What is in a Short Sale Information Packet?

July 10, 2012 By Leave a Comment
 

 

What is in a Short Sale Information Packet?

 

A Short Sale is the agreed upon sale of your home with the ending sales price being less than the amount you owe on the mortgage.

If you are a homeowner in distress, if you have lapsed on your mortgage payments, or cannot afford to make your payments then it is important to contact or your lender immediately. It is essential to work with a local licensed real estate professional and an attorney who can protect your rights and help you find the right options during the process. If you are in Central New Jersey, I can provide you with guidance and refer you to the best lawyers.

My negotiating success in short sales comes from preparation. That is why it is so important to have a complete Short Sale Package.

Each lender has their own specific package of documents, below are the preliminary documents you should be prepared to provide:

Hardship letter. A hardship letter is a written statement as to what consequence has caused you to fall behind on your mortgage. Examples of hardship are:

a)    Unemployment

b)    Divorce

c)    Medical emergency / sudden illness Bankruptcy

d)    Death

A signed Authorization to represent form(s) for each lender (Lenders typically do not want to disclose any of your personal information without written authorization to do so.)

Copies of all legal notices you have received from your lender and copies of Mortgage Statements

A completed Income and Expense Form or Lender Specific Financial Statement (Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value.) 

Last 2 years of your Tax Returns

Bank statements for the last two months

Your last two paycheck stubs

Verification of any other source of income

An Accepted offer on your home (provided there is one)

If the lender discovers assets, the lender may not grant the short sale because the lender will feel that the seller has the ability to pay the shorted difference.

Keep in mind that all banks have different guidelines/timelines when it comes to the short sale process.

Let the DoorPath Team provide you with the best service.

 
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Buying and Selling a Home in Central New Jersey

April 28, 2012 By 3 Comments
 

Buying and selling a home in the Somerset and Middlesex County areas of New Jersey is not for the faint of heart!

With the economy the way it is there are a lot of things to consider before you even start to look for a new home.

Foreclosures, short sales, distressed properties, and the like may be terms you are not familiar with and could have a big impact on your home search.  If you’re thinking about buying a foreclosure, you have to ask not only the price but the type of financing offered.  On short sales and foreclosures you should do an in depth check on the condition of the property condition.   Many times the previous owner has left the home in disrepair and has no incentive to disclose any defects. Despite this, you can make an intelligent decision about the home by having a licensed home inspector look at the property.  Then you can tell if the home is worth repairing and bringing up to snuff as they say.  Foreclosed homes can be a bargain or a bust; consider lots of options and make certain to get an independent appraisal before you make a contract offer.

Supply and demand always plays a part in the price of a home whether buying or selling. Right now in Central New Jersey, the supply is much higher than the demand. Many buyers are waiting to see if home prices and interest rates have hit bottom. If you want a successful home sale on your own place, you have to make decisions about what you have to offer as compared to other homes in the area. A little creativity can go a long way towards getting your home sold.  Some home sellers offer to hold a part of the mortgage, pay a part of the closing costs, or pay for some upgrades such as new appliances.

Buying and selling a home in Central New Jersey can be tough right now. Take the time to learn as much about the market as you can.  It will pay dividends with a completed home sale/purchase. Knowing the pros and cons of the potential home will help you make the right decision. If you would like advice on how to determine your specific needs and how they impact the sale or purchase of a home just drop us an email at mike@mikedowner.com or give us a call at 732-302-1771.

 
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Is Buying a Short Sale in Your Future?

April 25, 2012 By 2 Comments
 

Even in Bridgewater the expression “short sale” seems to be popping up more and more. You see it in economic reports, the local newspaper, on real estate web sites, and you may even have friends or relatives who have looked at or purchased a home that was a short sale. But what exactly is a short sale? Is a short sale always a good deal? What are the potential problems with buying a short sale?

If you are thinking about buying a short sale in Bridgewater or some other area of Central New Jersey here are some questions you should ask your REALTOR.

What exactly is a short sale?
A short sale happens when a homeowner is “underwater” on his or her mortgage.  (The house is worth less than they owe on the mortgage.)  They have usually missed at least three months of payments to the bank or lender and they are trying to make a deal with a bank in hopes of avoiding a foreclosure. The bank that holds the mortgage allows the owner sell the home for less than he or she owes on the mortgage.  A short sale agreement allows the bank to avoid a foreclosure process that in New Jersey can take up to two years in many cases. The short sale allows the homeowner to escape the effects that a foreclosure has on their credit score.

