Whew! The market's turning

We are ahead of last March at this time by about 10%. Foreclosures are the hot commodity right now, drawing multiple offers left and right. This week, we were involved with two foreclosures -- one had 10 offers; another 13.

Prices are stabilizing and moving upward in some areas in the DC market. I'm seeing the same thing happening around the eastern seaboard. See my piece on http://www.realtytimes.com/ (http://realtytimes.com/rtpages/20080305_condotrends.htm) about the bottoming out of many markets across the country.

Report: Best Time To Buy In 4 Years

By Tim McLaughlin

According to a report released by CNN this past week, it may be the best time to buy a house in more than four years.

Valuations on home prices (the difference between what a home should cost and its actual price) are the lowest they've been since 2004, according to the report.

The Cleveland-based bank National City Corp, together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued. The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today Interest rates, although they have inched up lately, have been steady or lower compared to late last year, and are certainly lower than historical norms.. There have even been wage gains; personal income rose 0.5% in December.

Takeaways: With the spring market upon us, economists and industry experts appear to be in agreement regarding the current value proposition regarding residential real estate and the strength in buying opportunities vs. any point in the foreseeable past. The home of your dreams in well within reach and more obtainable today than ever before. Fair market prices, affordable interest rates, and the most knowledgeable team of financial consultants can make that dream a reality. At Weichert Financial, with an array of product options and the expertise to assist, we are here to help. What can we do for you? It pays to ask.

Tim McLaughlin is senior vice president of secondary marketing for Weichert Financial Services.

Whose Fence Is It Anyway?

By M. Anthony Carr
Property line issues have suddenly cropped up in the emails I've received in the past few weeks. It appears that homeowners are more aware of their property lines (specifically if a neighbor is violating it) during the spring and summer months than at other times. As we get out there and trim limbs (from the neighbor's big oak tree), mend the fence (which is actually the neighbor's), and try to clean up unsightly encroachments on the line, we become aware that the guy next door hasn't kept up with his property and now the problem is personal.

Keeping up with local fence laws, good neighbor regulations, even your local home owners' association rules can keep relations between you and your neighbors a lot more healthy.
One reader wrote that he spent "a weekend helping [my neighbor] take down and erect a new fence. After that he asked me to pay for half the fence, stating that all his other neighbors on the other sides of his property had pitched in to pay as well for their respective sides."

He was now worried that he had just signed up for some sort of legal liability if someone got hurt on the fence, the fence got knocked down by a tree, etc., now that he "owns half" of the fence.
Local jurisdictions have funny rules about fences, trees, etc., and who's responsible for them in case of damage or destruction. That's when I go to FindLaw.com to do some real estate research.
On this particular issue, they actually have a whole section on dealing with neighbors and the property lines under their real estate section. As far as the fence is concerned, "Unless the property owners agree otherwise, fences on a boundary line belong to both owners when both are using the fence. Both owners are responsible for keeping the fence in good repair, and neither may remove it without the other's permission," according to the site.

The part of this story that has the reader upset is that he wasn't asked to pay for the fencing until after the neighbor had already picked out the wood, style, etc., and paid for it, thus locking him into a certain price range and style of improvement to the property.

Keep in mind, your local laws may be different. Visit the local building code office to find out your responsibility before hammering away at your neighbor's fence or expecting your neighbor to help pay for a replacement fence.

Another reader has a problem with a backyard property that's nearly 100 years old and just looks really bad. "Our issue is that the neighbor that shares the other side of this wall has 2 different constructions that are not only viewable from our yard, but also have additional roofing or siding that attaches to our side of the wall."

In essence, the neighbor just kept tacking on to the existing aged structure that was already there. Both the residences had purchased these properties with these structures in tact -- so if it's that old, is it violating the law or not? Is there a statute of limitations on really ugly fencing?
Again, FindLaw points out a couple of laws you may have on your side to keep badly constructed or really ugly fences from continuing to plague your community.

"As long as a fence doesn't pose a threat of harm to neighbors or those passing by, it probably doesn't violate any law just because it's ugly. Occasionally, however, a town or subdivision allows only certain types of new fences -- such as board fences -- in an attempt to create a harmonious architectural look. Some towns also prohibit certain materials -- for example, electrically charged or barbed wire fences."

"Even without such a specific law, if a fence is so poorly constructed that it is an eyesore or a danger, it may be prohibited by another law, such as a blighted property ordinance. And if the fence was erected just for meanness -- it's high, ugly and has no reasonable use to the owner -- it may be a "spite fence," and you can sue the neighbor to get it torn down."

What's not talked about here is the fallout from one neighbor forcing another neighbor to rebuild, repair, or tear down an existing structure. In a subdivision environment with quarter-acre plots and less, we would like to think that all neighbors would keep up their properties to a certain standard. If they don't you have to make a decision on whether a clear view out your kitchen window is worth the relationship that may be damaged through the process.

However, it never hurts to ask, point out the law and see how they react.
_________________________
M. Anthony Carr
Weichert Realtors
Manager, Burke/Fairfax Station
9299 Old Keene Mill Road
Burke VA 22015
(703) 569-7870 ext. 160
Change Your Thoughts, Control Your Life.
Click for Anthony's Latest Blog Entry

Mortgage Limits Increase Provide Buyers Opportunity

By M. Anthony Carr

Congress has spoken on the economic stimulus package and that means most of us are going to get a nice little check in the bank – complements of yourself (it’s your money anyway, right?) Included in the package is a section that will increase the loan limits for conforming home mortgages. Without getting all financialezey on you, it means that higher loan amounts will come with lower interest rates. That will help more people to purchase in high-priced areas like here.

