What is an FHA MIP- Besides a Lot of Letters?

FHA is one of the most, if not the most, popular ways that first-time homebuyers finance their purchase. FHA stands for Federal Housing administration, a division of HUD (housing and urban development) that ensures loans to homebuyers with low down payments. These down payments at 3.5% of home price would probably not be made by banks without the federal guarantee. 

So, what is MIP? MIP stands for Mortgage Insurance Premium, charged by FHA when approving a loan. The money from MIP goes into a pool that helps fund the federal guarantees for loans against default by the home owners. There are two different MIP charges: Upfront and Monthly. 

The upfront MIP charger from loans is 1.675% of loan amount. So, if you had a loan amount of $100,000, you'd have an upfront MIP charge of $1,675. FHA does allow this upfront premium, however, to be rolled into the loan amount. So the actual loan amount stated on all of your documents would be $101,675. 

In addition to the upfront MIP, there is a monthly premium that you will pay to go into the same mortgage insurance fund. This amount has an interest of 1.25%. To find out what the monthly MIP charge is, you'd multiply the amount by 1.25% and divide the amount by 12. Therefore, the MIP amount on a loan of $100,000 would be $1,250, which divided by twelve would be around $104.17 a month. 

Because the monthly fee has gone up dramatically in the past few years, the issue has come up that many think that FHA financing is too expensive for some buyers. In our next article we'll discuss other financing ways that don't have this MIP. 

Top Five Ways to Find Your Dream Home Now!

This reporter must have read our blog!

Click here for the story. 

The Things to Bring Along with You

Many times we've encouraged first time buyers, well all buyers really, to make full loan approval prior to ending their search for their new home. So, assuming that you're taking that advice and that you're going to meet with a loan officer to make loan applications, there are some things that you need to take along with you (besides a pen). 

Below is a list sent to us by one of our lender friends of things you need to bring, including financial documents. This will provide you with a checklist for you as you make your way towards your new home.

• Copies of 2011 & 2010 Tax Returns including ALL W-2's and/or 1099's (if Tax Returns are not completed then we will need a copy of the extension & 209 Tax Return)
• Copies of one month of your most recent Pay Stubs
• Complete Copies of two months of your most recent bank statements
• Most recent 401K and/or Investment Statements
• Divorce Decree (if applicable)
• Social Security Award Letter(s) (if applicable)
• Bankruptcy Petition and Bankruptcy Discharge Papers (if applicable)
• Gift Letter, copy of Cashiers Check and Bank Statement from Donor (if applicable)
• Copy of Real Estate Sales Contract (sale and/or purchase)
• Name and phone number of Insurance Agent

For more information, contact us by visiting our website at www.springfieldfirsthome.com, or call or text us at 417.872.9222.

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Location, Location, Location

So, what is the oldest rule in the book about real estate? Location. Location. Location.

This should be the case when you're buying your first home as much as it is when you're building a parcel of land on which to build the world's largest office building. Location is going to be important to you for a number of reasons including a location that is close to work or schools, or just generally meets your needs for a house. But it is also the case that location is extremely important in terms of both resale value and desirability by future buyers  (which is just another factor of resale value).

While it is necessary for everyone to find an area that suits their basic needs, in terms of resale value, do your best to find an area with increasing popularity and therefore value. One of the great parts of this is that you're not attempting to base your value for a certain area on its value now but on the perceived value in the future. Therefore, a neighborhood made up of newly constructed homes may be higher-priced right now, but 10 years down the road if that same neighborhood were full of foreclosures, while at the same time a currently lower-priced neighborhood made up of older homes becomes in high demand because of its area and the character of homes, a buyer would be better off buying one of those older homes right now.

The bottom line is, you should be looking at homes that suits your needs the best. But don't forget to put location in the equation as well. It could reap great rewards down the road.

Women and Home Ownership

Some interesting insights on how women view home ownership.

Click here for the full story.

FTB vs. Cash

It's been an ongoing battle all year...

Click here for the full story.

Really? Again?

Surely we've talked about this before, but it's happened again- we talked to another lender who wouldn't order an appraisal on a contract until the inspections were done. 

