Mortgage Fees are Increasing for Closings After April 1, 2012

Another good reason to close on your new  home before April 1, 2012.

Congress voted in December of last year to increase the guarantee fee charged by Fannie Mae and Freddie Mac, and premiums for mortgage insurance that are charged by the FHA for new mortgage loans.

The amount of the increase that begins April 1, 2012 is equal to 0.1 of 1 percent, (10 basis points) and is approximately $10 per month for each $100,000 of the loan.

Lenders may choose to either raise rates slightly to cover this additional cost, or charge higher fees. Banks and mortgage lenders will need to implement these fees sooner for new loans, so that they are being  incorporated into loans closing on and after the deadline.

IMPORTANT: If you are in the midst of a mortgage application, go through the fine print. ASK your attorney to review it as well. This fee may be in your loan package even if you are closing prior to April 1, and NOW is the time to get it removed.

For example, if you are getting a loan of $350,000 that is amortized over  30 years, this new fee translates to $12,600 that you should not have to pay.

And a note From Judy: If you have a question about buying or selling a home in Fairfield County, and are in need of an Realtor to represent you, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

Is Your Buyer Agent Really Trying to Get You the Lowest Price?

If you are thinking about signing up with a buyers agent to represent your best interest, go ahead and test their negotiating skills first. If the agent that you are thinking about hiring to represent you can't pass your own litmus test, it will only get worse when it comes time to negotiate with another agent to get your home at the best price when that agent has better skills.

I have come across many agents who just really have no clue as to how to negotiate properly. Trust me, I don't care  if I am on the other side- their ineptness only helps my client. Harsh, but true.

One of the dumbest missteps from a number of buyer agents that I come across much more frequently than I should is right in the pre-approval letter from the buyer's bank. I cannot tell you how many times that I have seen these letters that say, "The buyer is approved for a specific loan amount". Those pre-qualification or pre-approval letters are not doing the buyer any favors, especially when they put an offer in on a house that's less than the stated amount. The buyer is then in an unnecessary predicament, because the seller's agent and the seller both know that this buyer can afford their house, and then some.  Come in with a lower than expected offer with one of these prequalification letters and your negotiations will be stunted. Completely unnecessary, and it will end up costing you money (if not the deal itself) because its worded that way.

Do you know if the agent that you are thinking about hiring habitually dots their "i's" and crosses their "t's?  Better figure that one, too. When it comes time to write an offer, that agent will be judged on how properly it is filled out. A few mistakes on that is a red flag to another agent, who probably rightfully would think that the agent is lax in their duties and follow through. Everybody has work to do to complete a transaction.  You do not want to lose out on the house of your dreams because of it.

And for heaven's sake, if the buyer agent is pushy, it's just a bad sign all the way around. Not only for you, while you are looking, but if that's the agent's style, it won't fare too well on the negotiating table with the other agent either.
 
Your buyers agent should be knowledgeable about the market, be a skilled negotiator, and as far away from pushy or combative as possible. and I just happen to know someone that fits that bill in  your area. (that's me!)

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of an Realtor to represent you, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

Is a Hubbard Clause Right For Your Connecticut Home Purchase or Sale?

Current homeowners who wish to buy another home, but need to sell their home first in order to use the equity as a downpayment can wonder if they should sell the home they own first, or find the home that they wish to buy first, and then start the process of selling their home. In the case of the latter, the homeowner who wishes to purchase a new home should consider placing an offer with a "Hubbard Clause" rider.

A "Hubbard Clause" is a contingency in (or addendum/rider to ) a purchase agreement that expressly conditions the buyer's offer upon their ability to sell and close on another home or property. It is almost like a first right of refusal to purchase the property- ALMOST, but not quite. Think of it like "reserving a right to buy a particular property" while trying to sell the one you own.

While most  buyers and sellers think this just another perk for the buyer, think again. By the way, I can include a number of agents who would tell you that this is a benefit for the buyer, as well. This type of agreement actually benefits the seller much more, especially  in a buyers market.

The "Hubbard" portion of the agreement must have the following two items included in the verbiage:

1. Final Hubbard contingency sale date- That is, the deadline for the buyer to secure a purchaser for their home, so they can move forward with the sale on the home that they wish to purchase.

2. A deadline for the buyer to remove the "Hubbard" contingency if another offer comes in during this period.

There is no national standardized  form for this, nor are there generally accepted statewide forms for "Hubbard Clauses"- rather the forms which are used tend to be much more regional or generated through independent franchises.  There are a good number of agents who just do not like to work with Hubbard Clauses at all, which I do not understand, but it is what it is. I think that if an offer comes in a home where I represent the seller, that we should absolutely listen to it. It's kind of like a back-up offer without having the main one. As long as all the conditions and terms of the sale are acceptable and  we can still market the house, it would be foolish not to entertain such an offer. When I represent the buyer, and if that's the only way they feel comfortable moving forward, I believe it's my fiduciary responsibility to help them get the house that they want.

