Why Getting Pre-Approved Should Be Your First Step

In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

Source: Keeping Current Matters | KCM Crew 09132016

HERE’S HOW TO TAKE ADVANTAGE OF REAL ESTATE FORECLOSURES

Foreclosures do appear in order to settle a dispute between the borrower and the lender but the truth is that it is always the buyer that has the highest advantages. We are faced with a world of opportunities at the moment and the foreclosure rates are higher than they ever were. Because of this, you want to know exactly how to take full advantage of foreclosures. That is possible when you remember the simple facts that are presented in the following paragraphs.

Research

So many research resources are now available and you can easily consider them when you look for foreclose properties. You even have some foreclosure listing sites that come with an advanced search option. That makes queries a lot faster. Narrow down the listings based on location and the budget that is currently available. Always know exactly how much money you want to spend on the property. If you do not know this, you will lose a lot of time during the research.

Confirm The Home Assessment

 The foreclosed properties normally have a discount of up to 40%. However, you should not just assume this when you see the listing price. Take a look at the assessment that was done. If time is available and you are interested in the property, do hire your own assessor. The actual property value is what is very important at the end of the day as you want to be aware of the potential major repairs that may be necessary with the home. Renovation costs should be added to market value. A foreclosed property that you want to consider buying is normally one that requires as fewer repairs as possible.

Educating Yourself

Taking advantage of the very best foreclosed properties automatically means that you need to broaden horizons. There is a lot of knowledge that can be gained and based on all the information you acquire, it is possible to avoid various mistakes and errors. For instance, when you are educated you can be able to spend less money on very good properties. Obviously, the internet can easily help you out the most in finding the information necessary to be able to educate yourself.

Take The Initiative

You always have to seize initiative and look for an opportunity to take advantage of the opportunities available on the market. Try to find a bank or a lender that looks for house claims. These are great sources for you since they would present the opportunity of actually being able to learn about foreclosed properties. The homes do tend to be sold really fast once they hit the market. Also, when you have a good relationship with a lender, you may be given a loan to actually afford the foreclosure auction when it becomes available on the market.

 The bottom line is the investors that do take advantage of all information channels are those that always find the best possible deals. Because of this, you want to start networking and you need to learn all that you can about the facts that should be important in the process.

Source: Realty Times 09092016 

5 Reasons to Sell This Fall

School is back in session, the holidays are right around the corner, you might not think that now is the best time to sell your house. But with inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

Here are five reasons why you should consider selling your house this fall: 

1. Demand Is Strong

The latest Realtors’ Confidence Index from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

According to NAR’s latest Existing Home Sales Report, the supply of homes for sale is still under the 6-month supply that is needed for a normal housing market at 4.7-months. This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market this fall. Also, as builders regain confidence in the market, new construction of single-family homes is projected to continue to increase over the next two years, reaching historic levels by 2017. Last month’s new home sales numbers show that many buyers who have not been able to find their dream home within the existing inventory have turned to new construction to fulfill their needs. The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

Fannie Mae announced that they anticipate an acceleration in home sales that will surpass 2007's pace. As the market heats up, banks will be inundated with loan inquiries causing closing-time lines to lengthen. Selling now will make the process quicker & simpler. 

4. There Will Never Be a Better Time to Move Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5.3% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. According to Freddie Mac’s latest report, you can also lock-in your 30-year housing expense with an interest rate around 3.46% right now. Interest rates are projected to increase moderately over the next 12 months. Even a small increase in rate will have a big impact on your housing cost.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should? Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire. 

That is what is truly important.

Source: Keeping Current Matters | The KCM Crew 09062016

DON'T HESITATE TO ADD YOUR SPOUSE TO YOUR TITLE

Question: I bought my single family home three years ago in my own name. Now I am married with a young family. I want to add my wife's name to the deed, but the local title company I contacted has recommended I get permission from the mortgage company to do this. According to the title company, adding her name without notice could cause my mortgage lender to cancel the mortgage. I then contacted my lender, who is insisting my wife be added to the mortgage -- and they will only charge $300 to accomplish this process. Does this sound right? Can I add my wife to the title without adding her to the mortgage? For that matter, do I need to add her name at all since if I die my wife automatically will inherit the house under my Will. How does inheritance of a house affect a mortgage anyway?

Answer: You have asked a lot of important questions, but this column is too short to give you a comprehensive response. However, here is my response to most of your concerns.

Your title company -- and the mortgage lender -- apparently are not aware of a law enacted by Congress in 1982, which deals directly with the issue of the due on sale clause.

A "due on sale" clause can be found in most mortgage documents. Oversimplified, it states that if the house is sold -- or otherwise transferred -- the lender reserves the right to call the entire loan balance due. In other words, the loan will not automatically be assumable. This clause was developed by lenders when rates were rising. Let's take this example: Mr. and Mrs. A purchased their house in l975 for $30,000, and obtained a mortgage loan of $25,000 at an interest rate of 6.5%. In l980, they sold the house to Mr. and Mrs. B for $75,000. Interest rates at that time were much higher -- in the range of 9.5%. In the absence of a due on sale clause (a non-assumable provision), Mr. and Mrs. B could have purchased the house and continued to pay the lender at the original rate of 6.5%.

