Real Estate Information

Charlotte Fine Homes

Q.  How Can I Protect My Home From Water Damage?

A.  Water damage is one of the most common problems affecting homeowners today.  In fact, the Insurance Information Institute reports that in 2007 it accounted for 22 % of all U.S. homeowners' insurance claims, with the average claim being $5,531.  That's why you need to have the right amount and type of insurance coverage.

The Institute says standard homeowners insurance covers burst pipes, wind-driven rain, and damage resulting from ice dams on your roof.  Some policies cover sewer and drain backups, but many don't.

In general, water coming from the top down (such as rain) is covered by a standard homeowners policy.  Water coming from the bottom up (such as from a river) is covered by separate flood insurance.  You can buy this from the National Flood Insurance Program and from some private insurers.

The best way to prevent water damage is proper maintenance.  For some excellent tips on such subjects as avoiding frozen pipes, replacing and maintaining bathroom fixtures and installing an emergency pressure release valve in your plumbing system, see the water damage section at the web site for the Institute for Business & Home Safety, www.disastersafety.org. 

If you have any questions, or need capable and trustworthy representation, please call either Joy Setzer at 704-241-8831 or Chelci Setzer at 704-605-9546 today!  Thanks for the question!

Q.  What Changes Have Been Made To Laws On Reverse Mortgages?

A.  First, a reverse mortgage is a loan that lets homeowners (age 62 or older) convert the equity in their homes into cash.  The equity can be paid to the homeowners in a lump sum, a stream of payments, or as a supplement to Social Security or other retirement funds.  No repayment is required until the borrower no longer uses the home as their principal residence.

Here are the key changes to the laws involving reverse mortgages according to the Housing and Economic Recovery Act of 2008:

• The loan limit has been increased from $362,790 (depending on home values in the region) to a nationwide limit of $417,000, and that can increase to as much as $625,500 in high-cost areas.
• Fees are now capped at 2% of the first $200,000 borrowed and 1% on the balance, with a maximum of $6,000.  To protect seniors from aggressive marketing tactics, the law prevents lenders from requiring borrowers to purchase insurance, annuities or other products as a condition for getting the mortgage.

While these changes have made the mortgages more attractive, they aren't for everyone.  You should do your homework and talk with a loan counselor.  

Thanks for the question!  And remember, if you or someone you know is looking for caring and competent representation when Buying or Selling to please give us a call!    

Q.  What are "walkability" scores?

A.  CEOs For Cities, (a national network of urban leaders), commissioned a study released in August 2009 that explored the relationship between home values and walkability in various U.S. metropolitan areas.

Walkability is defined by the Walk Score algorithm, which calculates the closest amenities to a U.S. address.  Scores range from 0 (car dependent) to 100 (most walkable).

The results showed that the walkability of cities translated into increased home values in 13 of the 15 housing markets studied.  In the typical metropolitan area, a one-point increase in Walk Score was associated with an increase in values ranging from $700 to $3,000 depending on the market.  The gains were larger in more dense markets like Tucson and Fresno.

Houses with above-average levels of walkability command a premium of about $4,000 to $34,000 over houses with average levels in typical metropolitan area.

Walk Score is an approximation.  It does not consider factors such as public transit, crime and topography.  Lots of real estate agents, however, are adding the Walk Score to their listings.

If you have any questions, or need capable and trustworthy representation, please call Joy Setzer at 704-241-8831 or Chelci Setzer at 704-605-9546 today!

Q.  What's the latest on the first-time homebuyer tax credit?

A.  The tax credit for qualified first-time homebuyers was extended to this spring.  Some of the original features are the same, including:
*  First-time Buyers can get a credit of as much as 10% of the purchase price, up to $8,000.  The home must be your principal residence for the next three consecutive years.
*  If you don't pay enough tax to offset the credit, you can get a tax refund. 
*  You can't purchase the home from your ancestors (parents, grandparents, etc.) or your lineal descendants (children, grandchildren, etc.).

New features include:
*  A buyer must have a contract before May 1, 2010 and the sale must close before July 1, 2010.
*  Income limits have been raised.  Check sites such as www.irs.gov or www.federalhousingtaxcredit.com for details.
*  If you buy after November 6, 2009, the credit is available if the home will be your principal residence and the price is less than or equal to $800,000.
*  Repeat Buyers who lived in one residence for five consecutive years of the last eight can qualify for a tax credit of as much as 10% of the purchase price, up to $6,500.
*  For purchases after November 6, 2009, you can't claim the credit if you buy the home from a spouse or spouse's family members.

