Making Your Home Affordable – The Plan

March 4, 2009

mhalogo

The US government’s Making Home Affordable plan was released this morning. Millions of homeowners wanting to see if they qualify under the plan for either a refinancing or a loan modification will be eager to check out this program.

You might qualify for refinancing under the plan:

  • If the home you want to refinance is your primary residence; and
  • The loan on your home is controlled by Fannie Mae or Freddie Mac; and
  • You’re current on your mortgage payments (not more than 30 days late on your mortgage in the last 12 months); and 
  • You have sufficient income to support a new mortgage.

You can owe between 80-105% of the current value of your home, but no higher than 105%.

If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:documents

  • Your monthly gross (before taxes) income of your household, including recent pay stubs.
  • Your last income tax return.
  • Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
  • Account balances and minimum monthly payments due on all your credit cards.
  • Account balances and minimum monthly payments for all your other debts, like student loans or car loans.

You might qualify for a loan modification (first mortgage only) under the plan: 

  • If you originated your mortgage before Jan. 1, 2009; and
  • You are an owner-occupant; and
  • You have an unpaid balance that is equal to or less than $729,750 (for a single-family home); and
  • You have trouble paying your mortgage due to financial hardship – perhaps because your  mortgage payments increased, or your income was reduced, or you suffered a hardship (such as medical problems) that increased your bills, or you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship; and,
  • Your monthly mortgage payment must be more than 31% of your gross (pre-tax) monthly income.

You must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.

The idea is for your monthly payments (not including private mortgage insurance) to reach 31% of your pre-tax monthly income. The monthly payments are defined as payments on the principal, interest, taxes, insurance (not including mortgage insurance) and homeowners association/condo fees. First, the lender will reduce the interest rate to no less than 2% on the loan, so that the monthly payments are less than 38% of your monthly income. Then, the Treasury will match further reductions, dollar-for-dollar, with your lender, to bring the monthly payments down further, to 31% of your monthly income.

If you keep your payments on time after the modification, the government will pay up to $1,000 each year in the first five years toward reducing the principal on your mortgage.

After five years, the interest rate on the loan will start to increase by no more than 1% per year, but can’t go higher than what the market rate was on the day your loan was modified.

The amount you owe versus the current value of your home doesn’t matter for this program.

The foreclosure process will stop while you’re being considered for the program, or for any alternative foreclosure prevention option.

The borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report. The company that services your loan will get a an incentive fee of $500 for each modification they do. Once your lender modifies your loan, they’ll be paid a $1,500 incentive.

Gather these required loan modification documents:

  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources;
  • Your most recent income tax return;
  • Information about your assets;
  • Information about any second mortgage on the house;
  • Account balances and minimum monthly payments due on all of your credit cards;
  • Account balances and monthly payments on all your 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 (job loss, divorce, illness, etc.).

Then call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives will motivate them to participate.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com

It’s Good To Have A Friend In The Business®
samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service — Cash Back to My Buyers!


Organizing Can Be An Emotional Thing

February 16, 2009

messydeskStuff. Most of us have waaaaay too much of it. If you know my wife, you will understand who keeps stuff organized in our house. She spent a good part of this weekend moving cookbooks, camera and various electronic gizmos from one cabinet to another, tossing things we haven’t been using, and getting some new things put away. It’s certainly not me – you should see my desk right now. I am not the best person to talk about decluttering, though it’s definitely a mantra of mine when talking to sellers! So that’s why I asked for professional help in writing this piece, and Aimee Saldivar obliged:

tmntDo you feel bad throwing out every greeting card you receive? Or do you feel the need to save every toy your children owned to hand down to their children someday? Keeping these toys and remembrances can add up, especially if you don’t have the space to store them. If you save the toys’ original boxes or perhaps the toys that are slightly tattered, they’ll be of no value if your children decide to buy their kids new toys altogether. Get rid of them! One way to keep that precious toy close to your heart is to take a picture of it and create a digital album for you and your children to cherish tomorrow. Those pictures would make a great hardback album for a holiday gift, or can be used to create a scrapbook. It will not only take up less room, be cost effective and environmentally friendly, but it will allow more room for you to use today.

