge of surrounding home search areas
Show them all homes available within their price range and search criteria.
Point out unobserved features or faults with a property.
Help to negotiate the best possible price and terms of the sale.
Provide estimate of closing costs
Manage the paperwork flow.
Furnish a list of service providers.
Help resolve mortgage, inspection, and other pre-closing issues.

These are but a few of the many issues and concerns facing home buyers in today’s market. Please feel free to add your own wants and needs in the comments section below.

Florida Ranked First in 2011 Home Sales to Canadians

Eric Slifkin — Fri, 16 Mar 2012 02:51:52 +0000

Florida ranked first in 2011 home sales to Canada

SARASOTA, Fla. – March 15, 2012 – The strength of the Canadian dollar, sustained low pricing in the U.S. housing market, and perceptions regarding the general economic outlook continue to encourage Canadians to purchase a home in the Sunbelt states.

According to the National Association of Realtors® (NAR) 2011 Profile of International Buying Activity, Florida and Arizona are top choices because of their favorable winter climate. In fact, 58 percent of all international sales in 2011 came from just four states: Florida at 31 percent, followed by California at a distant 12 percent, Texas accounted for nine percent and Arizona at six percent.

Even for international buyers it’s location, location, location. Forty-three percent of those surveyed report a favorable location as their clients’ most important factor when choosing where to purchase. That was followed by 27 percent who stated their clients’ top reason to buy in the U.S. was that they view U.S. real estate as a profitable investment.

Canadians specifically purchase due to a perceived positive return on their investment. They also showed a strong desire for a lakefront recreational location. In fact, eight percent of Florida re-sales were to Canadians in 2010. Similar culture, closeness to their native homeland and lack of a communication barrier are also factors steering Canadians to the lower 48 U.S. states.

The NAR profile also showed that in the 12-month-period ending March of 2011, Canadians accounted for 23 percent of all foreign buyers – the largest of any country. In a 2010 article, Canada’s largest daily newspaper The Globe and Mail reported that a vast majority of Canadians were paying cash for their purchase.

“There are few lenders who have a mortgage process tailored for Canadians looking to purchase a home in the U.S.,” said Sheila Blom, Florida mortgage market manager for M&I, a part of BMO Financial Group. “Our parent company is based in Toronto, so naturally we have relationship products specifically designed to meet the needs of Canadian customers for purchasing or refinancing their primary residence, second home or investment property in the U.S.”

Top 10 Homeowner Financing Tips

Eric Slifkin — Mon, 05 Mar 2012 10:44:46 +0000

Top 10 Homeowner Financing Tips
Here are 10 great tips to consider when getting a mortgage.

1. Don’t Stretch Your Loan Qualification Limits to Buy a Home Beyond Your Budget. A home should be a source of satisfaction and an investment not a financial albatross, especially for first-time buyers. Borrowing heavily from family members, selling assets, and living poor just to own a bigger or better home, makes for larger mortgage payments and risks difficulties in the future.

2. Always Shop for Competitive Rates, Points, and Fees. Get at least three bids. The most competitive lender one week may not be next week so get (or reconfirm) quotes the same week you are ready to make the commitment.

3. Get An Immediate Written Confirmation of Your Locked-in Interest Rate and Interest Rate Terms. You might find some discrepancies with the figures used on the final loan documents.

4. Don’t Agree to Prepayment Penalties. You may want to refinance or partially prepay part of the mortgage. If there is no mention of prepayment penalties, make sure you have an addendum attached to the mortgage specifying that no fees will be imposed.

5. Understanding All the Conditions of Your Loan: You or a professional that you trust should thoroughly scrutinize each document. Ask questions if you aren’t sure what something means.

6. Pick the Right Kind of Loan. Rates are higher on 30 year loans than on comparable 15 year loans. That’s because there is a greater risk that rates will go up the longer the lender commits to a fixed rate. Lenders hate holding loans at below market rates. While there is an advantage to the predictability of fixed rates, if you expect to be transferred in 5 years, you’ll be paying more than you need for a 30 year fixed rate loan. If you want both the security of predictable payments and the lowest monthly payment consider “hybrid” loans – those with a fixed rate for the first five or seven years of their 30 year duration. If you are going to be there for a shorter period, or have confidence that rates will be dropping further, consider an adjustable rate mortgage.

7. If You Are Buying Rather Than Refinancing, Consider Getting a Pre-approved Mortgage or Contingent Loan Approval Letter. The former is a binding commitment for a loan up to a certain amount. It can substantially strengthen your negotiating position with the seller, but it puts pressure on you to close a deal before the loan commitment expires. A contingent approval is a letter from a lender that states the largest loan you would qualify for, subject to confirmation of the financial information you’ve provided and formal approval. It will also give you additional negotiating leverage without binding you to the lender (or vice versa). Sometimes owner financing can work to both parties advantage. Ask the seller if it’s a possibility. If so explore further to see if there might be mutually agreeable terms before making an offer.

