Lehigh Valley Real Estate Blog

FHA Changing the Rules on Lehigh Valley Home Buyers

The FHA is doing its part to insure that it will be able to keep financing new Lehigh Valley Homes The past few years have not been easy in the housing sector and the FHA is working hard to assure its stability in the market. Created to insure that people could purchase affordable homes and catering mostly to the Lehigh Valley First Time Home Buyer, the FHA is an integral part of the real estate business and keeping the association healthy is important to communities around the country. The changes that the FHA is making to insure its survival are as follows: § The mortgage insurance premium will rise. It will now be 2.25% of the loan amount as opposed to 1.75%. § New Borrowers will have to have a FICO score of 580 or more to qualify for a 3.5% down payment, those with a score of less that 580 will have to put a 10% down payment toward their new home. § Sellers Assist for FHA Home Loans is being reduced to 3% from 6%, to limit any inflation that can occur on the price of a house. § FHA lenders are going to be carefully scrutinized to make sure that they are adhering to FHA rules and regulations. The FHA has helped to put many people into new homes in the Lehigh Valley since its inception in 1934. Its changes reflect its desire to continue to help many more for years to come. For more information on the FHA changes click here.

FHA Will Allow Mortgage Insurance on Properties Owned Less Than 3 Months

 
HUD (Department of Housing and Urban Development) has announced that on February 1st, 2010, they will allow the FHA to Relax the Rule Restricting Mortgage Insurance on homes owned by the home seller less than 90 days.

This new ruling will allow Lehigh Valley Home Buyers to purchase properties they may not have been able to purchase in the past.

The past restrictions would not allow mortgage insurance on a home that was being sold within 90 days of being purchased.

In other words, if an investor purchased a property, remodeled it, then put it back on the market in 50 days, an FHA Mortgage could not be obtained on the property. The seller had not owned the property longer than the FHA requirement of 90 days.

The above scenario allows the house to be on the market for 40 days and possibly sold before the FHA Home Buyer could even qualify for the mortgage.

The new ruling should also attract Lehigh Valley Property Investors who wish to purchase rehab houses, clean them/fix them up, then quickly sell the home. It allows more home buyers in the market during a shorter turn-around time.

The full text of the waiver is on www.hud.gov

Lehigh Valley Real Estate Investment Tips

The following guest article was contributed by Richard Hemby a freelance writer who writes on the topics of real estate, technology, and online degrees.

When starting out in the Real Estate market, there are a few key tips that will help first-time investors maximize their returns while ensuring that they don’t overextend themselves financially. The risks of real estate investment have been highlighted in recent years by the housing market crash and the attendant foreclosures and financial difficulties that affected even the most experienced investors. However, those same difficulties present unparalleled opportunities in the current Lehigh Valley Real Estate market, as distressed and foreclosed properties can often be found at extreme discounts.

Especially when considering Lehigh Valley Real Estate, it’s essential to understand the overall market picture in the area. Investors should research the comparable properties in the area to get a sense of the real value of the property; especially if the investment is intended as a rental, it is crucial to have a clear idea of rental prices throughout the area.

According to investment professionals, a successful investment offers a ten percent return over and above expenses and loan costs. If the property is already rented, find out how much the current tenants are paying per month; this information, along with a general overview of rental prices throughout the area, can provide a solid basis for determining whether the purchase is a sound financial investment.

Start small. Purchasing a number of properties simultaneously may seem like a good idea, but this can lead to serious difficulties if the properties turn out to require serious repairs. Be certain to keep a sizable financial reserve in place for unexpected expenses; real estate investments require flexibility on the part of investors, since mechanical breakdowns and unexpected expenses are par for the course in this volatile market.

By ensuring that there is sufficient liquidity to take care of expenses, including Lehigh Valley Property Taxes and other administrative costs, investors can ensure that their real estate investments remain secure.

The most important advice, of course, is the traditional “Buy low, sell high.” In the current real estate market, it may be easy to find properties to buy low; the trick is to purchase the right properties that will appreciate in value when the real estate market returns to its previous levels. By knowing the market and by purchasing conservatively, Lehigh Valley Real Estate Investors can amass a portfolio of properties that will form the basis for future wealth.

Does NOT Using a Lehigh Valley Home Buyers Agent Save the Buyer Money?