Thus, lenders -- to protect their investment -- developed the concept of the due on sale. However, in l982, Congress address these issues, and specifically stated that "a lender may not exercise its option pursuant to a due on sale clause upon... (6) a transfer where the spouse or children of the borrower become an owner of the property."

There are other exemptions, but clause 6 is relevant to your situation.

Thus, it is very clear you have the right to add your wife to the title, without having the lender call the mortgage due. Furthermore, the lender does not need to have your wife added to the mortgage documents. You signed a mortgage (deed of trust) with your lender and it was recorded upon the land records. When you transfer the property to both of your names, that recorded document will be after the deed of trust. The law looks to priorities of recording; the first recorded document takes priority over the second recorded document. Thus, if you should fail to make your mortgage payments, and the lender would foreclose on the property, your wife's title interest would be subordinate to the recorded first deed of trust, and her interests could be eliminated by the foreclosure sale.

It would appear that the lender is completely protected, and does not have to charge you anything more for this protection.

Your second question raises the issue of inheritance. If the house is in your name only, upon your death there are several options.

1. If you have a Will, the house will go to the person named in your Will. However, your estate will have to be probated, which can be time-consuming and expensive.
2. If you have no Will, the house will be distributed in accordance with the laws of intestacy in the jurisdiction where you live. Depending on the state, your wife may get between one-third or one-half of your estate -- including the house.

If, on the other hand, your wife is on title with you as either tenants by the entireties (reserved exclusively for husband and wife) or joint tenants, she will automatically inherit the entire house. No probate will be required.

Your final question is also answered by the l982 law. Clause 3 states that the lender cannot exercise its option under the due on sale clause where title is transferred "by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety."

This is a general overview of an answer to your important questions. I have two recommendations for you.

First, discuss your personal situation with your own lawyers and tax advisors.

Second, consider transferring the house into your joint names as soon as possible. If, for example, you are sued and the plaintiff is awarded a large judgment against you, your house can be sold to satisfy that judgment if it is only in your name. If the house is held as tenants by the entirety between you and your wife, unless the judgment is against both of you, the house cannot be touched by a creditor of only one party to the marriage.

Source: Realty Times | 08302016

Why Is There So Much Paperwork to Sign to Get a Mortgage?

We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form.

Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

1. The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage.

During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.

2. The banks don’t want to be in the real estate business.

Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation.

The housing crash that mandated that banks be extremely strict on paperwork requirements also allows you to get a mortgage interest rate as low as 3.43%, the latest reported rate from Freddie Mac.

The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s). If you went to the bank and offered to pay 7% instead of less than 4%, they would probably bend over backwards to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.

Source: Keeping Current Matters | The KCM Crew 08302016

10 THINGS YOU HAVEN'T THOUGHT OF THAT'LL MAKE YOUR MOVE EASIER

Moving is one of the most stressful activities there is. It's true - experts put it right up there with getting married - and divorced - and remodeling a house. If you're getting ready to move or are in the process of buying or selling a house, you may have been thinking about the unpacking and the packing and the change of address and turning on utilities. But there may be a few things you haven't thought of. These tips can help you make a smooth move.

1. Hook up your cable and internet ASAP Many utilities require only a phone call to switch them to a new address, but cable/satellite and Internet are a different story. There are a lot of options out there today, but not all of them are necessarily going to be available in your home. Doing the research ahead of time, figuring out what's best for your home, and making any necessary installation appointments as close to your move-in day (or even before, if you're us!) will help ease the transition from one home to the other - especially if you have kids. And don't forget to change your address with Netflix and any other similar services to avoid any interruptions.

2. Find doggy daycare options Animals don't always adjust to moves so easily. If you need to place them somewhere to minimize the trauma during the actual move and initial unpacking, you'll want to do the research and make the arrangements in advance.

3. Pack a box of essentials… And take it with you. Bring anything you think you'll need for the first night in your home, and then a few extras in case there's a holdup with your moving truck and your stuff doesn't arrive for a few days. If worse comes to worse and your moving truck doesn't arrive as expected, you want to make sure you have the things you need to get you through at least a few days. Things like:

•  A couple of outfits for everyone for a few days - and don't forget pajamas! 
• Towels and toiletries - soap, shampoo, toothbrushes, etc. 
• Blankets and pillows 
• Medications for every member of the family - don't forget about any pet meds you have, too 
• A first aid kit 
• Jewelry and other precious items 
• Chargers 
• Toilet paper and paper towels - you'll be glad you remembered 
• Paper plates and plastic cups and silverware 
• Dog food and bowls 
• Dog leashes and beds 
• Checkbooks and credit cards 
• Important papers including taxes, passports, social security cards, etc.

