Cleveland Real Estate News » home buyers

PMI Insurance Co of America Says NE Ohio is in Least Risky Area of the Country for Home Insurance

Carole Cohen — Wed, 18 Feb 2009 15:34:32 +0000

Most of my home buyer clients wistfully wish they had 20% of the price of the home they want to use as a down payment. Lots of reasons, but the main one is that once you can hit that 20% mark, you don’t have to tack on extra monthly PMI insurance charges to your mortgage. As I stated in a prior post, you don’t have to have 20% down. But it brings up another point: the insurance industry looks at market areas to see how risky or how stable they are. PMI Insurance of America has a lengthy just released pdf talking about their list of best and worst. And the criteria they used. This is unlike any silly Forbes or other article you can read, because this gets to the heart of your home buying transaction. So how does PMI of the US see NE Ohio?

We fall into the 0% to 10% risk category. If you look at the map on page 11 of 12 in this pdf they put out, you will see a rather interesting picture, and one that may differ from a lot of the information you read or hear in the media.

I found it very interesting that both coasts were the riskiest. Most of the country is in the same pretty sky blue area that says low risk.

I would still encourage everyone to use a professional to help you figure out what is a better or not so good investment if you plan on buying and moving in less than five years. Or if you plan on buying and renovating the home to sell as an investor. But if you plan on buying and living in your new home for a while, I would think this is calming news?

In reality, they list Cleveland in the top ten of most stable markets. How about those apples? Peace out – 3C

The Old Adage of Taking What You Read in the Paper With a Grain of Salt Still Applies

Carole Cohen — Sun, 15 Feb 2009 17:03:42 +0000

I read the Teresa Dixon Murray article in yesterday’s PD and felt a bit of a rant coming on. After talking with two colleagues today it became clear that getting (as Paul Harvey used to say) the rest of the story out there is needed here. I’m talking about the article Theresa wrote about the current state of getting home loans. The title of the piece is the usual chicken little approach. But let’s take the ‘consumers face stricter standards for loans’ phrase in her title at face value. Since we got into a bit of a mess with everything from predatory lending to borrowers over extending themselves, does it not make sense that we all strive to change our ways? That automatically means stricter loan standards – or at least it means following a standard and not letting someone get a loan who should not have one. So why would this be a bad thing? It’s not.

She chicken littles the title but then goes on to say that a family she interviewed wondered if they could refinance and lo and behold they could. So no need to panic, it worked out.

Getting away from the article now, the point I want to make is this. You do not automatically have to put 20% down to get a loan in 2009. There are, for example, plenty of 3% FHA loans to be had. There are mortgage programs that offer a whole slew of possibilities. One of my colleagues heard from a National City lender talking about some of the programs available. We have programs available at Howard Hanna Mortgage Services, along with more than 120 million bucks to lend. Plenty of other lenders I have not mentioned here do too.

My last point is this. Stricter or more conscientious loan practices, however you want to describe them, are good for us and our economy. Second, there are home loans being made every week. I had a listing go under contract two weeks ago, and have two buyers with pre approval letters (and a few buyers in same category but have been with me longer) ready to find a home.

Teresa Dixon Murray makes one point that bears fleshing out. You can be afraid to find out if you qualify for a loan. You can be afraid to check with your lender to see if you qualify for a refinance. The truth is, once you make the calls you will feel much better. Knowing what your situation is and how to move ahead is the way to go on any financial matter.

If you qualify for a loan you can get one. As opposed to the years that got us into this mess when you may have gotten one even if you didn’t qualify. Which situation is better for our economy? So if you were tempted to just read the headline on that PD article yesterday, remember that grain of salt that says, is this the real story?

Rant over, Peace Out, Ohm…. 3C

The House Version of The Stimulus Package

Carole Cohen — Wed, 11 Feb 2009 22:43:55 +0000

Today the Senate version passed, now the House has their version…more money than the Senate version – they claim it has more emphasis on jobs. Here is a site where you can read the versions yourself: ReadTheStimulus.org. Both versions are there. I’m of course very interested in what will finally happen with passenger rail, but as a Realtor® I’m also concerned about the Tax Recovery and Reinvestment Act portion of it, as it most definitely assists home buyers.

