Trick or Treat…Lets plan for nothing but Treats.

As the temperatures drop and it begins to get dark earlier, it can mean just one thing…Halloween is just around the corner.  As goblins, witches, football players and cheerleaders, your little ones are likely getting excited for Trick or Treating. Here at Lawyer’s Realty we’re feeling the Halloween spirits and wanted to offer a few quick tips for a safe and fun time for all.

No matter how old your kids are, there are certain “rules” that should always be followed. Make sure your child chooses a safe costume. Reflective materials or blinking lights on their costume is easier to spot for drivers in passing vehicles. 

Masks sometimes make a more exciting costume, but make sure the mask doesn’t impair your child’s vision. Blocked vision can lead to tripping or other injuries. If the costume requires a prop, you want to make sure that the prop has flexible edges and obvious markings to ensure that it’s not mistaken for a real weapon.

It may be hard for them to avoid the temptation to start indulging in the great amount of chocolate treats, but you want to make sure your children know to wait until they get home to eat any of their treats. Once home, inspect the treats for tampering.  If it looks suspicious, throw it out. I’m sure they’ve gotten enough candy from their trip that they won’t notice a few pieces missing. Better safe than sorry.

If your child is older and trick or treating with a parent is just not cool, ensure that you know their planned route and they have a cell phone with them.  Remind them about not cutting through alleys or fields and to  only use the sidewalks that are often well lit and are much safer. Many developments are also patrolled by the police throughout the designated trick or treat times.

They don’t want to hear this, but it makes you feel better to remind them about not getting into a stranger’s car or going into any house other than their own. It may seem redundant, but a simple reminder never hurt anyone.

Finally, ensure your group, or your child’s group, if they are going out without a parent, has several flash lights. It not only helps to brighten any dark area, but also works much the same as headlights on a vehicle. It increases your visibility to passing cars and will help to keep everyone safe.

From the Lawyer’s Realty family we wish you and your family a safe and fun Halloween!

Found a Home, but it is in Need of Work? There’s an App…err, Program for That!

You have been looking and looking for a new home within your price range, but what you are finding are houses that are best described as  “fixer-upper”, “needs TLC”, “has great bones” and houses that are stuck in the 1970’s (lime green?).  What has been your reaction to these houses?  “No way, too much work!” “We won’t have any money left over to bring it to 2011!”  “How did a family survive with one bathroom, we need at least 2!” Sound familiar? 

Well, did you know that the Federal Housing Administration (FHA) has a program for that? The FHA 203k Program allows for the cost of renovations to be included in your mortgage. By considering this program, many more houses may open up to you as possible choices. 

  

There are a few options in the 203k program. For smaller renovations there is the 203k Streamline. Cosmetic work and minor repairs would usually fall under this program. In order to qualify, the renovations must be between $5,000 & $32,000 and can even include the cost of appliances. This program allows up to 110% loan to value of the improved property. Depending on the work needed, this option can convert into the 203k full renovation option.

The 203k Full Renovation option allows for additions, garages and other structural/foundation work needed, but it does not allow luxury items such as an in-ground pool or a spa. While the streamline program has an upper limit of $32,000 this option covers renovations that total over that mark. A HUD consultant is required for the 203k full renovation.

The final option is the 203k Conventional. This option allows for luxury items to be added to the house, and is only limited by the conforming limits. Those limits are 95% loan to value for the improved property if the owner occupies the unit, and 75% LTV if it is a non-owner occupied unit.

For all of these programs, a validated contractor will be required to provide estimates on the renovations as well as complete the work. Home Depot & Lowe’s are both validated contractors.  

The FHA 203k Program is a great option to help improve a potential home, but the process may be slow so be prepared to be patient.  By working with a REALTOR®, you will be guided throughout the process including finding the right mortgage professional who knows the in and out’s of the FHA 203k Program.

I Don’t Have to Have 20% Down Money to Get a Mortgage?

Traditionally, a 20% down payment is ideal for many mortgages to avoid paying private mortgage insurance, aka PMI.  Also, by having more money saved that you initially put into your home rather than borrowing will help to reduce your monthly payments, and provide you instant equity in your new home.  However, thanks to the Federal Housing Administration (FHA), you need much less down money, or with some programs, zero money down.  We’ll briefly discuss several of the programs available.