walshI recently finished a book by Peter Walsh, professional organizer and motivational speaker, called “It’s All Too Much: An Easy Plan For Living a Richer Life With Less Stuff.” He makes some great points about happiness: more material things don’t really measure success, having more possessions may be more suffocating than liberating, and the stuff we own ends up owning us. When we feel like we have too much stuff, we buy more containers; but in reality we aren’t cleaning out clutter, we’re just storing it away. Eventually this will build up and take over our space.

We have more winter ahead of us, but it’s a great time to start planning our organization. Here are few ideas to get you started without being overwhelmed by the task:

  1. One room at a time. Focus on a room rather than your entire home. A smaller goal cuts down your anxiety and helps you stay focused. Prioritize each room according to either your budget or the time you have to spend. This will help you plan your project more effectively and will keep you on track to organizational success.
  2. Think about what you want to achieve out of that room. If you’re planning to put your home on the market, you may want to consult a professional stager or organizer to create a “punch list.” An extra set of eyes can’t hurt, and they know creative ways to minimize clutter and maximize your sale price without going overboard. If you’re looking simply to organize, store away those keepsakes into one box you can bring out when you want to reflect, and keep the room livable without feeling cramped and cluttered.
  3. consignTIP:  In today’s economy, second-hand and consignment stores are becoming the hot place to shop. If have you some great items that you feel guilty about giving away, consignment shops are a great way to get rid of them without having to host a yard sale or post them in the classifieds online. Remember, one man’s junk can be another man’s treasure – at less than half the price! [Followup tip from Kim:  Drop off your stuff and drive away quickly, or you will come home with more than you took in!]
  4. If you haven’t used in the last year – GET RID OF IT! Some things we own may be seasonal items, which is okay; however, if you’re still thinking that the one item you’re saving may go back in style, dump it. If it comes back someday, there will plenty of options to choose from. Many times we get so wrapped up in how much we paid or how much we saved on a particular item when, in reality, it was probably an impulse buy at the time. We may also keep something “in case we need it.” Unless you are talking about fire extinguishers and the like, if we haven’t used it in a year, then we don’t need it, and we’ve probably forgotten about it.
  5. books1TIP:  Getting rid of dust collectors such as books, lampshades and dried flowers can help alleviate dust for people with allergies. You may continue to dust the shelves, but not the books on the shelves or the dried flowers you are saving from a special occasion. It rarely occurs to people that dust build-up on these items is overlooked and can make matters worse for people with allergies. Once you finish reading a book, trade it for a new one or donate it. Donating books to your local public library is a very simple process and is a tax write-off for you next year.
  6. The more you can eliminate, the better. Linen closets become an emotional trap for us since they house blankets and linens we don’t want to part with. This is usually where Grandma’s hankies and table linens end up. Instead, think about storing them in a dedicated keepsake box from Grandma, or framing and hanging them in a guest bedroom (if they go with the theme). Once you make room for the linens you actually use, you won’t have to shuffle through mismatched sheet sets and torn towels. If you have different sizes of sheet sets for different rooms and/or family members, a great way to keep them organized  is to color-code them. Buy a different color of two-inch grosgrain ribbon rolls for each size or family member to keep the sheet sets together for “grab and go.” It adds a nice touch to your linen closet, too. NOTE:  When you have your home on the market, prospective buyers look through everything, especially closets – they’ll be impressed.
  7. medalsA great way to pay tribute to a loved one after they have passed would be to dedicate a space or a room for their items. If they were in the military, one way to pay tribute would be to frame their military medals along with their uniform jacket. Or if you are having a hard time parting with their collected items, perhaps you could sell them and donate the money in their memory to an organization or educational institution they would have appreciated.

ladybugsoMany thanks to Aimee Saldivar, professional organizer and home stager. She also offers special occasion set-up such as table setting and arranging. You can find before and after pictures on Facebook by looking up Ladybug Staging and Organization.