The idea of opening it up as a ‘no repayment needed’ assistance was a good one. Even if the amount of money is not raised from the existing $7500 credit to $15,000 I can’t help but think it would be a boon to the economy to allow the credit to apply to all buyers, not just first time home owners, and allow the credit to stand as is, without repayment. Maybe those ideas make too much sense so they have no possibility of staying in the bill?

Only a few Republican Senators supported the Senate version, and I seem to recall Senator Snowe saying if more money is added to the House version all bets are off. Which gets me to my last point: can they actually pass a Bill soon enough to make a difference? Stay tuned.

Peace Out – 3C

Wonder Which Method They Used on The Home My Buyer and I Had Under Contract?

Carole Cohen — Sun, 04 Jan 2009 01:21:34 +0000

So we all know the City of Cleveland demolishes homes. Since the foreclosure mess the number of homes has increased a lot yes? I had the pleasure of being the agent for a client under contract to purchase a bank owned home. It was supposed to close at the end of January.

Last week, the listing agent for the bank went to the property and lo and behold, it wasn’t there anymore. The City of Cleveland had demolished it.

My client signed off on all the city violations and said he would rehabilitate it properly. It’s a gorgeous location and he was most excited about sprucing up the house and making it fit in with the neighborhood.

Imagine my surprise when I heard the listing agent on the other end of my cell phone (sounding like a deer in headlights) saying ‘you know that house on ________? Well it’s not there anymore!’ lol See what I mean, it’s never dull in real estate.

Okay two things, first, regarding demolition. When a home is inspected by the city and the city (cleveland) condemns it, the owner is sent a letter and a list of violations. We (my buyer and I and the listing agent) got the list of violations in this case. But the bank neglected to let any of us know they had a deadline (which came and went in December) by which the repairs had to be made. They sure did a speedy job of demolition. Just a tip for all of you, if you happen to get this notice from the City, make sure you talk with them and understand the deadlines.

Secondly, the title of my post relates to an article in today’s PD about new method of deconstructing a home instead of demolishing it.

The article and info is interesting regardless of my tale. Supposedly, by deconstructing (taking roof off and working wall by wall) the City saved a lot of time and money per house on the entire project.

My client is trying to decide now if the location warrants his purchase anyway, just for the land. Like I said, never dull! Peace Out – 3C

If You Are Writing An Offer on a Short Sale or Bank Owned Listing, You May Want To Make Your Best and Highest Offer

Carole Cohen — Fri, 07 Nov 2008 23:49:22 +0000

Today was one of those gratifying days in real estate. I was able to hand over the keys to my clients because they are the proud owners of a new home. There would be more days like this except for one pesky little thing in real estate: short sales and bank owned homes.

To recap from earlier posts: A short sale is a home listed for sale at a price that is less than what the mortgage holder (owner) owes on the house. We call these owners upside down in their mortgage. We’ve all heard a lot about upside down owners in the last year as it relates to foreclosures. People who enter into a short sale of their homes are trying to avoid foreclosure.

In our area, when a home is listed at a price that puts the home owners upside down, there are remarks listed for the brokers (on our computer MLS listing service) that alerts us so we can inform our buyers when we show it. It will say something like ‘this home is subject to a short sale.’ To the point and helpful.

A bank owned home means someone waited too long to be able to negotiate a short sale (or didn’t try to do it) and now the bank owns it. It could have also already gone through a sheriff sale and been bought back by original mortgage lender or a different bank.

Yes I sell bank owned and short sale homes and yes they can be negotiated. But there are certain things buyers have much less control over on these homes, compared to sales negotiated with private sellers, regular home owners like you and me. The main thing is the price. There are so many variables, that when you make an offer that is less than the listed price you have to be prepared to lose the house to someone else. That is just a fact of life.

