Spring 2012 is really heating up in the Dane & Rock County Wisconsin real estate markets! You’ve probably heard about it, whether on the news, in the paper, online, [..]
We wanted to make everyone aware of recent price reductions on two fantastic short sale homes. One home is a beautifully maintained Deerfield Wisconsin home that has 3 [..]
Understanding the Subtle Differences in Various Mortgage Loans Getting a mortgage to purchase a home can be a little confusing. There is so much industry lingo that loan [..]
WHEDA Fannie Mae Advantage Most homes are expensive. There is just no way to sugarcoat it. Finding affordable transportation and good clothes at a decent price can be [..]
WHEDA FHA Advantage In 1934 the United States congress created FHA (Federal Housing Authority) which originally was designed to insure loans offered to contractors that were building affordable [..]
Unique Features of WHEDA Loans In an effort to help the lower income individuals of Wisconsin find affordable housing, the Wisconsin Housing and Economic Development Authority, or WHEDA [..]
What is WHEDA and how can it Help ME? The American Dream usually consists of a few major items for the majority of people; a satisfactory, well-paying job, [..]
What: FREE LEGAL HELP! For homeowners facing foreclosure. Help available in English and in Spanish Ayuda disponible en español también. Who: For homeowners who have received a Foreclosure Summons and Complaint When: 11:00 am – 1:00 [..]
The Wisconsin housing statistics are now in for March of 2012. Here is an excerpt from what the Wisconsin Realtors Association (WRA) had to say: “We certainly had [..]
Ways to Put Aside Your Emotions When Selling a Home Because of the large investment needed to purchase a home, sellers often find themselves in a difficult situation. [..]
Looking for a 4 bedroom walk out ranch in Madison, WI? Take advantage of this aggressive short sale price reduction! Be the first to submit an offer that we can bring to the bank! Bring your handyman skills for some necessary updates.
Be the new owner of this large 4 bedroom Eastside Madison ranch. Master bath and walk-out basement with a raised deck overlooking the back yard. Needs some TLC. All offers subject to lenders approval of Short Sale.
Tips for Home Sellers to Minimize Their Risk in Lease-to-Own Transactions
The economic downturn in the housing market over the past 5 years has driven up the number of sellers willing to consider leasing out their homes with an option to sell. This can be a wise move in the right situation but sellers need to make sure they take steps to minimize their risk in these transactions.
Demand an Option Fee Up Front
For the duration of the lease the seller of the home cannot market the home to would-be buyers. This time period could be as short as one year or as long as three years depending on the renter’s financial condition. Sellers should demand an option fee up front. This fee can be applied to the purchase if the renter indeed manages to arrange financing at the end of the lease. However, if the renter decides to pursue another home, they forfeit the fee. This fee is usually in the range of 3% to 5% of the agreed purchase price in order to ensure the buyer is committed to the purchase.
Protect Against Appreciation
Once again, going back to the fact that the seller is not able to market the home while it is under a lease contract, it is possible the home could appreciate greatly in value. It is wise for most sellers to add at least 5% to the current market price of the home when writing out the lease-to-own contract to help the seller reduce their possible loss. At the same time, the buyer is getting a price on the home, in writing, for a future date. This is a big plus for the buyer since they now know the price cannot rise.
Work Out a Contract for Maintenance and Repairs
In order to give the buyers the sense of actually owning the home, sellers can ask buyers to sign a contract that spells out responsibilities for maintenance and repairs. Obviously, most renters will not be inclined to pay for major repairs such as a roof replacement or installing a new heating and air conditioning system. But the seller may want to enforce a policy that lawn maintenance, modest repairs for plumbing and electrical needs, and other such items are the responsibility of the buyer. This can help the buyer budget for future repairs and also help them decide if they are financially ready to purchase a home.
Carrying Additional Insurance
While the buyer/renter is in the home as a tenant sellers will require proof of renters insurance. However, it is a good idea to carry an additional policy on their home beyond their current needs. Catastrophic events such as tornadoes, fires and floods happen when we least expect them. Nothing makes a tragedy worse than realizing there was not sufficient insurance coverage to handle the damage.
Many hopeful borrowers are in need of something beyond a traditional mortgage. The lease-to-own model is a good way for sellers and buyers to reach their intended goals. However, sellers need to be especially careful in these deals to make sure their interests are protected beyond merely the sale of the home.
Rising Rents Provide More Reasons to Buy a Home
The economic climate of the past few years has made the real estate industry a buyer’s market. With so many homes available due to foreclosure or short sales, a buyer can pick and choose their next house. However, there is another segment of the real estate industry that is in the driver’s seat; the landlord. People searching for a place to rent are finding that the landlords are not quite so willing to offer incentives as they once were.
High Demand for Places to Rent
Real estate analysts have stated that the demand for renting has greatly increased in the past few years. More people renting means the landlords can raise the rental rates. It also means the landlords are in control of the transaction. People that have searched for a suitable place to rent have come to realize that the monthly rental amount is either too high for their budget, or is higher than a comparable mortgage payment.
