Open house- A selling tool in which a real-estate agent advertises a property for sale and invites people to visit without making an appointment.

Origination fee- A fee that the lender or mortgage broker charges to process the loan

Owner financing- Financing that is all or partly arranged by the seller and not by a lender or bank

Option ARM mortgage- A potentially negatively amortizing mortgage that is adjustable and offers several payment options. Typically a principal and interest 30 or 15 year payment, an interest only payment and a minimum payment that is less than interest only and negatively amortizes the loan. 

Per Diem interest- Daily interest amount based on your note rate and the amount of your loan

Piggyback loan- A first and second mortgage taken out simultaneously. In most instances it would be done to avoid mortgage insurance or to stay at a conforming loan limit

PITI- Principal,interest,taxes and insurance

PITI reserves- Monthly reserves in either a bank or investment account to cover the  principal,interest,taxes and insurance of a property

Points- 1 percent of the loan amount. It can be “origination” points that are charged to process a loan or “discount” points that are charged to buy down the interest rate

Portfolio lender- A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.

Pre approved- Your credit has been pulled and based upon your said income and assets you have an approved loan through an investor pending sending in the supporting documentation like pay stubs, assets etc.

Prequalification- Another term used for pre approved except it may be based solely on a credit report and not actually looked at by an investor

Preapproval letter- A letter given by investor to real estate agent confirming that they can qualify to purchase a home. It is typically a requirement to have one to even place an offer on a home

Prepayment penalty- A penalty that is enforced if you pre pay a large amount of the outstanding principal balance or refinance within a certain time frame. The penalty can sometimes be as much as 5 percent of the loan amount

Prepaids- Are referring to your odd days interest, taxes and insurance

Prime rate- A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender’s assessment of the risk in lending, plus its profit margin.

Principal- The balance of your loan outstanding excluding any interest or charges

Private mortgage insurance- A policy that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Although PMI protects the lender, it is paid monthly by the borrower. Private mortgage insurance usually is required if the down payment is less than 20 percent of the sale price.

Probate sale- Sale of property after the death of the owner, supervised by a court, with proceeds divided among creditors and heirs

Promissory note- A written promise to repay a loan by a specified time

Property taxes- Taxes figured on the value of property you own

Property values- The given market value or worth of one’s property

Purchase agreement- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract

Purchase contract- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract

Qualifying ratios- As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the front ratio, is the percentage of monthly before-tax income that goes toward a house payment. The back ratio is the sum of the house payment and all other monthly debt — credit cards, car payments, student loans and the like — divided by before-tax income

Quitclaim deed- A document that transfers the grantor’s interest in a title to property and is filed with a county recorder. It often is used among family members and can be used to clear up a gap in the chain of title

Rate lock-  A guarantee by the lender or mortgage broker that the agreed upon interest rate will remain for a said period of time.

Real estate agent- An individual who is licensed to assist a buyer or seller in purchasing or selling real estate

Real estate attorney- An attorney that specializes mainly in the transfer of property as well as housing, tax or land disputes. They may also specialize in foreclosure protection as well as any judgments or liens involved with a property or piece of land

Real estate broker- A person who is licensed to represent a buyer or seller of land and the buildings and other improvements on it and collect commissions for the work. Most brokers have agents working for them and collect a portion of their commissions in exchange for providing office space, marketing and other overhead

Real property- Permanent, non movable property, such as land and buildings

Recording fee- cost incurred by buyers and sellers of real estate. It is usually referring to the recording of the transaction at their town or city

Refinancing - Taking a new mortgage to pay off an existing one. One would refinance to lower their payment, the term of the loan or to take cash out or consolidate debt

Regulation Z- A rule, enforced by the Federal Reserve Board and implementing the Truth-in-Lending Act, that requires lenders to disclose all credit-related costs including the annual percentage rate

Rehabilitation loan- Financing obtained to cover any costs or building expenses to take a dilapidated property and fix it up

Relocation company- A business that specializes in providing help to employees who move for their employer. Typically the help is the sale and purchase of their existing and new homes

Remaining balance- The amount that is left to pay your loan off in full

Remaining term- The amount of time that is left on your loan

Rent loss insurance- Hazard insurance that pays for a loss in rental value or rental income if damage causes the property to become unfit for habitat