First, let’s take a look at FHA 203(b). This program allows a qualifying buyer to put down as little as 3.5% of the total purchase price. There are loan limits in this program, but they vary by area so be sure to check with your REALTOR® about your area. Also in this program, the PMI is wrapped into the loan. You can use this loan to purchase one to four unit structures. There are some income and other limits with this and many other FHA programs so be sure to check with your REALTOR® about those as well. Some other FHA programs can be found here.

Another popular program is the 100% USDA Rural Development Program. This is a 100% loan that requires no down payment as well as no PMI. A minimum credit score of 640 is required and the loan can be up to 103.5% of the appraised value of the structure. With no limit to the seller’s contribution toward closing costs this loan is very beneficial to the buyer and may require little to no money at all for closing.

However, there is one “catch” to the USDA program. The property must be in designated rural areas. You can check out http://eligibility.sc.egov.usda.gov to see what areas are approved. Also, there are income eligibility requirements to be met as well. They vary based on county for instance a 1-4 person household can make no more than $81,650 in Dauphin or Cumberland counties but in Lancaster county the limit is $77,500 (as of June 2, 2010 – subject to change).

Are you a veteran?  Don’t forget that as a veteran you are entitled to a VA Loan which is also a 100% loan that requires no money down.  As with all of these programs, your REALTOR® can help you to get in touch with a mortgage broker that will work with you to understand which program will best meet your needs.

Next week, we’ll go into more detail about another FHA program that allows you to include money for improvements to the dwelling in the purchase price. Be sure to stay tuned for a great FHA program that is often overlooked.

Flooding…It happens everywhere, not just along the banks of a river.

With over 10 inches of rain falling on the mid-state recently (13.4 inches reported by Harrisburg International Airport) widespread flooding was expected. The Susquehanna River and other large creeks hit near record flood levels. Even streets became creek and river-like with cars being swept away.

Between the rains of both Hurricanes Irene and Lee, the mid-state is currently in the midst of a massive cleanup and the area has been declared a disaster by President Obama. If you were affected by flood damage you have a few options.

First, check with your homeowner’s insurance policy and see if you’re covered. Depending on where you live, you may need a separate policy or rider, but in the case of one local couple…their homeowner’s policy came through. 

Matt Hannaford, a social media manager and part time DJ in Harrisburg, works from home most days and Wednesday, September 7^th was no different.  After an early morning meeting, he was back home by 10:30 to get to work. 

Knowing that his outdoor drain sometimes gets clogged with leaves during heavy rains, he decided to make sure he wouldn’t have any problems and checked the drain. He noticed that it was covered and that there was about four inches of water at the bottom of the steps. He quickly grabbed a shovel to move the leaves away from the drain. 

Unfortunately, for Hannaford, the drain wasn’t clogged. Rather, it was flowing water in the opposite direction and into the base of the steps. The high water forced its way through the exterior door and into the basement where it had already filled the basement with about two to three inches of water throughout the 1000 square foot space.

Hannaford quickly called his wife, Erin, and then other members of their family for help. They eventually got the situation under control, but it took until Thursday afternoon to rid the basement of standing water. By Friday evening, the five-room, finished basement was gutted and the clean up and rebuilding process could begin.

The young couple called their homeowner’s insurance company Wednesday afternoon while attempting to remove the water and found out that they were covered for at least part of the damage. Lucky for them, the insurance will cover the majority of the damages. Others however, may not be so lucky. 

It’s important to work closely with a REALTOR® to ensure that you have the proper coverage in case of emergency situations such as these.  When the Hannaford’s purchased their home in late 2010, they had been told that the basement only had water in it one other time…in 1972. What are the chances?

Second, you should check out www.fema.gov/assistance and see if you qualify for any additional help. If your homeowner’s coverage doesn’t cover flood or water back up damage, you may be eligible for federal loans to help with the unexpected costs. 

Remember, our team of REALTORS® and legal advisors are here to help you through the purchasing process, including considering the unexpected.

We continue to keep your best interest in mind and we hope you all are safe, dry, and insured!

You Only Have One Chance to Make a First Impression & That Includes the Internet

With more and more people turning to the internet for shopping, it was only a matter of time before people started to do the same when searching homes for sale.  Gone are the days when you relied on a real estate agent for access into a homes interior, and he/she would have to drive you around to show you a variety of homes just to walk in the door, know that it is not what you want, and walk right back out.  Now potential buyers have that power to explore inside, outside and all around houses all by themselves without having to leave the comfort of their home, or with their smart phone as they are out and about.

