Chicago Suburb Real Estate & Area Guide

Save Money on A Home Purchase With a VA Home Loan

judyorr@gmail.com (Judy Orr) — Sun, 09 Oct 2011 20:34:31 -0500

Save Money on A Home Purchase With a VA Home Loan Home loans are presently at an all-time low. Currently, lenders are able to issue new purchase, refinance and FHA loans at rates that were previously unheard of. These rates are a result of the economic crash and housing market crash of 2008, and allow first-time homeowners, veterans and everybody else to purchase or refinance a home at prices and rates that have never before been seen. While this is great news for those who are currently looking for a new home, home buying gets even better for those who have worked in the Armed Forces and have served to protect our country and its freedom. Those who have been in the Armed Forces are eligible to receive a VA Home Loan. This is a special loan that allows honorably discharged servicemen and women to purchase a home at an even lower rate than what the public is able to qualify for. While there are certain limitations to VA loans and a special process to obtain one, these loans are a great way for veterans of the military to provide a home for their families. There are a few qualifications one must meet to receive a VA home loan. First, one must have served in the US armed forces and have received a DD214. A DD214 certifies that the holder served honorably in the US Armed Forces. Once the DD214 is obtained, interested homebuyers can find a VA specific lender who can help them find out what their loan limit will be. Be careful, however, as not all lenders are qualified to write VA loans. Lenders who deal with VA loans will be specially certified and licensed to issue this kind of loan. VA Loans are quite simple and their limitations are easy to understand. Qualified buyers may borrow up to $719,000 with no down payment for the purchase of a new home, and this amount may be increased up to $1,094,625 in areas that are specially constituted as “high-cost counties.” VA loans allow the buyer to borrow up to 103% of the total purchase price, and the buyer is not required to purchase private mortgage insurance. There are a few fees associated with a VA loan, but they will never be more than 3.15% of the total purchase price. In addition, these fees may be rolled in to the amount of the loan and paid off over time. For those who currently own a home and also qualify for a VA loan, they have the option of refinancing to lower their loan interest rate. These refinances may be part of a “streamline” refinance that allows the homeowner to save time and money on the creation of a new loan. The streamline option allows a new home loan to be created without many of the hassles of a traditional refinance, such as a home appraisal. Homeowners are able to take advantage of these expedited refinances and lower their interest rates to the level that are currently being given to new VA home loan buyers. Refinancing a property can potentially save a homeowner thousands of dollars over the life of their loan. No matter your buying circumstances, if you are looking for a home or currently own a home, a VA loan is the best option if you qualify. With the available financing options and lowest rates in history, consider purchasing or refinancing your home. This post was written by Jessica Markam of MilitaryVALoan.com. If you are interested in finding a VA lender in your area, visit MilitaryVALoan.com.

Is Home Ownership Losing Popularity?

