What is an Assumable Mortgage?

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Pinellas County Homes, Real Estate

What is an assumable mortgage? In this economy, with buying and selling houses being so difficult, many people are starting to ask this question as they gradually hear about different ways they can get (or get rid of) a house. In many cases, an assumable mortgage can be a lifesaver for both buyer and seller, as it allows the seller to get out of the mortgage commitment with no fees, and lets the seller buy the house without having to qualify for a new mortgage. It can really be a winning proposition for anyone in the real estate game.

Basically, an assumable mortgage is one in which the buyer takes over the seller’s existing mortgage. If the mortgage was taken out before 1989, the buyer can simply take over the payments on the seller’s house and does not have to qualify for any type of new mortgage. However, the original mortgage remains in the seller’s name, so if the buyer defaults, it will affect the seller’s credit. If the loan was taken out after 1989, then the assumable mortgage becomes a kind of refinance, where you keep all the original terms (including interest rate) of the seller’s original mortgage, but a new mortgage with those terms is issued in your name and you still have to qualify for it just like you would a regular home loan.

Essentially, if you can find a house for sale with an assumable mortgage that was taken out before 1989, then you should have no problem at all getting the house if the seller is agreeable. This can be a real blessing for people who have poor credit and can not qualify for a mortgage on their own. If the mortgage was taken out after 1989, then you still need to have good credit to get the bank to let you take over the terms of the original mortgage. Don’t worry, though. If you really want an assumable mortgage and have poor credit, you can look through the property records for your town online or at your local court house to find homes with mortgages taken out prior to 1989. If these houses are for sale, you should feel free to put in an offer, because you could end up with a really great deal and the house of your dreams with no qualifying.

What is Considered a First Time Home Buyer for Mortgage Purposes?

Published by julia | Filed under Buyer / Seller Tips, Cool Listings, Market Trends, Pinellas County Homes, Real Estate

You’ve probably heard a lot about special mortgage programs for first time home buyers. These programs provide some really good deals for people who fall into this category, such as lower down payments, looser credit requirements, and lower interest rates in some cases. You can also often qualify for down payment assistance grants if you are a first time home buyer. You may think that just because you have owned a house before that you are out of luck on any of these special programs, but you are wrong. Being a first time home buyer does not necessarily mean you have to have never owned a home before.

Naturally, the basic definition of a first time home buyer is one who has never owned a home before. If you fall into this category, then things are very straight forward for you. You will easily qualify for all kinds of programs to help you get into a house and become a home owner for the very first time. It is a great feeling to own a home, and the government and many private organizations are ready to help you make it happen.

However, there is another, lesser known definition of a first time home buyer, and that is someone who has not owned a home or had an ownership interest in a home for at least three years. Yes, that is right. If you have not owned a home or had your name on a mortgage of a home someone else lived in, then you are once again considered a first time home buyer and are again conferred with all the rights and privileges thereof when it comes to being able to take advantage of all of the special loan programs for this class of people.

If you fall into either of the two categories of first time home ownership, you should jump on board the home buying bandwagon now, while there are still some great deals available. With the economy the way it is, there has never been a better time to buy a home. If you are a first time home buyer, you are in a perfect position to do it.

When a Dream Home Needs Work

Published by julia | Filed under Buyer / Seller Tips, Communities, Feng Shui Real Estate, Market Trends, Pinellas County Homes, Real Estate

That dream home that you searched for is now yours, but there are changes and upgrades that need to be made. Choosing a home contractor is the first step is refurbing that home, but how can you ensure the home contractor you find is the best one for the job?

Step 1 – Meet with the contractor. The first step in finding a home contractor is to meet with several. The contractor will need to listen to the things you want done to the home and offer up some advice on what some better changes may be. The communication should be that of a back and forth talk with friends. If you are not comfortable with one contractor, meet another and another until you find that professional friend that is willing to talk to you about what may be a bad choice.

Step 2 – Check the references and licenses. Every contractor should come prepared to the first meeting with a list of references and licenses they currently hold. If the contractor does not have these things handy, they were not prepared for taking the job. That is a huge red flag. Move on to the next contractor.

