Waiting For Your Current Home's Value to Rise Could Cost You Hundreds of Thousands of Dollars

A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Of these home owners, 75% are considered to move up buyers. These buyers are looking for a larger and/or higher valued home.

Although we don't know exactly what will happen to the market in the year ahead, we can look at what has happened in the past year. The following is an example of buyers who waited one year to purchase because they were waiting for the value of their current home to rise before buying:

Assume these owners had a home worth $300,000 and were looking at a home priced at $450,000. At 10% down they would get a mortgage for $405,000. By waiting, their house appreciated by approximately 10% over the last year (based on the Case Shiller Pricing Index). Their current home could now sell for $330,000. That would mean an additional $30,000 in equity assuming they didn’t incur any repairs by waiting one year to sell the house.

But because they waited, the new $450,000 home would now be worth $495,000 (10% more). Adding the original 10% down payment ($45,000) to the $30,000 in proceeds they received from the sale of their house, they would now have a $75,000 down payment. So, they would now need a mortgage of $425,000.

Here is a table showing what additional monthly cost would be incurred by waiting:

SO, BY WAITING, THE HOMEOWNERS MUST PAY $305.85 MORE EACH MONTH FOR THE LIFE OF THE LOAN. FOR A 30 YEAR LOAN, THIS EXTRA WOULD EQUAL A TOTAL OF $110,106. AND, ALL FOR WAITING 1 YEAR.

Sacrificing Your 1st Amendment Rights for a Loan Modification??

Reuters news service is reporting that Ocwen, Bank of America and PNC Financial Services have been adding new terms to their loan modifications preventing the homeowner receiving a loan modification from publicly disparaging the lender as part of the loan modification.

By accepting these loan modification terms, the homeowners must agree to never publicly say, write or post anything negative about the company doing the loan modification. 

If the borrower agrees to this gag order, he/she may be foregoing his/her right to complain publicly or sue if they have difficulty with the lender's actions during the entire term of the loan modification...even if the lender is in breach of the contract.

Where is the government watchdog now?  Is this not in violation of our 1st Amendment Rights?  Why are lenders afraid of what the public is saying about their actions during loan modifications?  Is it because their performance when conducting loan modifications is less than stellar?

Did You Modify Your FHA or VA loan and Receive a Principal Reduction?? Read This...

Some homeowners who had FHA/VA loans were offered a loan modification that promised a permanent principal reduction. The amount of the principal reduced was turned into an interest-free second mortgage and was due only when the first mortgage was paid or when the home was sold.

Generally, these borrowers pay only interest during the first 10 years of the heloc before it resets.  When it resets, borrowers will have to pay BOTH interest and principal payments for the first time. 

If your permanent FHA/VA principal reduction occurred in 2004 or 2005, the new payments with interest will be starting soon.  We have seen homeowners quoted jumps from 0% interest to 13% interest.  In some cases, the heloc payments were now more than the first mortgage payment.  If the household has not had a significant increase in income during these past 10 years, these adjusted Heloc payments may be impossible for homeowners to pay.

If you are caught in this situation, please call us at 623-694-0354 and we will guide you to the best resources to help you make a decision on your home.  Your best bet is to be proactive and call your lender to see what your new interest rate and payments will be so you can adequately plan for your next move.

Explosive Growth in West Valley New Homes

We are seeing a huge increase in the number of new home starts planned for the west and northwest valley.  With the completion of Loop 303, builders are beginning to prepare their land for these new communities.

New homes are very attractive to buyers who have recently had a short sale or foreclosure because builders are often able to give better loan terms to their buyers. 

Do remember that to be represented by your own real estate agent at a new home community, the agent MUST accompany you on your FIRST visit to the community.  The Builder's Representatives are often friendly, but represent the builder and the builder only.  Be sure to call us to have The Drefs Team's New Home Specialists accompany you on your first visit.  Our specialists will be able to help you make the best decisions and negotiate on your behalf.
http://www.azcentral.com/story/money/real-estate/2014/03/26/loop-drives-housing-development-northwest-valley/6907717/

AZ Real Estate Update: Loan Mod Expiring... Get A Plan!

AZ Real Estate Update: Loan Mod Expiring... Get A Plan!: What should you do when you receive a notice that your loan modification trial period will soon be expiring?  Most people will ignore the ...

Loan Mod Expiring... Get A Plan!

What should you do when you receive a notice that your loan modification trial period will soon be expiring? 

Most people will ignore the warning which is the WORST thing to do.  This is not the time to be idle, but the time to be proactive!

Some of the loan modifications will have a gradual escalation for several years and will top off at your previous interest rate.  This may have sounded good at the time you started the loan modification, but making higher payments each month does not sound good now that the time is near!
If your lifestyle has not changed and your income has not increased since you started the loan modification, you may not be able to make the higher payments. So, what should you do?

First call The Drefs Team at 623-694-0354 to see if you have any equity in your home. Then have The Drefs Team review your options with you.  They can help you make an action plan so that you are in control and not at the mercy of the lenders.

400,000 loan Modifications Expiring

I just learned that in 2009 over 400,000 loan modifications were given. Soon those loan modifications will be expiring.  This means that 400,000 homeowners will need to make some big decisions in the next six months.
It is time for the Drefs team to get busy so that these homeowners realize that they have a friend.

AZ Real Estate Update: RENTAL DEMAND IS HIGH. RENTAL RATES RISING...

AZ Real Estate Update: RENTAL DEMAND IS HIGH. RENTAL RATES RISING...: In the last 2 weeks we have seen an explosion in the number of renters seeking rentals.  The demand is high and the supply of rentals is low...

RENTAL DEMAND IS HIGH. RENTAL RATES RISING...

In the last 2 weeks we have seen an explosion in the number of renters seeking rentals.  The demand is high and the supply of rentals is low. 
The average asking price for rent has risen from $.70 per sq foot in January '14 to $.81 per sq foot in April 2014.  The average days that a rental is actively listed on the MLS has dropped, showing that rentals rent fast!
So, it is a good time to be a landlord and a bad time to be a tenant.  This is a signal for both groups (landlords and tenants) to buy, buy, buy if possible!