judyorr@gmail.com (Judy Orr) — Wed, 13 Apr 2011 18:57:35 -0500

Everyone knows that prices continue dropping in many areas, including Illinois suburbs. But those low prices could be good enough for buyers to consider making a purchase this year. An easy way of figuring out if it's worthwhile purchasing a home vs. renting is to figure out what your mortgage payment would be compared to current rental prices. You also need to take into consideration tax deductions for mortgage interest and real estate taxes for home owners, although they might not last forever. Feel free to use my mortgage calculator, although this does not compute any tax deductions. There is More to it Then Just Monthly Payments Even if your mortgage payment is more than a local rental, there is a completely different lifestyle in owning your own home vs. living in someone else's property and having to follow their rules. Many landlords don't allow painting or pets. With today's low prices and interest rates, you could purchase a single family home for the same or a little more than an apartment rental payment. Instead of living the apartment lifestyle with other tenants close by, you could own your own piece of property, and possibly have a yard to relax in, garden and have a place for children and pets to play in. When I was younger and rented my first apartment, my goal was to own my own home as soon as I could. I purchased my own home at the age of 21 and I've never looked back. I made a profit on every home I ever sold except one, which was sold during the recession of the '80's. I was getting divorced and we agreed to sell, even though we had only lived in the home for less than 3 years. We didn't take a huge loss, but at that time it wasn't common to lose money on a real estate sale. Look at Home Ownership as a Lifestyle, Not an Investment Most home owners feel grounded and a part of their community. They usually stay put longer than renters. When I was growing up, we only moved once into a brand new home. I was 10 at the time and not happy about the move, but I made new friends quickly and loved our new house. My parents kept that house until my Dad retired and they were ready to move to Arizona. For some reason, people have become transient and don't stay put as long as they used to. Many younger people do not want to live in a "starter home" and some of those people purchased their dream home during the seller's market when it was easy to get a mortgage. It is still difficult for sellers to understand that they cannot get the prices that homes were selling for during the seller's market. Unless someone absolutely has to move I always suggest they stay put. I can understand job transfers or financial difficulties, but if you want a larger or smaller home this might not be the time to sell. But if you have enough equity or you're just starting out, it might be the greatest time to buy. Call Judy Orr at 708-536-8200 or James Herter at 708-207-5324 if you are interested in buying and/or selling. Or fill out our Automated Home Finder's Form to get listings sent directly to your e-mail. We specialize in Orland Park or Homer Glen homes but sell in a large area of the southwest and near west Chicago suburbs. If we don't work in your area we can find you a great agent that does. Give us a call first!