With this in mind, the demand for quality real estate photographs has never been higher, and yet, we still find home photos on line that are dark, that are of a corner of a room, and are just poor quality.  Heck, there are even photos of laundry thrown about and dishes in the sink.  When searching homes for sale online, you will inevitably come across many potential homes.  However, the only ones that will be given a second look at are those that are presented well in the photos.  After all, if the house does not look good in a picture, what are the odds of it looking good in person? 

There are two main problems that occur in amateur real estate photography that are sure to cause a potential buyer to gloss over the listing online.  The first is perspective and the second is season.

Many real estate agents are content with standing directly in front of a home when taking a front shot.  This provides no depth to the house and makes it look smaller than it is and almost cartoonish.  Instead, the better perspective would be to move off to one side of the house and crouch down.  That way, the building looks bigger by comparison, and you can see how far back it goes.  Even if the house does not go back very far, it at least lets a potential buyer know that there is a home behind that door.

  Second, the issue of seasonal photographs is such an obvious one that it seems everybody should be aware of it.  If I am looking for a house in the summer, it will be hard to picture myself there if the photo was taken under two feet of snow. 

For those agents who do not have an eye for architectural photography or the ability to enhance photos, it is a wise investment in having them taken by a professional.  There is no better way to peak interest in a home than to have quality images on line as soon as the property is listed.  It is all about that 1st Impression. 

The Importance of Credit Scores in Real Estate

The search for a new home can be an exciting one; however, before you begin your quest for that dream home, your Realtor® would require that one of your first steps would be to meet with a mortgage lender.  This individual will help you determine the price range at which you should be looking, and at the end of the meeting, if all goes well, you should find yourself pre-qualified for a mortgage loan. 

What is one of the primary factors that go into a lender’s decision of whether or not to grant a loan?  Credit scores.  It has been estimated that nearly 75% of all mortgage loan decisions are made with the applicant’s credit score in mind.

The importance of credit scores in mortgage decisions and real estate transactions has risen over the past decades, and this is in large part due to what the lenders call risk-based mortgage pricing.  Essentially, the lender will make a decision on a mortgage based on how much risk is involved in the transaction.  If an individual has a credit score below 700 (which I’m sure none of you do), then that tells the lender that they are at higher risk of defaulting on their obligation to pay, and that will be reflected in the loan that they propose.  They may be offered a higher interest rate.

Now before you rush off to a free credit report website in a wave of panic, please keep in mind that a credit score is not a permanent and accurate representation of who you are as a person, and many mortgage lenders understand that.  It is important to find a lender who can see you as an individual with your own story.  That is not to say that you should ask them to completely disregard a credit score of 450 and give you a loan for that million dollar home, but there are some lenders out there who are willing to work with a low credit score, owing to the fact that you are not a number, but a person.  They will take into account things like your rental history.

That being said, it can’t hurt to try and raise your score before meeting with a lender, and there are many ways to do this.  Getting a credit card and keeping up with the payments is a quick and easy way to improve your credit and show lenders that you are serious.  In the end, that is all the lenders want.  They want to know that you are a responsible borrower and understand the value of a positive credit history, and a high credit score will give them a good first impression. 

Mortgage Industry Adjusts as Real Estate Market Fluctuates: An Interview with Robyn Sealover

The following is an interview with Robyn Sealover, a mortgage specialist. Robyn has more than 20 years in the real estate industry including three and half years in the mortgage business.

Once someone has decided on a home to purchase, it’s time to secure a mortgage. Or is it? We often hear that one should be pre-qualified before searching? Is this true or does it vary? Please explain.

It is best to get pre-qualified before the search for a new home begins.  This will determine whether someone may be credit worthy as well as what price range they may be able to afford.  It will save the buyer as well as a realtor’s time ensuring that they are searching for an affordable home and not something that is ‘OUT’ of their price range and comfort zone.

It’s said that most mortgages are 30-year terms, although some are 15 or 21-year options. Do you recommend the 30-year or does it vary based on the individuals seeking a loan and/or the cost of the home and down payment?

