Helpful Links

Here's a summary of useful links featured in my blogs over the past week:

Preparing for home ownership

Buying guide lines

203K Loans

FHA Resource Center

Illinois Association of Realtors Assistance

Central Illinois Debt Management & Credit Education

Free Credit Reports

Declined? Now What? Buying 101 D

I called this 101 D because you have been "declined". It's a serious thing. And I am not trying to make light of the situation. But, this is also not a time for self-pity and withdrawal. Instead, this is a time to take on the problem head on. I found an interesting and helpful article. Here's a quick summary:

1. Ask Why. Can't fix what you don't diagnose.


2. Find a fix ... may be easier than you think ... if not most can be repaired within 1 year.


3. Don't give up ... try some one else. Some times differnt types of lenders, ie a credit union, vs a bank, can make the difference.


4. Try again. Or, as the adage says, "If at first you don't succeed, try, try again." ... recaps the above three points.

For help contact Central Illinois Debt Management and Credit Education, INC. or try e-mailing Mrs Leary directly.

A quick word of warning, do not fall for quick fix credit repair scams. That is a full post of it's own. You can often accomplish the same results for free if you will exert a little effort. Order your free credit report, and then work on eliminating the issues.

An alternative you can pursue at this point is a Contract for Deed ... Caveat emptor: Buyer beware. You will find many of these homes are over priced, in ill-repair, are in less popular areas, or have limited terms. It is this last point that will require you fix your credit, anyway.

Don't go it alone. Get an attorney to help. I can say from personal experience, I will never do another without referring buyers and sellers to different attorneys. Better safe, than sorry.

Home Buying 101 or Three Reasons to Get Pre-qualified

A young couple wants to buy their first home together. They call a Realtor (r) only to be told they need to be pre-qualified at a minimum. But they haven't even seen the first home. What gives?

First things first. Most people think the answer is finding the home. Truly I recommend that be the last step. Prior steps in the process are speaking to a lender, choosing an agent, and, making a wants and needs list.

A good place to start is a home buyers course ... What? School? Are you kidding? Not every one needs this step. But for 1st time buyers or credit challenged buyers a class conducted by a debt management organization, can be a big help. It will give you a neutral starting point and help you get your "ducks in a row". It also helps get FHA approval.
Why find a lender first... three basic concepts to deal with here:

1. What can you afford?
2. How much will you need out of pocket?
3. What terms will be included in the offer?

Question 1: How much can you afford? Getting a pre-qualification will help you discover exactly how much the bank is will to loan. I have seen couple disappointed after finding the perfect house only to be told it was more than they could qualify for. Banks will require certain debt to income (DTI) ratios or loan to value ratios (LTV). Some loan officers (the good ones) will even let you do a pre-approval. In this scenario, you will actually complete the mortgage application before you go out to look.

If you are limited to homes that qualify for a traditional FHA loan, there will be homes that do not meet the FHA specs, you can avoid. Or, if you find a great value in a wonderful neighborhood, you'll know if you can afford a 203 K mortgage that will allow you to buy a home that normally wouldn't qualify for FHA and will include renovation costs in your mortgage.

Question 2: How much will you need out of pocket? That is a question I am asked often. The answer is, "it depends." At a minimum, you should count on a down payment of 3.5% if the house qualifies for FHA. If you are getting a conventional loan it will be between 5 & 20% depending on the lender and the program. This information will also help you determine the closing costs, and other expenses you might need to pay ... Once done, you will know how much of the inheritance you have just received will be left over for furniture.

Question 3: What terms will be included in the offer? In IL and IN we include mortgage terms in the offer. When you submit the offer, it is contingent upon loan approval under certain terms. Things you will need to know are: What interest rate? What LTV % you need? What the length of the loan term will be. (A side note here: if you can afford the higher monthly payment of a 10 or 15 year fixed rate mortgage, it will yield a tremendous savings over the course of the mortgage. If you haven't looked at the options check out good

mortgage calculator. Be sure you look at the amortization schedule to see your total investment in your home.) If you cannot find a home under the terms in the agreed upon contract, you will be able to terminate the contract without penalty.

Now that you know the answers to the three questions, it's time to take the next step: finding the right agent. Will help you with some tips, next time. For more information, check out the helpful HUD guide or this one from the National Association of Realtors.

Number, Numbers, and More Numbers

If you missed last months stats you can follow along by looking in the archive or visiting http://activerain.com/blogs/rohall59.

Numbers, numbers, and more numbers; but, what do they all mean. Over the coming days and weeks, we will look @ Danville area real estate trends, and what they mean.

This post will focus primarily on the general trends for the 1st quarter of 2009. Stay tuned for Information on the impact of foreclosures on the local market, as well as, price range comparisons.

I am writing this to shed light on the local real estate market. We constantly hear the major media stories filled with gloom and doom. It’s my goal to help you sort through all the hype and to dispel some of the myths out there.

Danville has not seen some of the steep declines we hear so much about. Just as we didn’t see run-away price inflation, we have not seem the “bubble burst.” That’s not to say the foreclosure market hasn’t had an impact. It has. But pricing is really a problem too.

Here's how we compared with 1st quarter last year.

1. Average selling value declined by 4.4% or about $2800.
2. Average Days on Market went up by almost 1 month.
3. Average % of list price to selling price went down.
4. Average listing price went up. An average increase of over $8000
5. Total number of transactions declined by 25.6%.
   

So what does it all mean. As a group we are listing homes for more than they're worth. Have your agent prepare a market analysis. If is looks overly optimistic, ask questions. As a seller be realistic. Look at the numbers carefully. And above all, don't close your mind if some one shows you the facts in black and white.

Februrary Stats

After a short down turn in prices, things seem to have leveled off. Prices so far in 2009 are down less than 1%. As i have said all along, we never had the steep increases. MLS average home selling price is just under $63K.

On the down side total homes sales in the MLS are down 25% as compared with the first 2 months of 2008. Market times have increased to an average of 155 days. While the market feels saturated, the numbers are encouraging. Current inventory is approximately 9.5 months. But, a word of caution here: this figure is much more influenced by price. For homes over $200K, the months of inventory grows to 20 months.

The other discouraging thing is home prices. Many homes are going on the market priced too high, period. Our average active list price is about $92,500. The current list to sale ratio is about 88%. Based on the averages, we should see a selling value of just over $81k.

For my local friends: If you feel led to list your home, please be sure to ask an agent for a comparative analysis to show you what appropriate pricing would be.

If you are a friend across the nation and are considering a sale, be sure the agent can give you specifics of your market, and ask for a comparative analysis of your home. If an agent comes to your home and has already made up his/her mind about the homes projected selling price and they have no comps to share, thank them for their time. Then, call another agent.

Remember real estate agents work for you. Conduct the listing appointment as if you were hiring for a company owned. Be sure they have a grasp of the market and have done their due diligence in preparing for their meeting with you. If they haven't done their home work, do you really believe they will do what ever they must to sell you home; even, if it means telling you the cold hard facts that you're asking for too much?.