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Real Estate News & Jeff's Blogs
Welcome to My Blog.........
Hello. My name is Jeff Noe and I am a professional Realtor® - a profession that I take very seriously and with great pride. I help people find that home of their dreams. What an honor! And now, with the innovative Money Merge Account Program, I can show them how to cut years off of their current mortgage loan while savings anywhere from 10's to 100's of thousands of dollars in interest - without changing their current lifestyle in the process!
To my Clients, I bring over 24 years of combined experience in sales, sales management, marketing, advertising, real estate, and exective management in both public, Fortune 500 companies as well as privately held businesses. My Team, The Jeffery Noe Group, brings experience to our Clients in the areas of mortgage lending, real estate, and residential construction, also. I got into the real estate profession after many years of frustration with watching how many real estate agents did business, and did it in such a non-professional manner bringing no real level of business acumen, market knowledge, or solid customer service to the table for their Clients. Not one even checked to make sure that we were truly qualified to purchase another home or at what level. They were glorified chauffeurs that tracked us through more homes which didn't meet our needs that you could imagine. In my heart, I knew that there was a better way to do business - and truly differentiate our business through unique, unsurpassed marketing concepts, individualized plans for each Client, building a strong Internet marketing and advertising presence, targeting key print media consistently, taking advantage of new technologies that would improve the efficiency and effectiveness of our business and for our Client's needs, unsurpassed regular communication with our Clients, and a straight-forward, honest, work ethic to always meet and surpass our Client's expectations. My goal is that our Clients walk away after each transaction, they are "simply delighted" with the overall experience, and gladly refer us to their family, friends, and colleagues - and that they're anxious and proud to provide feedback and a testimonial on that experience.
This is my blog. I don't profess to be a professional blogger - nor do I ever want to be one! However, I think that it's important for my Clients to have access to pertinent local real estate news and information and to better understand my business philosophies as we work together to buy and sell property for them. I hope that you enjoy the articles on local community news, real estate, new trends and laws in real estate, mortgage trends and programs, new programs for our Clients, plus market conditions both locally and nationally. I welcome your constructive feedback and thoughts. Most importantly, I welcome you to experience the difference that we bring to our Clients and that, you too, walk away in the end as another "simply delighted" Client. Enjoy!
Mortgage Applications Up From Last Year
Posted December 31, 2007 - Source: Mortgage Banker's Association
Mortgage applications fell last week but they were up nearly 10 percent compared to the same week last year, according to the Mortgage Bankers Association’s weekly survey. The index fell a seasonally adjusted 7.6% last week to 603.8. On an unadjusted basis, the index decreased 8.2%, compared with the previous week and was up 9.9% compared with the same week a year ago. The refinance share of mortgage activity decreased slightly to 53.0% of total applications from 53.2% the previous week. Mortgage rates declined:
1. 30-year fixed-rate mortgages decreased to 6.10% from 6.18% (-1.3%).
2. 15-year fixed-rate mortgages decreased to 5.66% from 5.78% (-2.1%).
3. 1-year ARMs decreased to 6.03% from 6.48% (-6.94%).
Mortgage Loans: Pre-Approval vs. Pre-Qualification vs. Loan Commitment - What's It All Mean?
Posted December 28, 2007 - Jeffrey Noe
"We are seriously considering buying a home in the next 6 months. Should I get pre-approved or pre-qualified for a loan beforehand? Why? Is it necessary? What's the difference?" Understanding the answers to each of these questions isan important key to a successful, stress-free home buying experience.
First of all, a pre-qualification is not the same as pre-approval. In any real estate transaction, the buyer, seller, and agents involved in should be in agreement regarding the buyer’s ability to bring the home purchase to a successful close.
