Let’s talk about loans …

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O.K. maybe not loans, but I think everyone should have a short primer regarding how folks pay for a house.  It really doesn’t matter if it is a co-op, a condo, a town home or a single family home.  One of the basic rules of contract law includes the need for consideration. Consideration is just a fancy legal term for money. If you want to buy a house, you have to be able to produce the funds at settlement.

Now, if you happen to be loaded and can pay cash for the house, well you can either read through this for information, or you can check out another one of the articles I have written. For those of you that want to buy a home and don’t have cash on hand, this is for you.

For purposes of example, I will use a $500,000 purchase price. You and the seller have agreed on the price. Well now, wait a minute, let’s back up. You really should have an idea about all of this before you begin looking for a home.  The very first question you have to ask yourself after deciding you want to own a home of your own is how much can I pay for a home (keeping mindful that your comfort level should be dictated by what you can afford and not what you would like).

I am not a lender. I can only give you general advice in this area. Let’s make that specific advice. After reading this primer, talk to a bonafide lender! Then talk to another. Keep talking until you find one that you are comfortable with. They will provide the rock that your dreams of owning a home will be built upon. The lender will gather information about you and tell you what you can borrow.

The most basic loan is a conventional loan.  Lenders like this sort of loan because it requires that the borrower (you) contribute at least a 20% down payment.  In the example of a $500.000 purchase, you will be putting at least $100,000 down and the lender will provide the rest of the money. Each month you will make a payment that includes principal and interest.  If you do not have 20% down, you can receive a gift from parents or grandparents or anyone to make up the difference. You will need to provide the lender with proof that it is in fact a gift and not a loan. If you just don’t have the 20% down, you have other options.

The FHA guarantees loans. That just means that your lender will have insurance that some of the money you borrowed is guaranteed to be paid back. If you default, the insurance involved steps in. This guarantee allows lenders to loan money to people that don’t have the 20% down payment available. You still have to have at least 3.5% of the purchase price available, and there are limits on how much money you can borrow. The credit demands are a bit less restrictive. Oh, and you still go through the underwriting process. The FHA has rules about who can qualify and their criteria must be met. Every month you will have a payment that includes principal and interest and the mortgage insurance premium (yep, you have to pay the insurance. if you don’t like that, put 20% down).

Veterans have loan guarantees available to them as well. They can get a VA loan. This type of loan is from lenders but it is guaranteed by the Veteran’s Administration. Another feature of the VA loan is that you don’t have to have any money down. This sounds great, but the flip side is that you will have a higher mortgage and you will have  VA fee as well. The VA doesn’t lend the money. Just like the FHA, they guarantee a portion of the loan. That’s right, you pay the premium for the protection.

In some areas, the USDA guarantees loans. It is very similar to the VA in that, you don’t have to put any money down. Again, remember your loan amount will be higher and your payments will be higher as well. This is a great program if you are purchasing a home in an area where these loans are available.

Of course there are all sorts of hybrid loan types out there. There are terms that vary with lenders.

Things to know.  An ARM is an adjustable rate mortgage.  Simply put, the interest rate is fixed for a short term and then it can go up or down depending on the market. Usually, there is a cap on the interest rate (i.e. the highest amount the interest can be).  Lenders offer these loans at attractive rates. You should always consider what you can afford at the market rate today, that means the size mortgage you are comfortable paying at market rates.  Use the lower rate as a saving not a method to qualify for more home  (if variable rates are lower, borrow less and invest the saved money). NOTE: that is just my opinion. I really believe borrowing money, hoping that your income will go up when the rates go up is a fast track to foreclosure.

An interest only loan is another product some lenders offer. Not a bad deal for the lender. You move in. You pay interest on the loan until the interest only term runs out and then your payment shoots up like a rocket ship on rails. Oops. You can’t pay and the home goes into foreclosure. Interest only loans only have the interest of the lender at heart.

So it is not really confusing. There is a conventional loan and then there are other products available to those that do not have sufficient money saved to buy a home. Lots of people have used the FHA guaranteed loans and VA guaranteed loans and USDA supported loans. They are good loans. As a matter of fact, all loan products are good products if they are used by the right borrower.

Buying a home is a major step. I think it is wise to have some money set aside to invest in your purchase.  Of course, you may use a loan product that does not require that you put that money into the purchase of the home. Home ownership is not cheap. The money should be set aside for maintenance and upkeep. It will be your home after all.

If you have any questions, talk to your lender. If you are in the DC area and do not have a lender, I will provide you with a list of three names. You can call them all.

