|
You Can Save Thousands of Dollars on Your Existing Loan!
There's a little secret that can save homeowners thousands of dollars. It works like this:
Rates have fallen and you want to refinance your fixed-rate loan on your Jacksonville home. You contact your lender and discover that, because you're a great and wonderful person and all your payments have been full and timely, you're qualified to refinance. New papers will be required, and that will mean a new closing, legal fees, survey, appraisal and perhaps a bunch of taxes.
What lenders DON'T say is this: You may be able to refinance without needing to fill out 900 forms or pay big closing costs.
For instance, several years ago rates were down and I needed to refinance an investment property. I called the lender and said, "Let's modify the loan."
I exchanged letters with the lender setting out the new terms. My attorney looked at the letter, the lender accepted, and that was it. Total cost: about $35.
What really happened was this: The home in Jacksonville was not refinanced. Instead, the loan terms were modified. Because the terms of an existing loan were changed, there was no need to record a new loan. Since there was no new loan, there was also no need for a new closing, title search or smaller checking account.
None of this is especially revolutionary. There are millions of adjustable rate mortgages, and the terms for such financing change constantly with new rates and payments. When these changes are made, no one refinances. The terms change because both lender and borrower have agreed that the loan provisions can be modified.
We now have lenders who have gone public with Adjustable Rate Mortgage (ARM) products where the initial rate is also the highest rate. If interest levels drop, the loan rate also falls.
Given the choice of an ARM where rates can rise and fall or an ARM where rates can only fall, you can bet that few consumers will opt for the greater risk of possibly higher rates--unless lenders want to make such loans attractive with significantly easier qualification terms, lower rates and fewer costs.
But while the modification "genie" is now somewhat out of the bottle, there is more to go.
Not only can new ARMs be modified, so can millions of existing loans whether they are ARMs or fixed-rate products. If lender and borrower agree, loans terms can be changed to whatever might be mutually acceptable.
So the next time you get the urge to refinance, stifle that feeling and think "modification." Increasingly, lenders will welcome such thinking--or lose your business!
Common Questions
1) I borrowed $100,000 several years ago and would now like to increase the loan amount to $150,000. Can a loan modification work in this case?
First, when a loan is recorded, there's typically a tax based on the mortgage amount. Thus, if a loan is modified and the interest rate, monthly principal and loan length are changed, there is no event to tax. But if the mortgage amount increases above the original principal, then a state government will likely see "new" financing and something to tax.
Secondly, loan amounts likely cannot be increased with a modification because: suppose a home has two loans, a first loan used to acquire the property and a second mortgage, perhaps a home equity loan. In this case, if the size of the first loan increases, the security of the second lender decreases.
When a home is foreclosed, all money is used to pay off the first loan holder. Any remaining money is used to settle the claims of the second lender, and then the third lender, and so on. If there is little or no money left over after the claims of the first lender have been satisfied, the other lenders lose. If we increase the size of the first mortgage, we also unfairly increase the risk of any second or third lender.
2) I can refinance with no closing costs, so why should I look for a loan modification instead?
There is a difference between "no closing costs" and "no costs." In your situation, the lender is paying your closing expenses. The lender must get that money from somewhere, and that "somewhere" is your loan in the form of a somewhat higher rate than might otherwise be available, a larger loan amount, a prepayment penalty if you quickly refinance or perhaps all three.
3) My lender will allow me to modify my loan, but only if I get a new appraisal. Why should I pay this cost?
Because it's not unreasonable, it's cheaper than refinancing and it assures the lender that the property has sufficient value to justify continuing the loan.
4)If a borrower can ask for less interest when rates go down, why can't lenders ask for more interest when rates go up?
They can--and you can say "no."
The goal of the lender is to make more loans and generate more income. The goal of the borrower is to have less debt with less cost.
A lender accepts a loan modification request to continue the loan and the stream of interest and servicing revenue it represents. If a modification request is not accepted, perhaps you'll refinance elsewhere.
Borrowers have different motivations, and since a fixed-rate loan agreement is in place and favorable to them in a rising market, consumers have no incentive to accept higher rates--unless a lender would like to make some concessions.
