Burnett Blog

Mortgage rates have dropped to 4.375%, which is as low as they have ever been. Common sense would tell us they are more likely to go up than down. These low rates, good weather and the quality inventory on the market make it a great time to buy or sell. We asked Brian Byrnes of Central Iowa Lending to explain how these rates can change a house payment compared to someone who bought 2 years ago and he said, “Compared to the 5.75% rate that consumers saw in May ‘08, a rate of 4.375% can lower a mortgage payment about $169 per month on a 200,000 mortgage.” For more information on the lowering interest rates and how it can affect your mortgage, call Central Iowa Lending at 515.334.4980 or talk with your Burnett Realty Realtor.

by Doug Burnett, Broker/Owner

I was at an industry awards function last Friday. The entertainment was a couple of guys doing the dueling pianos thing. They were really good and I shouldn’t be surprised that after hours of performing classic hits that one of the biggest responses from the audience was the “Free Credit Report.com” commercial jingle. Everyone knew the tune and the words; amazing! I am sure that jingle is responsible for driving millions of consumers to that site.

Only problem is it isn’t free. Anything that is offered on this site that is of value when it comes to getting a true snapshot of your credit profile will cost you. If you go to www.freecreditreport.com you will find this on the home page:

“IMPORTANT INFORMATION

When you order your free report here, you will begin your free trial membership in. If you don’t cancel your membership within the 14-day trial period**, you will be billed $14.95 for each month that you continue your membership.

ConsumerInfo.com, Inc. and Freecreditreport.com are not affiliated with the annual free credit report program. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to www.annualcreditreport.com.”

Does this sound free to you? The second paragraph is basically telling you what you can get for FREE from a different website!!! I give them props for the disclosure. I wonder how many people ever actually read it? As I read through the site, I understood that the report will be from only one of the credit providers.

There are three major credit reporting firms. To get an accurate profile one should check all three (most major creditors do before making a credit decision). The law provides that each consumer is eligible to receive that information, once per year, at no cost and with no negative “dings” against their credit score.

Your best (the only one I am aware of) source to get the credit reports from all three agencies at no cost is at www.annualcreditreport.com. Before you go there, click on http://www.ftc.gov/freereports. It is easy to use and has great information about credit reporting, but caution; they have their own catchy tunes! Below, the Federal Trade Commission, developed their own jingle in response to the FreeCreditReport.com marketing blitz:

To find out how your credit rating may affect your next home purchase, please contact our qualified mortgage lenders at Central Iowa Lending, 334. 4980 or visit www.CentralIowaLending.com.

The Worker, Homeownership and Business Assistance Act of 2009 has extended the $8,000 tax credit for first-time homebuyers, and expanded the credit to include a provision for existing homeowners.  The changes were signed into law by the President on Friday 11.06.09, in an attempt to help spur housing sales, a critical part of our national economy.

First-time homebuyers eligible for the tax credit must sign a purchase agreement between January 1, 2009 and April 30, 2010, and the transaction must close by June 30, 2010. The credit is for up to 10% of the purchase price, not to exceed $8,000. The income range for eligible purchasers has expanded to $125,000 for single filers and $225,000 for joint filers.  This is an increase over the $75,000 and $125,000 thresholds previously in place.

The credit has also been expanded to include a new tax credit of up to $6,500 for certain repeat home buyers.  Eligible purchasers must have lived in their current principal residence for at least five out of the last eight years. The new home must be used as the principal residence.

The new law combats concerns about fraud and misuse of the credit by capping the purchase price of eligible homes at $800,000, and excludes purchasers under 18 years of age.

More detailed information about the Homebuyer Tax Credit can be found at www.irs.gov, or by contacting your Burnett Realty agent at (515) 334-4900.

Record low mortgage interest rates are good news for everyone. Mortgage providers are having a hard time keeping up with the demand for new mortgages and refinancing. Unfortunately such high demand opens the door for unscrupulous if not fraudulent practices among some Mortgage providers.

We recently received a call from a prior client that was looking for a referral for an appraiser. This client had been directed by the Florida based mortgage company to find their own appraiser. As we dug deeper we found that the loan documents called for $5,800 in closings costs plus an additional fee of $2,000 that the company wanted paid up front for a total of $7,800. If she hadn’t made the call she would have gone with this company; instead she found a local mortgage company to quote the same loan terms for around $3,000.

Here is the dirty little secret; the nature of how mortgage loans work and how they are priced makes it very confusing at best for a consumer to get a clear, apple to apples picture of how one company’s loan terms compare to another. Loan companies use this to their advantage in marketing. Too many times consumers fall victim to a low advertised rate only to find out that fees are sky high or worse, at the last minute the low rate is yanked off the table and borrowers are forced to take a higher rate, lose a house or upfront fees.