This is a common question. If a Lehigh Valley Home Buyer does not use their own real estate agent will it save them money?

The spread of real estate information on the internet has led some home buyers to believe they do not need to work with their own real estate agent to purchase a home. They believe the only thing the real estate agent does is find the house. This is definitely not true and I'll discuss it in a future blog.

Home Buyers believe that BY NOT using their own agent they will get a better deal on the house. After all, the home owner will save half the commission.

In Pennsylanvia anyways, this is a misconception. When a listing agent signs a contract with a home seller they both agree on a total commission that will be paid to the agent's broker upon the sale of the home. The broker will typically offer half that Commission to a Buyer's Agent, from any firm, as an incentive to sell the home.

In most cases, if their is no buyer's agent, the listing agent/broker will get the complete commission. This results in No Savings to the Seller!

In addition, this means that the home buyer may end up working directly with the agent who is representing the home seller. This is known as Dual Agency and should be disclosed (in writing). The real estate agent is working for both the Lehigh Valley Home Buyer and Seller and must represent each while protecting both parties privacy and confidentiality.

Is working directly with the sellers agent in the best interest of the buyer? Can the agent truly remain neutral and equally represent both the buyer and the seller throughout the negotiations, inspections and other contingencies? Hopefully, the answer is yes but if either side feels that the other was given preferential treatment it can cause a lot of problems. 

Either way, whether the home buyer has their own Real Estate Agent or decides to work directly with the seller's agent may not affect the purchase price of the property. Why go it alone when agent representation is built into the price of almost all home purchases on the market including new construction.

Visit www.LehighValleyHomes.com for more information.

Chimney Liner for Your Lehigh Valley Home?

Why Homes Need a Chimney Liner By Chimney Liner Depot With winter in full swing and the temperature dropping, many Lehigh Valley Home Owners will begin utilizing their chimney. It is important to make sure it is safe and will work efficiently. If your chimney was built in the past 50 years, you will most likely need a chimney liner. Even some “newer” models of chimneys could use one. This piece will talk about what a chimney liner is and why you would need one for your chimney.

What is a chimney liner?

A chimney liner is metal tubing that simply goes inside of the flue of the chimney and acts like a chimney within a chimney. There are two different liners: rigid and flexible both being made out of stainless steel. The majority of chimney liners on the market today resemble dry vent hose, but the Flex King brand of chimney liners are the exception to the rule. If you are looking for the Rolls Royce of chimney liners then the Flex King Pro is the way to go. The Flex King Pro is the only smooth wall interior chimney liner on the market that is sold directly to homeowners. This smooth wall interior allows for a 20% better draft and the Flex King Pro is twice the thickness of normal chimney liners. The design of your chimney will depend on which liner you would choose. If your flue is a straight shot to your fireplace then you could use either a flexible or rigid flue liner. If you have bends or it is not a straight shot then using a flexible chimney liner is the way to go.

A chimney liner can attach to any heating source that is being vented through your chimney including fireplace inserts, regular fireplaces, furnaces, and other heating appliances. Chimney liners are good with most heating fuels including wood, gas, and oil. If you are heating your home with coal or pellet, depending on your configuration in your home, we would recommend either a combination of a chimney liner and a Class A chimney system such as DuraTech. Chimney liners are becoming required in most home sales and home inspectors are suggesting that they have them put in to make code.

So why would you need a chimney liner in your Lehigh Valley Home?

Masonry chimneys are typically lined with clay tiles to prevent buildup; however, over time they can crack and develop creosote buildup. This cracking can be contributed to the moisture getting into the masonry joints and expanding and contracting with the temperature . Creosote is a carbon by product from burning wood and other fuels. It can buildup over time and these gooey looking flammable deposits can cause a chimney fire that could devastate your home and property. Installing a chimney liner in your home helps to protect from creosote build up by funneling the smoke from your heating source through your chimney creating a barrier between your flue tiles and the smoke. By insulating the chimney liner, the creosote has a harder time of building up since the liner stays warmer longer which in turn keeps the creosote from building up in the cold air. Tiles that are missing or even have small cracks create areas where creosote can build up and become a hazard. Some chimneys are built without a clay lining, in which case they would definitely be candidates for a chimney lining system.  The biggest reason why you need to have a chimney liner installed is to extend the life of your chimney. Overtime your masonry chimney will deteriorate from the intense heat and just general usage. By having a chimney liner installed, you extend the life of your masonry chimney.