RESPA- Real Estate Settlement Procedures Act. Known as RESPA. A consumer protection law that requires lenders to give homebuyers advance notice of closing costs, which are payable at the closing or settlement meeting. It outlaws kickbacks and illegal markups in costs

Reverse mortgage- A special type of mortgage, sometimes called a reverse mortgage, that enables older homeowners to convert the equity in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans or mortgages, a borrower does not qualify on the basis of income but on the value of the home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property

Right of first refusal- An agreement by an owner to give another party an opportunity to buy the property before it is offered to anyone else

Right of rescission- The time period that a borrower has to rescind or decide not to go through with their refinance. That time period is three days after the initial closing date of a refinance

Sale contract- A written agreement between buyer and seller that details price and other terms and conditions of sale

Second mortgage- A loan taken on a property that is in addition to their first mortgage. Typically HELOC’s or home equity lines of credit are the most common examples of second mortgages

Sellers market- A real estate market where there are more buyers than sellers of real estate. Usually during this period the top asking price is the accepted offer taken on a sale 

Servicer- An organization that collects monthly mortgage principal and interest payments from homeowners and manages escrow accounts for paying taxes and homeowners’ insurance premiums. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market

Settlement statement- A document that details who has paid how much to whom

Short sale- A short sale, in real estate terms, is a sale of a house in which the sale price is less than what the owner still owes on the mortgage. It is a procedure sometimes agreed to by lenders, who would often would rather take a small loss than go through the lengthy and costly foreclosure process

Simple interest- Interest computed only by the principal balance. Not taking any principal payments into the equation

Spec or speculation home-  A home built as an investment. One that is built with no buyer in mind and just as an investment to hopefully profit from. It can be extremely speculative and risky

Starter home- A home that is usually lower in price and purchased by a first time home buyer.

Subordinate loan-  A mortgage whose priority is below that of another mortgage, for example a second or third mortgage or a home equity loan

Subprime mortgage- A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report. Subprime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default

Tenants in common- Ownership by two or more people in which each person owns an undivided interest in the entire property and all have equal rights to use the property. When one tenant in common dies, that person’s interest may be sold, mortgaged or transferred to another in a will

Term- the length of time of your loan. For example a 30 year or 15 year term

Title - Ownership of real property to the exclusion of anyone else’s right to claim the property. Evidence of title is recorded in a deed and held in a county recorder’s office. The terms “title” and “deed” often are used interchangeably; strictly speaking, the deed is the document and the title is the ownership right that is recorded in the deed

Company that checks a property’s title for liens and other obstacles to sale, fixes any clouds to title, supervises the closing transaction, and makes sure that money transfers in a purchase are processed correctly

Title insurance- A policy that guarantees that an owner properly has title to a property and can legally transfer title to someone else. Should a problem arise, the title insurer pays any legal damages

Title search- The actual search of a property title and its chain of owners at city or town hall of records

Total expense ratio- The percentage of monthly debt payments compared to total before-tax income

Trade line- An account listed on a credit report. Each separate account is a different trade line

Transfer tax- A levy by a state or local government on the change of ownership of real estate

TransUnion- One of the three major credit-reporting agencies, along with Experian and Equifax

Truth in lending act- A federal law that requires lenders to provide certain information so borrowers can compare one loan to another. The most important facts lenders must provide are: finance charges in dollars and as an annual percentage rate (APR); the credit issuer or company providing the credit line and the size of the credit line; length of grace period, if any, before payment must be made; minimum payment required; any annual fees; and fees for credit insurance, if any

Underwater- your property is worth less than what you owe on your mortgage.

Underwriting- the investors review of the loan application for final approval or denial

Variable Interest rate- a rate that changes periodically based upon a certain index and the certain terms of the note                                                                                                                 

Verification of employment- a written or verbal verification from borrower’s employer

VA Loan- mortgage  given to qualified veterans and backed by the government

Walk through- final inspection of home being purchased usually done with your realtor

Zoning- classification that the local government gives to a piece of property to determine residential or commercial etc.