Rates published in the paper or on the internet are designed to get you to call. The rate you will actually receive will depend on a host of factors such as down payment, credit, income, and net worth. Did you know that if you specify that you will close a loan in 30 days that you will likely be quoted a better rate than if you specify a 60 day closing?

When looking for a mortgage, whether to buy or to refinance, a few simple steps will go a long way to help you select a company and product that is fair and a good fit.

If you do not have a mortgage company, bank, or credit union in mind then ask for referrals from friends, family or a real estate professional.

Never select a mortgage lender without getting at least two quotes or more. If you already have a relationship with a mortgage provider shopping around will verify that the rates and terms they are quoting are competitive. If they are reputable they will not mind that you are shopping.

Be wary of any company that demands that fees be paid up front. In our market this is not a typical business practice and should be a red flag. If you should agree to up front fees be certain that you get in writing what the fees are for and how or if you are entitled to a refund if the loan does not close.

Buy local. I’m a huge believer in keeping dollars in my own community as long as I’m not penalized for it. Mortgage lending is a very competitive business and unless you live in a very small community you will find many lenders that will meet or beat an out of town or internet lender in overall value including rate, fees, and service.

Being informed is your kryptonite to an unscrupulous mortgage lender. Besides shopping around, use your gut instincts (if it sounds too good to be true…), and resources around you. Share the information you get with your CPA, family, attorney, or real estate professional. Online resources like http://www.federalreserve.gov/pubs/mortgage/mortb_1.htm will help you get comfortable with the process and terminology.

Finally, never allow yourself to be pressured into signing anything until it has been explained to your satisfaction. High pressure is often the technique of choice for those that would prefer you make a commitment with out doing proper due diligence.

Selecting the right mortgage product is a big decision. Exercise some patience, ask questions, and pay attention to your own good instincts and you will be sure to find the right fit.

Author: Doug Burnett is the Owner of Burnett Realty, a residential real estate brokerage company located in the Greater Des Moines, Iowa area. Burnett is also the owner of Central Iowa Lending, a provider of residential mortgage loans. He can be reached via email at dburnett@burnettrealty.net.

Hubbell Realty announced this week that it will give first-time home buyers qualifying for the New Stimulus Tax Credit an additional $1000 toward the purchase of of a Hubbell Home.

This $1000 may be used in conjunction with other spring specials Hubbell is offering, but is available to first-time buyers only.

For more information, please contact Burnett Realty agents Kim Byers, Jenn Clark, Rob Langloss, Marcia Munger, or Bill Nittler at 515.334.4900.

First-time home buyers will receive up to an $8000 tax credit if they purchase a house between January 1 and November 30, 2009, according to provisions in the massive federal stimulus package signed into law this week.

A “first-time� home buyer” is any individual (and spouse if married) who had no present ownership interest in a qualifying principal residence during the 3-year period ending on the date of purchase of the principal residence for which a first-time homebuyer credit is being claimed.

This tax credit does not have to be repaid, however, if you sell your home within three years of purchase, you will lose the credit.

An individual who earns less than $75,000 annually and a couple that earns less than $150,000 annually qualify for this tax credit. Single taxpayers who earn more than $75,000 are eligible to receive a partial tax credit.� The same applies to married couples who earn more than $150,000. Home buyers will see the savings when they file their 2008 or 2009 income tax returns.

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

For more information on the first-time home buyer tax credit, please contact your Burnett Realty agent at 515.334.4900.

In February of 1989, the City of Des Moines, Polk County and the business community came together to formulate an effective strategy to improve the condition of housing in Des Moines Neighborhoods. On May 4, 1990 Neighborhood Finance Corporation, a non-profit organization, was incorporated.

The mission of the Neighborhood Finance Corporation (NFC) is to provide unique lending programs and services to help revitalize targeted neighborhoods in Des Moines through partnerships with the City, County, area banks and neighborhood associations.

A primary focus of the NFC is their Home Purchase Program.� This program is designed to help one obtain financing to buy a home.� This is not an income-based program: rather, a program intended to strengthen neighborhoods and provide the assistance to accomplish this.

When a home is financed through NFC, a rehabilitation subsidy of up to $10,000 is provided to help revitalize the home.� This subsidy should be used to address major repairs or health and safety problems.� This may include roofs, foundations, siding, garages, sidewalks and driveways, windows, furnaces, plumbing, electrical systems, functional landscaping, energy efficiency and independency measures.

