Realities in Real Estate

Loan modification - Should you try it yourself, use a non-profit organization, or hire a professional?

We are not experts on this subject, but we talk with the experts a lot.  So here’s some important information we want to pass on to you.  

Anyone can work directly with their lender(s) and it costs you nothing. However, most of the people we know who have tried have been unsuccessful. Some have actually spent months talking with their lender only to have their home foreclosed upon anyway. This dispite the claim by the lender’s negotiator that the “modification proccess will put the foreclosure on hold”.

But as we said previously, lenders seem to be improving the process and their communication. So should you try it yourself or hire an expert negotiator to represent you?

First, gather all the paperwork you will need (most lenders web sites will help you with this information). If you are adept and successful at buying your own stocks, doing your own taxes (long form), etc., you might want to try it yourself. On the other hand, if you hire a professional to do these tasks then we recommend doing the same thing here. Trying to save some money here can cost you your home.

You can choose from; 1) non-profits and not-for-profits, 2) attorneys, 3) financial advisors. Be careful as this has become quite a fast growing cottage industry, so be sure you check with the BBB and attorney generals office web site, even if (especially if) they advertise they’re a non-profit.

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For the housing recovery to move forward at a more rapid pace, we need to dramatically reduce the number of new foreclosures. So this will be the subject of the next few posts.

Loan modification is where a lender agrees to restructure a homeowner’s loan to reduce their payments so they can afford to stay in their home. The borrower has to prove hardship and meet several other conditions.  Here is some important information from HUD (note this information changes nearly daily and you should check your lender’s web site too):

http://www.makinghomeaffordable.gov/modification_eligibility.html

 http://www.nls.gov/offices/hsg/sfh/nsc/faqlm.cfm

It’s imperative to note that your lenders first goal is to keep you making the current payments. Their second goal is to collect as much current information about your financial status to assist them in their collection process, in case you default. 

Until recently, most people we have talked to who called their lender for help, did not get the kind of apathetic treatment they anticipated. I cannot tell you how many times people have told us that when they called their lender they said ” You are current in your mortgage. We can’t help you until you are behind at least two payments.” This is not the progressive, kind assistance our government outlined when they passed the stimulus plan. Frankly it creates more stress and frustration with homeowners just trying to do the right thing, and they wonder “Why are these lenders getting my tax dollars for their support?”.  Under these conditions, even the most rational people make some irrational decisions that can have an adverse affect on their lives. However, due to pressure and incentives from the government, as well as some time to absorb the constant stream of changes affecting the banking industry, things seem to improving in this area. Lenders seemed to be wising up to the fact that in many cases loan modification is far less costly to the lender than foreclosure. We are hearing success stories where homeowners have received a lower payment plan.

Be sure to check out our next post about loan modification, “Should you try it yourself, use a non-profit organization, or hire a professional”?

Michael & Shannon Collins

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Usually we talk about real estate. However, at times we talk about our community our our country. This is one of those times.

One of the great things about American capitalism, is that the consumer often has an opportunity to purchase an item that in some way benefits those less fortunate. Well here’s a a chance to feed the hungry, just by pledging to lose weight, and it costs you nothing but time and maybe a little sweat.

Yes I am talking about NBC’s Biggest Loser, Pound for Pound Challenge. All you have to do is pledge to loose weight and General Mills will donate an equal amount of food to a local food bank. No purchase necessary. And I doubt that Jillian or Bob will stop by with a scale (but that would be cool too).

Just click on http://pfpchallenge.com and register the weight you want to lose. In a few months you look better in your swimsuit and others don’t starve. Truly a different type of sweat equity.

It only takes a few minutes. Be sure to use the above link as the web site address is difficult to find.

Michael & Shannon Collins

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Click here for an invite to our Home Buying Clinic on May 9th. http://www.youtube.com/watch?v=VauZxLuyW3Q 

Here’s a map to the location:

 http://www.mapquest.com/maps?name=Creative+Touch+Interiors&city=Mesa&state=AZ&address=525+W+Baseline+Rd&zipcode=85210&country=US&latitude=33.378709&longitude=-111.844448&geocode=ADDRESS

Michael & Shannon Collins

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We decided that there’s so much new information and misinformation out there about the housing market that we are going to conduct a series of real estate workshops, clinics and forums. We will start with a clinic for first-time homebuyers (and those who haven’t owned a home in the last three years), as there’s an $8000 tax credit waiting for you when you buy a house.

We will provide updated information about:

We recently received our GREEN designation from the National Asscoaition of REALTORS. The next few posts will be concerning how we can all live more environmentally responsible.

