Update on Fannie and Freddie

The government has agreed that Fannie and Freddie will be no longer. They plan to roll out the plan soon with the intention of completing the phase out in 5-7 years. The sole purpose of getting rid of Fannie and Freddie is to get government out of the mortgage industry and put the private sector back in. Right now, 9/10 mortgages are backed by the government. In addition to removing themselves, the government is also proposing changes to FHA loans in order to level the playing field. They still will require 10% down on conventional loans, but will raise monthly premiums another 25%, which will make qualifying for a loan a bit harder. The hope is that by raising FHA monthly premiums, it will be harder to qualify for the loan and buyers will be more inclined to go back to buying conventional loans which will be owned by private investors. The idea is that if private investors are ones setting the terms they will keep interest rates lower in order to compete with each other. Let's hope they're right. Guess we'll just have to wait and see.

Fannie Mae and Freddie Mac- no more?

For the past year, rumors have been swirling over the fate of Fannie and Freddie, especially with the talk that China may sell off their percentage of the Fannie and Freddie stocks and the recent announcement that Fannie and Freddie were "delisting" from the New York Stock Exchange. A decision by the Treasury was to be released on the future of the mortgage firms at the end of January, but has since been pushed back to mid-February. Reports are saying the statement could be released as soon as the 11th.

The talk seems to come down to the overall shut down, combination, or sale of the firms by the end of 2012. The reason for the drastic decision is that confidence is at an all time low and keeping them around would cost the US taxpayer another $73 billion, bringing the total bailout funding to $215 billion, a position that cannot be sustained in the long run.

Republican Scott Garett accuses the two mortgage companies of being the major cause of the financial crisis. He proposes that the two companies be overhauled, but did not say outright that the companies should cease to exist, privatize, or reduce in size.

The Obama Administrations has proposed the creation of a new federal subsidy, but Republicans don't feel that's the best solution. Since the elections, Republicans, in the House and Senate have been writing bills and amendments asking for the end of the bailouts or for an overhaul of Freddie and Fannie. Currently, Rep. Jeb Hensarling, the author of the sole bill in Congress (H.R. 4889), asks that any further bailout of the two mortgage companies be halted and for both companies to close. As of this moment, the bill is stuck in the House Committee on Financial Services and any action does not appear to be expected.

Many fears surround the topic, suggesting the housing recovery remains too fragile and feeble for the government to abandon Fannie and Freddie anytime soon and that the continued bailout is our only option at this moment. Needless to say, it's obvious something has to be done.

What would you like to see happen to Fannie and Freddie?

Cash is King in Las Vegas

Yesterday, the Greater Las Vegas Association of Realtors reported that in January more than half of the transactions were cash purchases. For the most part, these cash investors are looking to rent out their investment properties. Paul Bell, GLVAR's president, believes that the cash investors are crucial to our Las Vegas market, "without them, the homes would sit vacant and inventory would rise. With low rents and attractive single-family residences available, many tenants are opting to rent their own homes rather than live in complexes."

If you are looking to invest in Las Vegas real estate, or are perhaps looking to rent a single family residence, please don't hesitate to contact me.

Reverse Mortgage Loans, and what they can do for you...

Late this morning, agents in my office were introduced to a few reps from Wells Fargo, the topic they discussed referred to Reverse Mortgages and the great opportunities it has for our clients. I am so excited about what they shared that I had to let you know about it right away!

First let's start off with a little definition, what is a Reverse Mortgage?

The easiest way to describe a reverse mortgage is that rather than the traditional mortgages, where you pay a monthly mortgage payment, the reverse mortgage is just the opposite... the bank pays you!

I know what you're thinking- "That can't be right. Why would the bank pay me?"
First, in order to qualify for the FHA-insured loan, you need to be at least 62 years of age, and all parties involved in the transaction (specifically those placed on title) will need to be as well. The only thing you'll need to submit is documentation on your assets. There is no credit check or Loan to Value ratio necessary to qualify for the loan! You can choose to use the loan in 3 ways. You can take out the money as a lump sum, take out part of it as lump sum and use the rest as a line of credit, or you can draw out from the line of credit and pay yourself a monthly income. The line of credit can be expected to increase over time (as long as money remains in the line of credit). If you draw out any money and use it as income, the income is tax free.

