The Difference Between Short Sale, Pre-Foreclosure, and Foreclosure?

by Elsa Soto | Dec 20, 2022 | Blog, Buyers, Homeowners, Homes, Villas and Condos, Mortgages, News, Real Estate News, Sellers

The Difference Between Short Sale, Pre-Foreclosure, and Foreclosure?

If you’re considering purchasing one of these kinds of properties, it’s very important to understand what these terms mean and how the home’s status could affect its sale.

The first rule of thumb: Proceed with caution. The pitfalls for the average buyer are numerous when it comes to a short sale or a foreclosure, according to Virginia Field, an instructor for the National Association of Realtor®’s Short Sales and Foreclosure Resource.

Let’s take a look at these three distinct real estate terms and what they mean for buyers.

Short sale

“A short sale is when the property owner owes more on the mortgage than the market value of the property and is asking the bank to accept a short payoff of the loan,” explains Cathy Baumbusch.

A short sale may or may not be in pre-foreclosure, but the homeowner is asking the bank to let it sell the property for less than what is owed on the loan.

Short sales go through a real estate agent, but they don’t function exactly like your typical real estate deal.

“The biggest misconception the average consumer has about buying a short sale is not realizing how long it takes,” says Field. “It can take between six months to a year to close. Also, people think they are going to get a screaming deal, but they have to understand that the bank is going to try to get as much back as it can.”

Even more frustratingly, a seller can accept an offer on a short sale, but that doesn’t guarantee that the deal is going to close. If the lender is not satisfied with the sale price, the home is not going to close. In some cases, foreclosure makes more sense for the lender because there are fewer costs associated with a foreclosure than a short sale.

Pre-foreclosure

A home is in pre-foreclosure if a homeowner is more than 90 days late on the mortgage payments and the bank has begun the foreclosure process.

“A pre-foreclosure is a property in the process of foreclosure but is still legally owned by the owner. It may or may not be a short sale,” says Beverley Hourlier.

Pre-foreclosure doesn’t necessarily mean that the homeowner is underwater, and it doesn’t guarantee that the home will be foreclosed on. In fact, says Field, if homeowners facing pre-foreclosure contact their bank, they have a chance of saving their home.

“The bank doesn’t want the property back,” she says.

“They want you to be able to save it, but you have to take action. Don’t bury your head in the sand and stop opening the mail. Contact your bank right away, and they may be able to find a way to work with you,” Hourlier adds.

Foreclosure

“Foreclosure means the property lender has taken back the property for lack of payment. It’s a process,” says Tracey Martin.

Buying a foreclosure is completely different from a typical home purchase. Generally, foreclosures are bought at auction sight unseen, meaning you could end up with a home in need of serious repairs.

“You don’t have investigatory rights; you’re buying a property as is,” says Field.

Field also explains that experienced investors go into foreclosure auctions with cash and a formula.

“For someone who just wants to buy a home to live in, it’s not a smart idea,” she says.

But whether you’re a seasoned pro or a first-time home buyer, a foreclosure can be a risky investment for anyone. Many foreclosure homes are still occupied by their former owners, whom you would be responsible for evicting.

Furthermore, “if you buy, you assume all liens, IRS liens, and other mortgages possibly tied to the property,” says Kevin Sucher.

Before signing on the dotted line, do as much research about the property as possible and be prepared for surprises. Field suggests investigating websites that sell foreclosures, as they tend to have more guidance for the novice than an auctioneer at the courthouse steps.

Also, when bidding on foreclosed homes, be aware that having the highest offer won’t necessarily nab you the property.

“Servicers will go with the buyer most likely to close. They may take a lower price from someone with better terms,” Field explains. In short, unless you’re shopping with cash, you might have to bid on several properties before you find a winner.

“It can be done,” Field says, “but it requires caution, patience, and ideally guidance from someone with experience buying foreclosures.”

Experts in Residential Real Estate in Orlando

If you are buying or selling real estate it’s quiet often the single most important financial decision you make. For the last 30 years we have helped clients buying and selling property in Orlando and the surrounding areas. Put simply, this means the knowledge and expertise accumulated over this time ensures our clients get the best representation possible.