Reviewing 2010

judyorr@gmail.com (Judy Orr) — Tue, 04 Jan 2011 13:51:44 -0600

It's been an interesting year and I'm looking forward to year-end sales statistics this year more than any other. We keep losing agents that can no longer earn a living selling real estate. However, 2010 has been one of my best years. It hasn't been easy and I've had to make some changes, but I've done well in a challenging market. I Moved to a New Home I moved to the Orland Park/Homer Glen area and sold my Oak Lawn home. I'm glad I had my own home for sale as it helps me explain the market to my other sellers. I sold my Oak Lawn home for less than what we paid for it in 2003. Add the new windows, two new bathrooms, remodeled family room, new carpet, hardwood floors, interior & exterior paint, etc., and we lost a lot of money. However, we had happy times in that home for seven years and we enjoyed the changes we made. And we made up for it since we purchased a foreclosed Homer Glen home (with an Orland Park address) and we are making it our own. So in our minds, our loss made up for the great deal we got. Getting Used to Today's Decreasing Prices It took me a while during the Seller's Market to get used to those ever increasing prices. It was sometimes difficult setting a price because they kept increasing and we didn't want to short change our sellers. As long as a home wasn't listed way too high over market value, the property usually sold, and quite quickly. Now I'm amazed at how low prices are going. It's a great market for buyers since interest rates are still quite low and prices keep going down. When will we hit bottom? Click the link for predictions I've read. The problem I'm running into is having a listing that seems priced correctly "on paper" based on a Comparative Market Analysis, but there are no offers being made. Buyers have so much to choose from, they can pick the cream of the crop. It could be the difference of one property having granite countertops compared to another that doesn't, and if the buyer wants granite, then the property without gets bypassed. Even if that property is a few thousand less, buyers want the house that has it done already. This goes with any upgrade/update that is most important to that particular buyer. It's simple supply and demand. Mortgage changes make it ever more difficult to qualify, leaving few buyers and too much available inventory. There aren't enough buyers to go around. Therefore, the homes that are selling are the best in their price range. They're the cleanest, have the most updates and amenities and show the best in their price range. Sellers are left with having to make updates or reducing price so their property is the best in their price range. Simple to write down, not so easy for a seller to do or even understand. The Tax Credit Ended in 2010 At this point in time, there is nothing similar to that tax credit. No special financing that I am aware of. Just ever tightening mortgage qualifications with interest rates inching up. I am Working with More Buyers Than Ever Before I've always considered myself as a "listing agent." That's where I focus on listings and I don't work with many buyers. I have been working with more buyers than marketing for listings because it's been so difficult getting listings sold. It's not fun having to keep telling my sellers to reduce price, over and over. I have sold most of my listings and the ones still on the market are where the sellers aren't understanding the current market, although I keep working on them as nicely as I can. When I do go on listing appointments, I am much more adamant about pricing the property correctly. If a seller doesn't agree then I won't take an overpriced listing, at least not unless I get some kind of automatic price reduction paperwork signed. If a seller doesn't price their property at market value they are simply adding more market time to their listing. The longer the property sits on the market, the more stale that listing gets. Many times, the sellers end up getting less than what they could have received if they had listed at the recommended price in the beginning. I see it all the time. Short Sales, Foreclosures and Auctions - Oh My! A regular seller is more likely to be in competition with a distressed sale. These kinds of sales are normally priced at a discount because the seller/bank wants a quick sale. Sometimes, it is priced even lower to overcome damage. As I mentioned above, we got a great deal on our new Homer Glen home, which required mostly cosmetic updates. We were also up against 8 other buyers and we offered higher than list price to give us the best chance. It was still a good deal. In some areas, specific subdivisions have so many distressed sales that they are bringing the value down in the area. If there is one regular sale and a handful or so of distressed sales priced much lower, it's difficult to get that regular property sold. Depending on recent past sales, the regular sale might not appraise because of recent distressed sales that have recently sold and closed. I've written several blog posts about short sales and foreclosures. I'm still hearing about shadow inventory and I also wrote a post about short sales and sellers. I am seeing more and more listings going to auction. This will be a new learning curve and from what I've studied, there are different auction services with different operating methods. Some auctions need to be attended in person and some are online only. It's Still a Good Market for Buyers - Not so Good for Sellers If you're qualified to purchase a property, you might not want to wait for that elusive bottom. We never know we hit bottom until prices go up, so only a few lucky ones hit the timing. We do expect interest rates to go up, possibly to 6%. A higher interest rate can make a bigger difference than a lower price, so those rate hikes can make a difference in your affordability. If you're a seller that needs to sell whether it is to upgrade or downgrade, you have a couple of choices. Make your home as appealing as possible (within reason, and I give my opinion on what will give the most bank for the buck) and price it right. Keep abreast of the changing market and be prepared to make price reductions. Your choice is to get your house sold (and not just up for sale) or hold onto it and rent it out. Some sellers are making strategic walk-aways, letting their homes go into foreclosure with the plan to start over again whenever they can (when their credit recovers). However, in states like IL, the lien holder can come after you later on, so you have to be very careful of doing a short sale, deed in lieu or foreclosure. There could be future consequences and you might not have the chance to clean up your credit. If you're ready to buy or sell in the southwest suburbs, give Judy Orr a call at 708-536-8200 or use the Contact Form.

