Oct. 31, 2017

How to Purchase a Home with No Down Payment! Movement Mortgage MAP

Check out my short interview with Bo Lee of Movement Mortgage as we discuss the MAP program.  The MAP program provides qualified first-time homebuyer with a grant of 3% of the sales price to be used as the down payment. 

 

www.callbolee.com

 

 

Bo Lee
NMLS# 195871
Senior Loan Officer
Movement Mortgage
703-967-9792
 

 

Dec. 28, 2016

Lease-to-Own

Is it a good idea to lease with an option to buy?

You have been renting your home for awhile now and you really like the place and the location.  You may have talked with your landlord about wanting to purchase the home. Sounds like a good idea, you may not have the money necessary for the down payment and closing costs. Paying a little extra above your monthly rent for the down payment sounds like an attractive option.  As in all big decisions should evaluate the pros and cons. The pros, unlike the cons, are easy to grasp. The pros; you stay in the home you love and by paying a little bit more a month you are saving for the down payment and are buying time to qualify for the mortgage.  The cons are however not as easily discerned.  So here are some things you should consider when deciding if lease-to-own makes sense:

Loss of Money Paid to Seller

It happens, you are late on the rent or miss a month or violate the lease that allows the landlord to cancel your lease.  In that event you will likely forfeit all the funds paid to the seller, not good.

Landlords Mortgage

If the landlord has a mortgage, the lender may prohibit the owner from entering into a lease-to-own agreement. You should have the landlord confirm with the lender that a lease to own arrangement is allowed.

Acts of of the Seller

What happens when your landlord isn’t paying the mortgage?  What happens to the money you have paid if the lender forecloses on the home?  Chances are high that if the seller isn’t paying the mortgage, your prepayments funds are long gone.  Same problems with seller bankruptcy, your rights to the property may end.

What happens if the seller dies before you can exercise the right to purchase the home?  You may not get clear title which will be required to exercise the right to purchase.

Unethical Seller

The seller may take out a second mortgage or transfer ownership rights to another buyer.  If your financial interest in the property (the amount you have paid as the down payment) is not recorded in the courthouse, a new buyer may take title to the property free and clear, cutting off your rights.

Property Improvements

Since you are going to be the owner one day you decided to spend money redoing the kitchen. If any of the above items occur and you end up not purchasing the home, the seller is not required to reimburse you for the improvements, even if you are evicted. 

How to Protect Yourself

Have an attorney review your agreement.  There are quite few risks associated with  lease-to-own, you need to understand the agreement and the associated risks. 

Obtain title insurance.  The title insurance firm will research the title to ensure the seller has clear title or what is called “marketable” title.  This means that there are no other claims on the property, liens, etc.

Have your financial interest recorded in the local land records, the title company can assist with this.  By doing this you are staking your claim to a share of the home.  However, most landlords/sellers will object as this may not be allowed by the lender and will cost the landlord money.

Posted in Lease-to-Own
Dec. 28, 2016

Virginia First Time Home Buyer Grant - REVISED

Virginia (VHDA) is offering first time home buyers a grant of up to 2.5% of the sales price to be used as the down payment. To be considered a first time home buyer you can not have owned a home in the past three years. 

There are some restrictions; buyers are required to put down 1% to be used as the down payment, households of two or fewer people must make under $97,520.  Maximum household income for 2 or more people is $113,840.  The maximum sales price cannot exceed $500,000 in the Northern Va area. Different parts of the state have different income and maximum sales prices limits.

Link to the VHDA Site HERE

The program is limited by funds- when the funds run out the program will end, so what are you waiting for? Begin the application process with Movement Mortgage by clicking HERE!

April 10, 2016

Virginia Home Buyer Grant - Free Money up to $17,500!

PROGRAM FROM VHDA HAS BEEN REVISED for Current Information Click HERE

 

Virginia (VHDA) is offering first time home buyers a grant of up to 3.5% of the sales price to be used as the down payment. To be considered a first time home buyer you can not have owned a home in the past three years. 

There are some restrictions; households of two or fewer people must make under $97,250.  Maximum household income for 2 or more people is $113,840.  The maximum sales price cannot exceed $500,000 in the Northern Va area. Different parts of the state have different income and maximum sales prices limits.

Link to the VHDA Site HERE

The program is limited by funds- when the funds run out the program will end, so what are you waiting for? Begin the application process with Movement Mortgage by clicking HERE!

Here is an interview I did with my preferred lender Bo Lee of Movement Mortgage about the grant. 

 

 

 

Feb. 20, 2016

Should I get a Home Inspection?

Generally it’s a good idea to get a home inspection, but it may depend on several factors.  It would be easy to simply state that yes everyone should get a home inspection.  However, the decision to pay for a home inspection depends on several factors. These factors include the nature of the property being purchased, the type of buyer, the overall structure of the purchase offer and market conditions. 

Purchase offers in Virginia for residential real estate can include an addendum to the contract that stipulates that the buyer's offer is contingent upon a home inspection. A home inspection will typically be conducted 7-10 days after contract ratification.  The inspection must be conducted by a licensed home inspector.  The buyer will then have the opportunity to ask the seller to repair or replace items found deficient in the home.  The seller may agree to some of the items, all of the items or offer a credit in lieu of repairs.  There is a negotiation period between the seller and the buyer to come to an agreement. If the buyer is not satisfied with the sellers offer the buyer may terminate the contract.  

What Type of Property is being Purchased?