What is the cost of a chimney liner?

If you have a chimney sweep install a chimney liner it could cost you thousands of dollars. There is an alternative that many DIY homeowners are taking advantage of which are DIY chimney liners. DIY chimney liners are a fraction of the cost depending on the length of your chimney and are easy to install. The only company out there that offers a lifetime warranty to DIY homeowners and carries a UL listed chimney liner is Chimney Liner Depot. A chimney liner is well worth the investment of time and money.

To learn more about chimney liners or to purchase one, please visit us at Chimney Liner Depot, www.ChimneyLinerDepot.com or give us a call toll free 1-800-943-1515.

Selling Your Lehigh Valley Home? Choose the Right Realtor!

Take time to choose the right broker when selling your Lehigh Valley Home

When preparing to sell your home it is important to find a real estate professional that will best suit your needs.  A warm handshake and a friendly smile is all well and good but if you want to sell your home pick a broker that is experienced and knowledgeable, someone that will do the best job for you.  When selecting your Lehigh Valley Real Estate Agent here are a few things to keep in mind:

Data.  Get a prospective Lehigh Valley Realtor to bring in a copy of what they have listed and closed.  They can present you with an MLS report that displays their inventory.

References.  Get references from a potential Realtor and call them.  Find out what other people’s experience with a particular Realtor has been.

Price.  Get an evaluation of your property.  A solid real estate professional will be able to detail what has been selling and for what price.  He will be able to evaluate your home and your location, giving you a value for your home that will help sell it not deter people from looking at it.

Plan.  What does your Realtor plan to do for you in terms of marketing, sales, listing, etc.  Make sure he has a plan for your house and find out what he is willing to do to get it sold for you.

Lehigh Valley Real estate is often a person’s most valuable asset.  Do your legwork and choose the best broker for your home.  He or she should be a salesperson.  If they can sell themselves to you perhaps they are halfway to selling your home for you as well.

Visit www.lehighvalleyhomeseller.com for more information.

Remodeling? Lehigh Valley Home Exterior Improvements Give More Bang for the Buck

Lehigh Valley Home Exterior improvements give more of a return when remodeling

There is an annual report that examines the cost versus value for home remodeling.  The report is helpful for those who are considering making improvements to their homes, especially if their home is one that they consider selling in the near future.  Historically, bedrooms and bathrooms are where people consider spending their money but the return on the remodel investment is not necessarily there.

According to the 2009 Remodeling Cost vs. Value Report the best return for your money are exterior improvements that often are lower cost projects to begin with.  Adding decks, replacing siding, new doors and windows are among projects that recoup the most money when re-selling a home.  The return on these projects is typically 80% or more.

The annual report shows how important first impressions are.  If you are considering Selling Your Lehigh Valley Home make sure that the exterior is as eye catching as it can be.

Click here to learn more about remodeling costs versus value at The National Association of Realtors’ website.

Buying a Lehigh Valley Foreclosure Home vs a Short Sale Home

  
In general, buying a Lehigh Valley Foreclosure Home is a much cleaner/faster process than a Short Sale.

You make an offer on a foreclosure and the bank accepts it, counters it, or rejects it. Once the offer is accepted, you are fully under contract to purchase your Lehigh Valley Home and if the inspections and mortgage go well you eventually move-in.

The time from the bank accepting the offer to closing on the home is typically around 1.5 months (at least in PA). Foreclososure properties usually include an addendum from the mortgage provider stating that they accept your offer and here are THEIR terms (being sold as-is, must close within 30 days...etc) 

From when you submit the offer until you hear whether or not the bank accepts it may take 1 day, a few days, or a few weeks. Each lender is different but most reply in an acceptable time. The listing agent should have some idea on a reply time. 

With a Foreclosure Property, the bank already owns the house. They don't want to own real estate and usually want to unload it (although that doesn't mean they will accept an unrealistic price). The bank typically gets a BPO (broker price opinion) or appraisal to determine the approximate worth of the property.

With a Lehigh Valley Short Sale the home owner still owns the home. They may or may not be paying the mortgage. The mortgage companies will look at each situation differently to determine whether or not there is a hardship that justifies the "Short Sale". The bank is being "Shorted" the money they are owed. They want to know Why?