Our experienced agents will help and guide you through the entire process providing valuable support every step of the way.

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Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

Understanding Interest Rate Buy Down

by Elsa Soto | Nov 19, 2022 | Blog, Buyers, Mortgages, News, Real Estate Components, Real Estate News, Renters, Sellers

Understanding Interest Rate Buy Down

WHAT ARE MORTGAGE DISCOUNT POINTS?

Mortgage discount points are fees paid to a lender to reduce your interest rate. They allow a borrower to trade paying more money upfront in exchange for a lower interest rate. A borrower can pay more in closing costs for smaller monthly payments over the life of the loan. Having an understanding of this substantial savings opportunity over the life of the loan is key. When reviewing interest rates from mortgage lenders, you’ll often see different numbers listed, including:

1. Mortgage interest rate
2. APR (Annual Percentage Rate)
3. Points

The mortgage interest rate is the percentage of the loan you are paying your lender to borrow the money. APR is the yearly income received by the lender over the life of the loan, reflected as a percentage of the loan amount (this includes other fees and costs charged in addition to the interest).

Points are fees associated with buying down your interest rate. Each discount point equals 1% of your loan amount and this discount point typically decreases your interest rate by about 0.25%.

How much will you save when buying mortgage points?

Depending on your circumstance, buying mortgage points can save you significant money over the course of your loan. Here’s an example:

Paying discount points to get a lower interest rate can be a great strategy. Lowering your rate even just 25 basis points (0.25%) could save you tens of thousands over the life of the loan.

Other things to know about mortgage points

The terms around buying points can vary greatly from lender to lender. Here are some important things to consider:

The lender and the marketplace determine your rate reduction, and it can change after the fixed-rate period for your mortgage ends. That’s why it’s important to make sure your break-even point occurs well before the fixed-rate expires. For Bank of America customers, however, if rates go up during the adjustable period, your rate will be lower based on the points you initially purchased.

Contact a tax professional to see whether buying mortgage points could affect your tax situation.

If you need to decide between making a 20 percent down payment and buying points, make sure you run the numbers. A lower down payment can mean also paying for private mortgage insurance (PMI), which could cancel out the benefit of buying points for a lower interest rate.

RE/MAX Heritage has served the Central Florida real estate market for over 30 years.

If you are interested in buying, selling or renting a property in the Disney Orlando area of Central Florida please complete the form below to provide us with more information so that we can better serve you.

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Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

Existing-Home Sales Fell 3.4% in May

by Elsa Soto | Jun 27, 2022 | Buyers, Mortgages, New Construction, News, Real Estate Components, Real Estate News, Renters, Sellers

Existing-Home Sales Fell 3.4% in May

WASHINGTON (June 21, 2022) – Existing-home sales retreated for the fourth consecutive month in May, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while year-over-year sales slipped in all four regions.

Total existing-home sales,¹ https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

Total housing inventory² registered at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun added. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”

The median existing-home price⁵ for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record.

Properties typically remained on the market for 16 days in May, down from 17 days in April and 17 days in May 2021. Eighty-eight percent of homes sold in May 2022 were on the market for less than a month.

First-time buyers were responsible for 27% of sales in May, down from 28% in April and down from 31% in May 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 2021⁴ – reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 25% of transactions in May, down from 26% in April and up from 23% recorded in May 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, down from 17% in April and 17% in May 2021.

Distressed sales⁵ – foreclosures and short sales – represented less than 1% of sales in May, essentially unchanged from April 2022 and May 2021.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate across all of 2021 was 2.96%.

Realtor.com®’s Market Trends Report(link is external) in May shows that the largest year-over-year median list price growth occurred in Miami (+45.9%), Nashville (+32.5%), and Orlando (+32.4%). Austin reported the highest growth in the share of homes that had their prices reduced compared to last year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points).

