interp[RE]tation » Sasha C. Farmer Realtor

Just in from CNNMoney; Trial Loan Modifications DO Hurt Borrowers' Credit

Sasha C. Farmer Realtor — Tue, 29 Dec 2009 08:32:01 +0000

Only weeks ago, I published a post with updated information from an advanced education class I was taking though the CRS (Certified Residential Specialist) program for Realtors, that was discussing different types of distressed sales and loan modifications to your mortgage, and how they would impact your credit score. In that class, we learned that borrowers were being told that taking advantage of the government HAMP (Making Home Affordable) program should not negatively effect their credit score, and that we should encourage borrowers to strongly consider this option before looking down the road of a short sale or foreclosure. Today, CNNMoney exposes several stories from people who have utilized the program, and whose credit scores are mysteriously dropping.

For some, a drop would be completely expected. For those who are behind on mortgage payments and who take the new mortgage arrangement, it is reasonable to expect that their credit would have already been damaged to some extent, just from the mortgage payments that had been missed. However, many other people have been encouraged to look at the HAMP program to re-arrange their mortgage and reduce their payments, even before they are behind on a payment. It is these people who have been squeaking by, trying to make ends meet and who have been making payments, who were being told (even by mortgage officers themselves) that their credit would not be effected. One of those stories is followed in the article today;

Axelrod, a municipal employee who lives outside Chicago, entered a trial mortgage modification program this spring.

He had not fallen behind in his mortgage, but he was finding it harder to make ends meet after his overtime was cut and his property taxes skyrocketed. Told it would not hurt his coveted 750 score, Axelrod secured a $565 reduction in his monthly payments.

Eight months later, Axelrod is still stuck in the trial modification, trying to satisfy his loan servicer’s endless requests for documents.

And to his horror, his credit score has plummeted to 644.

“It’s completely destroyed my credit,” said Axelrod. “If I had known it would affect my score, I would have never entered the program.”

Representatives at JPMorgan Chase (JPM, Fortune 500), which services Axelrod’s loan, are instructed to tell applicants that entering a modification could impact their credit histories, a bank spokeswoman said.

Despite his weakened credit score, there is at least some good news for Axelrod: After being contacted by CNNMoney.com, JPMorgan Chase said his permanent modification had been approved.

[From Trial loan modifications hurt borrowers' credit histories - Dec. 28, 2009]

According to CNNMoney;

The coding alone can impact credit scores, which measure a consumer’s financial health and range from 300 to 850 under the FICO system. The severity depends on how many payments the borrower missed before entering the program. Those who were current in their mortgages could see their scores fall up to 100 points, according to the Treasury Department.

[From Trial loan modifications hurt borrowers' credit histories - Dec. 28, 2009]

For now, it sounds as though a mortgage modification may still certainly have its benefits over a short sale or a foreclosure, if you want to keep your home. However, it is important for everyone to know that for what we can tell, it does not come as “risk-free” as it may have been advertised. This is sure to be a topic we’ll be hearing about more soon, but until then, please be sure to consult your tax advisor and your attorney for advice before beginning a mortgage modification program.

[Hat tip to Lani Rosales at Agent Genius for pointing out this important article.]

Give Where You Live: December: Charlottesville SPCA Blanket Drive

Sasha C. Farmer Realtor — Tue, 29 Dec 2009 00:28:22 +0000

The December “Give Where You Live” focuses on the Charlottesville Albemarle SPCA (Society for the Prevention of Cruelty to Animals). They are currently partnered up with the City of Charlottesville for their 4th Annual Blanket Drive.

There is no better time than now to support this drive, as I’m sure we are all mindful of the bitter temperatures Charlottesville has been experiencing! While we are all trying to keep warm from the bitter cold this winter, many of the SPCA animals are housed in outdoor runs and kennels and can use any extra warmth that we might be able to spare! If you have old blankets that won’t hold up in your home much longer, make sure to drop them off at the Albemarle SPCA (Berkmar Drive) or Charlottesville City Hall in Downtown Charlottesville!