If you haven't done so already, your Realtor will want you to talk with a mortgage company as soon as possible. The Realtor needs to know the top price range you can afford as well as the housing expense that you are comfortable with. In addition, it significantly helps your Realtor from a negotiating standpoint when presenting an offer to the seller’s agent to show that you have taken the necessary steps for your mortgage approval. Not only can it help to persuade the seller to accept your offer, it strengthens your position in the negotiation. It can greatly speed-up the closing process by, essentially, eliminating a step after the offer is accepted and can eliminate a "contingency" with your offer (i.e. pending mortgage approval). In many markets, and specific real estate transactions, a pre-qualification or pre-approval letter is required as part of the purchase documents to the sellers and their agent agent.
Let's begin with pre-qualification. Getting pre-qualified for a mortgage helps give you an idea as to how much you might be able to borrow. When you speak with a mortgage lender to be pre-qualified, you are essentially providing information about your financial condition. But since you did not actually apply for a loan and the lender only has your word on your credit, assest, liabilities, and income, the mortgage loan is not guaranteed simply because no information has been formally verified. The lender will ask questions regarding your credit. There may be a credit bureau check to see where you stand in terms of your credit score. The lender will provide you with an opinion of what you can afford based solely on the information that you have provided. It is important to understand that this is not a commitment to actually make the loan. The mortgage company should provide you with a letter outlining the pre-qualified mortgage amount as well as the type of loan. It should clearly state that loan approval could likely be issued after the information you provided is verified and formally underwritten. The term means that someone has taken a general look at your income and expenses and plugged them in to a debt-to-income ratio formula. Pre-qualifying yourself before you start looking for a home gives you nothing more than a general idea of the price range you can afford.
A mortgage pre-approval has significantly more weight than a pre-qualification. A pre-approval letter will give the maximum loan amount with the specifics of the type of mortgage loan that you qualify for. The pre-approval letter should only state conditional terms such as a clear title report, underwritten appraisal, general closing conditions, and no negative change in your status as a buyer. It can discuss the interest rates it will offer for different types of loans. A pre-approval is a much firmer commitment on behalf of the mortgage company and is a more formal process which includes a credit check and even an employment verification. During the pre-approval process, the mortgage company does almost all the work of a full approval, except for the appraisal and title search. The lender will obtain a copy of your credit report to verify your monthly payments on installment loans and credit cards and to check whether you have a history of making your payments on time. You will need to provide paystubs and W-2 forms (or tax returns if you are self-employed), plus statements from savings and investment accounts to verify your assets. If you've been pre-approved for a loan, you can shop for a house with more certainty about your buying power and less anxiety because you won't be going through the whole process worrying about your mortgage approval. However, it still isn't a guarantee that the lender will ultimately approve the loan. At a minimum, if you are serious about buying a home and satisfied with the mortgage company, you should always get a pre-approval. Neither you, your Realtor, the Seller, or their agent wants to have any surprises along the way.
A loan commitment is issued by a lender after it has approved both the home and you. A home appraisal must meet the lender's guidelines, which usually includes a stipulation that the home must appraise at or higher than the sales price. Price is just one aspect of the home the bank considers. An FHA appraisal is even more detailed than those required for conventional loans. Every area has its own issues. Your Realtor should be able to advise you about potential red flags or problems that could affect your purchase. In addition, a title search must show that the home's title is cloud-free, meaning there are no problems associated with it such as outstanding liens that can't be paid at closing, pending lawsuits, right-of-way issues, etc. Your credit report could be checked again prior to closing in order to make sure it hasn't negatively changed. You'll be asked to show proof that the home will be insured as soon as ownership transfers to you. The loan commitment letter is issued only when the bank is sure it will lend. Therefore, if you must provide a loan commitment date on your offer to purchase, be sure it provides plenty of time for the lending institution's requirements. If a commitment date is a part of your contract, the seller can request to see written proof that your lender has issued it as soon as the date has passed.
Fannie Mae & Freddie MAC Redefining the Meaning of "Sub-Prime"
Posted December 11, 2007 - from Active Rain
If you have a FICO Score of less than 680 and a down payment of less than 30%, the cost of mortgage money has increased significantly.
