Metro Atlanta North Real Estate

Last week I closed on a property located in Loganville, GA, representing the buyer.  The property was brand new construction; the bank had foreclosed on over one-third of the subdivision.

Even though it was a foreclosure, the bank agreed to pay for:
$5,000 in closing costs
$   480 for a home warranty
$   330 for HOA transfer and assessment fees
$   300 to install two new windows that had been broken
$   400 for a termite bond

As we were closing, the attorney saw those numbers on the HUD and told my client that he might have had a good advocate in the process, and my client agreed with him.  When the closing had ended, the attorney turned to my client and told him that he had closed that morning on a house in the same subdivision, with the same floorplan, for a price $35,000 higher than we were paying.

In these times where everyone is counting the pennies, you need to look not just for an agent who will represent you, but for an advisor who will advocate in your favor during the whole process.  One who will help you to purchase your dream home while looking out for your best interests.

I would like to earn your business by providing you with that same level of service, and have a client for life.  What do you buyers think of this kind of service?  Leave us a comment here and tell us what kind of service you are looking for.

The Congress and the President are considering legislation to phase out the deductibility of mortgage interest for people who make over $250,000.  This appears to be the first installment of the President’s pledge to raise taxes on those making over that amount.  The plan is still in the development stage, so it is unclear how much and how quickly the deduction will shrink for those people. 

At first glance, that does not affect everyone making less than 250,000, but that does not consider collateral consequences.  When people making more money are given less of a deduction, they will sell their higher priced homes and reduce their mortgage by buying a cheaper house.  This has the potential to further stress our already challenged market and reduce the prices of homes across the board - just as the foreclosure crisis has done.

Let me know what you think of this idea, post a comment here.  But more importantly, contact your Senators and Representatives and let them know how you feel - whether you are for or against this idea, it is important that they know your opinion.

Here are 5 things you should consider before applying for a loan.

1. Expect a larger downpayment - at least 10 percent for a “conforming loan” (a mortgage that Fannie Mae and Freddie Mac will purchase).

2. Credit scores matter.  FICO has a scale going up to 850.  Above 740, you get the best rate.  For every 20 points below that mark, a premium is added to your rate: 1/8th, 3/8ths, and 1/2 of a percent at each respective level.

3. Consider VA and FHA. If your credit score is not perfect, or you are short of a full downpayment, consider government-insured loans offered through the Federal Housing Administration or the Veterans Administration.

4. Gather the Paperwork. Before applying, put together all the records for taxes, banking and other proof of income, savings and debts. Be patient with the endless requests for information.

5. Pay down debt. It is important to limit your debts, including the prospective mortgage, to under 43 percent of gross income.

Now is a great time to buy a house, especially with the $8000 first time buyer tax credit.  If you are preparing to buy, start considering these 5 steps and give me a call. 

On March 4th, President Obama laid out some of the details of his Homeowner Affordability and Stability Plan.  It is mostly aimed at people who already bought their homes.  It has two large components: one to help those who cannot pay their mortgages and are already behind, the other to help those “under water” who have a home worth less than their mortgage.  A smaller part of the plan is to extend and change the first-time home buyer credit.  As with most bailout policies of the last year, this one has its share of proponents and antagonists.  Without discussing the appropriateness of the approach, I would like to take a moment to point out the benefits for you, depending on what group you belong to.

For those behind on their mortgages and unable to get current, the idea is that you talk with your lender to see if you can qualify for the government plan.  The lender gets some money from the government as an incentive to help you modify your terms.  You would negotiate a payment you can afford, and the lender gets money from the goverment corresponding to how faithfully you pay the new mortgage - how much is unclear.  Obviously, if your new negotiated payment plus the government subsidy add up pretty close to your current payment, the lender is more likely to accept as it prevents a default.  But if the two do not add up to a reasonable portion of your mortgage, the lender has no reason to want to accept it. 

For those current but underwater, the idea is to refinance the loan under Fannie Mae or Freddie Mac (only if they already hold your mortgage) into a 15 or 30 year fixed rate loan.  To qualify, you must have a home worth less than the mortgage, but not by more than 5%.  If you have a $200,000 mortgage, for example, the house must appraise for between 200,000 and 210,000.  Anything more or less does not qualify. It is aimed at those in that underwater position who have a current interest rate significantly higher than the market rate.  If you are not in that position, the plan is not likely to help you even if you qualify.

If you have never owned a home before, the government has changed the first-time home buyer tax credit.  The one passed last year was for up to $7500, but it was treated as a loan that had to be paid back over 15 years through your taxes (500 per year).  This one has no repayment clause, and was increased to $8,000.  So, in essence, the government is giving you $8000 to add to your downpayment.  It is a fantastic deal, open only to first time home buyers.

For more information on the Plan, go to http://www.whitehouse.gov/blog/09/02/18/help-for-homeowners/.

Let me know if you think this plan will help you, and what you think about the whole idea, by leaving a comment here.

The numbers we are hearing in the media are astounding and incomprehensible.  A billion for this, ten billion for that, how do they decide who gets how much?  What does it mean to us?  To our children?

Let’s take a moment and put it in “Kitchen Table” terms - illustrate it with a family budget.  Let’s say your family takes home 26,600 per year (one ten-millionth of the federal income).  But you have been living beyond your means, borrowing money from your credit cards to make up the difference.  You owe the credit card companies $106,000 - four years worth of your take home pay.  You are still spending 2,400 a year more than you make.  And those were the numbers 4 months ago.  In the mean time, you borrowed another 8,400 to help an ailing friend (the banking industry).  Now, a lender comes to you with a very strange proposition.