Buyers:

If your home is not already on the market, be prepared to list it THE SAME DAY that you place your offer in on the property that you wish to buy. You do not have to list it if the homeowner does not wish to entertain your offer, but  if they are willing to negotiate with you, it is of extreme importance to be ready...ready.... ready.

I have to go on record, here- this is not the most cost effective way to purchase a home. Sorry, but it's true. If this is what makes you most comfortable, I am all for that, and will do as you wish. Often times, you will end up paying a premium for the right to purchase a home in this manner,  and you may end up selling your home for less money to satisfy the Hubbard Contingency within the time. allotted.

Sellers:

I do not really see a downside to sellers as long as an acceptable Hubbard addendum allows you to continue to market the home as ACTIVE, and not change its status to anything else. (See FAQ's below)   Provisions must be made  for the instance of  another offer coming  in during the period that the Hubbard is in effect. Usually, giving a buyer 2 or 3 business days to remove the Hubbard Clause is sufficient, so if they are comfortable removing the clause, you will sell it without the contingency, or if they cannot remove the Hubbard, that you are free to sell it to another party. There are no guidelines as to price or terms for accepting another offer unless they are written into the addendum itself. You must just concern yourself with the time frame.

Hubbard Clause General FAQ's

• Hubbards may include unique terms or conditions.

• Understand that homes are shown with a signed Hubbard Clause agreement in place.

• And then, some agents will NOT show homes that have a signed Hubbard Clause

• Some buyers choose to include a Hubbard Clause because they would actually qualify for your home purchase without selling their home, and just do not want to carry two mortgages.  

• Hubbard clauses can be extended by agreement from both parties.

• Regionally, we work with binders first and then formal contracts are prepared within two weeks- Sellers may decide NOT to have their attorneys draw contracts until the Hubbard Clause is removed.  

• The buyer can withdraw their offer entirely with no penalty, unless expressly written in the contract.

• This agreement seems to be more binding  performance wise to the seller than it is to the buyer.

• And in case you were wondering, the name has nothing to do with Old Mother Hubbard, (despite the shoe)

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

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Buyers and Sellers- How to Prevent a Failed Building Inspection on Your Home

Nobody's too happy when the house doesn't pass a building inspection.  In fact, everyone has to start from square one all over again....The seller, the buyer, and both agents that are involved. Everybody begins their tasks all over again- and that should ALMOST NEVER be the case.
 
A failed inspection would only occur rarely in the market if agents educated their clients during the process.

It is extremely rare  that my clients have had to endure a failed building inspection, and that's whether I represent the seller or buyer- and I have sold hundreds of properties. ....So what makes such a big difference for my clients as opposed  to everyone else?

Education and disclosure. Those two factors will prevent over 99 percent of failed inspections.

Education:

For Buyers: Look closely at the home before you place an offer in on it. My buyer clients get a kick out of looking at houses with me, because I perform mini-inspections as we look at homes, and educate my buyers as to what potential problems there may be if any. I knock on tiles, stomp on the floors, and poke wood that looks like it needs poking.  I am not a building inspector, and do not have that specialized knowledge, but I have attended EVERY home inspection for EVERY home that I have ever sold. If some knowledge hasn't rubbed off on me to impart to my clients, then I wouldn't belong in the business. A couple of very good things result out of this practice- One, if the house doesn't pass my mini-inspection, there is no need to put an offer in on the home and spend money for an inspection that won't end up on a positive note, or, Two- the buyers make their offer knowing that there are some issues that will need to be addressed and are not blindsided by the building inspection.

For Sellers: When you decide to put your home on the market, you  pretty much have a good idea as to whether there may be issues, which could or would break a sale. Tell Your Realtor!  Once you are lucky enough to have a sale, you don't want to needlessly lose it. As a listing agent, I do that same mini-building inspection that I do for buyers when I list your home, and try to find the most common deal-breaker issues that may arise so that we can address them prior to putting the home on the market.  If I see something that looks like a specialist is needed, I'll say so. It's much easier to fix it now rather than fix it later, AND risk a sale because of it.

Disclosure

For Buyers: When buyers disclose found issues prior to the formal building inspection and adjust their offering price because of it, sellers are more likely to accept that offer given that they would have to address items with any future buyer as well. It gives the owner some peace of mind that they won't be nickeled and dimed at time of inspection, which seems to be a common occurrence these days. ( I do not subscribe to the last minute nickel and dime tactics. )

For Sellers: Disclose your known issues, or your suspected issues. By the way, it is the law. Besides that, the little items that wouldn't normally mean a thing to buyers become amplified when there are bigger issues to address, and  they can feel like there might be a lot of hidden problems that the inspector hasn't even found. What happens then is the proverbial straw that breaks the camel's back, and it's hard to keep the deal together or even renegotiate if that's the case.

If buyers have a good idea what they are getting into right from the get go, they are less likely to "walk" after a poor inspection report. They will already be aware of most of the issues. If sellers feel that the buyers have been honest with them, they are more likely to negotiate, or renogiate as the case may be.

