If you thought that needing a large downpayment was an obstacle on your road to homeownership, we’ve got great news. This homebuilder’s No Money Down purchase option has allowed hundreds of buyers just like you to move into a brand new home, oftentimes for less than it was costing them to rent!

For those that qualify, this homebuilder’s easy No Money Down financing allows renters to become homeowners, while keeping their savings account in tact. In many of our communities, our homebuyers are building equity in their houses for a monthly payment lower than their previous rent, and they are now eligible to receive extra financial benefit from the federal mortgage interest tax deduction.

Six floorplans to choose from ranging in price from $106,900 to $154,900.  Features:

• Brand new 3, 4 & 5 bedroom homes
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• Rounded corners
• Custom built cabinets
• Vaulted ceilings
• Quality appliances (refrigerator, stove, microwave included)
• Fully-fenced backyard
• 2-car garage
• Utility room
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Michele Lerner, author of Homebuying: Tough Times, First Time, Any Time, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:

Mortgage rates will stay low. Even with rates climbing — maybe to as high as 6 percent by 2012 — they are still well below where they have been historically.

Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.\

Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.

Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.

Homes are shrinking. Homes are getting smaller, which has made them more affordable.

Source: Investopedia, Michele Lerner (12/24/2010)

Habitat for Humanity says it has built its 400,000th home. The organization was founded in 1976, and has served more than 2 million people worldwide.

“In 2005 we celebrated our 200,000th house. Now, five years later, we have more than doubled that number thanks to the generous support of our volunteers and sponsors,” says CEO Jonathan Reckford.

A copy of Habitat for Humanity International’s fiscal year 2010 annual report, “What We Build,” is now available on the group’s Web site. The report gives a snapshot of Habitat’s work around the world.

Source: Habitat for Humanity (12/13/2010)

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:

1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.

2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.

3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.

4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.

5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the “seriously delinquent rate” — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Source: Freddie Mac (12/09/2010)

матрациIt’s common knowledge that today, 87% of buyers are searching for homes on the internet. They are still using real estate agents to buy the homes; however, buyers are going to the internet before and during their home search in greater numbers each day.

Now, let’s say 87% of all buyers were searching in your local newspaper for a home. Would you hire an agent who ran 1 ad a month in the newspaper or would you prefer to go with the real estate agent who ran an ad everyday? Dumb question, huh? But it’s not…many sellers are still not asking the right questions regarding the internet presence of their real estate agent in marketing their property. “My agent has a website and my property is on the site” is not an acceptable online marketing strategy for your property.

Here are some questions I came up with and I hope they will help you in finding a real estate agent who can successfully market your property in 2010:

1. On how many websites will my property be advertised?

2. Will my property be featured on any of these websites?

3. Do you have your listings professionally photographed or do you take the pictures yourself? If you take them yourself, can I please see a sampling of the quality of your photos?

4. Do you create a video of my property and post it online? If so, where do you post it?

5. On which classified websites do you advertise your listings? (i.e. Craigslist, Backpage, etc)

6. Do you create a single property website for each listing?

7. How do you make sure my property ranks high in the search engines?

8. Do you create interactive floorplans of your listings?

9. How will you market my property to buyer-agents and how will you get feedback from them for showings?

10. How will I be kept in the loop with regards to showings, feedback and marketing activities on my property?

11. Will there be a text-for-info, Voicepad or other form of marketing on my “for sale” sign for potential buyers who drive by?

12. Does your Company have a website? How will your company be advertising my property? (Remember, when you list your home, you are listing it with an agent of a company…they BOTH should be advertising your property)

13. What phone number will buyers call to get information on my home? Does this number connect them to a recording, an office, an answering service, a cell phone?

14. If a buyer leaves a voice mail or an email requesting more information about my property, who gets that message and how quickly is it responded to?

15. What other marketing activities will be done? Newspaper? Magazines? Open houses? Direct mail? (These are not nearly as important, but even marketing that is 1-5% effective can help as long as is does not become a waste of valuable time).

Functional Obsolescence, with regards to real estate, occurs when there is a loss of building utility.  This can occur with a home that is too lavish or improved for a neighborhood, or on the other end of the spectrum, a home that is much smaller or under-improved for an area.  Functional obsolescence can also occur when a property no longer meets the basic needs and wants of a certain society; such as a 2 bedroom, 1 bathroom home or a home heated with coal. Functional obsolescence can be curable or incurable depending on how difficult it is to overcome the obsolescence.

