Archive for February, 2008
Mortgages 101 - A First Lesson
February 29th, 2008 Categories: Alexandria Dirt, Arlington Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
Mortgages 101
One question I get asked a lot is “What are rates these days?”
And the answer is, drumroll please….. “well, that depends!” You know, back in the old days, real estate finance was fairly simple. You had to save up a nice down payment of 20% and there was 1 program (an 80% first trust loan) and a rate. That’s it – simple – so simple that the real estate agents used to qualify the consumers! Yep – you met with your Realtor, filled out an information sheet, then he or she would qualify you and after writing a contract, THEN you would head off to find a lender.
Wow have things changed! Now, the lender is one of the very first things we usually like to get taken care of. 1) It helps you to understand what you can afford and 2) you can choose the program that best suits your plans.
Some of the more popular mortgage programs are:
The Classic 80% - fully amortized loan
The Classic with a twist – maybe an 80/10/10 or an 80/15/5 that involve a 2nd trust or Home Equity Line of Credit
Interest Only
ARMS
Another twist now is that the interest rates are influenced by your credit score – the better the score, the lower the risk and therefore, the lower the rate.
Let’s look at some of these programs.
You’ve heard 1st trust, 2nd trust, 80/15/5 or 80/10/10… these terms get tossed around all the time – mainly these programs are determined by how much cash you have to put down at settlement. Example: If you’re looking to purchase a home for $400,000 by the old standards you would need to have $80,000 to put down and you would then finance 80% or $320,000. If you don’t have $80K, you might look at an 80/10/10 which means your 1st trust loan would be in the amount of $320,000 and you would have a 2nd trust loan in the amount of $40,000 which would reduce your down payment to $40,000.
If you don’t have $40K, then you could either look at an 80/15/5 which would lower your down payment requirement to 5% - $20,000 – or you could even consider 100% financing which is still an option today under certain circumstances! With the credit crunch and the tightening up of loan guidelines, you may find this is no longer an option for you – all the more reason to be working with a good, local, TRUSTWORTHY lender!
Once you determine what your cash position is and how much you’d like to 
finance, then you would need to choose a program – do you want to pay down your loan amount each month? That’s called a “fully amortized” loan – if you are more aggressive (and possibly a more disciplined investor) you might want to consider an interest only loan – NO principle is paid down, but the theory is that you can take that monthly savings and place it in your investment account.
In this scenario, you are relying on housing market appreciation to allow you to make a profit and move in years ahead. It’s all about risk. You should also consider the length of time you plan to stay in your home. If you’re looking at a 5-7 year investment, you might consider a 10 year ARM or Adjustable Rate Mortgage. If you’re in shorter – there are 3 or 5 year ARMS.
These days there is an additional category of loans that should be discussed, and I will do so in another post. Those are Government backed loans: FHA, VA, VHDA and the like. These are now VERY viable options whereas they used to be looked at as options only for those with credit issues. This is quite possibly the best route to take in some cases now.
One thing is for sure - you need to be well guided, well educated and ready to make some responsible choices for yourself — especially to avoid future problems. Many people have gotten in over their heads and are now going through the foreclosure process. If you’re conservative and have good advice, there are wonderful properties out there just waiting for you to call “home.”
I hope this has given an introduction to the very complex mortgage industry – de-mystifying some terms – it’s always good to partner with a good lender that can help you navigate through this complex process, making it simple and straight forward. I can help you find some great lenders if needed – I’m always here!
Happy Friday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 1 Comment »
Mold…. ick!
February 28th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Reston Dirt
What type of an image do you see in your head when you think about mold? Green? Slimy? Fuzzy? Black? Sticky? White? Health hazards… “sick houses”… Mold is so hostile!
I recently had a new experience. A buyer of mine wanted to do a mold inspection. Honestly, they aren’t done too much around here. Generally when you enter into a basement that smells musty or where you can see mold, buyers tend to just steer clear. So I was very surprised when my client wanted to conduct a mold inspection when there was so little visible evidence of mold or even indications that there may be issues.
Well, a mold inspection company had been recommended to her, so on that recommendation, we set up the inspection. They came with all sorts of interesting devices to measure temperature behind walls (indicating possible moisture), a device that measures moisture (indicating possible mold) and equipment to gather air samples, confirming what spores are indeed flying around the home. Now, mold IS EVERYWHERE! It’s a naturally occurring biological phenomenon, but it’s a matter of what spores are caught in your trap, relative to the outside sample, that becomes interesting. The inspector, while at the home, made many comments to the effect that he would be absolutely floored if “elevated mold results” were found at this property as he found very little evidence of anything suspicious.
