Here's some good information you don't want to overlook if you're planning to obtain the $8K tax credit, or get OHFA (Ohio Housing Finance Association) funding for your new home.
If you plan to move in the next three years OR turn your property into an investment property and buy higher, the tax refund up to $8,000 will be DUE IN FULL in the year the property ceases to be your primary residence (36 months from date of purchase). This info is from an IRS.gov Q & A.
OHFA loans are for a principal residence. If you plan to buy a new home and hold the old home as investment property, you should refinance BEFORE you decide to sell... to wipe out the OHFA grant. If you move, then refinance, it will be considered an investment property. Refinancing the property at that point may be difficult - as high LTV loans are not generally available for investment properties.
Check out these other resources...
Monday, September 14, 2009
Wednesday, September 9, 2009
Echo Boomers to the Rescue -- part Deux
I wrote a post here in June '09 about the effect the Echo Boomers generation will have on housing demand and pricing over the next 5+ years. It's HERE.It's nice to see that Harvard's Joint Center for Housing Studies agrees with me. In their report entitled "The State of the Nation's Housing 2009" they detail - with lots of words, charts and graphs - the shabby state of today's housing market, and the effect Echo Boomers will have on the market in the coming years.
You've already heard enough gloom and doom about today. Here's a few of the high points of the report's look-ahead about the Echo Boomers and other demographic factors affecting the housing market. (I'm paraphrasing from the report - if you want, you can download it - I'll show you where later in this post)
- The difference in household formations from 2010 to 2020 is conservatively 1.25 million households annually (and may be as high as 2.3 million!) over the next the next decade - thanks to the aging of the Echo Boomers.
- The number of households in the 25-44 age group (home buyers in their prime) will increase by 2.0 to 3.4 million from 2010 to 2020.
- Hispanic household growth will increase by 1 million; and Asian household growth by another 1 million between 2010-2020.
It's a fascinating read (if you're - like me - really interested in the housing market). You can find the Harvard State of the Housing Market 2009 report HERE
And - call me or visit my website if you want some help buying a home in Cincinnati or surrounding areas.
Bob Wuest
(513)328-1520
Tuesday, August 11, 2009
Can a Good Loan Officer Make A Difference?
What would you rather have - a smooth home purchase that closes on-time with minimal stress? Or one where you wonder - throughout the process - whether your home purchase will go through?
Here are a couple stories about recent home sales, that illustrate the difference.
A Trusted Loan Officer
An investor client of mine had been turned down by two lenders (of the client's choosing) because of the presence of mold in the bank-owned property he was buying. Because of the delays in having his lenders review the deal, we were under the gun to meet the closing date. Our contract called for a $100 per day penalty for closing late!
I introduced him to Wally, a loan officer whom I know and trust. We informed Wally of the two other lenders' disapproval of the loan because of the mold condition. Probably not a problem, according to Wally. Within 24 hours of the introduction, Wally said my client qualified financially for the loan. He then immediately scheduled the appraisal. A couple days later the appraisal came back well over the purchase price. We closed two weeks later - a week before the contract closing date.
The closing costs for the purchase were very reasonable. On the order of $500-$1,000 lower than the other deal I'll mention below.
Throughout the process, my trusted loan officer responded to both me and my client whenever we had a question. He returned phone calls promptly; and always told the truth about the status of the loan. My client thanked me for referring him to Wally; and said that if he needs a loan in the future, Wally will be his first choice.
Random loan officer
A client was excited about buying his first home. He was a veteran, and when we met, he had already pre-qualified for a VA loan with an out-of-state lender. We found a home he loved, and negotiated a great deal - with the seller covering all of his closing costs.
His loan officer, Jeff, seemed very pleasant and helpful. Since a VA loan typically takes a while longer to close, I had set a closing date six weeks out. Jeff said that should be no problem.
The appraisal came back fine. Smooth so far. A couple weeks go by, and Jeff tells me that everything's moving along well. A week before closing I call Jeff to schedule our upcoming closing. "The closing date's on the 5th of the month? I thought it was the 15th!", he says. First sign of trouble.