Short Sales and Buyers

judyorr@gmail.com (Judy Orr) — Thu, 30 Sep 2010 15:10:49 -0500

I still meet buyers that don't really know what a short sale is. A short sale listing is a property the seller is trying to sell for less than what is owed on the mortgage. A short sale can actually take a very long time, the "short" is referring to the fact that there will be less money to the mortgage provider than what is owed, not the length of time from contract acceptance to closing. Short sales are available in every town and every price range. Data suggests that only about 50% of short sale offers ever make it to closing. Agents, buyers and sellers don't understand why a mortgage provider would rather foreclose than sell short, especially when it seems like most closed short sales sell for higher prices than foreclosures. Not to mention the cost of foreclosing, holding onto a vacant property and keeping it up and having to offer it at a real discount. I just attended a short sale seminar and the speaker explained that the banks and mortgage providers just don't have the staff to handle the lengthy process of short sales. Too bad they can't hire and train more employees to help with this backlog to get homes sold "short" rather than foreclose. In many short sale listings, the sellers still reside in the home and are taking some type of care with it. Many short sales are in very good to excellent condition. Short Sale Buyers Need to Know Your offer is first accepted by the seller, but the short sale and monetary amount must be approved by the mortgage provider Getting mortgage provider approval can take up to a year or more Only around 50% of short sales make it to closing You will probably have to bring in earnest money once the seller accepts the offer You could lose your earnest money if you walk away You might be expected to complete your home inspection once the seller signs the contract (per contract dates) Short sales are sold in "as-in" condition Your agent has no control over the communication between the listing agent, seller and mortgage provider Your agent cannot contact the mortgage provider or seller You could get approval, a counter-offer (sometimes higher) or a rejection You must be ready to close - sometimes once approval is made you are expected to close very quickly If you aren't ready to close, the mortgage provider could close your file and you've lost the property The property could foreclose even after short sale approval has been made Some short sales have fallen apart at the closing table So Why Would You Want to Buy a Short Sale? Many mortgage providers are attempting to streamline the process so it doesn't take so long The properties are usually in better condition than foreclosures You can get a good deal - most short sales sell for under market value You might have less buyer competition on short sales since many are not interested in them Understand the Process As has been mentioned, you write up a normal offer on our approved purchase contracts. The offer is presented to the seller and the seller can accept the offer, make a counter-offer or reject your offer. A knowledgeable listing agent (and your buyer's agent) should have an idea of what the mortgage provider will accept. Some listing agents prefer to have the seller accept any offer to get the short sale process moving and to see what the bottom line will be for the mortgage provider. Most listing agents prefer not to put a lowball offer in and will counter-offer at what they think the mortgage provider will accept (sometimes it is somewhere within 10%-20% of appraised value, but each mortgage provider has their own standards). Once an offer is accepted by buyer and seller, the buyer might be expected to treat it as any other offer by bringing in earnest money and handling inspections within the time frame provided on the contract. Some listing agents will allow these things to occur after mortgage provider acceptance. However, this makes it much easier for a buyer to walk away as they have no skin in the game. Once the seller has accepted the contract and all inspection/attorney/earnest money contingencies have been taken care of, the wait begins. The listing agent will send the contract to the mortgage provider. It is usually by fax, and for some reason these faxes constantly get "lost." I believe the faxes get lost because no one has been assigned to handle the file yet. I feel the wait is trying to get the person assigned that is responsible for the particular sale/file. Once the person is assigned the file, things usually start moving a bit more quickly. But keep in mind, I've waited 60-90 days just to get that person to finally be able to communicate with. Prior to that, you get a different person every time and they don't have a file in the system yet - for 3 months or longer! Your contract is in limbo somewhere at the mortgage provider's short sale office. Until it is assigned to one of their employees, no one knows where it is. In the meantime, the buyer is calling their agent who is calling the listing agent who is calling the mortgage provider and getting the same answer over and over - we don't have that fax, send it again. The listing agent might have to send that contract package (with much more than the contract - this can be a very lengthy package) many, many times. Until someone is assigned that file and it gets entered into their computer system, there is simply no one that can help. I even sent a package in via Fed Ex once and was told they don't look at anything that is sent by mail! They only wanted faxes. I've also had short sale employees switched and have to establish a rapport with yet a new person who doesn't know anything about the file. During the months this is happening, the seller, the attorney and the listing agent are all calling, faxing and e-mailing (once we get someone's e-mail), trying to get an answer. There is a fine line to keep up contact vs. getting these employees upset. Some listing agents call daily and I think that's taking a big chance at having your file get "lost" or something else. It is recommended to only make a weekly call. These short sale employees are inundated with short sale files. One very nice person told me they were so understaffed that even if he worked 24/7 he could only make a small dent in the files. And that is why many short sale listings end up getting foreclosed on, even when they have a good offer in the works. Be prepared to get a counter-offer from the mortgage provider, and it could be for more than the list price! They send out agents/brokers to provide them with BPOs (Broker Price Opinions). They want a certain value based on those BPOs and expect to get it. You must decide whether you feel the property is worth it. They can also outright reject your offer, after all that time. You must also be prepared to close very quickly. I've heard of short sale approvals expecting a closing in less than a week! If you have applied for your mortgage like you should have, you should be able to close quickly. However, in a case like this, you would have also already paid for an appraisal. Your mortgage company might give you the choice to send the appraiser out prior to mortgage provider approval or take the chance of waiting for approval and having enough time to get the appraisal in and be ready to close quickly. Most times, once approval is made you could have up to 30 days to close, but each mortgage provider is different and if you're not prepared you could lose the deal. Keep in mind, the foreclosure department is separate from the short sale department, and they rarely communicate. I've heard of transactions making it to the closing table only to be told it was officially foreclosed on that morning! Sometimes, that can be reversed (by a good attorney) and the closing can happen at a different time. The Agents Usually Get Blamed There are some inexperienced agents, both listing and selling/buyer's agents, that should not handle a short sale on their own. But many agents get blamed when they've done nothing wrong because no matter how much is explained to the buyer and seller (who is usually going through an emotional roller coaster), they simply don't understand the wait and the lost paperwork and the "broken record excuses". I've told buyers what to expect yet they start calling me twice a week after a two or three week wait and they start getting antsy. This wait also negatively affects the sellers since they don't know if they're going to be able to do the short sale of if they will foreclose. Many buyers walk away before approval, which wastes valuable marketing time for the seller, bringing the looming foreclosure ever closer. Judy Orr is an experienced sw Chicago suburbs real estate short sale agent and has a 100% closing ratio on her short sale listings. In fact, there is only one short sale that didn't make it to closing and Judy represented the buyer on a problem property listed by another brokerage. That home is still up for sale and we've waited since January of 2010! If you're interested in buying short sale listings give Judy Orr a call at 708-536-8200 or use the Contact Form.