What this banker wants you to do is borrow another 8,100.  But he has some restrictions.  You are not to use the money to pay any other debt, or to buy anything that would increase your net worth (say an investment property or a car). You have to give it away, or use part of it to reduce your income.  As a matter of fact, the suggestion is that you reduce your income by 2,000 (the tax cuts that make up 25% of the package).  The other 6,000 you have to give away, not pay bills.  And you have 2 weeks to figure out where you are going to put that money.

So now, you and your family sit around the table figuring out how to spend that 6,000.  You decide to give 5% to the united way, 10% to your church, etc. etc. etc.  That is exactly how our lawmakers are deciding how to spend the money in the stimulus bill.  They do not even have exact costs for specific projects, in most cases.  They just believe that program X is underfunded by some amount, so they write a line giving that program that amount of money.

Some of that money you gave your sick buddy (the banking industry) was used to buy trinkets for his wife instead of going to his bills - because you didn’t tell him he had to pay bills with it, because you had to come up with the money in 2 weeks to help him or he was going to lose his job.  Because you did not think it through.  And it still has not helped him get back to work.

These are all numbers we can understand.  Now, multiply every number by 10,000,000 and it is incomprehensible.  That is what our legislators are dealing with right now.

You may believe the United Way and your Church are worthy causes, and they are.  But does it make sense to only have 2 weeks to figure out what kind of charity giving is best going to make a dent in the plight of the world?  Or what kind of spending programs will “save” our economy?  No matter what it is that you believe in, it makes sense that we should step back and think a little more.  Be sure what we’re doing is right. 

Let me know your thoughts on all that is happening with the Government, the Stimulus, the Economy, and the Real Estate market.  I’d love to hear your perspective.

With the economy in the news every day, more attention is being focused on the Federal Reserve than ever before. Let’s look at some of the facts, and understand exactly what they do and how they do it.

Essentially, the Federal Reserve is the central bank of the United States, and is overseen by a seven member Board of Governors in DC.   The current Chairman is Ben Bernanke.  OK, so what do they actually do?

The job of the Federal Reserve is to research the national and regional economies; provide financial services to banks, the government, and foreign institutions; regulating our banks and protecting consumer credit rights; (most notably) controlling the Fed Funds rate to regulate the swings in our economy; and communicating with us about the state of the economy.

The communication that most interests everyone is the statement they give every six weeks when they decide if the interest rate needs to be changed, and tell us their view of the state of the economy at the same time.  The overriding goal of all of their actions and decisions is to keep the economy growing at a steady pace and minimizing inflation.  When inflation is low and stable, businesses and households can spend, knowing their money is not being devalued.

There is a very interesting and educational site for children which explains the Federal Reserve and inflation in a way that even younger children can understand.  Given the enormous impact each of their decisions has on our lives and the economy, we should take some time to understand them. 
Let me know your thoughts by posting a comment.  I’d love to hear from you.

Last year the government passed a tax credit for first time home buyers of $7,500.  This tax credit is more of a 15 year interest free loan that is paid back each year at tax time by charging you another $500 in taxes.  So far, it has done very little to cause people to buy houses.  Senator Isakson wants to change that.
He is proposing a new tax credit to anyone buying a vacant or foreclosed home, in order to reduce the inventory of homes that is choking the market.  The credit ranges from 10,000 to 22,000 according to an as-yet unclear formula.  It would work in a way that you could file it in 2009, but have the credit added to your 2008 refund, so that you can get the money this year to add to your down payment.  Isakson believes that this will do more to relieve the housing market and stimulate the economy directly than anything they’ve done so far.  If you agree, and would like to see this happen, contact your congressman or senator.  Let them know you want this.

Seeing that some portion of the economic chaos of late has been because homeowners signed up for mortgages that they knew, or should have known, were over their heads and out of their reach, the Department of Housing and Urban Development has announced a new website.  This site is aimed at improving the homeowner’s financial literacy, and includes tools to measure and understand your current state.   You can also find classes to increase your knowledge.

You might want to take a look at the site, and give us some feedback on your thoughts.  Does this site help you?  Do you think it’ll help others?  Leave a comment here and tell us your thoughts

In this market, it is important to present the best image you can for your house, in order to have the best chance to sell against the competition.  You may also be thinking of home improvements in order to get more enjoyment out of your home.  But it would be wise to concentrate your investments on those that get the best returns when you sell your house.

Every year, Realtor Magazine does a study to figure out what projects have the best return on investment when you sell your house.  In the past, for example, adding a bathroom was the best investment you could make.  This year, it’s Fiber-Cement Siding followed by a new deck.  The full report can be seen here.

The 2008 Remodeling Cost vs. Value Report compares construction costs with resale values for 30 midrange and upscale remodeling projects comprising additions, remodels and replacements in 79 markets across the country, expanding from 60 markets last year.

The least profitable projects are Office Remodels and Sunrooms.   Of course, the value of any addition or remodel is very dependent upon the comparison of your home to others in your neighborhood and competing in the same market.

With my background in Interior Design, and my knowledge of the North Metro Atlanta real estate market, I can help you choose the best project and find the right contractors to do your remodels and list your house with the best chance of selling in this chaotic market.

The Federal Reserve and Treasury Department are starting to see results from all the bail out mania.  Take a look at mortgage rates this week.  I am seeing rates around 4.5 to 5.0 from various lenders.  The market is extremely volitile, what is available today may not be there tomorrow, then come back a day or two later.  Talk to your mortgage lender.  If you don’t have one, call me and I’ll find the right one for you.

So, are the rates going to come down further?  What do you think?  Leave a comment and let us know.