Gather Your Paperwork

By Liz Rainey – Agent/Relocation Specialist

In planning your sale, you can get a great head start by pulling together the necessary paperwork ahead of time.

• Disclosure Documents: Your agent will provide you with this form, in which you are legally bound to disclose any problems that you know of in the house. This includes any documentation of anything that might impact a buyer’s decision about your home, whether it’s inspection reports, repair receipts or estimates for repairs you haven’t actually done yet (ask your agent what exactly is needed here).
• Home Documents: These should include the deed to the house, proof of title insurance, proof of homeowner’s insurance, a property survey, a floor-plan with dimensions, and a list of any appliances or other items that you intend to include with the house.
• Mortgage Statements: Before the property’s title can transfer to another owner, the escrow or title company will need your mortgage statements to order payoff demands from any mortgage holder who has to get paid before that can happen
• Financials: If you are planning on a short dale, you’ll have a lot more paperwork to gather in your process – including paycheck stubs, bank and investment account statements and two (2) years’ W-2 forms or tax returns – the bank will review these to determine whether they will authorize you to sell the home for less than what you owe.
• Draw up a list of all your home’s best selling points, as your agent may not notice all of them. Not all of these documents are absolutely necessary, but if you have them handy it will save you time later on.

Keep in mind that it is a good idea to make copies of these documents or scan them into your computer whenever possible.  By preparing these documents in advance you can save yourself some time and headaches later on.

Find the Right Agent

By Jen Ross – Real Estate Agent/Relocation Specialist

There are several key things to be aware of when getting ready to list your house for sale, among them, finding the right agent is first.

Interviewing agents can be like screening for a babysitter: you need to find the one you feel most comfortable with while still having the qualifications to take care of your most important investment.

Choosing an agent should not be based solely on who tells you they can sell your house for the most money.

When comparing agents, their style and personality are good indicators of whether or not you feel they are a good match for you, but what about concrete factors? An agent should be able to produce a biography, their background and past sales history so that you know they have a proven track record.

They should go through their advertising/marketing plan for your house and have examples to show you.

They should offer honest advice for pricing and preparing your home for sale.

They should explain their communication and follow-up procedure as well as the process for listing your house with them, including a timeline for how long it will take to get the house officially “on the market”.

After you have collected all the information and can make a decision about which agent is the best fit, you should expect them to promptly deliver the listing paperwork to you and explain it in detail.  You should expect an agent to ensure that your house goes on the market according to the timeline you were presented and for them to follow up with you and contact you as they said they would during the listing appointment.

You should expect that your house, if priced correctly, will sell and that your agent (always having your best interest at heart) will be there for you throughout the entire process.

By Greg Iverson

Mortgage Banker – Envoy Mortgage

A very important tax benefit disappeared at the end of December that could cost homeowners thousands every year in lost tax deductions.  This tax benefit was for homeowners who pay private mortgage insurance premiums as part of their monthly mortgage payments.

Many homebuyers in recent years have taken advantage of lower down payment mortgage programs, oftentimes with only 5, 10 or 15% down.  These mortgages come with a monthly mortgage insurance premium that protects the lender in the event that the borrower defaults.

Beginning in 2006, these mortgage insurance premiums were tax deductible (similar to mortgage interest) within certain restrictions.  Single borrowers and married borrowers filing jointly with adjusted gross incomes of $100,000 or less could write off 100% of their annual mortgage insurance premiums.  Married borrowers filing singly were able to write off 50% of premiums.  Above $100,000, borrowers were possibly able to qualify for partial deductions on a sliding scale.

As of January 1^st, this tax incentive is no longer available along with 58 other tax code benefits such as tax credits to homeowners making energy-efficient home improvements.

MGIC, a private mortgage insurer estimates that a borrower earning $100,000 per year with a mortgage of $200,000 stands to lose between $600 and $1,000 per year in tax deductions.

There is still some hope that this part of the tax code could be included in an election year package that could be passed later in the year.  One thing is for sure, homebuyers of the last few years will want to keep a close eye on this and possibly look to a loan program with Lender Paid Mortgage Insurance if they are no longer able to deduct the premiums they’ve been paying and still don’t quite have 20% equity in their home.

Study the Local Market

By Elaine Medve – Agent

When contemplating selling your home and putting it on the market, it is imperative to educate yourself as to what is happening in the marketplace.  This is a major decision that can be quite stressful, and having realistic expectations makes the entire process go smoother.  We don’t have a crystal ball to predict what offer may be received, but by studying the market we gain a better idea of the value of your property at this particular time.  Armed with this information, you will be able to make a more informed choice as to whether or not this is the right time for you to sell.