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

A Sharks Tale – How to find a good Realtor

by Elsa Soto | Jan 14, 2022 | Blog, Investment Property in Florida, Mortgages, Real Estate Components

A Sharks Tale – How to find a good Realtor

Rather than understanding what investors are looking for, many real estate agents lack work ethic and can be difficult to coach. It is imperative that you let the agent know exactly what you are looking for or he or she will bring you many loser deals.

Do not leave out any details when explaining to a real estate agent what you are looking for. You should specify the locations you are looking for, the price range, the return/cap rate you are looking for, the type of home, the number of bedrooms, and other details which are important to you.

A good agent will also be willing to make multiple offers and make a low ball offer. Some agents do not like investors and only work with the typical home buyer. That is fine, but we need to be aware of that as early as possible.

You should ask other buyers for recommendations before choosing a real estate agent. Often, investors will be more than happy to give you recommendations on investor-friendly agents. If you are serious about investing in real estate, remember that what works for one investor might not work as well for you. Make sure you are comfortable with the investor friendly broker before signing a contract.

It is also possible to find reviews of agents on sites like Zillow and realtor, however I would strongly recommend getting a recommendation from an investor you know. It is also a good idea to find a realtor who is able to bid on HUD homes, as these homes can be great deals and it makes things much easier if your agent is qualified to bid on them.

Finally and most importantly, make sure your real estate agent has invested in properties themselves since these individuals understand us, buyers, far better than those who have never purchased real estate before.

Choosing a good realtor is challenging, but don’t cut corners on finding one as a good realtor will take your business to the next level and make your life much easier.

Re/Max Heritage Realtors are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

Mortgage Rates Are Rising … But That Doesn’t Mean It’s a Bad Time to Buy Homes

by Elsa Soto | Jan 14, 2022 | Blog, Mortgages, Real Estate News

Mortgage Rates Are Rising … But That Doesn’t Mean It’s a Bad Time to Buy Homes

Will 2022 be the year you buy a house?

If you’re hoping to buy a house in 2022, you’re probably watching the market closely.

Interest rates are on the rise. And home prices have climbed at a record pace in 2021.

Does that mean it’s a bad time to buy a house?

Not according to Jon Meyer, The Mortgage Reports loan expert and licensed MLO.

“While it’s always nice to get a better rate and have a smaller total monthly payment, if you can afford the home it’s never a bad time to buy,” Meyer says. Here’s why.

Is now a good time to buy? Key takeaways

As always, buying a home is subjective. It’s more about your personal finances than it is about the market.

Here are some key housing trends in 2022 to keep in mind:

With home prices still rising it makes sense to buy sooner rather than later if you can afford to do so
Home price gains should slow down in 2022, but not reverse. So it’s not worth waiting on lower home prices
Mortgage rates are climbing. But don’t let that put you off. Even if they reach 4%, that’s still less than half the historic average

Higher mortgage rates likely on the way

After watching interest rates tumble to all-time lows in 2020 and 2021, it’s tempting to play the waiting game and see if they can fall further.

However, the Freddie Mac monthly average for 30-year fixed rates has been on the upswing over the last quarter.

“My mentor used to always tell me, ‘The person who says they know where rates will be in the future knows less than the person who knows nothing,’” Meyer said.

“He didn’t mean we can’t gauge the market or have a decent idea where rates are trending. His underlying message was you can’t chase rates.”

Do rising mortgage rates mean it’s a bad time to buy a house?

The Federal Reserve announced on Dec. 15 that American consumers should expect a series of rate hikes throughout the year.

Given what we know now, locking in a mortgage rate sooner will likely be better than later in 2022. Plus, the longer you own a home, the more equity you build.

“Even if rates jump up 1 percentage point from where they are today, they still wouldn’t be considered high interest rates historically.”

But that doesn’t mean prospective buyers should be put off by rising rates.

Historically speaking, today’s mortgage loans are still ultra-affordable. And they should stay that way throughout 2022.

“Even if rates jump up 1 percentage point from where they are today, they still wouldn’t be considered high interest rates historically. When my father bought his first house, he got a loan with an 11.5% interest rate,” Meyer added.

Home prices will keep making gains

With low mortgage rates and a squeezed inventory stoking buyer demand, housing appreciation hit never-seen-before heights in 2021.