Have We Hit Bottom Yet?

judyorr@gmail.com (Judy Orr) — Sun, 19 Sep 2010 13:56:38 -0500

Have we hit the bottom of low home price values? The optimists keep saying we should see an improvement at the end of 2011 and into 2012. They might be somewhat correct, let's face it, they're talking a year down the road. Today's low interest rates are tempting Others are saying that the current low interest rates are another government ploy to keep buyers in the market. And they might be correct, depending on how low prices drop in the future. At today's current rates, you'd be better off with 4.5% interest rates vs. a 10% reduction at 6% based on an average home price of around $300,000. You can try out my financing calculator to play around with rates on different price ranges. How low will prices go? No one can say for sure, but some are predicting closer to 20% vs. 10%. There are several reasons stated: interest rates will rise, keeping many buyers out of the market unless sellers reduce home prices are still too high, even with current price corrections - home prices are still outpacing income there will be many more distressed sales such as foreclosures and short sales coming down the pipeline unemployment is still too high Will interest rates really go up in this economy? I would love to think they will remain this low, but I do not see that happening. I've heard statements that they will rise to around 6%. I still think that is low; when I purchased my first home in the 1970's my interest rate was 10.5%, and we didn't blink an eye. The price of that home was just under $20,000! We sold it around 3 years later for the upper $40,000's. Interest rates were still around the same. In the early 80's (after a recession), interest rates fell to 8.5%, causing a seller's market! Aren't foreclosures winding down a bit? They might be down right now a slight percentage, but there are still future adjustable rate loans that are scheduled to reset. Some mortgage holders will not refinance into a fixed rate because their rates might actually go lower and some can't refinance since their home isn't worth what they paid for it. If interest rates go up next year then those buyers might not be able to afford the next reset. That will keep short sales and foreclosures coming. Should we wait to purchase? I just purchased a home at the beginning of the year. I am taking a loss on my resale Oak Lawn home. I purchased a foreclosure and although we are remodeling it, I feel we got a great deal. Even if the true value of my remodeled home falls 20%, we plan on living here for a minimum of 10 years, possibly more. Although we feel we made a good investment, the reason we bought is because we outgrew our other home. We needed more space. Lucky for us, we found a home that is perfect for us and was a foreclosure that only needed cosmetic fix-ups/remodeling. We felt the need to move and went for it. We are so happy in our Orland Park home. It's tough losing money on our resale home (and that's not even taking into consideration all of the money and work we put into it) that we lived in for 7 years, but it worked out for us in the end. If you are currently renting and want to own a property, then with these low interest rates you should really consider purchasing now, before interest rates spike. Keep in mind, different towns will depreciate at different rates. There are many areas in Cook county that have already fallen by double digits. An average drop of 20% does not mean that figure will occur in every single town. It might be a gamble to wait No one can predict the future, but if you're ready to buy a property, you might regret waiting. Feel free to fill out my Automated Home Finder Form to see what's out there right now, while interest rates are so low.