Unlike the "subprime" loans of the past several years that have been processed by "subprime departments" of mortgage institutions or brokered to subprime specialists, these loans will be handled routinely. While borrowers with FICO scores of 620 to 680 may not be considered subprime, their scores are "rated" for additional pre-set premium of from 2% to 3/4%. Further, this "rating" of loans by credit score will encourage many lenders to "push" marginal borrowers into subprime loan instruments as they have often done in the past.
Fannie Mae's most recent report states that the average FICO score for the bundled loans that they buy is 721. That alone indicates a system of "creaming" of loan packages. The new rating of loans based on credit scores alone, is likely to make mortgage financing much more difficult for borrowers with scores of less than 680.
The changes in the fees Fannie and Freddie will be requiring of borrowers will, as of March 1, 2008, apply to home buyers with FICO scores of below 680 rather than the former score of 620 or below. Further, and very important, these new fees will apply to home buyers who are putting down less than 30%. That's right, not the traditional 20% required for Private Mortgage Insurance, but 30%.
For a $300,000 Purchase with 10% Down.....
FICO 620 or below, the premium will be 2% of the amount borrowed and the home buyer will have an additional fee of $5,400.
FICO 620 to 639, the premium will be 1.75% of the amount borrowed. The home buyer will have an additional fee of $4,725.
FICO 640 to 659, the premium will be 1.25% of the amount borrowed. The home buyer will have an additional fee of $3,375.
FICO 660 to 679, the premium will be 0.75% of the amount borrowed. The home buyer will have an additional fee of $2,025.
Of course, borrowers can elect to roll these fees into the mortgage interest rate, thereby raising the interest rate by up to 1/2% or more. Add the higher cost o f PMI and it's likely that rates will increase by 1% or more.
Higher Mortgage Insurance Premiums. Sure to follow will be an increase in Private Mortgage Insurance premiums. Some in the industry predict an effective doubling of the PMI costs for conventional conforming loans, those purchased by Fannie and Freddie. On a $300,000 home purchase with a 10% down payment, the Private Mortgage Insurance cost will be about $4,590. Further, many private insurance providers will no longer insure loans with less than 5% down. If your home buyer has a FICO score of 659, their increased cash needs for settlement will increase by about $7,700 or an increase in interest rate to finance the increase cost.
Rate Shopping, As We Know It, Is Over. One thing is for sure. Buyers will find it more and more difficult to shop for lenders with the lowest rate because  rates will become much more FICO Score sensitive than before. It will be difficult for any lender to quote a rate without looking at the prospective borrower's credit score. How will this affect the mortgage companies that advertise rates on the Internet??
Buyer's Agents. It will also make it much more difficult for real estate agents who are writing a contract to prepare a Buyer's Estimated Closing Cost document. How much additional closing costs for lender fees can an agent estimate without knowing the credit score? When determining a prospective buyer's price range for search, the answer will have to be "depending on your credit score", based on your income and cash available, you area in an approximate price range for initial search of $XXX." Price ranges will be much more credit score sensitive now than in the past when income was the factor used.
Since these additional fees apply to buyers with less than 30%, more buyers will have larger 2nd trust financing or HELOC lines which also carry a higher interest rate than the underlying mortgage loan. Buyers with limited cash are going to be faced with significantly higher monthly payments or will be limiting their searches to lower price ranges. If buyers can't find homes that suit their needs and wishes in the lower price ranges, they are not likely to buy.
Do the "Risk-Based" Credit Score Premiums Violate the Fannie Mae Mission? Fannie Mae and Freddie Mac are Government Sponsored Enterprises and as such, enjoy a $2,250,000,000 line of credit from the U.S. Treasury Department. Fannie and Freddie are also exempt from state and local taxes (except property taxes). Although Fannie and Freddie are government sponsored, they are shareholder owned corporations and are regulated by HUD. To enjoy the special privileges of a GSE, Fannie and Freddie are required to operate in a financially sound manner in the performance of their MANDATED mission.
The Public Purpose of Fannie Mae and Freddie Mac Mission. Under the Government Sponsored Enterprise Act, Fannie and Freddie have a mission, under the law, to devote a percentage of their business to three specific affordable housing segments:
Low and Moderate Income Housing
Special Affordable Housing
Underserved Areas
The most recent goal levels were implemented in 2004 and are effective through 2008.
