Posts Tagged ‘closing costs’

A Century of NAR® First House Buyers Guidance…and a Quiz!

My organization—the National Association of Realtors®—offers a wide range of guidance for Burlington families who have decided it’s time to land their first house. With more than a century’s worth of experience, you’d expect nothing less.

Last week I happened across an article the NAR had distilled that looked like a must-read for anyone who is just starting out on the path to buying their first Burlington house. Its title was “8 Critical Things to Do Before Buying a Home”—but it could just as well have been “8 Critical Things to Do Before Buying Your First Burlington House.” Each of the eight was apt—and important to mull over—but it’s the kind of list that’s awfully easy to read without giving much thought to the individual items.

The challenge was to come up with an interesting way to share the ideas with you. The article put the “8 critical things” in order—so I decided to make a game out of them: a quiz.

See if you can guess what was the order—from first to last—that the NAR presented them in. I don’t know that the order I’d choose would match theirs exactly …but see how well yours does:

-A. Amass a down payment

-B. Go mortgage shopping

-C. Ponder the future (*I love this one: wait till you see where the NAR put it!)

-D. Crunch your numbers

-E. Know your credit score

-F. Get educated

-G. Ballpark your closing costs

-H. Interview at least three real estate agents

 

The NAR’s answers are at the bottom, but I have a minor addition for Burlington first house buyers: if you’re just getting started, you can get a head start right now by giving me a call. There’s never an obligation, but I’m always happy to discuss where you are and the options you might already have. In any case, later—when it comes to action H.—you’ll definitely have a head start!

Answer:

D, E, A, F, H, B, C

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

MassHousing – An Option for Homebuyers

What is Mass Housing

MassHousing, created by an act of the Massachusetts Legislature in 1966, is an independent public authority whose purpose it is to increase affordable rental and for-sale housing in Massachusetts. Since 1970, it has provided $13 billion in financing. 

This year alone the Agency has come out with some new and innovative financing options:

January 15 22012 – No-MI Mortgage – A 30 year fixed rate mortgage (purchases and refis) to finance up to 97% of purchase price or home value at low rate of interest with no points, no mortgage insurance premium and low closing costs.

May 1, 2012 – Single Premium MI – A low cost single premium mortgage insruance option that allows third parties to provide downpayment and closing cost assistance to homebuyers by prepaying the mortgage insurance with a single premium.  Mass Housing MI continues to provide borower payment protection in case of job loss.

May 15, 2012 – Refinance Program for MassHousing Borrowers – Provides lower, fixed interest rates for homeowners with MassHousing loans wanting to refinance, regardless of property value.  This may help those who are upside down on their mortgage – yet have a job, income, good credit, and the ability to pay.

May 23, 2012 – Right Rate for Lower Income Borrowers – Discounted rate for borrowers who earn 80% or less of the local area median income.  It is available for both purchases and refinances.

For more information about MassHousing, visit their website at https://www.masshousing.com/portal/server.pt?open=514&objID=268&parentname=CommunityPage&parentid=4&mode=2&in_hi_userid=2&cached=true

I constantly refer buyers to Mass Housing.  They have great products and also provide classes for buyers to help them understand the process upon which they are about to embark. 

Joan Parcewski, Realtor & Notary  (GRI, CBR, LMC, SFR, CDPE, SRES, GREEN, CIAS, BPOR, E-PRO, AHWD)

Woods Real Estate     c 978-376-3978    Joan@woodsre.com

FHA’s New Limits on Financial Concessions from Sellers to Buyers

This is a reprint from Inman News (3/1/2012)http://lowes.inman.com and is information everyone should know and understand (sellers, buyers, agents)

    

The Federal  Housing Administration’s long-awaited rules on how much home sellers can  contribute to buyers’ closing costs are finally out — sort of.

Rather than  publishing final guidance on “seller concessions,” the agency put out  a Federal Register notice late last week saying, essentially: “OK folks,  here’s what we plan to do — but if you don’t like it, we’ll give you just 30  days to tell us why.”

As forecast  in an earlier column (see “FHA  may lower cap on seller concessions to buyers“), the almost-final rule  abandons the agency’s previous plan to impose a flat 3 percent, across-the-board  limit on settlement cost contributions by sellers that sweeten buyers’ deals.