[From 4th Annual SPCA Blanket Drive - NBC29]

Charlottesville is teaming up with the SPCA for the 4th Annual Blanket Drive to make sure man’s best friend isn’t left out in the cold.

The shelter houses dozens of animals, and while a lot of the kennels are indoors, several have an outdoor component as well. Last year, the drive brought in 600 blankets. This year the city is hoping for 750.

Susanne Kogut of the Charlottesville – Albemarle SPCA said, “It’s really incredible, I mean during the winter it gets pretty cold. We have the outdoor runs and it gets pretty cold no matter what you do so having the dogs have the blankets, it’s really awesome.”

If you would like to help, you can drop off your donation in the front lobby at Charlottesville City Hall or the Charlottesville – Albemarle SPCA on Berkmar Drive.

For more information, call 434-970-3129.

[Photo Credit: Charlottesville Albemarle SPCA]

—–

Every month, I will post a segment called “Give Where You Live,” which will be focused on Charlottesville and the surrounding counties, reminding us of little things we can do to make our community a better place. There are tons of incredible non-profits and charities around the area, and hopefully these segments will help residents become more familiar with some of the different needs in the community and maybe even inspire some giving!

I will try to post about a variety of needs and programs, from big to small, so if you know of a great local cause that is running a donation-based or volunteer campaign, please feel free to send the details my way and I will make an effort to include them in an upcoming “Give Where You Live”!

Does all this snow hurt my lawn?

Sasha C. Farmer Realtor — Mon, 28 Dec 2009 22:02:41 +0000

I have had several clients ask about the damage that our recent snowfall is doing to their land. I am definitely not the expert on this, but found a really helpful answer on Turf King-Hamilton- Lawn Care.

Some plants will benefit from a little extra snow during the winter. Snow around the rose bushes will provide some insulation from the sap-chilling deep freeze of this past week. Bitterly cold temperatures for prolonged periods of time will result in more roses biting the dust this winter.

On the lawn, a thick layer of snow will not harm it, provided that there aren’t leaves left on the surface. The snow and leaves combine to prevent air from the foliage. This is likely to lead to accumulation of water under the leaves which in turn will lead to putrefaction. If the grass is cut short in the fall, the lawn is less likely to get diseased by the longer leaf blades being smothered. The last mowing should always be a little shorter. (the problem I’ve had is that autumn doesn’t seem to know when to quit, and I end up with 2 or 3 last cuts. Don’t cut the lawn too short of course, as this makes it more susceptible to frost damage if there is little snow.

Grass that has been cut too short, on the other hand, is susceptible to frost damage.

If you walk on the lawn regularly during the winter, it is also advisable to remove the snow from these paths. Snow that is hard packed by foot prints on the lawn could lead to damage to the grass plants. (it could also lead you down a garden path)

[From Turf King- Hamilton- Lawn Care: Does all this snow hurt my lawn?]

I would love additional input on this from anyone with first-hand experience. Unfortunately my lawn probably won’t even notice the difference!

January is National Radon Month!

Sasha C. Farmer Realtor — Mon, 28 Dec 2009 04:44:03 +0000

For those of you who aren’t yet familiar with radon, it is an odorless gas that is undetectable by humans. As described on the EPA website;

Radon is a cancer-causing natural radioactive gas that you can’t see, smell or taste. Its presence in your home can pose a danger to your family’s health. Radon is the leading cause of lung cancer among non-smokers. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually. Learn how you can protect your family. Test Your Home for Radon — it’s easy and inexpensive. Fix your home if you have a radon level of 4 pCi/L or more.

[From Radon | Indoor Air Quality | US EPA]

In Charlottesville, the standard is to test for radon when you purchase your home during the inspection period (and some people will opt not to test at all) but for most people, that is the first and only test for radon that they will do on their home. There are many areas in Charlottesville where radon gas is present in homes, so if you’ve never checked- now is a great time!

