It’s time again for that annual right of passage when we all file our income taxes. It’s predicted that almost 70% of taxpayers will get a refund this year. That means over the next 60 days about $230 billion in tax refunds will start hitting households in our area. It seems appropriate this week we would discuss a few ways to leverage this annual phenomena to help you buy a new home.

Timing is everything: It’s a buyer’s market out there. Prices are the lowest levels we’ve seen in some time.The supply currently exceeds demand so there is a lot of inventory available giving a buyer a vast array of selections to choose. Couple that with my incredibly low interest rates and you have a winning combination. But wait - there’s more. If you act quickly and sign a contract as late as April 30th, 2010 first time buyers can receive up to  $8,000 and move up buyers can still take advantage of up to $6,500, if you meet the qualifying criteria. 

Current Home Owners: It’s easy to watch the news and believe that real estate has screeched to a halt, but that simply isn’t the case. Now’s the perfect time to take advantage of tax credits for moving-up, refinancing with lower interest rates or buying that 2nd home or investment property you have always talked about. Even if you want to buy in another area - you can place a referral with Coldwell Banker’s relocation department and trust you will be taken care of like family.

Renters: A lot of people who rent simply don’t know they can buy. I still have programs with low to no down payment options and programs for people with credit scores as low as 600. In case you were curious, myfico.com reports only 15% of Americans have a score below 600. I would be happy to work with you to show you the difference between renting and buying and how you could leverage your tax refund.

So if you are a first-time home buyer, the move-up market, or second home & investment property leverage your tax refund- there’s no time like now to buy. Contact me to become pre-approved and lock in your interest rate before you start to shop for a home.

Coldwell Banker was recently awarded the Seller Satisfaction Award by J.D. Power and Associates. Watch the Coldwell Banker co-founders Colbert Coldwell and Arthur Banker as they tout their new award!

Financing for up to 102% of the Appraised Value of the Home

What is a Rural Development Mortgage?
The USDA Guaranteed Rural Development Mortgage program (Rural Housing) offers 100% financing, in addition to other benefits, for eligible buyers looking to purchase a home that meets the specific USDA guidelines. 

USDA Mortgage highlights include:
• No mortgage insurance required, regardless of down payment
(there is a required 2% Guarantee Fee that can be financed into the mortgage.)
• 100% financing– up to 102% of the appraised value when the Guarantee Fee is also financed.
• Loans up to $417,000
• Gifts from family allowed for down payment
• Seller contributions (concessions) are allowed

Buyer eligibility requirements:
Rural Housing mortgages are conventional loans that offer attractive terms for buyers who do not earn more than 115% of the HUD median household income for the property area. This is designated county by county. If you would like to know what it is for your county contact me and I can let you know. A credit score of 620 or higher is required, although non-traditional credit is allowed if there is limited credit history. Non-permanent resident alien buyers are also eligible for this mortgage program.

Property eligibility requirements:
The home must be located in a designated rural area. Properties cannot be income-producing or located on a farm. Other restrictions apply. Contact me for details.

What is not eligible for USDA Mortgages:
Farms, income producing property (although some mixed-use are eligible), undeveloped land, construction loans, and commercial property.

This is a great opportunity to buy a home with no Mortgage Insurance, no down payment, and great interest rates. What are you waiting for– call Marianne Lane at 540-915-3015 to see if you are eligible for this program.

From the NRV Living blog...

Ever wondered how far your salary would go if you moved to another area of the country?  OR, maybe you’re moving to the New River Valley, and you’re wondering what you’ll need to make in order to maintain your lifestyle.  CNNMoney.com has come up with a calculator to do just that, as well as many other calculations – want to know when you’ll be a millionaire?  There’s a calculator for that.

We’ll start with some assumptions.  We’ll assume that a couple makes $100000 a year, and they are moving to New York City.  In order to maintain their Blacksburg lifestyle in New York City, they’d need to make $216000 a year, a significant increase.  And everything costs more, as well – groceries and utilities are 50% more, while housing can be had for an astonishing 270% more!

