Fannie Mae Now Offering 97% Loans

Fannie Mae has announced its new 97% conventional loan product.

Designed for qualified first-time buyers, the new loan program will provide financing with 3% down to well-qualified borrowers.

The new Fannie Mae program compares favorably to FHA financing with a 3.5% down payment because FHA financing requires costlier mortgage insurance.

This new loan program also includes a home buyer education and counseling component.

And. there’s a refinancing option for qualified borrowers.

It’s important to understand that this new loan product is primarily intended to facilitate home ownership to qualified first-time buyers.

This is not a return to the wild days of low documentation/no documentation loans that contributed to the housing collapse a few years ago.

All loans will be fully-underwritten and borrowers can expect to be required to provide extensive documentation as part of the loan approval process.

Source: Fannie Mae Lender Fact Sheet

 

When Home Inspectors Cause Problems

I was recently involved as the listing agent in a transaction that included several problems caused by a home inspector who raised issues that weren’t, well . . . issues.

That inspector’s findings caused considerable unnecessary concerns with the buyers and their agent and nearly caused the transaction to fail.

The inspector called the gas fireplace, stating that it wouldn’t turn off.

When I met the repair technician at the house, I turned the fireplace on and off three times with no problem.

The inspector had obviously tried to turn the fireplace off with the wrong wall switch.

Having incurred a $90 service call, I went ahead and spent $130 to have the fireplace serviced and cleaned as a courtesy to the buyers.

The inspector also called frozen moisture on the exterior stucco near the tankless water heater vents.

When my seller called him for clarification, he mentioned that he had turned on all of the hot water outlets in the house and left them running while he inspected the house.

Given the cold outside temps and the fact that the home had four bathrooms with showers, it was obvious that two 90% efficiency tankless water heaters would create excessive moisture near the exterior vents with extreme use.

The inspector also questioned the location of the tankless water heaters near the electrical panel.

The tankless water heaters and the electrical panel had final inspection tags on them, indicating that they were properly installed and met code.

I had to get confirmation from the Director of the Idaho Building Safety Division that the units conformed to code at time of construction and current code to defuse those concerns.

It’s important to understand that anyone can be a home inspector in Idaho.

Home inspectors aren’t regulated, there are no education or experience requirements, and there’s no consistency in inspection procedures.

I once had an inspector show up to inspect one of my sold listings in a ratty pickup truck, with a gun and a dog, and a Masonite clipboard with a single sheet of paper.

That inspector walked around the house, didn’t inspect the crawlspace or attic, and wrote “looks good!” on the sheet of paper and left.

When you hire a home inspector, make sure you’re hiring someone who’s experienced, knowledgeable about building codes, and check references.

Ideally, the inspector you hire should have extensive experience in construction and have a plumbing or electrical license.

 

7 Mistakes Boise Home Buyers Make

I work with a lot of Boise home buyers and have learned that there are a number of best practices that lead to successful transactions.

I also see many instances of common mistakes that Boise home buyers make while trying to buy a home.

Here are 7 mistakes that Boise home buyers often make.

1) Not Getting Your Financing Pre-Approved

Buying a home isn’t like buying a car.

You can walk onto a car lot, pick out a car, and the dealer will arrange your financing.

When you make an offer on a home, the seller and their agent will want proof that you can obtain financing before they’ll seriously consider your offer.

That means getting pre-approved for your financing before you look at homes.

Getting pre-approved will also allow you to fully understand all of the costs and terms of your financing.

2) Looking At Homes You Can’t Afford

If you are pre-approved to purchase a $250,000 home, there’s no point in looking at $300,000 homes.

The odds of finding a home you love, owned by a desperate seller who will meet your price point, are slim and none.

Don’t waste your time, and your agent’s time, by insisting on looking at homes that you can’t buy.

3) Selecting A Home On The Internet

The internet is a good place to start, but trust me, there’s much more to consider than Photoshopped photos on a website.

Everything looks good on the internet, but often not so much when you actually view the homes you like.

I’ve seen many homes that looked terrific online, then wondered if the home was the same home when I viewed it in person.

And, believe it or not, Zillow, Trulia, and Realtor.com don’t have a clue about the condition, neighborhood, and true market value of that home you just love on their sites.

After you find a home that looks good on the internet, drive by, check out the neighborhood, schools, schools, drive times, and other important considerations.

Then, ask your agent for their input on other details of the property.

4) Working With More Than One Agent

Contrary to popular belief, it’s pointless to work with more than one agent.

Why?

Because we all have the same listing inventory to show you.

Find a competent, full-time, experienced agent and pledge your loyalty to that agent by signing a buyer representation agreement.

Experienced agents won’t give you the time of day if they figure out that you’re playing the field and working with other agents.

5) Making Lowball Offers

Motivated sellers who are offering quality homes are rarely inclined to accept a lowball offer.

In some instances, a lowball offer will result in an outright rejection of your offer vs. getting a counteroffer.

When your offer is rejected, negotiations end unless you write another offer.

Lowball offers are offensive to a seller who has a quality property offered at a fair price.

When you make a lowball offer, you’re setting yourself up for the listing agent to use the existence of your offer to entice other buyers to write competing offers that will likely beat your offer.

If you want the property, make a reasonable offer and work toward a win-win transaction.

The lingering resentment that accompanies a lowball offer usually leads to a challenging escrow if the offer is accepted.

6) Making Contingent Offers

Few sellers, and their listing agents, will consider an offer that’s contingent upon the sale of another property.

A contingent offer transfers control of the sale process from the seller to the buyer.

A contingent offer essentially says” Mr. Seller, I want to tie up your property while I see if I can sell my property”.

That’s not very appealing to a seller with a desirable property who simply wants a firm sale and a smooth closing.

If you must sell before you can buy, it’s best to sell and close first so you can make a firm offer.

7) Requesting A Long Escrow

Escrows are like fruit ~ they don’t improve with time.

Sellers, listing agents, and buyer’s agents all hate long escrows.

Why?

Because things go wrong with long escrows.

  • Interest rates can rise.
  • Buyers change their minds (aka “buyer’s remorse”).
  • Buyers can lose their jobs (I’ve had this happen).
  • Buyers can decide to get a divorce (I’ve had this happen too).
  • Buyers can die during escrow (I’ve also, unfortunately, had this happen too).

Most escrows can be closed in 30-45 days.

Requesting a long escrow can cause a seller and their agent to question the strength of your offer.

If it’s worth doing, it’s best to get it done quickly.

 

Change Your Locks After Closing

It’s common practice for buyers to be given the keys to the home they bought when escrow closes.

In fact, it’s an accepted ritual that has been going on forever.

In most instances, the listing agent leaves the keys and the garage keypad code with the escrow officer, who then releases them to the buyer upon closing.

I have often wondered if this is a good idea.

Think about this for a moment!

How many neighbors and family members have an extra key for the home?

If it’s a new home, how many subcontractors have a key or know the garage keypad code?

I’m guessing that it’s very rare for the previous owner to have sole possession of all keys, extra garage door controllers, and the garage keypad code.

That’s why I recommend that buyers have all locks re-keyed by a locksmith and change the garage keypad code immediately after closing.