Testing for radon is easy and inexpensive, and the EPA Radon site has lots of local and national links to help connect you with how to purchase a self-test, connect with someone locally to administer a professional test, and find people to mitigate a radon problem should you have one.

Locally, one of my preferred home inspectors, John Handloser with Pillar to Post Home Inspections, will be happy to administer a professional radon test in your home- call him a few days in advance to schedule him to come out.

Downloadable Résumé

Sasha C. Farmer Realtor — Sun, 27 Dec 2009 01:51:55 +0000

Click the image for a copy of my current résumé.

Charlottesville is extremely lucky to have been the home of Dave Matthews!

Sasha C. Farmer Realtor — Thu, 24 Dec 2009 09:52:07 +0000

$222,000 lucky, in fact! Dave Matthews has again given out another set of grants to Charlottesville non-profits, totaling $222,000 in grants, and benefitting 39 grateful (and deserving!) non-profit organizations here in town. Evidently BAMA Works holds a competitive grant application process and selects the groups most in need of their funds every year (side note- this is very similar to the United Way’s Program Review and Funding Committee, that determines the allocation of the United Way’s grant monies each year.) We are blessed to have such strong supporters of our non-profits here in Charlottesville! Take a look at some of the grants, and what they are going to be used for.

If any of the projects sounds interesting, I’d venture to say that many of these non-profits are likely looking for volunteers to help carry them out!

The following is a complete list (Credit to Newsplex.com):

1. Albemarle County Schools (Monticello High School) – $3,000 for school supplies, books, field trips, glasses, and clothing to financially needy Monticello High School students.

2. Albemarle County Schools (Stony Point Elementary School) – $1,000 stipend to a professional songwriter who will teach music literary to students in Pre-K classes.

3. Albemarle Pipes and Drums Band, Inc. – $1,500 for musical instruments for the volunteer Celtic band at various community functions.

4. Charlottesville Abundant Life Ministries – $5,000 to support a dance instruction curriculum to enhance the 5th-8th grade tutoring program at Walker Upper Elementary and Buford Middle School.

5. Charlottesville Area Dental Access – $10,000 to support the Community Children’s Dental Center that provides full service pediatric dental care for low-income children in Central Virginia.

6. Charlottesville City Public Schools (Adult Education Program) – $2,000 to help fund a one-day Festival of Cultures in Lee Park in the spring of 2010.

7. Charlottesville Jazz Society – $3,000 to fund educational program by which jazz artists teach local students.

8. Charlottesville Police Department Foundation – $10,000 to support police/community activities, including the Cops4Kids program that provides positive engagement with disadvantaged youth.

9. Children, Youth & Family Services – $8,000 to support the STAR Kids program that teaches positive social and decision-making skills to low-income preschoolers.

10. Covesville Child Development Center – $5,000 for scholarships to financially disadvantaged preschoolers from Albemarle and Nelson counties.

11. Fluvanna County Habitat for Humanity – $10,000 to help build one of five Earthcraft-certified homes for deserving Fluvanna County residents as a part of a new rural conservation cluster subdivision design.

12. Fluvanna County Schools (Fluvanna County High School) – $1,500 to help fund the Fluvanna County High School Blue and Gold monthly newspaper.

13. Habitat for Humanity of Greater Charlottesville – $10,000 to help complete critical electrical work at Southwood Mobile Park.

14. Hope Foundation, Inc. – $10,000 to support the Hope Community Center’s afterschool program for elementary and middle school children in the Tenth and Page neighborhood.

15. International Rescue Committee – $10,000 to create an emergency fund for medical and dental assistance to Charlottesville refugees whose health insurance programs do not meet their health needs.

16. James River Association – $5,000 to support education efforts of the Upper James Riverkeeper program.

17. Monticello Area Community Action Agency (MACAA) – $10,000 to fund the Hope House transitional housing facility for homeless families.

18. Meals on Wheels of Charlottesville-Albemarle – $9,000 to provide hot meals for seven homebound disabled clients for one year.