8. Save Everything. Lenders require and provide numerous documents. Some get misplaced, usually at the most critical time. Keep copies of everything you send the lender and everything the lender sends you.

9. Take Advantage of the Deduction. The mortgage interest deduction is one of the few remaining tax deductible interest payments, and it’s also the cheapest form of long term financing. Consider financing/refinancing as an alternative source of funds for home improvements or other constructive long term investments like education. Don’t get in over your head, and never use it to finance your summer vacation or other short term pleasures.

10. Study! A lot of money is at stake. You can’t learn too much, and you won’t have time to learn what you need, interview and select a lender in the five days allowed most buyers to apply for a loan. Read the real estate section of your local paper and books on the subject.

Courtesy of the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners

Top 8 Things to Know about a Mortgage

Eric Slifkin — Sat, 03 Mar 2012 07:39:15 +0000

Top 8 Things to Know about a Mortgage

By Barbara Pronin, RISMedia Columnist
Deciding what kind of home loan is best for your needs is an integral part of the home buying process. But it’s not always easy, according to California mortgage broker Ken Go.

Go notes the eight most important factors to compare when shopping for a mortgage:
• Principal – The principal is the amount you are borrowing—or the price of the home you are buying minus the down payment. Lenders will tell you how much they are prepared to lend you based on your income and credit score. That will help you determine how much house you can afford.
• Mortgage type – Mortgages fall into two categories; fixed rate or adjustable. With a fixed rate mortgage, you pay the same amount each month for as long as you have the loan. The interest rate is slightly higher than some adjustable rate mortgages, but adjustable rates change with the market and will likely rise over time.
• Interest rate – A loan with the lowest posted rate may have higher closing costs. Consider the Annual Percentage Rate (APR), which takes into account the interest rate and the loan’s other costs.
• Monthly payment – A mortgage loan should help you build equity in your home. The best one may or may not be the one that carries the lowest monthly payment. Consult a mortgage broker for details.
• Term – The term is the number of years your loan will remain active. Mortgages with shorter terms generally carry a higher monthly payment but they can save you a lot of interest over the years.
• Discount points - A point is equal to one percent of the principal. Lenders may offer you the chance to pay points in order to lower the interest rate of your mortgage. If you plan to stay in the home a long time, it may make sense to pay points.
• Lock-ins – When you apply for a loan, the lender will quote you the rates. But rates can go up while you shopping for a home, so it’s a good idea to lock in the quoted rates. There may or may not be a fee to do so.
• Closing costs – Origination fees, appraisal fees, and other costs will be added to your loan. Ask your lender for a good faith estimate of the costs, and an explanation of any charges you don’t understand.

Real Estate FAQ

Eric Slifkin — Sat, 03 Mar 2012 07:21:43 +0000

Question of the Day

Q: How can I finance work needed on a fixer-upper?

A: According to the Millennial Housing Commission, few lenders are willing to administer home improvement loans. Most prefer to make home equity loans or unsecured consumer loans because they are easier to manage. Home improvement loans usually require inspections and irregular draws on the loan amount as work is completed, which requires regional or national lenders to find local partners to provide oversight.

Financing repairs and improvements with home equity is okay for most homeowners, but it is difficult for many first-time buyers. They have lower-incomes, smaller savings, and have made lower down payments on their homes than first-time buyers a decade ago. So they have little equity to borrow against. Unfortunately, it is often lower cost older homes purchased by first-time buyers that need the most work.

Unless you have a cash reserve, you will have to shop around for the best borrowing terms. In addition to the options listed above, you can ask relatives for a loan. Borrow against your whole life insurance policy. Refinance your existing mortgage and take out cash. Get a second mortgage. Contact the government about home improvement programs. And – as a last resort – borrow from a finance agency, which generally charge high rates.

What You Need to Know about Short Sales

Eric Slifkin — Fri, 02 Mar 2012 13:21:37 +0000

What You Need to Know about Short Sales

By John Voket
In the previous segment, we looked at reasons to consider a short sale. But in this segment, we’ll hear from Charlotte, N.C. REALTOR® Jon Widdifield about what you need to know if you’re considering buying a short sale property in 2012:

1. The list price may not be the sales price; the bank may ask for more than the list price.

2. The bank makes the final decision, not the homeowner.

3. The home will typically be sold as is. If the homeowner does not have enough to pay the mortgage, they probably do not have enough to do repairs.

4. A short sale is not owned by the bank. However the bank must approve the sales price.

5. A short sale is not a short process; it can take several months to get to the closing table.

6. There will be bumps in the road when purchasing a short sale; you must be patient if you plan on purchasing one.

7. You can get really great deals on a short sale; just keep in mind it can be an arduous process.

8. Do not set your hear on a particular short sale until the deal is closed; the deal can fall through at any time.

9. Don’t give up. The process is difficult but these homes do get sold. And most importantly, if you’re considering transacting a short sale in 2012, Widdefield says…

10. Make sure you have an agent that is experienced in Short Sales. You need someone that knows what to do to get the deal closed.