Step 3 – Ask for the bid. No matter how professional, personable and prepared the contractor may be, the bid is what drives the contract. It is okay to ask for more than one bid for a job at the same time. The best choice is to ask for several bids from several contractors. The lowest bid may not always be the best, but it certainly could be.

Step 4 – Check the team. If the contractor will sub-contract some of the work on your home refurb, make sure each of these workers and their work is guaranteed by the contractor. The final bid should list the names and contact information for the sub-contractors being used on the job. If the contractor changes the sub-contractors during the scope of the job, the new contact information should be offered to the homeowner without asking.

The home of your dreams is not necessarily perfect from day one. When there are a few changes that need to be made, the contractor is the foreman that will handle the transformation. Choosing a good contractor can take weeks or months and is not a process that should be rushed. Local contractor license websites and the Better Business Bureau are also great places to start the search.

Home Sales in Tampa Bay Have Best December In 3 Years

Published by peter | Filed under Market Trends

Tampa Bay ended the year with 2,123 home sales, the best December for real estate since 2006, according to Florida Realtors.

The yearly home sales total also improved: Tampa Bay sold 28,617 in 2009, up from 23,615 in 2008. It, too, was the best since 2006, when 37,190 homes sold.

Here’s the report from the whole year: Download FAR2009. And here’s the December chart: Download Fardec.2009

Home prices continued to hold steady at around $140,000, a level they maintained for most of 2009. The $8,000 first-time home buyers tax credit gets part of the credit for the price stability. To use the credit, you must sign a purchase contract by April 30.

More Proof for Tampa Bay Home Price Flattening: Price Per Square Foot

Published by peter | Filed under Market Trends

Is it too soon to call a home price bottom? Is it a coincidence that price flattening began with the approval last year of the $8,000 home buyer tax credit? Will prices fall again when the credit disappears this spring? James Thorner attempts to answer these questions in a must-read blog post.

Tampa Bay Area Could See Home Prices Stabilize Later This Year

Published by peter | Filed under Market Trends

Home prices declined once again in November, but the bottom may be close for the greater Tampa housing market.

A new study from First American CoreLogic said home prices in Tampa, St. Petersburg and Clearwater dropped 13.5 percent since November 2008. That was smaller than the 14.5 percent decline experienced between in October, but was well above the national decline of 5.7 percent.  For the rest of this story, click here.

Real Estate in Florida is Far From Recovering

Published by peter | Filed under Market Trends, Real Estate

A must-read from the NY Times: Fellow adventurers, refugees from winter and armchair archaeologists, we are here on this shiny green tour bus to embark on a safari of sorts. We’ll be exploring the local habitat, as upended and reconfigured by an epochal real estate fiasco.

Our guide, Marc Joseph, stalks wildlife of the white-elephant variety. A real estate agent, he specializes in houses that proved financially disastrous for someone — the banker, the homeowner, the American taxpayer, often all three. Mr. Joseph’s bus is emblazoned with red letters spelling the name of this thrill ride: ForeclosureToursRUs.com.

As we navigate this speculator’s paradise turned financial wasteland, Mr. Joseph stands at the front of the bus in a green polo shirt, highlighting specimens like this one: a white stucco house fronted by palm trees and topped by a Spanish tile roof on a canal emptying into the Gulf of Mexico. It last sold in 2005 for $850,000. Yours today for $273,000.

“How much cheaper does it have to go before you say, ‘Well, that’s just craziness,’ ” Mr. Joseph beseeches as our tour group — mostly retirees from up North, basking in Bermuda shorts on another December day stolen from winter — examines the swimming pool and the Jacuzzi. “I’m telling you now, your opportunity is banging at your door.”

Yes, it has come to this in Cape Coral, a reluctant symbol for the excesses of the great American real estate bubble: foreclosed homes served up as tourist attraction. The struggles and pain that produced this ecosystem are neatly masked by the newly installed granite countertops, pristine carpets and fresh coats of paint that now ornament many properties on the tour.