The homebuilding industry continued its descent lower in December slowing to the slowest pace since 1963. This is the lowest pace on record. New home sales fell 14.7 percent in December to a seasonally adjusted rate of 331,000 the Commerce Department said Thursday. New home prices fell more than 9 percent from a year ago.

The 2008 annual figures are not much better. For the entire year of 2008 new home sales were down 38 percent from 2007. In 2008 builders sold 482,000 new homes chalking up the worst year since 1982 where 412,000 homes were sold.

Although for home builders the outlook is not very good there is one bright spot that we can look at to possibly get the ball rolling in our favor. Sales of existing homes increased in December! December outpaced November by 6.5 percent according to the National Association of Realtors. It is a sign that low interest rates and some real bargains in the market are starting to stir some buying. It is a very good sign. As I have said before now is the time to buy. This may not be dead bottom but buying here is without a doubt a win/win situation in the long run.

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While the Connecticut housing market may not be as bad as some of the “ground zero states” of the housing meltdown it is certainly on the decline. The state has heavy ties from a population stand point to the financial markets especially in Fairfield County and the insurance sector in Hartford and its surrounding areas.   

Late last week The Warren Group, the Boston based publisher of The Commercial Record  reported a 26.6 percent drop in single family home sales as well as a 16.2 percent median price drop between November 2007 and November 2008.

It will certainly be interesting to see what the years’ end figures will be. Being a mortgage broker I see appraisals on a regular basis and in some towns the prices have been flat but that is mainly due to a lack of sales in that respective town.  In some instances I have seen sharp declines and in speaking with several appraisers that cover the state they are reporting the same thing.

Below is a brief look on a Town by Town basis:

 Town                 07 sales-08 sales            Median price 07-08

Ansonia Homes sold 14-7 -50%              Price $236,650 - $190,000 -19.71%

Bridgeport Homes sold 40-33 -17.5%     Price $235,950 - $168,500 -28.59%

Derby Homes sold 4-4 0.00%                  Price $260,500 - $249,000 -4.41%

Easton Homes sold 4-10 150%                Price $618,750 - $577,500 -6.67%

Fairfield Homes sold 46-19 -58.7%         Price $598,000 - $615,000 2.84%

Milford Homes sold 41-22 -46.34%         Price $355,000 - $261,250 -26.41%

Monroe Homes sold 17-16 -5.88%           Price $439,000 - $423,750 -3.47%

Oxford Homes sold 5-13 160%                 Price $363,400 - $345,000 -5.06%

Seymour Homes sold 8-6 -25%                 Price $241,250 - $263,500 9.22%

Shelton Homes sold 27-16 -40.74%          Price $375,000 - $327,500 -12.67%

Stratford Homes sold 26-24 -7.69%           Price $264,950 - $266,950 0.75%

Trumbull Homes sold 28-22 -21.43%        Price $423,000 - $362,500 -14.3%

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Anytime that you are purchasing a home or refinancing your mortgage you will need an appraisal. The appraisal is also referred to as a URAR (Uniform Residential Appraisal Report) the cost ranges anywhere from 350.00 for a single family home or condominium to 500.00 for a multifamily property.

 The purpose of the appraisal and the reason it is required is to ensure that the value of the home is there for both the borrower and the lender.  The appraisal is a comparative look at the home that you are buying or refinancing compared to other similar homes in the neighborhood. The range that is typically used is a mile radius surrounding your home. Homes with similar square footage, bedroom and bathroom counts, amenities etc. are used as comparables against your home’s value.

 Actually the appraisal is the most important part of getting your financing. Other than needing to qualify income wise to be able to secure financing ultimately the bank or lender is basing your financing around your home. Your home is used as collateral for the bank or lender so the appraisal is very important in that aspect.  This is why some lenders will not lend on what we will refer to as “unique” properties. For example log cabin homes or contemporary homes. Ultimately the home itself is all the bank has to fall back on if the loan defaults and if it is a log cabin style home for example and that is not common to your area some lenders will have a hard time lending on these properties. Mainly because if the loan defaults the lender then needs to proceed to sell or liquidate that home and if it is “unique” it would be much harder for the lender to do that.