Over the past few years, we have experienced a market correction in terms of value, resulting in an abundance of property on the market, and unfortunately less demand than we used to see.  By studying the market conditions specific to your area, you will gain a much better idea of the value of your home and where to position it in the marketplace.

Meeting with an Upper End agent who is able to provide data and get an idea of value is a great place to start.  We can customize a property report comparing your home to others within a close radius that factors in square footage, bedrooms/baths and lot size and give you an idea of what has sold in your area for what amount.  With this information, you can ascertain a realistic price range for your home to be sold.

Visiting other open houses in your area to compare homes to yours and seeing the advantages of getting your home REALLY ready before listing it will be an eye opening experience.  Doing all the right things to market your home in the best light will truly pay off.

If you’re looking to sell sometime this year, there’s no better time to start researching than now.  We understand that the selling process can be quite intimidating, but the information gained by analyzing the market and setting a realistic price range for your home is an exceedingly valuable early step in the process that can provide great peace of mind.

Therefore, do you see this decline in home-ownership becoming permanent or as merely a temporary reaction to the current economic situation?

Cory Spielberg, Operating Partner:

Temporary, this has happened before several times.  The economy is dependent on cycles, and we are going through a tough one, but it will eventually recover and the American Dream of home ownership will return.  My prediction is 10 years, but don’t hold me to that

Michael Weiss, Agent:

The decline could be permanent as the rate of home ownership of the last 20 years has proved to be unsustainable.  The ratio is correcting itself from the last 10 years of the home market frenzy.  It is a good thing, as it will stabilize the housing market even if it does depress it in the short term.  Renting is a viable option specifically for short-term occupancy or those uninterested or incapable of managing the logistics of home ownership.

The underlying factor is that the US population is still going to grow like crazy in the next 25 years and housing will grow again one day, and the dream of home ownership is and will forever be part of our national fabric.

Liz Rainey, Agent:

What goes up must come down and vice versa.  The housing market will pick up again but with the unemployment numbers still low, buyers are more hesitant to make the move to ownership.  There are also a lot of college grads who might be looking for their first place but have chosen to live with their parents while they obtain a job and are able to save money towards a down payment on a home.

Seth Reeder, Broker/Partner – Upper End Leasing & Management:

Temporarily permanent – it will take a good 10-20 years for everybody to loosen up and forget about this economic downturn.

Liz Gangl, Agent/Leasing Specialist:

I think the numbers will stay where they are for a while.  I think the fear of owning that has been instilled in the American people will always be there and therefore the market will never be as good as it was.  Plus, I think a lot of people are no longer looking at home ownership as a great thing.

So, are we really becoming a nation of renters?

Cory Spielberg, Operating Partner:

I believe we are only becoming a nation of renters mostly due to economic conditions.  There are many factors that contribute to this.  The first is the inability for people to qualify for a loan.  The second is the inability of people to sell their homes and get equity out, therefore causing them to rent, or in the worst case get foreclosed on.  Finally, the laziness of Americans in general makes renting a home a very easy option.

Michael Weiss, Agent:

We are trending more towards renting as a society on a whole for a variety of reasons.  Although homes ought not be thought of as an investment, they have been for years.  Why buy something that is as likely to become less valuable during your tenure as more valuable?  Also, not everyone is qualified and should be entitled to own.  We are going back to a society that allows only purely qualified citizens the ability to purchase in the first place.  The US dream is and always will be to buy a home, but until the economy comes back the ratio of renters to owners will continue to increase.

Liz Rainey, Agent:

I think there will always be a market for home sales.  A main reason for the rise in rentals is that people are relocating and renting instead of buying a house right away.   They are renting for a year to decide if they like the area, schools, location, neighborhood, etc. before they make the decision to buy.  A few years ago if you were coming to town to do your fellowship with Washington University, for example, you might be inclined to purchase a home and then sell or rent out after you completed the program.  Now people are more apt to rent so when they are ready to move they don’t have to worry about selling.

Another reason for the rise in rentals is that buyers are able to afford homes in areas they couldn’t before so they are taking advantage of the market and interest rates but may not be able to sell their homes or do so at a large loss so they are listing their homes for lease and are able to cover their mortgage (and most of the time more than that) and then put their homes up when the market re-bounds.

