Centers And Squares
It’s a testament to the complexity of the real estate transaction that after twelve years selling real estate full-time I still learn new things and encounter various twists for the first time on a regular basis. Today at a closing I learned three things I didn’t know about MassHousing loans.
Mortgages from MassHousing have become more and more popular in the last few years with first time homebuyers. They allow for a low down payment and since nobody seems to be offering “blends” – second mortgages that make up for down payments under 20% – a Mass Housing loan without mortgage insurance is an attractive option for many buyers.
So what do I know now about Mass Housing loans that I didn’t know before?
– You have to be an owner occupant as long as you have a Mass Housing mortgage. Even years down the road, if you still have your MassHousing mortgage, you can’t opt to rent out your place. You can buy a multi-family with a MassHousing loan but it still has to be your primary residence.
– You may have to move into the place you just bought with a mortage from MassHousing within 30 days. Most lenders require you to move in within 60 days – giving you some time for renovations, etc. – but Mass Housing cuts that period in half. I’m not sure this applies to all MassHousing loans – I found info that varies on other sites but this was a requirement of the buyer’s loan today.
– There’s the potential for paying back some of the MassHousing benefit you received if you sell before nine years have passed. Talk to your lender to get the particulars – it has to do with your income going up beyond certain levels as well as the profit you make when you sell. Mass Housing may reimburse you if you’re subject to this “recapture tax” – again, make sure you ask your lender to explain how this works.
A good lender who offers MassHousing loans can explain these provisions and more. If you’re interested in Mass Housing loans or other mortgage products that fit your particular circumstances give Kevin Greeley of NEMoves a call at 781-929-4147.
The New York Times had an excellent article today about appraisal issues. Real estate appraisals are more often a challenge in today’s market. We’ve been experiencing it here in the Cambridge area but it’s happening all over the country according to the New York Times.
One thing I learned over the last few years is that appraisals aren’t an issue in a declining market – it was easy for a property to appraise when properties were selling for less than they had in the months before. Values may have been going down but appraisals were easy.
In an appreciating market appraisals are more apt to cause problems. Prices are going up so past sales may not support the prices buyers are willing to pay in the current market. Additionally, in areas without a lot of inventory it may be difficult to find enough comparable sales. Lack of inventory is often one reason why a property will sell for more than it might have in the past – buyers have been waiting for that property type to come on the market and are prepared to pay more to secure it.
New lending regulations for appraisals have also caused challenges. In the past local appraisers did the lions share of appraisals in the market. They knew the housing stock, they were more likely to have actually seen inside the properties they used as comparable sales, they understood the sublteties of neighborhood values and features buyers in this area were likely to appreciate, etc. A parking space for example may not have the same value in the suburbs as it does in the city.
As the New York Times reporter described, new regulations mean that many more appraisals are being done by out of town appraisers. My heart sunk recently when an appraiser pulled up in a car with Connecticut plates. That appraisal turned out ok but other times appraisers’ lack of familiarity with the area has caused problems.
The New York Times article also pointed out the value of cash sales in the appraisal process. Those sales will become the “comps” for the next appraiser and happily we’ve had many of them this year.
If your buyer is getting financing what can you do as a seller to ensure that your property appraises?
Make sure that your real estate agent is prepared for the appraisal. Your agent should bring printouts of comparable sales to the appraisal. I’ll highlight features on the sheets I want to call to the appraiser’s attention and make notations about similarities or differences – “only one bath,” “not a fancy renovation,” etc. Sometimes it can be tricky to get the right “comps”. When the comparable sales aren’t easy to come by I will make sure I bring sales sheets for similar properties that have sold nearby but over the line in an abutting town. I’m pulling together the comps that tell the story – that explain why a buyer would be willing to pay this price for this particular property.
On your end you’ll want to make sure that your property shows at its best. The appraiser is the final person that you need to impress during the sale of your home. Make sure your property sparkles, that it’s clean and picked up with lights on.
If you’re a buyer and the appraisal came in low what can you do? You may be able to renegotiate price with the seller. If not, you may have to put down more money since the bank is only going to lend X% of the value they’ve assigned to the property. You may be able to withdraw from the purchase if you’re unable to get your financing but that’s something to discuss with your lender and attorney.
If you’re hoping to buy a house or condo in Cambridge or nearby this spring you’ll want to get pre-approved for a mortgage as one of your first steps in the homebuying adventure.
Nowadays, sellers expect to see a pre-approval with an offer – and ideally one from a known, reputable lender with a track record of closing loans. Real estate is moving very quickly in Cambridge this spring so you really need to get your pre-approval ready in advance. Talking to a lender and getting a good idea of what you can afford and what your payments are likely to be will help you to focus on looking at properties that you know you can afford.
When you’re getting ready to buy real estate you need to get your financial ducks in a row. Gone are the days of “no-doc” loans that didn’t require you to document your finances. Nowadays lenders need to thoroughly document your finances before they will lend the large sums of money needed to buy real estate in today’s market.
Courtesy of Kevin Greeley, the absolute top notch NE Moves loan officer, here’s what your lender will need when you are ready to get pre-approved for a mortgage:
What Do I Need to Get a Mortgage Pre-Approval?
