Like That Payroll Tax Cut?

Well, it's here. President Obama has signed into law a payroll tax cut for Americans. This cut was spurred on by a weak economy. The President has said that he wanted to help Americans bring home more money monthly. The average increase in take-home pay is approximately $40 per month.

However, what is given away must be paid for. Fannie Mae and Freddie Mac will be collecting this difference beginning April 1, 2012. The charges will be in effect through 2026.

If you're looking at buying a house, then you need to do it now. The average increase for a $200,000 will be approximately $15 per month. That means buying power will decrease slightly for all home buyers.

For more information, check out this LINK.

Washington STILL Hasn't Passed Flood Insurance Coverage!

Usually I don't rant and rave about anything much on this blog, but today is different. Right now, real estate transactions where houses sit in any of the AE flood plains in Tennessee ARE NOT able to close. Why? Because the US Senate has NOT voted to pass the bill that extends flood coverage for millions of homeowners nationwide. Without flood insurance, lenders will not allow homes in flood plains to close because there is no coverage for those homes.

Phone calls to Senator Lamar Alexander's office this week revealed that this is a political maneuver by self-serving politicians. Right now, the Senate is considering bill H.R. 4213, a jobs and tax loophole bill that includes language renewing the extension of the coverage. CLICK HERE for more info about the bill.



The Senate has had the bill since last week and it came to the floor earlier this week. Unfortunately, there have been 180 proposed amendments to the bill, some of which have passed, some of which haven't. Even if the Senate votes for the bill, it then has to go back to the House for that body to approve it.

When asked why the flood insurance extension could not be isolated, I was told by Ashley (one of Senator Alexander's assistants) that the Democrats stopped this move originally initiated by Republicans. Unfortunately, the Republicans will not vote for the bill because the bill INCREASES OUR DEFICIT. Republicans want the Stimulus Money to pay for the expenses of the bill, but the Democrats refuse to agree to that.

It doesn't really matter where any of us stand politically. The problem we face is that our representatives are doing nothing more than playing ego-centric games, using bills (such as this one) to foster their own careers instead of taking care of the people who elected them.

If you want to contact your senator's office to register your dissatisfaction about this issue, then CLICK HERE to find the contact phone number for your senator. Even if you don't live in Middle Tennessee, PLEASE call your senator and express your concern for your fellow Americans.
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To work with an agent who knows the Middle Tennessee real estate market, and who is abreast of what's going on the world of real estate, give me a call. I can be reached at 615.373.3513 or via email: jack@jackjernigan.com.

Home Sales and Mortgage Rates

Well, the numbers are in and it's good news and bad news. The good news is that home sales were up in August of this year from July of this year. The bad news is that sale were down in August of this year compared to August of last year. Other good news: that decline from 2008 to 2009 is only 9.2%, unlike the 22-30% drops we've seen in past months.

My listings have received a lot of showings over the last two weeks, good news for sellers. There are also lots of houses out there on the market that need to be sold. Those houses selling are the ones that are the best value - great condition and location for the best price.

And for people who want to refinance or buy a home, the good news is that rates remain around 5%. A loan officer friend of mine and I had lunch last week and he mentioned that he strongly believes that rates will be around the 6% mark in about four to six months from now. While there's no absolute guarantee, you may want to consider talking with your mortgage loan officer so you can make a move to either buy or refinance.

The Nashville Business Journal has both of these articles online. For information about home sales in the area, just CLICK HERE. And for more information about mortage rates, CLICK THIS LINK.

If you're looking for an agent who has a handle on the current market conditions in the Middle Tennessee area, look no further. I'd love to give you a hand with your real estate needs.

Tax Credit Loans for First Time Homebuyers

It looks like 100% loans will always be around in one way or another. This time, The Housing Fund is offering loans up to $7,000 with a first time home buyer's tax credit as collatoral (remember that the credit is UP TO $8,000). This will satisfy a downpayment and closing costs for some homebuyers. It's a coup for a first time buyer because the repayment schedule is $50 a month at 0% interest through July 31, 2010. If not paid in full by that date, the loan converts to a montly payment of $100 and the loan is then amortized at 8%.

Of course, there are limits on income, the price of a house, terms of the loan, etc. These details can be found by checking out this THDA LINK. There are very few banks that handle THDA loans. Of course, one of those is Magna Bank, Crye-Leike's in house lender.