How is a short sale different than a foreclosure?
In a short sale, the owner is probably living in the home while it is for sale. The owner is usually significantly underwater in the home so the hope of selling for what they owe is out the window. When a home is marketed as a foreclosure, the bank has already evicted the homeowner and taken possession of the house.

When a potential buyer places a bid on a short sale property, the offer must be accepted by both the homeowner and the bank. If there are two mortgages on the home (commonly called a second mortgage or home equity loan) all banks must sign off on the offer. In a foreclosure the offer must only be accepted by one bank since they have taken possession.

What should you consider if you put an offer on a home that’s a short sale?
Patience is the key to short sales. Since there are multiple parties involved (banks, homeowners, lien holders, etc.), the negotiation process can take a lot longer than in a traditional purchase. Also, many lenders only accept “as-is” contract offers on short sale properties. Basically they will not do any repairs to the home.  (Make certain your contract offer allows for a home inspection period so you have a clear idea of what you are getting into with your new home.)

Will you save money buying a short sale property?
Especially for first time buyers, a short sale can be a great way to get into a home.  It is also a great way for move up buyers to find a place in a more desirable neighborhood at a good price.  Keep in mind that your real estate agent should be able to help you find comps in the area so you can submit a winning offer.

Is a short sale right for you?
A short sale is best suited for buyers with patience. Short sales can span many months.  The hurry up and wait aspect drives many potential buyers crazy. Often short sales attract multiple offers, including all-cash offers from investment speculators. If your timeline is flexible for moving and have found a home you love, buying a short sale can get you the home of your dreams for less money than you might think.

For a list of short sale properties in Bridgewater or Central New Jersey in general just drop us a line at mike@mikedowner.com.

 
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New Jersey Mortgage Escrow Account Clarifications

April 24, 2012 By 1 Comment
 

Two things that influence a mortgage escrow account the most:

  1. Property tax on the home-Most lenders requires this in escrow because if the taxes are not paid, your municipality could place a lien on the property that would have a higher priority than the mortgage lender’s lien.
  2. Homeowner’s insurance policy – All lenders require home insurance because of the investment they are making in your home.

The day you close on your new home, your lender will usually require you to open an escrow account to cover property taxes and homeowner’s insurance. You make the initial escrow deposit, followed by payments to the account every month. The monthly escrow payment is calculated by taking the total of all projected tax and insurance payments for the coming year, and dividing that number by 12.

When making your mortgage payment, you may have the option to pay extra into the escrow account, which is a very smart choice since property taxes or insurance premiums may rise. This helps to avoid the increase to be paid all at once. The benefit of this to borrowers is that this plan helps to stretch insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month. When the tax or insurance payment is due, the lender pays the bill using the funds accumulated in the mortgage escrow account.

If you have a Conventional Loan and you do not have PMI (Private Mortgage Insurance), you have the option to close your escrow account and make your own tax and insurance payments. If you have a VA or FHA loan, the lender may be required to continue to keep an escrow account for the life of the loan making this a provision in order to receive the funds for your government-insured loan.

This strategy protects the lender by making sure you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell.  If your house burns down and you have neglected to pay your homeowner’s insurance, the lender is going to be without collateral.

Here is a little mortgage lingo for you. Since mortgage escrow payments are applied to taxes and insurance, you may hear it addressed as T & I, while the mortgage payment consisting of principal and interest is called P & I. They both equal PITI for Principal, Interest, Tax, and Insurance. Occasionally you will hear these terms from your lender.

By RESPA (Real Estate Settlement Procedures Act) guidelines, escrow payments will be evaluated at least once every 12 months to account for any increases in property taxes or insurance. This is known as Escrow Analysis.

Any overpayment of $50 or more will be refunded to the borrower or your lender will send you a bill at the end of the year to make up for any shortage in your escrow account based on the tax and insurance bills.

