FHA suspends 90 Day anti flipping rule!

February 1 rule will allow FHA borrowers to make offers on properties that have been renovated out of foreclosure and haven’t been seasoned longer than 90 days.

I have run into this problem many times in the past few years. This is a very good thing for home buyers who don’t have 20% to put down.

According to a January 16 report in the North County Times, the FHA has announced a one-year reprieve from the administrations “anti-flipping” to start in affect on February 1, 2010.

The anti-flipping rule was instituted in 2004 as an attempt to prevent FHA loans from getting caught up in speculative buying by FHA-backed borrowers. Yet at the time, FHA loans comprised a miniscule percent of the loans in the market and only prevented a few hundred FHA loans a year.

Now FHA loans represent approximately 30% of all new loans in Franklin County

The abundance of housing demand in the current distressed housing market has been a source of much frustration, particularly for first time buyers looking to use an FHA-backed loan in order to take advantage of the first-time buyer’s $8,000 tax credit. The tax credit, which was already extended once, is widely expected to end for contracts not signed before April 30, 2010.

Until February 1, 2010, only cash and conventional loan borrowers have been able to purchase homes that had been foreclosed by investors. This left FHA borrowers with good credit yet with limited funds no ability to make offers on those homes.

The exact affect of this suspension is uncertain with continued demand for the homes by all cash buyers and conventional loan buyers who usually put down at least 20% on their purchase. FHA borrowers normally only provide 3.5% down and additional FHA “health and safety” rules can make investor asset managers wary about contracting with FHA borrowers.

However, the suspension will be welcome for buyers and the real estate community that represents them.

Time will tell if the suspension translates into more sales of foreclosed and distressed properties to FHA borrowers during February, March, and April when the first time buyer credit ends. Contact me if you would like help finding a great house!

2009 ends with a bang for Columbus home sales

Indicators forshadow a stronger market in 2010

Home sales in the last four months of 2009 were up 24.3 percent over the same time in 2008, according to the Columbus Board of REALTORS®. In the month of December alone, 1,464 homes were sold, 150 more than the year before.

“This is great news for central Ohio housing,” said Sue Lusk-Gleich, President of the Columbus Board of REALTORS®. “Sales and home prices are up while inventory, months supply and days on market are down. After more than two years of market challenges, we’re excited to be able to be able to make this type of positive announcement.”

The average sale price was $157,130 in December, an increase of nearly 5 percent from the same time in 2008. Residential inventory shrunk 2.7 percent and homes spent an average seven fewer days on the market than a year ago.

“The number of homes listed for sale continues to decline which is what the market needs to occur in order to correct itself. Our inventory skyrocketed in 2007 and 2008, causing home sale prices to decrease. It was simply a matter of too much supply and not enough demand. But 2009 saw a real stabilization of those inventory levels. Accordingly, home sale prices are rising.”

The months supply, an estimation of the number of months it would take to sell the entire current housing inventory, dropped 12.7 percent to 8.99 between December 2008 and 2009. The total dollar volume rose 16.9 percent, to more than $230,000,000 over the same time period.

Short sale, or Foreclosure?

Understand first that defaulting on your mortgage loan can have more serious penalties than selling your house as a Short Sale. If you let your house go to foreclosure the Bank can come back and file a judgement against you for all the money they lost. They add up attorneys fees, collection fees and the money you owed in late fees, taxes the difference between what you owed and the price received at the foreclosure auction. Make sure you know the difference between deficiency and non deficiency short sales. You can call me or read my other blog entries for more information. You can also contact a real estate or tax attorney.

Short Sales

If you can negotiate a short sale. In a short sale, the lender agrees to accept less than the borrower’s mortgage indebtedness when the borrower sells the property to a third party in an arm’s-length transaction. Lenders usually agree to short sales to avoid the costs of foreclosure and having a large inventory of empty, unsellable homes. However, short sales come with their own costs. First, as a matter of contract law, a lender may pursue a deficiency if the short sale approval is not conditioned on the lender waiving the deficiency. Therefore, be sure to condition any short sale plan submitted to your lender for approval on the lender waiving any deficiency. Second, the short sale approval process is long and tedious; you and your potential buyer must be willing to wait. Large lenders have short sale packets for use. They include forms for, inter alia, comparative market analyses and brokers’ price opinions, hardship letters, financial disclosures, authorizations to release information, listing agreements, and proposed sale terms. If your lender does not, you will have to obtain these materials. A real estate agent and/or a lawyer experienced in real estate law should be able to assist you. Third, if the lender does approve the short sale and waive any deficiency, the forgiven debt may trigger income tax liability. The lender must send the borrower Form 1099-C, Cancellation of Debt, to indicate the amount of debt forgiven. If the debt was for a principal residence, under the Emergency Economic Stabilization Act of 2008, until 2013 borrowers may exclude the forgiven debt from gross income for federal tax purposes. There is no dollar limit on the exclusion if the principal balance at the time the lender forgave/cancelled the debt was less than $2 million for a couple filing jointly or $1 million for a borrower married but filing separately. Otherwise, the debt may be includable in gross income for tax liability calculations.