In Springfield, using the Springfield contract, a buyer is responsible for paying for and ordering both the credit report and the appraisal with the default position being 7 days from the effective date of the contract. 
Therefore, waiting until after inspections may place a buyer in default on the contract, meaning that they haven't met their obligations. Even if this decision is made by a lender, the lender may have unintentionally placed the buyer in default on the contract, and if an agreement is not reached between the buyers and the sellers over inspections or any other matters, the seller could come back and hold the buyer for breach of contract because they didn't pay for and order the appraisal to be done within the course of the contract.

Now, of course, the reason that buyers (or lenders on behalf of buyers) wait to order an appraisal is because once you order an appraisal, you have to pay for it, and if the inspections identify a number of problems on the property and the buyer either doesn't want to complete the purchase or cannot come to an agreement with the seller as to the repairs to be made, it would save money to not order the appraisal if the deal isn't going to work anyway. 

Well, the reason it's important to order the appraisal early is that it doesn't serve anyone if the appraisal doesn't get done on time or to be done right before closing. Then, if there's an issue with the appraisal, there's no time to react to it, and the deal may die because of failure to close. The Springfield contract also contains big, bold print at the end of the inspection paragraph that says "hey, just because you've got this inspection contingency doesn't mean that the buyer is free of other obligations" such as financing for just this reason. 

It's just as important when buying any house, but especially your first one, to work with someone who knows what the contract says, to prevent issues from happening just like this. 

For more information, visit us on the web at www.springfieldfirsthome.com or simply call or text us at 417.872.9222.

National Housing Reports

We've just received the National Housing Reports from RE/MAX National for July, 2012. While this information is usually more applicable to sellers, we still like our buyers to know about the recent changes in our real estate market.


For more information, visit us on the web at springfieldfirsthome.com, or simply call or text us at 417.872.9222.


(For more detailed/downloadable pictures of the report, visit our Facebook page, which is under the same name as this blog.)

Bragging Rights

Today’s entry is just us bragging. On Google Reader today we found this article for first time homebuyers encouraging them to ask their realtor five things before buying their first house, and we are proud to announce that we have covered all but one thing- whether to find out whether the place is considered sacred by Native Americans.

I guess we can talk about that one tomorrow.

For more information, visit us on the web at springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Google article: http://atlanta.cbslocal.com/2012/07/18/5-questions-to-ask-your-realtor-before-buying-your-first-home/

207 West Center- Best of Both Worlds

When you list your home or put it on the market, one of the first things you do is write a tagline or headline for a website or the advertising for that new listing. When we listed the house on 207 West Center in Rogersvile, Missouri, the tagline was "The Best of Both Worlds". This defines two different aspects of the house, being built a while back but having been modified to include modern technologies found in new construction today.


First, let's talk about the house itself. Built in 1905, this house has had extensive updates, especially in the kitchen and bathrooms. So, the house has all of the character of having been built  in 1905, with the beauty and comfort of a home built more recently, which beats the cookie-cutter qualities of new construction homes. Three bedrooms and one and a half baths, about 1400 square feet, and a huge (2/3 of an acre) lot, this house truly is the best of both worlds. 


The other way that this house exhibits the best of both worlds is the fact that it's located in Rogersville, Center is the old highway going through the middle of Rogersville. This house, with it's large front porch and its small town feel, allows you to enjoy days going by and days gone past, sitting out front with seeing neighbors go by and getting the chance to wave and exchange pleasantries. However, as you know, Rogersville is only 9 miles away from the eastern part of Springfield, so it's a very quick commute down highway 60 to some of the major retail and employment areas of Springfield, making it a quick and easy way to reach some of the major areas of city life, as well. Finally, the home is only priced at $80,000, which is a big deal. You've got a hose that's bigger than most new construction these days for a lesser price! 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.


House website: http://www.jkester.remax-midstates.com/remaxmidstates/index.asp?p=findahome.asp&selected=mls&listing=true&mlsnumber=1209428&mlsid=556&acc=93983

Buy to Sell

There is one more thing to consider when buying a house- what you want to be the first time seller of when the time comes. Buying a home is an emotional thing, and we're looking for a house that suits our wants and our needs. Most of the time, we end up buying a house that "speaks" to us, one that causes us to make that emotional buying decision. The house that makes you say "this is going to be my home". 