Or, perhaps you’re moving into the New River Valley and want to see how things compare to your current location of, say, Washington DC. Assuming a $100000 lifestyle in Washington DC, a couple would need to make $74000 here in the New River Valley – and daily needs like groceries and housing are cheaper, as well.

Check out the calculator – how does the New River Valley stack up to your area?

H/T to AgentGenius.com for the link.

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The Federal Reserve has been buying Mortgage Backed Securities for the last 13 months.

They will be officially out of money at the end of March.

Now what?

I’ve been closely watching how the Federal Reserve (the Fed) has been purchasing Mortgage Backed Securities (MBS) and thought I would give you a little color on what I’ve seen. Since the inception of the program in January 2009, the Fed spent $1.19 trillion in the MBS market. That’s 95.6% of the $1.25 trillion allocated, and scheduled to run out March 2010. This leaves the Fed $55 billion left to spend over the next 6 weeks.

 The goal of the Fed’s program was to purchase MBS at below market rates in order to provide support to the housing market. They did this by purchasing large blocks of MBS thus keeping stability in the market and driving down interest rates. In this respect the program has been a success and we’ve enjoyed very low and very stable interest rates for the past year.

So what happens now? The Fed’s relying on private investors to come into the market at the end of March and purchase billions of dollars of mortgage backed securities in order to keep rates stable. We are - by definition - a free market economy based on the Father of Economics, Adam Smith’s invisible hand driving the market. I believe in free economy and when it comes to the mortgage rates, its critical private investors step in to fill the void.

But the question begs asking - where are the private investors now?  If the rate of return was high enough, investors would be clamoring to jump in now undercutting the government for access to these investments. Unfortunately, that’s not the case, and in order to entice investors, MBS valuations will have to become less expensive relative to benchmark Treasuries. When that happens, mortgage rates will increase.

It’s basic supply and demand economics. The country has a constant supply of mortgages needing to be purchased. Investors need to purchase those loans. If the government had to buy over a trillion dollars of those loans in the last year the message is clear - the private sector needs a greater rate of return. How does an investor get a greater rate of return? Interest rates have to rise to get investor demand to buy the loans.

So how can you benefit from this information?

If you believe in the logic presented, then you are under the gun to get locked in on an interest rate very soon. But what if you haven’t located a property to purchase? Great news – I have a solution. Coldwell Banker Mortgage is one of the only lenders offering the ability for you, the customer, to cap your interest rate at today’s rates for the next 90 days while you look for a property. Call me, e-mail me, contact me any way you can to ask about Pre Purchase Rate Protection (PPRP). You have insurance to protect your car. You have insurance to protect your health. You can even buy vacation insurance. Shouldn’t you insure yourself with a service that protects you from looming rising mortgage interest rates?

When shopping for mortgages, one of the maddening little details is figuring out whether it's worth paying 'points' up front. Points are percentages of the loan amount that you pay to reduce the rate. They make sense if you expect to hold the mortgage for a significant amount of time, but what exaclty is the appropriate time period? Recently, I found a very useful resource on www.smartmoney.com that offers a way to calculate this time period. The calculator on this site helps you determine how long you need to hold the mortgage to start making a profit on that up-front investment of cash.

It's important to note that a good lender should also take the time to walk you through a range of scenarios with the mortgage loans you qualify for, and help you make the decision about when a higher rate might be more beneficial in your particular circumstances.

If you have questions about mortgage points or need assistance buying your next home, please give me a call!

If you have plans to sell your home, now and in the coming weeks is a great time to do so. This important process involves careful and honest evaluation of the interior and exterior.  Increasing your home’s appeal, often referred to as home staging, should be included in your plans. Here are several ideas to get you started:

Your Home’s Interior:
The fewer personal items, such as family photos, souvenirs, keepsakes, awards, etc. displayed, the better. You want the prospective buyers to view your home as their home. This also applies to closets and storage areas. Painting dark or scuffed walls and cleaning your carpet and window coverings will also increase the appeal of the interior. Set out nice towels and new soap in the bathroom and create a pleasant aroma in your home with vanilla scented air fresheners. This scent appeals to a broader audience.

