VHDA announces higher income limits

Posted: 02 Aug 2011 06:34 AM PDT

Great news for your first-time homebuyers-and for you!

It’s now possible for more of your first-time homebuyers to qualify for a VHDA loan, thanks to maximum income limits that have increased in all areas of Virginia-with the most significant occurring in the larger Metropolitan Statistical Areas (MSAs).

In addition to an affordable fixed rate, Virginia Housing Development Authority (VHDA) mortgages can also provide help with the down payment.

The new limits are effective with new loan reservations beginning August 3, 2011.
You can take a look at VHDA’s new income limits for each of Virginia’s geographic areas at vhda.com/LoanLimits.

Sellers Brace for New Mortgage Caps

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By NICK TIMIRAOS And ALAN ZIBEL, The Wall Street Journal, Real Estate, July 6, 2011
October Change Is Meant to Reduce the Government Footprint in Housing, but Industry Fears It Could Lead to Lower Prices

The federal government is readying its first retreat from the mortgage market, with the size of loans eligible for government backing set to decline in October.

As an emergency measure three years ago, Congress raised to as high as $729,750 the maximum loan amount that Fannie Mae, Freddie Mac and federal agencies could guarantee.

That made it easier—and cheaper—for borrowers in pricey housing markets to obtain mortgages, because the government guarantees that investors receive payments on those mortgages even if homeowners default.

Now those limits are set to decline modestly in hundreds of counties across the U.S. as the government attempts to reduce its outsized footprint in the mortgage market and create room for private investors to compete. Government-related entities stand behind more than nine of 10 new mortgages, and taxpayers have sunk $138 billion into Fannie and Freddie, underscoring the eagerness to dial down the government’s share.

The new limits will vary widely by location, but will drop to $625,500 in top-tier markets such as New York, Los Angeles and Washington, D.C.

Even though the new limits won’t take effect until Oct. 1, some lenders are already warning borrowers that they will stop accepting applications for loans that exceed the new limits much sooner, to ensure the loans are funded before the cutoff date.

Industry groups are making the case on Capitol Hill that reducing current limits in some of the largest markets is "the exact wrong way to go," said Jerry Howard, president of the National Association of Home Builders. But Obama administration officials say the limits should fall as scheduled, and Republican lawmakers have introduced measures to shrink the Federal Housing Administration’s reach more aggressively.

Had the lower limits been in place last year, Fannie and Freddie would have backed 50,000 fewer loans, according to the Federal Housing Finance Agency. The bulk of the affected loans —about 60%—are in California, with another 20% in Massachusetts, New York and New Jersey.

Parts of the country with less expensive homes also would be affected; their limits are scheduled to fall as low as $417,000 for Fannie and Freddie loans and as low as $271,050 for FHA loans.

Limits for Fannie and Freddie-eligible mortgages will fall in 250 counties, and FHA limits will drop in about 600 counties. While that is a fraction of the nation’s 3,000 counties, economists at the National Association of Home Builders say those densely populated areas account for 27% and 59% of the nation’s housing stock, respectively.

The possibility of lower loan limits is causing considerable anxiety in coastal California and other high-end housing markets that will serve as test cases for how the government’s withdrawal from housing will affect the market and local economies.

Homeowners whose mortgages are too big to qualify for a government-backed mortgage must seek a so-called jumbo loan, which often carry higher interest rates as well as larger down-payment requirements, sometimes more than 20%.

"Sellers are going to have to reduce their prices if borrowing costs rise," said Scott Sheldon, a loan officer with First Cal Mortgage in Petaluma, Calif.

One of Mr. Sheldon’s clients, Ed Barr, has been pre-approved for a $662,000 loan backed by the FHA, the largest mortgage the agency can insure in Sonoma County, Calif. He is racing to close a sale before the limit drops to $520,950.

Mr. Barr, who owns a wine-making machinery company, said he has excellent credit but a recent divorce left him with little cash for such a purchase. "I don’t have any other alternative," the 48-year-old said. Without the loan backed by the FHA, which allows for down payments as low as 3.5%, "the sale won’t happen."

Scaling back loan limits underscores a broader challenge facing the government: It wants more private players to hold mortgage risk, but it doesn’t want to destabilize fragile housing markets.