If you or someone you know are considering building your next home, you might be thinking you have to build small to be energy efficient. Custom home builder Tom Norris has been building GREEN custom homes for a decade. Here are two examples:

The Gladding Residence - On Jan 16, 2009 we received certification from D.R. Wastchak, L.L.C. that the Gladding Residence energy usage is Net Zero eliminating 21,647.4 pounds of carbon dioxide (CO2) per year.

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The perception - Politicians and the main stream media paint a picture that the Housing Recovery is like one huge ship on the wrong course that cannot be easily turned around.

The reality - The Housing Recovery is more like a flotilla of smaller ships, some of which have been heading on the right course for some time (i.e. sales of single family homes under $200,000 are booming across the country)

Sales of SF Homes from $70,000 - $150,000 in Maricopa County are up over 1200% for 2008 vs. 2007
 

And the trend continues in 2009, up 490% YTD over 2008
 

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Yes there is currently a boom in resale homes occurring right here in metro Phoenix, and very few people are talking about it. MLS reports that sales of single family homes between $70,000 and $150,000 in Maricopa County increased 1855% in 2008 vs 2007. I know what you’re thinking that could be 75 homes this year vs 3 last year, but that’s far from the case. There were 7571 homes sold in 2008 at a total value of $894 Million. Pinal County reported 2469 units sold in this price range vs. 385 in 2007.  And these totals only include a fraction of new homes sales, as most new homes are not reported in MLS.

You see there’s always a silver lining.  The depreciation in housing values, combined with lower interest rates have created a great opportunity for 1^st time homebuyers, who 2 years ago thought they were priced out of the market. One can actually purchase an 1800-2200 square foot, 3 bedroom, single family home, built since 2000 and your mortgage payment will be equal to or less than renting a 3 bedroom, 1200 square foot apartment. An of course savvy investors have noticed and are gobbling up inventory as well. These are clear indicators that housing values have bottomed out in this price point. Back in June we reported that it was a great time to buy and these statistics bare that out. What do you think is going to happen when the media starts to report this information? If you or someone you know is looking for your first home please have them contact us. Also, as we previously reported, your 401K or IRA can be used to purchase real estate. Purchasing homes in this price range might offer you a quicker and greater ROI than mutual funds.

Check out this recent article that illustrates this housing boom is happening in many areas of the country.

http://www.realtor.org/RMODaily.nsf/pages/News2009011602?OpenDocument

Call us for details or to get on board.

Michael & Shannon Collins        

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NEW FHA Loans are great for borrowers!

• Down Payment Is 3.0 % and increases to 3.5% on January 1, 2009.
• Loan Limit $346,250.00, reduces to $314,000 after 12/31/08.
• Interest rates below 6% (as of 10/23/08)
• No Pricing Hit for Credit Scores above 620
• 6% Seller Contribution Allowed toward buyers closing costs.
• Portion of MI Financed (tax deductible)
• No Required Reserves
• Assumable with Qualification

Also don’t forget - The (temporary) tax credit for 1st time homebuyers for up to $7,500. Buy your 1st home before the end of the year and take this credit off what you pay the IRS for 2008. Check this with your tax preparer as conditions apply.

Call us to discuss these terms with a lender.

Michael & Shannon Collins

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Barring a total reversal of what history shows us about the real estate and financial markets, it’s a great time to buy; your first home, your next home, or real estate as an investment. Why?  The simple answer is the age-old investment cliché, “buy low, sell high.” The value of real estate is at or near it’s low point, which means it’s a great time to buy.   The only way to know when we have hit the bottom is when the market values begin to escalate, and if you wait to see that, you’ve missed the prime opportunity.

Here’s the rest of the story:

Contrary to what the news media and financial talk shows tell you, there are lenders out there with a variety of loans available to help you purchase almost any property.  And yes, we can still help many people get into a home with little, or no money out of pocket. Yes, the qualification standards are more stringent these days. You will have to provide the lender with proof of income, employment and tax records, as the stated income loans have disappeared for the most part. However, that’s the way it was just a few years back, and the norm for the foreseeable future.

There are also sellers out there that are very motivated and willing to be that lender by offering Seller financing.

There are developers that we know (and sellers that we represent) that can put you in a lease-purchase program, which will not only get you into your next home, but they also assist you in restoring, improving, or building your credit scores.

For investors, there’s even a way that your IRA can be used to purchase real estate.

Please let us know if you need additional information.

Michael Collins & Shannon Collins

MoveUp AZ

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