Once you have been pre-approved and are ready to begin the search, well, that”s my area of expertise. Once you are in my hands, I will review where you are with the lender, offer some advice about fine tuning the financing and then I will listen to you tell me a tale of your dreams and set out to assist you in making those dreams come true.

As always, I am only a phone call away…. 301-509-5111

Experience…the difference; Experience the difference!

I believe that anyone seriously interested in buying a home possesses an attention span greater than 140 characters.  If you fall outside of those parameters, you need to slow down.

One of the largest purchases of your life is important enough that you set aside 5 or 10 minutes to read information. Maybe a good rule of thumb should be that you devote one minute of reading for every thousand dollars you plan to spend.

After all, it’s your money, your house, your life.

Consider this a job application.

I want to work for you.

You may not realize it, but you need to hire me.

My name is John MacArthur and I am a Realtor in the DC area (Maryland and the District of Columbia).

c21nm  Century 21 New Millennium

The first thing most people consider is the broker. My broker is the number one Century 21 franchise in the world. I don’t work for some cute little boutique firm.  I don’t work for one of those “mom and pop” companies that are still locked into the way things were done before Al Gore invented the internet.  I don’t work for some local firm trading off the name of their forefathers. Nope, I work for Century 21 New Millennium and I have all the resources necessary to assist you.  My broker has been heralded as being ahead of the curve and creating a real estate experience based on today and tomorrow.  Having those resources behind you will give you the support you need to find the right home.

Reputation

When seeking someone to represent you in your undertaking, you have to have more than a gut feeling about your decision.  Certainly, you can ask for references.  The downside of getting a list of references is that they will all be stacked in the favor of the person offering the list. Only an idiot would give you the name and number of a disgruntled past client.  The other hiccup involves the people on the list. Some people do not want their name and number given out.  I always like to offer a recommendation I am very proud to have received a JD Powers award for customer satisfaction.

“John is a true real estate professional who combines passion, integrity, and a deep knowledge of real estate to produce outstanding results”
                                                                                                                                                      David H. Stevens, Assistant Secretary – former, FHA Commissioner at HUD
Results
Your comfort level during the process is a number one priority.  Too often, consumers feel like they are talking to a wall when purchasing a home.  Too often, consumers are being shown homes that are not even remotely close to what they are seeking and often priced no where near what they would be comfortable spending.  While working together, you have my focus on the task at hand.  I listen to you. I hear what you are saying .  I provide feedback. The truth. There is no need to go seeking dreams. Home buyers need to be working in real terms with attainable goals.
I will share the truth with you. It is important for  you to have complete information about neighborhoods, traffic, schools and value. Understand, the asking price on any home is just a number. Your offer has to be rooted in value to you. It is my job to prepare you.
John MacArthur
This is my profession.  I do this on a full time basis. When I am not working with clients, I am staying up to date on market changes, changes in the laws, changes in financing and changes in real estate.  It is not secret that the market has changed a great deal. I make sure that I keep my finger on the pulse of the market.  I have negotiated million dollar contracts and made sure that an $18,900 purchase transpired correctly. I have served on advisory committees to the Montgomery County Council and represented the Montgomery County Contingent at the National Head Start Meetings. I have worked with the County Council on services for Clarksburg.  I have lived in this area my entire life. I have raised a family here.  I know the I-270 corridor and the brand new ICC and more importantly, I know where all the pot holes are and how to avoid them.  This is my home and I look forward to helping you make it yours.
I can be reached at 301-509-5111.  Experience … the difference; Experience the difference !

You want results … we deliver !

Buying, Selling 

You want results … we deliver !

          Unless you have actually been involved in the sale or purchase of a home this year, you may not understand what in the world is going on in real estate.  Interest rates remain low, apparently home prices have dropped significantly and yet, the news media keeps sharing dismal results.  You want results, we deliver.

         “The reality is that the well-documented contraction of mortgage credit, including larger down payment requirements, has actually put homeownership beyond the reach of many otherwise qualified homebuyers. Unfortunately, a steady drumbeat of headlines regarding this credit tightening has persuaded millions of potential homebuyers to abandon their dreams of home ownership.”  source http://www.workforce-resource.com

          If home prices dropped another 50%, the vast majority of buyers could not purchase them without a mortgage loan. If interest rates dropped to zero, it would not change the market if lenders do not make loans.  The access to mortgage money is the current roadblock to revival of the real estate market.

 You want results, we deliver.

          If you are considering selling your home, we will offer a full service listing for a rate between 5% and 6% (this does not apply to sellers that are in a “short sale status”).  If the home is priced right (based on local market, condition and location) it will sell!  Our fee is lower than most and you keep the difference. Money in your pocket, results, we deliver.

