Utah Real Estate & Mortgage Blog

Is this a realistic headline?  No.

Everybody is looking for a deal, so there’s a lot of competition in purchasing distressed or bank owned properties.  Good deals often average less than 7 days on the market because they have been priced to sell fast.  There are many buyers who are pre-approved or have cash in hand, waiting for new home listings to be announced.  Don’t miss out because you are not prepared for what homes are selling for in the zip code you are searching.

What do I mean?

Let’s talk about unrealistic home buyers.

Naturally everyone wants to get the most home they can for the least amount of money. This is in opposition to the home seller, who wants the most money for their home. This conflict is one of the things that make real estate sales challenging at times.  When the market starts a shift in an opposing direction, this conflict stands out.  Starting back in 2006 the shift in Utah real estate was starting to occur.  It has been almost four years and it has been our experience that home sellers in Salt Lake, Utah, Davis, Weber, and Washington counties are becoming much more realistic.

While it used to be quite common to hear sellers say things like, “But my neighbor’s home sold for “x” dollars last year!” sellers seem to be getting more realistic when it comes to their home’s value.  They are letting go of the attitude that their home needs to sell for what their neighbor sold for the year before.  A year is almost an eternity in the Utah real estate market.

Home buyers on the other hand seem to be losing their grip on reality.  Yes, there was a time when buyers were able to get significant savings off of the list price. While there is room to negotiate, we have not seen low-ball offers succeed in our local markets.   We often negotiate price discounts up to 10% – 20%, anything more is unrealistic in Utah.   Our market has stabilized from past volatility.

Here are some examples of recent conversations we have had with Utah buyers:

* We’d like to offer $40K under list price on a $175,000 home.

* We just short sold our home last month and are looking to buy now.

* The bank is out of state and doesn’t  know what the property is worth, let’s offer $100,000 less.

* I need a smoking deal on a bank owned home or short sale. I’m willing to pay 60% of list price.

* I refuse to pay a dime over list price on a short sale or bank owned home.

The answer for all of those comments above is “you can’t do/get/buy that”.  You might be asking yourself “why would I pay more for a short sale or bank owned home?”  Because there are multiple offers from buyers who are all looking for a good deal.  These homes are typically priced below market value to induce multiple offer situations.    This is why these homes often sell for more than list price.

Much of this type of thing comes from simply not understanding what is happening in the real estate market. And by “the real estate market” I am not talking about what you hear on network news or even your local evening news / newspaper. You need to understand what the market is doing in the specific area you are interested in. The term “real estate market” is just too broad and real estate is local.

Our agents at Zoom would be happy to provide you at no charge, specific pricing statistics on local Utah zip codes or a specific property.

As a home buyer, you may not know the details and current trends about your local real estate market. Most people buy a home every 7 – 10 years. We are up to our necks in this stuff every single day. This is what we do for a living and helping people understand the details of their local real estate market is what we get paid for.

Give us a call today to discuss your local market. 

You may reach Kris, Zoom Real Estate Realtor at 801-792-5040

What is really going on in the Utah Real Estate market?

We’re inviting you to a special workshop, co-sponsored by the Utah Chapter of the Financial Planning Association, and of course, zoomUTAH.com.

You’ll get valuable tips from various experts on such topics:

• Utah’s Economic & Real Estate Outlook
• Home Grants, Tax Credits and 100% Financing Options
• Improving Your Credit Scores
• Cash Flow Management & Cutting Your Debt Strategies
• Recovering your Stock Market Losses – Based on Last 9 Recessions

Be prepared to take a lot of notes! Whether you’re a first time home buyer or a seasoned real estate investor, you do not want to miss this free seminar.

To Register Visit http://www.zoomutah.com/events/

The Treasury Department has called it the “Making Home Affordable Program”. There are two options that you can choose from, depending on your personal situation. Most people who are not late on their payments, who owe up to 5% more than the current value of their home (not including a 2nd mortgage), and can prove their income will probably go for the refinance program. People who are (or are not) behind on their mortgage payment, have a mortgage payment that’s no longer affordable, perhaps because of a significant change in income or expenses, will probably go with the modification program.

Below, you will find a summary of each program along with questions that most people can relate to. If you want to look at a much more detailed breakdown of the two programs, please click on the links at the bottom of the segment. Keep in mind, this just got signed into law. The Servicers that collect your payments, Fannie Mae and Freddie Mac, other Banks and lending institutions that hold your mortgages are all going to adopt these guidelines at different times throughout the year. Matter of fact, they have until the end of the year to even report that they would like to participate in this program. I suggest you look on your 1st mortgage statement and call the number listed to see if they are prepared to deal with your issue now or later. If your 1st mortgage is held by either Fannie or Freddie, you’re in luck. You will be the first to be able to get something done on your behalf. Please read below and get the fine points of this new law.

Refinance Opportunities Now Available to Those Who Lack Sufficient Equity

The Obama Administration unveiled the final details of its “Making Home Affordable Program,” which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future. One of the initiatives in this program is aimed at helping responsible homeowners “refinance” their loans to take advantage of historically low interest rates. Here are some common Questions and Answers about the Refinancing Initiative in the program.

Who is eligible?
You may be eligible if:

• You own and currently occupy a one- to four-unit home.
• Your mortgage is owned or controlled by Fannie Mae or Freddie Mac.
• You are current on your mortgage payments.
• The amount you owe on your first mortgage is about the same or slightly less than the current value of your house.
• And, you have a stable income sufficient to support the new mortgage payments.