The type of property being purchased is a major consideration when considering a home inspection.  The type and age of  the home typically determines if a home inspection should be done. Is the home new construction? If so, the builder’s warranty will typically cover any problems encountered by the new owners and a home inspection may not be warranted. Is the home a condo?  Prospective condo owners have a lot less to worry about.  There is no roof and basement, the problems areas that are most likely to blow up a deal.  Is the home an older single family home such as a townhome or single family detached?  If so, it is a good idea to protect yourself with a home inspection. These are the types of homes that are more likely to have possibly significant problems such as foundation/structural issues, water damage, mold, non-permitted improvements, etc. 

How will the Home Inspection effect the Offer?

There are several factors a seller considers when reviewing a purchase offer.  The offer price is only one of the factors. The seller will consider the overall strength of the offer. Offer price is of course important, but other aspect of the offer are important too.  Other considerations include the strength of financing (or cash), settlement date, earnest money deposit and other offer contingencies.  Other offer contingencies include the home inspection, financing, appraisal, must sell home first, etc.  Dropping the home inspection in certain cases will make the offer more attractive to the seller.

What are the Market Conditions?

In a hot seller’s market the buyer’s offer may be one of many the seller is considering. Buyer’s facing a seller’s market looking to improve the offer may drop the home inspection contingency.  In a seller’s market the buyer may make an offer with a home inspection for informational purposes only.  Meaning that the buyer will be protected by the home inspection contingency but acknowledges in the offer that the seller will not be expected to make any repairs. In this scenario after the inspection the buyer's option is to take the property "as is" or to terminate the contract.  In a buyer's market a home inspection contingency is common, and sellers of older single family homes should expect an offer with a home inspection contingency.  

Who is the Buyer?

The buyer's knowledge or lack thereof of home systems including heating/AC, roofing, appliances, etc. is a factor in determining if a home inspection should be done.  I have worked with buyers who are very home savvy and forgo the inspection, such as investors.  I have also worked with clients who are not sure what a hot water heater looks like.  So, if you don’t know what a hot water heater looks like, get a home inspection!  

What about “As Is” Sales?

Buyers can still protect themselves with a home inspection when negotiating for a strictly “as is” home. Actually all homes listed for sale in Virginia are "as is", but that is another blog post.  Since the seller has listed the property “as is”  the buyers expectation should be that the seller will not respond to any repair or replacement requests. However, the buyer may use the home inspection contingency to exit the contract.  It should be noted that even the “as is” seller may comply with repair or replacement requests for significant issues that were unknown to seller. Virginia law requires sellers to disclose any latent defects (present but not visible).  So if the home inspection uncovers a significant problem, the seller may reconsider and remedy the issue.  If the buyer terminates the contract and the seller is made aware of the latent defect, the seller must disclose the problem to the next prospective buyer.  Rather than having to disclose the problem, the seller may reconsider and negotiate a remedy with buyer.   Typically properties sold by banks (REO/Foreclosed) will not make any repairs.

Summary

The answer to the questions of should I get a home inspection depends on all the factors above. Working with a knowledgeable REALTOR® will help the buyer navigate the home buying process which includes the decision to include a home inspection in the purchase offer.

Feb. 10, 2016

Can I Really Get a Credit Report for Free?

Yes You Can!

Credit reports affect your mortgage rates, credit card approvals, apartment requests, or even your job application. If you watch TV chances are you have seen various companies advertise credit reports for free.  While you can get your report for free from some these advertisers, their goal is to up-sell you additional services, such as financial advice, credit strategies, etc.  For some folks these services may be worth while, put if you simply want your credit report there is only one website explicitly directed by Federal law to provide the report for free:

www.AnnualCreditReport.com

You may think you have one credit report and one credit score. But you really have several, and they may differ. You should check all three reports regularly.  In addition, reviewing your credit reports regularly helps you catch signs of identity theft early.

Federal law and the website allows you to get a free copy of your credit report every 12 months from each credit reporting company.

 

 

Posted in Free Credit Report
Jan. 28, 2016

Home Ownership and Wealth Creation

Does it Still Make Sense to Own a home?

Most folks remember the housing bubble and the trillions of equity lost.  This equity, while accumulated in a bubble was still real.  Real enough that owners had what some economist term the "Wealth Effect".  This theory states that consumer spending increases greatly as the overall value of one's financial position improves.  This was certainly true during housing bubble.  

However, similar to the stock market, wealth is typically created over the long term.  That is also true with housing. The longer ones hold a home, the greater the opportunity to ride out the down turns.

An article from the NY Times concerning wealth and home ownership:

Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.  

Bottom line: home owners accumulate significantly greater wealth than do long term renters!

Jan. 26, 2016

What is a Seller Subsidy or Seller Credit?

Seller Subsidy

Besides the down payment, buyers typically need to pay closing costs. Closing cost are just that; the costs incurred to close on the property. Closing costs are not considered part of the down payment.  Typically I advise my clients to figure on closing costs equal to 3% of the sales price.  For example the closing costs on a $300,000 home will be around $9,000.  

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Nov. 28, 2015

When is Bedroom not a Bedroom?

What makes a bedroom?  I was in a meeting the other day filled with folks in the real estate business;  agents, investors and appraisers.  The the question was asked "when is a room a bedroom?"  There were several answers, some closer to more correct than others.  Some said the room had to be above grade, others said it had to have a closet, others stated that it had to have egress (an exit to the outside).  

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