So I tell my clients, when they really want a home, to make their best and highest offer. This means a price that, if you lose the house to someone else anyway, you know you did the best you could or the best you felt comfortable offering. Best and highest doesn’t have to mean full price. Plus, if a home is drastically lower in listing price than non-bank owned or short sale homes in the neighborhood, someone could actually still outbid you by offering more. If you want to make an offer on one of these under market value homes, it’s good to think about it differently. Meaning, not thinking how low can I go and still get this home. Instead, what is the best and highest offer I feel comfortable making, knowing what I know about my finances and my belief, after seeing the home, what might need to be done to the house to get it up to my comfort level when I move in. In my experience, people feel this way about a home because it already meets certain criteria that could include floor plans (that first floor bedroom they need), number of bathrooms, it only needs cosmetic work like painting, it has enough bedrooms for everyone in the family; things like that. I don’t think it’s necessary to make a best and highest offer on a home unless you really want it.

Nothing is etched in stone, believe me. It’s possible you could be successful in owning a home after offering much less than the listed price. And sometimes people are making offers on homes they can take or leave. By that I mean, it meets their needs, but they won’t be upset if they lose it. They might not have a time crunch, or care if they are in a new home before the end of the year. I think you get my drift here.

But if you really want a particular house, and it happens to be a bank owned home or a short sale, there are enough variables to make it a crap shoot. In reality, making your best and highest offer can take away some of the stress or disappointment you might feel afterwards if someone else has their purchase offer accepted and you don’t. Peace out – 3C

More Thoughts On Should You Buy A Home Now

Carole Cohen — Fri, 18 Apr 2008 16:06:08 +0000

I read a long article this morning that actually covered quite a few angles on this issue. Is It Time To Buy Real Estate by Vicki Gerson. It’s worth reading, it reiterates some points we’ve (myself and commenters) made on this blog in prior posts. And of course I don’t agree with everything they say.

One of the bankers answers the question about who should buy by saying that dual income families should buy. What do I say? Maybe! Other factors come into play – what is your credit situation, how much money do you spend on other things every month? Just because you have two incomes doesn’t mean a home purchase is a good idea at this point in time.

And sadly the article doesn’t seem to ever interview anyone who says buy if you want a home to live in for a while. A few people infer that, but no one says it. They do say this is not a market for flipping. (this is a national article but that is one area that applies to NE Ohio — this is NOT a flip this house market).

One of the loan consultants says this is a good time to buy high end properties because they are for sale at lower market values.

The National Assn of Realtors says that by the end of the year the market will start an upturn. I’m not in that camp; I think by the end of the year it could stabilize but not seeing any indication that prices will start to swing up in 2008.

I stick to my original suggestions. If you can afford to buy a home and want to be a homeowner then talk to a mortgage broker and find out what your comfort level is regarding a monthly payment on a home. And buy a home because you want to live in it and keep it for a while. Or buy an investment second property with the intention of keeping it for a while. Don’t buy it if you don’t think you can live in the same home in three years. It’s just common sense. The good news is, I’ve got 8 sets of buyers so have seen a lot of housing inventory over the past two months. There are good solid homes for sale. Here is a quote from the article:

“….Kaiser warns that potential home-buyers must not get in over their heads. They should feel comfortable with their mortgages and be confident they can handle the payments along with taxes and insurance….”

Peace Out - 3C

A Tip When Buying a Home With an FHA Loan

Carole Cohen — Tue, 08 Apr 2008 01:40:58 +0000

And buying with an FHA loan is a good idea. You can buy a home in Cuyahoga County borrowing up to $298,000, and the interest rates are always a bit lower than with a conventional loan. I did want to pass on some information about searching for your new home however since there is a difference in inspection requirements between FHA and Conventional.

If you are using a conventional mortgage loan, you might see a home with a floor plan that suits you and at a price you like; it might need some work, but you figure you can get an inspection and then maybe decide to buy it anyway and work on it over time.

