Home inspections are always a good idea for buyers… and they actually can benefit sellers! But a home inspection is not a pancea–there are things that can go wrong with the process. The “House Detective” is nationally syndicated columnist Barry Stone–he writes a great blog and answers some tough questions. There’s some interesting reading even if you’re not considering buying a home!
Occasionally taking what appears to be a minority position has its rewards! Several months ago I posted a plea for some objectivity regarding the proposed Qualified Residential Mortgage Requirements. While much of the industry is predicting doom and gloom over the proposed requirements, there’s much to be said in favor of them.
Well, in an article published by RIS Media, I’m joined by a writer who at least somewhat shares my perspective. He offers an interesting twist, however, by pointing out an impact of the doom and gloom predictions. “It seems the speculation and debate surrounding QRM is causing some low-downpayment home buyers to believe they will not be able to obtain financing.”
Interesting–and it makes sense. Those who are crying that these new requirements will “kill” the real estate market, are actually contributing to the depression?
What’s actually needed right now is concrete, objective information. Yes, underwriting standards are higher, but at the same time rates are at historic lows. Those lows mean lower payments and lower payments mean more people can qualify based on debt ratios. Prices are lower. There’s a lot going on that makes it feasible for many more people to buy and “low down payment” mortgages are not going to cease to exist.
The best advice for potential real estate buyers is “turn off the television and put down the newspaper and contact a real estate and/or mortgaging professional and get some credible information regarding your specific situation.”
In an article titled “The Emergence of a New Real Estate Industry” Greg Rand offers some interesting statistics from a number of sources. One that I found particularly interesting was the observation that according to the U.S. Census 34% of households are renters–and that number is growing at a significant rate. He also quotes a survey conducted by Move, Inc. suggesting that investors (as differentiated from home owners) are three times more likely to buy a house in the next three years.
He uses this statistics to support his conclusion that a new industry is emerging. While it’s not clear to me what he thinks that industry is, he seems to be suggesting it’s about a lot more than home ownership.
I’m not sure if I take issue with him, but I would opine that one of the problems with this business has been the narrow view the industry has taken. We’ve tended to think that “real estate” is all about owning a home and that’s something everybody should strive to do. (We’ve acknowledged that there are investors, but have tended to put them into the commercial segment.) In short, we’ve never even pretended to offer “full service” because we still think the real estate business is about selling properties.
This is a short term outlook in an industry that thrives on the long term. If all we do is decide we should be serving investors as well as homebuyers (I would think we’d benefit from clearly identifying the difference between them), we’re still going to miss the boat.
Our ads need to stop reading, “If you want to buy or sell, call me!” What they need to say instead is “If you want to make an intelligent decision about real estate, call me.”
The PinchME Promotion is underway… the fundamental idea behind it to make it easy for folks who are interested in a second home. You can try out the search routine here. Contrary to the slogan, not every one can afford a second home. But if you can afford one, it is a great time to buy. You might want to check with your bank or mortgage lender before you get too deep into shopping… if you are seriously interested, let me know–I’ll be glad to “hook you up” with a lender and we’ll see if we can make your dream come true.
According to a recent article in Real Estate Economy Watch, “Despite 19.1 percent fewer home sales in September than a year ago, private mortgage insurance applications received by leading mortgage insurers are up 32 percent in the past 12 months.”
For those who might not know, private mortgage insurance (PMI) protects the lender in the event the borrower defaults and it comes into play when the borrower is unable to make a conventional (20% of purchase price) down payment. Using PMI the borrower can borrow with as little as 5 % down. The smaller down payment makes the loan higher risk.
So a somewhat simplified analysis suggests that while the number of home sales is down 19%, more and more of those purchasers need private mortgage insurance (32% more) because they simply do not have the traditional down payment. The good news is PMI makes home purchasing possible for buyers who’ve been unable to accumulate the sizeable amounts of cash typically necessary to purchase a home. The bad news is PMI significantly increases the monthly cost of the home. (A homeowner with a $100,000 mortgage could see an additional $40 tacked on to his or her mortgage payment.)
So what makes sense? Does a buyer who does not have an abundance of cash buy now and pay the PMI? Or does it make sense to wait? The only correct answer is, “It depends.”
