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FHA CHANGES AND BUYING OPPORTUNITITES
from the August 2008 Newsletter
As part of the 2008 Foreclosure Prevention Act, Down Payment Assistance Programs (DPA) will be eliminated. The President signed off on the new bill on Wednesday, July 30th. What does this mean for a lot of home buyers? Well, considering that more than 40% of new FHA loans are using one of these programs, it could become interesting for first time homebuyers, and many others for that matter. Additionally, the minimum down payment for FHA loans is being raised from 3% to 3.5%. FHA still allows borrowers to use gift funds for their down payment from specific sources, such as family or employers, but the financial burden of coming out of pocket for funds to purchase a home has definitely been raised. On a brighter note, a $7,500 tax credit for first time homebuyers has been initiated which will hopefully offset the impact of this new legislation. The elimination of these programs is set for October 1st, 2008 (with many individual lenders likely imposing earlier deadlines), meaning that there is still time to take advantage of DPA’s before they are gone forever (well, perhaps forever, as some members of Congress are trying to introduce a new bill that would again make DPA programs available under much more stringent qualifying criteria). If you or someone you know would benefit from this type of financing or have additional questions about how it works, give us a call today – because tomorrow may be too late!
One other often overlooked opportunity in the housing market are HUD owned homes. Special financing for HUD owned homes is currently available for qualified borrowers that allows for a $100 down payment and 3% in seller assisted closing cost contributions. The program also credits the borrower $1000 at close of escrow! This is a fantastic deal and contrary to popular belief, not all of these homes are trashed. Many are very nice, newer homes, albeit many are in outlying areas of the Valley, but nice homes. The deals are even sweeter if you are a teacher, police officer or firefighter! Additionally, if these homes are not snatched up within a certain period of time by an owner-occupied buyer, then they become available to investors! The deals on these homes are hard to beat. If you would like a listing of current HUD homes that are available or more information on this opportunity, contact us today!
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Home Improvements That Actually Add Value
from the July 2008 Newsletter
In this competitive market, sellers are looking for ways to differentiate their home from the myriad of other homes available. And for those who are deciding to stay put to “weather the storm,” you may still be looking for ways to improve your home in the most practical ways possible. For instance, you may think that an additional bedroom or a new pool would add thousands to the resale of your home, but that may not be the case. Homeowners are often surprised they are unable to reclaim all the costs involved with remodeling their homes.
Recouping your entire investment is ideal when you sell your house. But all home improvements are not equal at the time or resale. Consider that kitchen and bathroom remodels pay back about 90 percent or more of their costs. Here are some estimates of the costs you can expect to reclaim on typical home remodeling projects:
New heating system: 100%
New air conditioning system: 76%
Minor kitchen remodel: 93% - 103%
Major kitchen remodel: 91%
Bathroom addition: 93%
Family room addition: 85%
Remodeled bathroom: 76%
New fireplace: 75%
Outdoor deck/patio: 74%
Home office: 70%
New windows: 70% - 75%
In-Ground Pool: 45%
Upgrade landscaping: 32% - 62%
These payback ratios, of course, depend on the real estate market and current property values. If the pace of home sales has slowed, expect to see less payback than you would in a fster market. Also, consider the other homes in your neighborhood. If you remodel your house to twice the square-footage of your neighbor’s, you cannot realistically expect to sell at twice the price.
Sometimes smaller projects can pay back more than larger projects because of their more immediate visual improvement. These projects tend to be more cosmetic: fresh paint, flooring, moldings, new doors, window coverings and ceiling fans. Contact The Jewett Group and your Accredited Staging Professional team to discuss improving the resale value of your home!
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Selling Your House in a Buyers Market
from June 2008 Newsletter
Intro by: Laura Jewett
The following article reiterates what we tell all of our clients looking to sell in today’s market. Furthermore, it reflects on the power and importance of Staging® a home prior to putting it on the market. According to Staged Home’s website, 93% of ASP Staged Homes sell on average in one month or less while non-staged homes take an average of 160 days! These numbers speak for themselves! I will soon have a page on Staged Homes website that will feature The Jewett Group’s staged listings as well as a wealth of other helpful information - it will be linked directly to the www.TheJewettGroup.com website as well!
Article by: Ray Martin
Published in: cbsnews.com on May 22, 2008
As the supply of homes for sale continues to grow throughout the U.S., hopes that the spring and summer selling season will see a rebound are dwindling. Many experts have declared that any meaningful rebound might begin next year. Home prices continue to decline in many areas, fueled by tight lending standards and a rising supply of houses on the market. It' been a long time since home sellers have faced these conditions - in fact, many homeowners looking to sell are in uncharted waters.
