Mechanic's Liens - Avoiding the seller nightmare!

Have you ever heardof a Mechanic's Lien?...If you haven't, let me enlighten you-  a Mechanic's Lien (sometimes called a Construction Lien) is a security interest taken in a property by contractors or other workers who have not been paid for their work. This type of lien can apply to anyone who has provided work, improvements, construction, materials  or goods to real property. To be technical, the minimum amount is $10.00, however paltry that may sound to you. A Mechanic's Lien against your property will preclude you from selling your home until the amount is satisfied, and it will have to be recorded in Town Hall as public notice, just as the lien was.

To reiterate, a Mechanics Lien  can be placed upon your property by ANYONE that performs work on your property and has a claim against you for non-payment . If you have sold your home before, you might recall that your attorney always asks you if anyone has performed work on the property in the last 90 days.  It may seem like an odd question, but your attorney asks you that for a reason. If you have had work done within the past 90 days, and have not paid for the work performed, there is a chance that a Mechanics Lien can be filed against your property. The reason for this seemingly innocent question is that any lien statement must be filed no later than 90 days after the supplies are delivered or the last day that work has been performed.

The work must be agreed to by the owner of the property and can occur on the building, in the structure itself,  or within the confines of the property owned. Besides the fact that the buyer will be unable to obtain Title Insurance for the bank, they may not be able to obtain the loan for your property because Title Insurance is required by the bank for a mortgage. This will cause an absolute mess at the closing table if that happens- if it doesn't ruin the sale altogether.

A few things that are VERY IMPORTANT to know:

• Check your contractor out thoroughly before hiring him/her. If your contractor has a history of non-payment, I would be wary. You can always ask if he has ever been involved in any type of Lawsuit. It's a basic question and the only people that would be offended by that are people that have. So do yourself a big favor, and ask. There are ways to find this out as well without asking, and you can always contact me to look up records if you wish- it only takes a few minutes, and is well worth the effort. 
• Also important to know: If your contractor does not pay the supplier for goods used in the work at your home, and the supplier is aware of your address for those materials, the supplier can even file against you. If there are sub-contractors involved, they can also file against you, if the contractor has not paid them.
• Make sure you have a contract for work to be performed with a stated cost, and get a receipt for your payment. 
• The contractor filing the lien has up to one year to file a foreclosure notice on your property to get paid. Contact an attorney and handle this NOW.
• If a Mechanics Lien is filed against your property, contact an attorney NOW. Even if you are not selling your property at this very minute, contact an attorney now.

If you have any legal questions about Mechanics Liens, contact your attorney. This article is not intended to give legal advice.

Today's Mortgage Rates 6/3/2011

I would like to introduce seasoned Mortgage Broker Jennifer Buchanan as a guest blogger to update you on the current interest rates and trends. Please feel free to contact Jennifer for any mortgage questions that you may have, and know thatshe and I work closely together as a team to help you reach your goals.

Mortgage Update:

A week of troubling economic data helped push fixed mortgage interest rates to a new low for the year, representing the seventh consecutive weekly decline, according to the latest survey from Freddie Mac.  Surveys of national consumer confidence and manufacturing activity in the past month have suggested the economy may be slowing.  The S&P Case-Shiller National Home Price Index, meanwhile, showed first-quarter home prices fell by the steepest annual rate since the third quarter of 2009.The 30-year fixed-rate mortgage averaged 4.55% in the week ended Thursday, down from 4.60% the prior week and 4.79% a year earlier. Rates on 15-year fixed-rate mortgages fell to 3.74% from 3.78% the previous week and 4.20% a year earlier. Five-year Treasury-indexed hybrid adjustable-rate mortgages held steady from last week at 3.41%, but are down from 3.94% a year earlier. One-year Treasury-indexed ARM rates rose to 3.13% from 3.11% the prior week but are down from 3.95% a year earlier.

30 year fixed - 4.50% - 0 points for rate
20 year fixed - 4.250% - 0 points for rate
15 year fixed - 3.625% 0 points for rate
10 year fixed - 3.250% with 1.00 point credit to borrower for rate
5/1 ARM - 2.75% - 0 points for rate
7/1 ARM - 3.250% - 0 -points for rate
Jumbo - over 729,000
30 year fixed - 4.99% 0 points  for rate
15 year fixed - 4.50% - 0 points for rate
5/1 ARM - 3.50% - 0 points for rate
7/1 ARM - 4.00% - 0 points for rate

About Jennifer Buchanan:

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.

Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.

Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
 
She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

What is PMI, why is it necessary, and how is it calculated?

PMI is the acronym  for "Private Mortgage Insurance", and is sometimes also referred to as "Primary Mortgage Insurance". It is insurance required by a lender for your home loan when you do not have a  twenty percent downpayment, which is considered a conventional loan. Buyers with less than 20% downpayment who require an 80% or more LTV loan (loan to value ratio) are almost always required to purchase this insurance for the lenders protection against a possible default on your primary mortgage.
 
Lenders typically look at a loan with over 80%  LTV as a riskier investment and  will require a PMI payment from the borrower. It is a special insurance that lenders force higher risk borrowers to pay to protect the interests of a bank in case of default.

A benefit of PMI is that it with this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment, when otherwise it would not have been possible. This means that you can buy a home sooner without accumulating a larger down payment.

Use the handy chart to the left  to estimate what your monthly PMI payment will be  for your thirty year mortgage loan. Your mortgage broker or banker will give you the actual monthly payment, and this chart is meant to be used as a rough guide.

PENDING LEGISLATION ALERT: Anything less than a 20% Down Payment a thing of the past?

IMPORTANT UPDATE: 20% downpayment requirement on future home purchases may be close. Contact your Congressman now!

This is no time to enact legislation that would hurt the volatile  real estate market and the economy, yet Congress is considering mandating a minimum 20% downpayment for home purchases.

Whenever legislation adversely affecting homeowners is in front of the national legislature, the National Association of REALTORS puts out what they call a "Call to Action". Most of the time, homebuyers and homesellers are even unaware that 1) the legislation is pending, or 2) That REALTORS, as a group,  fight the proposed legislation so it does not affect homeowners and the real estate market.

In this case, the legislation on the table has to do with "QRM", which stands for "Qualified Residential Mortgages".  Some highlights of the proposal in front of Congress right now:

• 20% downpayment requirement on al home purchases.

• 28/36 Mortgage qualifying ratios. (28% of gross income allowable for mortgage, and total debt not to exceed 36% of monthly gross  income)

• Additional credit history requirements, and the instance of just one 30 day late report can severely affect the borrowers ability to obtain a loan.

Connecticut State Representative Jim Himes is among the few Legislators that is circulating a letter to ask Federal Regulators to "follow the intent and language of the QRM exemption provision contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act".

Contact your Legislator now and voice your concerns in writing- give them everything they need to stop this in its tracks before it's too late to do anything about it.  This will affect you whether or not your home is valued at $300,000 or $3,000,000.

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Should a home seller even respond a verbal offer?

In our part of southwestern Connecticut, verbal offers are not considered bona-fide  offers, but that isn't necessarily true  in all parts of the state, or the country for that matter. Generally speaking, if a buyers agent presents a verbal offer to your agent for your home, and the buyer couldn't even take 15 minutes to write up an offer, I wouldn't hold too much stock in that offer. BUT THERE ARE EXCEPTIONS....

I do want to stress that if your agent receives an offer on your home, whether it's verbal or written, it must be presented to you. As for buyers reading this article, you should know that all offers are to be presented to the seller  up until the time of closing, and the fact that you have a fully executed contract on a property does not diminish the listing agent's responsibility to present those offers, unless the seller has specifically requested in writing that they do not wish to see any other bids.

When to respond to a verbal offer: If and when your agent calls you with a verbal offer on your home, it is always your decision as to whether you will respond. Sometimes, the buyer's offer has an odd contingency and the buyers agent might feel that if you won't even consider that offer, that it is not worth anyone's  time to put anything formal in writing.  It could be that the buyer is out of town and want to move forward and that buyer just can't get together with his/her agent to put an offer in writing. Let your agent be your guide- I can assure you that most listing agents will request that the offer be in writing before presenting anything to you- bu there are extenuating circumstances.


When NOT to respond to a verbal offer: Again, let your agent be your guide. I would tell you to consider  not responding to a  verbal lowball offer . That buyer has nothing to lose, not even 15 minutes worth of his time to write up an offer. If they are truly interested, the psychological benefits of making a bona-fide offer, along with a deposit check can only help to make that buyer come up to a a reasonable price. If the buyer has not even seen your home, and is purchasing your home for speculation purposes, let him put something in writing.

In some areas, verbal offers are not so frowned upon- ask your agent at the time you authorize your listing contract how verbal offers will be handled.

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