The problem is that some buyers make an emotional decision, which by itself isn't necessarily bad, but without any thought to the fact that they are making the single largest investment of their lives so far. In order for that investment to be a good one, it has to pay off in the end. 


So, bottom line is, if you want to make a good emotional decision with reason attached to it, put into your decision-making 'mix' a question. Will I be able to sell this house whenever the time comes to sell it, for at least the amount of money that I bought it for, and is it the kind of house that other buyers are going to want? 


In other words, buy what you'll be happy to sell. 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Challenges for the Good

We ran a story today about the shortage of first time buyers this year, due to challenges that many buyers are facing because of the market. The story begins with talking about how many buyers aren't qualifying for a good mortgage or loans due to credit standings. It also tells about the troubles buyers are facing because of a lack of inventory in the market. Less houses create more competition between buyers, and then therefore higher prices. 


We don't doubt that these challenges exist in the marketplace right now, in fact we've pointed out numerous times that the buyer's market of the last few years is coming to an end, and we've also talked about price changes and low inventories. 


All of this having been said, not all of these challenges are bad things. First of all, higher loan standards may prevent some buyers from making the same mistakes some buyers made back in the past when standards were lower. There were many buyers in 2005 or 2006 that regret the choice because they bought the house with a loan they got too easily, and were not able to pay back all of the interest. With higher credit standards, it means that when you're qualified to buy a home, you're really and truly qualified to buy a home, and preventing mistakes that other buyers have encountered before is definitely a benefit. Also, the lower inventory of houses currently on the market means a healthier real estate market, and if reporters had dug deeper, they'd have known that most buyers are only missing out on buying a home because they failed to pre-qualify for their loan.


The bottom line is yes, first time buyers-or really any buyers- those challenges can be seen as good things, and the silver lining is that buyers that can and are ready to begin their search may do so in a healthier real estate market than there's been in years. 


For more information, visit us on the web at www.springfieldhomebuyers.com, or simply call or text us at 417.872.9222.

Rogersville: A Quiet Missouri Town Turned Suburban

Today we experienced a great example of how a very small town can develop into a significant suburb. This afternoon, we visited Rogersville. If you're a native of the Springfield area, you might recall the first time you ever visited the small town of Rogersville. If that time was anywhere prior to 2000, you'll remember it as the quaint, quiet, railroad town east of Springfield that more or less functioned as the last stop on the railroad before arriving in the queen city. And if you haven't been to Rogersville since then, you'd be amazed at the changes the town has gone through. 


According to the 2000 census, there were about 1500 people living in Rogersville at that time. That number alone may be more than anyone expected, but imagine the vast change in the recent years, population jumping to double that number in ten years, and that is nothing compared to the estimated 4.5% growth expected to take place by 2014. 


You'd also be surprised, if visiting for the first time in a long time, that there's a lot more on Highway 60 than there used to be. Many fast-food chains and other sorts of stores have popped up everywhere, turning Rogersville and the surrounding area into a bigger deal than it ever was conceived as being before. 


None of this compares to the amount of growth in the housing area/subdivisions. There are still the quaint little old houses that have been there since the dinosaurs roamed the earth, but there are also quite a few new developments and housing areas available that weren't there before. These new construction housing areas pop up from within Rogersville and towards Springfield as the city spreads to include more and more area. 


Rogersville has become quite the bustling suburb, firmly connecting with the old parts of the city as well as the new parts spreading towards Springfield, and is not to be overlooked by home buyers that want access to a smaller area as well as the ability to have a nice-sized 'city life'. 


For more information visit us on the web at www.springfieldfirsthome.com or simply call or text us at 417.872.9222.

Housing Inventories

We've mentioned before that the so-called buyer's market from the previous years is coming to an end, and now the numbers are starting to bare that out. Present inventories of homes on the market (that is, the number of houses currently active on the market compared to the monthly sales rate) is hitting a five year low in some areas. Some parts of the Greater Springfield Market are down to four months of inventory, which means that if all the houses on the market sold at the present rate, how long would it take to sell them? Well, the answer there is four months, and this really is happening in some areas. 