If you mention this article, Aimee will provide a free consultation when you sign up for a service. Plan ahead and call today for an estimate at 703-856-3404 or email ladybugstaging@gmail.com.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service


What’s My Home Worth?

January 27, 2009

The first question a potential home seller has is undoubtedly, “What’s my home worth?”homesaleprice

A real estate professional will establish the likely selling price by doing a comparative market analysis (CMA) – comparing your home to others like it that have sold recently. We would include market conditions, such as the inventory of homes for sale and the ease of purchase (interest rates, mortgage availability).

Ideally, your agent will be looking for homes

  • of similar size;
  • in similar condition;
  • in the same or a nearby neighborhood; and
  • sold in the past three months.

In a large subdivision or condo complex with many recent sales, this can be fairly easy. If your home is very similar to several recently closed sales, except for the level of improvements, adjustments can be made for the various differences.

It is more difficult to establish market value when there are few or no comparable sales (“comps”). Sometimes your home is unique compared with nearby homes sold recently. In this situation establishing a reasonable market value will also be a matter of adjustments, but the adjustments will be trickier.

The most important factor is location, so up to a point we would tend to favor closer homes over more recent sales from a distance. On the other hand, if we can locate several recent sales of similar model homes by the same builder in a distant neighborhood, we can adjust for location.

mcmansionAdjustments may be made for the home’s “fit” in the neighborhood. A home that “sticks out like a sore thumb” – either too fancy or too big compared to nearby homes, or relatively small or unimproved relative to the neighborhood – will require more up or down adjustment. If the comps are in a more highly sought after school district than your home – or vice versa – it will be necessary to adjust for the schools.

Occasionally we might try multiple approaches. For instance, in addition to pricing recent sales of similar homes from other neighborhoods,  we can also research sales in your neighborhood from previous years and then adjust for what has occurred in the local market since then. By establishing the value from several perspectives, a more accurate price range for your home will become clear.

Finally, when a property sells, it’s not just about the price. There are other factors that influence what a buyer will pay and how much a seller will accept:

For example, terms such as these might induce a seller to take less money:

  • an all-cash offer (no mortgage contingency to worry about);
  • an as-is offer (no concern about repairs);
  • a fast closing or a longer closing, depending on what the seller prefers; or
  • a free rent back, to allow the seller time to complete his move at a more leisurely pace.

And these terms might make the seller demand more money:

  • seller financing all or part of the purchase price;
  • seller paying for closing costs; or
  • offer contingent on sale of buyer’s home.

If you would like to know the likely market value of your home, please contact me. I’ll be happy to help you evaluate your property’s value.

Kim Hannemann, Real Estate Consultant/Realtor®, Samson Realty
Cell: 703-861-9234 • Fax: 703-896-5055 • Email: KimTheAgent@gmail.com
It’s Good To Have A Friend In The Business®

samson-realty-and-bird

If you would like to discuss real estate questions, sell or buy a home in Northern Virginia – including Alexandria, Annandale, Arlington, Burke, Centreville, Chantilly, Clifton, Fairfax, Fairfax Station, Falls Church, Kingstowne, Lorton, McLean, Reston, Springfield, or Vienna – contact Kim today.

4 – 4.5% Listings with First-Class Service


Good News for Countrywide Borrowers

January 13, 2009

From the Virginian-Pilot:

Countrywide Financial Corp. has agreed to cut interest rates and provide relief to more than 8,900 troubled Virginia homeowners to help prevent them from going into foreclosure, the state attorney general’s office announced Monday.

Virginia joined a nationwide settlement between state attorneys general and the home loan giant, which was acquired in July by Bank of America. Designed to help those most at risk of defaulting on their mortgages, the settlement will provide as much as $212.8 million of relief in Virginia, mostly in the form of loan modifications.