One thing is certain; in 2009 it will still be a buyer’s market. The most recent stat that I have seen is Fairfield County and that is an 18 month inventory of existing homes. That is a good amount of inventory and could very well be a good indicator that 2009 may not shape up to be any better than 2008. As optimistic as I am or want to be stats are stats and that is a huge inventory.

If you have been waiting on the sidelines as a Real Estate investor 2009 may very well be your year for the taking. I personally believe that we still have some downside to the housing market here in Connecticut. However with the vast inventory of homes and some research there are some incredible buys out there. I have personally seen homes that had sold close to 300k at their peak and being short sold for fewer than 100k.

The equity markets started out the New Year on positive footing although there was little news out there to trade on. The Dow Jones opened trading on January 2, 2008 and closed that day at 13, 043. On January 2, 2009 the Dow Jones started the first trading day of the year at 8,772. Looking back at 08’ the equity markets certainly had a rough time of it. I think 2009 will be bumpy however I do not think that it will be as volatile as last year. I also do not put much faith in a huge rebound of the Dow. I am optimistic that by year’s end we will hopefully be past the half way point of this financial meltdown and am looking at 2010 to be a better year for the equity markets.

Mortgage rates are AWESOME. They are the lowest that they have been in over 50 years. 30 year fixed rate mortgages have been under 5% now for close to a month. Refinance business has been strong but as good as rates are there are still several problems standing in the way. For one the housing market is still declining making it very difficult to get the appraised values that would be needed to make refinancing an option for some. Two is unemployment. It is hard to be able to qualify for a lower mortgage payment when you are not employed. I think for at least the first half of 09’ that rates will remain low. It would be in the Fed’s best interest to see that happen. I truly believe that employment is going to be the key to making the turning point of this mess but I also believe that low rates will also be helpful.

I have posted earlier on Loan Classroom how mortgage rates are derived. A combination between the MBS (Mortgage Backed Securities) and the Ten Year Treasury Bond. Here is a chart of the Ten Year Bond.

I think that we can see the 10 Year Treasury stay in the low 2.00% range for some time. So I am optimistic that we will see rates stay in the low 5 to under 5% range for a while.

Selling Real Estate in this environment is tough. If you are a seller you have to be patient, you also need to be realistic. Although I see values going lower still you need to find a good Realtor. If you are using a Realtor to sell your home he or she should be able to give you a plethora of info on your local market including expected turn times of homes sitting on the market. If they cannot or are not ready to sit down and go over this with you, look for a new Realtor. You also may want to be creative when listing your home in 2009. That could mean painting rooms, keeping the house extra clean when being shown and also staging your home. I have posted several blogs on helping you sell your home in 2008. One specifically on staging your home. You should also ask your Realtor for their advice on what might help sell your home.

In 2009 all things considered I think we are still going to have a tough go at it. Patience is going to be the key as is creativity. There are still a lot of hurdles to overcome but I am optimistic that coming into 2010 we will be sitting in a much better position than we are starting 2009 in.  

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In a perfect world we find a home that we like, purchase it and then seek out a suitable mortgage to help finance the purchase. And in that perfect world we pay the mortgage, have no financial worries and live happily ever after. And we all know that this is a dream and reality is their are financial struggles and their are people struggling to pay their bills. I wanted to go over and inform you of different options that you have as a mortgage holder during these difficult times. All of these options are available to you before what should always be your last and final resort which is foreclosure.

If you are unaware that the U.S. economy is struggling you are presently living under a rock! That said there are options available to you if you do find yourself in financial disarray.

1) Loan Modification- contact your lender and see what they can do. The lender will modify your loan meaning the payment based upon your current income.

2) Forbearance Agreement- If you have fallen behind on your mortgage and are in risk of heading to foreclosure you can work this written agreement out with your lenders loss mitigation department. It will allow you to work a repayment plan to catch up on the past due payments so that the bank does not have to foreclose.

3) Short Sale- If you are selling your home and owe more than the home is worth you arrange a short sale. It is an agreement with your lender to sell the your home ans the lender will take a loss on the property. Allot of times lenders would rather take less on the payoff than bear the expense of going through foreclosure.