That  approach was strongly criticized by the National Association of REALTORS® and by  prominent regional realty brokers as penalizing buyers and sellers in markets  with low to moderate home-sale prices.

Limiting seller  assistance to just 3 percent would smother sales, brokers complained, because  many closing costs are fixed and represent a larger percentage of the bottom  line in moderate-priced transactions compared with higher-cost sales.

To remedy  this, FHA officials now say the agency intends to adopt a more nuanced approach  under which the maximum allowable seller contribution can be the greater of  $6,000 or a percentage of the selling price, based on a sliding scale.

In some  cases, the current 6 percent cap will remain. In many others, it will dip far  below 3 percent and become a tiny fraction of what is allowed today.

For example,  in the sale of a $100,000 home, the maximum seller concession would be $6,000,  or 6 percent, under the new rule — the same as it is today.

On a  $120,000 purchase, it would be 5 percent ($6,000 is 5 percent of $120,000). At  a $140,000 selling price, the $6,000 cap would be 4.3 percent; at $180,000 it  would be 3.3 percent. At $200,000, the $6,000 cap would equal 3 percent, but  would still be one-half the $12,000 (6 percent) limit currently allowed.

All higher  sales amounts would be progressively more severely restricted by the 3 percent  limit. For instance, on a $300,000 home purchase the present FHA rule would  allow a seller to kick in as much as $18,000, but under the new cap that  assistance could not exceed $6,000 — far below even a 3 percent limit, which  would total $9,000.

In effect,  FHA wants to rein in what it sees as unacceptable distortions of the true  property value — and therefore its own risk of loss in the event of a default  — as transaction prices rise.

Left at its  current 6 percent across-the-board approach, FHA noted, sellers can throw in as  much as $43,785 in financial inducements to buyers in high-cost areas such as  California, New York and Washington, D.C., where the maximum conforming loan  limit is $729,750.

Fannie Mae  and Freddie Mac have long limited seller contributions to a flat 3 percent of  the selling price. The U.S. Department of Veterans Affairs allows 4 percent.

In its  proposed rule, FHA also took aim at certain types of seller assistance — particularly  those offered by some builders to bring buyers to the settlement table.

No longer  permissible under FHA’s revised definitions are seller concessions involving advance  payment of homeowner association fees, advance payment of mortgage interest for  a period of months, and “mortgage protection plans,” where borrowers  receive insurance policies free of direct charge that guarantee up to six  months of mortgage payments in the event of an unforeseen job loss or medical  disability.

“HUD  believes that these types of payment supplements, while permissible under  current seller-concession guidelines, are really inducements to purchase and  should be treated as such,” the agency said in its proposal.

To the  extent that builders or other sellers continue to make such offers to buyers,  FHA intends to subtract them, dollar for dollar, from the sale price of the  house before calculating the loan-to-value limit on the insurable mortgage  amount.

Still  acceptable to FHA under the proposed changes:

  • actual  closing costs;
  • prepaid  expenses;
  • loan discount  points; and
  • the  upfront mortgage insurance premium charged by FHA.

Though NAR  has not commented publicly yet on the FHA proposals, homebuilders are unhappy  with the rollbacks and new restrictions.

“This  is going to impinge on (builders’) ability to sell homes,” David Ledford,  senior vice president for regulatory affairs at the National Association of  Home Builders, told me.

Worse yet,  he said, FHA is planning to change the rules “at a very inopportune time”  in the market cycle, “just when there are ‘green shoots’ ” of  recovery sprouting up — in the form of higher traffic and slowly increasing  sales — in markets around the U.S.

In  particular, he added, many builders now routinely offer to pay a limited period  of homeowner association dues for their buyers, but now they may have to cut that  practice.

Steve A. Brown,  executive vice president of Crye-Leike REALTORS®, a large regional brokerage  based in Memphis, told me that in relatively moderate housing-cost areas such  as where his firm operates, FHA’s new sliding scale on sellers assistance caps “should  not have a huge impact, especially if agents advise clients to close toward the  end of the month to minimize prepaid interest, (which is) a large variable in  closing costs.”

In higher-cost  areas, however, it will be a whole different story.

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