Conditions are Right for Many People
Fortunately, many of the conditions that have forced rental rates to rise are the same factors influencing low mortgage rates and affordable home prices. The real estate bust in the past few years has greatly reduced prices in most areas. And with the mortgage rates at the lowest point in history, many new buyers are finding it easier to justify a home purchase in light of the rise in rental rates.
Future Benefits
While buying a home now makes sense for many people, it will also be a good boon for people in the years to come. It is inevitable that home prices will begin to go up in the next few years. People that buy now while prices and interest rates are low will reap the financial gain of an appreciation in home values. They can later choose to use the equity to move up in a home, purchase a different home or even invest in rental properties.
Improve Financial Situation through Fixed Costs
Buying a home now with a fixed rate mortgage can also help people improve their financial planning. As we have seen in the past, rent amounts normally increase year to year. Sometimes the amounts are minimal and other years the change is substantial. People who choose to purchase a home using either a 15 year fixed or a 30 year fixed rate mortgage will be able to plan financially for the future with a fixed cost for housing.
Emotional Stability
Beyond the financial gains seen from purchasing a home, most people see an emotional benefit from being a homeowner. The knowledge that they have a true place in the world to put down roots can be quite satisfying for many people. They realize they now have a place to call home and it helps improve their general outlook.
If you are part of the rental crowd considering a home purchase now could be one of the best times in history to take the plunge and become a new homeowner. At Rock Realty, we are now offering a 1% home buyer credit. This could mean $1,000 back to you on a $100,000 home purchase.
We are happy to announce that last Friday we had another successful short sale closing. As you have likely heard, short sale transactions can be complex, and an experienced Short Sale Realtor® is a must.
This was a great home that the buyers are sure to enjoy! If you are thinking of selling or buying a short sale home in Wisconsin, we would be happy to assist you. Give Rock Realty a call at 877-774-7625.
Or, if you are considering a short sale for your home, feel free to fill out our no obligation
Short Sale Home Evaluation Form
How to Buy a Home Once You Have Completed a Short Sale
Tragedy strikes across the country every year. People lose jobs, injuries are sustained from accidents and financial hardships cause tough decisions. Fortunately, most things improve with the passage of time. Read on to see how you can prepare for your next home purchase once you have sold a home via short sale.
Option 1: Big Down Payment
One constant that has remained in mortgage lending in many years is the power of a large down payment. Although it is uncommon to see someone with a 30% or more down payment, it does happen. Especially for people who are recipients of a windfall, such as payment on a judgment or an inheritance. If you can rationalize the high interest rates, and you have the funds for the large down payment, then you can usually find a private lender to set up a mortgage for you.
If you choose this route, be alert to a few items. First, the lender may have a stiff penalty for paying off the loan within the first few years. Secondly, the lender may attempt to set up the mortgage with a balloon payment. Avoid these two snags at all cost.
Option 2: Wait a Few Years
If you don’t have the money for a 30% down payment you can simply wait for three years. The Federal Housing Administration (FHA) will ask that a person who sold their home via short sale to wait for three years before applying for a new mortgage. However, if your circumstances show that the short sale was beyond your control, and you kept your payments up to date right up to the sale date, then you may be able to get the loan sooner.
People who would prefer to use conventional loans offered by Fannie Mae or Freddie Mac will have a similar wait. Fannie Mae only asks that borrowers wait for two years if they are able to pay a 20% down payment. For circumstances beyond your control Fannie may allow you a 10% down payment after a two year period.
Veterans who wish to use the VA loan will need to wait a full two years after their short sale to apply for a new loan.
Option 3: Lease with Option to Buy
It is not surprising that many home sellers have chosen to offer their homes with a lease and an option to purchase at a certain time and at a designated price. Due to the economic slump over the past few years, home prices have dropped. Sellers do not wish to sell their home at such a loss so many are willing to lease out the home in hopes that the market will rebound. For buyers who are not quite ready to qualify for a traditional mortgage, buying with a lease-option could be the easiest way to get in to a home.
With a little planning and a little patience it is possible to find yourself holding the keys to your next home after you have made it through a short sale. Feel free to contact me at 608-921-8536 if you have further questions. I am certified through the National Association of Realtors® (NAR) as a Short Sales & Foreclosure Resource.
Additional Short Sale Information
Rock Realty is a full service brokerage that specializes in Short Sales and Bank Owned Foreclosures|REO homes in the Madison & Janesville Wisconsin area. This may involve negotiating a short sale for a home owner in need or finding the perfect home for a first time home buyer. Whatever it is you are looking for, Rock Realty's WI real estate agents are here to help you with your real estate needs!
REALTORS® who have earned the SFR certification know how to help sellers maneuver the complexities of short sales as well as help buyers pursue short sale and foreclosure opportunities. The certification program includes training on how to qualify sellers for short sales, negotiate with lenders, protect buyers, and limit risk.
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