Craig Van Sant is looking to pay $500,000 for a home with a $20,000 down payment in Rancho Cucamonga, Calif. Once the FHA limit drops to $335,000, he would need to more than double his down payment. The only upside, he said, is that "home values slide even more, allowing us to buy more house, if we can pull together all the cash."

Investors and some academics say the government needs to shrink its footprint if private markets are to re-emerge, and that big loans for pricey homes are a reasonable place to start. "Credit unions, small banks, and hedge funds are all eager to buy these loans," said Brian Brady, a mortgage banker at World Wide Credit Corp. in San Diego.

For now, interest rates for jumbo loans are relatively low, which could cushion the impact of changing loan limits. Rates on 30-year fixed-rate jumbos averaged 5.07% last week, compared with 4.62% on government-backed loans, according to financial publisher HSH Associates. The jumbo rates are near the lowest mark since HSH began its count in 1986, and the spread is the lowest since mortgage markets seized up four years ago.

But rates are only part of the equation. Because jumbos aren’t being securitized, banks must keep them on their balance sheets and are generally requiring larger down payments and stringent income qualifications."It’ll be a real test of private lenders and their ability to fill the void," said Mark Zandi, chief economist of Moody’s Analytics.

See the story in The Wall Street Journal by clicking here.

Write to Nick Timiraos at nick.timiraos@wsj.com

Lake of the Woods, VA Real Estate Stats 6/2011

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Happy Independence Day to all of you – I hope you have a safe but fun holiday!

I thought I’d pass along the June real estate stats for Lake of the Woods.  I do them for the Lake because I live here, but if  you are on my list and would like to have them for your area of Virginia, just let me know.

The good thing for us to understand is that things are not so bad in our area.  Any area that is within commuting distance of D.C. has felt the pain, but it has not been the severe cutting pain the rest of the country has felt.  In addition, we are reportedly at the bottom.  Housing starts in the D.C. area are up.  This will be a trickle down effect to our area.  Also, with WalMart building in our area, we will need housing for people who work there.  Doesn’t matter if they are cashiers, greeters, accountants, or managers, they will need housing.  Our area will feel growth or a rise in our real estate because of WalMart – whether you think it is a good thing or not, economically it is a boon.

So, peruse the numbers below – call if you have any questions – and, as always, feel free to pass this on to your friends and family.  If they want to be put on the mailing list, have them send me an email at smbrady@mris.com.    The more the merrier – and, as always, See you at the Lake!

Key:       Active:  Currently listed property

CNTG/NO KO:  Under Contract with contingencies but no kick out clause

CNTG/KO:  Under Contract with contingencies with a kick out clause

CONTRACT:  Under Contract no contingencies or contingencies have been met

SOLD:  Have gone to settlement

DOMM: Days on the market with current REALTOR.   DOMP:  Days on the market total.

Status: ACTIVE (122)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP



Min

$58,900

2

1

1

0

0

0

Max

$899,000

6

5

4

2

647

1,09

Avg

$284,308

3

3

2

0

104

142

Status: CNTG/NO KO (20)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP


Min

$94,490

2

1

1

0

7

7

Max

$599,900

5

4

3

1

405

585

Avg

$170,625

3

2

2

0

140

256

Status: CNTG/KO (1)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP


Min

$199,998

3

2

2

0

32

32

Max

$199,998

3

2

2

0

32

32

Avg

$199,998

3

2

2

0

32

32

Status: CONTRACT (16)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP


Min

$102,600

2

2

1

0

0

0

Max

$1,200,000

6

5

4

2

217

217

Avg

$273,063

3

3

2

0

67

61

Status: SOLD (10)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP


Min

$84,900

2

2

2

0

0

0

Max

$549,900

4

4

3

1

655

856

Avg

$242,590

3

3

2

0

157

214

Status: All (169)

List Price

Bedrooms

Baths

FB

HB

DOMM

DOMP


Min

$58,900

2

1

1

0

0

0

Max

$1,200,000

6

5

4

2

655

1,098

Avg

$266,822

3

3

2

0

108

151

Copyright © 2011 Metropolitan Regional Information Systems, Inc.

Tarasoft MATRIX v5.5. Copyright © 2011 Tarasoft Corporation.

Orange Neighbors Get Look at Walmart Plans

In case you missed it, here is Robin Knepper’s article from the Free Lance Star on June 26, 2011.