Income and Employment Information:
- Last 2 years of W-2’s (if self-employed, 2 year’s complete and signed 1040 tax returns).
- Current year-to-date paystub (covering last 30 days)
- Complete addresses and phone numbers of employers for the past 2 years.
Liquid Assets Info (checking, savings, and/or investment accounts used for the purchase of property):
- Complete addresses and account numbers of checking, savings, and/or investment accounts.
- 2 months of statements and/or passbook.
- Verification of the source of any large deposits in statements provided.
- If receiving gift funds, fully executed Gift Letter. (see loan officer for details)
- If separated/divorced: copy of separation/divorce decree and/or child support agreement.
- If resident alien: copy of both sides of Resident Alien card.
- If relocation or new position, copy of Offer Letter and relocation benefits, if applicable.
I can’t say enough about working with Kevin Greeley to get a mortgage. We have been so fortunate to work with him over these crazy years in the mortgage market. He is very thorough, anticipates problems and solves them before they become an issue, he personally dots all the Is and crosses all the Ts along the way, he is a master of all of the loan products and scenarios that come up in lending here, and he has a marvelous manner that will put you at ease in what can be a stressful situation. Repeatedly, attorneys and agents comment on his ability to get a loan closed when other lenders are floundering.
You don’t have to be buying your house or condo with Coldwell Banker to get a loan from NE Moves Mortgage with Kevin’s help. If you’re shopping for a mortgage or need to get pre-approved I encourage you to call Kevin at 781-929-4147, email him at [email protected] or contact him online at his mortgage website.
Congress has just restored the higher loan limits for FHA loans. The loan limits had rolled back as of October 1st but are now back to the higher levels that had been in place since January 2009.
This means the FHA loan limit for Middlesex and Suffolk counties is back up to $523,750, rather than $465,750, for single-family houses. In these counties, the limit for a two-family house is $670,500 and for a three-unit property is $810,450.
The bill did not increase the loan limits for Fannie Mae and Freddie Mac-backed mortgages.
Questions about mortgages? Contact Kevin Greeley of NEMoves Mortgage.
And then you do what you’re told and answer what’s asked.
There’s no doubt about it – getting a mortgage isn’t an easy process. That’s certainly true nowadays. In fact it’s always been true – aside from applying for the no-doc loans of yore you’ve always had to provide plenty of documentation to get a mortgage.
Think about it – the bank is lending you 100s of thousands of dollars – often many 100s of thousands. No matter how entitled you feel to that loan, how stellar your credit is, how large your bank account, or how long you’ve been paying the mortgage on the property you want to refinance – the bank is going to need to thoroughly document your current finances and your financial track record.
Lately I’ve been hearing from many lenders that they’re getting lots of push back from potential borrowers. Borrowers get aggravated when they’re asked for documentation or they fail to turn in necessary forms and documentation on a timely basis.
This is not what you want to do if you want a mortgage.
Your lender has to jump through far more hoops nowadays in order to get your loan approved. Underwriters are more reluctant to sign off on things, appraisals are problematic (topic for another post!), regulations change frequently – and the changes almost always make things even more difficult.
So when your lender asks you for documentation get him or her what is asked for – quickly. When you’re asked to sign and return documents do so – quickly.
Organize your records. Don’t bring piles of papers to your lender and expect him or her to organize your paperwork. Go through the list of what’s been requested and put together your papers in an orderly fashion. Spend as much time and care on this as you would a job application or a tax audit.
Documents that your lender will ask for may include:
- Tax returns
- W2 forms
- Pay stubs
- Bank statements
- Canceled rent checks that show punctual payments
Your lender needs to verify your income, assets and debts. Be prepared to document the source of all deposits into your accounts that appear on your bank statements. You’ll need information about all of your investments. Unless you’ve been employed at one job for a number of years you may be asked to provide explanations about job changes, etc. If you’re starting a new job you usually have to have received a paycheck before you can get a loan. If you don’t have a credit history in the US be prepared to be asked for alternative evidence of payments to creditors.
Your lender will tell you what’s needed. Get what’s asked for as quickly as you can and you’ll be that much closer to moving into your new home or getting that amazingly low interest rate when you refinance.
Banker & Tradesman reported in a story this week that Cambridge is one of a number of Massachusetts towns where more than 50 percent of the residential real esate sales in the first six months of 2011 were cash deals.
In the first half of 2011, 36.8% of residential real estate transactions in Massachusetts were cash sales. This is a big jump from previous years. In 2010, 24% of Massachusetts real estate sales did not involve a mortgage and in the years from 2005 to 2007 cash transactions only accounted for just over 12% of the market, notes B & T.
In the first six months of 2011, 53.6% of real estate purchases in Cambridge were paid for with cash. Other communities where cash transactions accounted for more than half of all sales included Edgartown, Provincetown and Brighton.
Tightened lending guidelines have reduced the number of people able to qualify for mortgages so it makes sense that cash buyers will make up a larger portion of the pool of buyers. It also seems clear that for many well heeled buyers real estate is seen as a solid investment.