Face the New Reality - It's a Buyers' Market
Homeowners who want to sell have a choice: sell in the current market, or wait until later, when market conditions improve. Of course, the latter assumes they can wait. But if you are determined to sell, you need to forget about the real estate market of just a few years ago and face the new reality in many real regions - it's a buyers' market, and you will be competing with a growing supply of motivated sellers to get buyers interested in your house.
Real estate professionals say that, when trying to sell your home in a buyers' market, the two most important factors, after location, are price and condition. I'll add flexibility. Buyers know real estate prices ran up far too much during the last several years of the real estate boom, and just because you may have paid too much for your home doesn't mean buyers think they should have to pay to bail you out. With this in mind, here are some of the strategies experienced realtors typically advise to help sell a house in a buyers' market:
Price It Right: Real estate pros say the key to selling a house is to “price it right.” Set the price at what you can get, not what you think its worth. The fact of a sellers market is that it doesn't matter what you or your realtor think your house is worth - the only thing that matters is what a buyer is willing to pay. You don't want to over-price your house, because buyers ignore it and your listing will lose its freshness and appeal, not to mention the uncompensated effort of keeping the home spotless during the showings. Also, the “original listing price” and “current asking price” are on your home's Multiple Listing Service (MLS) listing; if you do not show some decline from the original offering price, some buyers will see it as a sign you have unreasonable expectations of what you can fetch for your home. Sellers fear pricing too low and leaving money on the table, but there is little danger of this. If a home is priced too low, far below the competition, you should receive multiple offers that will drive up the price to fair market value.
Research Local Market: The best way to know if your home is priced fairly relative to comparable houses for sale is to compare your asking price to a comprehensive market analysis. This is the first step before you list your house. Get the listings of the houses in your area, and the price range. Look at the listing for every comparable home that is or was listed in your neighborhood over the past six months. Compare similar properties, make adjustments for locations, age, upgrades and lot sizes. and come up with a range of values. Also, get a list of the recent sales prices and the original listing prices of comparable houses in the area. You can track this down on web sites such as www.zillow.com , www.realtor.com, and/or ask a local realtor to do it for you.
Have an Internet Strategy: Most buyers search the Internet and buy a home within 12 miles of their existing one - so use the Internet tools available in your area to see what the supply of homes for sale in your area looks like online. Also, if you are working with a realtor, don't choose to list with the one who suggests the highest listing price. Instead, select a listing agent who can back up his or her proposal with the most facts, market research and experience. When setting the listing price for your house, use round numbers, in increments of $5,000. Most buyers use the Internet to search for a home. When searching by price, they typically search in increments of $5,000. So, listing at a price of $250,000 will turn up in more searches that listing at $249,900.
Make a Great First Impression: Real estate pros often talk about “curb appeal.” Homes with it sell more quickly and those without it can languish on the market longer, further eroding the price buyers are willing to pay. Realtors often comment on the number of homes put on the market with little or nothing done to improve their curb appeal. One real estate pro put it this way: “Most buyers know the house is 'the one' when they see it the very first time; if they make a connection on the first showing, it's sold.” For this reason, doing what it takes to get your house in selling-shape is the second most important factor (after setting the correct price) if you want to get close to your asking price or sell as quickly as possible.
Some things you can do to increase your home's curb appeal and help it "show" better that don't take a lot of money include:
- Sprucing up the yard: Sweep the walk, mow the lawn, prune the shrubs, and clean up debris.
- Cleaning: windows, floors, carpets, kitchen, appliances, bathrooms, and even windows.
- Painting: front door, walls leading to entranceways, ceiling stains, cracked or chipping areas.
- Fixing or repairing: broken doorbell, leaky faucets, broken floor or counter tiles, door that don't close properly, and broken deck railings
- Organizing: all rooms, closets, and even the basement.
- Setting the Stage: Remove pets and litter box, light scented candles, play background music, rearrange and remove excess furniture.
The industry term for doing this is “staging a house” and, as you can imagine, it goes far beyond decorating and cleaning. But doing this can result in selling your home faster and getting a higher price, according to professionals who offer these services. If you don't have the time or would prefer to have someone trained and objective do this for you (after all, they will tell you to lose the bright orange paint in the kitchen!), ask your realtor to refer you to a professional home stager. Some realtors have earned the Accredited Staging Professional (ASP) designation and can do this for you. You can also learn more and locate a professional home stager at www.stagedhomes.com.
Get a Pre-Sale Inspection: Sellers are strongly advised to consider getting a pre-sale home inspection, especially if their home is older or in need of repairs. They can either use a clean home inspection report as a selling advantage or take care of the repairs listed on the inspection report. Of course, it's advised that you make the repairs before listing the home if possible, especially if they involve things that can be messy and unsightly, such as replacing the roof or removing an old fuel oil tank. But if you can't make the repairs, you can use the report to make estimates available to show potential buyers about the cost of repairs.