To clarify, you must have equity in your house in order to qualify for this loan. But, if you've lived in the property for awhile you have probably accrued some equity. This is a great thing to do if you happen to be a homeowner over the age of 62 who finds they have equity in their property, but are finding it difficult to keep up with the payments of their current mortgage.

Let's discuss what property types are eligible for this loan...
you can purchase a Single Family residence, HUD-approved condo, Planned Unit Developement (PUDs), Two- to four-unit properties (one unit must be occupied as a primary residence), or a manufactured home built after June 15, 1976.

Requirements of the new home
The home must be the primary residence, must be occupied by the borrower within 60 days from close date, and construction must be complete, properly habitable, and a certificate of occupancy or its equivalent must be submitted prior to the loan application.

It is essential that if you receive a reverse mortgage that you pay your taxes, your insurance, your HOA dues, and is kept in good shape.

Wells Fargo wants to ensure you are not being pressured, so all seniors wanting to apply for a reverse mortgage must first attend a meeting with their local rep (which I can get you in touch with if you live in the Las Vegas/Henderson/North Las Vegas Valley), then a counseling session with a Hud-approved counselor. These counselors will send you a packet of information, and will then speak to you on the phone. The conversation typically lasts for about an hour, and is to ensure that no one is pressuring you into the application and you fully understand what this mortgage entails. Counseling is also required to be attended by all parties in the transaction, regardless if they will be on title or not.

Wells Fargo is the nation's leading originator of reverse mortgage loans. In December of 2010, here in Las Vegas, they closed 1,832 loans. Bank of America had only 837, which was the closest of their competitors. It is expected that more of these transactions will happen more frequently with the expected retirements of the baby boomers and the current economy we find ourselves in. They are here to help you and can answer any questions you have about the program, also known as the Home Equity Conversion Mortgage (HECM). If you would like more information about this loan, please contact me or contact your local Wells Fargo Home Mortgage rep.

How to Sell Your Home in a Slow Market

Although the real estate market has slowed in recent months, there are still plenty of people looking to buy a home. If you know how to prepare your home, when to allow access for property showings, and are willing to consider offering buyer incentives- you can find the right buyer, even in a declining market.

Before you put your home on the market, take a once over of the property and make sure that all basic or minor repairs are completed. Nothing can turn off a prospective buyer quicker than little things. These repairs don't cost a lot of money and buyers are likely to believe that the larger things may be neglected too if the little things aren't maintained. You want buyers to know that you have pride in your home, so make sure that all of the small repairs are taken care of. Make sure to fix loose railings, torn screens or missing hardware on cupboard doors as these do not cost much to repair.

Keep your home clean throughout the time it is on the market. Its important, especially in a slow market, to have your home available to show at a moment's notice so vacuum regularly, keep kitchens clean, grass cut, and windows washed.. The more often your home is shown, the more likely it is that your home will sell.

Have your home staged by a professional. Home stagers have become a booming business and a professional home stager can help you remove clutter and depersonalize your space. If cost is an issue, you can remove the clutter and personal items yourself. Some real estate agents can advise you on how to arrange the furniture or what pieces to remove so your home is well received. I, myself, have a background in Interior Design and Visual Merchandising so I can certainly help you with this. Don't get too crazy with the removal of furniture, unless of course you intend to keep the home vacant while you are trying to sell the property, but, any pieces that are difficult to maneuver around or are unnecessary should be cleared away. It's important to remember that prospective buyers want to picture their family in the home, not yours and a home full of personal clutter won't show the potential your home offers.

Keep pets contained while your property is being shown and make sure that your cat litter box is always clean and waste of any kind is thrown out (preferably outside of the property). Nothing will turn off a prospective home buyer like a home that smells. Also, make sure that if you have a dog, that you either take your dog for a walk while your home is shown or is put away. Many people are afraid of dogs and although yours would never bite or wouldn't jump on people, its best to remove them to keep buyers safe and to make sure the buyer doesn't accidentally let the pets out of the house if you intend to not be present during the showing.

