Effects of the Rebounding Housing Market

There’s no debating it- the housing market is rebounding. We’re going to take a look at some of the effects of the recovering housing market and why now, not later, is a really great time to buy a home.

Prices Rising

Home prices rose over 10% in the first few months of 2014. These numbers are in comparison to when the housing market were at or near their lowest, so this is expected to level off, but the fact remains that home prices in almost all markets are continuing to increase. Obviously, if you’re buying a house you’ll want to get as low a price as possible on it. Buying now instead of next year, or even next month, could get you a lot more house for your dollar.

Above Water

Because of the rising home prices, many homeowners are just now starting to see equity in their homes, which will give many people who have been afraid of losing money on their homes the impetus to start selling and move themselves. Additional buyers will create more competition and help drive prices up as well.

 Short Supply of Short Sales

With homeowners gaining equity in their homes, fewer and fewer short sales and foreclosures are on the market, which will help stabilize home prices. It will also reduce a homebuyer’s ability to find some truly great deals, once again netting less house for the money. If you’re thinking about finding a short sale or foreclosure, you’d better get moving while there are still plenty of them out there. Check out our page on short sales for more information.

Low Rates

This isn’t an effect of the rebounding housing market, but while we’re talking about reasons to buy a house now, it’s worth mentioning that mortgage rates remain extremely low. In fact, as of this writing, Freddie Mac reported that the average 30 year fixed rate loan has fallen for the fifth straight week and is down to 4.12%. As low as this is, it’s a percentage point higher than it was a year ago. Mortgage rates won’t stay this low forever, so once again, buying now while they are so low will save you a lot of money over the course of the loan.

As you can see, the improving housing market is affecting several factors that make buying a home now a really good idea if you’re planning on buying one anytime in the foreseeable future. If you’ve got any questions about buying a home in Wilmington, Leland or the surrounding areas of southeatern North Carolina, give Nilesh a call at 910-622-0319.

Three Reasons Not to Lend a Short Sale to the Previous Owner

If you’re buying a short sale as an investment property to rent out, it would seem like a good idea to give the previous owners first dibs, right?  The former owners probably like where they are and wouldn’t mind avoiding the hassle of packing and moving.  Actually, it’s a terrible idea.

Legalities

Oftentimes, renting a short sale to the previous owner is simply not allowed, as stipulated by clauses and disclosures and the like.  Buying a house is complicated enough, and a short sale is even more so, so make sure you understand all the fine print.  More often than not, you’ll find in the fine print that you just can’t do it.

Emotions

It may seem like a great idea to you as the new owner and the previous owner.  You might talk it out and they might see it as you doing them a great favor.  Everyone may be happy at first, but resentment often comes when a person is at the mercy of someone else, especially when it comes to something that comes with all the emotions of something like a house.

Business

If you’re depending on someone to pay rent on a house, would you really trust the person who just sold their home for less than it’s worth because they couldn’t afford it to pay the rent?  Not to disparage people who short sell their homes, it happens for any number of reasons, but the hardships you have to prove in order to qualify for a short sale are not flippant or easy.  So while it might feel like you’d be doing the person a favor, you’re probably going to end up making things harder for yourself.

If you think you’ll have that hard of a time getting a recently-purchases property rented, talk to your short sale agent.  Chances are they know people who can help you with it.  And if you have any other questions about the intricacies of short sales, call Nilesh Jethwa at 910-622-0319.  He is a short sale expert in the Wilmington, NC area and would be glad to help.

Real Estate Jokes

The funniest day of the year has arrived. In honor of April Fool’s Day, here are a few real estate jokes to take your mind off that housing market stress.

Seller to Agent: You’ve done such a great job describing my house in your real estate listing that I’ve decided to keep it!


Agent: Why do you have your front door leading right into the dining room?

Seller: So my relatives won’t have to come all the way inside.


A broker was dismayed when a brand new real estate office, much like his own, opened up next door and erected a huge sign which read BEST AGENTS.

He was horrified when another competitor opened up on his right and announced its arrival with an even larger sign reading LOWEST COMMISIONS.