I explain that the closing date has always been the 5th of the month (and bring his attention to my first email that clearly indicates such). He says he'll expedite it with the loan processor and the underwriter; shouldn't have any problem closing on time.
A few days later Jeff tells me they haven't been able to get the VA certification for my client (something that should have been known weeks earlier). So, he's shifting him to a FHA loan. The appraiser must re-write the VA appraisal for FHA; and the loan application must be re-submitted to FHA. "May push us back a few days... no more than that", says Jeff. I'm doubtful at this point.
From that point on, Jeff is unavailable. He doesn't respond to several voicemails. The title company has another contact - Donna - who seems real helpful. She says she's pushing the deal through underwriting, and suggests we extend the closing date one week.
The seller is getting married three days after our initial closing date. Since she'll be on her honeymoon during the new closing date, we must arrange for her to sign the deed and other documents before she leaves. And of course, we must have all the forms notarized at a bank, and delivered to the title company. Like she doesn't have enough stress or scheduling difficulty three days prior to her wedding.
Meanwhile, the buyer has already given notice to his landlord, and scheduled a mover. When we have to push the deal back a week, he has to pay another month's rent, and reschedule the mover. Now he has to live out of the boxes he's packed.
Two days before the new closing date, Jeff's voicemail indicates he's on vacation for a week. I call Colleen (Jeff's assistant), and all she'll say is that the loan is in underwriting. She gets snippy with me when I push her for more information. She gives me a statement that will she thinks will get me off her back - "maybe it'll be done today". Riiiiiiight.
The second closing date comes and goes. Thank God the seller is out of town... but my buyer is literally overcome with stress. Five days later, we finally get the OK to close - not from the lender, but from the title company. Nearly three weeks after the initial closing date, we finally close the deal.
My client, the buyer, asks me if there's any way to report the lender for the terrible mishandling of his loan.
The Difference
As you can see, there's a world of difference between a trusted, efficient loan officer, and - well, you fill in the rest.
I invest time and effort into interviewing and qualifying loan officers... because when I refer a client to a lender, I want to know that they'll work as hard as I do to minimize the stress of buying a home.
My Problem
Many of my buyer clients have already pre-qualified for a loan at the time I meet them. I don't know their loan officer, nor the nature of their relationship. As I'm trying to cultivate a new relationship with a buyer, it feels pushy to me to suggest that they speak with another loan officer.
And - who knows? - maybe their loan officer is excellent! (My first contact with Wally was when a buyer client introduced me to him!)
What can you do?
By all means, I recommend pre-qualifying for a loan before you begin looking for a new home. When you interview a Realtor, ask if they have trusted loan officer(s) who:
Here are a couple stories about recent home sales, that illustrate the difference.
A Trusted Loan Officer
An investor client of mine had been turned down by two lenders (of the client's choosing) because of the presence of mold in the bank-owned property he was buying. Because of the delays in having his lenders review the deal, we were under the gun to meet the closing date. Our contract called for a $100 per day penalty for closing late!
I introduced him to Wally, a loan officer whom I know and trust. We informed Wally of the two other lenders' disapproval of the loan because of the mold condition. Probably not a problem, according to Wally. Within 24 hours of the introduction, Wally said my client qualified financially for the loan. He then immediately scheduled the appraisal. A couple days later the appraisal came back well over the purchase price. We closed two weeks later - a week before the contract closing date.
The closing costs for the purchase were very reasonable. On the order of $500-$1,000 lower than the other deal I'll mention below.
Throughout the process, my trusted loan officer responded to both me and my client whenever we had a question. He returned phone calls promptly; and always told the truth about the status of the loan. My client thanked me for referring him to Wally; and said that if he needs a loan in the future, Wally will be his first choice.