Typical reasons for a Short Sale:

• Job Loss
• Divorce or Break-up of owners
• Medical Emergency

When a Lehigh Valley Home Buyer wishes to make an offer on a Short Sale, the offer is presented to the seller of the home. Since the home seller will not be making any money on the purchase, they are likely to accept an offer that may not get accepted by the bank. On the other hand, the closer the offer is to what they owe on the house the better likely hood for a successful sale. 

Once the home seller accepts the offer, it goes over to the bank to get approved. The process of the bank reviewing and either accepting, countering, or rejecting the offer is the painful part. It may take months of waiting without any indication that the bank has even looked at the offer. The term no news today is very common. In the meantime, the listing agent may continue to market the property to accept a better offer or a backup offer.

So, a home buyer may wait months without hearing a word about their offer. This is very discouraging to many home buyers. This year I worked with 4 home buyers on short sales that never closed. In each situation, the bank was given 4-6 months to give a reply on their offer. Each of the buyers moved on to another house (2 went on to purchase foreclosures) after giving the bank ample time to reply to their offer.

The term Short Sale is deceiving because it may take months to get an approval from the bank that the offer has been accepted. 

Regardless of a Foreclosure or a Short Sale Property, a Lehigh Valley Home Buyer may end up with a really good deal pursuing one of these properties. Unfortunately, there is no set roadmap since each situation is unique.

With a Foreclosure, there is no longer any involvement with the original home owners so a VERY time consuming step in the process has been removed. With a Short Sale, the home owner is motivated to sell the home before it goes into foreclosure so the home may be in better condition.  

Each property needs to be looked at with these thoughts in mind.

Get a Mortgage Before Searching for Lehigh Valley Real Estate

 
Finding a mortgage before looking for Lehigh Valley Real Estate is a smart idea

The first step in purchasing real estate should be getting a mortgage.  Getting a mortgage, or rather getting approved for a mortgage, lets a buyer know what he can expect to afford when looking at property.  It is important for a potential Lehigh Valley Home Buyer to know how to secure a mortgage.

There are any places to look for a mortgage these days.  There are banks, mortgage brokers, finance companies, credit unions and private lenders.  Often experienced Realtors have mortgage brokers or banks that they work with often and using a lender that has a good reputation is often a safe bet.

When looking for a mortgage have a good idea how much you can afford to pay each month.  Look into the past, present and future to determine this.  It is of the utmost importance not to bite off more than you can chew when it comes to your finances and the affordability of a home that you might buy.

When applying for a Lehigh Valley Loan a person must provide documentation of income, expenses, and assets.  Have your financial statements and tax returns ready and the process will be much easier.

Having a mortgage ready to go before finding a Lehigh Valley Property will make the entire process smoother.  Financing is harder to get these days and being prepared is a wise step in the home buying process.

For more information on mortgages click here.

Waiting For The Lehigh Valley Real Estate Bottom

Waiting for the bottom in real estate is similar to grabbing a yo-yo at the bottom, you are usually a little early or a little late

There are many people out there waiting for the bottom to hit in many facets of the economy, including real estate.  Perhaps there will be a big announcement one morning across newspaper headlines and across the internet “THE BOTTOM IS HERE: NOW IS THE EXACT MOMENT TO BUY A LEHIGH VALLEY HOME”.  Of course by the time the announcement comes the bottom will have hit and the exact time to buy real estate will have come and gone.

A great analogy to the bottom of the real estate market is a yo-yo.  Take a yo-yo in your hand and use it.  Can a person grab the yo-yo at the exact moment it hits bottom every time?  Chances are a person will grab it just before it hits bottom or just after, rarely at the exact bottom.   Real estate is the same game, if it is indeed a game.  If people knew, absolutely knew, the exact time to buy stocks, real estate, or any other investment then no one would ever have a financial worry.

For people who believe in investing in Lehigh Valley Real Estate now is a great time to buy.  Interest rates won’t be low forever, real estate has either already hit the bottom, is about to, or is already on its way up, we’ll know for certain sometime in the future.  If you want to buy at the bottom, buy now or wait until it’s too late, when you can look back and say, “If only I had bought then.”