Palm Beach Real Estate and Loans

Today's post comes from Jason Price of Knightlines Mortgage Services:

July 1, 2009 marked the new fiscal year for SHIP (State Housing Initiative Program), a state funded down payment assistance program for low-level income home buyers. However, this year the $161 million grant used to fund this program has been cut to $30 million to fund the Florida Homebuyer Opportunity Program (FHOP).

The $30 million is split amongst the counties of Florida. Each county then distributes the money based on city/area. In most areas, this will mean that less than 10 first time homebuyers in any given city/area will receive an advance on their $8000 tax credit to use towards the purchase of a new home today.

If you are one of the lucky few to get the $8000 advance to use towards down payment, mortgage loan closing costs, or pre-pays associated with the purchase, here is what you need to know:

1. First-time home buyers this year are eligible for a federal income tax credit of up to $8,000 if their income generally is $75,000 or less for single taxpayers and $150,000 for married couples.

2. Anyone who hasnt purchased a home in the past three years qualifies as a first-time home buyer.

3. Rather than let home buyers wait until 2009 tax returns are filed next April, Florida legislators decided to advance the $8,000 in an interest-free loan.

4. Buyers have to agree to file for the tax credit and to repay the money within 18 months.

To find out more about FHOP or to stake your claim for the $8000, contact your local SHIP office. Click here to find your local SHIP office. Oh, and one more thing, even though the program officially started on July 1, 2009, the cash is not there yet to make the loans to home buyers.

Should you not get the $8000 tax credit advance loan, do not worry. 100% USDA Guarantee Mortgage Loans are still in place and are still funding. And 97% HomePath is still going strong. Compare these two loans side-by-side.

Today's post comes from (the slightly aggravated) Jason Price of Knightlines Mortgage Services:

(BTW - I can't stand the term 'pre-qualified'. Shoot for 'pre-approved', but hey, it's not my story!)

When a buyer wants to buy a home, the Realtor they are dealing with usually asks right off the bat: "Have you been pre-qualified or pre-approved for a mortgage?" Why is this such an important questions? There are several things a Realtor will know based on the provided answer and information to follow it.

Here is what the Realtor finds out:

• They have a legitimate buyer.
• They know what price range to shop for.

Okay, now keep that second point in mind as we delve into the pre-qualification process. And to explain this, I am going to use a recent buyers story:

The buyer came to us to be pre-qualified for the purchase of a new home. Based on early findings, we were able to qualify this buyer for a mortgage of $x.xx and a monthly payment not to exceed $y.yy. Now, the monthly payment took into consideration the basic PITI (Principle, Interest, Taxes, and Insurance) for a home of that value for which she qualified for.

When we told the Realtor what the borrower qualified for, we also explained which programs the buyer was eligible for. In this case, if the buyer wanted 100% financing through USDA, then the loan amount could not exceed $a.aa and a monthly payment of $b.bb. If the buyer put 3% down, then HomePath financing was available at a mortgage amount of $x.xx and a payment of $y.yy. Conventional and FHA financing were not options.

Pretty straight forward, right? Wrong. The buyer is insisting on a home in a neighborhood where the HOA fees are over $200/month. Yes, the home prices are in the range that the buyer is qualified for, but the monthly payment is well over $200 for what they are eligible to borrower. Now with HomePath, we were able to get a FNMA DO/DU approval even with this $200 a month increase, but the home the buyer wants is not HomePath approved.

There are homes in that area, in that same neighborhood, in that same model, that are on HomePath, but someone did not show them to the buyer. I am not going to speculate why they were not shown. But I am going to ask, why did the Realtor allow the buyer to enter into a contract, put earnest money down, when they have something in writing that states what the buyer qualifies for and that property does not meet that criteria?

Oh, wait... it does. It meets the value of the house. The Realtor only listened to the buyer when they asked the question, "Have you already been pre-qualified for a mortgage?" The answer was probably something like this, "Yes, I was pre-qualified for a purchase price of $x.xx." So, when the Realtor got our letter, they just checked to make sure the purchase price was what they were told. Monthly payments went right out the window.

Now, I am not pointing fingers as to who is to blame because it can go many directions. But as a potential home owner, the buyer should have said right away when they learned of the $200+ per month HOA fees, that the house was now out of range. However, when we got the approval from HomePath to continue with that price range with the HOA fees, the Realtor should then have switched to HomePath homes for those homes with higher monthly payments.

