A Texas-based insurance company, ValueInsured, is now offering a brand new product for home buyers. We’ve all heard of property insurance, title insurance and mortgage insurance. ValueInsured is offering something different: down payment insurance. According to ValueInsured, you (the buyer) pay them a one-time premium based on the value of your downpayment. You can insure up to 20% of your home’s value, but ValueInsured’s limit is $200,000. The insurance is good for seven years. If within those seven years, you have to sell your home but the value has declined and you’re losing your down payment equity as a result, ValueInsured will pay you back your equity. Sounds like a no-brainer, right? Well, the catch is that if you do actually have to sell your house at a loss, ValueInsured will not look at your specific house to see how much value was lost. Rather, they will review a state-by-state… read more →
The Federal Housing Finance Agency (FHFA) has announced a plan that will help some homeowners who are severely underwater reduce the principal on their mortgages. You could qualify if: The balance of the principal on your mortgage is $250,000 or less. You are at least 90 days delinquent as of March 1, 2016. Your home is valued at least 15% less than the balance of your mortgage. Your loan is backed by Fannie Mae or Freddie Mac. If you qualify, your principal balance could be reduced by up to 30% of what you owe. However, the principal can’t be reduced below 15% of the market value of your home. At the end of the day, you would still be underwater, just less deep. Only about 33,000 people will qualify for this program across the US. How do you find out if you’re one of the lucky few? Your lender should… read more →
If you live in a condominium association and are aware of a dangerous condition on-site, hopefully it is fixed before your association becomes the subject of a lawsuit. Recently, the Illinois Appellate Court held that if a condominium association has constructive knowledge of a dangerous condition, it can be held liable if anyone is injured as a result. In the case of Scepley v. The Condominiums of Logan Square, which is not published, the plaintiff was delivering a parcel to the association when he was injured due to a hole in the ground. The court determined that the condominium association should have kept the common elements in a safe condition, and as long as the association had constructive knowledge of the dangerous condition, that was sufficient for the association to be held liable. Note that constructive knowledge is not the same thing as actual knowledge. Undoubtedly the association would also… read more →
Among all the other things that Fannie Mae does, it also maintains a Home Purchase Sentiment Index. Here’s what their latest figures show: Since March, the number of people who think home prices are going to up over the next 12 months has increased. Additionally, more people also seem to think that mortgage rates will go up over the next year. 11% of people state that their household income is significantly higher than it was a year ago. 15% of people say that right now is a great time to seller a home. This is the highest ever. Interestingly, 30% of buyers say now is a good time to buy. While that seems high compared to the sellers in number 4 above, it’s actually the lowest it’s ever been. 74% of people state they are not concerned with losing their job.
Back when the real estate market was hot, in the mid-2000s, people were borrowing against the equity in their homes for pretty much anything and everything. In 2005, in fact, American homeowners borrowed more than $350 billion. After the economy crashed, whether out of fear or because their homes no longer had equity, people stopped borrowing against their homes. In 2011, home equity borrowing was down to about $73 billion, just about a fifth of what it was during the real estate hey-days. But since then, it’s been gradually increasing. In 2014, Americans borrowed about $121 billion against their homes. In 2015, that amount went up by 20%, to about $146 billion. As the values of their homes increase, borrowers are taking advantage of their newfound (or returned) equity to update their homes, among other things. Of course, it’s still not always easy to get a loan, what with tight… read more →
If you’re one-half of a married couple buying a house, chances are that you’re applying for your loan together. Stop. Think about it. Is that the right move? If it’s not necessary – that is, if you don’t need both of your incomes to qualify – should you do it? Maybe, maybe not. It depends on your situation, and a lot depends on something that most people don’t know – usually, lenders will price out your loan application based on the lower credit score in a couple, not the higher one. If your credit score is 750 and your spouse’s or partner’s is 670, your interest rate will probably be higher based on your spouse’s or partner’s lower credit score. On the other hand, if you both score around the same, it won’t make much of a difference. This interesting and fairly unknown rule is known as the Minimum FICO… read more →
What makes VA loans different? First of all, the VA does not actually lend money. Rather, it guarantees loans made by other banks. These types of loans are only available to veterans, currently active military, National Guard members, and the spouses of people in the military who died or were disabled on duty. If you qualify for a VA loan, you do not have to make any downpayment at all, so long as you are purchasing a primary residence. Moreover, you can use a VA loan not only as a first-time homebuyer, but for subsequent purchases as well. On the flip side, the VA charges an upfront fee of 1.25% – 3.3% of the loan amount. The upfront fee is usually included in the loan amount, although the seller may agree to pay it on behalf of the buyer as well. Also, the VA limits how much it will lend… read more →
Long before the real estate market crashed, developer Kimball Hill signed an agreement with the City of Elgin to develop land. Kimball Hill was to improve the land at its expense, and Elgin would then annex the land into the City of Elgin. Kimball Hill obtained bonds from two separate insurance companies to guarantee its performance of the Annexation Agreement it had signed with Elgin. Back in 2003, when all of this was done, the real estate market was booming. Unfortunately, by the time the property was developed, the economy had crashed; Kimball Hill filed bankruptcy in 2008. A company called TRG purchased the property out of bankruptcy, and subsequently refused to make the improvements Kimball Hill had promised to make in the Annexation Agreement. As a result, in 2012 Elgin sued TRG and both insurance companies that had issued bonds. Eventually, the case was appealed, and in City of… read more →
The SBA 504 program is a refinancing program for owner-occupied commercial real estate. It will be available starting in mid-2016, and will likely be a popular choice amongst small-business owners who also own their own real estate. If you’re looking to refinance your commercial property, it might be worth looking into the SBA 504 program. To qualify, your commercial property must be owner-occupied, and the project cost cannot exceed $15,000,000. Moreover, you need to be able to put 10% down. If you qualify for financing under SBA 504, you will get a fixed-interest rate (presumably lower than conventional financing, although that remains to be seen). You will essentially have two mortgage liens on your real estate. The first lien will be for 50% of the total project cost. The second lien will cover an additional 40% of the project cost, but it will be 100% guaranteed by the SBA. The… read more →
Condominium associations can generally determine whether or not they want to allow renters. If they choose to allow renters, they can then decide to what extent renters are allowed. They can limit the term of the lease, the total units available for rent, and require tenants to submit to background checks. But whatever they do, they have to go about it the right way. A recent decision by the appellate court, Stobe v. 842-848 West Bradley Place Condominium Association, 2016 Il App (1st) 141427 (Feb 3, 2016) Cook Co., 3rd Div., proves just that. In Stobe, the association’s condominium declaration allowed owners to rent their units. The condominium association’s board, however, had adopted rules that limited how many units could be leased at a time. The plaintiff argued that this conflicted with the condominium declaration. Clearly, the intent was to allow owners to lease their units, and it was wrong… read more →