Now more than ever we all need to manage our money wisely. You don’t have to see too many real estate ads to hear “it’s a good time to buy.” I’d suggest inserting some disclaimers. It might be a good time to buy. Prices are down and interest rates are at historic lows.
But if it’s a great time to buy, why isn’t everyone buying? Why were sales down 19% in September? Here’s one correct answer that’s certain: Now more than ever it makes sense to sit down and look hard at your personal situation before making a major financial decision. It might also make sense to do that with someone who has a long term outlook and no immediate self-interest in your decision. I have several clients who’ve told me that I’m not allowed to retire for at least three years.
That’s called “taking a long term outlook.”
Summary of the Program Beginning August 1, 2010 for Refunds of Property Tax Assessed and Rent Paid During 2009. (Note: The program to apply for refunds of property tax assessed and/or rent paid during 2009 begins August 1, 2010.) Nearly 200,000 Maine households qualify for a partial refund of property tax assessed and/or rent they paid in 2009. The maximum refund available is $1,600.
You may qualify for a refund if:
- You do not have a spouse or dependent(s) and your 2009 household income was $64,950 or less; or
- You do have a spouse or dependent(s) and your 2009 household income was $86,600 or less AND Your 2009 property tax was more than 4% of your 2009 household income; or
- The rent you paid in 2009 was more than 20% of your 2009 household income.
NOTE: Seniors do not need to meet this requirement when their household income is below $14,700 for those living alone or below $18,200 for those living with a spouse or dependent. See the application booklet for more information on who qualifies for the senior portion of the program.
One important consideration in the process of purchasing your home is an inspection by a qualified “Home Inspector.” In order to determine whether or not you should have one, it’s important to understand the purpose. Many people think the point of a home inspection is to discover problems not readily seen and — to some extent — that is true. But that is also a very narrow view and doesn’t include the full benefit of this service.
A professional home inspection is really another important piece of determining the total cost of purchasing the home. The final report should include a list of maintenance items and repairs that are time-phased. “Here are some things you’ll need to do immediately… some things you’ll need to do in the next year or two…”
Much like taking the used car you are considering to your own mechanic, you hire a knowledgeable (and insured) professional to look at the home you are considering from “top to bottom” and report his or her findings to you. Most inspectors/companies allow you to customize the inspection to include or exclude certain things. Fees are typically based on size of the home and scope of the inspection.
If you are represented by a real estate licensee, he or she can
The National Association of Realtors recently opened a new consumer website to “help you make smart and timely decisions about your home.” Content covers home improvement, maintenance, taxes, finance, insurance, and even ways you can get involved in and enrich your community. I’ve only surfed the site a little, but it does appear to have some good information. One of the things I like is that you get an estimate of how long different things will take and how much investment is required.
Since I’m putting together a short article on home insurance for the next “Mooseprint” I looked at that section on the site. “Improving your insurance score” takes an estimated two hours, costs $12.95 (for a report, apparently) and could yield a $60 annual savings. That’s not a bad return on investment, but I didn’t start the project–yet. (Another feature is that you can apparently create a “binder” (notebook) of projects.
Check it out at House Logic… let me know what you think!
MaineHousing reports that automated phone calls are being made offering foreclosure and refinancing assistance by someone pretending to be from MaineHousing. Just hang up. Scams seem to be growing by leaps and bounds and some are pretty creative. Don’t relax your suspicion index!
The state has begun accepting applications for Maine’s Property Tax and Rent Refund Program for the 2008 tax year. This program, also known as the “circuit breaker” program, is run through Maine Revenue Services (MRS). Each year thousands of qualified homeowners and renters fail to apply for the program and do not receive the refunds to which they are entitled. Nearly 200,000 households qualify for a partial refund of property tax assessed and/or rent they paid in 2008.
A single person with no dependents who makes less than $61,400 qualifies for the program. Those with a spouse or dependents can make up to $81,850. The 2008 property taxes must exceed 4 percent of household income in either case. Renters qualify if their rent exceeds 20 percent of their income.
MRS sends applications to anyone who filed in the previous year and to those who requested an application on their Maine income tax return. You may also request an application from MRS by calling them at 207-624-7894 or download an application from their website at http://www.maine.gov/revenue/taxrelief/.