So, in a few days I was delivered some lab results with spore counts. Interesting, but HEY, who can read this thing? I don’t know if 1 spore could kill pets and small children OR if it would take 100,000 spores for anyone to even take notice. So, we rely on the mold inspection company for interpretation. Well, guess what, folks… they are also the remediation company… hmmmmmmmmmm… so cautiously I enter into the world of mold inspection/remediation. It wasn’t fun. The inspection company recommended $10,000 of remediation services including men in clean suits and masks, dumpsters to dispose of toxic contaminated materials, super strength mold-fighting chemicals, etc… You get the drift.
Well, when I finally got to the bottom of the situation a few more tests, a few more days and many more dollars later, it turned out to be a small isolated EASILY treatable situation.
BE CAREFUL!
If you suspect you have a mold problem, OR as a buyer if you’d like to conduct a mold inspection – PLEASE get recommendations from people who have utilized the services and have been pleased with the outcome. There are some excellent companies out there and there are some who I believe are in it for the almighty dollar. Mold can be an extremely serious issue, one NOT to be taken lightly - but you should at least feel you can trust your sources!
Call if I can be of any assistance at all!
Happy Thursday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 2 Comments »
To Inspect or Not? That is the Question…
February 19th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Real Estate 101, Reston Dirt
One of the questions I get asked a lot is “do I need a home inspection?” ![Images[3]](http://www.thearlingtondirt.com/wp-content/uploads/2008/02/images3-small.jpg)
Well, MOST of the time the answer is a resounding YES!!! Not only is it an opportunity to uncover possible deficiencies in your prospective new home, but it’s also your chance to learn about your home. Perhaps you’ve never bought a home before? Or perhaps you’ve always had a heat pump and in your new home it’s a gas furnace… Your Home Inspector will help you learn all sorts of wonderful things about your home and about home maintenance in general.
With regard to property condition, here in Northern Virginia, our contract stipulates that there will be 6 systems to convey to the purchaser in Normal Working Order: heating systems, cooling systems, plumbing, electrical, appliances and smoke/fire detectors. Aside from those, sellers generally aren’t required to warrant or disclose to a purchaser anything about the condition of their property. This is why a home inspection becomes very important.
So let’s look at some exceptions:
Condominium Purchase
If you’re purchasing a “traditional” condominium unit in a building - you know, like a box in a building – I’m not referring to the garden style with direct entry, maybe porches, patios, multi-level, etc… – but a traditional apartment style condo – there’s not a lot for the home inspector to uncover about your property that’s not already covered by the Normal Working Order requirements as described above. So they can look at the windows, the walls, floors, doors, etc… but really in a condo, I typically recommend a Home Warranty which covers most appliances, heating/cooling systems, etc… as an added protection for the first year. The only exception being if your eyes are telling you that you suspect problems… trust your gut!
If you’re purchasing a condo unit that is perhaps structurally a little more complicated, has attic access, dormer windows, has stairs, is significantly larger or generally you’re unsure of condition, it’s always a good idea to go ahead with the home inspection
An AS-IS Sale
Sometimes around here, sellers want to sell their homes in “as-is” condition. This just means that they’re not even going to conform to the standard contract language requiring those 6 systems listed above to be in normal working order… so they’re asking the purchaser to accept it in as-is condition as of the date of the contract. So basically what-you-see-is-what-you-get. In this case, it’s still a good idea to get a home inspection but what the seller is saying is that 1) they will not remedy anything and 2) they won’t let you out of your contract based on home inspection findings. Although special language can be written in acknowledging the first point, but still asking for an “out” based on findings. Anyway, in either case, it’s a situation to be a little leary of unless you basically already know what you’re getting into OR you’re VERY handy and it doesn’t matter.
Another tactic in these situations would be to go ahead with seller permission and have a home inspection completed prior to writing a contract. Then you’ve got a little protection.
So, I hope you’re a little more comfortable on the topic of home inspections… a few more thoughts… Always hire a home inspector that’s certified either through ASHI, NAHI or NACHI.
Any other questions? You know where to find me.
Happy Tuesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 5 Comments »
Buyers - Buyers — Where For Art Thou?
February 18th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Real Estate Dirt, Reston Dirt
Some people see the glass half empty – others see it half full. But those that see this market as an enormous buying opportunity will be those who prosper in the end! You think that’s crazy? Let’s look at the current market conditions.