5) Other than money, why do lenders prefer "refinancing" rather than a loan modification?
Replacing an existing loan with a new mortgage can substantially impact lender risk. For example, if you live in California and buy a home with a new loan, your financing is generally considered a "purchase money mortgage." If you're foreclosed or go bankrupt, the lender gets back the house but cannot sue you for any shortfall. However, if you "refinance" you no longer have a "purchase money mortgage" and a lender can seek a deficiency judgment if you're foreclosed.
6) I have a lender who will agree to a mortgage modification. Do I just write them a letter to create the new terms?
You want your attorney to review any proposed loan changes before signing anything.
7) Are loan modifications a new concept?
The book, "The Common-Sense Mortgage" (HaperPerennial) in 1994 and in later editions discusses the concept in detail--and surely there are other earlier sources which described loan modifications.
|
|
|
|
|
|
Avoid the Most Common, Painful, Frustrating Mistakes that First-Time Home Buyers Make!
Buying a Jacksonville home can be a hair-raising experience. You will experience a roller coaster of emotions while finding the right place, securing the loan and finally moving in. For most of us, the first-time home purchase is the largest investment we’ve ever considered. The emotions of purchasing something so expensive and personal can often cloud our business judgment.
Most home purchasers do little to no research before they invest their nest egg. Doesn’t it make sense to become as completely informed as possible before you buy your first home? This special report is designed to help you avoid 10 common and crucial mistakes. Keep in mind that the right real estate professional can help you make good sound business decisions based on your personal situation.
1. Inspect, Inspect and Inspect - Go over the inspection report with a fine tooth comb. Make sure the report was done by a professional organization. For condo purchases, go over the CC&R’s, By-Laws and Association Fees. Don’t take anything for granted--inspect everything!
2. Imagine the Property Vacant - Your furnishings and decorations will be the ones filling this new residence. Don’t be swayed by beautiful furniture; it leaves with the owner.
3. Income + Lifestyle = Mortgage Payment - Sit down with your professional real estate agent and honestly discuss your income level and living expenses. Take into account future considerations, children, add-ons, amenities and fix-ups. Your dream home is certainly worth a sacrifice, but don’t mortgage your entire future.
4. View Several Homes - Look through the Jacksonville MLS with your Realtor helping you. See at least 7 to 10 properties. Don’t move too slow, but don’t move on the first property you see. With your agent’s help, you should be able to view enough properties for sale in Jacksonville to get a good overall perspective of the home market. When you find the right property, all the leg work will be worth it.
5. Utilize Your Team - By aligning yourself with the right real estate professional, you will have an entire team at your disposal. Utilize your lender, title rep and agent. Each of them should work hand-in-hand for your benefit. Explore all the options before you sign.
6. Be Columbo - Check out all costs and expenses before you sign: utilities, taxes, insurance, maintenance and home owner dues, if applicable. Make sure all utilities (gas, electricity and water) are on during your walk-through so you can inspect everything while it is in working order. Ask lots of questions and be very detail-conscious.
7. Do a Final Walk-Through - Visit the property after all furnishings have been moved out to be sure there are no surprises. Be absolutely positive that the property was left exactly as you had agreed upon in the contract. Things that could have been spotted in a final walk-through are often unintentionally overlooked.
8. Plan For Flexibility - Closing dates are not written in stone. Allow for contingencies and have a back-up plan. If you or the sellers need a little more time to conclude the final arrangements, don’t let these delays upset or frustrate you. These types of circumstances are not uncommon in a real estate transaction.
9. If It’s Not In Writing, It Doesn’t Exist - All promises and discussions should be in writing. Don’t make any assumptions or believe any assurances. Even the best intentions can be misinterpreted. Have your professional agent keep an ongoing log in writing of all discussions and get the seller’s written approval on all agreements.
10.Loyalty Breeds Loyalty - Be open, honest and up front with your team. Hard feelings and disloyalty will cause headaches, delays or may even keep you from getting into the home you worked so hard to locate. Take the time to select the right team in the beginning, and your first home purchase will be a pleasing and memorable experience.
