You may not know it but we are currently experiencing a time in Real Estate that has never existed before…EVER. The market was so hot in 2004-2006, then the market crashed in August in 2007 with interest rates in the 6.5% range. Housing values took a huge dive! Some markets were hurt more than others. At the time I was working as a Title Sales Rep for a National Title Insurance Company in Phoenix, AZ. If you know anything about the Phoenix market…the property values went up 47% in 2005 alone! Well what goes up must come down and when the market crashed and the subprime market went bye bye so did the home values. Let me give you a real life example: In July 2006 I bought my first home…a condo next to the Raven Golf Course in Phoenix for $145,000. I was happy with my purchase and no issues making the payments. By January 2010 the value of my property was $35,000! Yes…$35,000. So I did what 75% of the housing market did in Phoenix, I listed my home as a short sale and said…”See ya later!” I know I made the right choice knowing the value might not ever return to what I owed on the property. So back to my original statement…we are in a weird place in Real Estate…a time that has never existed before that presents SOOO many business opportunities for Real Estate agents AND Mortgage Lenders. Here is why if you are considering do a refinace or short sale…might be good to do both. Let me explain…
Homeowners on the Fence…its Time…
Back in 2007 when the housing market took a nose dive the Government took some initiative and put into place the “Mortgage Debt Relief Forgiveness Act.” The act created some breathing room for homeowners that were either foreclosing or short selling their home in the terms or tax liability. It allowed homeowners to walk away and not get “stuck with the bill” if you will. It was the right thing to do because if you start taxing everyone who walked away on the debt as “income earned” then our country would have seen a Bankruptcy epidemic like never before. The Mortgage Debt Act was extended in 2009 by President Obama and is up for review on December 31st 2012. This means that at the end of this year it could be extended to continue the protection it provides to homeowners…on the other hand it may not. There are still thousands of homeowners in Northern Virginia that are behind on payments and/or have negative equity and need the services of a Real Estate agent to list their home and get it sold and accepted by the bank as a short sale by December 31st 2012. The motivation of a seller in a short sale situation is NOT the same as an equity seller. It is not “highest and best” but “get it listed and sold who cares!” Short Sales are a great way to pick up a lot of listings and build a great referral network from homeowners you are saving from Foreclosure. These same seller though not able to purchase a home right away will be able to down the road in a few years. If you market to them on a regular basis and remain top of mind you will surely have a buyer stream coming your way in 3-5 years. Reach out to your database or ask your Title Sales Rep (hint) for a list of homeowners with negative equity or 30-60 days late in your preferred area.
Time to Lower my House Payment
On the other hand of short sale you have the refinance. After the market crashed in 2007 rates have been slowly getting lower and lower. They were 6.5% on a 30yr mortgage in 2007…they are currently 3.5% on a 30yr fixed! This is the lowest interest rate offered by lending institutions in history. In essence this the cheapest money has ever been to buy. It is a big difference in what a homeowner can afford to buy in terms of payment, and also walk into a cheaper house payment where they currently live. Especially as the holidays get closer. How great to have all that extra cash flow! The Government has also created several programs to entice and allow homeowners in difficult situations refinance, get a lower payment and remain in their home to avoid the short sale situation. Here are some of the advantages of doing a refinance right now:
1. Lower your house payment. (possibly by hundreds of dollars a month)
2. Skip a mortgage payment. Close August 15th you make your next payment Oct 1st.
3. Get a 20 or 15yr loan at an even lower interest rate and skip 10-15yrs of interest payments and thousands in savings
4. FHA/VA Streamline Loan (if you have an FHA or VA Loan) and no appraisal is necessary (most of the time)
5. Govt Refinance Loans (FHA/VA) are “no cost loans” to the borrower.
Money has never been cheaper. If you have a free moment contact a reputable mortgage lender and explore your options. Rates will more than likely creep up as the market and economy improves so take advantage now. If you are in a situation where you are upside down on your home or behind on payments please reach out to a Real Estate agent to get your home listed. Remember…you DON’T pay the Realtor’s commission…the bank does. It is only to your advantage to do this. If you do not have any contacts in the Real Estate/Mortgage world please fill out my form below and I will connect you to a top professional.
I also help Realtors and Lenders with their marketing. As the Director of Sales and Marketing for Stewart Title and Escrow is it my job to make sure you do more business than you are currently doing. Fill out the form below for an appointment and lets chat!
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