October Housing Sales Highest Since Housing Boom!

October home sales highest since the housing boom!
Demand rises and inventory declines as market nears stabilization

(Nov. 23, 2009) Home sales in the month of Oct. were up 25.6 percent from this time last year. The 2,021 sales last month represents the highest number of listings sold in the month of October since the housing boom in 2006.

“At a time when sales traditionally start to taper off, central Ohio home sales are increasing,” said Gary Parsons, President of the Columbus Board of REALTORS®. “We know the first time home buyer tax credit has had an impact. But, the fact that we have a solid inventory of homes available at very affordable prices and interest rates are still at record lows has also strengthened our housing market.”

The number of homes in contract (but not yet closed) is also up. The 1,539 homes in contract is 17.2 percent higher than last year at the same time suggesting that November home sales will also be strong.

The month’s supply has dropped 30 percent from last year. Last year at this time, the months supply was 9.82 meaning that if no new homes were added to the market, it would take almost ten months to sell all remaining inventory. Today, that number is down to 6.86. A market is typically considered balanced with around a 6.5 to 7 months supply.

“These numbers are a great sign of stabilization,” adds Parsons. “Demand has picked up, inventory continues to decrease, and the month’s supply is now very close to balanced.”

“The $8,000 tax credit for new homebuyers was renewed earlier this month and added to it was a $6,500 tax credit to benefit those homeowners who wish to purchase a new residence. This incentive will further bolster the central Ohio housing market.”

HOW DID YOUR CITY SELL DURING THE RECENT HOUSING CRISIS? YOU MIGHT BE SURPRISED.

Are you curious about the value of your house after the recent economic downturn? Many of my clients are very interested to see how their city stacked up against other Central Ohio Cities. Columbus Monthly published an article with all the statistics for the Central Ohio Area. If you get the magazine, they made some major mistakes and I have the corrections. The statistics are based off of real estate sales from 2005 through 2008.

If I had to describe the trends in one sentence, it would be that the rich areas became richer or lost a little, and the poor areas became much poorer. One of the worst areas was the Northeast Columbus Area which plummeted 63%. Olde Town East area dropped 58%. The worst hit suburban area above I-70 was Reynoldsburg with an 18% drop. There were a few areas that actually had an increase! Please follow this link to see all the details. Central Ohio Sales Statistics

 

 

 

 

 

 

 

 

Lower mortgage rates, prices boost home affordability

Several factors which influence sales, including falling mortgage rates and increased consumer activity
point to a positive future, the Columbus Board of REALTORS® said today.

A total of 1,123 homes changed hands in February, down 23 percent from February 2008.

“In the last several weeks we’ve seen an increase in phones ringing as people are realizing the extra buying
power they have with the new $8,000 first-time buyer tax credit and other incentives, said Gary Parsons, president
of the Columbus Board of REALTORS®. “We expect the credit to make a significant difference for first-time
home buyers in central Ohio.”

“Mortgage rates continue to be near 40-year lows and housing affordability has increased dramatically,” Parsons said.
“There are some amazing opportunities out there for first-time or move-up buyers.”

With an average sale price in February of $133,604, central Ohio homes are at their most affordable prices in years.

The buying power of the typical family has risen over the last several months; average buyers can now afford a home
costing $20,000 more than a year ago, according to the National Association of REALTORS® Housing Affordability Index.

“That figure is a national number and it will vary among individual buyers, but traditionally central Ohio has always been
among the most affordable markets nationwide,” Parsons said.

“Home sales continued to lag 2008 levels, reflecting recent layoffs and economic uncertainty, but I’m hopeful historically-low
mortgage rates, historically-high housing affordability and the $8,000 first-time homebuyer tax credit will combine to increase
sales this spring.”

