The Bergen County Homes Blog

June began a new requirement from Fannie Mae.  Mortgage applicants must now have their credit checked 3 days before closing.  If there are any significant changes, the terms may be adjusted or the mortgage may actually be cancelled.  While this may sound harsh, it also makes sense.

When you apply for a mortgage, your credit, debt and assets are checked.  The bank wants to verify that your credit history shows that you are a responsible person and your income, debt and assets are enough to allow you to comfortably carry the expenses.

Once you get your mortgage commitment, nothing should change.  You should be just as credit worthy on the day you close as you were when you first applied for your mortgage.  Fannie Mae is just checking to make sure.

Before the sub prime mortgage market existed, this was a normal part of the process.  Fannie Mae found that a good number of people abused the system by being irresponsible or commiting outright fraud.  By requiring this verification just before closing, Fannie Mae is hoping to avoid such trouble.   

In the past, some people actually took out other loans just before closing because they knew they’d never qualify once the mortgage closed and was on their credit record.  So, they got a car on a loan, bought an appliance on credit etc. and sometimes even quit a job just before closing on a house.  This sort of irresponsible behavior often ended up in foreclosure.

I believe Fannie Mae is taking the right approach; this will go a long way to ensuring the integrity of the mortgage system.  It also protects buyers from over burdening themselves with debt.  It does no one good when a home ends up in foreclosure.  So is Fannie Mae making life impossible for buyers?  Not at all.

Does this look familiar? 

If it does, then you”re like many people who’ve bought an older, charming colonial home in Bergen County.  Along with the home (and especially if you bought it in towns with large inventories of charming colonial homes like Tenafly or Teaneck or Ridgewood) you got a red brick fireplace in the living room that you figured you’d fix in the future.  An article I read in Lowes “Creative Ideas” magazine recently showed how you can transform that old red brick quickly and affordably.   

Lowes has a special program for real estate agents which I’ve found to be a great help for my clients and myself.  Recently there was an article in “Creative Ideas” that solved this problem.  By resurfacing the existing red brick with a combination of tile and slate you create an amazing, beautiful effect immediately. 

This fireplace was an old, stained, red brick unit and then the Lowes team went to work  with a combination of tile and slate.  You can, of course, use other tile and stone materials but the change is certainly remarkable.  No structural renovations were needed to make this fireplace a modern showpiece.

If you’d like to get “Creative Ideas” you can go to http://www.Lowes.com or you can get in touch with me for the full real estate agent benefits program.  Lowes has many simple and affordable solutions to design problems for homeowners and they also have a lot of good tips for you too.

If you’re a typical home buyer you’ll be on the web looking at all the real estate websites gathering information on homes for sale.  It’s really very easy to get plenty of information on the real estate market through the internet but its not very easy to get information on the communites where the homes are located or to get a feeling for a town.  If you’re thinking of buying a Westwood home  New Jersey Monthly Magazine will help you. 

New Jersey Monthly Magazine  has a simply great article on taking a day trip to Westwood that highlights the business district and all it has to offer.  Westwood has one of the best local business districts in Bergen County which has a very positive impact on the value of Westwood homes.  Many of the local stores, restaurants and boutiques have been in Westwood for decades and have gone through several generations of owners.  Westwood homes are always in high demand and the many features this town has to offer is a big reason why.  You can find more information on Westwood at the Borough Website at http://www.westwoodnj.gov/

Inman News is the leading source of news for the real estate industry.  I receive it’s news updates twice daily and this afternoon  there was a book review on a new book that I thought would be of great use to any home owner who is thinking of selling his home as a short sale.  

The book is titled “How to Use A Short Sale to Stop Home Foreclosure and Protect Your Finances” and what I liked about it was the clear way the material is presented.  The reviewer, Tara-Nicholle Nelson,emphasized that the author made everything involved in a short sale easily understandable.  Short sales can be a great solution to avoid foreclosure but what I’ve observed is that most homeowners and most real estate agents simply don’t understand them. 

I’d also recommend that any home buyer who is thinking about purchasing a short sale get this book.  From what Ms. Nelson wrote in her review, the material is very comprehensive and a lot of it would also help to educate a buyer.  You can get it at Amazon and the 2 reviews there were positive.

 On January 15th the IRS released a new form for home buyers who want to claim the tax credit when they file their taxes this year.  This is Form 5405.  Form 5405 is a revision of the previous  2009 First Time Home Buyer Tax Credit so that the current 2010 Home Buyer Tax Credit program is covered. 

I would like to point out 2 important changes:  Along with Form 5405 you MUST include documentation such as your RESPA closing statement.  Because there is more documentation required to claim your tax credit for both a repeat and a first time home buyer, your tax return must be filed manually.  So remember – more documentation and manual filing is what you’ll have to do. 

For more information, just go to the IRS website .  It’s really not hard to take care of this and since you will have purchased your home recently, it shouldn’t be difficult to access your RESPA closing statement.  As always, I recommend that you consult with a tax professional.

There’s a new website in the internet that’s all about your house – from doing a repair or renovation to tax credits to protecting yourself from a scam artist.  Created by the National Association of Realtors, it’s in beta testing on the web right now but I’ve taken a look at it and, frankly, I’m very impressed.

Go to http://www.HouseLogic.com and take a look yourself.  Buying a house in Bergen County is the start of a long term relationship with your home and your community.  House Logic helps you ”protect, maintain and enhance the value of your home” in so many ways.  I found tips on how to do economical repairs that pay big dividends to how to get tax credits for energy efficient improvements. 

