The 6 Most Common Home Inspection Problems

April 5, 2012 by · Leave a Comment 

Foreclosures continue to dominate the market.  This creates incredible buying opportunities, however, because most of these properties are sold “as-is”, buyers must be very cautious and do proper due diligence when purchasing a foreclosure.  A good home inspection becomes a critical tool for a buyer during this process.  According to HGTV, here are the six most common problems uncovered through the home inspection process and the main issues that a home buyer needs to investigate before buying a foreclosure:

1. Water problems.  Leaky pipes, unseen leaks behind siding or in roofs, and water intrusion into basements and attics are the #1 problem uncovered on home inspections.  These are serious issues that can be quite costly to fix.  In 36% of homes inspected, poor grading and drainage were observed, which often times is the source of major water problems.

2. Roofing.  The roof is a difficult part of the house to inspect and inspectors don’t always climb atop roofs when preparing the home inspection report and much can be missed from the ground.  Roofs don’t last forever and they will begin to show diminishing performance over time.  Some roofs have also been improperly installed leaving gaps for water, rodents, and insects to enter the home.  Make sure the roof is safe and effective before pulling the trigger on a foreclosure.

3. Electrical wiring.  Incorrect or undersized wiring can be disastrous and dangerous for home owners.  Older homes were never wired to handle the amount of appliances, electronics, and modern conveniences that they must today, and when overloaded, have the potential for fire.  Another major problem seen by inspectors is do-it-yourself projects that result in overloaded circuits and exposed wiring!

4. Plumbing.  Unfortunately, the most common places for plumbing leaks are behind walls, under floors, and in connections between pipes.  In addition, the water often runs down walls and often collects in places nowhere near the true source of the leak!  Thus, fixing these leaks can be quite problematic and expensive.  It can also lead to consequences like mold damage or even pests like carpenter ants.

5. Heating and Cooling.  An inspector will run a furnace and air conditioner through a cycle to ensure they are working but home buyers should also investigate how much the longer the units will last.  If they need replacing any time soon, then this cost should be built into the projected cost of the home.

6. Decks.  A beautiful outdoor space can actually be covertly hiding structural problems or poor workmanship.  Investigate who built the deck and when.  If the home owner built the deck be extra careful with the due diligence.  Make sure the deck is structurally sound and safe.

There are fantastic deals available in the market place today, but it is more important than ever that buyers do proper due diligence to make sure the money saved does not disappear in costly repairs.

Make Sure You are Working with Best Appraisers

February 7, 2012 by · Leave a Comment 

It would be a big understatement to say the the residential appraisal business has changed over the last few years.  Rules have been enacted to restrict communication between loan officers, customers, and appraisers.  Loan officers and realtors are, in fact, not even allowed to talk with appraisers directly about a property or its value any longer.  New reporting requirements, with updated codes and explanations, have gone into effect as well.  The goal of all of the changes has been to create appraisals that are more accurate and less influenced by the loan officers and realtors who rely on their conclusions to get a transactions closed. 

Although a noble goal, the new regulations have caused many a headache and do not always lead to the most accurate results.  So, what can a real estate professional do to alleviate appraisal problems?  The answer is to work with a lender that has a system in place the insures only the very best appraisers in each county are used on each and every transaction.  Working with such a lender will be critical to a realtor’s success in 2012. 

Can you really afford to have your customers working with national appraisal firms that look for the cheapest appraisers who are rarely local?  At Fairfield Mortgage, we have a very limited list of the best appraisers in each county who are local and know the given area.  They know the factors such as the neighborhoods, schools, surrounding communities, etc. that truly impact a valuation.  Quality people produce quality work and our approved appraisers are the best of the best and produce extremely accurate work.  They are also professional, courteous, and almost always turn around orders in a week.

Your next transaction does not have to die due to a bad appraisal.  There is a better way…

FHA Considering Lowering Max Debt Ratio

August 5, 2011 by · Leave a Comment 

A few weeks ago, I warned about the threat of lower FHA Loan Limits rolling out this fall.  More bad FHA news to announce as FHA is considering tightening the maximum debt ratio on FHA loans, too.  This issue is still in the “comment stage” and exact details as well as timing are still being debated.  FHA has made other moves to attempt to lower its delinquency rate and strengthen its Mortgage Insurance Fund, but this is the first time that a lower debt ratio has seriously been considered.  Without question, this would limit who could get an FHA loan, which would probably lead to a further drop in home prices.   

FHA loans are very important to the market.  FHA’s market share has surged from less than 2% of the market five years ago to about 30% of the market today.  This time last year FHA was considering lowering the amount of seller concessions from 6% to 3%.  Fortunately, this stalled out during the comment period so, hopefully, the proposed lower debt ratios will as well.

Incredible Refi Opportunities

July 11, 2011 by · Leave a Comment 

With rates so low, it really is an incredible time to refinance right now.  Many people are taking advantage of Conventional 30 year rates in the mid 4’s and 15 year rates in the high 3’s, but also consider the following three sizzling hot refinance alternatives:

  • 10 Year fixed-rate at only 3.625%.  For those deep into their mortgage or wanting to really shed some years off of the loan term, this presents an incredible opportunity.
  • 5 Year ARM at only 3.25%.  Rate is fixed for five years and then can change annually.  For this program, if you apply and lock by end of July, we are able to trim another .25% off of the rate.  A 3% rate that is fixed for five years is an amazing opportunity, especially considering the fact that the payment five years from now will be based on the lower mortgage balance at that time.  Thus, if you can pay balance down a good bit over next five years, your payment shouldn’t go up even if rates do.
  • FHA rates remain super low and about .125% lower than Conventional.  If you have an FHA loan now, you are eligible for a Streamline refinance at a reduced cost.  FHA is a great alternative for anyone with marginal credit and offers cash-out up to 85% of the value of the home.

I would love to help you with refinance info and please let me know how I can help you further.

Recent Fannie Mae Underwriting Changes

January 7, 2011 by · Leave a Comment 

Fannie Mae has rolled out its latest underwriting changes, effective December 11th. Most of the changes are fairly minor but, surprisingly, a few are more lenient including the first two listed below. Here is a summary of a few of the changes worth noting:

Gifts.  

 

 

 

In the past on a Conventional loan, if the borrower received a gift, the borrower still had to come up with at least 5% from their own funds unless the borrower put 20% or more down. Moving forward, all funds can come from a gift even if the borrower puts less than 20% down! This is an amazing development that will help more people get Conventional financing. Gifts are not allowed on investment property purchases, so this rule does not apply on this property type.

Pay Stubs.

Foreclosures. In the past when obtaining a new mortgage, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allowed a shorter time period – five years – if certain additional requirements were met (e.g., minimum down payment, credit score, and occupancy requirements). These requirements have now been modified to remove the five year option. Moving forward, all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure before being eligible to obtain a new mortgage.

 

 

Self-Employed Borrowers.

 

 

These are just a few of the changes in the most recent Fannie Mae manual update, but the most significant worth noting.  Fortunately, there is some good news mixed in with this round of changes.  Lets hope this is a trend that continues….

 

2011 National Association of Realtors Forecast

January 7, 2011 by · Leave a Comment 

Last week, the National Association of Realtors (NAR) released their forecast for 2011. Overall, they see a steady improvement from 2010. NAR projects that Existing Home Sales will increase 8% in 2011, New Home Sales will increase 24%, and Housing Starts will increase 21%. According to NAR, “All the indicator trends are pointing to a gradual housing recovery.” This is a very encouraging report and lets hope that NAR is right and then some!