In the end, a pre-qualification or even a pre-approval is only as good as the terms that are given in it. Going outside those terms, means a big fat DENIED!!! If one does not listen to the terms, then a lot of time is lost and possibly a lot of money. Communication is key. Each player of the buyers team needs to be clear as to what each other team member is doing to help direct that buyer to a victory of a new home. If you find a team member slacking, wake them up and tell them to get on the ball. If they continue, bench them and bring in the second string.

Today's post was provided by Jason Price of Knightlines Mortgage Services:

Looking to buy a bank owned property?

Is that bank Fannie Mae?

Or does the seller currently have a FNMA secured loan?

If so, you have a new loan program on your side.  FNMAs Home Path offers all the normal benefits of a conventional mortgage program offered by the loan giant, but with a few unique twists.

Just what are these twists?:

• No appraisal required.  LTV is based solely on the purchase price.  They already hold the mortgage on the property (or own it), so they know what the property is worth to them.
• No Mortgage Insurance.
• 6% (not 3%) contributions towards closing costs or pre-pays (cannot be used towards down payment).

There is however one main catch... yes, everything has a catch.  The property that you are trying to buy must be on "the list." . That list is FNMA's list of approved homes.  Not on the list, got to go with another program.

In addition, you will have to come up with 5% to put down on the property.  This 5% can come from a family member in the form of a gift if you are unable to put the money down yourself.

Time is running out, as home prices are starting to go back up.  Buy a new home today before rates start going up, too.  Call us to find available homes in your area and get the process started.

What are the 3 most important things to consider when getting ready to sell your Palm Beach real estate?

Pricing,

Pricing

and, as you might guess-

PRICING.

It is true that location, condition, etc. all count - but if your real estate is over-priced you will be waiting a very long time for a closing - and that will most likely only be after several price reductions.

Any of you that follow my posts will realize that Ive said this many times already - but people continue to shoot for the stars only to be very disappointed!  If you start with a realistic price you will already be one-up on your competition.

The pricing problems are not just with Palm Beach real estate - its unfortunate but MANY areas are facing this same problem.

Take Bonita Springs for instance.

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Recently a friend and associate of mine - Chris Griffith - wrote an article in her local newspaper and on her blog that went over the effects of over-pricing property.

Was she right? Absolutely. 

Was she given an absolute TON of grief (I’m being polite) for publishing her views?  Absolutely.

If you disagree with someone, that’s fine - but some of the dissenting comments she received were beyond asinine.  Someone even took out a full-page ad to personally bash her & her opinions, I think that comes under the heading of 'PATHETIC”.

I urge you to check her article and let me know what you think-

It comes down to a very simple point: If something is over-priced, it won’t sell.

It does not require a PhD to realize that!

Next to Pricing (don't even get me started!) the most misunderstood topic I run into when talking to people about Palm Beach Gardens real estate has got to be Commissions.

The most important thing that you need to realize is that no matter what anyone tells you there is no such thing as a STANDARD COMMISSION!  Low-quality Agents would prefer it if you thought there was - it just makes their job easier because there is less to explain, they just tell you what you HAVE to pay.

I have seen commissions anywhere from 4% to 8% - it all depends on the specific situation and there is always room to negotiate.

That might sound like a lot of money to some of you and I think it is the main reason that some people decide to go FSBO (For Sale By Owner Nobody). 

If all of that money was going to one person, it WOULD be a lot!

But it's not - the total commission is split between the Seller's Brokerage and the Buyer's Brokerage.  It's typically a 50/50 split.  Then, each Brokerage splits what it received with the Agent that did the work.  Each Agent will get around 35% of the total commission.  Out of that, the Agent pays for advertising and all of the other job-related expenses and if the home doesn't sell, there is NO income.

So, as you can see, your Agent is not making anywhere near what you might think- no sympathetic pat on the head is needed, I'm just presenting the facts!

That's the typical situation, there are also:

• Brokerages that will advertise 'extra low' commissions - of course you'll get less advertising and less help - what a deal!  If it sounds too good to be true.....
• Companies that charge a large, non-refundable, up front fee.  I actually talked to someone who got conned into this one - the deal was this: You pay $thousands up-front. If the house sells, they refund the money and just charge a percentage of the sales price.  What a scam!  They get paid even if the house DOESN'T SELL!  Please don't fall for this.

OK, now you know where the money is going - so how do you arrive at the amount that you want to offer?

I'll discuss that soon, in Part II.