Some of those states had sued Countrywide for deceptive business practices, alleging the lender had misled consumers on the escalating nature of the loans. The institution agreed to provide $8.4 billion in loan modifications to as many as 397,000 homeowners across the country.

If you have a loan financed by Countrywide before 2008, read this article:

Mortgage giant offers relief in Virginia to buyers on brink


Ten Mistakes Sellers Make

January 2, 2009

. . . or, ten ways to improve your chances to sell your home. A funny but oh-so-true description of steps all home sellers should take to ensure the fastest, most profitable sale.

Vodpod videos no longer available.


Making Your Home Stand Out In A Buyers Market

November 6, 2008

sellhomeIn a buyer’s market, besides pricing your home right, you need to do whatever you can to make buyers like your house more than the others.

It’s never fun to put a lot of money into a house you are selling – especially when you feel like you lost out on the big boom –  but there are many affordable ways to improve your chances of attracting serious offers and getting the best price possible: 

  • Paint the interior. Fresh paint can do wonders. This is the perfect time to change those kid-decorated rooms to more neutral colors. You can do it yourself unless you don’t feel comfortable about the quality of your work or are pressed for time.
  • Repair cracks and holes. Repainting gives you a good excuse to patch holes left from hanging pictures, and to fill any small settlement cracks that may have formed over the years. Remember to check kitchen and bathroom areas that might need recaulking, too. 
  • Clean or replace carpeting. If your carpeting is in good shape, free from stains, you might try renting a carpet cleaner. This can give new life to your carpeting. But if your carpet is stained, odiferous,or just plain old, your best option may be to replace it. A dirty or ugly carpet will not impress buyers.
  • Clean or paint the exterior. Curb appeal is everything (well, except for location-location-location), and no matter how great the interior of your house looks, a dirty exterior can make buyers flee before they get inside. A good power washing can brighten it up considerably – but if you have faded siding or peeling paint, you should strongly consider a fresh coat.
  • Pay attention to the driveway. If you have a paved driveway, fill in any significant cracks. Clean up any rust marks or oil stains too.
  • Clean the windows. It will improve the brightness and curb appeal. Don’t forget the window sills and tracks – dirt and mildew accumulates there, and can be a real turnoff. 
  • Make your landscaping stand out. Again, curb appeal is very important, and your landscaping will make a difference. Make sure you keep your lawn mowed and neat. If you have existing decorative landscape plants, take care that they are in pleasing shape. Make sure you have fresh looking mulch, and remove any dead or dying plants. If you have some empty space, consider putting in a few showy plants. If you have a front porch, adding some planters or hanging baskets of flowers is a nice touch.
  • Remove exterior clutter. Get rid of that old grill that you no longer use, and if you have kids, organize or remove some of their toys from the yard. Keep it simple – no pink flamingoes or other items that may not appeal to everyone.
  • Clean up your clutter inside. What may not seem like clutter to you may be instantly perceived as clutter by someone else. This includes jam-packed closets, the stack of mail or newspapers on the counter, and the handy but unsightly treasures stuck to your refrigerator. While these things may not seem to take up space, they give the impression of crowdedness.
  • Clean out the attic, basement, garage, and other storage spaces. Most buyers will be interested in storage space. This space can be the difference when the buyers decide to make an offer. If you currently use those storage spaces yourself, at least organize them and make it look like there is plenty more storage. Consider clearing some of the stuff out – after all, you’ll be moving soon anyway!
  • Create more open space. Remove unnecessary furniture and personal items that take up space. Maybe you have a coffee table that collects magazines and dust, or a treadmill/clothes hanger in your bedroom. When you open up more space in your rooms, the buyers will have a better visual image of how their own furniture might fit into the house.
  • Clean the kitchen and bathrooms like never before. These are the real selling points, and they have to shine. You want every inch of the bathroom to look as if you could eat off of it, and you want your appliances and counters in the kitchen to look like new. If you have a problem with ants or some other pest, make sure you take every possible step to eradicate them – and don’t leave your traps or bug spray in sight.
  • Update your lighting. Replace any burnt-out bulbs, and make sure the bulbs in a multi-bulb fixture all match. If you have windows that provide a lot of light from the outside, keep the blinds or shades open and working properly to let this light in. Most buyers love rooms that receive a lot of outside light, so if you’ve got it, flaunt it.
  • Finally, deal with odors. Every home has its distinct odors – favorite foods, plants, that special air freshener you can only get in Guam – but prospective buyers will zero in on smoke and pet odors. You can try to minimize these odors, but they are almost impossible to hide without changing all the carpeting, curtains and upholstery in the home. Cheap cover-up sprays can just make things worse. Try quality scented candles or potpourri – don’t go overboard! – or better yet, do some baking before you are expecting to show the house. Try to refrain from cooking strong smelling foods like fish or sauerkraut on weekends or when you otherwise expect you might have visitors.