          If you are considering making a purchase, we will do everything possible to make sure you are aware of down payment assistance that is available to you (Everyone’s situation is different…don’t assume their is no help for you). Should you be successful in finding and purchasing a home, we will make sure you receive a rebate on the purchase price (this offer is not available if you were referred to us by a Broker that has to be paid a referral fee).

          A successful real estate transaction is possible today. You just have to exercise your right and choose an agent that will deliver.  You want results … we deliver !

Contact us now

John MacArthur

Lourdes Tudela

Century 21 New Millennium

301-509-5111

Same sex couples find refuge in DC

         Back in March, the District of Columbia began allowing same sex couples the opportunity to marry.  The usual suspects attempted to reverse this decision, but in July the courts upheld the original law.  DC already had a reputation for being “gay friendly” ( I personally think that the term should be “somewhat tolerant if you stay in limited areas and keep your fondness for one another private”).  Friendly is not the word that immediately comes to mind when considering the vitriol and animosity shared by the narrow minded neanderthalic and religious conservatives. To my way of thinking, the human race has bigger fish to fry than expending so much energy on trying to prevent basic human rights and considerations being afforded to EVERYONE.

          I do not live in a vacuum and I am perfectly content to accept that there is room on this mortal coil for people of all persuasions.  As long as one’s chosen lifestyle does not infringe on the right’s of another, they should have the opportunity to seek “life, liberty and the pursuit of happiness”. ( If that sounds vaguely familiar, it is taken directly from the Declaration of Independence. A little document our founders put together without reference to marital relationships. It was directed to everyone, well almost everyone, it took the Civil Rights Act to increase the African American from 3/5th’s to a whole.)

          The DC law has ” leveled the playing field” for same sex couples. Concerns about the right to do something as basic as visiting a partner in the hospital or whom to list as an emergency contact are no longer an issue in the District of Columbia.  The law does not mean that those opposed will be silenced, it does mean that if you are in love and want to be married, DC will grant you that opportunity. It’s about time that the removal of stigmas associated with caring for a same sex partner were legislatively removed.  It’s about time we allowed couples to legally marry.

          I am sure that there will be those that decide to not do business with me because I support this basic human right.  Truth be told, I won’t miss them. I would prefer not to do business with people that have a warped sense of supremacy.  Business transactions are much smoother when you deal with people that are comfortable in their own skin.

         Had the law been passed sooner, I could have attended family members weddings (I was not able to travel to a past wedding that had to take place hundreds of miles away because two people in love happened to be of the same sex.)  I won’t drop that old ” I have lots of (gay,black,jewish, insert any group) friends” line.  Truth be told, everyone has friends from every walk of life and lifestyle (some of you just don’t know it!).

         You see, I don’t care what consenting adults do in their bedroom. Professionally, I want to be sure that they find the bedroom they want.  I don’t care who is relegated to cooking. Professionally, I want to be sure that the kitchen they find is suitable for their culinary skills.  I don’t care about the ethnic, racial, religious or sexual persuasion of the friends enjoying a backyard barbecue.  Professionally, I want to be sure that the backyard is the size they desire. My job is to help people find a place they can call home.  I like what I do.

          I am a Realtor. I am licensed in the District of Columbia.  I don’t believe that your personal comfort zone eliminates me from representing you.  I happen to believe that people want experienced assistance.  The experience may include people from all walks of life, but the common denominator is the ability to find a home, negotiate a transaction while protecting the client’s interests.  The practice of solid real estate is the basis of my business.  I love the challenge of finding the right home at the right price for my clients.  I think everyone deserves that sort of representation.

          I was born in Washington DC and I have seen it go through growing pains and metamorphis into the city it is today. I have watched it move from a sleepy southern town to vibrant metropolis.  I miss Griffith Stadium but love the new ballpark.  I still sneak a bowl of Chili at Bens now and then.  I know the traffic patterns.  I am happy that the P Street beach remains and still find spending an afternoon at Dupont Circle relaxing. I am glad the DC government seems to be functioning more smoothly and I share the angst of many with the foibles that are ongoing in the Mayor’s Office and City Council.  The city continues to improve despite their short comings.

         DC is a Capital City.  DC has taken a large step towards equality for all it’s residents.  DC is a great place to live. If you are interested in moving to the District of Columbia, I would welcome the opportunity to assist you.  I can be reached at 301-509-5111.  Isn’t it nice that same sex couples find refuge in DC?