Be Flexible: In this market, buyers will expect to pay less than the asking price. They will be armed with the original list prices and final sales prices of comparable homes and will know the price reductions other sellers are accepting. Many buyers may make a low-ball offer to see what your reaction is. Remember this: Emotion is the enemy of flexibility, so keep emotions out of it. Your objective is to sell the house and, if a buyer is truly interested and able to buy your house, then there is a price they may be willing to pay and you may be satisfied to get. Don't simply reject their first offer. Instead, make a reasonable counteroffer and send the message that you want to work with them to close the gap between their offer and the price you need to get for the house. Also, ask the prospective buyer or his or her realtor what information was used to determine the price offered for your house and why they want to buy your house. For example, say the buyer's respond that the offer was based on comparable price per square footage for two other listings. If your house includes upgrades and a finished basement that the other listings do not have, include with your counteroffer an explanation of the cost of your upgrades and the additional value per square foot.
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How to Manage Your FICO Score
from January 2008 Newsletter
I recently attended a course on consumer credit that covered the structure of the credit world and how the Credit Reporting Agencies (CRA) manage our credit data using the Fair Isaac System. This was an insightful course that really highlighted the fact that we as consumers are not the CRA’s primary customers… the credit companies are! This puts us at a considerable disadvantage if you are trying to rebuild or repair your credit. Here are some tricks of the trade and a few tips that were covered in the course that I thought you might find helpful.
The eight factors that most significantly impact your FICO scores:
- Performance
- For example: a 30 day late payment will negatively impact your credit score for seven years! It has a drastic impact in the first six months and then continues to have a declining effect over time.
- Type of Accounts
- There are three major types of credit accounts and to maintain a healthy credit score, it is ideal to have all three types:
1) Revolving Credit Accounts – standard credit card accounts
2) Installment Loans – car loans, student loans, lines of credit for furniture, electronics or other similar things
3) Mortgage Loans
- History
· if you are going to cancel any credit cards, cancel the most recent ones first as length of credit history impacts your score
- Ratio of Balance to Limit
· your credit score will be negatively impacted if you charge over 50% of your credit limit against your cards
- Number of Accounts with Balances
· do not fall victim to the discounts that stores offer for opening an account with them. Your score will be impacted from the inquiry and the additional line of new credit – having too many revolving accounts can negatively impact your score
- Ratio of Derogatory Accounts to Good Accounts
- It is essential to make your payments on time. If you are having trouble, contact your creditors and tell them your circumstances. They want you to continue to pay so they will generally make special arrangements with you until you are able to get back on track. As with most things, ignoring the situation, hoping that it will just go away, does not work!
- Date of Last Activity
· it is important to use your cards, even if you pay off the balance at the end of the month, to keep the use history current on the account
- Inquires
· having too many inquires on your credit will negatively impact your score but they do “go away” after 180 days
Unfortunately there is no fail safe equation for repairing your credit. Even if you do something that you think should positively impact your score, it may have the opposite effect in the short or long term. Since our credit scores are calculated using a complicated algorithm it is impossible to put definitions on different actions, such as if I pay off this account and close this one, it will improve my score 50 points. All that we can do is try to follow the above guidelines and if we do get in trouble, there are remedies but it takes time… lots of time! But, as consumers, we do have rights…
Consumer Bill of Rights
The Federal Trade Commission (FTC) enforces credit laws that protect consumer’s rights to obtain, use, and maintain credit. The Fair Credit Reporting Act (FCRA) was designed to help ensure credit reporting agencies (CRA) furnish correct and complete information to businesses to use when evaluating a consumer’s application. To read a list of the rights afforded you under the FCRA, click here or give me a call and I will be happy to send you a copy.
If you are interested in more information or would like to discuss this topic further, I would be happy to help! I received some great materials in the course, including formatted letters to send to the CRA’s in the event that you need to dispute an item on your credit. As always, I am here to help so feel free to give me a call or email anytime!
The above is intended for basic information only and should not be construed as legal or accounting advice. All information is deemed reliable but is not guaranteed.
PUT A STOP TO JUNK MAIL! Well a lot of it anyways!!! From February 2008 Newsletter
You can choose to stop receiving “prescreened” offers of credit from credit and insurance companies.
Under the Fair Credit Reporting Act (FCRA), the Consumer Credit Reporting Companies, are permitted to include your name on lists used by creditors or insurers to make firm offers of credit or insurance. The FCRA also provides you the right to "Opt-Out", which prevents Consumer Credit Reporting Companies from providing your credit file information for firm offers of credit or insurance that are not initiated by you.
www.OptOutPrescreen.com or 1-888-5-OPT-OUT
Through the website or toll-free phone number, you may request to:
· Opt-Out from receiving firm offers for 5 years
· Opt-Out from receiving firm offers permanently
· Opt-In and begin receiving firm offers. This option is for people who have previously completed a request to Opt-Out.