Interest Rates Are Dropping!

judyorr@gmail.com (Judy Orr) — Wed, 26 May 2010 11:26:02 -0500

Things have definitely slowed down since the tax credit expired. However, we're hoping sales will pick up again with the lowering interest rates that caught everyone by surprise. It was predicted that interest rates would rise to around 6% in 2010. No one was ready for this latest drop, below 5%! Some are now saying we could see rates as low as 4.5% again! How Low Can We Go? We now have a great combination for buyers - prices have backtracked to 2003 values and interest rates are below 5%. Some say prices have another 20% to fall, but I'm not a gambling person and with these low interest rates right now, I'm not sure I'd want to wait if I were thinking about buying. What if prices don't fall another 10% or 20%? What if interest rates start creeping up, especially since no one predicted they'd drop this low again? Because I'm not a risk taker, I purchased a Scottsdale townhouse in Arizona last year. I didn't want to take the chance that prices would get higher, especially when there was talk of Arizona getting over the "hump" of foreclosures and stabilizing. I probably could have gotten a better deal had I waited. If I purchased this year I might have gotten a better deal if I waited until next year. Boy, if I only had that crystal ball! But my Scottsdale, AZ purchase was for the long-term, for our future retirement, and we love it. The only reason we'd ever consider selling it would be to get something even bigger down the road or to get a single family residence. In fact, I love my townhouse so much I can't imagine ever selling it. I'd almost rather rent it out but that's difficult if we don't live in the area full-time. This Could Be the Best Selling Climate for Buyers I've said this many times before during this continued Buyer's Market. This market is great for buyers but terrible for sellers. I'm seeing more and more sellers turning into reluctant landlords - and I might do the same! I just wish I knew a turn-around time, but there goes the need for that crystal ball again. If we turn into landlords, how long will we have to rent before prices increase again? One year, two, three? What about predictions that we won't see appreciation until 2015, or even as far as 2020? As a Potential Buyer, the Best Time to Buy is Your Decision If you're ready for a long-term commitment by making a real estate purchase, with today's low prices and our once again under 5% interest rates, this might just be the best time for you to make that purchase. When we made our Arizona purchase, we went in knowing that prices might continue to drop, but we were ready to buy and interest rates were good. We love our townhouse and have no regrets that we should have waited for even lower prices and/or interest rates. If you think it's a good time to buy, feel free to fill out my Automatic Home Finder Form that will send you listings from the MLS straight to your e-mail and keep you updated of all new listings to hit the market and price changes. Or call Judy Orr at 708-536-8200.