Orange neighbors get look at Walmart plans
Neighbors of new Walmart site in Orange hear details of the plan.
Date published: 6/26/2011

BY ROBIN KNEPPER

Residents of Lake of the Woods and Somerset Farm got a chance to take a look at plans for the proposed Walmart Supercenter inOrange County last week.

Walmart officials and contractors brought the show-and-tell to Germanna Community College‘s Locust Grove campus on Wednesday evening. About 75 residents of nearby Somerset Farm turned out to view the design for the 128,500-square-foot store and its accompanying road plans.

"I wasn’t happy with the format or the answers given or not given," said Bob Jones, secretary of the Somerset Community Association.

"There were several displays set up with people to talk to about traffic analysis, site planning and the architecture," Jones continued.

"My opinion is a consensus of Somerset Farm residents are not happy with the location Walmart has chosen," he said. "We had a meeting the next night as a follow-up to Walmart’s presentation to figure out our plan of attack."

The proposed Walmart will be part of a commercial development on the north side of State Route 3 at State Route 708, Somerset Ridge Road.

Somerset Ridge Road is the only entrance to the nearby 292-acre Somerset Farm subdivision of 225 occupied homes.

Yesterday the community conversation was held at Lake of the Woods, where fewer residents turned out and there was less opposition.

"I’m a little disappointed that more people haven’t shown up," said Lake of the Woods Association board member Ernie Meier. "But that shows that most people in Lake of the Woods are in favor of it."

Lake of the Woods’ 8,000 residents make up more than 25 percent of Orange County‘s population, and homeowners association officials say there will be no official opposition to Walmart’s location.

Walmart filed its application for a special-use permit, required for retail uses over 60,000 square feet, about two weeks ago. It is moving quickly to get its complete application to the county.

Bowman Consulting traffic engineer Erich Strohhacker said Walmart’s traffic plan will be delivered to Orange County next week for review by the county’s planning director and the Virginia Department of Transportation.

County Planning Director Gregg Zody has said that his office will move quickly to get the application to the Planning Commission once all the details have been submitted.

Walmart officials have said that construction would take 10 to 12 months.

Walmart’s first choice of a location in Orange County was four miles east, near the intersection of State Routes 3 and 20.

After a three-year effort. the giant retailer abandoned that site and ended a legal battle against the county brought by Friends of the Wilderness Battlefield and some area residents.

Historic preservationists claimed that the site would be detrimental to the Wilderness Civil War battlefield. They launched a nationwide campaign in 2008 to stop it.

Supporters of Walmart in Orange County have long stressed the importance of the tax revenue and the estimated 300 jobs the store will bring.

"The economy is so horrible we need it," said LOW resident Joanne Lambert. "But we want to make sure about the security," she added, and questioned Walmart spokesman Rob Shinn about the store’s business hours.

Walmart officials haven’t decided whether the store will be open 24 hours a day, Shinn said.

He later added that Walmart was extremely pleased by the level of support found at the LOW meeting.

Robin Knepper: 540/972-5701
Email: rknepper@earthlink.net

Ch..Ch…Ch…Changes…!

                       C21Logo                              Hello to all and I hope you are having a great first day of June – although in Virginia it feels like AUGUST!

I just wanted to let everyone know that I have made a huge change in my life and have traded the blue for the gold.  I am now an associate broker at Century 21 AdVenture on Rt. 208 (Courthouse Rd) in Fredericksburg.  For anyone interested enough to ask, I am taking a break from managing and putting more focus on my clients. 

I am still servicing the same areas – Lake of the Woods, Locust Grove, Orange, and all surrounding counties, but I am hoping to be able to do an even better job with a company outside of the Locust Grove area.

So, please continue to call, my cell phone number is still the same (540) 907-2727, and continue to send your friends and family.  After managing, mentoring and teaching for the last 12 years, I am looking forward to being able to put my preaching to practice!

See you at the Lake!

March Home-Sales Drop, Reinforcing REALTORs Agenda

March home-sales drop, reinforcing our agenda

via: Daily VARbuzz.com digest

Posted: 21 Apr 2011 01:52 PM PDT

The U.S. existing-home sales figures came out (Virginia-specific numbers will be coming shortly). They show a drop in March – sales were down 6.3% from March 2010.

Added to that was the small jump in month-to-month numbers; March 2011 sales were up 3.7% over February, compared to an 8.4% increase in 2010.