~~ We sincerely hope these tips and ideas are of value to you. If there is any way we can be of service, please contact our office; North Florida New Homes. We would consider it a privilege to be of service to you! If you would like a FREE consultation, contact us at any time. ~~
|
|
|
|
|
|
Sell Your Home Yourself And…You Can Save The Commission!
Many homeowners who believe that to maximize their profit on a home sale, they should sell it themselves. At first glance, they feel selling a home in Jacksonville is simple and why should they pay a broker fees for something they could do themselves?
In fact, close to 25% of all the homes sold last year were sold For Sale By Owner (FSBO).
However, close to half of the FSBOs said that they would hire a professional next time they sold. Thirty percent said they were unhappy with the results they achieved by choosing FSBO. Why?
Many FSBOs told us that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings were even more disappointing. By the time they figured the amount of fees paid to outside consultants, inspectors, appraisers, title lawyers, escrow and loan officers, marketing, advertising...they would have been better off having paid the broker’s fee (which would have included many of these charges up front).
Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself serious money. Some FSBOs discovered that the lost money as a result of poor decisions outweighed the commission.
Before you decide to sell FSBO, consider these questions and weigh the answers of assuming the responsibility versus employing a professional. A little time spent investigating up front will pay off tenfold in the end.
Questions To Consider:
1. Do I have the time, energy, know-how and ability to devote a full-forced effort to sell my home?
One of the keys to selling your home efficiently and profitably is complete accessibility. Many homes have sat on the market much longer than necessary because the owner was unwilling or unavailable to show the property. Realize that a certain amount of hours each day is necessary to sell your home.
2. Am I prepared to deal with an onslaught of buyers who perceive FSBOs as targets for low-balling?
One of the challenges of selling a home is screening unqualified prospects and dealing with low-ballers. It often goes unnoticed...how much time, effort and expertise it requires to spot these people quickly. Settling for a low-ball bid is usually worse than paying broker commissions.
3. Am I offering financing options to the buyer? Am I prepared to answer questions about financing?
One of the keys to selling, whether it’s a home, a car...anything, is to have all the necessary information the prospective buyer needs readily available and to offer them options. Think about the last time you purchased something of value: did you make a decision before you had all your ducks in a row? By offering financing options, you give the home buyer the ability to work on their terms and you open up the possibilities of selling your home quickly and more profitably. A professional real estate agent will have a complete team, from lenders to title reps, for you to utilize...they’ll all be at your disposal.
4. Do I fully understand the legal ramifications and necessary steps required in selling a home?
Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your state's disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, a professional would be a wise choice.
5. Do I have the capability of handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented?
Ask yourself if you are well-versed in legalese and if you are prepared to handle disputes with buyers. To avoid disputes, it is wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.
6. Have I contacted the necessary professionals... title, inspector (home and pest), attorney and escrow company?
Are you familiar with the top inspectors and escrow companies? Don’t randomly select inspectors, attorneys and title reps. Like any profession, there are inadequate individuals who will slow, delay and possibly even cost you the transaction.
If these questions raise some concerns, you may want to speak with a professional. As active real estate agents in Jacksonville, we sincerely hope these tips and ideas are of value to you. If there is any way we can be of service, please contact our office. We would consider it a privilege to serve you!
|
|
|
|
|
|
Which Is A Better Buy? A New Home In Jacksonville or An Existing Resale?
This question is a serious one for today's homebuyers because interest rates are at an eight-year low, new residential construction is high and demand for homeownership is strong. So which is better, a new home or one that's already been broken in by previous owners?
If you talk to homebuilders, you'll hear only about the advantages of a new home.
Real estate agents who work with existing homes will obviously give you a different line of reasoning.
Both viewpoints are right; both new and existing homes have pluses and minuses. The job for a prospective buyer is to determine their individual preferences and shop accordingly.
-Buying a New Home In Jacksonville
More Amenities:
Typically, a new home will be more expensive than a 15-year-old house, but not always! They cost more, but you get more amenities. Twenty years ago, an average new home had about 1,200 square feet; today it's more like 1,900 square feet. In 1977, the average new home had one and a half bathrooms; today, it's closer to three.
