Archive for the 'Real Estate News' Category
May Real Estate Sales in Northern Virginia See Upswing in Repeat Buyers
June 10th, 2009 Categories: Real Estate News
Sixty percent of May real estate sales in Northern Virginia were composed of repeat buyers. This is in contrast to April sales where sixty percent of the buyers were first time home owners.
First-time buyers, taking advantage of their $8,000 tax credit incentive, have bought the “starter homes” on the market - encouraging more sellers to move up to a new, larger home. In fact, today’s environment, with lower prices for everyone, is the perfect model for “moving up”.
Here is why moving up to a larger home is better now: because all properties in the area have depreciated by the same percentage. Assume a home was valued at $250,000 and then depreciated by 20%, leaving a current value of $200,000. A previously valued $500,000 home at 20% less is now $400,000.
A homeowner would sell their home for $50,000 less than its high value, but would buy the larger home for $100,000 less, giving that homeowner a $50,000 positive increase.
Take a look at the graphs below to see how housing inventory is doing in your area:
If you, or someone you know, think now is the time to consider “moving up”, please contact me at 703.927.4554 and let see how the numbers work for you.
Michael
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First Time Home Buyers Can Turn Tax Credit Into Cash
May 27th, 2009 Categories: Real Estate News
The first time home buyers tax credit which was increased from the $7000 high in 2008 to $8000 in 2009 has just gotten even better.
Housing and Urban Development Secretary Shaun Donovan has announced a change in federal policy that will allow first time buyers to turn that tax credit into cash.
Essentially, first time buyers eligible for the credit who apply for mortgage insured by the FHA will also be eligible for bridge loans or cash advances - up to the $8000 limit - to use for down payments, closing costs or other loan expenses.
According to the secretary, the idea is to “monetize” the tax credit, e.g. turn it into immediately spendable cash.
Under the guidelines drafted by the FHA, all lenders approved by the agency will be authorized to provide bridge loans secured solely by the tax credit at closing.
A small but growing number of states have started bridge programs to stimulate home buying and this announcement from the federal government is welcome news.
For more information on the first time (not within the last three years) home buyers tax credit, click here; or for information on Fannie Mae’s refinancing program, click here.
To find out who is an approved FHA lender in the Northern Virginia area and how we can help put you in your first home, give me a call at 703.927.4554.
Michael
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Do You Know the Difference Between a Note and a Mortgage?
May 26th, 2009 Categories: Real Estate News
Real estate is filled with terms that are often used 1) interchangeably and/or 2) erroneously. The terms loan, mortgage, deed of trust and note are among those terms frequently used and misused. Our thanks to Mid-Atlantic Settlement Services for this easy to understand tutorial on the true distinction between a note and a mortgage.
Note
A note or promissory note is a contract whereby a party makes a promise to pay a sum of money to another party under specific terms. In real estate, the party is typically a borrower to agrees to make monthly payments of principal and interest over 20 or 30 years to a lender.
“The note has virtually nothing to do with the property itself and can technically exist without any collateral at all. If the borrower doesn’t pay, the lender can sue ‘under the note’ and obtain remedies for breaching that contract.”
Mortgage or Deed of Trust
For the purpose of this explanation we are going to use mortgage and deed of trust interchangeably. A mortgage is a transfer of an interest in property. Mortgages are tied to the debt created by a note, but a mortgage in and of itself is NOT a promise to pay the debt.
In fact, it is not a promise to pay anything. “Instead, it contains ‘granting’ language - like a deed - which gives the lender the right to take the property if the borrower goes into default and doesn’t pay under the terms of the note.” (And if you really want to know the difference between a mortgage and a deed of trust, click here.)
Key Differences
- A note is signed by the people who agree to pay the debt. A mortgage is signed by those who own the property being mortgaged. In residential real estate, the signers of the note and the mortgage are typically the same. A commercial transaction more often involves a corporate entity holding the mortgage, while principals sign the note.
- A mortgage needs to be recorded in the county or town recording office, the note does not. Instead, the note goes directly to the lender (and may then be sold to another lender.)
Questions? Want to sign a note and a mortgage for property in Northern Virginia? Give me a call at 703.927.4554 and let’s talk.
Michael
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