Buyers beware … Fair Housing does not limit your decisions

Buyers beware, Fair Housing does not limit your decisions.  The Fair Housing Act was adopted in 1968 and then modified by amendments in 1988.   The law was part of the Civil Rights Act.  In short, it prohibited discriminating against people based on race, color, national origin, religion, sex, familial status or handicap, when those people are seeking housing.

The law covers those that are selling, renting or lending money to people.  End of story.

This may be one of the intended goals.

It is far from reality.

         People by nature are more comfortable with people that are from a similar race, color, national origin, or religion. People often prefer to live in an area where their particular chosen lifestyle is accepted.  People, across the board, want to feel comfortable in their new living environment.  It is just my opinion, but that seems to be human nature.

It is not a violation of the Fair Housing Act to assist them in finding a home that THEY want.

         Real estate agents seem to get confused or perplexed when dealing with buyers and/or renters.  They rebuff inquiries about neighborhoods or fall into the “strange mode” of ” I can show you anything based on your criteria, but I can not comment on the racial make up, color make up, predominant national origin or predominant religion in any area.” “I can not tell you about schools, crime or sexual offenders, but I can direct you to websites where you can discover the information your self.  I can not tell you about any potential changes to the community, but I can direct you to the planning office where you can research that information for yourself.”

          When asked, what then is your value Mr. or Ms. Realtor, I guess they can reply “I have access to the homes. I can open the door for you.”

          Oh, now there is justification for the money you earn! 

         It would seem to me that the value of an agent working with a buyer or renter is in part their knowledge of the community.  Clients come to agents and are quite open in their desires.  Should they be left to the whims of the agent? If someone asks to live in a predominantly Asian community, is the agent doing their job when they drive them all over hill and dale (when any agent that actually lives and works in the area knows full well where Asian communities are located).

          If a client wants to look at homes that are within walking distance of a religious location, is the agent doing their job when that drive them all over hill and dale ( when any agent that actually lives and works in the area knows full well where religious locations are located).

         I happen to believe that locating the right home is my job.  If there is reluctance on the part of the seller because of the race, color, national origin, religion, sex, familial status or handicap of my client, well then we shall seek the protection of the Fair Housing Act.  That is what the act exist for…to protect, not hinder those that are buying or renting a home.

          If you happen to be a single woman and the thought of walking through the gauntlet of young men jeering every night when you come home makes you sick,  you do have a right to find a home that may preclude that experience.  If you have a good agent, they should be able to assist you.  Just because testosterone laden cat calls are not illegal, does not mean you have to live where they might well exist.

         The internet is chock full of data that buyers can use. You can go to crime sites and see the crimes reported. You can go to city data sites and see the demographics of a neighborhood.  You can go to school sites and see the demographics of any school, including test rankings, racial breakdown and percentage of free lunch participants.  You can search and juggle data as infinitum.  Your agent should have internet access as well.

The law dictates that you can not be discriminated against on basic criteria.  YOU have the right to discriminate against anything you like when you are buying or renting.  No government can dictate where you choose to live.

          Buyers beware … fair housing does not limit your decisions. Fair housing protects your right to act on those decisions.  The law is a good law, but it is not a guideline for purchase or rental decisions.  Keep that in mind the next time you ask an intelligent question of an agent and get sent to Wikipedia or Google.

Five Steps to Home Buying

Five steps to home buying is an overview of the home buying process. As time goes by, I will review each of the five steps to home buying individually. I will be the first to agree that it is not rocket science, but I do believe that the process is made much easier with the help of a buyer’s agent. (A buyer’s agent is a real estate agent representing the buyer via a buyer-broker agreement).

The five steps to home buying are:

  1. Honest evaluation of your current situation.
  2. Careful determination of your needs.
  3. Thorough review of possible homes.
  4. Negotiation of  your offer to purchase.
  5. Fulfilling requirements of contract prior to settlement.

The honest evaluation of your current situation will require that you take stock of your finances, speak with a lender regarding a mortgage and decide if that amount you are comfortable paying will be sufficient to carry your loan.  The type loan program you choose will dictate how much cash you will have to have.  In general, FHA loans require a lower amount of down payment ( around 3.5%) and conventional loans will require about a 20% down payment. There are programs that fall in between these amounts. A good lender will be able to direct you.

The careful determination of your needs should include the size, type and location of your new home. The lender will have given you a price range to work with while searching.  Often the decision will be impacted most by location. While you can certainly find bargains close to the city, prices are usually lower as you move farther from the city.  The counsel of an experience real estate agent is very valuable during this stage.