Updated Wiring:
Most new homes today are being wired for new technologies: multiple telephone lines to accommodate new communications and computer requirements, electrical wiring that supports security services and other options that simply weren't available 20 years ago.
Greater Customization:
You can pick and choose the features you want in a new home. The more you spend, the more customizing is available.
Cost More:
New homes typically cost more. Constantly escalating land values and labor costs are major contributors to this.
-Buying an Existing Home
If money's tight and costs, rather than convenience, are a primary consideration, perhaps you should examine the possibilities of purchasing an existing home.
According to experienced Realtors, an existing home may be more of a bargain than a new residence.
Appliances Included:
Existing homes usually already have appliances in place, so a buyer doesn't have to shop for refrigerators, stoves, microwaves, freezers and other extras which can represent a sizable capital investment in a new home.
Updated Look:
Often existing homes have been updated so the home has the look of a newer home.
Mature Landscaping:
An existing home comes with "mature landscaping" which will require less maintenance than the nurturing of new landscaping in a new residence.
Established Neighborhoods:
Existing homes are usually in established neighborhoods. The character of an older neighborhood is different from that of a new development. In a new development, you don't know who your neighbors are. But in an older neighborhood, you can go to the neighbors, knock on the door and ask about schools, how many children are on the block, police protection -- the important things. You know who your neighbors are before you move in.
As a buyer, you will see a direct relationship between the care, maintenance and pride of the neighborhood in general and the price of the homes that are for sale. You know what you are dealing with in terms of shopping centers and amenities because an older neighborhood is already "built out." In new construction, you could be unpleasantly surprised when undeveloped land near your home is sold and used for something you don't want nearby.
Costs Less:
The purchase price tends to be less for existing homes. You are paying for past prices for labor and materials. Current building costs can add substantially to the price of a new home.
Greater Negotiation Potential:
Finally, existing homes offer more room for negotiation. While there is a "psychological value" in a new home with warrants that can cover construction and appliances for terms ranging from one to 10 years, a builder has to get a certain amount for the house. With an existing home, price can be negotiated more readily.
Proponents of both types of home purchase agree, though, that now is an ideal time to buy since interest rates are so moderate. What you buy is an individual choice. You almost can't go wrong either way, and you'll find that you get what you pay for.
If you need any other Jacksonville real estate advice, don't hesitate to contact us.
|
|
|
|
|
|
I know of a few buyers who have taken advantage of the Jacksonville real estate market to move up to a larger home given the vast amount of opportunities out there. I also know of a few who have done it without selling their current properties and are feeling it. I've been advising people in this situation who are deciding to move up to be sure they have six to eight months of reserves in pocket to handle the "double mortgage" scenario. Better yet, I advise them to get their current home sold, even if it means making two moves into a rental. The nuisance of a rental is far better feeling than that of having two mortgages hanging over your head and the sleepless nights that go a long with it. http://realestate.yahoo.com/Real_estate_news/story;_ylt=Arg0kVZ9g1vqYKjxuAoSpsSkF7kF?s=inman/item-8c8af0a116c3f29ddff42a440aed63d6.html
|
|
|
|
|
|
Here's a little tip when you use an agent's website to search the local Jacksonville MLS or any Florida real estate MLS system. Try using less parameters to search as many times you'll notice you'll get many more results. For instance, lets say your on an agent's website and are searching for a home with a minimum of one acre of property. All of the information that is feed into that particular local MLS system will only be as good as the agent who enters it. Some listing agents do not put the property dimensions or lot sizes in MLS. Why? Most likely becauss of laziness or the agent just doesn't take the time to find out from the sellers. Instead they just leave that tid bit of information out the property size description. A simple solution is just look at the home's pictures or those of the yard and make an educated guess as to the property size. As a broker I myself am forced to do this many times in our MLS system. You can try this with other search parameters such as school districts (leave them out). Again, many agents don't place the school districts in MLS for the same reasons. Afterall, you don't want to miss something that was meant for you. If your looking at a property online and are unsure, contact that agent who can easily find out for you. They'll even be happy to email you the results and at the same time answer any additonal questions you might have. Contacting an agent can save you hours of internet shopping. Happy Internet home hunting!
