Real Estate Information

By some estimates, a large percentage of the homes being foreclosed on across the United States today have been rented out.  These properties may have been investment properties or the homeowners’ primary residence who thought that renting the home may be a stop gap to their money troubles.  In either situation, many times the tenants are completely unaware of what’s going on, and continue making their monthly payments to the landlord.  When the bank initiates foreclosure proceedings, the tenants find themselves in a very awkward and trying situation.

However, tenants rights during foreclosure have been strengthened by the “Protecting Tenants Rights at Foreclosure Act” signed into law by President Obama on May 9^th, 2009.   

The major provisions of this act are as follows: 

-During the term of the lease, the tenant has a right to remain in the unit and cannot be evicted, except for actions that constitute good cause.

- If the lease ends in less than 90 days, the new owner may not evict the tenant without giving the tenant at a minimum 90 days notice.

- At the end of the term of the lease, the new owner may terminate the tenancy if the new owner provides a 90-day notice.

- The new owner may terminate the tenancy if the owner will occupy the unit as a primary residence, and has provided the tenant a notice to vacate at least 90 days before the effective date of such notice. This is the only exception to the rule that the tenant may not be evicted during the term of the lease.

These provisions expire on December 31, 2012.

Bottom line, be sure you have a lease and know what’s in it.  Tenants have rights.  For a brochure outlining these rights in North Dakota click on this link:  http://www.ag.state.nd.us/Brochures/TenantRights-2003.pdf  or here http://www.dakprop.com/rights.htm . 

For Minnesota, click here to go to the Plain Persons Guide to Minnesota Landlord-Tenant Law http://www.tenant.net/Other_Areas/Minnesota/ppgmnllt.html

If you have further questions about foreclosure or how to avoid it, call me, Dan Whitman, at 701-238-2582.

Neighborhood Watch is one of the oldest and best-known crime prevention concepts in North America. It is also one of the most efficient and least costly ways to prevent crime and reduce fear. Neighborhood watch is a group of neighbors looking out for their fellow neighbors, and these types of groups have been shown to reduce crime by 50%. 

This program empowers homeowners to become active in protecting their community through participation in Neighborhood Watch groups. Residents participate in Neighborhood Watch in their area by organizing residents to communicate any suspicious behavior to others by phone trees and reporting it to the authorities. 

Benefits of  Neighborhood Watch

• Your risk of being burglarized as well as other crimes such as auto theft, vandalism and personal assault are significantly reduced.
• By helping with this program you help to stretch the tax dollars by helping law enforcement agencies, who are limited in their available manpower.
• Not only does neighborhood crime go down, but many communities report a new feeling of caring and belonging amongst neighbors. Many have used their combined efforts to improve their streets, recreation opportunities and local services.

If you are interested in starting a neighborhood watch in your community, below are some steps to help you get started!

• Form a small planning committee of neighbors to discuss the needs of your community, gage the level of interest and potential problems, decide on a date and place for an initial Neighborhood Watch meeting
• Contact Your Local Sheriffs Office or Police Department for more information or to arrange a speaker
• Arrange a meeting location close to your neighborhood. It should have enough room to hold your invited neighbors and, if needed, for the use of audio visual aids such as an overhead projector.
•  For more information and educational materials related to starting a Neighborhood Watch, visit the National program's website.

On February 1, 2010, the Department of Housing and Urban Development relaxed the FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days.  This could help the rehabilitation and resale of foreclosure properties.

This temporary waiver of their property flipping regulation will be in effect for the period of one year, unless extended or withdrawn by the FHA. 

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sale price of the property is 20% or more above what the seller paid for the house, the waiver will only apply as follows:

A. The increase in value is justified by documented improvements, repair and/or rehabilitation work on the subject property or, if no work was performed, a second appraisal is obtained with a detailed justification for the increase in value, and

B.   A property inspection is obtained which addresses the overall condition of the property, both interior and exterior including structure, foundation, roof, plumbing, insulation, etc.  The property inspector must not have any interest in the property or have any relationship with the seller of the property.  The inspector may not receive any compensation for referring or recommending contractors for any repair work deemed necessary by the inspection.

Many homeowners who plan to sell their home want to know which room is the most important to invest your time, money and effort into to help make the sell. Your best bet is the kitchen, this room is the one that sellers focus on the most and investing in this room will add the most value. According to Remodeling Online’s 2005 Cost vs. Value Report, even a minor kitchen remodeling project will return an average of 98.5% of its cost when it comes time to sell the home.