19. North Branch School – $5,000 for the Naomi Scherr Memorial Scholarship to provide tuition assistance to needy students attending the North Branch School in Nelson County.

20. People and Congregations Engaged in Ministry (PACEM ) – $8,000 to fund the salary of the Guest Advocate position to assist shelter guests by creating a relationship of trust and to provide information about jobs, housing, and identification documents.

21. Piedmont CASA, Inc .- $5,000 to support a part-time teen specialist position to increase the effectiveness of advocacy for teens (13 to18) who are victims of abuse and neglect.

22. Quest Institute, Inc. – $2,500 for the Books Behind Bars program that collects and provides books without charge to incarcerated individuals in Virginia prisons.

23. QuickStart Tennis of Central Virginia – $5,000 to introduce children throughout the CACF service area to the game of tennis.

24. Second Street Gallery – $2,000 to support Family Art Day and the Public Art Project which provide art education for the Charlottesville community.

25. Senior Center, Inc. – $5,000 to support arts and humanities programs to enrich the lives of area seniors.

26. Service Dogs of Virginia – $7,000 to provide a Service Dog Scholarship to support advanced training and placement of one diabetic alert service dog.

27. Spay/Neuter All Pets, Inc. (SNAP) – $2,500 to provide low-cost spay/neuter services to low-income residents of Louisa County.

28. Special Olympics Virginia – $7,500 to support a tennis tournament for individuals with intellectual disabilities in Charlottesville with participants from across the country.

29. Thomas Jefferson Area Coalition for the Homeless – $8,000 for supplies for the community kitchen at “The Haven at First and Market” (formerly known as the First Street Church Project) that provides daily meals and a food service job training program.

30. Thomas Jefferson Planning District Commission/Jefferson Area Disability Services Board (DSB) – $3,500 to develop a home modification network for people with disabilities in the planning district.

31. Town of Mineral – $6,000 to modernize and expand Walton Park utilizing a plan by the Virginia Tech Design Group to attract more performing arts activities to Louisa County.

32. University Montessori School – $3,000 to complete construction of an outdoor classroom for environmental education classes.

33. UVA Rector and Visitors (UVA Children’s Hospital) – $3,000 to provide helmets to third grade children in Charlottesville and Albemarle, to be distributed through the Bike Helmet program.

34. Urban Vision – $8,000 to help start an incentive program for Friendship Court families with the goal to make families more self-sufficient.

35. Virginia Foundation for the Humanities and Public Policy – $3,000 for travel, lodging and honoraria for 10 authors/storytellers/illustrators to give presentations fostering the love of reading and literacy skills to local schools, youth and community organizations during the Virginia Festival of the Book March 17-21, 2010.

36. Virginia Organization of Consumers Asserting Leadership (VOCAL) – $5,000 to support Firewalkers: Changing the Story of Mental Health, a book and outreach project to educate the Charlottesville community about mental illness and to improve mental health services.

37. Wildlife Center of Virginia – $8,000 for environmental outreach programs for area elementary schools.

38. Wintergreen Adaptive Sports – $8,000 to support an ongoing sports program for wounded servicemen and women.

39. Writer House, Inc. – $3,000 for scholarship funds for disadvantaged youth to develop creative writing skills.

[From Dave Matthews Band Gives Back to Hometown]

[Photo Credit: http://wknc.org/blog/post/wp-content/uploads/dmb.gif]

Celebrate the Holidays in Charlottesville Safely

Sasha C. Farmer Realtor — Thu, 24 Dec 2009 05:01:11 +0000

The Chandler Law Group is again offering its Charlottesville Safe Ride Home Program, for the 20th consecutive year! This is a great option over driving home unsafely. You must be going within a 10 mile radius of the city you are in, and you MUST be going home-

Chandler Law Group isn’t paying for you to party-hop!

Please note the local phone numbers and keep them handy during your holiday celebrations! Thank you Chandler Law Group!