Where the loan limit used to be $417,000 for the Washington, D.C. metro area, it looks like it will move upwards to $562,500. (They will go into effect March 14, 2008.) Any mortgage below this amount is called a “conforming” loan – it conforms to established guidelines so that the mortgage can be sold on the secondary market (usually on Wall Street). Loan amounts above the $562,500 will now be considered “jumbo” loans, which are subject to more stringent underwriting guidelines and potentially higher interest rates. By raising this limit, loan amounts that were previously jumbo now come under the more affordable guidelines, making it easier for buyers purchasing in high-cost areas such as Northern Virginia.

When you’re talking interest rates of under 6%, you’re talking a lot of savings for many, many buyers. The catch is (and there’s always a catch!) you must apply for the new mortgage BEFORE December 31, 2008.

So what? What does that mean to you? Three things:

1) if you’re considering a move up or refinance, you MUST have your application signed, sealed and submitted before the end of the year.

2) If you need to sell your house first, before taking advantage of these new features in the market, now is the time to fix it up and prepare for the selling process. And,

3) government-backed programs (FHA and VA) are also following these new loan limits.

Blog: http://commonsenserealestate.blogspot.com/

BTW: MILITARY RESIDENTS: Are you or a colleague preparing for your next PCS? Weichert Financial can get you VA financing up to $700,000 for qualified buyers. Call me for help alleviate the stress of the pre-listing/pre-purchasing process.

Multi-Layered Loans Lower Down Payment, PMI

by M. Anthony Carr

If you're in the market to buy a home but have little down and want to avoid private mortgage insurance, you might want to look at the multi-layered financing options which have become increasingly available.

With these programs, there's a first loan equal to 80 percent of the purchase price, and a second loan for 10 or 15 percent of the remaining costs. The remaining money, 10 percent or 5 percent, is the buyer's down payment.

Described as "80/10/10" and "80/15/5" financing, buying with multiple loans allows purchasers to avoid the up-front costs and monthly expenses associated with private mortgage insurance (PMI).

Private mortgage insurance is a policy taken out by borrowers who lack big downpayments. Statistics show that buyers who purchase with less than 20 percent down have a higher risk of default than those who purchase with a downpayment of 20 percent or more.
If you buy with less than 20 percent down, lenders will generally require that you purchase with PMI when financing with a conventional loan. In the event of default, the policy kicks in to protect the lender.

(It's also possible to buy without PMI. In these cases, the lender self-insures -- you don't pay PMI, but you do pay a somewhat higher interest rate.)

Insurance coverage requirements for government programs such as VA and FHA loans are somewhat different.

With FHA, there is a "mortgage insurance premium" or MIP. FHA loans have a 1.5 percent up-front fee plus a monthly premium equal to .5 percent of the outstanding loan balance. FHA programs generally allow homes to be purchased with 3 percent down. The up-front fee can be financed as an addition to the loan amount.

First-time VA borrowers do not pay a monthly premium, however they do face an up-front "funding fee" equal to 2 percent of the loan amount in most cases. Many VA loans are for more than 100 percent of the value of the house, since Uncle Sam allows military veterans to finance closing costs.

Multi-layered loans are for people who want to buy with conventional financing, don't have 20 percent down, don't want to pay PMI, and don't want to wait for years to acquire a massive downpayment. In such cases they obtain a first mortgage equal to 80 percent of the purchase price. There is no PMI requirement here because there is a 20 percent gap between the amount borrowed and the purchase price.

The borrowers then obtain a second loan equal to 10 to 15 percent of the purchase price. Combine the 80 percent first loan with financing equal to another 10 to 15 percent of the purchase price, and the borrower must now bring 5 to 10 percent of the purchase price to closing as a downpayment. If you're looking at purchasing a house with a second trust, there are a couple of nuances about a second mortgage of which you should be aware.

The interest rate for the second loan is going to seem a bit higher than what you will be quoted for a regular mortgage. For instance, if you're paying 7 percent on the first trust, don't be surprised if interest on the second mortgage is considerably higher. Shop and compare rates for both loans, and look at your total monthly costs.

The interest rate for the second loan is going to run higher because the loan has more risk to the lender. In case of a default, the first trust holder may foreclose to receive payment on the loan while the second mortgage holder doesn't get a cent until the first-trust holder is paid completely. In addition, the amount of the loan is so small that the lender/investor must charge a higher interest rate to receive ample compensation.

Second trusts typically last for 5 to 15 years. Because they have a short term, they require big monthly payments to be quickly re-paid -- or they have low monthly payments and at the end of the loan term the borrower faces a big single payoff, a so-called "balloon" payment. If you can't pay or refinance the balloon payment, the property can be foreclosed.

The mortgage insurance industry argues that multi-layed loans, so-called "piggyback" financing, may be less attractive than the combination of a bigger first loan plus PMI. (See this calculator here from goodmortgage.com to see if it makes sense for you.)

But whether you prefer multi-layered financing or a big loan plus PMI, the fact is that both options allow you to buy with little down, both have costs, and both have risks. Each option should be reviewed with care to see which works best for you.