Buyer’s Choice Realty blog

12 Top Spots to live in the Greater Boston area.
 

This year’s Globe Magazine’s “Top Spots to Live” are all places that didn’t fare too badly during the economic downturn. Some even gained value during the five years.
 

The top 12 are Wenham, Jamaica Plain, Cambridge, Winchester, Rowley, Lynnfield, Natick, Downtown Boston, Weston, Brookline, West Tisbury on Martha’s Vineyard and Eastham on Cape Cod.
 

The selection came out of data from the Warren Group tracking single family median prices for 2005 and 2009.  The market peaked in 2005 and has gone steadily down through 2009. Median values for single family homes in our state have come down an average of 20% over the five year period.
 

As an aside, Buyer’s Choice Realty is located in the top choice town with our corporate office at 162 Main Street, Wenham. Two of our Exclusive Buyer’s Agents, Melissa Addis and Lorna Zizza, live in Wenham.
 

For more information on the why and how of the Globe’s Top 12 picks see Elizabeth Gehrman’s article on Boston.com.
 

Do you think this is an accurate picture of values in these towns? What does the median price comparison in 2005 and then in 2009 tell us? Is the real estate market any better today in March of 2010? We welcome your thoughts. Call or email us for more data and learn why despite climbing interest rates, this is a good time to buy.

The U.S. Department of Housing and Urban Development (HUD) recently updated their helpful Settlement Cost Booklet, a publication aimed at helping consumers shop for a home loan. This resource also provides basic tips about the entire home buying process.

In the ‘Shopping for a House’ section, a necessary update has finally happened: HUD mentions the importance of hiring a real estate agent who actually works for you.

“It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you. “

Please visit the National Association of Exclusive Buyer Agents (NAEBA) press release to learn more about why this is such an important step for the government to take, and see a few reasons why consumers will realize and experience tremendous benefits if they hire an EBA to represent them in any real estate transaction.

Click here to download a free copy of Shopping for Your Home Loan - HUD’s Settlement Cost Booklet

Governor Deval Patrick held a press conference in Springfield, MA today and provided a list of lenders that are participating in this program. If you are a first-time home buyer and are eligible for the $8000 tax credit, you may be able to utilize the credit as part of your down payment. Previously, it was very difficult to find a lender who would do this, but the state of Massachusetts has been working hard to help potential buyers realize their dream of home ownership.

Here is the list of lenders that are participating in this program:

The U.S. Department of Housing and Urban Development recently announced that eligible borrowers who intend to purchase an FHA-insured home may elect to ‘monetize’ the first-time homebuyer tax credit and apply those funds toward their down payment or closing costs. Previously, buyers could only receive the credit (up to $8000) by amending their 2008 income tax return or waiting until they file their 2009 return.

Read more about this new program:

HUD news release (opens as a Word document)

IRS tax credit answers

Hud Secretary’s announcement of new plan

Here are a few of the rules involved (per HUD’s letter) in order to be able to use this credit before you actually purchase your home:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
• The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
• Secondary financing may be “soft” (silent) or require a monthly repayment.
• If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
• The secondary financing may not require a balloon payment before ten years.

So, you have 3.5% of the purchase price saved up to use as your down payment on your FHA loan and you want to use the tax credit you qualify for in order to not have to pay closing costs out-of-pocket. What’s the next step? Get your lender to participate in this program. However, most, if not all, lenders are not participating.

You will have a hard time actually using this new program and getting your tax credit up front. As of today, it is near impossible. Why? Lenders want to be able to have borrowers sign a document that would allow the credit to be disbursed directly to the lender when the borrower files their 2009 income taxes, but they are not allowed to do this because the government feels it would not protect the consumer.

As a result, lenders have little to no protection or guarantee that the borrower will send the credit to them next year and have no desire to have these short-term loans convert to secondary liens on homes. If this does not change, it will be yet another example of good idea, bad implementation.

*The above material should be used for information only. Please consult your lender and tax professional with any questions. Maybe your lender will allow you to do this. If so, please share your success with me. And, if you are looking to cash in on the tax credit in Massachusetts, let me know and I will provide you with all the information you need. At Buyer’s Choice Realty, we only work for buyers and have saved thousands of buyers millions of dollars.

Many common mistakes that buyers of real estate make can usually be avoided. Here are a few mistakes many buyers make, and some ways to avoid them.

#1. Buying before selling. It sounds simple, but the lure of that new house can have an overwhelming effect on your finances. Sell the home you currently own before buying a new one. Sure, bridge loans can be obtained, but in the current buyers’ market, who knows how long your home will be on the market before someone purchases it? Unless you are able to pay cash for that new place, wait until you are certain your home sale will close before placing an offer on another piece of property.

#2. Continuing to look when it’s time to make an offer. This mistake, most often made by first-time buyers, is very common. Many folks think they must look at 30, 40, 50 properties before making a decision. If you see property you like, it fits your budget and needs, and you envision yourself living there, pull the trigger! Assuming your real estate agent is working for your best interests only (as Exclusive Buyer Agents are, hint hint), they should have a good idea of what you are looking for in a home based on your preliminary interview, and should be knowledgeable about what’s on the market as well as what’s not. They are likely to show you the properties that match the majority of your search criteria first. Don’t fall into the trap of feeling anxious because you feel haven’t looked enough. Remember, this is only the first part of a long process. Be grateful it was easy.

#3. Waiting for prices to drop. In most towns, real estate prices have dropped significantly over the past few years and show few signs of increasing. Many buyers fear paying too much for their home. Keep in mind that real estate is cyclical, so prices will move up eventually. There is no failsafe way to ‘time the bottom’, and you should take the long view. If you are planning to spend more than a year or two in the home you are purchasing, don’t worry about short term price changes. Focus on finding a great place that you can afford. Large price drops are very uncommon in the short term, so don’t fret. Either way, it is almost always a better use of your money to make mortgage rather than rent payments. History shows us that real estate has been one of the safest and lucrative investments ever.

I’d be happy to discuss your home buying wants and needs if you are thinking about starting a home search. I work only for buyers and as such have your best interests in mind at all time and my only loyalty will be to you. Call me at 800.25.BUYER (ask for John) or email me.

Check back soon, as there are many mistakes buyers make that I have yet to cover. An educated consumer is the best consumer.

President Obama announced a plan today designed to help millions of homeowners around the country. While final details and rules & regulations will not be announced for two weeks, we learned some details today. The plan is scheduled to begin March 4.

Some homeowners will be able to refinance their existing mortgages, only on owner-occupied properties. There are several criteria they must meet. Owners must be current on their mortgage payments, must have a conforming loan (less than $417,000) that is owned or guaranteed by Fannie Mae or Freddie Mac, and apparently must owe more than 80% of their home’s value. Currently, lenders are not likely to refinance loans for borrowers who have less than 20% equity in their home. A further caveat: the new mortgage and refinancing costs must be no more than 105% of the current value of the home. Obama’s administration predicts that this plan will help up to five million “responsible homeowners.”

This initiative also aims to bring mortgage payments down to no more than 31% of borrowers’ income. The goal for this portion of the plan is for lenders to reduce interest rates on loans to bring monthly payments down to 38% of income and the government will further subsidize lenders and servicers to bring the ratio to 31%.

Check out this article from CNN for more information on this hot-button issue.

There are plenty of details surrounding this plan that I haven’t included, such as the government throwing more money to Fannie and Freddie, etc., with the end goal being to keep mortgage interest rates down for some time.

What do you think? Is the plan going to work? Will it really help millions of at-risk homeowners?