All of which goes to our point and our plea to Congress: Don’t mess with the mortgage interest deduction. The market clearly has not yet recovered, and making — or even talking about — changes to the MID will only weaken home sales, and could stall the housing recovery.

Because, despite that March drop, there is good news in the numbers: While sales lagged the 2010 figures, they were only down 6.3% — but in 2010 the homebuyer tax credit was in effect, artificially inflating sales.

Perspective: When the tax credit expired, sales dropped 25.5% (from July 2009 to July 2010). How about previous Marches? When the housing bubble had its biggest ‘pop,’ sales dropped 19.3% from March 2007 to March 2008.

So while this year’s drop of 6.3% may not seem like good news, put in the context of the big bust three years ago — and taking into account last year’s tax credit — you see it’s not so bad after all. Over time, slowly but surely, the market is recovering.

And that’s why the idea of removing or threatening the MID incentive gets us riled up. Americans are recovering from their skittishness about real estate. Lenders, hopefully, will begin to loosen their purse strings again. The ball is beginning to roll. Let’s make sure it continues.

* * *

Some more info: Here’s a handy seven-year chart of existing-home sales from Calculated Risk. It uses NAR’s numbers, not seasonally adjusted.

Note that 2011 numbers (dark orange) lag 2010′s, but also that they’re recovering steadily since the expiration of the homebuyer tax credit. You can see when that happened — look at the big drop in 2010 sales (light orange) from June to July.

EHSNSAMarch2011

Chart courtesy Calculated Risk. Used with permission. For a more detailed look at the March numbers, visit CR’s post about the existing home inventory

5 Things Home Buyers Do That Turn Sellers Off (and Kill Deals)

By Tara-Nicholle Nelson | Broker in San Francisco, CA, http://www.trulia.com/blog/taranelson

On today’s market, every savvy seller wants to know what turns buyers off, so they can get their homes sold as quickly as possible, for as much as possible.  But buyers, take note – there is a minefield of seller turn-offs you can trigger that hold the potential to keep you from getting the home you want at the best price and terms, or to unnecessarily complicate dealings with your home’s seller.
Lest you think all of today’s sellers are under the gun and will just put up with whatever behavior buyers dish out, be aware that there are still many multiple offer situations in which buyers have to compete with each other to get a home – buyers who trigger these turnoffs tend to lose in those scenarios.  Also, avoiding these seller turnoffs can create a transactional environment of cooperation and avoid things turning adversarial.  That, in turn, can empower you to score a better price, get extra items you want thrown into the deal, and even negotiate more flexibility around your escrow and move-in timelines – all perks that can make your life easier and your budget go further.
For sellers, these turnoffs pose the potential of irritating you out of an otherwise good deal – maybe even the only deal you have!
Here’s a few of the most common buyer-perpetuated seller turnoffs, with tips for sellers on how to keep an emotional (and economic) even keel, even if your home’s buyer makes some of these waves:
1. Trash-talking. Trash-talkers are the home buyers who think they’re going to negotiate the list price down by slamming the house, telling the sellers how little it is really worth, how the house across the street sold for nothing, why the school on the corner should make them desperate to give the place away, etc. This strategy never works; in fact, when you attack a seller and their home, you only cause them to be defensive, and think up all the reasons that (a) their home is not what you say it is, and (b) they shouldn’t sell their home to you! 
Sometimes this happens with buyers who actually love a house and just walk around it fantasizing about all the ways they would customize it to their tastes while a seller is there.  Sellers: avoid being at home while your home is being shown. Buyers: save your commentary for your agent; if you do encounter the seller in person keep your conversation respectful and avoid critiquing the house or the list price.
2. Being unqualified for mortgage financing. When a seller signs a buyer’s offer, most often the seller agrees to effectively pull the home off the market, forgoing other buyers who might be interested.  As such, the only thing worse than getting no offers on your home is getting an offer, getting into contract, then having the whole thing fall apart when the buyer’s loan falls through – especially if that could have been predicted or avoided up front.
Sellers: Work with your agent to vet your home’s buyers’ qualifications, including their loan approval, down payment and earnest money deposit – before you sign a contract.  It’s not overkill for your agent to call the buyers’ mortgage pro before you sign the contract and get a level of comfort for how robust their qualifications are. Buyers:  Get pre-approved.  Seriously.  And make sure that you don’t buy a car, quit your job, deposit lottery winnings or do any other financial twitchery between the time you get loan approval and the time you close escrow on your home.
3. Making unjustified lowball offers. No one likes to feel like they are being taken advantage of.  And sellers generally know the ballpark amount that their home is worth, as well as what they need to sell it for to get their mortgage paid off.  Yes – the price you pay for a home should be driven by its fair market value, rather than the seller’s financial needs, and deals are more available in a market like the current one, in which supply so vastly outpaces demand. But just throwing uber-lowball offers out at sellers hoping one will hit the spot is not generally a successful strategy, especially if you really, really want a given property.
Sellers: Don’t get overly emotional about receiving a lowball offer; counter at the price you and your agent decide makes sense based on the total circumstances, including your motivation level, recent comps and the interest/activity level your listing is receiving. Buyers:  Work through the similar, nearby homes that have recently sold (a/k/a comparables) before you make an offer to factor the home’s fair market value into your offer price – also factor in how much you want the place, too.  Don’t be amazed if you make an offer far below asking, and don’t get a response.
4. Renegotiating mid-stream. Sellers plan their finances, moves and  – to some extent – their lives around the purchase price a buyer agrees to pay for their home.  If you get into contract to buy a home, find out during inspections that costly repairs need to be made, then propose a lower sale price, repair credit or even actual repairs to the seller, that’s sensible and fair.  But if you were aware that the property needed a lot of work before you made an offer on it, then you come back asking for beaucoup bucks’ worth of credit or price reductions midstream, expect the seller to cry foul.  And holding the seller up two weeks into the transaction because you caught a case of buyer’s remorse? Not cool, and not likely to foster the spirit of cooperation you may need to get your deal closed.
Sellers: avoid mid-stream price renegotiations by having a full set of inspection reports and repair bids at hand when you list your home. Buyers: try to avoid renegotiating the entire deal unless you get some major surprises at your inspections or inflating small repairs to try to justify a major price cut.
5. Misleading or setting the seller up.  Remember when we talked about
buyer turn-offs?  Being misled by listing photos or very fluffy property descriptions was high on the list.  The same goes for sellers.Offering way over asking with the plan to hammer the seller for a reduction when the house doesn’t appraise at the purchase price?  #LAME  Making an as-is offer planning the whole time to come back and ask for every penny ante repair called out by the inspectors?  Lame squared.