Random loan officer
A client was excited about buying his first home. He was a veteran, and when we met, he had already pre-qualified for a VA loan with an out-of-state lender. We found a home he loved, and negotiated a great deal - with the seller covering all of his closing costs.
His loan officer, Jeff, seemed very pleasant and helpful. Since a VA loan typically takes a while longer to close, I had set a closing date six weeks out. Jeff said that should be no problem.
The appraisal came back fine. Smooth so far. A couple weeks go by, and Jeff tells me that everything's moving along well. A week before closing I call Jeff to schedule our upcoming closing. "The closing date's on the 5th of the month? I thought it was the 15th!", he says. First sign of trouble.
I explain that the closing date has always been the 5th of the month (and bring his attention to my first email that clearly indicates such). He says he'll expedite it with the loan processor and the underwriter; shouldn't have any problem closing on time.
A few days later Jeff tells me they haven't been able to get the VA certification for my client (something that should have been known weeks earlier). So, he's shifting him to a FHA loan. The appraiser must re-write the VA appraisal for FHA; and the loan application must be re-submitted to FHA. "May push us back a few days... no more than that", says Jeff. I'm doubtful at this point.
From that point on, Jeff is unavailable. He doesn't respond to several voicemails. The title company has another contact - Donna - who seems real helpful. She says she's pushing the deal through underwriting, and suggests we extend the closing date one week.
The seller is getting married three days after our initial closing date. Since she'll be on her honeymoon during the new closing date, we must arrange for her to sign the deed and other documents before she leaves. And of course, we must have all the forms notarized at a bank, and delivered to the title company. Like she doesn't have enough stress or scheduling difficulty three days prior to her wedding.
Meanwhile, the buyer has already given notice to his landlord, and scheduled a mover. When we have to push the deal back a week, he has to pay another month's rent, and reschedule the mover. Now he has to live out of the boxes he's packed.
Two days before the new closing date, Jeff's voicemail indicates he's on vacation for a week. I call Colleen (Jeff's assistant), and all she'll say is that the loan is in underwriting. She gets snippy with me when I push her for more information. She gives me a statement that will she thinks will get me off her back - "maybe it'll be done today". Riiiiiiight.
The second closing date comes and goes. Thank God the seller is out of town... but my buyer is literally overcome with stress. Five days later, we finally get the OK to close - not from the lender, but from the title company. Nearly three weeks after the initial closing date, we finally close the deal.
My client, the buyer, asks me if there's any way to report the lender for the terrible mishandling of his loan.
The Difference
As you can see, there's a world of difference between a trusted, efficient loan officer, and - well, you fill in the rest.
I invest time and effort into interviewing and qualifying loan officers... because when I refer a client to a lender, I want to know that they'll work as hard as I do to minimize the stress of buying a home.
My Problem
Many of my buyer clients have already pre-qualified for a loan at the time I meet them. I don't know their loan officer, nor the nature of their relationship. As I'm trying to cultivate a new relationship with a buyer, it feels pushy to me to suggest that they speak with another loan officer.
And - who knows? - maybe their loan officer is excellent! (My first contact with Wally was when a buyer client introduced me to him!)
What can you do?
By all means, I recommend pre-qualifying for a loan before you begin looking for a new home. When you interview a Realtor, ask if they have trusted loan officer(s) who:
- They have worked with in the past, and have always demonstrated their ability to communicate throughout the process, and get deals closed on time.
- Have low closing costs.
- Are knowledgeable about all types of loans and home buyer assistance programs, and help you find the best program(s) for your unique circumstances.
- Can work with you, if necessary, to clear up any credit dings that might otherwise increase your house payment
If the Realtor doesn't have preferred lenders (or doesn't understand your questions), you have the wrong Realtor.
Unless you have prior personal experience with a loan officer, I highly recommend you consider your Realtor's trusted lender!