How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac?
Visit Fannie Mae or Freddie Mac to determine who your mortgage is backed by.

I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?
Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative?
No. But the good news is, you may qualify for the Modification Initiative. Contact me to discuss your situation and review your options.

I have both a first and a second mortgage. Do I still qualify to refinance under Making Home Affordable?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.

Will refinancing lower my payments?
That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount. However, if you are paying interest only on your mortgage, you may not see your payment go down. BUT… you will be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.

What are the terms of the refinance and what will the interest rate be?
All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which makes this a good time to examine your refinancing options.

Will refinancing reduce the amount that I owe on my loan?
No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

Can I get cash out to pay other debts?
No. Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.

How do I apply for the Refinance Initiative?
Call or email me today to discuss your specific situation and to examine your options. If this plan is right for you, we can begin working on your refinance immediately. As part of the discussion, we may need to look at the following information:

• Recent pay stubs to help determine your gross (before tax) household income.
• Your most recent income tax return.
• Information about any second mortgage on your house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all other debts, such as student loans and car loans.

Click here to read more about this Law.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call me at 801-949-4872 or email me to set up an appointment.

Modification Opportunities for Those At Risk of Foreclosure

The Obama Administration unveiled the final details of its “Making Home Affordable Program,” which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future. One of the initiatives in this program is aimed at helping struggling homeowners “modify” their loans to avoid foreclosure. Here are some common Questions and Answers about the Modification Initiative in the program.

Who is eligible?
To apply for a Home Affordable Modification, you must:

• Own and currently occupy a one- to four-unit home.
• Have an unpaid principal balance that is equal to or less than $729,750 (for one unit properties).
• Have a loan that was originated before January 1, 2009.
• Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income.
• And, have a mortgage payment that is no longer affordable, perhaps because of a significant change in income or expenses.

If you answered YES to all of these questions, you may be eligible for the Modification Initiative.

Am I eligible if I missed some mortgage payments?

Yes. If you missed two or more mortgage payments and answered “yes” to the Modification Initiative requirements above, you may be eligible for a loan modification.

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default. Examples of being “at risk” include facing a significant increase in your mortgage payment or a reduction in your income. Contact me to discuss your specific situation.

I have a second mortgage. Am I still eligible?

Yes, but only the first mortgage is eligible for a modification.

I have an FHA loan. Can it be modified under this program? Are all loans eligible?

Most conventional loans including prime, subprime, and adjustable loans; loans owned by Fannie Mae and Freddie Mac as well as private lenders; and loans in mortgage backed securities are eligible for a modification. Contact me to discuss your specific situation.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.

What does the Modification Initiative do?

If you are eligible for this plan and are approved, you will be put on a trial modification for three months at a new interest rate and payment. If you successfully make the payments and are current at the end of the three-month trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.

What happens after five years?

Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the “rate cap” in your modification agreement, which is basically the
market interest rate on the date the modification is finalized. That means your rate can never be higher than the market rate on the day your loan is modified. This is great news because rates are currently at historic lows… and you can lock in now.

How low can my interest rate go?

Treasury is providing incentives to your investor to write the interest down as low as 2%, if necessary to get to a payment that you can afford based on your income.

What happens if that is not enough to get to an affordable payment?

If a 2% interest rate is not enough to bring your payment down to 31% of your gross monthly income, your servicer can extend your payment term–for example, give you a 40-year loan rather than a 30-year. If that is still not sufficient your servicer will defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance. A portion of the debt could also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.

Are there any other benefits to this program?

Yes. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. Over five years the total principal reduction
could add up to $5,000.

How much will a modification cost me?

There is no cost to borrowers for a Home Affordable Modification. You will not be asked for any money. If there are costs associated with the modification–such as payment of back taxes–your servicer will add those costs on to the amount you owe. Your servicer will also forgive any late fees.

Is housing counseling required under this program?

Borrowers are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan. However, housing counseling is only required for borrowers whose total monthly debts are very high in relation to their incomes (55% of your gross monthly income). If you would like to speak to a housing counselor, call 1-888-995-HOPE (4673).

How do I apply for the Modification Initiative?

If you meet the general eligibility criteria for the program, you should gather the following information:

• Recent pay stubs to help determine your gross (before tax) household income.
• Your most recent income tax return.
• Information about your assets.
• Information about any second mortgage on your house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all other debts, such as student loans and car loans.
• A letter describing the circumstances that caused your income to be reduced or expenses to be increased (for example: job loss, divorce, illness, etc.).

Once you have this information, call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.

My loan is scheduled for foreclosure soon. What should I do?

If your mortgage has been scheduled for foreclosure or if you have missed one or more mortgage payments, should contact your servicer immediately. You may also want contact a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).

Click here to read more about this Law.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call me at 801-949-4872 or email me to set up an appointment.

Hello all! We, at zoomUTAH, have been doing a lot of brain storming recently on how best to communicate with our members. We feel we have a wonderful service and product (zoomutah.com), but with all of that, we still don’t feel like our members are correctly informed and up-to-date on the current real estate market.

Having said that, we have put together a plan to keep you informed. On a monthly basis, you will be receiving our newsletter. This will be straight from the best real estate and mortgage professionals in the area.

Each month we will personally be writing articles on the most important industry news and new happenings with zoom. I think more so than ever it is important for everyone to understand just what it going on around them. There is no better way to know than to hear it (or in this case, read it) straight from the “horses mouth”.

If there are any questions, or you would like to know more about a certain topic, please contact us. We will definitely listen to any feedback and would love to hear from all of you. Have a wonderful day!