Thanks for the question!

Existing Home Sales - Up 24% from last year

• Existing home sales recorded another strong gain in October with many Buyers rushing to beat the deadline for the first-time buyer tax credit scheduled to expire at the end of November. Sales surged 10.1 percent to 6.1 million units over September sales of 5.54 million and are 23.5 percent above the 4.94 million-unit level seen last year. Sales activity is at the highest level since February 2007 when it reached 6.55 million.

Median Home Price - Very favorable

• Low home prices are contributing to extremely favorable affordability conditions. Existing-home price was $173,100 in October, 5 percent higher from its low in January but still 7.1 percent below October 2008. Distressed properties, which accounted for 30 percent of all transactions in October, continue to hold down the median home price, as they typically sell for 15 to 20 percent less than traditional homes.

Inventory - Lowest level in more than 2.5 years

• “We are getting closer to a general balance between Buyers and Sellers,” according to Lawrence Yun, NAR chief economist. The supply of homes is now at the lowest level in more than two and a half years. Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, representing a seven-month supply at the current sales pace, down from September’s eight-month supply. Compared to a year ago, there are now 15 percent fewer homes on the market.

Mortgage Rates – Back at 4.78%

• Remaining at attractive levels for people looking to buy a home or refinance, historically low interest rates are boosting the market. Rates for 30-year fixed loans fell to 4.95 percent in October from 5.06 percent the month before. During the week ended November 25, rates again dropped to the low 4.78 percent reached in the spring. As the economy enters its recovery phase and concerns over inflation come back, mortgage rates are expected to go up.

Affordability – Best since 1970s

• Unprecedented interest rates, low home prices, as well as the first-time buyer tax credit are lifting the housing market. All these factors combined are “adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970,” according to Lawrence Yun, NAR chief economist. So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 15 percent.

  New Fannie Mae Policies

In many markets dominated by distressed properties, Buyers jumped off the fence in droves and as a result the number of homes for sale in the first tier of the market decreased significantly. When a new foreclosure becomes available for sale, it often is snapped up by investors with cash on hand, leaving the average home buyer looking for a place to live out of luck.       

Fannie Mae introduced a new “First Look” initiative to address this and aid in the stabilization of neighborhoods.

1. During the first 15 days a Fannie Mae REO is on the market, only Buyers who will live in the home and public entities committed to the best interests of the community may purchase it.
2. Buyers will have 45 days to close, up from 30 days.
3. Earnest money requirement may be reduced.

This will hopefully give the average home buyer a greater chance of purchasing foreclosures and provide support to hard-hit neighborhoods, because owner-occupants are more invested in the long-term vitality of a community whereas investors typically are more invested in their monetary return from the property.       

Increased Credit Scores

Fannie Mae is raising its minimum credit score from 580 to 620. This risk management measure will help protect Fannie Mae from future defaults and foreclosure by raising their standard and accepting less risky loans.              

While risk management is a sound and healthy approach for an entity that the economy depends on, this underscores the importance that potential home Buyers check their credit report early in the process, allowing more time to clear up any errors.         

Earlier this year, Experian, one of three major credit-reporting bureaus, began exclusively providing complete credit report information when purchased directly from Experian or obtained from the government annual credit report.

FHA Signals Efforts to Manage Risk

In an effort to secure its financial health, the Federal Housing Administration plans to require borrowers to have more “skin in the game” soon. Over the past three years, FHA’s market share has boomed from about 2 percent of all new loans to about 30 percent of all new loans this year and 20 percent of refinances. The escalading volume that the administration is currently handling calls for stricter requirements as evidenced by FHA’s capital ratios falling to nearly 0.5 percent well below the minimum of 2 percent.

The agency is still analyzing the levels and time frames it wishes to tighten its standards but they expect to:

1. Increase minimum down payments
2. Increase minimum credit scores
3. Increase insurance premiums
4. Lower the amount of seller concessions

As one of the major players in the mortgage market, the health of FHA is imperative to the housing market and flow of credit to home Buyers, as well as to the health of the overall economy. Taking measures to safeguard the agency from needing a government tax payer-funded bailout is a notable risk management measure.

According to a research study, the typical first-time buyer put down 3.5 percent this year. Those who want to take advantage of the tax credit before the April 30 contract, June 30 closing deadline may want to beef up their savings and check their credit report now in anticipation of any changes.