Northern Virginia Real Estate Blog

As expected the average days on market is continuing its seasonal decline into the month of June with the increased activity during the summer months. What is interesting to see here is that the average price for houses that have sold has been stable since January of this year. I’m not going to speculate as to whether we have reached a bottom as far as price is concerned, but at the very least we have hit a plateau.

When homeowners borrow more than 80 percent of a home’s value, mortgage lenders often require a corresponding insurance policy called Private Mortgage Insurance.

PMI provides a cash payment to lenders in the event of a homeowner defaults.

But because PMI policies are designed for high LTV loans only, they usually contain cancellation options for when home equity percentages reach 20 percent or more.

In other words, PMI can be temporary.

There is a caveat, however: Lenders will not automatically remove mortgage insurance when LTV falls below 80 percent — the onus is on the homeowner to initiate a formal request.

Earlier this decade — when home values were soaring — many PMI-paying homeowners recognized their equity growth and successfully petitioned out from PMI.

Many other homeowners, however, forgot.

So today, as home values stagnate or depress in different U.S. markets, homeowners eligible for cancellation may find that both their home equity and their right to cancel have vanished.

PMI helps makes high LTV loans possible, but there’s no reason to pay it longer than necessary. If your current mortgage requires PMI payments and your loan-to-value lurks below 80 percent, contact your mortgage lender to start the PMI cancellation process.

Or, if you’re unsure about your home’s value and the 80 percent threshold, call or email me anytime for a home value analysis and we work on your research together.

When a home buyer is gifted cash for a downpayment, there is a right way and a wrong way to receive the funds.

The right way includes:

• Completing an acceptable gift letter
• Documenting the withdrawal of funds with receipts
• Documenting the deposit of funds with receipts

The wrong way is to ignore the rules that mortgage lenders clearly spell out for you.

Mortgage lenders watch gifts closely because they want to make sure that the “gift” is not really a loan-in-disguise. If it’s a loan, the total dollar amount must be counted against the home’s total loan-to-value and higher loan-to-values typically increase lender risk.

If it’s a gift, a signed and dated gift letter should accompany the home loan application. An example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift — not a loan — and there is no expectation of repayment.

Signed,
[Signature of donor]

For additional evidence that the gift is legitimate, the recipient should make sure that deposited funds are not commingled at the bank. If the gift is for $12,000, for example, then the recipient’s bank deposit receipt should indicate that a $12,000 deposit was made.

There may be legal and tax liabilities when gifting funds between family members so if you’re unsure about how donating or receiving a gift may impact you, call or email me. If I can’t answer your question, I can certainly refer you to somebody that can.

Interior designers have 16 million colors in their palettes with which to work, but room planning often boils down to three other numbers — 60, 30, and 10.

As in, the 60-30-10 Rule.

As featured on HGTV.com, the 60-30-10 Rule says that decorating a room should be based on percentages:

• 60% should be a dominant color
• 30% should be a secondary color
• 10% should be an accent color

A quick look through design magazines will show that this is not just a theory — it’s a planning tip that is used over and over again by the world’s most famous designers.

The HGTV piece also explains why do-it-yourselfers should add black elements to every room and how to visually divide colors from dark-to-light.

Interior decoration requires flair and intuition, at times. But, because there are practical methods behind designing, that intuition can be honed with education.

The HGTV Web site is a terrific place to start.

Source
COLORSwatch
Mark McCauley
HGTV.com

Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.

The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from “prime” mortgage rates altogether.

The new “mortgage rules” include the following changes:

1. Higher income levels required for basic approvals
2. Interest only loans are now considered high-risk
3. Condos are now considered high-risk
4. 60-day mortgage lates within 6 months are a major red flag

Not all of the changes are for the worse, though.

In the new guidelines, self-employed borrowers will no longer be viewed as more risky than a W-2 employee. This will help small business owners and commission salespeople get more mortgage approvals than in the past.

Fannie Mae agreed to honor all mortgage approvals granted prior to its changes, so if you’ve been putting off that pre-approval, consider talking to your loan officer before the weekend starts.

Your mortgage approval will be much more lenient today than if you wait until Monday.

The monthly S&P/Case-Shiller Housing Price Index is a popular and often-quoted measurement of the housing market’s health. The chart above is sourced from its report published yesterday.

In 18 of the 20 largest metropolitan areas, home values declined at a slower pace than in the previously measured month. The report also showed that national home prices are down 14.4 percent from March 2007.  The Washington metropolitan area was on the list for areas that have improved.  While 0.2% isn’t a dramatic change, it’s still good news.

Unfortunately, it’s the more sensation “14.4″ figure that newspapers chose to report this morning. If you never went further than the headline, you’d miss a key piece of analysis.

Comparing today’s market to last year’s market is a lot less valuable than comparing it to last month’s market. That’s a better way to analyze the market’s health.

If we look beyond the headline and examine the data behind it, we see that housing may still be sagging in some areas, but it’s not sagging nearly as much as it used to.

(Image courtesy: Standard & Poor’s)

At 32 million acres, homeowner lawns are the most irrigated crop in the United States.

That’s more acreage than the state of Pennsylvania.

Water is not free, however, and the 7 billion gallons deposited on lawns each day comes at a high cost to homeowners and to the environment.

Installing a basic rain monitoring device is one inexpensive way to save money and reduce water use. The Vigoro Rain Monitor, for example, costs $15 at Home Depot and attaches to an electronic sprinkler system.

The Vigoro Rain Monitor collects rainfall in its reservoir and when a half-inch of rain has collected, the monitor seals the path between the water source and the sprinkler heads, thereby preventing unnecessary watering and wasted money.

Many lawn care experts recommend 1 inch of water per week.

Source
Create a Greener Landscape
Pat Mertz Esswein
Kiplinger’s Finance, April 2008

The process of buying a home is very different from the process of selling a home, but they both end the same way — with Moving Day.

Choosing a moving company is the often-hurried “last step” that buyers and seller view as a hassle.

Because it’s difficult to differentiate between the moving companies, they look for the lowest-cost provider or a “guy” who can do the job.

If it was that simple, sites like MovingScam.com wouldn’t exist and the New York Times wouldn’t run headlines with the phrase “Furniture Ransom“.

There are a lot of reputable moving companies but there are a lot of con artists, too, and it’s sometimes hard to tell them apart.

This is one reason to ask your real estate agent for a direct referral to a mover; many brokerages have relationships with larger, national companies that can service your in-state and out-of-state moving needs. These movers will come to your home, give an accurate quote, and then stand behind their estimates.

Now, versus the smaller players, the estimates may look a little bit high, but know that they’re legitimate. Don’t think of the higher costs as dollar’s wasted — think of them as piece of mind while your life’s treasures are in transit.