If your kitchen needs a better look, but you can't afford a complete kitchen remodel, consider these below kitchen fixes to help sell your home faster and for more money:

1. Paint or re-stain worn wood cabinets and install cabinet hardware. Stay with simple and neutral hardware, avoid large clunky designs.

2. Remove outdated or busy wallpaper and any bold, bright paint. Stick with neutral colors.

4. De-clutter all counter tops, keep them free and clear of appliances, butcher blocks and knickknacks.

5. Update the faucets. New faucets can make a outdated sink look revitalized. Faucet replacements are also fairly inexpensive and simple plumbing projects with all of the parts available at your local hardware store.

6. Remove photos, calendars and personal effects from the refrigerator door.

7. Updated and simple rugs and towels with a splash of color can bring warmth to a kitchen.

Replacing outdated appliances and flooring are great improvements that should be considered but may not always be part of your budget. Keeping a kitchen clean and maximizing space is key to getting buyers interested. Simple fixes just as keeping garbage cans, and pet bowls etc. out of sight can make a kitchen seem more appealing to potential buyers.

In the coming weeks there are several changes that are going to affect the costs for home buyers.

First, the Federal Reserve Board mortgage backed securities (MBS) purchase program will expire.  This program has kept home interest rates artificially low for over a year.  The purchase program will be concluded by the end of March.

There is a wide range of expectations in the investment community about the impact of the end of the MBS purchase program on mortgage rates. The Fed has been purchasing roughly 75% of new MBS issuance, and a decline in demand from one source normally leads to higher yields to attract other buyers. One argument, however, is that the end of the program has been expected for quite a while, so mortgage rates already reflect the news, and there could be little reaction over coming months. Other analysts predict an increase in mortgage rates of as much as one percent. The Fed itself expects a small increase in mortgage rates as a result of the end of the program.

Second, the office of Housing and Urban Development will be implementing a couple changes this spring that will have significant effect on closing costs for those buyers acquiring a Federal Housing Administration (FHA) backed mortgage.

On April 5 the cost of required up-front mortgage insurance for FHA loans will increase from 1.75% to 2.25%.  For a borrower purchasing a $155,000 home with a 3.5% down payment, the up-front mortgage insurance will increase $747.  This amount will not make a huge impact on the monthly payment, however it is still an increase in cost to the borrower both at closing and monthly.

Furthermore, later this spring, the amount of money a seller can contribute from their proceeds to the buyer in the form of points or closing costs is going to be reduced from 6% to 3%.  This can increase the amount of cash a buyer will be required to pay out of their own pocket at closing.

The best way to avoid these increases in costs is to have your FHA mortgage applications submitted to your lender by the end of March.  If you have any questions, please feel free to call me at 701-238-2582.

Depending on credit history and budget, potential home buyers typically have several different mortgage options available when shopping for a new home.  However, there are a number of high risk mortgages on the market that you should avoid.  Many of these risky mortgages usually seem attractive on the front end,but it is vital to do your research and look closely at the fine print.  Consult with a real estate professional to discuss all of your options to find a mortgage that fits your needs but also does not put you at risk for loosing your new home. Below are a few types of loans that you should stay away from.

Interest-Only Loans

This type of loan is one of the most riskiest types of loans out there. This type of mortgage is of course very attractive because the homeowner is presented with a very low monthly payment.  What many homeowners don't think about is that since you will only be paying the interest on the mortgage, the principal payment does not go down. While it is nice to have a lower payment, you will be blindsided at the end of the mortgage term.  At the end of the loan term, you will be required to pay for the entire loan amount.  So if you don't anticipate on having the entire purchase price available, you could loose your home.  Another aspect that many homeowners don't realize, is that with this type of a loan you will not accrue any home equity.  Building equity is one of the main reasons to buy a house in the first place. 

 Adjustable Rate Mortgages

With this type of  mortgage, your monthly payment is not a set amount. Because your interest rate is tied to a certain index such as the prime rate that is currently in the industry it will fluctuate with the market.  Most people who choose this type of loan do so because initially you will have a lower payment. For a certain period of time, you will have a fixed rate on the mortgage. For example, you might have five years of a fixed rate, followed by an adjustable rate period. So for five years, you reap the benefits and then you are at the risk of the market. Many people who opted for this type of a mortgage a few years ago fell into big trouble when the economy took a turn. Many homeowners with this type of a loan found that their mortgage payments almost doubled and many have fell into foreclosure. 