 
Filed Under: Buyers Resources, Finance, Taxes Tagged With: , , , , , , , , , , , , , , , , , , , , , , ,

Beginner Tips On Buying Bridgewater Homes For Sale

April 24, 2012 By 1 Comment
 

When it comes to looking at Bridgewater homes for sale; many first-time buyers often are overwhelmed by the thought of the process.  With the assistance of a professional REALTOR, the way toward a new home can be not only fun but quite successful.  Here are some tips on how to start your search and things you can do before you even look at the first picture on www.REALTOR.com, www.CBMoves.com or www.DoorPath.com.

Ask your real estate agent to get you preapproved for a mortgage through a reputable mortgage lender.  They will help you determine how much you can afford and more importantly how much you are comfortable affording.  Many people tend to go for the as much money as they can qualify for, even if they can’t really afford it and enjoy their lifestyle.  Remember you have other expenses that you already incur such as car payments, food, insurance, etc., not to mention new ones such as taxes, HOA fees and so on for the new Bridgewater home.

Determine what is reasonable for you long term, particularly when it comes to your mortgage and key elements such as what is important to you in a new home. Setting a budget for you and then sticking to Bridgewater houses that meet this price range can often help to avoid the hassle of being tempted by unrealistic houses or homes out of your price range.

To help you with your search you should ask your real estate agent for a bracket search form.  It is the easiest fastest way to determine needs versus wants in your next home.  (For a copy of the form just send me an email with the word bracket in the subject line – mike@mikedowner.com)  Space is also a big consideration, as well as whether or not you want a single family home or a townhouse/condo format.

In general start with the basics. For example, think about how many bedrooms you need, are you OK with living right next to neighbors or do you need a fenced backyard. Do you need a garage for your car or for storage or can a basement work for storage?

Most importantly you need to be realistic with your expectations and budget.  In Bridgewater you usually do not get a moat and a drawbridge for $100,000. Fortunately Bridgewater has many different neighborhoods and price ranges.  You may choose to go with a smaller residence or choose to move to a different place in order to get a larger-sized home.

Working with a professional real estate agent about Bridgewater homes for sale can often be a great way to gain further help and insight. We are familiar with the area and pricing since we work the market every day.  We often have access to hard-to-find deals that could potentially be in your favor. Prior planning can be a great way to find what you’re looking for.

If you have questions or comments about these tips for buying a home, please call us at 732-302-1771. We’d love to hear from you.

 
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Saving Your Home From Foreclosure

April 13, 2012 By 5 Comments
 

If you are facing a foreclosure, it is not a trivial situation. The stress can lead to anxiety or depression and create tense situations in your family life. The thought of losing your house or condo can be frustrating and embarrassing especially since it’s probably your biggest investment.

A foreclosed home attracts more buyers who want to invest in cheaper, but good properties, and grab a superior investment opportunity. Seeing your home in public auctions is the worst thing that can happen to any homeowner.  Luckily an experienced REALTOR can often help you avoid a foreclosure by working on your behalf with the mortgage company and credit agencies to help you stay in your home.

Overcoming a foreclosure can be difficult but the truth is you are actually caught in a situation faced by many homeowners. In fact, foreclosure rates have significantly increased during the past few years. Many homeowners are becoming overwhelmed with the process and worried about a situation that they find it really tough to pull themselves out of due to all the financial anxieties.

Fortunately, there are a few companies offering stop foreclosure assistance—things you need to learn to save your home. Make sure you opt for legitimate services so you won’t get hooked on scams. Doing thorough research online can help you find legitimate services or talk to a real estate agent who specializes in Short Sales and Foreclosures. Aside from getting information and solutions from a reputable organization, you can also consider some efficient tips or tricks on how to stop foreclosure and secure your home.

One of these tips is to learn about the things you should NOT do if you want to prevent the foreclosure procedure.

In reality, lenders are more willing to give you a list of options that can help you save your property as opposed to you having to sell your home in a public sale or spending thousands on a complicated foreclosure process. They are even more interested to know what caused your failure to pay your credit and if you can still remedy the situation.

So, don’t ignore their calls because they won’t just go away by you not doing anything. Don’t file a bankruptcy right away if you haven’t yet talked with your lawyer or tried other options. Don’t be in too much of a hurry to settle everything with loan modification if you can’t assure you can afford the interest rate. While getting modified loans is another way to protect your home, you should be aware that some companies want to benefit from this option so they occasionally adjust the interest rates.