By opting out, your name will be removed from the lists that Equifax, Experian, Innovis and TransUnion provide to businesses for the purpose of making you a firm offer of credit or insurance, you may continue to receive offers from sources that do not use Consumer Credit Reporting Companies to compile their lists. Your request becomes effective with Equifax, Experian, Innovis and TransUnion within five days of your request. However, you may not see an immediate reduction in the amount of offers you receive because your name may have already been provided to some companies that have not yet mailed their offers to you. You may continue to receive certain firm offers for several months.
You can also contact the consumer reporting agencies directly if you want to “opt-out” from receiving prescreened offers of insurance or credit by writing or calling toll-free:
Experian Consumer Opt Out
Experian Target Marketing Services
701 Experian Parkway
Allen, Texas 75002
1-888-567-8688
Choicepoint Options
2825 Breckenridge Boulevard
Suite 200
Duluth, GA 30096
1-888-203-7969
Direct Marketing Association
Greatly reduce the amount of advertising mail you receive from national marketers!
The DMA tracks consumers who prefer not to receive mail or telephone solicitations. The DMA can provide information about Opting-Out of lists produced by companies that subscribe to its Mail and Telephone Preference Services. You may contact the DMA at the following web address:
http://www.dmaconsumers.org/consumerassistance.html
Some consumers would like to receive less advertising mail at home. DMA’s Mail Preference Service (MPS), which was created in 1971, is designed to help consumers decrease the amount of nationally generated commercial or nonprofit mail they receive at home. The above website will give you information on how you can opt out of — or even opt into — mailing lists. The DMA Mail Preference Service will greatly reduce the amount of advertising mail a person receives from national marketers.
PROTECT YOURSELF FROM IDENTITY THEFT!
from April 2008 Newsletter
Read this and keep a copy with your credit card statements in case you need to refer to it someday. A corporate attorney sent the following out to the employees in his company. Maybe we should all take some of this advice!
- The next time you order checks have only your initials (instead of first name) and last name put on them. If someone takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but your bank will know how you sign your checks.
- Do not sign the back of your credit cards. Instead, put “PHOTO ID REQUIRED”.
- When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the “For” line. Instead, just put the last four numbers. The credit card company knows the rest of the numbers, and anyone who might be handling your check as it passes through all the check processing channels won’t have access to it.
- Put your work phone number on your checks instead of your home phone. If you have a P.O. Box, use that instead of your home address. If you do not have a P.O. Box, use your work address. Of course, never have your Social Security number printed on your checks. You can add it if it is necessary, but if you have it printed, anyone can get it.
- Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place. It is also a good idea to carry a photocopy of your passport with you when you travel either here or abroad.
True Story from an Attorney who was a Victim of Identity Theft
We’ve all heard horror stories about fraud that’s committed on us in stealing a name, address, Social Security number and/or credit cards. Unfortunately, as an attorney I have firsthand knowledge of this because my wallet was stolen last month. Within a week, the thieve(s) ordered an expensive monthly cell
phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change my driving record information online, and more. But here’s some critical information to limit the damage in case this happens to you or someone you know:
A. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.
B. File a police report immediately in the jurisdiction where your credit cards, etc. were stolen. This proves to credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).
C. But here’s what is perhaps most important of all: (I never even thought to do this.) Call the 3 national credit reporting organizations immediately to place a fraud alert on your name and Social Security number. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the Internet in my name. The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit. By the time I was advised to do this, almost two weeks after the theft, all the damage had been done. There are records of all the credit checks initiated by the thieves’ purchases, none of which I knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw my wallet away. This weekend someone turned it in. It seems to have stopped them dead in their tracks.
The numbers you always need to keep on hand (a great place to keep them would be with the copies of the contents of your wallet) to contact regarding the theft of your wallet, etc.:
1.) Equifax: 1-800-525-6285
2.) Experian: 1-888-397-3742
3.) Trans Union: 1 -800-680-7289
4.) Social Security Administration (fraud line): 1-800-269-0271.
I am sure that you have all heard the advertisement for LifeLock on TV or the radio with the CEO of the company giving out his social security number. They are the leading provider of Identity Theft Prevention Services. LifeLock developed the nation’s first and only proactive identity theft solution designed to help prevent crimes before they occur. They back their service with a $1 million service guarantee. I recently became a customer and am looking forward to the comfort that knowing that my credit is safe affords! You can additional information about this company and their services at: www.IdentityTheftLifelock.com
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