Your Home’s Entry:
The look of the entry is especially important during this time. It is advantageous for prospective buyers to feel welcome when entering your home, so make certain this area is clean and beautiful. Paint where needed and repair any chips. Consider replacing doorknobs and hardware and add a nice doormat. Add lighting to increase the existing wattage for evening showings.

Your Home’s Exterior:
Since the lawn and exterior of your home is the first thing a buyer will see, it is important to make sure your lawn is well-maintained and manicured and your walkway is mended of any cracks or chips as well as swept. Invest in some attractive foliage (make sure to follow seasonal planting directions.)

When preparing your home, be sure to view your property as you think someone else will. Take a good look at both the exterior and interior features and make a list of areas of concern.

I am here to help you by offering honest advice regarding your home’s condition. A successful sale starts with increasing your home’s appeal. Contact me for home enhancement ideas.

Basic Math 101:

Everyone has to pay for housing in one form or another. With today’s historically low home prices and interest rates, the cost to be in your own home may be less than the cost to rent. As an example, if you pay $1000 in rent, to your landlord you will have spent $12,000 after a full year. If you pay a monthly mortgage payment of $1000, you’ll have spent $12,000 to your future – and have realized a variety of tax breaks in the process. I can provide rent vs. buy flyers and examples that clearly illustrates this benefit.

Are you a first time homebuyer?

If so, you can write and ratify a contract as late as April 30th, 2010 and still realize up to an $8000 tax credit provided the transaction closes no later than June 30th.* Remember the amount of the actual tax credit is contingent on whether filing singly or jointly, and that there are income and other limitations. 

Are you moving up to a larger property?

If you have lived in your primary residence for no less than five out of the past eight years, you may be eligible for a tax credit of $6500.*  As with the first time homebuyer credit, the same deadlines and income etc. guidelines apply. 

Buyers are requiring more time from their Realtors before they make a decision with whom to work. As Walter Sanford noted in Broker Agent News, “The public is seeking experienced and successful real estate agents who know how to cope and be successful in a more normal market.” I can introduce you to a Realtor that will help you understand the transaction, work diligently to help you secure your home, along with being easy and fun to partner with.

In addition, there’s no need for you to become a mortgage expert yourself. When you work with Coldwell Banker Mortgage we take care of providing experienced personalized service to help you with every aspect of home financing. This lets you focus more time on finding your perfect home!

If you have any questions about this, or would like to discuss your mortgage options, please contact Marianne Lane at Coldwell Banker Mortgage.

From the NRV Living blog ...

There are five bills currently making their way through the Virginia General Assembly that homeowners in Virginia, particularly those in Montgomery County, should be paying attention to.  From the Virginia Homeowners Alliance:

• HB570 – real estate taxes are based on a real estate assessor’s assessment of your property’s value, and is almost always based on a combination of a visual inspection of the exterior (read – sitting in the car) and a quick perusal of the property card.  If you don’t like the assessment, it’s up to YOU to defend whether the property’s value should have gone up or down.  This bill shifts the burden of responsibility from you to the assessor who valued the property.
• HB552 – a scenario to consider – you want to build a detached apartment on your property, and you petition your local government to change the zoning to allow for just that.  You break ground, start building, and then … the locality changes its’ mind and makes you undue everything.  Hmmm … I can’t think of anything like that happening around here.  HB552 strengthens a property owner’s “vested rights”.
• HB191 – this legislation unifies the process of filing formal complaints against a homeowners association.  Right now, the rules are different for each association.
• HB205 – when your home gets damaged, your hazard insurance should pay to fix that damage.  However, there’s no guarantee that the brown roof you had on the house won’t be replaced with a green one.  This bill serves to make sure that you’re not stuck with a green roof when you ordered a brown one.  Unless, of course, you wanted the green roof … oh, nevermind.
• HB430 – Remember HB570, up above?  HB430 focuses on values as well, but this time requires that real estate assessors have more education, and make the appeals process easier for homeowners.