General Facts (From the Chandler Law Group Website):

Campaign began in 1990 making this the twentieth year.

Through the past nineteen years, The Chandler Law Group has provided nearly 40,000 safe rides home.

The following cities are participating this year: 2009- Charlottesville, Waynesboro, Harrisonburg, Staunton, Winchester, and Front Royal.

Cab rides will be paid for by The Chandler Law Group within a ten mile radius of the city.

Riders must be going home; The Chandler Law Group will NOT pay for a ride to another party or drinking establishment.

Campaign runs December 18th, through New Year’s Day.

In Charlottesville call 295-4131

In Staunton call 886-3471

In Waynesboro call 949-8245

In Front Royal call 683-1305 or 631-1306

In Harrisonburg call 438-7777

In Winchester call 662-1199

[From THE CHANDLER LAW GROUP OFFERS SAFE RIDE HOME FOR 20TH CONSECUTIVE YEAR | Chandler Law Group]

[Image Credit: https://www.tlw.org/public/content/Documents/TLW_Logos/SafeRideLogo_edited.jpg]

Charlottesville Christmas Tree Recycling Program Begins Saturday!

Sasha C. Farmer Realtor — Thu, 24 Dec 2009 04:36:48 +0000

The Charlottesville Christmas Tree Recycling Program begins on December 26, 2009! As seen on the Newsplex website here are some details;

The sites are as follows:

* Chris Greene Lake in Earlysville
* Crozet Park
* Darden Towe Park
* Greenwood Community Center
* *Rivanna Solid Waste Authority Recycling Center on McIntire Road (*note: Sunday hours are 12noon – 5pm)
* Scottsville Community Center
* Walnut Creek Park

By combining forces with the Charlottesville Curb Side Pick-Up Program, the two programs collected over 5,600 trees in 2008, yielding approximately 268 cubic yards of mulch. According to the City Public Works Department, their curbside pick up will be the week of January 11, 2010. Trees must be at the curbside by 7:00 am.

Shortly after the City’s curbside pick up, the County and City Parks & Recreation crews will team up to chip the estimated 2600 trees at Darden Towe Park.

As a reminder, this program is for Christmas trees only, please no yard waste. Both the County & City programs require that all decorations, stands and nails be removed from the Christmas trees.

Free mulch will be available to citizen by February 1, 2009, at Darden Towe Park.

[From Christmas Tree Recycling Program Details Announced]

[Image courtesy of http://www.eastampton.com/images/Christmas_Tree.jpg]

Before beginning a new home improvement project- Check this list!

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 22:29:40 +0000

Before choosing which home improvement project you will take on next, check out this list for a national survey on which improvements are the most valuable and will produce the highest return on investment. The survey is broken down region-by-region and then parsed into large metropolitan areas; the closest to us in terms of size, location, and economy being Richmond. Take a look, you may be surprised at what you find!

2009 Remodeling Cost vs. Value Report

Stocking Stuffers for Real Estate Aficionados

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 22:20:22 +0000

From the Minneapolis Star-Tribune, A fun list of reading for those of you on the market for a home in 2010;

Nolo’s Essential Guide to Buying Your First Home, Ilona Bray, Alayna Schroeder, and Marcia Stewart, Nolo publishing, $24.99

This Sold House: Staging Your Home To Sell in Today’s Market,Diane Keyes, Third Child Press, $14.95

If I Had A Hammer: More Than 100 Easy Fixes and Weekend Projects, Andrea Ridout, Collins, $17.95

New Classic American Houses: The Architecture of Albert, Righter & Tittmann, Dan Cooper, Vendome Press, $50

Country Color: Perfect Palettes for Every Room, Judith Miller, Vendome Press, $35

Source: Minneapolis Star-Tribune, Lynn Underwood (12/20/2009)

[From REALTOR® Magazine-Daily News-Stocking Stuffers for Real Estate Aficionados]

According to NAR, 4 out of 10 Recent Buyers Used FHA Loans

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 17:39:53 +0000

As you probably already know, FHA loans are becoming an extremely popular loan device for purchasers in this marketplace. FHA loans used to evoke lots of negative connotations, a few of which were; lots of extra requirements, much longer time to process, and stringent and difficult home inspection standards. However, these hassles have been eliminated, and FHA loans seem to rarely differ in difficulty from pursuing a conventional loan. I expect that the use of FHA loans will only continue to grow into 2010.