Low and Moderate Income Housing 56%
Special Affordable Housing 27%
Underserved Areas 39%
HUD has no requirement for the total number of home purchase mortgages that Fannie Mae and Freddie Mac must buy. However, they are required to buy a percentage in each category. If Fannie Mae buys a million mortgages, 470,000 of them must be for low and moderate income families. Perhaps Fannie Mae and Freddie Mac do not know that low to moderate income home buyers are not the group with the highest FICO scores.
No Help from Fannie Mae and Freddie Mac for Home Buyers. "Fannie Mae has a federal charter and operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. Our job is to help those who house America." - this directly from the Fannie Mae Mission Statement.
Fannie Mae's stated mission is NOT to help the home buyers who finance the purchase of the homes in America.
Mortgage Rates Drop to Two-Year Lows
Posted December 5, 2007 - from The Baltimore Sun
What a time to buy! The 30-year fixed mortgage rate fell to a more than two-year low in the week ended Nov. 29, slipping to 6.1 percent from 6.2 percent the prior week.
Freddie Mac also reported that the 15-year fixed loan rate fell to 5.73 percent from 5.83 percent over that same time span, and that interest on five-year adjustable-rate mortgages dipped to 5.86 percent from 5.88 percent.
Meanwhile, the one-year ARM bumped up to 5.43 percent from 5.42 percent.
Freddie Mac chief economist Frank Nothaft attributed the decline in mortgage rates to worries about an economic downturn tied to the weak housing and credit markets, which has pushed down interest rates on U.S. Treasuries.
Stage This Room!
Posted December 3, 2007 - From Realtor Magazine July 2007
Could you walk into a room and, in two hours, working mainly with what’s there, make it more attractive to buyers? Taking a cue from “Iron Chef,” REALTOR® Magazine posed this test to three practitioners earlier this year.
In February we dispatched each one, along with a camera crew, two professional stagers (who provided only commentary), and some helping hands, to a Chicago-area home. The practitioners staged a home office, a bedroom, and a living room, respectively. Each had a $250 budget and one opportunity to see the room before the big day.
Our stagers demonstrated how creativity combined with a few accessories, a little reorganization, and ruthless paring can make a property stand out in today’s slower markets.
That’s important not just at showings but also on the Internet, where buyers increasingly rely on photos to narrow their choices, says salesperson Mark Jak, ABR®, of Coldwell Banker Residential Brokerage in Chicago.
Even in a fast-paced market, staging can pay off. A survey of 2,000 practitioners conducted by HomeGain in 2003, at the height of the boom, found that staging could increase the sales price by $2,275 to $2,841. Cleaning and decluttering could add $2,093 to $2,378 to the final price. Likewise, a 2004–2005 survey of owners by training company StagedHomes.com found that staged homes sold for 6.9 percent more than homes that weren’t staged.
Such statistics have led to a dramatic uptick in practitioner interest in staging. StagedHomes.com says enrollment in its Accredited Staging Professional designation courses has increased 49 percent in the six months ending March 30, 2007, compared with the previous six months.
Small Bucks Net Big Rewards
As our makeovers show, staging doesn’t have to cost a lot or take much time. One of our stagers, Bobbi Williams, relied on items she already had. Professional stager and trainer Lori Matzke looks around sellers’ homes for staging props and stages only key rooms— the entryway and any room visible from it (first impressions count), the main living area, the kitchen, the master bedroom, and one extra room, such as a den or deck. “Those are what buyers usually base their decision on anyway,” she says. She also encourages sellers to “tuck away anything smaller than a football. Who wants to pay my fee to pack for them?”
Professional staging costs $500 to $1,000 and up for an average-sized home. The price generally includes painting, carpeting, accessories, and labor, but costs can go higher, depending on the extent of the work.