Additional subsidies may be available to help pay for the downpayment and closing costs.� Qualified borrowers may receive up to $2,500. NFC subsidies, presented in the form of a 5 year forgivable loan, are secured by a second mortgage.

To obtain financing with the NFC Home Purchase program, the borrower must live in the property purchased.� Mortgage terms range from 10 to 30 years, with both fixed rate and adjustable rate loan products available.� PMI may be required on certain loan products.

Other services provided by NFC include:

• Home Improvement Loans � Loans for homeowners living in a NFC lending area who have owned their home for more than one year.
• Refinance Loans � Refinance loans with home improvements for homeowners that live in a NFC lending area that have owned their home for more than one year.
• Homebuyer Education � Homebuyer education classes are held on topics such as: Are you Ready to Buy a Home?, Managing Your Money, Understanding Credit, Shopping for a Home and Getting a Mortgage.
• Tool Lending Library � Home repair tools are available to borrow for eligible individuals.

For more information on the Neighborhood Finance Corporation and their Home Purchase Program, please click on the link to visit their website, or contact Joni Norman (515.288.5626 ext. 209), Karen Riccelli (515.288.5626 ext. 211) or for Spanish speaking clients Alejandra Peverill (515.288.5626 ext. 207).

Or, don�t hesitate to contact your Burnett Realty agent at 515.334.4900 to learn about homes available in NFC eligible neighborhoods.

In these crazy economic times, the term� �foreclosure� creeps into our real estate vocabulary much more frequently. Today we are going to take a look at the foreclosure process, and what it means for buyers and sellers.

By definition, a foreclosure is the process by which a lender takes ownership of a property after a borrower has defaulted on payments.

As we have seen more and more lately, when a home owner fails to make their mortgage payments, their lender may begin foreclosure proceedings. This process is governed by the laws of the state in which the property is located.

Here in Iowa, the foreclosure process typically takes 4-6 months, and may occur with or without redemption rights. Thirty days prior to starting the foreclosure process, the lender delivers written notice of default to the borrower. If the borrower doesn�t remedy the amount in default by the date specified in the notice, the lender may start the foreclosure process.

The county Sheriff�s office conducts the sale of foreclosed properties, after notice of the sale has been published in at least three public places and two weekly notices have appeared in the local newspaper.� The first notice must appear at least 30 days prior to the Sheriff�s sale.

For buyers, foreclosed upon properties pose risks, which is why most are purchased by experienced investors.� When you purchase a home in foreclosure, it could be at risk for serious problems that are normally investigated by Realtors�, attorneys and title companies, including: title issues, IRS liens, tenants or owners refusing to give up possession of the property, or structural issues.

�The price may seem good at auction, but unless you have experience, purchasing a foreclosed property is risky. Anyone considering purchasing a foreclosed property should have a qualified team of professionals to advise them.� stated Doug Burnett.

For more information on short sales and foreclosures, don�t hesitate to contact your Burnett Realty agent at 515.334.4900, or email dburnett@burnettrealty.net.

In these crazy economic times, there are a few real estate terms that are being used more frequently than in the good old days. Over the next few days, we are going to touch on some of these terms. Today we are going to start with the term �short sale� and what it means to buyers and sellers in this market.

Short Sale
A short sale occurs when a property is sold and a lender agrees to accept less for the payoff than is actually owed.

In normal market conditions, short sales represent a small segment of mortgage defaults. However, lately the number of short sales happening has been on the rise. In part because lenders are inundated with foreclosures, and when evaluating their situation, a bank may allow a short sale if it results in a smaller financial loss than foreclosing.

Sellers need to be very careful when agreeing to a short sale with their lender. This is not a get out of debt free card. The difference between what is owed on the mortgage and what the house sells for on a short sale must be accounted for. This can be loaned to the seller in the form of a promissory note, which must be repaid, or, the bank will report the difference as 1099 income.

Buyers beware as well, short sales are never quick, and aren�t governed by any sort of regulatory agency. They are in essence a hybrid transaction between the buyer, seller and the bank. They usually take a lengthy amount of time to close, and if a better offer comes in on the property at any point during the transaction, they will likely take it, and you will be left to increase your offer or search for a new property.

This means that buyers most suited for short sales need to have a high degree of flexibility, the ability to deal with uncertainty, and the willingness to accept the possibility of not buying the home if the bank and the seller can not come to terms.

Mortgage News Daily offers an excellent article on Short Sales which I think is particularly insightful to sellers in this situation.

Contact your Burnett Realty agent for more information regarding short sales at 515.334.4900, or Brian Byrnes or Mic Hayes at Central Iowa Lending (515.334.4980), and they can help walk through your options.