Simply put, your agent has to have well rounded skills- marketing, negotiating, and good solid knowledge of a home and its components. You deserve nothing but the best.

When you're ready to buy or sell, contact me. It's my job to keep everything running smoothly, and especially when it gets rough- without worrying you about it unless absolutely necessary.

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The Twelve Most Common Connecticut Homebuyer FAQS

Are you ready to buy a home, and have a few questions? It doesn't mean that you are naive if you have questions about the home buying  process and experience, and it doesn't matter if you have bought a home before or not. Conditions change, parameters change and the economy changes. There are many questions about the home buying process that are very common  for first time buyers to ask,  as well as anyone who has ever bought a home before.

How long does it take to buy a home?

You can expect the process to take anywhere from 45-60 days on average from the day you negotiate your home purchase. The time involved has mostly to due with fulfilling various contingencies and obtaining a mortgage.

How much should I spend for a house? How much can I afford?

The answer to this question is directly correlated to your income, your debt, and your liquid assets. You may have heard a few rules of thumb, such as purchasing a home between 1.5 and 2.5 times your annual income,  Other "rules of thumb"  say that you should spend roughly one quarter of your monthly income on a mortgage.

In general, your monthly prinicpal interest, taxes and insurance payment should not exceed 28 to 29 percent of your monthly gross income. Your total debt payments (car payments, credit card payments, etc. plus the monthly mortgage amount) cannot exceed approximately 36%-41% of your gross monthly income. The calculations can differ depending on your credit score, and the amount of time the current debt has to be satisfied  It's best to get initially pre-qualified from your real estate agent and ultimately through a lender.

What's the minimum downpayment that I need to buy a house?

Government backed loans are  available with as little as a three and one half percent deposit.  As a note, there are income and price parameters that must be adhered to within your area.

Should I buy a foreclosed home?

You can certainly save a lot of money on purchasing a repossessed home,  just be ready for the length of time it takes to come to an agreement with the bank, the additional paperwork necessary, and the deferred maintenance that will most likely need to be addressed at that particular property

How many houses should I look at before I buy?

 You can look at one, you can look at one hundred. The best thing for you to do is to have a good idea as to what your wants and needs are. When you see a home that "speaks" to you, whether it's the first home, or the tenth home, listen to what your heart tells you. Further, if your agent asks you enough questions, you may only need to see less than a dozen or so homes before you very comfortably find "the one".

How much should I offer for a house?

There is no simple answer to that question, since each property truly stands on its own, and  has its own unique set of circumstances.  Just as a seller obtains a market  analysis on a home, you should also receive one for the home that you want to buy. The analysis will help you decide what to offer, based upon list price to sales price ratios and comparable sales.

How do I know if I am spending too much for the house that I want to buy?

A market analysis  completed by your agent will tell you how much the home is worth, but ultimately it is worth what you are willing to pay, and what the bank is willing to lend you if you are getting financing. If the appraisal as commissioned by the bank does not equal your agreed upon price with the seller, the bank will notify you and you can either renegotiate or walk away from that house. It's a wonderful third party check on value.

How do I know if I am getting a good deal on a mortgage?

You must compare loan packages. There is just no way around it. Shop for rates, but do not give out your social security number to various lending institutions, as it will lower your credit score and raise your interest rate. Obtain your score from one  lender and use that  number to shop around. Make sure you add up all the fees  to compare apples to apples when you shop.

Do I really need to use an Agent to buy a house?

I would highly recommend it!  Buyer Agency contracts are generally  written with the proviso that the agent will obtain their fee from the seller. In that case, there is no cost to you to have an expert and advocate on your side, who is bound by law to hold a fiduciary responsibility to represent your best interests . 

Should I sell my current home first?

Although this will differ for some homeowners for  various reasons, generally speaking you should get your home under deposit first,  in either a buyers market or a sellers market.

Do I really need a building inspector?

YES! Unequivocally yes.  A home purchase tends to be emotional, and you may unconsciously overlook issues  even if you are very well versed and knowledgeable about homes, their components, and construction.

How much will my closing costs be?

Figure your closing costs to top out at about four percent of the mortgage amount, and we can work on shaving that number down depending on whhat time of year you close, what day of the month that you close, and what type of mortgage you obtain.

Just one closing thought (pardon the pun)  If you get the jitters the night that you put your offer in on your house, try and relax. It's absolutely normal.  It doesn't mean that you shouldn't buy that particular house. It's a big decision and having a  little anxiety as to whether you have done the right thing, or  whether or not the bank will approve your loan is quite normal- just try and relax.

If it makes you feel any better, I have been in real estate for 27 years, and every time I purchase a home I even get a little anxious. You would think that helping buyers for this amount of time would make me immune to that. It doesn't.  So yes, I've been there. I understand how you feel. Get a good nights rest and it will be okay, I assure you. If you happen to be one of my future clients,  remember-I am always there for you.

When you are ready to buy a home, contact me. I'm there start to finish ....and beyond.

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

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