Stricter Qualified Mortgage Rules take effect this year

The Federal government’s new qualified mortgage rules will take effect for borrowers originating
home loans for purchase or refinance this year. The new rules detail documentation that the lender
will require to verify income,  expenses and assets.

The Qualified Mortgage rules limit the types of mortgages your lender can issue if they want to resell
the loan on the secondary market, but lenders may modify the requirements if the note is kept in house.

The new rules will give lenders less discretion to deal with unique circumstances of individual applicants and may make getting a mortgage for self employed borrowers more difficult.

   Some key features of the qualified mortgage are:

Interest only periods and negative amortization are prohibited
Loan periods cannot exceed 30 years and no balloon payments
Fees are limited to 3% when mortgages exceed $100,000
Teaser rates that spike upwards are prohibited
Most borrowers are already annoyed at the intrusive nature of the financial documentation required
to originate a mortgage. The purpose of the new regulations, regulators claim, are to avoid a repeat
of the 2008 financial crash.

It’s debatable whether unqualified borrowers caused the real estate bubble to burst – many other factors were involved including bundling and reselling of mortgage notes to create a new financial product for investors.

    Many unexpected circumstances forced borrowers to default when their home value fell:

Unemployment shot up to 10% leaving millions with no income
Job transfers – sell, maintain two households or rent
Medical bills, illness and death can force many sales

Despite many state and Federal attempts for lenders and borrowers to renegotiate mortgage loans, very few were ever modified, forcing insolvent borrowers to lose their homes.

There are still many options for home buyers to qualify for a mortgage, although it may cost you
more. Low down payments in the 5 to 10% range are still available either through FHA and VA loans and some conventional loans are offering down payments of 10%. Expect to pay a Mortgage
Insurance premium with these lower down payment loans and possibly a higher interest rate.

Fortunately interest rates are still near historic lows and housing prices have not yet recovered what
they lost in the previous eight years. The affordability factor as calculated by the Federal government is still much better then it was in 2006.

Why use a Buyers Agent for Your Vero Beach Home Purchase?

Purchasing real estate is a complex and major transaction with many details to be handled.  Depending on the laws in your state and the business arrangement you have with a licensed real estate agent, that agent may actually be negotiating for the seller, not you the buyer.

The best way to be certain that an agent is working in your best interests is by using a buyer’s agent. All commissions are paid by the seller as in a typical Vero Beach Real Estate transaction.

The agent offering a home for sale, must by their contract, represent the seller’s  best interest. A buyer’s agent is paid by the seller but represents you, the buyer.

Vero Coastal Homes is a buyer’s agency – I do not list homes for sale, so I am not focusing on “in house” listings. I have access to all homes in the Indian River County MLS and I will research, submit and negotiate the best deal for YOU.

A real estate buyer’s agent represents the buyer who is purchasing property in a real estate transaction. Research by the National Association of REALTORS has shown that when a buyer’s representative is used, the prospective buyer found a home one week faster and examined 3 more properties than consumers who did not. The buyer’s representative works for, the Vero Beach home buyer and has buyer’s best interests in mind throughout the entire real estate process.

 A buyer’s representative will:

• Evaluate the needs of the buyer and locate homes with those specifications.
• Assist the buyer to pre-qualify with a lender and show properties in that price range.
• Accompany the buyer on the showings, or preview the properties on behalf of the buyer.
• Research the selected properties to identify any problems or issues.
• Advise if a foreclosure or short sale in Vero Beach or Sebastian is right for you.
• Assist the buyer on structuring an appropriate offer to purchase the selected property.
• Present the offer to the seller’s agent and the seller on the buyer’s behalf.
• Negotiate on behalf of the buyer to help obtain the identified property.
• Most importantly, fully-represent the buyer throughout the real estate transaction.

How to Determine if a Home is Available or is a Contingent Listing

Many of the homes that you see online are under contract, but not yet closed. You can determine if the seller of a home has accepted an offer by looking for the word “contingent” on the details page. If it does not appear, the home or condo is still available. The Financial notation of “Contingent” means that the home is under contract, but the closing is “contingent” on: inspections, HOA review, title work, bank approval (short sales)  or buyer financing. Most sales of these “contingent” sales will close.

