Everyday I come across things of interest. Some related to Real Estate and some just plain odd. I'll share them with you here. If you have any questions, comments or suggestions, just give me a yell any time.
Writing a Home-Offer Letter – Is It a Good Idea?
The most important letter you'll submit to a home seller is the one you'll get from your lender stating that you are preapproved for a mortgage. Savvy listing agents will counsel their clients to refuse offers from unapproved buyers, so all the flowery prose of a home-offer letter will mean nothing without loan preapproval.
Assuming you have your lender's letter, whether or not you also submit a home-offer letter depends a great deal on the type of market in which you're buying and the competition.
When the real estate market has lots of buyers looking for homes and few houses for sale, it's a seller's market. With the seller in the driver's seat, purchase offers tend to get cleaner, with fewer demands from buyers. Offering prices typically come in at or even over the asking price. When supply is low and demand is high, it's challenging for buyers.
Several regions of the country are currently in seller's markets. In some of the more in-demand areas of California, for instance, there are so few homes for sale and so many buyers in the market that almost 6 in 10 homes are selling in multiple offer situations, according to the California Association of Realtors®. In the second quarter of last year, home sellers received an average of 4.2 offers.
In San Antonio, Texas, homes are selling quickly and for over list price, according to Marilyn Moritz of KSAT-TV. The head of the state's Realtors® association cautions homebuyers in these types of markets that they shouldn't be picky and that time is of the essence when making an offer.
If you're unfortunate enough to have fallen in love with the same home that three other people are smitten with, be prepared to do battle. The chances are good that they, too, are preapproved for a mortgage, which puts you on equal footing. If any of them is waving cash, however, all bets are off, as the table is tilted in the cash-buyer's favor.
There are several reasons for this, the most significant of which is that the seller doesn't have to worry about a loan falling through if the house becomes overpriced in a bidding war. There is no appraisal with a cash offer. There is no lag time, waiting for final loan approval. Cash buyers are streamlined buyers, and they usually prevail in a bidding war.
Home-offer letters, however, have been known to sway some homeowners in this situation – especially those with an emotional attachment to the home.
The home-offer letter was created years ago to help sellers stand out from the competition. The problem now is that so many buyers use them, they may be losing their effectiveness.
Since there is no harm in trying, however, let's take a look at some tips for the ideal home-offer letter:
Don't be robotic. This isn't a form letter, it's a letter that you hope will tip the scales in your favor, so put as much personality into it as possible. Start by using the seller's name in the salutation. "Dear John and Mary" is far better than "Dear Seller."
Make it emotional. Tell the seller how the home resonates with you. Even if it's just the color of the walls, tell the seller how much you appreciate her taste and how close it matches yours. Be sincere in telling the seller why you fell in love with the home and why you want to live in it.
Explain why they should pick you. Point out your strong points as a buyer, such as few contingencies, your willingness to increase the offered price, or your strong credit score that will help your loan approval zip right through.
Keep it brief. Try not to go over three to four paragraphs.
Keep it upbeat and positive. Sellers don't care if theirs is the ninth house you've made an offer on. They don't care that you need a one-story because of health issues. Accentuate the positive and leave the complaints out of it.
Don't forget to include photographs to help cement the fact that you are far more than a signature on a purchase agreement.
There's an old saying that is frequently tossed around in business circles: "People do business with people they know, like and trust." Helping the seller get to know you, like you and trust you is a tall order for a short letter, but it should be your goal nonetheless.
Fans of late-night TV will recall the infomercials of a few years ago, hawking zero-down loans. Those loans, along with loans requiring no documentation, were being handed out like candy to anyone who applied, and were largely blamed for the mortgage industry implosion.
In the wake of that mess, mortgage lenders tightened standards. Lenders began demanding that homebuyers needed some skin in the game - a healthy down payment - to make them think twice about defaulting on the loan.
Zero-down loans became a memory.
Today, you have three choices if you're seeking a mortgage without a down payment: Navy Federal Credit Union, The U.S. Department of Agriculture (with no-down loans for very low-income borrowers who agree to live in rural areas - like most of Portsmouth, North Kingstown, Tiverton and Little Compton), and the Department of Veterans Affairs (VA).
"The VA loan is the best mortgage around," according to Envoy Mortgage's Nathan Raich. "Not only will you not be required to make a down payment, there's also no mortgage insurance requirement, which makes the loan even less expensive. Finally, borrowers typically get a lower interest rate with a VA mortgage than with a conventional loan," he concluded.
Eligibility for a VA-backed loan includes what the VA calls "suitable credit" and sufficient income to make your payments every month. You'll also need a valid Certificate of Eligibility (COE), which in many cases your lender can obtain for you.
Separation from the service must have been under conditions other than dishonorable. Additionally, you must plan on occupying the home as your personal residence.
When buying a home for the first time, many veterans are confused by the process. One of the most confusing aspects of the loan is the VA entitlement. Basically, the entitlement is the amount of money that the VA agrees to pay the lender if you stop making payments and default on the loan.