Stylistic Obsolescence is a home which does not conform stylistically to the neighborhood or incorporates some sort of material that is no longer manufactured or utilized.  It can be a contemporary home in a traditional neighborhood or a home with a EIFS exterior that is no longer used.  Stylistic obsolescence is almost always curable, but it is not always economically feasible to do so.

Economic Obsolescence is rarely curable.  This occurs normally with older properties and is usually out of the control of the owner.  Economic obsolescence can occur when commercial zoning encroaches onto residential or when a road widening diminishes the front yard of a home.

It’s important to understand obsolescence and the effect it can have on the value of your property.  In some cases, especially with stylistic obsolescence, it may take a third party to inform you of the status (just like when you wear your favorite skinny tie and leisure suit).

“Subject to” (as it relates to real estate) refers to a method of purchasing a property while leaving the seller’s existing mortgage(s) in place.

The seller deeds the property to the buyer, who agrees to make the existing mortgage payments on the property.  In most cases, the seller is not released from liability on the mortgage.  In some cases, the agreement may also include the provision that the buyer either sell or refinance the property within a certain period of time.

What is the main benefit?  The seller’s costs to sell are usually very small with this type of transaction.  It’s also easy to sell this way as the buyer does not need to qualify for a mortgage and incur a high cost for closing on the property.

The main negative?  Most mortgages contain a due on sale clause.  This allows the lender to call the note if there is a transfer of title on the property.  If the lender is made aware of the sale, they could require payment in full and the original owner (the seller) is liable party.

As the economy has wreaked havoc on the second home market, some buyers are seeing an opportunity to own something they might not otherwise be able to afford. Others are finding themselves “stuck” with 2 properties and not being able to sell one.

The IRS allows for up to 2 residences for a taxpayer to deduct mortgage interest. Also of note is what qualifies as a second home:

1. House
2. Townhouse
3. Condominium
4. Boat
5. RV
6. Mobile home
7. Trailer

The requirement states that the second home must have a sleeping space, toilet and a place to cook. In addition, the second home must be at least 50 miles from the primary residence.  (Note about the 50 mile rule -  say you commute 45 miles to work each day, a second home could be a “crash pad” near your employer but 50 miles from your home).

Can you rent your second home and still take the mortgage interest and property tax deductions? Yes! As long as you use it for 14 days or 10% of the time it is rented, whichever is greater. Another benefit:  if you rent your second home out for 15 days or less and for fair market value, the rental income is not taxable.

Of course, speak to a qualified accountant to answer any questions or concerns you may have regarding a second home.

Negative amortization occurs when the payment made by the borrower does not cover the amount of the interest incurred.  The difference is added to the loan amount.

Traditionally, negative amortization loans have been used by lenders to allow for a lower monthly mortgage payment in the beginning of the loan period.

So, why would someone want this type of loan?  Well, it may be an option for a couple where one person is presently employed and the other is in school, graduating in a year or so and will be employed, bringing the household income substantially higher.

In the 1980′s when interest rates very very high, negative amortization loans offered borrowers the ability to keep their payments low and ride the market hoping that in a few years, they could refinance into a lower interest rate.

In our current market of low mortgage interest rates and lenders having stricter lending guidelines, negative amortization loans are very rare; however, there are still some lenders offering the product.

The Due on Sale Clause, or Acceleration Clause, is a clause in a mortgage which states that if there is any transfer of ownership or interest in a property, the mortgage can be called and immediately due to the lender.  With the exception of VA and FHA mortgages (which are generally assumable by a qualifying party), almost all mortgages have a due on sale clause.

Keep in mind that generally, this clause is a contractual option by the lender.  This means that the lender may or may not decide to call the loan due once notified of a transfer in title or ownership interest.  If the loan cannot be paid, the lender has the option of beginning foreclosure proceedings.

A “sale” is not the only thing that can trigger the due on sale clause.  Sometimes, a long term lease, lease-purchase agreement, or even a quit-claim deed can trigger the clause.

The reality is, in today’s market, a lender would be nuts to call a loan when the payments are being made in full and on time.  And usually, they don’t.  That being said, we do live in a world where nutty things are done….

Depending on applicable state laws, it may be possible to purchase a property “subject to” the existing mortgage by creating a land trust when transferring title.  Obviously, it is highly recommended that one consult with a qualified attorney before entering into such a transfer.