Many real estate practitioners today include staging as part of their marketing services, either doing the job themselves or hiring and paying for a professional stager. In such cases, sellers pay only the cost of new accessories, furniture rental, paint, or new carpeting. Often the stagers — with some help from the sellers — do the heavy lifting.
Sometimes, convincing sellers that their beloved home needs a makeover takes finesse. To illustrate staging’s value, Bobbi Williams of Keller Williams in Chicago tells sellers what she learned from her staging mentor, StagedHomes.com’s Barb Schwarz: “A car depreciates the minute you drive it off the lot. But what’s the first thing you do if you sell it? Detail it. Your home is an asset, so now it’s time to detail it.”
Even getting sellers to recognize the need to declutter isn’t always a cinch. “They’ve been living with clutter for years and just don’t see it anymore,” says Dede Banks, ABR®, CRS®, of Renaissance Realty Partners in Lake Forest, Ill. To help home owners see their houses as buyers would, Banks takes photos of rooms. When she shows them to sellers, the problem areas become more apparent.
The Secrets of Successful Negotiation
Posted December 2, 2007
Bargaining is an art, particularly when the buyer wants to make a low bid without insulting the seller. The offer has to be palatable and show that you've done your homework. Sometimes an unreasonably low offer can make a seller so angry they won't make a counter offer or deal with a buyer.
Every real estate transaction requires negotiation. Many factors are written into a home purchase contract, such as price, terms, dates for the home inspection, appraisal and settlement, moving dates, and what personal property will be included or excluded from the sale. In coming to terms on these issues, the needs of the parties involved are likely to conflict at some point. The key to a satisfactory resolution is the willingness to compromise.
The foundation of a “win-win” negotiation is that no one expects to triumph absolutely at the expense of the other participants. If everyone assumes that some concessions will be made at the bargaining table, a resolution is easier to achieve. Both buyer and seller must also be clear about their priorities – which points of the contract they will remain firm on, and where they feel they can be flexible.
Here are a few suggestions for determining an offer that is competitive and compelling:
- Point out to your buyer that an offer that is more than 10 percent off the list price isn’t customary and is likely to be rejected.
- Make sure the buyer realizes that there are other attractive homes on the market and won’t be shattered if the sellers reject their lowball offer.
- Help the buyer recognize the home’s strengths as well as its weakness.
- Make a list of reasons to share with the seller for offering less than list price.
- Instead of asking for the price to be lowered, negotiate other tangibles such as repairs, closing dates, and closing costs.
- Encourage the buyer to be respectful whenever he or she is around the seller.
In an atmosphere of mutual trust, where each party is truly willing to listen and take each other's needs into account, negotiations are most successful. Working with real estate agents who are skilled negotiators will be of great benefit to both buyer and seller.
 Money Merge Account - United First Financial
Posted November 30, 2007
Through an innovative program called the Money Merge Account, homeowners across the nation are literally paying off their existing mortgages in as little as 1/2 to 1/3 the time with little-to-no change in their lifestyles. Become one of the thousands of United First Financial Clients paying off a home mortgage quickly without increasing monthly mortgage payments. Request a free Money Merge Analysis Report and DVD explaining how our Clients are becoming debt-free from their mortgages in record times by utilizing this powerful tool to help them fulfill their dream of home ownership and save money for their future. How would you like to be on the path to being mortgage debt-free? How would your life change for the better as a result?
• Would you like to payoff your home mortgage in as little as 1/3 to 1/2 the time potentially saving tens or hundreds of thousands of dollars in closed end interest?
• You might be surprised to learn that paying your home off quickly can be done without refinancing your existing mortgage and with little adjustment to your budget.
• Similar programs have been in place in Australia and in the UK for several years, but not in the U.S. - until now!
Columbus Ranks Third in America's Most Stable Housing Markets
Posted October 30, 2007 - From Forbes 10.01.07
Nationwide, home prices are falling, sales are sluggish and the number of foreclosures is mounting. Ask any economist and you'll hear that things are bad, and likely to get worse. Unless you live in Seattle, where the market is slowing but fundamentals remain strong.