Be realistic in your expectations of the price you will be able to sell your home. Forget about what could have been and focus on what your home is worth now. In a buyer's market, buyers won't negotiate much. They know that you want to sell your home and a home that is priced too high is likely to be dismissed. You and your realtor should come up with the best price that will not only get your home sold quickly, but will create a lot of activity and interest in the property. High activity and a reasonable price will guarantee a quick offer.

In a slow market, it is crucial to hire a real estate agent so your home will sell in a reasonable amount of time. Yes, there are ways you can list your home for sale by owner using the internet, but nothing beats the experience and know-how of a real estate agent who is able to take care of everything in order to sell your home. This is especially true if you plan to sell your home as a short sale. Navigating through the process of a short sale can be difficult, confusing and time consuming, only a professional should handle the transaction.

Selling your home can be a stressful time, but if you remain patient, flexible, hire the right agent and can think of it as a business transaction, you'll be able to sell your home in a reasonable amount of time. There are buyers out there and the key is to make your home the best one on the block for the best price.

Contact me today and let's discuss your situation and my plan of action on how I will get your home sold!

Rent vs. Buy

To Rent or to buy? That is the question! With the amount of foreclosed properties, short sales and bankruptcies occurring in this economy there has been a huge fluxuation of renters in the market like never before. These instances, unfortunately due to their decreased credit scores and rules, renting may be the only option at this point and time.

The people I'd like to focus today's discussion on, are those that already are renting or may be thinking of renting. In Las Vegas and other cities in my local market, I'm seeing a big majority of young families, recent graduates, and retired families renting properties. These renters are paying any where from $900 to over $2000 per month in certain areas in the valley, when they could be using that money towards the purchase of a property... and more often than not, could be paying less per month on a mortgage!

So, let's take a look at the differences between buying and renting.

As you can see from this example, when you "RENT" the longer you stay in the property the more you end up "WASTING". In the example shown above, the renter is losing out on $54,000 if they stay 3 years, and $90,000 if they were to stay for 5 years. Could you use $54,000-$90,000 in your savings? I'm sure you could come up with better uses of that money in this economy!

Now let's look at if you "OWNED" a property... notice that the property tax you pay each year is a deduction, and the amount of money you receive if the market appreciated even 1%... you are receiving an extra $66,514 in 3 years or roughly $125,000 in just 5 years. Notice your "costs" in this example are at a 6.5% interest rate- imagine how much you can gain at the current interest rates of around 4%! Plus, you'll be getting in when home prices are low so you can save even MORE money and you have the potential to gain quite a bit of equity as the market rebounds!

This past year in fact I helped a couple get into their first home, where their payments ended up being around $800 a month!! As I've said time and time again, there is no time like the present to buy real estate. There is already talk that interest rates will go up before the end of the year, and this may be your last opportunity to take advantage of these historic lows. So contact me today and let's get started!

Down Payment assistance?

If you are like most people, you recognize that now is the best time to buy a home- but unfortunately you don't have an extra $5000-$10,000 dollars just lying around for a down payment. So what do you do? Luckily, state and local governments across the nation have created "down payment assistance programs" or low- and no-interest loans for people just like you!

The number of programs, about 1,000 nationwide, have increased 3% to 5% in the last six months alone... Some banks are now far more willing to work with people who need down payment assistance, or were considered too risky 18 months ago. State housing agencies say that they're seeing the biggest spike in lender support since before the housing downturn and foresee this will continue to increase this year.

These programs specifically target low- and middle-income buyers who are brand new homeowners, or haven't owned a home in a few years. Typically, the programs offer up to $80,000 in loans with interest rates from 0% to 2% for people with little or no money to put down. And then, because participants often have to get their mortgage through the programs' preferred lenders, primary mortgage rates are usually about 1% lower than average interest rates. Surprisingly, these programs can be a better deal than FHA-insured mortgages, due to their required annual mortgage insurance, upfront fee, and possibly higher interest rates.

Even cash strapped states are finding ways to fund the programs because they find the programs boost homeownership, which lead to more jobs and higher home prices. "It promotes affordability, gets people into homes and improves the economy," says a spokesman at the California Housing Finance Agency.

There is no national database as of yet, but ask local mortgage lenders and realtors, check state housing agencies and local government web sites to find if a program is currently available in your state. Also, look for programs that offer grants – they may not be able to provide you with a lot of money up front, but you also don't have to pay the money back!