For more information on this tax credit loan, check out TAX CREDIT LOAN INFO.

If you need help buying a home, I'm here to help. As a savvy negotiator, I will work for you to get you the price, terms and conditions that are satisfactory to you.

Buying Short Sale Property

So many questions from clients recently has prompted me to do a part 2 on short sales. This time it's about purchasing a short sale property.

As a review, a "short sale" means that the lender is willing to accept less money for the purchase of a property than is actually owed on it. Properties listed as "short sale" on the MLS may or may not actually be approved short sale properties. Sometimes the agent will be presumptuous about a lender agreeing to a short sale and will list it as such, hoping that the lender will accept it.

Under any condition, the buyer must be aware of what is actually happening with the property. For an agent to list a property as a real short sale, he or she must have done all the work prior to the listing. That begins with communicating with the seller's lender. If the agent has not done this, then this is a "speculative" short sale.

PRICE: When a buyer makes an offer on a true short sale, he should not expect to get a "low ball" on the house. The lower listing price has already been determined by the lender, and while they are willing to take a lower price, they want to sell the property for as close to market value as possible. Sometimes lenders will foreclose on the property because it's less expensive to do that as opposed to a low ball short sale.

WAITING: A short sale contract is still between the buyer and seller, but has to have lender approval. Waiting times for lenders to respond are typically between 30 and 60 days. However, if the lender is local, it's usually a much quicker turnaround. Buyers should be prepared to wait for a long period of time to hear back from their offer. Lenders have thousands of these to review and before they will approve a contract, they have to make sure the seller cannot pay the difference they would loose.

CONDITION: Sometimes the property will be in top-notch condition. Sometimes it won't. If the short sale is pre-foreclosure and needs a paint job, for example, then the lender will probably not approve for the seller to paint it for the buyer. Rationally, the lender thinks that if the seller could pay to have it painted, then he/she could have made the payments on it.

CONTRACT: Lenders want the contract to be clean. Sometimes they will agree to paying some closing costs for the buyer, but this is not typical. Buyers should be prepared to pay their own closing costs, warranty, and other expenses. There's no harm in asking for those in the initial offer, but lenders will not necessarily agree to paying those in the end.

CLOSING: For a short sale to be closed, the seller's lender must have the following from the seller: (1) Hardship letter/statement; (2) W-2's from the last several tax years; (3) Recent federal income tax returns; (4) A HUD-1 settlement statement: (5) The listing agreement from the sellers/listing agent; (5) Title work already completed by the title company; (6) Any other documents such as a Disclaimer, Disclosure of Relationships, Notice of Consent/Agency Status, etc. (approximately 32 pages of information); and after the contract is signed, (7) A final copy of the contract agreement between buyer and seller.

A good listing agent will have already taken care of all except the settlement statement prior to receiving an offer. After the offer is received, the agent will get the title company to prepare a HUD-1 statement based on the contract. The lender now has everything it needs to make a decision.

Waiting is the most difficult part of this process. But after the wait, everyone is happy it's all over.

If you need help purchasing a short sale or foreclosure home, and/or listing your home for sale, please give me a call. I'm here to help.

What Is a 203(K) FHA Loan?

Have you found a house that you love but needs some repairs to pass an FHA appraisal? Or do you have a house that you need to sell that needs some more work to get it ready to sell? In either case, if the work is $15,000 or less, then the houses may qualify for the 203(K) FHA loan.

There are only a few select lenders in Middle Tennessee that are certified to loan 203(K) FHA funds. In our current market, this has become a viable tool for people to be able to buy or to sell a home.

Here's how it works for buyers: Find a home that needs some work. Get estimates from licensed and bonded contractors (the lender will have a list of approved contractors). If the amount of repairs/replacements is under $15,000 to bring it to an average livable condition, then make an offer on the house. Here are some things to remember: (1) The appraisal value has to be the total of the contract price PLUS the repair amount; (2) The work has to be completed within 50 days of the loan application OR within 30 days of closing; (3) The $15,000 is NOT a line of credit or a second loan - the main mortgage and the repair loan are just one loan; (4) The $15,000 can be used for other things beyond basic repairs.

For sellers, talk with your real estate professional about marketing your home as a possible 203(K) FHA home.