Financing your Home Through the USDA and VA Programs

judyorr@gmail.com (Judy Orr) — Thu, 13 May 2010 11:41:25 -0500

The process of becoming a homeowner is an exciting and often daunting one. The current economic climate has heightened the anticipation since, while it’s a wonderful time to buy a home. In fact, the government recently provided a tax credit to buyers (which is still available if you are a deployed service member). While the market is favorable and sellers are extremely motivated, many banks are tightening their lending requirements and loans can often seem hard to come by. Although USDA and VA loans may not be the first loans most potential home buyers normally consider when looking at home financing options, each can be a wonderful choice for a wide variety of lifestyles, budgets, and properties. VA loans, which are backed by the US Department of Veterans Affairs, are primarily aimed at active duty service members and veterans. The VA doesn’t provide consumers with actual loans but instead provides a guaranty to the bank issuing the loan to lower the risk, which in turn reduces the stringent credit requirements and allows the bank to accept a smaller down payment from the buyer. In fact, VA loans permit as little as 3% down (traditional loans require around 20%), have a separate zero down payment options, and allow closing costs to be financed with the principle of the loan. Rates are highly competitive, with interest rates very similar to (or even better than) traditional programs. The USDA loan program is open to low income homebuyers (those which make less than 80% of the median income for the area) regardless of whether they are first time homebuyers or not. The program requires no down payment and in fact, homes needing improvements can be financed at 102% to allow the homeowners to have cash to complete the necessary projects (which can be done after closing). While most loan programs insist upon mortgage insurance if more than 80% of the home’s value is mortgaged, the USDA program does not have this requirement, saving borrowers over one hundred dollars monthly. Each program has a maximum loan limit, which is based partially on the cost of living in individual areas in the country. The policy of adjusting the loan limit to cost of living ensures that every qualified borrower, regardless of the economy in their area, will be able to find a suitable house within the limits of each loan program. For more information on USDA and VA loans, visit your lender or go to www.usda.gov and www.va.gov

Final Days to Get In On The Home Buyer Tax Credit

judyorr@gmail.com (Judy Orr) — Wed, 28 Apr 2010 11:57:09 -0500

Friday is the last day a buyer can qualify for the Home Buyer Tax Credit. You must have a fully signed and accepted contract by Friday, April 30th, in order to qualify. You have up to June 30th, 2010, to close. I have been waiting for a Frankfort townhouse short sale to get approved so my buyer would be able to take advantage of the tax credit. Things weren't looking good and she was ready to move on. Just yesterday I got the notice from the listing agent that the bank approved the short sale. My buyer was losing her locked-in interest rate but could get a 10 day extension. I am hoping that we can get this to closing (I don't trust that the short sale mortgage holder will have their act together in 10 days) so my buyer will have her Frankfort townhome at her locked-in rate and qualify for the tax credit. I warned my buyer about how short sales work and the length of time it could take. I have another short sale contract that was accepted around the same time and no approval in sight. I'm not sure if it is the listing agent or the mortgage holder, but each one promised a closing within 30-45 days, which did not happen. The other buyers are not eligible for the tax credit so that is not an issue to them. They just want to close on the home! If you want to take advantage of the tax credit you should not be viewing short sales or foreclosures. I have waited more than 2 weeks just for an answer on a contract for a foreclosure. Remember, you need a signed and accepted contract by this Friday to get the tax credit. That will mean you will have to deal with a regular seller sale as that is the best way to get an answer in a more timely fashion. So many agents think it's funny that we now have a term for a "regular sale" vs. a short sale or foreclosure. Happy house hunting!