Don’t Let An Agent “Buy” Your Listing

November 6, 2008

conmanMost homeowners love their home, and they think it should sell quickly at the highest price ever seen in their neighborhood. They hear outlandish tales about how much so-and-so got for their piece of trash in the next block – in a different market, even assuming the tale has any relationship to reality – and figure they will get at least $XX thousand more. Not many have any understanding of the market, let alone the competition. When they go looking for an agent, they want the agent that will promise the highest sales price. D’oh.

How does the home seller know if that price is realistic? They don’t. I get paid on commission and I’d like to sell your home for big bucks, too. But buyers make offers on the home that is the best value for them. Marketing is intended to attract the buyers whose needs and desires that home meets, at a better value than any of the competition. Sure, we’ll try to seduce the buyer into liking the property so much that they will pay a little more. But if the agent is selling a price to the seller, how can they also sell it to the buyer? Not gonna happen.

But to the owner with $ in their eyes, the “con agent” can promise whatever sales price he thinks will get the owner to sign that listing contract. It’s so easy – much easier than having the tough discussion about pricing realistically, or what has to be done to help the home look its best. It’s all about getting the listing contract. When they’ve got the contract, and the seller is locked in for 90 days or more, then they will start working on the seller to lower the asking price.

No harm in trying the higher price, right? Wrong. In fact, terrible. The buyers who are looking in the range where that home should be priced won’t see it. The buyers looking at competing properties will see those properties as better values. Within thirty days, all the buyers who could have been there have moved on, and new buyers coming onto the market see that it’s been for sale for over a month, and suspect there’s something wrong with it. And the agent who “bought” the listing by promising the moon is telling the seller about how tough the competition is, and insisting he must now lower the price . . . to less than he should have gotten if it had been priced right to begin with.

These homes eventually sell, at the lower price, so the con agent looks like a big wheel. He’s got plenty of listings for sale all over town. On paper, he’s doing a lot of business, and so he’s deemed successful – just the “top producer” many homeowners think they want. Yikes.

When you are discussing selling your home with a good agent, the pricing part of the conversation is supposed to be gritty. You want the highest possible price for your home, but you need to price it competitively with other homes. If a prospective listing agent does not show you the competition and recent sales, and suggest a price in line with that market, the agent isn’t doing his job. Is he ignorant of the market, or is he trying to buy your listing contract with a price he can’t deliver? Either way, you’re talking to the wrong agent.

Furthermore, unless you’re Martha Stewart, the discussion about what needs to be done to make your home ready to sell can also be somewhat painful. It’s to your advantage to make your home appealing to buyers, but if the agent doesn’t tell you how to clean it up and get rid of the clutter and make certain it stays presentable, he’s avoiding possibly unpalatable truths. Just like when he avoids the pricing facts, this is not a good sign.

Don’t confuse complaisance with competence. Keep searching until you find an agent who tells you the facts, even if you find them unpleasant.