The broker panicked, until he got an idea. He put up the biggest sign of all over his own office. It read MAIN ENTRANCE.


Home sick is what you feel every month when the mortgage is due.


If you want to know exactly where the property line is, just watch your neighbor cut the grass.


Why didn’t the hipster real estate agent show the oceanside mansion?

It was too current.


How do you save a drowning real estate agent?

Take your foot of his head.

Why Buy a Wilmington, NC Short Sale?

It’s no secret that the Wilmington, NC area, including Wilmington itself, Wrightsville Beach, Carolina Beach and Leland, is one of the best places to live. Wilmington has a population of just under 110,000 people (2012 data), a thriving art scene, an historic downtown and plenty of beaches. It’s one of the most popular tourist destinations in North Carolina with four of the state’s most popular tourist attractions within about half an hour. Wilmington, NC is not just a popular tourist destination though; people move here from all over the country.

One downside to Wilmington’s popularity and the fact that so many people want to live here is that the law of supply and demand keeps the houses more expensive than other areas a little further inland. It’s not as expensive as buying a home in the Hamptons by any means, but the home prices drop a good bit if you head out towards places like Burgaw or Beulaville.

So what if you want to own a home in Wilmington so you can be near the beach, but you don’t want to spend an arm and a leg? Consider a short sale.

To quote myself, a short sale is when a seller attempts to sell their property for an amount that is less than the price they paid for it. Because the other option is a foreclose, which can cost the lending bank $40-50,000, banks see short sales as a way to cut their losses so they are often more inclined to grant a short sale than go through a foreclosure. As a result, a home buyer can save a lot of money by purchasing a short sale.

If you’re one of the many people who wants to own a home in the Wilmington, NC area, but you’re just not sure if you can afford it, give Nilesh Jethwa a call at 910-622-0319. Nilesh is a short sale expert and can help you find and get into the perfect Wilmington, NC short sale home.

Buying Short Sales in Wilmington, NC

Buying Short Sales in Wilmington, NCBuying a short sale in Wilmington, NC, or anywhere for that matter, is not as simple as a usual real estate transaction, and those aren’t exactly easy-breezy themselves.  Not any real estate agent can help you with a short sale either; you’ll want to make sure you’re working with an experienced short sale agent.  (Call Nilesh at 910-622-0319 for one of those if you’re in Wilmington, Leland or the surrounding areas).

Even though you’ll definitely want to have some help, we’ll outline the process of buying a short sale in Wilmington, NC here for you.

Find a short sale

Obviously, the first thing you’ll need to do is find a short sale to buy.  You can look on this website, search popular online real estate listing websites or even check courthouse records to find pre-foreclosures.

Research

A downside to short sales is that they’ve often been somewhat neglected and will need a little fixing up.  Make sure you are able to get a good look at the house to gauge how much money and effort you’ll need to put into it.  You’ll also want to find out what you can about the house and the seller.  What is the property worth?  Are there liens on the property?

Get financing

You’ll want to make sure your financing is lined up once you’ve settled on how much you want to spend on the short sale home.  Once the agreement is done lenders want to move along quickly to sell the home, sometimes closing in as little as three weeks.  If you don’t have all your money lined up, you might miss out.

Talk to the lender

When getting in touch with the lender, make sure you’re not talking to the collections department- their only concern is getting back lost money.  The department you’re looking for might be called loss mitigation or recovery.  Either way, make sure you’ve got signed (preferably notarized) permission from the current homeowner to discuss their mortgage with their lender.  The lender may have a short sale application for you to sign.

Propose and negotiate

There’s a lot that goes into the short sale proposal, and this is one of the areas where a short sale expert will help you out.  We won’t go into all the details here, but there will be a package ranging from the sales contract to the settlement statement.  Once that’s submitted, the lender will probably reject your offer and give you a counteroffer.  Make sure you have your negotiation tactics ready, including knowing the max you’re willing to pay for the short sale property.

Close it

Once everything has been agreed upon between yourself, the seller and the lender you sign some papers, shuffle some money around and congrats: you’ve got a new home at a discounted price!