Seth Reeder, Broker/Partner – Upper End Leasing & Management:

1) Many companies are not providing as cushy of a relocation package for their employees they are transferring as before. Therefore, the employee is left to deal with the property in the current market they are living in and the market they are relocating to.  Since the market is rough, they can’t sell their home in market A and cant buy a house in market B.  So they lease their home in market A and lease a home in market b.

2) Loan underwriting guidelines have changed.

Liz Gangl, Agent/Leasing Specialist:

Yes and no. I can say that a lot of my friends/people my age are still buying homes because, to them, it is an investment and “the American Dream.” On the flip side, I think it is hard for a lot of people to get mortgages and for people to sell their homes so we are coming into a lot of renters.  I don’t think the homeownership percentage will ever be as high as it was in 2004, but I think for a while there will still be a higher percentage of buyers than renters.

So, why should/would anyone buy a home right now?

Cory Spielberg, Operating Partner:

Very simply put, you can borrow money for next to nothing!  In some cases as low as 3%.  This will never happen again in our lifetime.  If people know they are going to stay somewhere for at least 7-10 years, there is no reason people shouldn’t be buying right now.

Michael Weiss, Agent:

Demand for homes is down, which is why consumers right now have a lot of leverage to negotiate.  On top of historically low interest rates and corrected prices 10-25% off their peaks, affordability is at an all time high.  If you are looking long term and not as an investment, you could not find a better time to buy a home.

Liz Rainey, Agent:

The interest rates are the lowest they have been in years and we don’t know how much longer that will hold out for.  Also, with the great pricing you can afford a lot more house than you could just a few years ago.  There are a lot of deals to be had as a buyer, get out there and enjoy house searching and getting a fantastic deal.

Seth Reeder, Broker/Partner – Upper End Leasing & Management:

Unprecedented economics.  Low interest and low home values don’t typically happen at the same time.  There will never be a better time to buy in our lifetime.

Liz Gangl, Agent/Leasing Specialist:

The interest rates are ridiculously low AND there are a ton of great deals on homes in every price range.

877.907.6907

Federal regulators are currently determining whether or not to require would-be homebuyers to come up with a 20% down payment in order to qualify for a loan to buy a home as a part of the Housing Reform Act of 2010. Believe it or not, this was standard practice years ago. One would have to search back to the 1960’s and 70’s to find similar requirements.  However, in order to stimulate the housing industry, programs were developed to reduce down payment and allow qualified buyers to purchase homes.  If underwritten correctly, many of these reduced down payment options are an extremely low risk and are very profitable for lenders.

Under this proposal, the average St. Louis county home sales price of $180,000 will require a down payment of $36,000, four times the current requirement of $9,000.  There isn’t any question that this will take many qualified buyers out of the market and further hamper the national housing recovery.  Should borrowers have some money in the deal?  Absolutely, the days of 100% financing are behind us and probably should remain behind us.  However, it seems that a 20% down payment requirement is a knee jerk reaction and could seriously damage our economic recovery.  Experts are quick to point out that tighter underwriting guidelines have led to fewer foreclosure starts even amidst high job loss and unemployment. Currently one out of four loan applications is denied – up from 18 percent in 2003.

Would it be wise to continue diligently underwriting loans and maintaining tighter guidelines than we’ve seen in the past few years? Yes.  Should we go in the complete opposite direction and require borrowers to put down 20%? No, not if we want the housing recovery and overall economic recover to take place.

Upper End Properties was thrilled to sponsor the 2011 Derby Party to benefit Big Brothers Big Sisters of Eastern Missouri.

Hundreds participated in the festivities, many donning derby hats and sipping mint juleps.

Aside from delicious classic derby food, such as cheese grits, the highlight of the event was the dice rolling game.  Participants were given the opportunity to roll enlarged dice to try to win the $10,000 prize by spelling out “D-E-R-B-Y.”

Although Animal Kingdom took home the wreath of roses at Churchill Downs, the real winner was Big Brothers Big Sisters right here in St. Louis!

By Greg Iverson

(636) 751-1068 – greg.iverson@upperendproperties.com

There’s great news from Fannie Mae: Buyers may be eligible to receive up to 3.5% in closing cost assistance through June 30, 2011 as part of the HomePath buyer incentive.

To be eligible for this incentive, the following qualifications must be met:
- Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible.

- The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.

- The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.

- Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance.

- Second homes and investment properties are excluded from the incentive.

- Buyers must sign an Owner Occupant Certification Rider to the real estate purchase addendum.