I like that HB570 shifts some of the responsibility away from the individual who isn’t actively involved in the assessment process to the one who should be well-versed in the area.  There needs to be a balance, certainly, but it’s a step in the right direction.  And certainly more education can’t be a bad thing as it pertains to HB430, but certainly education doth not a good assessor make.  Interested to see what the final iteration of this one might be.

If you’re a homeowner in Virginia, I would highly recommend joining the Virginia Homeowners Alliance.  This service, provided by the Virginia Association of REALTORS, helps all of us protect our homes’ value by knowing what’s happening in legislation that affects each of us.  As someone who’s worked very closely on the implementation of this very important service, I can speak firsthand to the attention to detail that has gone into it.  The link to signup is here, and as always, it’s SPAM-free!

As a final aside, during the middle of this month I’ll be attending what’s called the Day on the Hill. It’s an opportunity for the real estate community to talk one-on-one with our elected officials in Richmond, and some of the discussions might center around topics like these above, or most certainly the first-time buyer credit.  If there are housing issues you’d like addressed directly to your representatives, email me and let’s see if we can get it in front of them.

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From the NRVLiving blog ...

The title of this post is a bit shocking, no?  I pulled it from an article posted at BusinessWeek.com last week entitled “If You Don’t Buy A House Now, You’re Stupid Or Broke“.  Do I believe you’re broke?  I hope not.  Do I believe you’re stupid?  No, although I’ve certainly been called worse.  Nevertheless, the title still makes you stand up and take notice.

If you have a few moments I’d encourage you to read the whole article; Marc Roth talks about the historical lows that interest rates are at, and gives some insight into how they’ve arrived at these levels.  While I find the constant yelling “interest rates have never been lower, buy now!” a bit tiresome and insincere given the current economic climate, the truth is that they’ve never been lower, and Marc gives a good visualization of that.

Where the post really resonates though, is when you look at the true costs of a loan at today’s interest rates.  Check out the section beginning at “Loan Costs”:

We are at 5%. As you can see by the graph above, as the economy stabilizes, it is reasonable for us to see 30-year fixed rates climb to 6% within the foreseeable future and probably to a range of 7% to 8% when the economy is humming again.  If every quarter of a point is worth $12,000 per $200,000 borrowed, then each point is worth almost $50,000.

Let’s put that into perspective. You have a good stable job (yes, unemployment is at 10%, but another way of looking at that figure is that most of us have good stable jobs). You would like to own a $240,000 home. However, even though home prices have steadied, you may be thinking you can get another $5,000 or $10,000 discount if you wait (never mind the $8,500 or $6,500 tax credit due to run out next spring. Or you may be waiting for the news to tell you the economy is “more stable” and it’s safe to get back in the pool. In exchange for what you may think is prudence, you will risk paying $50,000 more per point in interest rate changes between now and the the time you decide you are ready to buy. And you are ignoring the fact that according to the Case-Shiller index, home prices in most regions have been trending back up for the last several  months.

If you are someone who is looking to buy or upgrade in the $350,000-to-$800,000 home price range, and many people out there are, then you’re borrowing $300,000 to $600,000.  At 7%, the $300,000 loan will cost just under $150,000 more over the lifetime, and the $600,000 loan an additional $300,000, if rates move up just 2% before you pull the trigger.

Am I suggesting everyone should buy a home right now?  Absolutely not, but it’s helpful to see what buying a home at today’s fixed rates (not a resetting ARM) will mean in dollars.  It’s also a good starting point for those planning on buying a home in the future, but not necessarily right now, as you can use his figures.

I can’t think of a clever way to end this post, and so I’ll just end it here.  Maybe some of those people were right when they called me stupid.

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