This was a press release from the Columbus Board of Realtors.

Columbus Area Housing returning to normal

(Jan. 22, 2009) While many markets struggled in 2008, central Ohio fared far better than Ohio and the nation, with inventory, sales and sale prices in keeping with pre-boom levels the Columbus Board of REALTORS® said today.

“Homes sold in 2008 were lower than the previous year, and the average sales price dipped a bit, but overall the local story was better than the national headlines would lead you to believe,” said Gary Parsons, president of the Columbus Board of REALTORS®.

There were 13.5 percent fewer homes sold in central Ohio during 2008 – down from 24,445 sold in 2007 to 21,153 sold last year.

With 13,533 homes for sale last month, December marked the lowest inventory level since April 2005.

Record-high inventory significantly influenced home prices in 2008. Homes were priced more competitively and more homes sold in the lower price ranges, further skewing the average sales price.

The average sale price of a home in central Ohio last year was $163,732, down 5 percent from the 2007 average.

Lowering inventory levels is a key to returning the market to a balance between supply and demand, and ultimately bringing prices back up.

“Yes, 2008 was a challenging year, but when you compare a 5 percent average price drop to other parts of the country, not to mention Ohio, it’s clear why Columbus is consistently considered a stable market,” Parsons said.

“The declining inventory of homes, coupled with historically-low mortgage interest rates should prompt home price increases in 2009,” Parsons added. “There’s a reason we’re telling our clients that now is a great time to buy is because the ability of buyers to stretch their housing dollar probably couldn’t get much better.”

Lower your tax bill!

Do you think you are paying too much in real estate taxes? If you have purchased a house recently this most likely is the case. I have many clients who purchase foreclosure type property and when they close the house is valued at a much higher price than they pay.

For example: I had a client who purchased a house for $22,000 that was taxed at $175,000 by Franklin County. The taxes he was paying on the $175,000 value totaled $2700. After dividing the new price into the old price he was overpaying by $2350!!!! I am in the process of helping him file with the Columbus Board of Revision to lower his tax assessment. I have helped 5 clients lower their tax assessment in the past year. It isn’t that hard of a  process, but you need to have some important documents.

The first thing that the Board of Revision will try to establish is an arms length transaction. Did you purchase the property on the open market. Did it have time for the market to bear a price? You will need the MLS printout showing how many days it was on the market and you weren’t related to the seller. You will also need the HUD-1 closing statement for that property. You must file your forms before March 31st for 2008 taxes. One bonus is that if you have been escrowing your your monthly taxes you will receive a refund from your escrow account for the amounts of overpayment for 2008. Your current escrow payment will go down as well.

Make sure you don’t advertise to the Board of Revision that you have done any major work to fix the property up. They will try to prove you have put a bunch of money into the house after you bought it for a depressed price. You might have to show inside pictures when you bought the house to show it wasn’t totally trashed.

You can also try to lower your tax value eve if you didn’t just buy your house. If you have seen houses selling for much less than normal lately, you can use those as comparable sales for your complaint.

 

 

Please contact me for the correct forms for your county. Visit www.ChadMillerHomes.com for all my contact info.

Chad Miller

Chad@ChadMillerHomes.com

Interest Rates Drop Yet Again!!

If you have been on the fence about whether to buy real estate in the past few months, now is the time to get in. Home prices are affordable and interest rates are dipping under 5%. They could go even lower, but it is very risky to play the waiting game. Rates could continue to rise in the near future and you could end up back at 7% or 8%. You will be kicking yourself at that point.

The FED is meeting today and could drop rates again. You will lock your rate in when you have an accepted contract to purchase a home. Some lenders will let you lock in prior to that for a fee, but normally they wait for a contract. If you are looking to refinance out of a bad loan, now might be a great time as well.

If you are buying a house in a rural area you have to read further. The USDA is offering financing assistance on rural homes where you can come to closing with zero dollars. Rural includes Pataskala, Galloway, Canal Winchester and parts of Blacklick. Most conventional loans are requiring 10% down, but with this loan you can have your closing costs paid and bring no down payment. I just had clients use this loan and they saved $4500 in down payment money. With the $7500 interest free loan this spring, you will save some serious money and have money to put back into the house!

There are many tricks for getting great value on homes and mortgage loans that only very experienced agents in this new real estate market will give you. Pleas visit my website at www.ChadMillerHomes.com for more info.