Residential Real Estate in SW Washington State

Residential Real Estate Services with Passion, Integrity, Knowledge

Archives for August 2010

Buy Now? … or Wait?

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I bought my first home in the mid-’70’s, and then bought again in about 1983. Even though interest rates were “obscene,” (seems like ours was somewhere around 17.5%) somehow we managed to make it work. Builders and sellers routinely bought down rates and prices were considerably lower.

I was reminded of this fact this morning when receiving a marketing piece by one of my favorite statistical companies, Estate of Mind. Simple little graphs like this one provide such a powerful visual guide of just how far interest rates have dropped and the resulting impact in purchasing power.

Now, granted, $1,500 was certainly a lot more money in the pocket in 1981 than it is now … and a home at just over $100,000 at least compared with the the $300,000 home in today’s market. (That cute little 3 bed/1.75 bath 1300 square foot house we bought at $89k is now worth about $250k.)

But what this graph does show is, on the short term, that $1,500 at today’s phenominal interest rates will buy more now than it will as interest rates rise. I wish this chart included an overlay that showed the average interest with reasonably comparable terms year by year … but the cart was free and helps get the point across — Buying at lower rates buys more house!

For a full size copy of this chart, click here.

Turtle Burgers

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This is totally off base as far as real estate goes, but just enough fun that I thought I’d share. I received this recipe this morning from a southern friend and am quoting it intact. I can tell you that as “bleagh” as this is to me, my husband thought this looked  fantastic! Must be a guy thing (sorry guys).

Cute though!!

If ya hain’t had yor furst heart attack, this’ll do it!!!

WOW!!! Only in the SOUTH!!

Here’s a new twist on how to serve burgers and if you don’t cook, give this handy little guide to someone that does and request them.

Handmade ground beef patties, topped with sharp cheddar cheese, wrapped in a bacon weave, then the next step, add hotdogs as the heads, legs with slits for toes and tail.

Next step. Place on an oven rack, covered loosely with foil and baked for 20-30 minutes at 400 degrees. A little crispy, not too crunchy…just how a turtle should be, right?

What is a Deed-in-Lieu?

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No foreclosure!

A Deed-in-Lieu of Foreclosure is a process where the lender agrees to take the deed to your home rather than pursue a foreclosure action against you for nonpayment of your loan. This option is easiest where there is only one mortgage, and where there are no other liens.

Depending on your lender, a payment might be offered to the holder of a second mortgage or home equity loan, but that lienholder must also agree. Further, if you have yet additional liens against your home, such as tax or utility liens, your bank will likely not even consider this option. Your bank wants your home with “marketable title” … i.e., a clean and clear title without other encumbrances.

While this seems as though it might be an easy and logical solution, what’s important to remember here is that a bank isn’t in the business of owning real estate. They don’t want your home, especially if there’s no equity to be gained in taking it.

While definitely a generalization, there’s certainly truth to the statement that where banks readily accept Deeds-In-Lieu is where a home has equity in the current market and can be quickly liquidated at a profit to the bank. Great if you’re behind in your payments and absolutely must leave the loan obligation and there’s equity in the house. However, if there IS equity, why not try to refinance or pursue a loan modification first?

It’s also important to know that some banks won’t even consider a Deed-In-Lieu of Foreclosure unless you’ve already been rejected for a Loan Modification and/or were also unsuccessful selling your home as a Short Sale.

The information presented on this Site should not be construed as legal or financial advice. You are advised to seek consultation with a qualified Attorney and Accountant. ©Gabrielle Nemes, 2010

Sometimes a Short Sale is Just NOT the Right Answer!

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I like to consider myself a resource for sellers who are considering their options. Should they pursue a short sale? Should they just walk away? Should they just try to hang on no matter what?

Recently I had an opportunity to meet with a wonderful couple that were truly truly trying to do “the right thing,” as they phrased it. We met for a couple of hours while they showed me around their home.

Their pride was obvious. This house was their baby. They’d improved and lovingly planted almost every inch of the yard … and the inside was eat off the floor clean. Every room was polished and tidy. They were devasted that life had taken an unfortunate turn and they just couldn’t figure out how to hang on any longer.

After talking through the options, I sent them to talk to the other necessary experts — the attorney and the accountant.

Yesterday the husband called me back with an apologetic voice: “The attorney said that it would make absolutely no difference whether we let the bank just have the house, or short sale it. We’ve decided to just walk away.” He was distraught, thinking he’d “wasted my time!”

Heavens. Sometimes a short sale is just NOT the right answer. I reassured him that I was so happy to have met him and his family and wished them well.

Is a Loan Modification for Me?

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A number of considerations should be made when you are either in trouble already with your current mortgage, or anticipate that you might be soon.

One excellent option might be a loan modification, which is designed to reduce the amount of your mortgage payment to no more than 31% of your gross income.

Unfortunately as of this time, it appears that most loan modifications are unsuccessful, with something less than 5% of all applicants successfully completing the loan modification program being reported by some analysts.

However, don’t be deterred! Perhaps you’ll be able to complete  a loan modification and be able to remain in your home. According to some reports, the biggest issue with unsuccessful loan modifications is that homeowners do not adequately complete the necessary application, or do not provide sufficient documentation as required by the lender. Of course, there are also reports that lenders don’t recognize that a homeowner has completely required with all requirements. In any event, it doesn’t appear to be an easy or guaranteed process.

The first step is to determine whether or not your lender will change your existing loan to more favorably meet your financial requirements. This process is formally termed “loan modification.” Under the terms of the federal program, HAMP (Home Affordability Modification Program), essentially lenders are encouraged to offer loan modifications to homeowners that are either already behind in their payments or who face the prospect of soon being so.  

Be sure to contact your lender and ask for their loan modification package. You should receive, at a minimum, a list of exactly what they require, and how to proceed and apply.

The information presented on this Site should not be construed as legal or financial advice. You are advised to seek consultation with a qualified Attorney and Accountant. ©Gabrielle Nemes, 2010

Thanks to Everyone — Another Sale Closed!

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Mission accomplished! The Seller of this little wonderful little house left a legacy for the new Buyer family — “Here’s a place where you can raise your own young children, with places to run and play and shout and sing. We loved it and know you will too.”

This transaction was simple and surprisingly quick! With particular thanks to Erik Reault of Cobalt Mortgage who put together a very fast and efficient FHA 203k rehab loan, and thanks to the cooperating agent on the transaction, Jeff Kissick. Thank you both for a job well done and your great communication.

And, of course, special thanks to the members of my valued team — Marilyn Brown (and Dawn Carlson, my local rep) and the staff at First American Title and Escrow in Kent — you guys rock! This one moved so fast that it caught us all scrambling at the end to get everything done in time. And thanks also to the staff at Stuth Septic for stepping up so quickly to complete the septic inspection and to Neighbors Septic for popping out at the last minute to pump the tank.

There were rocky moments as there are with every transaction, but the Seller and I definitely appreciated everyone’s efforts!

Thanks again to everyone involved!