Here comes the confusing part: The basic entitlement amount is $36,000, but there is a secondary entitlement as well - $68,250, according to Veterans United. The secondary entitlement kicks in only if the purchase price of the home you wish to buy exceeds $144,000.
How they come up with these amounts only causes more confusion, but it has to do with the amount that the VA guarantees, which is one-fourth of the loan amount.
Once you use the entitlement, it can't be used again until the loan is paid off or another veteran assumes the loan and uses his or her entitlement.
Although the VA doesn't set loan limits, since it has limits on its liability (one-fourth of the amount of the loan), lenders may set a cap on the amount a veteran can borrow.
They typically set the cap, for a loan with no down payment, at four times the veteran's available entitlement as long as he or she otherwise qualifies for the loan, according to the Veterans Administration.
Other than VA-specific paperwork, purchasing a home using a VA loan is very much like purchasing a home with a conventional loan. Your first step will be obtaining loan preapproval. This is the step that requires your COE. You'll find a chart listing service requirements that need to be met for obtaining a COE at the VA website.
Once you have your preapproval letter in hand, it's time for you and your real estate agent to begin searching for a home. When you find a home, your real estate agent will insert a contingency in the purchase agreement stating that your offer is subject to final approval for a VA loan and a successful VA appraisal.
Your lender will obtain a VA number for your loan, which is used to track your loan application. The lender will also send a VA form to a state-licensed VA appraiser who will determine the home's current market value.
The VA has what they call minimum property requirements, or MPRs. Here are a few items the appraiser will be looking for:
These are the basic MPRs and, although it seems as if the appraiser is giving the home a thorough inspection, the appraisal does not replace the need for a home inspection.
The best place to get answers to your questions about a VA loan is at your lender's office or by calling a Department of Veterans Affairs Regional Loan Center. or for a local Lender, please reach out to Adam Ethier at Homestar Mortgage (401.954.4757)
Considering Kitchen Layouts: What's Cookin' Good Lookin'?
The single-guy-who-nukes-his-dinner-every-night crowd probably doesn't care about a good kitchen. To the rest of us, the kitchen can make or break a real estate deal. To a lot of people a kitchen isn't just a room in which to prepare meals. It's a homework area, a place to sit with a neighbor over a cup of coffee, and, in the case of the country kitchen, an area where the family gathers to share the day's stories. If you're not that single guy with a microwave, evaluating kitchens will be an important aspect of your house hunt.
One element of classic kitchen design remains constant throughout the years: the work triangle. The triangle's three points are the refrigerator, the oven and the sink, and its purpose is to ensure efficiency and good traffic flow.
To picture the triangle, consider how you work in the kitchen. When preparing a meal you move between the refrigerator, the stove and the sink. Good kitchen design places these elements in a triangle. Which element is at the apex of the triangle depends on the kitchen's layout. There are four distinct kitchen layouts, and within each of them the work triangle remains a constant: the galley, the "L" shape, the "U" shape and the "G" shape or peninsula.
Within the kitchen triangle there should be an area for food preparation, such as a cutting block, counter or island.
While the work triangle is a well-known aspect of kitchen design, many kitchen layouts either ignore it or have a deeply flawed triangle. When you're looking at a kitchen, keep the work triangle in mind. Even small kitchen layouts can be functional and practical if the work triangle is properly integrated.
Kitchen cabinets play a dual role in the kitchen. They are both functional and, hopefully, decorative. Deep cabinets are ideal for storage of seldom-used and oversized items, while shallow cabinets work best for small, frequently used items, such as spices. When viewing a house you're considering purchasing, take a look inside each kitchen cabinet with an eye toward whether it will accommodate your kitchen equipment.
The location of kitchen cabinets is also important. You should be able to reach the pantry and cooking supplies without having to deviate from the kitchen work triangle.
A number of features are wonderful surprises when house hunting, even if they're not essential to kitchen layouts:
Avid cooks understand the importance of good lighting in the kitchen. Homebuyers, on the other hand, seem to give it a cursory glance. If you cook, even if it's just family meals, good lighting is essential. Turn on the lights – all of them. Try to picture the room as it will be at night, while you're cooking dinner. If the light is insufficient, is there a way to add more light? Some of the big-box department and import stores carry inexpensive under-counter lighting that you can install with just a screwdriver.
Time is Running Out: How the Mortgage Debt Relief Act can save your home.
In 2007, the Mortgage Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure.
The act has helped many distressed homeowners find solutions to avoid foreclosure and opened up options to them that were previously unavailable.
However, the Mortgage Debt Relief Act was always intended to be a temporary solution and it is now set to expire at the end of 2012. For distressed homeowners, this means that time is limited for you to take advantage of this program.
Time is running out. But there is still a chance to change your financial direction and avoid foreclosure.
Wendy Lord Harvey