Friday, August 7, 2009
Extended closing periods, and FHA mortgages
A couple of recent developments in the mortgage industry will likely result in:
- More difficulty obtaining a FHA mortgage
- Extended closing dates
Here's a little background:
FHA Mortgages becoming more scarce
Taylor, Bean & Whitaker is the largest privately held issuer of FHA mortgages; and the 12th largest FHA underwriter overall. They were suspended from issuing FHA mortgages earlier this week: see article HERE. The likely result: more difficulty obtaining a FHA mortgage.
Extended closing dates
Add to that dilemma the new federal guidelines for Truth-In-Lending disclosure by your lender, that's likely to further extend closing dates. Here's a good article that outlines those guidelines, and their effect: View article
The $8000 Tax Credit and You
With the expiration date of the $8,000 tax credit looming, the message to Cincinnati first-time homebuyers is clear: if you intend to qualify for this credit, you need to get going NOW... rather than waiting till September or October.
Between the inevitable surge in demand, the loss of a major FHA lender, and the incremental time delays to conform to Truth In Lending guidelines, it's inevitable that some peoples' dreams of homeownership will be shattered, as word comes back that their closing can't occur before the expiration date for the tax credit - November 30.
Please, don't become a member of that class. Get going now. If you don't know how, you can download the First Time Home Buyer's Bible from my website. This 30-page guide provides in-depth yet easy-to-understand guidance as to how to go about buying your first home.
Tuesday, July 28, 2009
100% financing, 0 Down, no PMI
If you think a USDA loan might be something purely agricultural, something farmers use to buy cattle, let me give you a brief overview of the program.
There are 2 main benefits of the USDA Home Loan. First, it is a true no money down home loan. Despite the elimination of virtually all other $0 down mortgages, the UDSA Home Loan still remains as a viable way to purchase a home with literally no money out of pocket, if you qualify.
Second, unlike conventional loans with a loan to value ratio over 80%, with this program, there is no mortgage insurance, easily saving a homeowner a couple hundred dollars a month.
If it is such a great program, why doesn’t everyone use it for their home financing? Good question. The answer is because not everyone qualifies, and that’s where this USDA Home Loan site comes in.
There are 2 eligibility requirements over and above a conventional mortgage that one needs to consider. First, there are income requirements. In order to qualify, your household’s total monthly income must be below a certain amount depending on the number of people in your household, county or metro area, etc. Second, there are location restrictions on the house you buy. Only areas designated eligible by the USDA qualify for this type of home loan.
Using the USDA Home Loan Eligibility section of the site, you can determine if you meet both the income and location requirements for the USDA home loan. Assuming you do, the process is very similar to obtaining a conventional finance loan.
Unfortunately, USDA Home Loans can't be used to buy a home in Cincinnati - as Hamilton, Warren, Butler and Clermont Counties are on the "Ineligible counties" list of the USDA. However, if you're looking in other counties, be sure to check out that site to see if they're available.
There are 2 main benefits of the USDA Home Loan. First, it is a true no money down home loan. Despite the elimination of virtually all other $0 down mortgages, the UDSA Home Loan still remains as a viable way to purchase a home with literally no money out of pocket, if you qualify.
Second, unlike conventional loans with a loan to value ratio over 80%, with this program, there is no mortgage insurance, easily saving a homeowner a couple hundred dollars a month.
If it is such a great program, why doesn’t everyone use it for their home financing? Good question. The answer is because not everyone qualifies, and that’s where this USDA Home Loan site comes in.
There are 2 eligibility requirements over and above a conventional mortgage that one needs to consider. First, there are income requirements. In order to qualify, your household’s total monthly income must be below a certain amount depending on the number of people in your household, county or metro area, etc. Second, there are location restrictions on the house you buy. Only areas designated eligible by the USDA qualify for this type of home loan.
Using the USDA Home Loan Eligibility section of the site, you can determine if you meet both the income and location requirements for the USDA home loan. Assuming you do, the process is very similar to obtaining a conventional finance loan.
Unfortunately, USDA Home Loans can't be used to buy a home in Cincinnati - as Hamilton, Warren, Butler and Clermont Counties are on the "Ineligible counties" list of the USDA. However, if you're looking in other counties, be sure to check out that site to see if they're available.