- If the buyer’s total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Keep in mind that offers submitted after May 15, 2011 may be difficult to close by the June 30, 2011 deadline

By Greg Iverson

(636) 751-1068 – greg.iverson@upperendproperties.com

With the rise in the number of foreclosed properties in the last few years, lenders have been scrambling to find ways to finance them for new buyers.  Historically, it has been very difficult to finance foreclosures due to the below average condition they are oftentimes in.  Lenders want to see that an appraiser is willing to state that the particular property is in average condition.  Otherwise, the lender could face a loss if the new borrower does not keep up with the mortgage.  In walks a program called “Fannie Mae HomePath.”  This program is specifically for borrowers purchasing a Fannie Mae-owned property.  In other words, the property that is being purchased was previously foreclosed on by Fannie Mae.  Following are details on this unique program:

The Homepath program is a special financing program to provide financing for purchasers of Fannie Mae Real Estate Owned (REO) properties (as a result of foreclosure or other similar action such as deed-in-lieu of foreclosure) that Fannie Mae has deemed eligible for HomePath Mortgage financing.

FEATURES AND BENEFITS:
-Low down payment (currently as low as 97%
-You may qualify even if your credit is less than perfect
-Available for primary residences, second homes and investment properties
-Down payment can be funded as a gift, a grant, or a loan from a nonprofit organization, state or local government employer
-No appraisal required
-No mortgage insurance required

FLEXIBLE TERMS:
-15- and 30-year fixed rate
-Adjustable options available

ELIGIBLE PROPERTY TYPES*:
-1- to 4-unit properties
-Planned unit developments (PUDs)
-Modular homes

*Restrictions apply

From Greg Iverson

(636) 751-1068 – greg.iverson@upperendproperties.com

Beyond Housing offers a down-payment assistance program to aid those who may have difficulty in coming up with the funds necessary to put money down on a home.

The non-profit organization was founded 30 years ago with the mission to help low-income families establish economic independence.  As part of this, they provide down payment and closing cost assistance to families throughout the St. Louis metro area and surrounding counties.

To be eligible, the total household income must be below 80% of the HUD median income for the specified area, and the individual must be a first-time homebuyer.  Also, the home being purchased must pass an occupancy inspection.

It is also important to note that this is not a cash-back program, and only needed funds will be utilized at closing.  Also, the total loan to value can not exceed 105 percent.

For instance, right now down payment assistance funds are available in the following jurisdictions: St. Louis County ($3,000), Florrisant ($3,500), and the City of St. Charles ($10,000).

Therefore, its good to know that assistance is available for those who are able to meet the requirements of the program.

Approximately 50 people came out. They consisted mostly of young professionals who support Friends of Kids with Cancer.

The night not only raised over $1200 for the charity, but promoted the organization and increased membership and interest.

The money raised will go directly to the Friends of Kids with Cancer center and will be used to help improve the quality of life for cancer patients undergoing treatment, as well as their families.

From Greg Iverson

(636) 751-1068 – greg.iverson@upperendproperties.com

The most recent Dodd-Frank Act requires banks to hold 5% of the credit risk of mortgages that are bundled together and sold as mortgage-backed securities in the secondary mortgage market.  The thought behind this is simple: banks won’t be tempted to make risky loans if they’re required to have some skin in the game as opposed to selling the mortgage and washing their hands of the risk.

The issue at hand is how regulators are defining loans that are exempt from these new rules.  These exempt loans are referred to Qualified Residential Mortgages or QRMs.  Currently being debated is what is considered a QRM?  Let’s just say, as the definition is proposed, only 20% of the mortgages purchased by Fannie Mae or Freddie Mac from 1997-2009 would qualify.  About 62% of the mortgages taken out to purchase a home last year would not qualify because they did not consist of down payments of 20% or more.  Keep in mind; this is after lenders tightened up guidelines used to qualify for a mortgage.  Scary, to say the least.  Here’s what the standards look like:

-Buyers must make a minimum 20% down payment.  For a refinance you would need to have 25% equity in your property and if you wish to pull equity out, you must have 30% equity after the refinance.

-Mortgage related debt cannot exceed 28% of gross income and total debt can’t exceed 36% of income

-Loans must be fully amortizing, no interest only mortgages allowed

The main concern being raised by consumer groups is that loans with less than 20% down will become more expensive and in turn more prohibitive due to the fact that banks will have to hold more capital in reserve for these mortgages and will therefore need to offset that missed opportunity with higher interest rates.

This piece of the act is still up for comment, so there is still hope that it will not be enforced.