For more specifics, check on details with your lender. If you're want to buy or sell a home that needs repairs or just needs to be improved, please feel free to give me a call or send me an email. I'm more than happy to help. Also, there are lenders I can refer you to who handle 203(K) FHA loans.

Short Selling Instead of Foreclosure

Short sales are becoming more common today as homeowners find themselves in a financial pinch. In fact, one of my current listings is a short sale. A short sale is when a house is sold for less than what is owed on it and the expenses to sell/close it. While not an ideal situation, a short sale is viewed as much better than a foreclosure sale. It's less expensive for the bank overall, and many times the bank will allow the seller to pay the difference through an unsecured note at little or no interest.

To get into a short sale situation, a seller must have lender approval. Sometimes a lender will NOT agree to a short sale up front, so the agent listing it posts a price that the seller hopes the bank will accept.

Once contractural terms have been agreed upon by both buyer and seller, the agent submits the contract, along with pages and pages of documents, to the lender (or lenders if there is more than one mortgage on the property). Those documents include:

1 - A hardship statement from the sellers

2 - Title work

3 - Preliminary (proposed) HUD-1 (settlement statement) prepared by the title company

4 - W-2s from the last two years

5 - Federal income tax returns from the last two years

6 - A promissory note signed by the seller to repay the difference (varies by lender)

7 - Notarized letter to the lender allowing the lender to talk with the listing agent about the sale

In all, there are about 35-50 pages of information that the lender must see and view prior to making a decision. Sometimes the decisions are very quick and other times they will take weeks and weeks.

If you are in dire financial straits, this may be the way to go (instead of foreclosure). DO NOT WAIT to take action. Doing nothing sometimes results in the lender taking legal action.

If you desire to purchase a home in short sale status, do not expect to "low ball" this property in your offer. Lenders will often just let it go into foreclosure if the short sale will be less beneficial to them. All offers are required to be presented to the seller, so if you do choose to low-ball the property, they still have to respond with either a "yes", "no" or a counter offer.

For help with a short sale, talk with a knowlegable real estate agent about this process and how you should proceed. If you'll give me a call, I will be happy to help you.

How Does a Property Go Into Foreclosure?

You haven't been able to make your payments on your house recently. Maybe you bought a house with the thought that your house would sell quickly. Or perhaps you lost your job or someone in your family had a serious illness. In any event, you moved into the cash shortage column after the depletion of money in the savings column.

Lenders determine when the foreclosure proceedings start based on their relationship with the homeowner, but once it is determined by the lender to move into foreclosure, a house can be sold in 30 days or less. Laws vary by state, but in Tennessee, the only requirement is that three consecutive printed notices appear in a local publication notifying the public of a foreclosure sale.

Contrary to popular opinion, lenders DO NOT want to take a house back. A lender looses money by taking a house back and the cost for a bank to foreclose on a house is an additional $30,000 to $40,000. This is not a deal for the bank, and it's definitely not a deal for the homeowner.

Options homeowners have when they have trouble making their payments:
1 - Contact the lender immediately and explain the situation. In EVERY phone call, document the date, time, the name/ID number of the employee, and the contents of the discussion.

2 - In your conversations, ask if you can restructure your loan. DO NOT just buy into what they tell you they will do. Calculate the TOTAL cost to restructure.

3 - Before you agree to restructure, talk with relatives, friends, etc. to see if you can make a short-term loan with them, interest free.

4 - Cut back on your household expenses. Why pay $250/month for cable, internet and phone service when you can find the best plans out there that are much less expensive? Be creative and frugle. This is NOT the time to be extravagent.

5 - Once you realize that you may not be able to continue making your payments, talk with a knowledgable real estate agent. I can help you get your house sold.

6 - If things are beyond trying to sell the house, ask the bank if they you can give them the deed in lieu of foreclosure. Some lenders are not willing to do this, but others are. Ask!

7 - Get your agent to ask the lender if they will accept a short sale on the house. A short sale is when the lender will accept a lesser amount for the sale of a house than what is owed on it. More on this topic next week.

8 - If you're at the end of the line in all finances, talk with an experienced bankruptcy attorney.

If you are not sure where you are in this process and need real estate advice, please feel free to contact me. I'm more than happy to share with you what I know to help you in this process.