Below is a great article about the demand for reverse mortgages is increasing. A reverse mortgage can be very expensive but if someone age 62 or older needs money, it is a great way to access the equity and not make payments.
Archive for January, 2009
How Does An Appraiser Come Up With A Property Value?
I have been hearing a lot of people commenting on the appraised value of their home whether for a purchase or a refinance. Many stated that the value has come in low due to appraisers not wanting to have the value too high because they might lose their license or the lender will get very cautious. That couldn’t be further from the truth.
An appraiser is required in this market to find comparable sales within the last 3 months, within .5 miles from the property, 1 outside the neighborhood, and an active listing. What are the most recent sales? They are foreclosures and short sales. That is what is selling so that is the fair market value. Yes, it is artificially deflated but it is the “true value” in this market.
On a purchase transaction many want to see the appraised value $50,000 or more above the purchase price because they picked up a newspaper or turned on the TV and heard it’s a buyers market and so and so got this incredible deal. Although this is great from a psychological standpoint, it means nothing. Think about it for a second. If you are buying a home for $300,000 and it appraises for $350,000, you are very excited because you feel you have an instant $50,000 of equity in your home. Wrong again. Remember how an appraisal is done. It is based on the most recent sales. What is the most recent sale now? You guessed it, your purchase transaction for $300,000.
This is a buyers market and buyers dictate the price of a home. That means the “true value” of a property is the amount someone is willing to pay. So whether your appraised value comes in $5,000 above your purchase price or $50,000 that doesn’t necessarily determine how great of a deal you got.
Most of the transactions that come across my desk do not have a large gap between the purchase price and appraised value. What makes these transactions such a good deal is that they are one of the lowest sales in the neighborhood. Remember, you are not buying the market but you are buying a specific home, in a specific area, for a certain price. Now please keep in mind that although I close a lot of transactions per month I am the whole market. That is why this is just my opinion.
What If The Government Takes Over Your Bank?
With the talks lately of the nationalization of some banks, the article below explains what that would mean. My opinion is that this will never happen but then again anything is possible in this economy.
http://online.wsj.com/article/SB123258304319904345.html?mod=todays_us_personal_journal
Interest Rates of 3.99?
According to the article below Toll Brother is offering rates at 3.99%.
http://online.wsj.com/article/SB123259465468105115.html?mod=todays_us_personal_journal
Very Important Condo Changes
There are a lot of changes to condo requirements. Below is the link for the condo changes. To summarize it, if you are buying a condo in Florida that is new or a new conversion it is going to be very hard to get financing. With established condos you will have to have “walls in” insurance coverage (separate interior policy), must be at least 51% owner occupied, cannot have more than 15% in delinquent dues, must have Fidelity Bond coverage, and loan to value changes.
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0834.pdf
HUD’s $100 Down Program
HUD has a program that allows for only $100 down. That’s correct, $100.00. What is a HUD home and who qualifies? Below is a link on HUD’s website that states “A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.” Who can buy a HUD home? “Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.”
FHA 203(k) Loan: More Information
Below is a great article that goes into detail about the FHA 203(k) rehab loan. It can be used for a purchase or a refinance.
New Rescue Options
The article below talks about new options for rescuing this current real estate market. There are talks of nationalizing some of the banks with the biggest problems. According to The Wall Street Journal article, “The hours-old administration of President Barack Obama is expected to move swiftly to try to stabilize the financial system by pumping more capital into weakened banks and buying bad assets. Nationalization appears to be a last resort, but other options on the table move the U.S. in that direction. In one idea under consideration, the government could buy convertible securities from financial institutions, an approach that could ultimately leave the government owning large chunks of many firms’ common shares.”
http://online.wsj.com/article/SB123249848926800519.html?mod=testMod
Down Payment Assistance: Can It Bring Home Sales Back?
Here is an article about trying to bring back down payment assistant programs. I would agree that this would help to spur sales but many forget the high default rate that these programs had. Down payment assistance is where the seller gives a portion of money to a non-profit organization for a small fee and afterwards the money is given to the buyer to help with the down payment. It can result in no money out of pocket on a purchase. This program is typically used with an FHA loan.
Located in South Florida, Justin Miller has established himself as a leader in the mortgage community for his expert advice and understanding of the current real estate climate. 
Jonathon Becker (Coastal Credit Clinic): Justin- GREAT blog post! This is a HUGE questions many of my clients h...
Sean: Justin- Great article...would be great to understand the differences i...
Phil Himes: You are so correct! Many of my clients are currently looking at purch...
Stock quote: Good blog post, nice efforts. It couldn’t appear to have been penned a...
Upside Down Guy: This sounds like a great program for someone like me but my lending in...