Monday, July 27, 2009
Asbestos info
This post is courtesy of Joe Lederman of http://www.asbestos.com/. He asked that I post it to increase awareness of asbestos in older homes. Thanks, Joe!
Commonly used to insulate boilers and pipes, many homes built prior to 1980 could harvest asbestos or other environmental defected insulation techniques. Due to its flame resistant and highly durable qualities, asbestos was the ideal form of insulation for many industries.
One of the main things that can go unnoticed is taking simple precautions to avoid asbestos exposure. Exposure can be easily avoided by taking simple precautions. Many green and health forms of insulation exist which replace the need for asbestos entirely.
Asbestos Tips
Located in the mid-Western part of the United States, Ohio is regarded as the "Buckeye State" for the high amount of Buckeye trees in the state. Home too many professional and college sports teams and vast rural areas; Ohio is simply a great place for potential Cincinnati home buyers to consider calling home. The journey to purchasing a home is an enjoyable time in one’s life. But it is one that will bring many additional responsibilities. Having the assistance of an honest real estate agent can make all of the difference during this process.
If you locate any suspected asbestos in the home, most experts suggest leaving it un-disturbed until a home inspector can examine your property, take evaluations and determine the safest course of action. Sometimes the best action is no action at all. Disturbing asbestos in good condition may cause its fibers to be released into the air.
Long term exposure to damaged airborne asbestos fibers can lead to the development of a severe lung ailment known as mesothelioma.
The mesothelioma survival rate varies from patient to patient for many reasons. These include age of the mesothelioma diagnosis, latency period and cigarette smoking.
Removal of asbestos in public facilities, workplaces and homes should be performed by licensed abatement contractors as long as the National Emissions Standards for Hazardous Air Pollutants (NESHAP) are not violated. They must wear protective equipment such as masks and gloves to avoid any exposure. The materials should be removed in as large pieces as possible and places in disposable bags.
Healthy Alternatives
The Ohio Environmental Protection Agency is a citizen based agency created to protect the environment and public health by instituting compliance with environmental laws. Citizens of Ohio are motivated and pushing for continued advocating of new green sustainable technologies. Everyone strives for clean air to breathe and clean water to drink.
For example, the use of cotton fiber foam has demonstrated to reduce energy costs by 25 % per year. As education and technology of green sustainable practices increase, the numbers will continue to rise.There is no need for any products used in construction to be made from asbestos; yet over 3,000 work and home-based materials still contain this toxin.
Ohio is taking the steps to move to a paradigm of environmental awareness and you should too. As education and technology of green sustainable practices increase, the numbers will continue to rise. Living in a world where environmental sustainability is a vital concern to the future of mankind, it is important to take note of the consequences of improper building materials and environmental degradation.
Friday, June 26, 2009
Cincinnati Real Estate Market - updated
Within the last 12 months, 48 homes sold per day in the Greater Cincinnati market. Housing Supply, Absorption Rate (AR), is 8.5 months down 1.5 months from April and virtually the same as last year. A “balanced market” is 5-6 months of listing inventory. Supply and demand.
The active residential inventory continues to decline below 2006 levels…this is very good. Inventory is being reduced not only by sales but also by properties being leased. It matters not the method, just the result.
Comparing to May sales in prior years
Unit sales are at 1994-95 levels. Dollar volume of sales are at 1998-99 levels. Average sales price is at 2001 levels. (As I noted in a previous post, this doesn't mean that home prices are down to 2001 levels - it shows the market momentum that first-time Cincinnati home buyers are creating, at the lower end of the price spectrum. Also, we know that Cincinnati real estate investors are back in the market - buying up REOs and short sales now that they can have up to 10 loans at a time - up from 3 earlier).
May 2009 unit sales were down about 13% from May 2008. Total dollar volume was down about 10% from May 2008. The average sales price was down 8%.
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