The median U.S. sales price shot up 14.6% annually in the four-week period ending Dec. 26 and climbed to a new all-time high of $361,171, according to Redfin.

Even as 2022 shapes up to be another strong year for the housing market, the pace of home price growth is expected to come down from 2021’s record-setting levels.

However, slowing price growth shouldn’t be misconceived as falling prices. All indicators point to rising housing values in 2022, just at a lesser pace.

“At least buyers have the benefit of low mortgage rates. But by next year, inflation may spread to more consumer goods,” said Redfin Chief Economist Daryl Fairweather.

“Even though our new year’s forecast includes more listings and slower home-price growth, buyers may feel so pinched by other expenses that they have to reduce their housing budgets.”

Is renting the answer?

Renting has its advantages, like not having to pay property taxes or homeowners insurance, especially if you’re not yet committed to where you want to live long-term.

But it’s similar to leasing a car, according to Meyer. “You pay every month to own nothing at the end of the day.”

With the supply of available for-sale listings so low and purchase prices continuing to climb, rent prices are also surging.

Now, the average renter faces even larger monthly costs and a higher rate of appreciation than homeowners.

Redfin found the average monthly rent grew to $1,985 in November, up 6.8% monthly and 20.5% annually. Comparatively, borrowers who put 5% down had a median payment of $1,551, which grew 1.1% from October and 19.9% from the year prior.

Rental market summary	November 2021	Month-over-month growth	Year-over-year growth
Average monthly rent	$1,985	6.8%	20.5%
Median monthly mortgage payment for home buyers w/ a 5% down payment	$1,551	1.1%	19.9%

Source: Redfin

With housing costs growing at such a rapid rate, inflation reached 6.8% in November and hit its highest level since 1982.

Many consumers were priced out of the for-sale marketplace and then turned to the rental market. That heightened demand and the anticipated elevated inflation rate will push up rent prices and could make it more financially challenging than buying.

“First inflation came for the for-sale housing market, and now it is coming for the rental market,” said Fairweather.

“Anyone who bought a home before this year can pat themselves on the back because their mortgage payments are fixed, meaning their biggest recurring expense is immune to inflation.”

Gambling on interest rates and home prices

Some buyers might be tempted to wait on lower interest rates — or slower home price growth — before they enter the market.

But if you as a home buyer wait for mortgage rates to drop to a certain range, you run the risk of:

Losing out on the house you wanted
Being priced out of listings you could’ve previously afforded
Waiting on lower rates that might never materialize

Meyer provides an in-depth hypothetical on how holding out for lower mortgage rates or property prices can potentially hurt you:

“When you wait for the right interest rate, you are gambling,” he says.

Home buying example

“Let’s assume you’re a borrower qualified up to a total monthly payment of $2,500.” If today’s interest rate is 3.25%, here’s how your home buying budget might look:

Home price: $500,000
Down payment: 20% ($100,000)
Monthly principal and interest payment: $1,740
Total monthly mortgage payment: $2,360

“You are qualified and can afford the home,” Meyer says, “but you decide you’re going to wait for rates to retreat back under 3%.”

“Now, six months have passed and rates are still at 3.25% and the original home you wanted is no longer available. An identical property in the same neighborhood is listed, but the market kept its pace and that home is listed at $530,000.”

Thanks to the higher price tag on that home, your monthly payments have risen and you’re almost maxing out your budget. Your down payment amount has risen, too.

Home price: $530,000
Down payment: 20% ($106,000)
Monthly principal and interest payment: $1,845
Total monthly mortgage payment: $2,497

And this is assuming you haven’t taken on any additional debt in the meantime, adds Meyer. “If you have an additional $1,000 balance on your credit card and can’t pay it off, you no longer qualify for the home.”

Risks of waiting to buy

“In terms of the price of the house, I have personally seen clients price themselves out of the market they were targeting just hoping housing prices were going to fall a bit and instead they continued to rise.”

“Then there is the other scenario that can happen,” he says. “Rates never go down and continue to rise.”

If mortgage rates go high enough, this could price you out of your qualified monthly payment and the home you want to buy.