Don’t spend on things you don’t really need. Instead, make plans to boost your income.

To summarize, talk to your lender, DON’T ignore the past due payments and get the help of a real estate agent specializing in Short Sales and Foreclosures. You may be surprised how willing they are to work with you to help you stay in your home.

 
Filed Under: Central NJ Property Information, Sellers Resources Tagged With: , , , , , , ,

$368,173 Comes to New Jersey!

April 12, 2012 By 2 Comments
 

New Jersey Received Counseling Grants from the US Department of Housing and Urban Development (HUD)

With ongoing efforts to assist families’ finding suitable housing and to put a stop to impending foreclosures, the U.S. Department of Housing and Urban Development (HUD) presented $368,173 in housing grants to eighteen organizations in NJ to counsel struggling homeowners. This funding will allow NJ residents to have a better chance in buying a home or keep the ones they already have.

Central New Jersey has agencies that have been training families in managing their finances. With many of them being first time homebuyers, counselors are evaluating their readiness to purchase a home. In addition, these organizations assist renters and homeless persons in finding the interim housing they need to move toward a permanent place to live.

Counseling agencies will also receive $4 million to assist senior citizens looking to seek reverse mortgages or Home Equity Conversion Mortgages (HECM).  These agencies will provide counseling for elderly homeowners who would like to convert equity in their homes into income that will be used to pay for home improvements, medical costs, and other living expenses.

The housing counseling program will teach borrowers how to review their own loan documentation to avoid future situations that can result in a loss of equity, increased debt, default, and even foreclosure.

More information about HUD and its programs on the Internet www.hud.gov and http://espanol.hud.gov or feel free to contact me at via email at dawn@dawnruete.com

I truly believe with this aide, it will better stabilize NJ’s housing market.

 

 

 
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Easy Explanation of Private Mortgage Insurance

April 8, 2012 By 9 Comments
 

Since I became a Central New Jersey REALTOR, I have been asked many times to explain what Private Mortgage Insurance is. It sounds a little more complicated than it really is. This is how I explain it to my clients. I think it is simple enough even for my first time home buyers.

Exactly what is Private Mortgage Insurance? What are the main reasons why you would really need to have it?

If you decide to purchase a home in Bridgewater, New Jersey and have less than 20% down  you will then be required to purchase Private Mortgage Insurance (PMI). This applies to conventional and FHA Mortgages.  If the purchase price of the home is $500,000, your estimated monthly PMI will approximately be $260 in addition to your regular monthly mortgage payment. Private home loan insurance is always added to your monthly mortgage loan payment until you reach 20% equity value in your home.

While this is a substantial insurance plan, it is mandatory in getting a loan. This protects the mortgage lender from delinquency, or whenever their investment becomes lower than 80 percent then what the home is worth.

What is the best way a consumer can get the maximum benefits of PMI?

Buyers who may have a less than 20% deposit for any conventional or FHA home loan or cannot match the earnings needs but want an opportunity to become homeowners, have the chance, by opting to pay for PMI. A buyer will then be approved to get a house, and at the same time build equity. Additionally they will have the advantage of getting tax breaks on the mortgage interest and property taxes. PMI helps prospective homeowners to have the opportunity to purchase home, years before they could save the 20% lower payment needed by mortgage loan companies.

The Home Entrepreneurs Protection Act states the customer can request the PMI be stopped as soon as they reach equity within their home. It is very important that the homeowner know when they have achieved the 20% equity level to be capable of save 2 percent of PMI.

PMI policy is in not to be confused with Life Insurance. When the borrower becomes disabled or dies, his family will have no assistance. PMI needs to be paid up until the home reaches 20% of equity.

What is easiest method to decide if there is 20% equity within your house?

Having to pay back 20 % within the loan and achieving 20% equity on your house is not the identical factor. Equity is dependent upon the value of your house and may increase because market values have elevated or due to home enhancements. The homeowner must first determine the worth of his home utilizing a licensed evaluation.

Contact your local real estate agency, such as Coldwell Banker Residential Brokerage to come visit your home. This way the agent can make detailed notes on the number of rooms, remodeling or updates on the property to give the best comparative market analysis (CMA) is an assessment of similar, recently sold homes that are near a home that you want to sell.