The Emerald City has experienced strong price appreciation over the last six quarters, and that's expected to continue in the new year, though at a slower pace. In addition to a very low housing inventory and a strong sales rate, there are few non-conforming and high-risk loans on the books than in other cities, which means the area will likely see fewer defaults in the coming months than the rest of the country's markets.
Also primed for a stable year are Pittsburgh, Columbus, Ohio, and Dallas. They follow Seattle in our ranking of the country's 10 most stable markets. All are projected to have median home sale price increases next year, thanks to a combination of factors including lower-than-average inventory levels, little price volatility and high job growth.
To arrive at our list, we teamed with Moody's Economy.com to develop three prediction models based on a range of factors that affect how prices move. These include, among other things, the state of local economies, new construction contracts, foreclosure rates, local credit markets, sales rates, affordability and inventory. Each of America's 40 biggest cities was ranked on all three models, with price appreciation counting one half and sales rates and credit models accounting for the other half. Data were drawn from the U.S. Census Bureau, National Association of Realtors, Equifax, a credit-market tracking firm, and Moody's Economy.com.
The first model looks at projected median existing home price growth from fourth-quarter 2007 to fourth-quarter 2008. Factors influencing this data include the market's inventory of unsold homes and the amount of new construction underway, both of which have obvious effects on supply. Housing affordability and local construction costs also play a role, acting as indicators of the market's ability to accommodate first-time buyers and new construction. Next is job growth, which attracts people to the area and increases their ability to buy a home.
Expensive markets like Seattle and San Francisco, which have low housing inventories and low construction costs, do well by this measure. Most of the top performers, however, are affordable, high-job growth markets like Dallas and San Antonio.
"It largely reflects that these markets never went through the boom and aren't going through the severe bust," says Mark Zandi, chief economist at Moody's Economy.com. "Price growth is not great, but [these markets] are not having house price declines. [All markets] are experiencing pricing problems, but in these markets it's less of a problem."
Moody's second predictive model examined market activity by calculating sales rate, which measures how quickly unsold inventory is expected to sell, and turnover, which measures how much of the overall housing stock those sales represent.
For example, the projected volume of home sales in San Francisco for the coming year represents a low 1.1% of the market's overall housing stock. In a market like Los Angeles, hamstrung by foreclosures and inventory glut, a 1% to 2% sales rate is potentially devastating--but given San Francisco's supply-side fundamentals and low foreclosure rates, prices are expected to modestly climb.
The last measure took into account delinquency and foreclosure predictions. By this model, adjusted-rate mortgage- and subprime mortgage-rich Detroit, Riverside, Calif., and Las Vegas got hammered, while Pittsburgh and Seattle performed well.
Regarding this measure, "it's important to differentiate between delinquencies: how many people are late relative to their most recent due date and how many people are in the process of losing their home," says Douglas Duncan, chief economist of the Mortgage Bankers Association. "Ninety percent of all 30-day late pays get fixed. Serious delinquencies are 90 days past current due dates."
When lending problems like this occur, the markets hit hardest are those with a high proportion of non-conforming loans. The most troublesome types are subprime mortgages and jumbo mortgages--those that are above the range of Fannie Mae and Freddie Mac's $417,000 securitization limit. Because few banks eagerly take on mortgages that aren't backed by Freddie and Fannie, the spread on jumbo loan interest rates compared to those of regular loans is at an all time high, according to data from HSH Associates, a credit-market tracking firm.
With fewer lenders wanting to take on jumbos and no banks willing to securitize jumbos, that adds another barrier to sales, especially in an expensive market. In Atlanta, for example, where the median home-sale price is $175,500, it's not an enormous setback, but when securitization stops in Los Angeles--where the median price is $593,000--a greater chunk of market activity halts.
As a result, cheaper markets are more likely to be healthier, as loan activity is less constrained.
Still, no market finds itself in a boom. As Zandi points out, discussing which markets are the healthiest "is a relative term."
"It's not like any of these markets are going gangbusters," he says. "Even Seattle: It's been very strong, but conditions are weakening and this year, at best, will be an OK year."
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