While the majority of most loans are for 30 years, with interest rates being at all-time lows, it may make sense for borrowers to examine the possibility of shortening the term of a loan.  Each circumstance will vary depending upon how much a borrower can comfortably afford.   The payment for a 30 year mortgage would be less than a 15 year loan since the payment is condensed.  There are no 21 year mortgages.  There are 30, 25, 20, 15, and 10 year mortgages that are the norm.  The rates for a 30, 25, and 20 are usually very similar.  Most 15 & 10 year rates are lower. 

In “The Money Book for the Young, Fabulous and Broke,” Suze Orman says there are three different types of mortgages: fixed, adjustable and hybrid. She recommends hybrid mortgages for first-time buyers stating they are the best deal. First, can you explain the different types and second, in your opinion, is Orman on target with her recommendation of hybrid mortgages for first-time buyers?

I really value Suze Orman and think that she has done a fabulous job educating people on how to manage their finances and prepare for the future.  I truly recommend reading her books or watching her seminar.  While I value her opinion, I don’t recommend a hybrid mortgage.  This is an adjustable mortgage that may start with lower payments that are fixed but then amortize or adjust to a higher rate.  With the market being the way that it has been and interest rates at all-time lows, it would be wise to grab a low rate without the fear of the rate adjusting to a higher rate and payment. 

Orman also says homeowners typically stay put for only five to seven years. This seems like a short amount of time, especially considering that many have taken out 30-year mortgages. Why is this and what does it mean for mortgage lenders?

Most people do not stay in their first home since this is usually a smaller home or a “starter home.”  By using a 30 year mortgage, the payments would be lower.  When their income/family size increases, most plan on purchasing a larger home.  There is mobility in home purchasing but many have found the right home and will stay there for a lifetime and raise a family following the American dream.  It is a good idea to establish a relationship with a lender to determine when it may be a good time to move up or conversely down-size and help determine the correct payment plan.

Let’s talk interest rates. We’ve been hearing it’s at an “all–time low” for  about two years now along with a bunch of other things such as “now’s the time to buy.” What’s a “good rate” and what are the current rates for a mortgage right now?

We are currently experiencing historically LOW interest rates.  This really is a great time to buy.  Home prices have stabilized somewhat and we haven’t been as severely affected by the prices of homes in Central Pennsylvania.  This will enable a buyer to have more buying power…therefore getting more BANG for the buck!  It is hard to quote a rate though because there are so many variables.  It all depends on what credit score a borrower may have.  What their LTV or loan to value may be.  This means how much they may be investing in a purchase: what type of loan program may be used, where the home may be located, etc.  With so many variables, the rate is really case by case.  If you look at the stock market, you will see how the stocks go up and down constantly!  Any rate that is quoted to someone is like the stock market.  It will change frequently and is only effective when it is quoted.  The rates may change multiple times during the day. 

It used to be that many saved for a home and put 20% down. Is this still the case? If not, what’s the cause of the shift?

It is actually shifting back towards wanting to have more money available for the down payment.  There have been so many foreclosures, which has made making a mortgage purchase with less money down, more of a risk.  The risk factors are determined by looking at someone’s three credit scores.  The lower the credit score, the higher the risk.  There are still programs that you may be able to purchase with little money down, but once again, this is a case by case determination. 

What signs are you looking for that the real estate industry is recovering?

The real estate market is still floundering and trying to recover from some of the toughest years we have had in some time.  The effects of some poor investments may take quite a while before we can say that it has recovered.  The glut of foreclosed homes on the market has affected the price and value of many homes.  We have been fortunate that Central PA has not been as severely affected as some areas since this is a conservative area, but we have still seen some harder times.  People are more cautious before making a purchase and are trying to educate themselves.  This is a great thing.  A more educated purchase will ensure that a home owner is making a wise decision.  Purchasing a home is the biggest investment someone will make in their life so it is important to choose wisely.

Lawyer’s Realty is a one-stop shop for real estate transactions by including both a qualified legal representative and a real estate professional in the transaction.  How does this legal representation trickle down to the mortgage lender? Does it help make the process smoother? Please explain.

It does make things easier to be able to know that all parties involved in the purchase process are able to interact and communicate easily since the title, realtor, and attorneys are all available within one “house.”  A more cohesive transaction will help ensure that a purchase will run smoothly.