Charlottesville Real Estate Photo Blog

Charlottesville Housing Recovery Starts Here

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Were you denied a mortgage and/or put through the ringer as a potential borrower?  The drag on the housing recovery as a result of the uncertainty and insanity of current mortgage underwriting cannot be overstated.  If the current administration wanted to do one thing to jump start the housing recovery (and by extension the US economy), it would provide clarity to the rules and regulations going forward for Fannie Mae and Freddie Mac.  Without clarity, lenders are terrified they will be forced to buy back a non-performing loan for some obscure reason.  Private mortgage-backed security investors also need clarity before they will be willing to return to a market that has shrunk by some 95% from its peak.

I frequently work with buyers who have the capacity to stroke a check for cash for the property they are attempting to purchase.  These are high net worth, high credit score individuals who should be able to obtain swift financing approval, but who instead are being subjected to overzealous scrutiny and supporting documentation requests that make them wish they had never even thought about purchasing real estate.  Why don’t they stroke a check for cash?  One of the reasons they are well off financial is because they are savvy about financial matters and understand the extraordinary value of obtaining 30 year fixed rate loan <5.0%.  In fact, for many of these buyers, availability of the mortgage money is just as important as the real estate they want to purchase.

If you know someone in Washington who can influence Fannie Mae/Freddie Mac policy (and who would love to be known as the architect of the US housing sector recovery), please tell them to take action.  We don’t need radical change to prevent another mortgage meltdown like we saw in 2007; we do need a little common sense.

More good reading: Outlook for Mortgage Market

Categories: Charlottesville Real Estate News, Selling Charlottesville Real Estate

PMI Premiums No Longer Deductible

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Larry Saunders, Mortgage Loan OfficerStarting this year, homeowners can no longer write off their private mortgage insurance (PMI) premiums like they have for the past several years.  Some type of mortgage insurance is required when a home buyer uses less than a 20% down payment.  Mortgage insurance for conventional mortgage loans can be paid two different ways.  It can be paid as an additional premium with their monthly mortgage payment.  Homebuyers can also choose to use a technique that I’ve recommended for years and that is to use what is called Lender Paid Mortgage Insurance (LPMI for short). W ith LPMI, the borrower pays a one time fee for the mortgage insurance at closing and then there is no monthly premium added to the monthly mortgage payment.

For many purchase transactions, the borrower can possibly negotiate to have the home seller pay the one time LPMI fee so the borrower ends up with a more affordable monthly payment without paying any out of pocket expense.  Now that the monthly premium for mortgage insurance is not longer tax deductible, LPMI is looking even more attractive to many home buyers.  LPMI is also an attractive option when a borrower is refinancing their home.  Using LPMI gives the homeowner lower monthly payments from the first payment and it costs less than using monthly PMI if the borrower stays in the home for more than 3 years.  The cost for using LPMI is about the same cost of about 3 years worth of PMI monthly payments.  A borrower paying PMI typically has to make those additional monthly payments for about 10 to 14 years.

Larry Saunders

Loan Officer

Mahone Mortgage, LLC

larrys@mindspring.com

Mobile:  (434) 466-5662

 

Categories: Charlottesville home buyers, Charlottesville Mortgage Tips, Charlottesville Real Estate News

Funding the Payroll Tax Cut with Home Loans

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Larry Saunders, Mortgage Loan OfficerA change that just started in the past week is an increase in the cost for conventional financing to pay for the temporary extension of the payroll tax cut that was enacted just before Christmas.  This new fee is supposed to go into effect on April 1 but it is for loans delivered to Fannie Mae and Freddie Mac starting on April 1.   That means banks are starting to add this fee to new loans that are being originated right now because by the time the loan closes and gets delivered to Fannie Mae or Freddie Mac, April 1 will be here.  The fee varies from 0.375% to 0.5% of the loan amount which is equivalent to an interest rate about one eight percent higher.  Some banks have not yet instituted this new fee yet so if are thinking about moving ahead, right now would be a good time to buy before this new fee hits.

Personally, I don’t understand the rationale for funding the payroll tax relief by raising costs for home buyers at a time when the housing industry is still trying to recover.  But they didn’t ask my opinion…

Larry Saunders

Loan Officer

Mahone Mortgage, LLC

larrys@mindspring.com

Mobile:  (434) 466-5662

Categories: Charlottesville home buyers, Charlottesville Mortgage Tips, Charlottesville Real Estate News

Lowered Cost for VA Home Financing

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There are some changes taking effect on October 1, 2011 when using  VA financing to buy a home.  VA financing has always been an attractive 100% financing program for qualified veterans (and national guard or reservists) and now it will be even better!  VA financing just requires a financed funding fee  paid at closing and no type of monthly mortgage insurance added to the monthly mortgage payment.  For first time users with a 0% down payment, the funding fee is being reduced from 2.15% to 1.4%.  If a veteran makes subsequent use of their eligibility, the funding fee is reduced from 3.3% to 2.8%.  There is an even greater reduction in the cost for veterans using a down payment between 5% and 10%.  In this scenario, first time users of this program will see the funding fee reduced from 1.5% to 0.75% and subsequent users will see the fee go from 1.5% to 0.75%.  The ultimate reduction in the funding fee is for veterans with a service related disability.  If a veteran has a service related disability, there is no funding fee at all!