While that might seem like a lot of inventory, remember that about six months of inventory is what we call a balanced market. More inventory than that, and you've got a buyer's market. Therefore, less inventory would be referred to as a seller's market. So you can see in various areas of the city, it's a seller's market again.

With low inventories, historically low interest rates, and rising prices, we again urge first time buyers to move now while the market is the way it is. This might be as good as it gets for a long long time. 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.8472.9222.

Meth Homes- Disclosure

In reading a story today from the New York daily news about the trouble buyers might encounter in the surprise of finding that their new home is a former meth lab (story available here: http://www.nydailynews.com/life-style/real-estate/shutdown-meth-labs-leave-dirty-secret-potential-homebuyers-article-1.1103805?localLinksEnabled=false. 

A number of thoughts crossed our minds.

At first, the story follows a family in Washington and another in Utah, where the families were surprised to learn and suffered many health problems from the fact that their home was a former meth lab and that this was not disclosed to them. This could be a problem financially in that once a home is labeled as having been a meth lab even in the past, the property value could decrease exponentially and the chemicals left behind from meth production can cause invariable illnesses and therefore money would be lost in treatment or removing said chemicals from the home to begin with. Make note that in Missouri disclosure is in fact required, and so therefore home-buyers in the state of Missouri are safer from these specific potential problems. 

That being said, to verify that the disclosure is correct, a new homeowner is advised to have a home inspection in all cases, but especially where questions might exist about drug production. Many home inspectors have services available for chemical testing either on surfaces or even into the drywall to see if those different and potentially harmful chemicals are still present. There are also testing kits available in some places to the public, so that people may test the area themselves for possible chemical issues, although it is still highly advised that a professional inspection take place. 

Without an inspection, identifying a home as a previous meth lab or other drug producing area can be difficult, while some texts indicate there are telltale signs of such things, these aren't always completely reliable or present. As always, when in doubt, inspect.

For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Closing Funds

Today, let's talk about the that money you'll bring to closing whenever it occurs.


A couple of days before closing, your loan officer, your agent, or someone from the title company will call you and tell you the amount that you'll need to bring to closing. This amount may be for a down payment, your closing costs, or a combination of both. The money that you bring should be in certified funds, a check directly from the bank, whether it be a cashier's check, accounter's check, or anything else of the sort. 


The amount that you bring to closing should be fairly close to the amount that was given to you on a good-faith estimate from the lender at the time you applied for a loan, which shows the down payment and other amounts associated with the closing. If the seller is paying closing costs, deduct that amount, and the remainder should be close to the amount that you bring to closing. If this isn't correct or close to being so, call your agent and they can help you with the problem. 


Sometimes this amount be slightly more due to higher inspection charges or costs such as this, and sometimes the cost may be lower than the estimate due to tax prorations by the seller and other charges that the lender may have estimated but were not realized. 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Closing Documents

A few people have asked us what exactly a person signs when they get to closing on their first house. There are generally three types of papers that a person will sign at closing time. 


The first part consists of a settlement statement, or HUD 1 statement,  that shows all the charges and credits to both of the parties, and the deed paperwork that goes with the actual property transfer. 


The second type of paperwork, usually signed by the buyer, are the documents needed for the loan. This can be a very large stack, depending on the type of loan the buyer has chosen to use. The documents will range anywhere from a new printed neat version of your original loan agreement, verification of name and address, and the note itself that says that you will pay the bank back. 


Finally, there are a number of documents that may or may not be needed as last minute items on the sales contract itself are needed by the agents on either side of the transaction.  We'll go more into detail on each of the types of documentation in future posts. 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

The Final Countdown

From time to time we like discuss certain terms that are used in the real estate business as if everybody knows what they mean, when in reality, not everyone does. So, in this entry we'll discuss the walk-through. 


There are a few good reasons to do a walk-through, but first let's talk about this really means. Walk-through is usually covered by something in a real estate contract, usually under the heading of something like "Verification of Condition". It's basically one last view of the property by the buyer prior to closing to make sure of three things.