You may also want to bring a cooler filled with sandwich fixings and bottled water, plus some snacks like protein bars and peanut butter and crackers. It might be a day or two before you're able to get to the market, and eating delivery pizza for every meal is going to get old pretty quickly. Classroom Freebies Too

4. Think about the kids A simple deck of cards or a new coloring book and crayons can be lifesavers if you have small kids who are getting bored with all that box carrying.

5. Do your due diligence when it comes to movers Going with any old mover without checking them out first could end up being a disaster. If you're not loading up a truck and driving your things to your new house yourself, you'll want to take a few precautions. "Get quotes from at least three moving companies, and make sure they do in-home assessments so your quote is as accurate as possible," said HGTV. "Talk to family and friends for recommendations, or get free moving quotes from websites like Relocation.com." You'll also want to research them online. Sites like Consumer Affairs and MovingScam.com are a good place to start. Finally, don't forget that moving expenses are tax deductible. "Obtain an IRS Change of Address form, Form 8822, by calling (800) 829-1040 or visiting the IRS website. You will be able to download and print form 8822 and most other IRS tax forms; e.g., Form 3903 to help deduct moving expenses," said HGTV.

6. Sign up on Nextdoor Nextdoor is a great way to network in your new neighborhood for things like babysitters and handymen and garage sales and the aforementioned doggy day care. Signing up when you're moving in will also alert neighbors who may become new friends.

7. Leave the clicker! If it's attached to the visor in your car, you may forget and take it with you.

8. Change the locks You never know who out there could have a copy of your house key. It's a good idea to change the locks before you move in so you don't have to worry that the cousin of the friend of the girlfriend of the guy who used to live in your house has an easy way in. Always Ready Locksmith

9. Call a cleaning service Most people clean before they move out, thankfully, but it might not be up to your standards. Plus, there's just something about moving into a freshly cleaned place. If your realty company didn't already take care of a move-in cleaning, you're going to want to.

10. Find a doctor and dentist If someone gets sick or needs medical attention in your new neighborhood, you want to make sure you know where to take them without having to Google the nearest random doctor. This is another place Nextdoor will come in handy.

Source: Realty Times | Jaymi Naciri

UNDERSTANDING ADVERSE POSSESSION

There is an ancient legal concept in the law known as "adverse possession." If we go back to our history books, this is also known as "squatters rights."

The theory of the doctrine of adverse possession is that the person who holds or uses property adversely against the rightful owner should ultimately be entitled to clear title. But not every possession of land will turn into fee simple ownership. As the name of the doctrine implies, the possession must be adverse, hostile, actual, notorious, exclusive, continuous and under claim of right. 

Needless to say, these sound like highly complex legal concepts, and to some extent they are. 

However, in the words of one judge, "the person claiming the property by adverse possession must unfurl his flag on the land and keep it flying so that the owner may see, if he wishes, that an enemy has invaded his domain and planted the flag of conquest."

Thus, the person claiming by adverse possession must do something to alert the true owner that a stranger has taken occupancy.

The first thing any property owner concerned about losing (or gaining) property because of adverse possession should do is to talk to a lawyer. Although the legal concepts for adverse possession are fairly universal throughout the country, different states have different time requirements before adverse possession will kick in. For example, in the District of Columbia, the elements of adverse possession (i.e. open, notorious and hostile use of real property) must have been in existence for a period of 15 years. In the Commonwealth of Virginia, the period of adversity is also 15 years, while in Maryland the law requires 20 years for a successful claim.

It should be noted that these time limitations do not require that the same owner hold the property for the entire length of time. If, for example, owner A has owned the property for 8 years and then sold to owner B, the courts will allow the times to be added together. So long as the current owner of the property can claim that for the statutory period, he or she has met the elements of adverse possession, the Courts will grant title to that portion of property to the adverse claimant. This is called "tacking". 

However, a recent case in the District of Columbia has significantly watered down the concept of tacking.

Keep in mind that the burden of proof is on the claimant to meet the tests for adverse possession. In order to actually get title to the land in question, the claimant will have to file a complaint in court in what is known as "an action for quiet title." Needless to say, this is both time-consuming and expensive, and many homeowners -- especially neighbors -- will be reluctant to get involved in a hostile piece of litigation.

The Courts are generally reluctant to remove property from one owner, and will require strict -- and clear -- evidence that all of the various elements of adverse possession have been met.

Thus, if you are a property owner and are concerned that your neighbor may be in the process of claiming a portion of your property, there is one easy way to stop this.

You can avoid your neighbor's successful claim of adverse possession by removing one of the legal elements required for this claim -- namely adversity. Send your neighbor a letter, certified, return receipt requested, telling them that you recognize they are on your land and for a limited period of time you are going to permit them to keep the shed on your property or whatever it is they are doing on your land.. According to one judge, "If the use by me of my neighbor's land is, on its face, permitted by my neighbor as a matter of neighborly accommodation, the use is not adverse or hostile."

Put a copy of the letter and the return receipt among your valuable papers, and periodically -- perhaps every five years -- you may want to renew the permission to your neighbor.

And don't forget to inform your buyers of this arrangement if you ever sell your house.

Source: Realty Times | Benny L. Kass