If you are using an FHA loan, you might not have the ‘over time’ flexibility. You and your agent will have to look for things that will pass an inspection: the roof will need to be able to be certified as ‘passing’ for a few years time; window jambs will need to be free of peeling paint, as will walls and home exteriors. That doesn’t mean you can’t pay for (as a buyer) or do some of the work yourself, as odd as that may sound. A few years ago a client of mine saw a home she fell in love with; an elderly woman owned it; she had updated and kept up the home so well you could eat off the basement floor. But there were a few issues with peeling porch rails and the garage. She was using a first time home buyer program that required a HUD inspection. I painted the porch along with the home owner, bless her heart and my client’s parents paid to have the garage sided.

You will need to access assess what kind of extra money you might have to do this kind of thing– but for sure, a HUD inspection is more stringent in terms of when the work gets done as opposed to a ‘regular’ or conventional loan that lets you have a home inspection and then decide when you want the work done, before you move in or after you buy it.

I have been thinking about this for a week or so because several of my current buyers are using an FHA program and so I am trying to explain as we see each house, what may or may not be an issue regarding the inspection. Just a Monday tip lol. Peace Out – 3C

Today’s Mortgage Rate: 5.875% – APR 6.001%

Carole Cohen — Fri, 04 Apr 2008 00:48:21 +0000

Why did I post a heading with today’s mortgage rate? My mind is all over the place thinking about phone calls I’ve gotten this week, on my cell and while on floor duty at the office. Maybe I’m a little slow, but I am finally understanding why so many people are asking me ‘do you think the market has hit bottom?’ Yeah some of us are just curious, but many are possible buyers who want to wait until the moment when the bottom is hit and prices are as low as they can get. I literally just realized this today; okay yes I AM slow.

What has me in a bit of a tizzy about this is that trying to buy a home at the bottom of a market cycle is like trying to figure out when it’s the best time to buy a stock; it’s a crap shoot! Plus, it serves no purpose! What kind of square footage do you need? How many bedrooms? Do you need a one or two car garage, or do you care less about a garage but want to be near RTA? Do you want a short commute to work? These are the quality of life issues that matter, not whether or not you have a cart full of clearance sale items!

Back to that mortgage rate. It hasn’t varied much since 2005. But now it’s tied into the stock market which is volatile, and while you are wondering if you can get that 65k home for 50k if you wait another six months, do you really trust the market enough to think that interest rates will still be steady at that time? They could be or they could not be! Then you will have waited for the clearance sale for nothing.

And that is not even the point.

Clearly, home prices are way down from where they were in 2005. Do you want to buy a house to live in? Good. This is my mantra (yeah you’ve heard it before): figure out what you can afford by talking to a mortgage lender. Then look at the figure and determine what it means as far as a monthly payment is concerned. Then decide on your comfort level, not what a mortgage person tells you but what you can reasonably spend a month on a mortgage. Do you travel a lot? Do you buy tech toys? Do you need money for kids sports and social events? In other words, figure out a budget for a mortgage payment.

Then we can find a house that is a good value in that price range. It’s not about having to get the cheapest possible home. Really! Cleveland is not a city for flipping homes, so why is it ever important that you have waited until some poor seller has listed his/her home for tons of money lower than typical market value (although market value is arguable but that’s another topic)?

What IS important is that you not overpay for a home. That’s where someone like me can help you. I spend an inordinate amount of time in the neighborhoods, in and out of homes, analyzing the market on line, etc. Cleveland IS a good place to buy an investment home, but only if you are doing it with the idea that you will keep it for a while..just like your primary residence. I cannot emphasize this enough.

So while you may read all the pundits trying to predict how low it can all go (now I want to find the limbo song on you tube), how low it goes is not the issue. The issue is what can you afford and are you financially able to buy a home? That’s it. I am not usually on a rant but apparently today was the day for one. Peace Out – 3C