First and foremost, the buyer wants to make sure that the property is in substantially the same shape that it was in when the buyer first put the property under contract or made an offer on it. Therefore, the buyer is going to make sure on the walk-through that there has been no damage done to the property by the seller, especially damage from moving out by the sellers if they were living there when the buyer made the offer. Sometimes when sofas or other furniture is moved, damage may be done to walls or doors in the moving out process. In other cases, rugs or other pieces of furniture had been covering stains or damaged flooring when the house was shown, and the buyers were unaware of this previously. Basically, the buyer is just trying to makes sure that the house is in the same condition as when they decided to make a purchase. Contrary to what some buyers believe, the walk-through is not a time to find new defects or do a new inspection of the home. 


The second potential reason for the buyer to do a final walk-through of the property is to make sure that the seller's responsibilities under the terms of the contract have been completed. For example, when a buyer goes through the property, they find an old car in the backyard. The buyer, when writing the contract, may dictate that the seller must remove the old car from the yard. The walk-through is the time to make sure that the obligation of removing the car has been filled by the seller. There may also be repairs needed to be made after the inspection has taken place, and if these haven't been made, the buyer may choose to terminate the contract. 


Most buyers who have been through a walk-through before know that it is a major part of the process, but as a first-time buyer, you may not have realized that a final look around is in fact necessary and proper. If something isn't the way it should be, don't close until it is. If your agent doesn't call you to schedule a walk-through, take it upon yourself to call them and schedule. The final walk-through is an important process, and is the only way to make sure that everything agreed upon in the contract is in fact the way it should be. 


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

What Questions are the Right Questions?

When you’re looking to buy a home, there appropriate questions and answers- and there are inappropriate questions and answers. It benefits both you and your agent if you stay on the appropriate side of the line. For instance, a good agent (we do this) will ask you to list all of your needs and wants in the aspect of looking for that next great home. So, for example, you might want a fireplace. But given that the home has central heating, you don’t really need a fireplace- so that would be considered a want.


The next step of that process (we do this, too) is to prioritize those needs and wants, so you know the top three or four things you are really looking for in a home. It is very appropriate for an agent to ask these questions of you, and it is very appropriate for you to ask those questions amongst yourselves if there’s more than one buyer. The next area of appropriate questions is questions about the area or the kind of area that you’re looking for, such as the proximity to shopping locations and restaurants or parks, or even the feel of the neighborhood you’d like to have- more centrally located, out in the suburbs, or even in an area less crowded out in the country.


Where many people make a mistake and cross over into the inappropriate side of asking questions is when they choose to inquire about racial, ethnic, or age breakdown in an area. These questions are not in any way relevant to real estate, and with fair housing laws in place, agents are never allowed to discuss information about neighbors or previous owners of the house you are looking at. While you may wonder about these aspects of a neighborhood, it is not appropriate to ask an agent these questions, and don’t be surprised when an agent doesn’t answer.


A good real estate agent is here to answer appropriate questions, educate you about the process, and ask you questions to help you find what you’re looking for. It benefits you and the agent and the whole real estate process to stay in the appropriate question and answer areas.


For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

A Rising Market is a Smooth Market

We've talked before about how the buyers’ market that we’ve encountered in the last two or three years may be coming to an end, and if this month’s market data is any indication, it may have already ended.

Several areas within the Springfield Marketplace, whether searched by zone or by school district, show that inventories of homes currently on the market have reached a three (or in some cases a four) year low (and by that we mean the number of months it would take to sell all of the houses currently for sale on the market).

In addition to that, the last three months have shown a robust increase in the median home sales price in Springfield. In May, median sales price of residential property went up to $116,500- the highest that it’s been since July of 2009. In January, we started the year off with a median sales price of $101,900, so this month’s $116,500 represents a 14.3% increase in the median sales price just this year.

For both sellers and the market, this is great news in that this greater median sales price may allow other sellers with good quality homes to place them on the market, in effect keeping the market going smoothly. However, it may indicate to buyers that it is a good idea to buy now, before the prices go up even further.

If you’re ready to buy a home, all of those reasons that you may have had to delay might  now have evaporated, and it may be just the right time to find a new home for you.

For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.