According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

“FHA helps provide affordable mortgage financing to home owners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

—NAR

[From REALTOR® Magazine-Daily News-4 out of 10 Recent Buyers Used FHA Loans]

What is a strategic default?

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 17:06:11 +0000

As defined by Wikipedia…

A strategic default is the decision by a borrower to stop making payments on a home mortgage despite having the financial ability to make the payments. Usually this occurs after a substantial drop in the house’s price such that the debt owed is considerably greater than the value of the property, and is expected to remain so for the foreseeable future. Such borrowers are called “walkaways.”[1]

[From Strategic default - Wikipedia, the free encyclopedia]

As discussed in CRS Course-111 on Short Sales and foreclosures, a strategic default will likely effect your credit score negatively by 140-150 points and will also result in 5-7 negative marks on your credit. This is likely going to be more detrimental than going through the process of a short sale or a loan modification, but is said to not effect your credit score as negatively as filing for bankruptcy.

**Disclaimer: I am a licensed real estate agent and cannot provide legal consulting or tax advice. For counsel on either of these things, please consult your tax accountant or attorney.

Before making any decision to pursue a short sale, a foreclosure, a strategic default, or to file for bankruptcy, it is in your best interest to consult with a licensed Realtor, your tax accountant, and an attorney.

Answer these questions to determine if purchasing a bank owned home/foreclosure is right for you…

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 16:43:55 +0000

Please read carefully through the following items when trying to determine whether or not you are interested in looking at REO (Real Estate Owned) and Foreclosure properties.

Would you be okay with a delayed closing? Purchasers of foreclosures may have to wait for a significant amount of time before closing can occur. Are you on a tight deadline to get out of your lease? Are you attempting to take advantage of the Home Buyer Tax Credit (in which homes must close by June 1, 2010?) If so, this may not be the best choice for you.
If closing were delayed, would you be okay with re-applying for your loan and possibly losing your current loan lock? All during the time that we are awaiting closing, mortgage rates will be fluctuating, and if the loan lock deadline passes, you will have to re-apply for the loan and incur any related charges.
If closing is delayed, will you be able to adjust the timeframe for your date of possession? It is very unlikely that we will be allowed to occupy the property prior to closing, so you would need to have a backup residence in mind, in case of any delays. If this is your primary home, some sort of temporary living arrangement would need to be made, and it may include moving twice- from your current home to the temporary residence, and the temporary residence to your new home.
Even if the property is priced extremely competitively, do you have other funds that may be necessary for updating, cleaning up, and repairing the property? Sometimes REO and foreclosed homes will require a significant cash investment just to bring them up to standard living conditions.
Are you comfortable purchasing a home “as is”? Most REO and foreclosed homes will come in “as is” condition. A handful of them will not allow any sort of home inspection prior to purchase at all, however most allow a home inspection for information only. Would you be comfortable making any necessary repairs yourself (or with a contractor, of course) and after closing?
Would you be willing to sign addenda that heavily sways negotiations in favor of the Lender/Bank who owns the property and overrides most of the standard protections granted to the buyer? Most of these forms override rights that we outline in the standard Virginia Association of Realtors Residential Contract to Purchase. Oftentimes, the lender will allow no revisions to be made to these documents. Some of the changes that are often arranged in the addenda; tougher restrictions on the Purchaser, shorter timelines for the Purchaser to secure a loan, conduct a home inspection, etc, a larger deposit, deposits to be held in the escrow of the lenders choice, and very few provisions that will allow for the Purchaser to get out of the contract and many ways for the lender/seller to walk.
Would you be okay with getting up to the week of closing, only to find that the lender received another offer and has chosen to take that offer and void their contract with you? Many of the packages of documents that the lenders have you sign will include a provision allowing for this.
Would you be comfortable with your earnest money deposit to be escrowed with a escrow company or attorney of their choice? This money will not be accessible during the time that the property is under contract.
Are you prepared to do a title search and purchase title insurance? You will want to verify that the lender does hold title of the property (not all homes transfer from the previous sellers right away). You will also want to make sure that any liens that may have been held against the previous owners (who may have had difficulty paying many bills, aside from their mortgage) have been released and you will have the ability to purchase the home free and clear of liens and encumbrances.