Finance Changes the Market - Part 2

Published by peter | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate

The following list of creative techniques is by no means exhaustive, but it represents the minimal set of “tools” at which real estate professionals must be proficient in order to best help home buyers and home sellers today:

Lease Purchase Agreements are the simplest way to get somebody into a home (today) when they cannot get a traditional bank loan. Buyer and Seller enter into a contract and set the closing date in the future, and then execute a separate lease agreement that dictates the terms of the Buyer’s use of the property prior to closing.

I have written quite a bit about lease purchase agreements , and I suspect the concept is similar in every other State. While this technique can be very beneficial to both the home seller and the home buyer, there are some risks and concerns that each party should consider before pursuing a this as a solution.

Purchase Money Mortgages are often misunderstood by homeowners, and that needs to change. A purchase money mortgage (also called “Seller Financing,” or “Seller Seconds”) is a technique used with home buyers who do not have enough cash to fulfill the obligations by the first mortgage holder.

Basically, the buyer obtains a new first mortgage on the property and the seller acts as a second mortgage lender by helping the buyer with some or all of the down payment requirement. Rather than receive cash at closing, the seller walks away with a note secured by the property. The seller then has to wait for the period of the note to receive the total equity in the property.

Most sellers would rather have cash, but many sellers would rather have cash plus a note rather than not sell the home. Remember, our latest measurement of homeowners who failed to sell their home is at 79%, so this is a viable option to allow a home owner to move on.

Real Estate Ad Spend On Newspapers To Rise Double Digits

Published by peter | Filed under Market Trends

The real estate market is expected to remain weak for at least another three years, but the category’s ad spending is expected to see a small recovery this year. However, as report from local ad analyst Borrell Associates shows, any uptick in spending will be unevenly spread across specific kinds of media outlets and regions. In particular, newspaper real estate ad spend is projected to rise 16 percent in 2010 after falling a staggering 34 percent last year. At the same time, online real estate ads will fall again to 4 percent, following ‘09’s 1 percent drop. In all, real estate ad dollars will be up 3 percent this year, a major reversal from last year’s 20 percent fall-off.

Finance Changes the Market - Part 1

Published by peter | Filed under Buyer / Seller Tips, Market Trends

Anybody who has been in or near the real estate market over the past ten years can attest to the fact that the money markets have been crazy. Crazy good for most of the time, but now we’re well into a cycle where money supply will be tight, and lending standards will be much tougher.

People relatively new to the real estate industry will see this as new and different, while those of us who have been around a while will tell you that we are just dusting off old skills and techniques that we haven’t had to use since the 1990s. It is time to re-establish all of the networks and processes that we used to help people buy a home without traditional financing.

The real irony in the current real housing market is that it is easier to get “free money” from the government than it is to get a loan from a bank. Unfortunately, the free money won’t typically buy a complete home, so we do need a plan on how to raise the rest of the money that people need to buy a home today.

While many real estate professionals do not like or understand creative financing, I actually enjoy the transactions that require a little mental agility to complete. Sure, easy “deals” are fun too, but being able to help a buyer that nobody else knows how to deal with brings a lot of satisfaction to the Realtor that knows are actually critical to home sellers too. If a real estate professional can use this knowledge to increase the pool of potential buyers for a home, then the Realtor is adding value to the home. Less than 10% of homes sold are done without financing, so the soft costs of buying a home are just as important as the tangible aspects of the home.

Foreclosures Increase

Published by peter | Filed under Market Trends

RealtyTrac reports that more than half a million individual foreclosure cases were filed in 2009, a jump of 34 percent from 2008.

Tampa Bay properties classified with foreclosure filings numbered 62,719 in 2009, up from 53,630 in 2008.

From December 2008 to December 2009, foreclosure filings plunged in all four Tampa Bay counties.

Nevertheless, 4,016 new cases were filed in December in Pinellas, Pasco, Hillsborough and Hernando counties. 

Tampa Home Sales Increased 27% This Year

Published by peter | Filed under Market Trends

Realtor sales for the year totaled 19,269, up from 15,227 in 2008, according to the Greater Tampa Association of Realtors. The year finished not-too-shabbily with December sales up 25 percent from a year earlier.