This is, of course, just a brief overview of the process of buying a short sale.  A lo of complications can arise throughout, and moving quickly, as we said before, is essential.  If you’re interested in buying a short sale in Wilmington, NC, Nilesh will be glad to help.  Give him a call at 910-622-0319.

Five New Year’s Resolutions for Home Buyers

It’s about a month late, but it’s still January, right?  So with the new year upon us, I thought it might be a good opportunity to list five New Year’s resolutions for home buyers.  Sure, we focus on Wilmington, Leland and the southeastern portion of North Carolina, but these homebuying New Year’s resolutions are pertinent to anyone who has been working on or is planning to buy a home.

Homebuying Resolution #1: Make a significant downpayment.

There are reasons to make a significant downpayment when buying a home, the most obvious of which is that the more you put down up front, the more you’ll save in the long run.  Let’s take a look at some numbers.

You’re looking at a $250,000 house.  If you were able to put nothing down on it with current (as of this writing) interest rates, a 30 year fixed mortgage payment (with taxes, insurance and all that fun stuff) would be $1774.  If you were able to save up and make a 20% downpayment, you’d instead be looking at $1319.  That’s a savings of $5460 a year.  To put it in more impressive terms, that’s a savings of $163,800 over the life of the mortgage.

Of course, not everyone can realistically make a 20% downpayment.  However, even a 5% downpayment under the same conditions could save you over $74,500 over the years.  So if you’re looking to buy a home, try to put as many pennies as you can into that initial downpayment.

Homebuying Resolution #2: Get your credit in order.

Unless you are planning to buy your home with cash, which, let’s face it, very few of us can do, you’re going to need a loan, and your loan will be determined by you credit score.  To get a good loan, you’re going to need to get your credit score above 700 in order to get the best possible interest rate.  Some lenders even want to see a score of 720 or more.  So what can you do to help get your credit up there?

The best way to do it is to pay all your bills in full on time.  And while some people are tempted to cut up their credit cards after taking care of any outstanding issues, that’s actually not the best thing to do to keep your score up.  You should have several open and active lines of credit at any time.  You don’t need to max them out; in fact you should probably not use more than 20% of what’s available to you.  Just remember the first part of this resolution: Pay everything off in full every month.

Homebuying Resolution #3: Get the best loan you can.

You’ve saved up your money for a nice, large downpayment and you’ve got that credit score above 700.  What do you do now?  Now you go out and get a home loan.  Don’t take the first loan you find though.  Make sure to call around and talk to different lenders in order to get the best interest rate you can.  It doesn’t end at interest rates though.  You’ll want to ask about any other fees, whether there’s a prepayment penalty, points, mortgage insurance and so forth.  You might want to seek the help of a professional once you have all your information together.

And that brings us to…

Homebuying Resolution #4: Use the best real estate professionals you can find.

Real estate is big business, and there are a lot of different people involved in real estate transactions.  There are the buyers and sellers and real estate agents, of course, but then you’ve also got the mortgage company, appraisers and lawyers, at least.  Purchasing a home is a big deal, so you want to make sure you’re surrounding yourself with the best, most competent real estate professionals you can.

How do you find those people?

A lot of people rely on word of mouth.  If your parents or your friends bought a house not too long ago and raved about their lender, they might be someone good to talk to, right?  The answer is “yes” with an asterisk.  The footnote should be that you can start with people who were recommended to you, but you should also do some of your own research.  Check out online reviews or sources like the Better Business Bureau to get more insight about the people who will be helping you move into your home.

Of course, if you’re looking for a real estate agent to help you buy or sell a home in Wilmington, Leland or the surrounding areas of southeastern North Carolina (especially if you’re looking at short sales), look no further than Nilesh Jethwa and Associates.  Give us a call at 910-622-0319.

Homebuying Resolution #5: Do it for yourself.

One thing to remember is that YOU are buying this house.  YOU are going to live in it.  Friends and family sometimes think they know what you should do and apply pressure for you to settle or to live somewhere that might not be your first choice.  They might have your best interests at heart, but remember that this is your house and your investment, so you need to be happy with where you end up.

