home

Emotional Matters in House Selling

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 1st, 2019

There’s only one thing more traumatic than selling the family house you’ve lived in for years: Selling the house of a recently deceased loved one.

All things being perfect, the former owner should have a will that states how the house should be disposed of. Beyond that, though, you and your siblings, other family members or friends are going to have to wing it. But either way, the sale will be fraught with emotion, if only because it’s like saying another goodbye.

Agent Maria Sapio of Berkshire Hathaway Homesale Realty in Carlisle, Pennsylvania, has a lot of empathy for people entrusted with selling a loved one’s house. She walked the same path in 2016 when her mother passed away. She’s also helping several clients go through the process right now.

Sapio’s best advice: Before putting the place on the market, hold a gathering at the house so extended family and close friends have the opportunity to join you as you sift through furniture, clothing and other household goods. “This,” she posted on the ActiveRain real estate chat room the other day, “helps to transform a challenging task into a celebratory event of reminiscing and sharing about special times and memories.”

Several years ago, Kathy Streib of Room Service Home Staging in Delray Beach, Florida, held such a get-together when a dear friend passed away. “It became a celebration of his life,” she says.

Once the gathering is over and your emotions subside, you’ll probably want to have an estate sale. And after that, it’s probably a good idea to clear the house of what’s left -- consider giving the remaining contents to charity -- so it can be cleaned thoroughly and possibly even painted so it shows fresh when you eventually put it on the market.

While you’re at it, take care of whatever repairs might be needed. Fix the dripping faucet, have the HVAC serviced and mend anything else that might turn off a prospective buyer. Also consider hiring a home inspector to go over the house so you’ll know if there is anything major that needs to be addressed. Your eventual buyer almost certainly will hire his or her own inspector, so it pays to know what to expect.

It helps if the deceased has named a favored agent in his or her will to sell the house. Jeffrey DiMuria of Waves Realty in Melbourne, Floria, says he’s been named “several times” in wills to handle a sale after someone has passed.

Absent that, you’ll have to find an agent on your own, and doing that takes some legwork. You’ll want someone who specializes in the hyper-local market, as well as one who is well-known in the area and is a sales leader.

But also consider agents who have experience dealing with situations such as yours. Pat Starnes of Front Gate Realty in Brandon, Mississippi, has assisted in several sales of a loved one’s home. “One of our privileges is to help” survivors and executors, says Starnes.

In looking at the house as something that must be liquidated, consider hiring an appraiser to come up with a fair market value. If there is a dispute among siblings, everyone should agree to hire his or her own appraiser and set the price somewhere in the middle of the various valuations.

Don’t set the asking price too far above the appraised value -- over-priced places don’t sell unless it’s a seller’s market -- and don’t haggle too hard with someone who makes you a reasonable offer. “Making an irrational counter-offer and not being willing to give an inch is what over-emotional sellers do,” Sidney Kutchuk of Realty Works in Temecula, California, warns. “This only drives well-intentioned and capable buyers away.”

Unless you intend to move into an inherited house, it pays to sell it as quickly as possible, if only because of the federal tax implications. Inherited properties don’t qualify for the sales tax exclusion, but you do gain ownership at a stepped-up tax basis -- the fair market value of the property -- at the time of the loved one’s passing.

That means you take over the house without having to pay any taxes to Uncle Sam. But for every day you own it after that, you’ll have to pay a tax on any increase in value until the house is sold.

home

New Loan App Is Coming

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 22nd, 2019

Big changes are coming in the standard application for home financing. But if lenders are not on the ball, the modifications could throw a monkey wrench into the mortgage sector. At least for a while.

The changes in the Uniform Residential Loan Application, aka form 1003/65, “are long overdue,” says Jon Haring, director of product management and a compliance expert at Ellie Mae, who notes that the document hasn’t been updated in nearly 20 years. But they “won’t be easy” to implement.

They have “the potential to disrupt” not just loan originations but also secondary market activities, Haring warns. Most lenders these days sell their loans to investors on the aftermarket.

The improvements to the form are intended to make the lending process more efficient and increase certainty. But, the Ellie Mae executive reports, they “are creating anxiety among lenders.”

Some 2,500 lenders use Ellie Mae’s loan origination system to process loans. About 40 percent of all mortgages are made on the Pleasanton, California-based company’s platform.

Fortunately, lenders have 11 more months to prepare for the changes. Use of the new URLA won’t be compulsory until Feb. 1, 2020. But in the lender world, that’s not a lot of time, especially with the heavy buying and selling seasons approaching rapidly and federal and state regulators looking over their shoulders.

At their request for a pre-mandatory test period, lenders can start using the upgraded form after July 1 so they can get any bugs out of their systems. But the changes impact not just lenders, but everyone else up and down the food chain, including title companies, mortgage insurers and servicers -- the companies that collect payments and distribute monies for insurance, taxes and profits on behalf of investors who own your loan.

“It’s probably unlikely that everyone across the entire lending ecosystem will be ready to support it. ... And if they don’t get it implemented correctly and information doesn’t flow completely and effortlessly, there could be delays or even pushback along the production line.”

Among the numerous challenges facing lenders and their vendors: Websites and point-of-sales platforms will need to be modified, data will have to be saved and reported, and decisions will have to be made regarding unusual situations, such as non-borrowing owners. And all of this will have to be done under existing compliance regulations.

The good news is that there is gold at the end of the transition rainbow. “The changes upon us are very positive,” Haring says. “Ultimately, the new URLA form is simpler, cleaner and provides better instructions for borrowers, and that’s a step forward.”