 
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A Different Kind Of Attorney Review

April 6, 2012 By 2 Comments
 

The expression under attorney review is one real estate agents hear almost every day.  It has to do with the period after the buyer and seller agree to a contract where the attorneys get together to make certain their client is protected legally and where a lot of the negotiation takes place over when things will happen with the contract (escrow deposit dates, mortgage commitment dates, closing etc.), how things will happen (is the money going to be exchanged as cash, check, gold, etc.), who is involved (is it both spouses on the deed, is it a corporation buying the property, is the bank in control of the property) and getting both sides to a completed deal.

The State of New Jersey maintains a web site for a different kind of attorney review.  The site allows the user to find lawyers who’ve been accepted to the bar in the state and also to obtain details about the lawyers, for example date of admission, status to practice in New Jersey, and county and town information regarding where an attorney maintains their business office.

When using the site be certain to use the attorney’s Attorney ID Number to verify the information is applicable towards the correct individual. (I know of several real estate attorneys who have the same name as attorneys who practice in different specialties such as criminal law and antitrust law) There might be several attorneys in the state with similar title or the same county or city. The consumer should exercise care to be certain the information relates towards the same attorney the consumer is investigating.

Attorney address and many status details are refreshed semi-monthly, which means this information might not reflect recent changes status changes according to discipline or reinstatement to rehearse are up-to-date within 24 business hours after entry of the Top Court Order.

For more information or to use the site please go to:

http://njcourts.judiciary.state.nj.us/web10/AttyPAWeb/pages/home.faces.

If you would like any recomendations about the real estate attorneys we use in the Somerset and Middlesex County area please just drop us an email (mike@mikedowner.comand we will give you the names and contact information for the people we work with on a regular basis.

 
Filed Under: Buyers Resources, Sellers Resources, Somerset County Community, Uncategorized Tagged With: , , , , , , , ,

How to Compare Homes for Sale

April 2, 2012 By 6 Comments
 

In Bridgewater New Jersey there are 243 single family homes for sale as I write this.  Most people will not look at all of them for obvious reasons but most people do get their search down to two places sooner or later.  The question then becomes what should they consider as important in each of the two places before they make the final decision?

This is where a professional REALTOR will be a big help.  There are subtle differences in each potential sale and our experience can help a home buyer make the right call.

To narrow the search from many to one we start with the buyer’s goals.  If we go with 4 bedrooms in the search above we narrow the list to 150 homes.  If we use budget as a factor (and who doesn’t?) we can assume $400,000 to $450,000 as a search criteria.  The search narrows to 23 places.  Next step is to figure out location within Bridgewater.  At just over 32 square miles we will focus on the Milltown Vanderveer Road Section and the search narrows to 9 properties.

Now we can start to compare homes.  In this section of Bridgewater most of the single family homes were built between 1993 and 1997, they are mostly two story colonial style, and as per out search they will all have four bedrooms.

The criteria for comparison boils down to four things; close proximity to each other, sold/listed/expired in a specific recent time period, similar style homes, and financing options.

  1. Proximity – Each of the houses is within a mile of each other so proximity is not a problem.  You never want to compare two houses that are a few miles apart since the area could be different in terms of neighborhood, flooding, taxes, shopping, etc.
  2. Sold/Listed/Expired in a similar period of time – The Comparative Market Analysis (CMA) is one of the most important factors in the search.  We will look at what the current homes on the market are asking (this is the competition), what homes have sold for in the past 90 days (the actual sales prices tell us what others are actually willing to pay for the area) and the houses that were not able to be sold and the listing expired on the MLS (this tells us what prices the market considered to be too high for the area).  By looking at these three sets of numbers we can determine which home has the best value.
  3. Similar Style Homes – In this case we will only look at Colonial style homes.  The characteristics of a Colonial and a Ranch would be very different so they are not comparable in this case.
  4. Financing options – One home may be listed at $400,000 and one at $390,000 but the first one has a seller’s concession of $15,000 towards the purchase price. One may only offer conventional financing and the other will accept FHA financing.

We need to look at the total picture to see which home works best for the buyer’s overall needs and desires.  By using the above criteria we can accurately compare homes in order to make the best deal.  If you would like more information about a Comparative Market Analysis or how financing affects your deal just send an email with your questions to mike@mikedowner.com.

 

 
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