If these items would not cause a major inconvenience for you, then you may be a perfect candidate to purchase a REO or foreclosure property- there are some incredible deals to be had!

Any more thoughts/additions to this list from others who have had bank owned/foreclosure homes?

Please do not hesitate to contact me if you’d like to be set up on a search that will send you foreclosure and bank-owned homes that might meet your search criteria!

An interesting thing about interest rates and value…

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 13:00:39 +0000

I have spoken to many of my clients about this previously, when saying that often a 1/4 point increase in interest rate can result in a higher monthly mortgage payment than would a 5% increase in sales price. What this means, is that the buyers out there who are waiting for the market to “hit bottom” may end up finding that their dream home becomes more expensive, even as the price drops. Marc Roth, writing for BusinessWeek sums it up nicely (emphasis added);

So, what can we learn from the historical trends and numbers?

First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.

Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.

Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.

Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let’s assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.

[From If You Don't Buy a House Now, You're Stupid or Broke - BusinessWeek]

Don’t just look at list prices when trying to determine the cost of your home- your interest rate may actually have a significantly higher impact.

If you could use a recommendation to a good local lender, who can walk you through all of the stipulations of your financing and help you determine if now is the right time for you to buy, please don’t hesitate to call.

[Image courtesy of http://www.tutor2u.net/blog/files/interest_rates.gif]

How Much Will A Short Sale/Foreclosure Hurt My Credit?

Sasha C. Farmer Realtor — Wed, 23 Dec 2009 11:15:12 +0000

I have had a couple of people over the past few months mention that they may consider a short sale, so that they can just get out from under their homes and move on. While the ramifications of a short sale or foreclosure seem to be getting slightly more lenient in light of all of the predatory lending that has occurred in the past several years, they are still significant.

Here are some general credit score ranges (as provided by the National Association of Realtors CRS Course 111);

990: highest calculable credit score.
900: 15% of borrowers have a credit score at 990 or above.
740: a rough number around which people are usually able to get a good, competitive loan.
680: the average credit score.
501: lowest calculable score.
500: 18% of people have a credit score of 500 or below.

Let’s imagine that you have a credit score of 740 and own your home, but are having trouble making your payments (which may actually be causing your credit score to drop in the meantime). Here are a couple of different options, and their effects;

A loan modification is said to have no negative impact on credit score.
A short sale is estimated to impact your credit score between 120-130 points.
A strategic default will likely impact your score by 140-150 points.
A foreclosure is said to impact your score by 200+ points.
Filing bankruptcy is likely to impact your credit score negatively by 355-365 points, putting even most prime borrowers below a score of 500. We are being told that it is still remaining on credit scores for up to 10 years.

Another crucial point to remember is that Virginia is a recourse state, which means that a short sale or foreclosure debt that is not forgiven by the bank, can be pursued later. This may result in credit collectors calling on you for years to come, to collect any remaining debt owed.

Let’s do what we can to help you avoid either of these results if possible. A really interesting fact to be aware of; According to the 11/03/09 issue of USA Today, only 9% of eligible homeowners have had their mortgage modified. There may be better options for you than a short sale or a foreclosure.

**Disclaimer: I am a licensed real estate agent and cannot provide legal consulting or tax advice. For counsel on either of these things, please consult your tax accountant or attorney.