One of the benefits of the new application form is that it puts a lot of the information that’s already being gathered into greater context. For example, the current 1003/65 collects employment information in one place and income info in another, and there’s no correlation between the two. Consequently, the underwriter must figure out where the applicant’s money comes from.

With the new form, though, employment and income data are married together, side-by-side, so there is no longer confusion about how much of the borrower’s income comes from a particular source.

Also, space to list current and former addresses and employers is limited on the current application, as is the spot for listing other properties owned by the would-be borrower. But on the new form, those sections can be expanded to accommodate all the information a borrower needs to provide. 

There are numerous other positives, too, all intended to provide additional levels of detail to make it easier to process, underwrite and securitize your loan. Here are just a few of the other improvements:

-- Borrowers should find the new form easier to complete without a loan officer’s help.

-- A new section allows you to choose the language you prefer. And there are now spots for email addresses and mobile phone numbers, items that weren’t even considered the last time the URLA was updated.

-- There’s a new field for rental or mortgage payments on former residences.

-- Another new section allows you to list assets such as earnest money, employer assistance and sweat equity that are tied to the transaction.

-- An unmarried addendum helps define the relationship between the borrower, additional borrowers and others with an interest in the property.

“All this may seem mundane; no big deal for consumers,” says Haring. “But in the final analysis, the time to get pre-approval or even approval should improve, and there will be less fallout because something was unclear. And eventually, the time it takes to close should be shorter.”

home

Odd Parcels: VA, Women, Affordability

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 15th, 2019

To protect borrowers with VA-guaranteed mortgages against churning by less-than-scrupulous lenders, the Department of Veterans Affairs has taken steps to make it more difficult to refinance loans that are all but brand new.

Under an interim rule that takes effect today (Feb. 15), loans used to remove equity from the underlying property cannot exceed 100 percent of the reasonable value of the underlying property. Also, while funding fees can be rolled into the amount being financed, any part of the charge that causes the loan amount to exceed 100 percent of value must be paid in cash.

These two new requirements will go a long way toward stopping lenders who try to convince veterans and current servicemen and women to turn in their VA loans shortly after they take them out in favor of higher-balance mortgages that are loaded with extra fees and charges.

The poachers offer a lower interest rate, but borrowers have to pay closing costs all over again, so there is little or no savings. And in some cases, the new loan is more costly than the old one, even at the lower rate.

Now, the VA says the new loan must provide a “net tangible benefit” to the borrower which can be satisfied in one of several ways. For example, it can have a shorter term, lower rate or lower payment. Or it can have a balance of 90 percent or less of value, eliminate mortgage insurance, or exchange an adjustable rate mortgage for one that has a fixed rate.

For some loans, all fees and charges to the borrower must be recouped within 36 months. Also, the rate on a fixed-to-fixed refi must be at least a half a percentage point lower; on an fixed-to-ARM refi, it must be at least 2 points lower.

A sign of the times: A Manhattan construction company is believed to be the first to post a “Men and Women at Work” sign at a building site.

As part of Plaza Construction’s effort to encourage women to enter the field, it is posting the gender-neutral sign at the entrance to all of its jobs in and around New York as well as Washington, D.C., Tampa and Miami.

Women account for 9 percent of the construction workforce nationally, but they account for a fourth of Plaza’s crews.

Most wannabe buyers are scared off by higher interest rates. But the more important factor in deciding whether to buy now or wait is what your monthly mortgage payment will be.

The typical house payment stands as good proxy for affordability because it shows how much a borrower would have to qualify for to obtain financing to buy the median priced home. It’s not exact because it only covers principal and interest. It does not include annual property tax and homeowners insurance payments, a portion of which lenders collect each month and pay out when those bills become due. But it is close enough.

Unfortunately, according to analysts at CoreLogic, the typical P&I payment rose 16.4 percent over the 12-month period that ended last September, whereas mortgage rates were up by less than 6 percent. The reason, of course, is that the median house price is up -- by 5.6 percent to $221,697 over the same period.

And it could get worse. CoreLogic research analyst Andrew LePage says the consensus forecast is for mortgage rates to bump up by 0.5 percent by this coming September. Couple that with a 2.7 percent increase in the median house price, and the typical house payment will rise from $912 in September 2018 to $994 in the same month this year.

That’s an 8.9 percent year-over-year jump on top of the 16 percent leap recorded in the previous 12-month period.

There’s no doubt that households with children have different needs from those sans kids when it comes to purchasing houses.

For example, kidless buyers could hardly give a hoot about schools. But for half of all those with children under the age of 18, the quality of the school district is a paramount consideration, according to the latest research from the National Association of Realtors. Forty-five percent say convenience to schools is an important factor.

Buyers with kids also purchase larger houses -- 2,100 square feet on average vs. 1,750 -- with four bedrooms as opposed to three for those without kidlets.

Buyers with and without children are on the same page when it comes to finding the right property. In both situations, 54 percent said it was the most difficult step in the process. But 27 percent of those with kids said child care expenses forced them to delay their purchase. And many made compromises when they did buy because of child care costs.

They compromised on the size of the house, distance from their workplaces and the condition and style of the house they bought. But only 10 percent caved on school quality and just 5 percent bought farther away from school than they originally wanted to be.

Next up: More trusted advice from...

  • Inheritances For Your Children?
  • Amid Recent Bank Failures, Are You Worried?
  • Wills: Should You Communicate Your Wishes With Your Children?
  • Enough Steps
  • Tourist Town
  • More Useful
  • Upsy Daisy!
  • Puppy Love
  • Color Wars
UExpressLifeParentingHomePetsHealthAstrologyOdditiesA-Z
AboutContactSubmissionsTerms of ServicePrivacy Policy
©2023 Andrews McMeel Universal