40-50 Year Mortgages

With these long term mortgages, homeowners are drawn to them so they can purchase a larger home but there are many disadvantages. First of all, will you outlive this mortgage? These ultra-long-term mortgages don't reduce monthly payments all that much when compared with a traditional 30-year fixed-rate loan. They do however, increase the amount of interest you pay over time and dramatically slow down the rate at which you build equity.

If you are in the market for a new appliance this year, you can take advantage of a new appliance rebate program that is aimed to help homeowners.

The Energy Star Appliance Rebate program,is part of the American Recovery and Reinvestment Act. How it works is that it will give rebates to consumers who replace certain home appliances with energy-efficient models. The new program underscores the Obama Administration’s commitment to make American homes more energy efficient, while helping to support the nation’s economic recovery

Under this program, the U.S. Government has set aside $300 million and each state will have the authority to handle most of the details separately.  It provides rebates for qualifying energy-efficient appliances.select ENERGY STAR qualified appliances. These appliances may include:

• central air conditioners
• heat pumps (air source and geothermal)
• boilers
• furnaces (oil and gas)
• room air conditioners
• clothes washers
• dishwashers
• refrigerators/freezers
• water heaters

The U.S. Government has given each State the authority to develop their own government appliance rebate program using the government’s guidelines. Individual states can decide the amounts of the appliance rebates up to $200 (reported) per selected appliance that is Energy Star qualified. Each state develops it’s own rebate program and may choose which appliances to include as long as it is on the list of approved Energy Star appliances that the U.S. Government listed. States will receive formula-based funding in order to start or continue an already established ENERGY STAR appliance rebate program

According to the trade journal, The Residential Specialist, published by the Council of Residential Specialists, Downtown Fargo is listed in the 10 Great Neighborhoods in America.  Selected by the American Planning Association through its annual Great Spaces in America program, the neighborhoods are judged on several criteria, including architectural features, accessibility, functionality and community involvement.  Other neighborhoods included were Ladd’s Addition, Portland, Oregon; Franklin Historic District in Franklin, Tennessee; and Historic Hilton Village in Newport News, Virginia.

If you will be purchasing a new home, one things you will need to get is a home appraisal. This will determine the worth, the property's market value. This will be required from your lender when you apply for a loan as they will want to make sure they property is worth the amount they are financing.

A real estate appraisal is conducted by a certified, state-licensed professional who determines the value of a piece of property. The appraiser should be an objective third party, someone who has no financial or other connection to any person involved in the transaction. The cost of a professional appraisals can range in cost from two hundred to five hundred dollars. You will receive a complete analysis of the estimated value of your home. Factors such as condition, proximity to services, and overall neighborhood values all will all be taken into account. The buyer will typically pay their fees when applying for the loan.

Keep in mind a home appraisal is not the same thing as a home inspection. If you're buying a home, you'll want to hire an experienced home inspector to point out any potential problems that could turn into costly nightmares in the future. Property appraisers will likely make note of any obvious issues, but they won't test and check to ensure everything is in order, that should be left to the inspector.

Nothing is better after being in the cold than coming home to a warm fire. With the brutally cold temps this winter, many homeowners in our area have been giving their fireplaces a workout. According to the US Fire Administration, more than one-third of Americans use fireplaces or wood stoves to heat their homes. To avoid fire and injury it is important to reduce your risk by following some safety tips listed below when heating with wood.

• Have your chimney or wood stove inspected and cleaned annually by a certified chimney specialist.
• When choosing firewood it is best to select "Well-seasoned firewood" that has been thoroughly dried for a minimum of six months and stored properly. 
• Clear the area around the hearth of debris, decorations and flammable materials.
• Make sure your fire alarms have fresh batteries and are in working order by testing them monthly!
• Install a type ABC fire extinguisher near the fireplace.
• Install a screen to completely cover the fireplace opening to keep sparks from flying out.
• Keep combustible materials such as carpets, furniture, paper, logs and kindling at least 3-feet away from the fireplace.
• Never leave a fire in the fireplace unattended. Extinguish the fire before going to bed or leaving the house.
• Do not use gasoline or other flammable liquids to kindle or rekindle a fire.
• Flammable vapors can explode! Any flammable liquids, including those from craft projects can vaporize and travel the length of a room!
• Keep the damper open while the logs or gas is burning to provide for efficient burning and to prevent accumulation of poisonous or explosive gases.
• Do not treat artificial logs the same way you treat real wood logs. Use only one at a time. If you use more, they can produce too much heat fro some fireplaces to withstand.

Fireplaces are a wonderful addition to a home and provide not only warmth but add charm to a home. Be safe and follow these safety tips and enjoy!