 

A Short Sale is Not a Foreclosure

Over the past few years the term short sale has been mentioned a lot. Unfortunately, many people have a misunderstanding of what a short sale actually is. A true understanding of a short sale is the key piece of information every buyer needs before starting down this road.

Before jumping into what a short sale is, let’s start with what it’s not. A short sale is not a foreclosure, though many potential buyers tend to interchange the two terms. A foreclosure is the process of taking possession of a mortgaged property due to the homeowners failure to keep up with payments. This is a done deal. The homeowner hasn’t upheld their end of the bargain. As a result the bank is taking the house from them.

Short sales avoid the foreclosure process. A short sale is is an arrangement between the homeowner and the lender to accept a price below the amount owed on the property.

There are many pluses and minuses to choosing to buy short sale over a foreclosure. The biggest advantage that turns people toward the short sale is the condition of the average short sale home. While short sales will still likely require some TLC, they tend to be in better condition than the average foreclosure. The reason: when a homeowner choosing to go through the short sale process, they are generally doing so to avoid being kicked out of their residence. The previous homeowner is still living in and maintaining the home. Foreclosures often sit vacant and untouched while waiting to be purchased. Any damages are not repaired and there is no effort to prevent normal wear and tear.

While some argue the purchasing process is easier for foreclosures, the increased chances of less updates is often what tips the scales in the direction of short sales. Neither can offer a “move-in ready” residence, but a short sale can offer less repairs once the home becomes yours at a lower price than the regular market.

If buying short sale is a potential option for you or if you would like more information on short sales in Pender, New Hanover or Brunswick Counties contact Nilesh Jethwa at (910) 622-0319.

What Hardships Qualify for a Short Sale?

You might already know the qualifications for filing for a short sale:

  • The market value of your home has dropped
  • Your mortgage is in default (or close to it)
  • You have no assets
  • You have fallen on hard times

Most of those are pretty straightforward, but what does is an acceptable hardship for the “hard times” qualifier?  First, let’s look at what does not qualify.

You made a bad financial choice.  You spent all your money on a new car or lost it in Vegas.  Poor financial decisions don’t qualify as a hardship for a short sale.

You want to move.  You found another house you like better or you’re not a fan of the neighbor’s 2AM garage band jam session.  Sorry, you’ll have to get some ear plugs and suck it up.

You’re having a baby.  Congrats on the new bundle of joy, but feeling like you need a bigger nursery or can’t take on the expanse of an additional family member won’t qualify you for a short sale.

To sum it up, none of the above things fall into anything but irresponsibility or personal preference, and none of them are considered hard times when you’re trying to apply for a short sale.  In order to prove you’ve fallen on hard times, things have to be a little more dire and less subjective.  Here are some examples of qualifying hardships.

Divorce

Your income effectively just got cut in half (or more) and you’re no longer able to make payments on your home.  Divorce is an acceptable hardship when qualifying for a short sale.

Unemployment

Like divorce, except you just lost all your income, sans whatever you’re receiving from your unemployment benefits.  Unemployment is also an example of a hard time that will qualify you for a short sale.

Bankruptcy

When you declare bankruptcy, you’ve already proven that you’ve fallen on hard times.  If you’ve successfully files for bankruptcy, you can qualify for a short sale.

Illness or Accident

We’re not talking the flu.  If you’ve come down with a serious medical condition or had a debilitating accident that affects your ability to earn a living, you can qualify for a short sale.

While it’s true that personal choices can lead to divorce, unemployment, bankruptcy or a serious accident, these things are generally a little more out of your hands than making a decision that you’d like to move.  These situations are acceptable examples of hard times that a bank will take into consideration when you are applying to for a short sale for your home.

There is, of course, a lot more to it than that.  Navigating the waters of a short sale can be tricky business, so if you’re considering a short sale in the Wilmington or Leland, NC area, make sure to call me, Nilesh Jethwa, your short sale expert, at 910-622-0319.