You will find this important information at the bottom of each search result:

While contingent homes are technically still “on the market”, they are often not available to show, especially if they are occupied. Short sales can remain in contingent status for months and often do return to active status if the buyer’s offer has expired or the bank counter offered at a higher price.

It may be possible to submit a “back-up” offer, although this does indicate to the seller that you are anxious to purchase the property. If multiple offers are submitted, the seller will usually ask for “highest & best” offer, which can bid up the cost beyond the original list price. The best strategy from a buyers perspective is to monitor listings closely and be prepared to act quickly on a new listing or a contingent property returning to the active market.

  What Does it Mean When a Vero Beach Home for Sale is Called a Short Sale?
Homes advertised as Short Sales are currently a much smaller percentage of all available listings for sale
in Indian River County, than they were a few years ago. The percentage varies by location and price
range, with the majority being at $100k to $400k list price. Homes built during the 2003-2006 construction
boom in Vero Beach are most likely to be in this category.

A Short Sale is when the lender agrees to discount their payoff to allow a sale
and the following conditions are met for a home for sale in Vero Beach Fl:

• The mortgage is delinquent or in default (pre-foreclosure) 
• The home’s value is less than the mortgage balance
• The home owner/seller can demonstrate a financial hardship      

    If these conditions are met, the seller benefits by:

• Avoiding Foreclosure and having their credit score ruined for 10 years
• Staying in the home during the sales process and not making payments
• Feeling that they have made the best of a bad situation, doing the right thing.

    You as a potential buyer benefit because:

• The home is usually better maintained than a foreclosure
• The price is adjusted to current market value and available for sale

    The Lender benefits from:

• Avoiding additional expense of Foreclosure and eviction
• Avoiding vandalism and liability for an abandoned home
• Removing bad debts from their books more quickly

    How a short sale transaction is different from a conventional sale:

• The lender must approve the sales price and can take more than a month to respond
• The home will always be sold “as is” with right to inspect but no repairs will be made
• Low offers are typically ignored rather than responded to with a counter offer 

Foreign Buyers Interested in Vero Beach Homes for Sale

The Treasure Coast has always attracted seasonal residents from the Midwest and northern states. But lately, a different type of buyer has started to purchase vacation and retirement homes in Martin, St. Lucie and Indian River counties.

“We’re only going to live here six months of the year,” said Fran Stewart, a Canadian citizen who bought a single-family home in Hobe Sound last month. “We spent three years touring Mexico for property but we decided on buying here. Real estate there is very complicated to buy.”

Fran and her husband, Greg Stewart, purchased the home through Janet McCullough, a Realtor with Prudential Florida Realty, which carries listings from the tri-county region. “It was one of the best-kept secrets for so long, but the Treasure Coast has been discovered,” she said.

McCullough is taking several Certified International Property Specialist (CIPS) courses to specialize in selling to international buyers. And that forward way of thinking might help boost her sales in the future.
International property buyers have started snapping up properties across the Treasure Coast and they’re using local Realtors to help them find their dream homes. Buyers say favorable currency exchange rates and attractive prices have made the Treasure Coast and Florida their top pick. The phenomenon is not unique to the Treasure Coast and is probably one of the few bright spots in Florida’s housing market.

From May 2007 to May 2008, the top three states for completed international residential transactions were Florida, California and Arizona, according to a new study from the National Association of Realtors. Florida had 25.4 percent of the foreign buyers nationwide with California coming in second with 8.9 percent and Arizona with 8.7 percent.

Local Realtors are now taking advantage of the region’s favorable weather and image abroad to boost stagnant home sales. “We’ve represented several Canadian buyers over the past year,” said Sally Daley, broker and owner of Daly and Co. Realty, which has listings across the Treasure Coast. “We’ve been attuned to opportunities to represent Canadian buyers for over the past year when the Canadian dollar reached parity with our currency.”

Earlier this month, Daley showed several Vero Beach homes to German couple René and Kirsten Jurk. At the same time, Daley’s most recent Canadian clients, Bonnie and Harry Morrison, were putting the finishing touches on their new home they bought last May in Vero Beach.

“Over the years, we had gone to the Gulf Coast and after that I told myself I would never come back to Florida again,” said Bonnie Morrison. “Then we had a couple of friends talk about it here. We came reluctantly to visit and just loved it.” Morrison was also pleased to have RBC Bank, which has several branches on the Treasure Coast, in her backyard.