It’s nice to see some changes that decrease the cost of home financing.  If you are eligible to use VA financing, these favorable changes make VA financing even more favorable than ever!

Larry Saunders

Loan Officer

Mahone Mortgage, LLC

larrys@mindspring.com

Mobile:  (434) 466-5662

Categories: Charlottesville Real Estate News

Automatic Subordinations in Virginia

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With home loan rates being so low right now, almost everyone wants to refinance to take advantage of the lower interest rates.  If a home has a second loan (like a home equity loan or a second trust loan), it is  required to seek a subordination of the second  loan from the bank holding that financing.  Some banks would not give an approval for a subordination which means the homeowner could not refinance.  But things are changing to make the process easier than it used to be.

First off, I thought it might be helpful to explain what a subordination is and why it is a requirement when a home loan is being refinanced.  When a home has two loans secured against it in the county or city land records, the loan that is recorded first in the land records has first priority of any proceeds in the case of a foreclosure.   This works fine until the time of a refinance and in that situation, the existing second place loan is already recorded in the land records and this would place the new loan after the existing second loan in the land records. This is not acceptable to the new first loan lender so the new lender will require that the holder of the existing second loan “subordinate” their loan.  This means the existing second loan lender agrees to move back into second place position after the new first loan.  Some people call this process resubordination but that just sounds redundant to me.

So it is necessary for a refinancing homeowner to subordinate their second loan which requires requesting the permission of their second trust lender.  In the past few years, second trust lenders have substantially increased their requirements for approving a subordination and without this approval, it was not possible for a homeowner to refinance thier first home loan to today’s lower rates.

Fortunately, the Commonwealth of Virginia legislature saw this problem and they passed a law that went into effect on July 1, 2011 that requires second loan lenders to automatically subordinate the existing second loan so that the homeowner could refinance their first loan to get the lower rates.  There are a few conditions for this automatic subordination.  It has to be for a residential property and the existing second loan cannot exceed $150,000.  The new first loan cannot exceed the original first loan amount plus $5,000 and cash-out refinances are not eligible for this new automatic subordination feature.

There were a lot of families that purchased homes in the last ten years using two loans because purchasing property this way provided for lower monthly payments than when one loan with private mortgage insurance was used.  In a way, people that used that used two loans to purchase a home were being penalized.  Without the automatic subordination which is now available, they just couldn’t refinance.  If anyone has been previously turned down for a refinance because their second loan lender would not subordinate their loan, now would be a good time to check if it would now be possible to refinance.

Larry Saunders

Mortgage Loan Originator

Mahone Mortgage, LLC

Office: 434-293-5200

Mobile: 434-466-5662

larrys@mindspring.com

Categories: Charlottesville Mortgage Tips

New UAD Format for Appraisals

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Effective September 1, Fannie Mae and Freddie Mac are requiring all new appraisals to be subject to the new UAD format.  Government agencies certainly love using acronyms.  UAD stands for Uniform Appraisal Data which is an attempt to standardize appraisals so that the information in appraisals is more consistent across the board.

Bathrooms will be coded differently in this new format.  If the house has one full bath and one half bath, the appraisal will not show the property as having 1.5 baths. It will be listed as 1.1 baths. The number to the left of the decimal will be the number of full baths and the number to the right of the decimal will be the number of half baths.  If the house has 2 full and 2 half baths, it will be shown on the report as having 2.2 baths.

For property condition, previously property was listed as good, average, or poor.  The new condition rating will be coded as C-1 (the best) to C-6 (the worse).  I’m told that lenders will mostly like not finance properties rates C-5 and C-6 but we won’t know for sure until we have some experience with this new coding.

The type of home will be more specific on the new reports.  Old descriptions like “single story” or “two-story” will be replaced with more specific types of design like ranch, colonial, contemporary, etc.  This will make it clearer that the appraiser is comparing the subject property to comparable homes that are, well… comparable.

Appraisers will be required to report the square footage of basements whether they are finished or not.  I’m glad to see this as I think it will help with consistency across reports.