No Spot FHA Approvals for Condos

judyorr@gmail.com (Judy Orr) — Sun, 07 Feb 2010 10:41:33 -0600

FHA has once again removed the ability to do an FHA spot approval on condominium purchases. They seem to have gone back and forth over the past year. They took it away, brought it back and took it away again. Here is one of the excerpts from a 2009 Mortgagee Letter from the Department of Housing and Urban Development: "“Spot Loan” Approval ProcessMortgagee Letter 2009-46B eliminated the Spot Loan Approval Process as defined in Mortgagee Letter 1996-41 for all FHA case number assignments effective on or after December 7, 2009. However, to address concerns involving the volatility in the condominium market, the new effective date for the elimination of this practice is for all FHA case number assignments on or after February 1, 2010. FHA may perform additional monitoring to ensure compliance with the “Spot Loan” Approval Process." That is just one tiny little paragraph in a lengthy letter regarding FHA changes for condominium purchases. It would be difficult to write all of the new changes for FHA loans in condos, but suffice it to say that it will be difficult to get an FHA loan on a condo that is located in a complex that is not already approved for FHA financing. To attempt to get an entire complex approved for FHA financing will now be a very lengthy and arduous process. Another new rule states that even if a condo complex gets FHA approval, only 30% of units will be eligible for FHA financing. On a small complex it's almost not worth it. For example, in a complex of 10 units, only 3 would be eligible for FHA financing. Small complexes will not want to spend the money required for FHA approval nor the paperwork and time necessary to get approval. I have a beautiful condo listed at 18001 S. Oak Park Ave., Tinley Park IL 60477. The seller purchased the unit with FHA financing by getting FHA spot approval for the unit. He didn't understand why I could not promote his Tinley Park condo as FHA approved. I did a lot of investigating and I found out that with his association, it would have been almost impossible to do on his unit. The interesting thing is that his large complex has multiple associations and some buildings were able to do spot approvals as they were willing to comply with FHA rules. His association made it difficult. Now none of those units will be FHA approved unless each association goes through the rigors of getting approved. I can't see that happening. I just had a buyer that insisted we only view true townhomes because she would have to put down more money if she purchased a condominium. Many mortgage companies consider condominiums a financial risk and they are tightening lending on them. This does not bode well for condominum owners. It will be more difficult to sell and for truly motivated condo sellers, prices will continue to decrease.

The First Time Buyer Tax Credit Has Been Extended

judyorr@gmail.com (Judy Orr) — Tue, 10 Nov 2009 17:44:33 -0600

This isn't really news by the time I'm posting this and most of you probably know it has been extended. Well, everyone figured it would get extended - right? There was word that it would get extended but until it was signed, sealed and delivered, it was just "talk." I had no idea if it would be extended or not. And I certainly had no idea what the rules would be. Details of the Home Buyer Credit Notice I did not put "First Time" Buyer Credit, because now it isn't just for first-timers! The credit is the same for first-time buyers as before but with a maximum earnings increase (up to $125,000 for an individual, $250,000 for a couple), allowing even more to qualify for the credit. It is still 10% of the purchase price up to $8,000. And for anyone that has owned their home for at least the past 5 years that also falls within those earning maximums, a $6,500 credit is available! This tax credit keeps offering more every time it is renewed. Remember, the prior credit had to be paid back and those buyers are expected to do so. Some are saying it is still leaving out a big section of would-be buyers Anyone that bought a property less than 5 years ago and want to sell will not be eligible for the credit. And those same people might be the one's that are trying to get out to try to save their credit and possibly get another home at a better price. Of course, if they paid top dollar during the seller's market they might have a difficult time trying to get what they owe on it (depending on what they put down). What is the time frame? You must have a signed contract in place by April 30, 2010. However, you don't have to close until June 30, 2010 to be eligible for the credit. This extension isn't very long in my opinion, especially since the winter months are historically slower sales months, especially in the Chicago suburbs real estate market with our cold weather. Will this cause a busier Fall and Winter season? Only time will tell. There were already buyers sitting on the fence waiting to see if this next extension would offer them more. They might expect another extension next April if the market hasn't picked up much. And if it does get extended again, buyers will start expecting this and won't feel the need to buy something by the end date because they'll expect another extension. This is actually giving me a push to get my house on the market so I can take advantage of the credit. I won't gamble that it will get extended again. If I didn't have this "push" I'd just take my time and probably wouldn't even get my home on the market until March. Now I'm hoping to get it up asap so I can get it sold and start my search. If this extension has given you new hope to purchase a new home feel free to search the Chicago area and suburbs MLS or even better, fill out the Automated Home Finder Form to receive new listings daily via e-mail.