The thorough review of possible homes usually begins with an on line search of possible homes. You may have already discovered that the internet is a well stocked resource of homes. Here is another step that is aided by a good real estate agent.  The wide range of homes that show up on line are not always what they appear to be. An agent can go through listings and give you an accurate picture of homes available.  Following the on line search, you will visit homes that seem to meet your criteria. The eyes and ears and knowledge of  an experienced agent are your best resource in this phase. DO NOT…Let me repeat…DO NOT fall prey to a listing agent. The listing agent CAN NOT represent you and their only goal is to sell the home for their client (They only can represent the seller).

The negotiation of your offer to purchase is one of the most crucial points in the home buying process. In plain language, this is where the rubber meets the road in the purchase of a home. An experienced agent will make certain that your interests are protected in every aspect of the contract.  Less experienced agents may prepare an offer that does not protect you completely.  Again, this is the most important juncture of your purchase. Negotiations will determine what you pay and the condition the home MUST be in when you take possession. Things like appraisals, inspections and possession are covered in the actual offer.  You may think you are saving money by going a discount or rebate route, but you may also be putting the entire process at risk.

Fulfilling the requirements of contract prior to settlement can be a confusing process for the lay person. An experienced agent will have the time table and required actions set in a calendar.  There are many things that must occur between contract ratification and closing the sale. Some things will relate to contingencies in the contract and others will relate to your lender. It is very important that you respond to requests from your lender quickly. They may be requesting information that seems burdensome, but they are only following the direction of the underwriters. In many cases, as closing nears, you will feel the pressure build. An experienced agent has guided many clients through this process and they will gladly “hold your hand” and calm your nerves. Experience makes a big difference.

Five steps to home buying is an overview of the home buying process, but it does offer a general idea of the steps necessary to purchase a home. As you can see, while it is not terribly complicated to those in the industry, it can be confusing to the average person.  You will find other lists and other thoughts on this process if you Google “home buying steps”.  This is based on my years of experience as an agent in the Maryland and DC area.  My clients are all treated the same way and they do experience the difference.

If you have any questions about the process, feel free to contact me, I really do love my job.

You DO need an agent… plain, cold real estate facts.

You think you found the house and the work is over.

Not so fast grasshopper. Who is going to assist you in the purchase? The nice agent that you met at the open house said they would help you? Really, do you want “help” or representation? You see, in the State of Maryland, that nice agent can not represent you and the seller. Maryland is one of the states where an agent (note agent, not broker) can only represent one side of the transaction. Please don’t get confused with Dual Agency, that is an entirely different matter.

What’s the big deal you say?

There is a very big difference between writing down terms that you dictate and explaining and guiding you through an offer. An agent representing the seller can not negotiate for you. An agent representing the seller can not legally suggest the terms of your offer. Those are the facts, period.

But that agent can take a cut in their commission you say. Sure they can, as a matter of fact, why not, they are not doing any work for you. They are not liable for any mistake you make. They weren’t going to get the buyer’s side anyway, so it is easy for them to smile and say no problem.

You weren’t going to pay the buyer’s agent commission either! It is offered through the terms set up by the MLS. It is part of the listing agreement, and the agent may offer to cut the price of the house and still keep the total commission. You will never know, they are not required to tell you and they certainly CAN NOT NEGOTIATE FOR YOU.

Seeing the world, collecting both sides now

The State of Maryland has a fund set up to cover the illegal behavior of agents. If they do not represent you, you will have little luck filing a complaint. The stack of paperwork you signed most likely included a document where you agreed to go forward on your own.  Everyone in the industry is well aware that by the time you start signing paperwork, you are more inclined to just sign where indicated rather than read every line. The comforting words, “oh this is a standard form” or “everyone signs this”, do not absolve you from responsibility for what the documents indicate. Within but a moment, you sign or initial and you have agreed that the agent sitting with you represents the other party.

 

Don’t try this alone

There is a reason that buyer’s agents will do searches, show you property and patiently explain the process. There is a reason that these agents assist you in the preparation of an offer and negotiate for you. Beyond the niceties of their passion for help others… that is what they are PAID to do.

I can not fathom why anyone attempting to accomplish one of life’s most expensive ventures would do it on their own. There is not room in the blog world to go over every challenge your agent must face. There is no way I can share the hurdles you must accomplish. I do know that I do this for a living and I read the same internet advice and I read the same books that claim to make it easy and I promise you….there is nothing as valuable as experience.

If you are in the buying mode and you would like to have your own personal representative, we would welcome the opportunity to assist you. We do this for a living and our success depends on your happiness.

The MacArthur Group

ReMax Realty Centre

301-509-5111