For these reasons, Meyer cautions against chasing lower rates and/or lower home prices.

“It not only harms your wallet,” he says, “but more importantly, your ability to qualify for the house you want.

This underscores Meyer’s overarching point that now is always the right time to buy if you’re ready and can afford it.

Find your lowest mortgage rate before they rise further (Jan 14th, 2022)

What are today’s mortgage rates?

Call us today for updated information!

Source: The mortgage reports

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.

Market in a Min November

by Elsa Soto | Nov 28, 2021 | Blog, Buyers, Homeowners, Homes, Villas and Condos, Investment Property in Florida, Mortgages, New Construction, News, Press Releases, Real Estate Components, Real Estate News, Renters

Market in a Min November

WASHINGTON (November 22, 2021) – Existing-home sales increased in October, marking two straight months of growth, according to the National Association of Realtors®. Two of the four major U.S. regions saw month-over-month sales climb, one region reported a drop and the fourth area held steady in October. On a year-over-year basis, each region witnessed sales decrease.

Total existing-home sales,¹ https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.8% from September to a seasonally adjusted annual rate of 6.34 million in October. Sales fell 5.8% from a year ago (6.73 million in October 2020).

“Home sales remain resilient, despite low inventory and increasing affordability challenges,” said Lawrence Yun, NAR’s chief economist. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

Total housing inventory² at the end of October amounted to 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September’s supply, and down from 2.5 months in October 2020.

The median existing-home price³ for all housing types in October was $353,900, up 13.1% from October 2020 ($313,000), as prices climbed in each region. This marks 116 straight months of year-over-year increases, the longest-running streak on record.

“Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country,” said Yun. “Record-high stock markets and all-time high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions.”

Properties typically remained on the market for 18 days in October, up from 17 days in September and down from 21 days in October 2020. Eighty-two percent of homes sold in October 2021 were on the market for less than a month.

In October, first-time buyers were responsible for 29% of sales, up from 28% in September and down from 32% in October 2020. NAR’s 2021 Profile of Home Buyers and Sellers – released earlier this month⁴ – reported that the annual share of first-time buyers was 34%.

Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in October, up from both 13% in September and from 14% in October 2020. All-cash sales accounted for 24% of transactions in October, up from both 23% in September and from 19% in October 2020.

Distressed sales⁵ – foreclosures and short sales – represented less than 1% of sales in October, equal to the percentage seen a month prior and equal to October 2020.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 3.07 in October, up from 2.90% in September. The average commitment rate across all of 2020 was 3.11%.

Single-family and Condo/Co-op Sales

Single-family home sales rose to a seasonally adjusted annual rate of 5.66 million in October, up 1.3% from 5.59 million in September and down 5.8% from one year ago. The median existing single-family home price was $360,800 in October, up 13.5% from October 2020.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 680,000 units in October, down 2.9% from 700,000 in September and down 5.6% from one year ago. The median existing condo price was $296,700 in October, an annual increase of 8.7%.

“At a time when mortgage rates are still low, buying and securing a home is a wise investment,” said NAR President Leslie Rouda Smith, a Realtor® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “NAR will strive to make homeownership obtainable for all who want to pursue one of the key components of the American Dream.”

Regional Breakdown

Existing-home sales in the Northeast fell 2.6% in October, registering an annual rate of 750,000, a 13.8% decline from October 2020. The median price in the Northeast was $379,100, up 6.4% from one year ago.

Existing-home sales in the Midwest rose 4.2% to an annual rate of 1,500,000 in October, a 6.3% decrease from a year ago. The median price in the Midwest was $259,800, a 7.8% jump from October 2020.

Existing-home sales in the South increased 0.4% in October, posting an annual rate of 2,780,000, a 3.5% drop from one year ago. The median price in the South was $315,500, a 16.1% climb from one year prior.

Existing-home sales in the West neither rose nor fell from the prior month’s level, registering an annual rate of 1,310,000 in October, down 5.1% from one year ago. The median price in the West was $507,200, up 7.7% from October 2020.

The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

Ready to make a Move?

Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.