If you aren’t a homeowner and are thinking of buying a home, this site is for you too.  There is so much excellent information about homeownership that you’ll get a great education. 

The site is very detailed about all sorts of things.  For example, House Logic has an entire section on improving your insurance score.  Most people don’t realize how devastating a bad credit score can be.  When I tell my clients that a poor credit rating even affects your insurance premiums they are usually surprised.  Here you will learn how a credit rating affects your homeowner insurance premium.  It’s a fabulous website for consumers.

My projection for Bergen County real estate is right on target - our housing market is improving.  New Jersey MLS data, bank appraisers and housing reports all say the same thing:  We have clearly bottomed out and are in a period of stabilization.

Today’s ratio of homes for sale to under contract is 4 to 1; early in the year it was in double digits.  Last spring Bergen County was classified by the mortgage industry as an “area in decline” meaning that values were falling.  Appraisers were deducting 1% per month of value; if a home appraised at $200,000 and was closing 2 months later, the appraisal was fixed at  $196,000.  Bergen County’s housing market is no longer classified as “in decline” and a Valley National Bank appraiser on Monday told me that price depreciation has ended.

Jeff Otteau in his latest real estate newsletter termed the NJ real estate market’s performance “remarkable” and forecast continued improvement.  The monthly Credit Suisse agent survey said that for the first time in a long time a majority of agents reported positive home buyer traffic and houses selling quicker.

With all time low interest rates, prices no longer dropping and falling inventory levels, there should be no surprise to find stability in the Bergen County real estate market.

If you are a home buyer and you qualify for the first time home buyer tax credit, time is running out for you to find a home.  You must buy a home by November 30th and because getting a mortgage these days often takes 45 days, many buyers feel pressured to make a decision now.  As a result, a first time home buyer who qualifies for the $8000 Tax Credit may find himself scrambling to get into contract this week.  However, I’m wondering if some of you aren’t making a mistake.

$8000 is nothing to sneeze at but a buyer may be missing out on a home value that far exceeds the $8000 credit – short sale opportunities are still available.  There are many homes for sale with steep discounts because they are a short sale and you may find a house that is a better “fit” for you in a short sale than trying to buy a home that you really don’t love just because of the tax credit.

In the New Jersey MLS this morning, searching for short sale homes shows that of the 3,796 single family homes for sale, 352 are a short sale.  There are also many that are described as potential short sales.  For our purposes, let’s say that a bit more than 10% of the Bergen County housing market is a short sale.   This figure has been pretty constant this year.  The bottom line is that there are other opportunities out there.

Even if you can’t find a home that works in time for the tax credit, you shouldn’t go into contract on something that isn’t the right home for you and your family.  Opportunities come in many ways.

One of the special advantages of living in Bergen County, at least from my point of view, is our gas and electric service utility – Public Service Electric and Gas.  Go to their website at http://www.pseg.com where you’ll find excellent information and their terrific Worry Free Contract system.

PSE&G has very reasonably priced maintenance contracts on your gas and electric heating, air conditioning and appliances that I always recommend to my clients.  One of the best values you can find in Bergen County when you buy a house is their Worry Free Contracts and especially their gas furnace maintenance program which only costs $5.90 per month for parts and labor.  Go to their Residential Worry Free Contract Enrollment and scroll down the page toward the bottom where you can see the a la carte menu or you can use the bundled options at the top of the page.  The cost is billed monthly on your utility bill which makes this affordable service even easier to handle. 

It just makes sense, especially now that the heating season is almost here, to get yourself protected.  I always recommend to my clients who have gas furnaces in their home that they at least get this coverage.  It’s simply the best deal around at an annual cost of $70.80 for parts and labor with no deductibles. 

When you buy a home the last thing you need is an unexpected bill for a furnace repair – at $5.90 per month you’ll have peace of mind.  Trust me – it can happen any time.  Years ago I had a 3 year old furnace that stopped working – it needed a new circulator pump.  PSE&G came in a few hours and replaced it.  No problems after that and it was well worth the $5.90 bill that month!

When the Home Valuation Code of Conduct went into effect by Fannie Mae and Freddie Mac on May 1st, appraisal protocols for mortgage loans changed. To protect consumers, loan officers, mortgage brokers and real estate agents can no longer choose appraisers.

Why is this so important? Because the mortgage bank and the home buyer rely on an appraiser’s determination of value; a lot of abuse and fraud has been uncovered. If, for example, an appraiser sets a home value to fit the sales price, that’s obviously wrong.

I just had a short sale listing close; the bank took nearly a 50% loss on a $1.8 million loan. The homeowner had been building a new home for himself. When he gave me his loan amount, I was stunned. There was no way to justify that mortgage loan and yet it happened.

To comply, banks no longer have their own appraisers; they use real estate appraisal services with pools of appraisers from which appraisers are randomly selected. This creates an added expense for the mortgage process and increasingly results in appraisers valuing homes who’ve never been to the area before and aren’t members of the local MLS. Recently my office experienced this.

An office listing had an appraisal that was ridiculously low. Both buyer and seller knew this but the bank, which had to use the appraisal, could no longer justify the mortgage. The appraiser had never been to the area before and used the wrong MLS. Bergen County homes are listed in the New Jersey MLS; the appraiser used the Garden State MLS which has only a few Bergen County listings. Without expert knowledge of the local inventory and no access to all the data, he wasn’t able to do a correct valuation.

Eventually things will straighten out but until it does, there will be higher costs to obtaining a mortgage for home buyers and for both buyers and sellers, there will be appraisals that unfairly cancel mortgages.