|
|
|
|
|
|
I'd like to take a moment to comment on the flip side of this buyer's market. What if your in the process of selling property in Jacksonville? There are still ways to do this to help attract buyers. Just the other day I passed by a home for sale in my neighborhood which had an additional rider sign in the lawn; "Free Cruise With The Purchase Of This Home." How dumb I thought. What a bad listing agent for even suggesting or agreeing with the seller on that idea. A cruise with an upgraded cabin will probably run you say $3,000 for the week on average, give or take. With that said, I think even the least experienced buyer's agent just out of real estate school could negotiate that amount off the home in today's market! Here's a secret...psst...the sellers are already expecting a lower offer. Meanwhile, the home inside (although I haven't been in it, but enough of them) probably needs new carpeting (or professional cleaning), paint, powerwashing and any other maintenance item one could think of doing. Only the listing agent is too fearful to mention these things at the chance of upsetting the seller's and losing the listing. It certainly needed fresh mulch in the beds outside I know that. The gimmicks don't work...stop offering them! People want a home, not a cruise. A cruise is something to give away on Wheel of Fortune. There's an old saying that only two things effect the sale of real estate... price and location...nothing else. And you can't change the location so what should we work with? Everything you do to sell property leads back to one or the other. If something else does effect the sale, please let me know. Offer a listing price that's near the bottom of the related comps in the area to attract buyers and their agents. It's now a buyer's market and your going to have to bite the bullet unfortunately. Your home isn't worth what it was a few years ago. Face it, accept it and move forward with that. Fix and clean up the home up and make it look like you want to sell it and buyers will appreciate that. If you currently have a listing with an agent who isn't blunt with you about these issues, get a new listing agent. In today's market you don't have time to be entertained with the sugar coating or bubbling personalities many agents try to sell you during their listing appointment. It's just going to cost you more money in the form of another mortgage payment as your home sits another month. Ask them for realistic numbers and what you can expect. Some listing agents are scared to tell you that your home will sit four to eight months in the fear they won't get the listing. They try to tell you what you want to hear. My philosophy is that I would rather disappoint you now, then disappoint you later. What I also tell sellers is that no matter what you personally believe, your view of "clean" is never someone else's. Don't lose a potential chance to sell your home. Make sure your home is in tip top condition for all showings as there are too many sellers your competing against. I work with many buyers and I can't tell you how many homes we walk into, turn around and leave in less than 30 seconds because of unpleasant odors, dirty carpets and frankly it shows (and excuse the expression) like a "monkey cage." I came across this article earlier today that only reassured me of my opinions that I'd like to share. http://finance.yahoo.com/real-estate/article/103345/Top-Tips:-Moving-Your-Home-in-a-Bad-Market
|
|
|
|
|
|
In my personal opinion, there is no better time to purchase a new home in Jacksonville than right now! I think prices have begun to bottom out as children have retuned to school. Although I haven't seen builders so much throwing in pool packages here in Jacksonville (most builders do not like to be in the "pool" business, email me if you want to know why), they have however reducing prices sharply, paying all closing costs and offering contingencies in their contracts if you have a current home to sell. I'm not sure what buyers think their waiting for as the real estate industry is having a sale! On average the cost of a basic pool package in Jacksonville is approximatley $30,000 to $35,000 which includes a full screen, soup to nuts. Most Jacksonville home builders have already reduced their prices on inventory homes this much already. http://finance.yahoo.com/real-estate/article/103373/Anxious-Builders-Pile-on-Incentives
|
|
|
|
|
|
With the mortgage industry tightening up, first time homebuyers will face new challenges buying Jacksonville real estate. As a real estate professional I was never excited about zero money down buyers. MAny seem to get into trouble if property values take the slightest dip in values. Selling the property as the result of a job relocation for instance has been one of the largest hurdles I've seen when this situation arises. Sellers are forced to sell somehow once they've accepted a job offer in another city. WHat is there to do...foreclose? Look for a renter? Many tough scenerios in today's marketplace. http://www.msnbc.msn.com/id/20127274/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