Here’s a chart: Download Gtar1209

Homes with “Walkability” Have Higher Values

Published by peter | Filed under Real Estate

Real estate agents often chant the mantra “location, location, location,” which essentially means “find a home in a well-kept neighborhood with good schools and a low crime rate.”

 Some may cite a fourth factor, “walkability,” a concept supported by self-styled “new urbanists” who advocate denser cities designed for the pedestrian and mass transit as much as for the car. In their ideal neighborhood, you could walk to a bookstore and then to an ice cream shop, and your children could walk to school, probably unescorted. (It sounds like so many movie depictions of America in the 1950s.)

They argue that walkability lowers crime — that good people on the streets drive away the bad guys — and that it generally improves life and sharply raises home values. Whether it helps homes retain their value when the market slumps, however, seems a harder question to answer.

Read study here.

Real Estate Double Dip - Part 3

Published by peter | Filed under Buyer / Seller Tips, Communities, Market Trends

Written by Joe Manausa
Tallahassee Real Estate Blog

So back to our thoughts of “U” shaped versus “V” shaped recoveries. If banks act swiftly, we will see a “V” shaped recovery. Prices will be slashed, buyers will flood the market to take advantage of “deals,” and unit sales will soar. If banks act slowly, then I suspect we will spend some time at market bottom.

Prices will continue to decline, but unit sales should slump along between the levels that we saw at market bottom and the level that we are at now. This will continue as we work to consume not only the current glut of homes for sale, but also those that will move from the shadow inventory into the inventory of homes for sale in the active housing market.

So, keep your eyes on the banks. Their actions will tell us all we need to know about the near future of the housing market. Too much emphasis is being placed on the Homebuyer Tax Credit, as it has had a significant effect on the lower end of the market, and nearly no impact on the upper end of the market.

We can find evidence of this (in Tmpa Bay for example) with inventories dropping nicely in homes priced below $200,000. But the Homebuyer Tax Credit offers little incentive for somebody purchasing a more expensive home, so high-end homes will be facing pricing pressures until we see real estate inventories return to traditional 6 months supply levels.

Real Estate Double Dip - Part 2

Published by peter | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous

Written by Joe Manausa
Tallahassee Real Estate Blog

What does retail giant WalMart do when it has put a product on its shelf that is failing to sell? Any five-year old who watches the television will tell you they “slash prices.” Walmart will drop prices on the product until price alone will stimulate demand.

As a central player in the retail industry, Walmart has great influence on the retail supply side of the market. With their large market share, if they cut prices, everybody knows about it. Liquidating inventory for them is part of their central business plan.

But the housing market does not have a “corporate office.” Homes are owned by individuals and the new construction side of the market rarely represents more than 1 in 5 homes sold. Even so, the new construction industry is also highly decentralized, with almost as many homebuilders as there are new homes built.

So prices in real estate can trend more fluidly than they do in other industries, because each price reduction is an individual decision made in some household in the real estate market. This fluidity allows real estate professionals who closely study the market to be able to project current and near-future market trends.

But we are about to experience a major change to this “fluidity” and it is entirely more significant than the Homebuyer Tax Credit!

Distressed Properties Will Centralize Pricing In The Housing Market

There is a Walmart looming around the corner in the real estate industry. This giant is going to come into the real estate market and play havoc on the traditional fluidity of pricing that we have enjoyed. Who is this real estate giant? What are they going to do?

The banks and investors who hold the mortgages on the 50+% of the housing market where negative equity positions exist will one day have to start making some decisions. It has been reported that more than 1 in 4 home loans in America are in default (distressed properties) and more than 1 in 2 owe more on the home than it is worth.

Banks have been slow to foreclose on these properties and the shadow inventory of distressed properties has been growing. When the banks finally do decide to act on these, there actions could be swift.

If they take ownership of the large portion of these properties that will not be sold at foreclosure, then the real estate market will have a new centralized supplier which will very much parallel the giant retailer Walmart. They will hold a large inventory of homes they do not want, and they will slash prices to rid themselves of these troublesome assets.