I expect there will be an adjustment period as appraisers get used to completing these new reports and bank underwriters get used to reviewing them.  I anticipate there will be some potential updates and revisions bank underwriters will require of the appraisers and this might add some extra time to get loan approved.  If your home financing requires an appraisal, it would be wise to plan on the approval process to take a little longer as everyone learns to work this this new appraisal format.

Larry Saunders

Mortgage Loan Originator

Mahone Mortgage, LLC

Office: 434-293-5200

Mobile: 434-466-5662

larrys@mindspring.com

Categories: Charlottesville home buyers, Charlottesville Mortgage Tips, Charlottesville Real Estate News, Selling Charlottesville Real Estate

Credit Rating Downgrade and Its Effect on Mortgage Rates

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A lot of people have expressed concern about the effect of S&P’s downgrading the credit rating of the United States would have on mortgage interest rates.  You would think a lower rating would mean interest rates would move upwards. Surprise!  Rates are already incredibly low (30 year  fixed conventional in low 4’s) and rates are moving a little lower again today.  The stock market is a little spooked  and the Dow Jones average is down.  What that means is there is a flight to safety and people are moving funds out of the stock market and into the bond market which are perceived as being safer although bonds have the lower credit rating.  I’m sure there will some volatility with interest rates but in the overall scheme of things, it is likely that rates will stay near this favorable  range for awhile.

Larry Saunders
Mortgage Loan Originator
Mahone Mortgage, LLC
Office: 434-293-5200
Mobile: 434-466-5662
larrys@mindspring.com

Categories: Charlottesville home buyers, Charlottesville Mortgage Tips, Charlottesville Real Estate News

Toan’s long journey to being a Charlottesville Realtor

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Starting this week, you can read my journey from being a coffee shop owner to being a realtor.  I will discuss why I am making this transition and the day-to-day process of mastering the skills and knowledge to become an excellent realtor.

Categories: Charlottesville Real Estate News, Charlottesville Realtor Journey

Charlottesville Real Estate Inventory

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Charlottesville Home Inventory Heading in the Right Direction

Inventory of homes for sale in Charlottesville generally increase in the first half of every year, with many homes coming on the market for the Spring selling season. The good news is that in 2009, we’ve seen the inventory of homes shrink – not enough to bring the market into balance, but it is heading in the right direction.  Excess inventory is causing most of our local housing market problems. Until we are able to reduce the number of homes for sale, we will continue to be in a strong buyer’s market. That’s good for today’s buyers but isn’t any better for the long-term than the strong seller’s market of 2005.

Buyers Finding Incredible Value

In our market aggregate, there are 3,602 homes for sale compared to 3,761 at this time last year. This small year-over-year decrease is a positive sign, but we have a long way to go before we see more sustainable inventory levels. The most telling statistic related to homes currently on the market is that the average price per square foot is $203 compared to $143 for homes that sold in the first six months of 2009.  This is a strong indicator that buyers who purchased a Charlottesville home in the first half of 2009 walked away with some incredible values. 

If you need help finding your next Charlottesville home – give your local Chase Team real estate agent a call.

Until my next post.

Brian

Categories: Charlottesville Real Estate News

Why We Ate Turkey for Thanksgiving

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Because the media said so, that’s why.  Again it all started back with the Pilgrims in 1621 and some guy by the name of William Bradford wrote “History of Plymouth Plantation” and said that turkey was served.  By the way, he wrote that piece 22 or so years after the fact.

Well, of course, turkey was on the menu, along with duck, fish, deer, oyster and whatever else was handy at the time.  But turkey was not the indispensable part of Thanksgiving that it is today.

National Bird!!

Ben Franklin wanted the national bird of the US to be the North American Turkey instead of the Bald Eagle.  The wild North American Turkey being a rather noble looking bird after all, not at all like the white ones we raise for the table today.  They are smart too!  They do have to survive in the wild after all.

Actually the turkey is native to Northern Mexico and the Eastern United States.  The bird was domesticated in Mexico and taken to Europe in the early 16th century.  In Europe, the goose was the selected bird for feasts.  In the colonies, turkeys were a lot more plentiful than geese, so they took its place.

While you’re thinking turkey . . .

If you want to give yourself a break from all those leftovers, there are a couple of really nice restaurants and inns in the Charlottesville Albemarle area that offer a fine dining experience!

The Inn at Sugar Hollow
Boar’s Head Inn
The Ivy Inn
Silver Thatch Inn
Michie Tavern
Keswick Hall
Double Tree
Omni
While we thoroughly enjoy helping you find (and understand) a great meal, we also thoroughly enjoy helping you find the perfect Charlottesville home.  If you need help, contact The Chase Team anytime.

With Thanksgiving now behind us for another year (except for the leftovers!), The Chase Team wishes you and yours a joyful holiday season full of good food and good friends.

Lauri

Categories: Charlottesville Events, Charlottesville Real Estate News



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