Inventory of Homes in Northern Virginia
Let’s see… There are over 6,600 homes for sale in Fairfax County alone, 2/3 of those under $500K! Think you might have some choices now? Uh huh! I think yes. Choices mean you get to be picky – picky about location, condition and, um, yes, PRICE!
Seller Contributions for Closing Cost Assistance
Yep - you betcha! In many cases we are seeing sellers more than willing to cover buyer closing costs. And, if your lender allows, you can accept as much as 6% subsidy from the seller, which often enables the already low interest rates to be bought down even further! There is a lot of creative financing being offered now and it’s NOT the types of programs that got folks into trouble - these are programs that can help you as a buyer get into your home by taking advantage of market conditions.
Price Flexibility
More than ever, sellers are making every attempt to price their homes properly. That is, pricing in order to get an offer in the first week or so at or near their asking price. Not all are able to hit this number, so once a property has been on the market for 30+ days, sellers are beginning to see their way to reducing prices and/or negotiating. Don’t be afraid to put an offer out there. You never know what a seller might be willing to accept - they even surprise us sometimes!
Interest Rates and how they translate to Purchasing Power
Interest rates are still in the extremely low ranges! Especially for borrowers who have been careful with their credit scores and have enough saved for good loan-to-value ratios (20% or more down). Did you know that on a $300,000 loan, the difference in just 1/2% of interest rate (say from 6% to 6.5%) either 
increases the payment by $100 OR it reduces your purchasing power by a whopping $16,000!!! That’s HUGE –
So I ask – why were buyers clamoring to make purchases while chasing the market upwards? Remember 2004 and 2005? Buyers were waiving their rights for inspection and sometimes appraisal; they were outbidding the nearest bidder sometimes by thousands of dollars; often they were behaving like this for homes they weren’t really in love with – it was just the home that happened to be available.
Here we sit in 2008 with inventory (read: choices), seller flexibility, and fantastic interest rates in our corner. Why on earth would you NOT think this would be a more ideal time to buy? You may be nervous about not hitting “bottom” yet – that’s valid - however, economic signs point to a healthy economy here in the Northern Virginia area for the forseeable future, so as long as you intend to stay in your home for the next 3–5 years MINIMUM, I say get your comfy shoes on, put in a call to your local lender and give me a call to get started.
Happy President’s Day!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! The Time is NOW!
| Discussion: 2 Comments »
McLean Market Stats - January 2008
February 7th, 2008 Categories: Market Stats, McLean Dirt
Where are things headed in the McLean housing market? Well, January trended along with the region a little sluggish — I find contract writing along with solds to be a little off - but then again, it IS January and unless you’re really in need, the spring season doesn’t kick in until the February/March time frame.
Here is how the numbers look for January Actives, Contracts and Solds look for different market segments within McLean:
We also like to look at absorption rates, i.e., how long will it take to sell through the current inventory at the current rate of sale. Now, since January was a bit sluggish, it will adversely impact absorption rates, but here they are:
Certainly this doesn’t bode well for the 22102 inventory of single family homes - this indicates 2+ years of inventory on hand.
If you’d like to talk over the numbers OR have a specific neighborhood investigated, please give me a call. I’m always happy to talk real estate with you!
Happy Thursday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Spring is right around the corner!
| Discussion: No Comments »
Sluggish Start to the 2008 year - or was it a Sluggish End to 2007?
February 7th, 2008 Categories: Arlington Dirt, Market Stats
Here we are again, looking at monthly sales figures for Arlington for January 2008. It was very interesting pulling this data together – it was a VERY slow month for sales – so I went back into the previous month’s records to make some sense out of it. Here’s what the snapshot looks like for January:
EIGHT homes sold in all of 22207? So I pulled together some interesting info:
Check this out… these are the raw numbers from April 2007 through January, 2008 – look at how contracts relate to solds… December was a LOW contract writing month and translated to a LOW January selling month. Same thing happened October to November. So, I feel better seeing the uptick in contract writing for January – it will be so interesting to see what 2008 has in store for us! Here is the same chart for Single Family Homes:
Now you know this sluggish sales activity will have a somewhat exaggerated impact on absorption rates, but here they are for Arlington:
I don’t buy it as a trend, looking at the contract writing stats, but there you have it. We are definitely seeing an up-tick in activity. There are MANY folks out there trolling open houses, trying to learn the market, how far their money will go, etc…
Please remember – here in Arlington, McLean, Alexandria we are NOT following national trends – we still have a healthy market in which to buy and sell real estate and if you’d like to talk further, I’m always here!
Happy Thursday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Spring is right around the corner!
| Discussion: No Comments »
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