Sellers:
  If you get multiple offers and are tempted to take a sky-high one or one that claims to be all cash, consider requesting proof that the buyer has sufficient funds to make up the difference between what you think the home will appraise for and the actual sale price, and statements showing the cash truly exists.  Buyers: Don’t be lame. I’m not saying you have to tell the seller exactly what your top dollar is, but making offers with terms designed to intentionally mislead is really, really bad form – and can result in losing the home entirely if and when your bluff gets called.

P.S. – You should follow Trulia and Tara on Facebook, too!

How to Assess the Real Cost of a Fixer-Upper House

By: G. M. Filisko

Published: August 24, 2010

When you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house. shack

  • Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.
  • Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?
2. Price the cost of repairs and remodeling before you make an offer
  • Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.
  • If you’re doing the work yourself, price the supplies.
  • Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.
3. Check permit costs
  • Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home.
  • Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.
  • Factor the time and aggravation of permits into your plans.
4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems.
Get written estimates for repairs before you commit to buying a home with structural issues.
Don’t purchase a home that needs major structural work unless:

  • You’re getting it at a steep discount
  • You’re sure you’ve uncovered the extent of the problem
  • You know the problem can be fixed
  • You have a binding written estimate for the repairs
5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.
If you’re planning to fund the repairs with a home equity or home improvement loan:

  • Get yourself pre-approved for both loans before you make an offer.
  • Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.
  • Consider the Federal Housing Administration’s Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It’s a simpler process than obtaining the standard 203(k).
6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.
Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it’s a good idea to share your cost estimates with the sellers, to prove your offer is fair.

7. Include inspection contingencies in your offer

Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

  • Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.
  • Radon, mold, lead-based paint
  • Septic and well
  • Pest

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.
If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

More from HouseLogic

What you need to know about foundation repairs
Budgeting for a home remodel
Tips on hiring a contractor

Other web resources

This Old House remodeling cost estimates
Check the average return on different remodeling projects
G.M. Filisko is an attorney and award-winning writer whose parents bought and renovated a fixer-upper when she was a teen. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.