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There is something to be said about a neat and tidy house when you are sorting through house after house looking for the perfect home for you and your family. This is something that should be kept in mind when selling either a personal home or an investment property. There are a few other things you should keep in mind when it comes to selling real estate. One of those things is that staging sells homes.

Seriously, there is something cold about an empty house. It could be painted impeccably and meet every possible standard a family has and yet feel cold and anything but homey when walking through the home for a real estate tour or inspection. This can be easily overcome by contacting a local furniture rental store and picking out furniture that will match at least the primary rooms of the home in order to make the home appear leaved in and homelike.

The primary rooms that you will want to appear ‘lived in’ are the living room, dining room, master bedroom, and all bathrooms. These are the rooms that essentially sell homes and it is important to make them appear neat, orderly, and well cared for. If you have the funds for every room in the home then by all means do so. It is a huge selling point, particularly for those who are trying to sell homes quickly. If the home doesn’t sell after the first two weeks or month (you decide the time limit) then you may want to remove the ’staging’ furniture in order to eliminate the expense. I would strongly encourage you to keep this furniture as long as the home is being shown fairly regularly though.

You will want to do so much more than simply putting furniture in the property you are trying to sell. You want to create an atmosphere or warmth and comfort. This means you want to have prints on the walls, mirrors, plants, and pillows. You do not have to purchase items particularly for this process. You can use things from your own home in order to establish this atmosphere of homelike comfort. Be sure not to use sentimental favorites or very valuable pieces, as not all people who will view the property being sold are honest. It’s a sad reality but something to consider all the same.

 
Other things that may help an empty home sell are scents. There is nothing quite like the smell of cookies in the oven or flowers in bloom to make a home feel ‘homey’. These scents can be easily accomplished with well placed scented candles, potpourri warmers, dry potpourri, fresh-cut flowers, and electric room air fresheners. There are few things that will turn off potential buyers more quickly than an overpowering fragrance however so keep this in mind when selecting the method of fragrance. Having some fragrance in the home also eliminates the problem of an empty house taking on the ‘empty house’ scent that so many do over time. In other words, this is yet another part of the staging process that works for many trying to sell homes.

The short answer to the question of whether or not staging sells real estate is “yes”. Staging a home can absolutely lead to a higher offer and a quicker sell, even in today’s sluggish market.

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When you sell your home, the process is almost like going to a job interview.  Selling a home involves presentation, which is one of the key factors that determine the outcome.  Although this may sound a bit weird, presentation is a way of life in the world of real estate.  Buyers in today’s market look for good presentation – many basing their final decisions on it.

If the property you are selling comes with a garage, you’ll need to go through your garage before you sell your home.  Chances are that you store things in your garage, which can easily pile up over time before you realize it.  If your garage is in a messy condition, you’ll obviously want to clean it up.  Buyers look for homes that are in perfect condition, and anything less than perfect will look bad in the eyes of the buyer.

Most homes have some truly outstanding features inside of them.  You should always do your best to highlight the best features of your home, instead of just hoping that the buyer understands what they are.  The ideal way to bring out the best features of your home is to use the proper lighting.  If your home is clean, you can use lighting to bring out the best features in your home, and ensure that they stand out to the buyer.

When a potential buyer first pulls up to your home; the first thing he will see is your lawn.  If your lawn is trimmed and well taken care of, he will get a good impression right off the bat. If your lawn is a wreck, he may immediately pull away.  To give the best impression to the buyer, you should put some thought into how things look.  You can always plant flowers around the walkway and throughout the yard, which will look great to a potential buyer.

You should also make sure that the entrance into your home is a positive as well.  The front door should be in great shape, as well as the entry area into the home.  You can add some plants, paintings, and rugs to ensure that your buyer gets a good impression.  When the buyer walks through the entry way into your home, you should make sure that the view he or she takes in is a good on.  Your biggest goal when showing your home is to ensure that the buyer is pleased.

Keep in mind that it may take some time to sell your home.  These days, homes can sit on the market for months at a time before they actually sell.  If you are having trouble selling your home, you can always reduce the price or simply go back to the basics.  Eventually you will sell your home – although it may take more time than you think.

Need help finding great mortgage rates call or click (203) 838-6760 or www.EversleyCapital.com