Talking the real estate talk…

15 Real Estate Buzzwords Explained

So you are entering the real estate world? Whether you are trying to buy or sell a home (or do both!), you need to familiarize yourself with the lingo. You don’t want industry jargon to confuse you and keep you from missing something crucial. Here are 15 real estate buzzwords to keep you in the know.

Adjustable Rate Mortgage (ARM)

When applying for a home loan, you can get an adjustable-rate mortgage (ARM) or a fixed-rate mortgage. An ARM usually has a specific interest rate for a set time and then the interest rate fluctuates. Most of these mortgages have a cap on how high the interest rate may increase.

Amortization Schedule

First off, amortize basically means to reduce a debt. An amortization schedule is a detailed breakdown that illustrates how much interest and principal of the mortgage has been paid off and how much remains with each payment.

Closing

The final step in a real estate transaction, a closing is the transfer of the title of the property for money or other considerations.

Down Payment

The down payment is the amount of money that a buyer pays upfront in order to purchase a property. This amount is typically between 5% and 25% of the value of the property.

Escrow

When a third party holds property, cash and the property title until all conditions of the property agreement have been satisfied. The third party, likely a lawyer, will then hand over the assets to the respective parties, as outlined in the agreement.

Fannie Mae/Freddie Mac

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are two government-sponsored enterprises that purchase mortgages from lending institutions. Their purpose is to promote stability and affordability in the housing market.

Flipping

Flipping is a way to invest in real estate with the goal of purchasing a property to re-sell it. Investors profit from the resale of the property if its market value increases either through price appreciation or repairs and remodeling.

Good Faith Estimate

A good faith estimate is an approximation of the total cost of the purchase of property. It is provided before the mortgage loan is secured so the homebuyer can compare the offers of different lending institutions.

Lien

A lien occurs when a legal claim is put on a property in order to receive payment for debt or for services rendered. The holder of the lien can sell the property in order to recover the money owed.

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Can you deduct your remodel? Some resources to find out…

Tax Tips Help Clients Deduct Remodeling Costs

HouseLogic | January 24, 2014 | link

Can homeowners deduct the cost of their kitchen remodel on their 2013 taxes? How about the interest on the home equity line they used to fund their bathroom upgrades?

Answer those and other homeownership tax questions by posting to your website a free article, Your Top Homeownership Tax Questions Answered, from the REALTOR® Content Resource. It’s one of five free articles now available in the January “Get Your Tax-Filing Party Started!” article package. Share all five today.

Veterans showed up big in 2013…

VA Loans Have Record-Setting 2013

The Department of Veterans Affairs backed 630,000 mortgages in fiscal year 2013, an all-time high for the benefit program. That record volume punctuates an incredible recent run for VA loans, which have experienced tremendous growth in the wake of the financial collapse.

VA loan volume has soared 372 percent since fiscal year 2007, driven in large part by historically low interest rates and a more restrictive lending environment that made conventional and even FHA financing tough to secure.

In addition to the record volume, the VA made history in 2013 by guaranteeing its 20 millionth mortgage, which went to the surviving spouse of an Iraq War veteran.

VA lending boom

Here’s a snapshot of national VA loan volume over the past seven years:

Fiscal year 2013: 629,312
Fiscal year 2012: 539,884
Fiscal year 2011: 357,592
Fiscal year 2010: 314,011
Fiscal year 2009: 325,690
Fiscal year 2008: 179,670
Fiscal year 2007: 133,313

The need for higher credit scores and bigger down payments has reinvigorated this home loan program. VA loans have no required down payment and feature more flexible and forgiving requirements.

Uncle SamDespite that flexibility, they’ve had the lowest foreclosure rate of any mortgage on the market for nearly all of the past five years, according to statistics from the Mortgage Bankers Association.

Most VA lenders are looking for a credit score of at least 620. Even that can be a difficult benchmark for some veterans, but it’s considerably lower than typical requirements for both FHA and conventional financing. In November 2013, the average credit score on a successful conventional loan was 756, according to Ellie Mae; for FHA loans, it was 690.

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Solid results mean more money for buyers…

Financing is Starting to Flow

Financing is Starting to Flow

Despite seeing 30-year fixed rate mortgage interest rates that were a hefty 1 percent point higher in December than a year earlier, the U.S. housing market is continuing to post solid results, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

Survey results for December pointed to a housing market that was significantly healthier at the end of 2013 than it was a year earlier. For non-distressed properties, the average time on market was lower and the average sales-to-list price ratio was higher compared to year-ago levels.

The new HousingPulse data also confirms that mortgage lending conditions have improved over the past year. Specifically, the survey data shows an increase in Fannie Mae and Freddie Mac financing – particularly for first-time homebuyers – as well as a plentiful supply of jumbo mortgage financing in most regional housing markets.

“Six months after the May-June 2013 rise in interest rates, the housing market is showing remarkable resilience,” said Thomas Popik, research director for the HousingPulse survey. “A year-over-year comparison of key metrics points to a housing market that was stronger at the end of 2013 than it was at the end of 2012.”

The average time on market for non-distressed properties, an important sign of health in the housing market, stood at 9.7 weeks in December (based on a three-month moving average), according to the HousingPulse survey. This was down from 12.4 weeks in December of 2012.

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Another game-changer – drones coming soon!

Drones in Real Estate: Soon, But Not Yet

The excitement around drones is increasing, and for good reason: The technology is steadily getting to the point where many commercial applications are possible, including for use in marketing real estate. Being able to hoist a camera up on a drone, or unmanned aerial vehicle, has the potential to be a cost-effective way to get dramatic shots of listed property, particularly for large, high-end homes or big expanses of land.

But while the technology is falling into place, a lot still needs to be done on the regulatory side. Drones present very real and very difficult issues, including safety and privacy. The safety issues are clear: People operating drones have to be trained, and systems have to be in place to help protect people nearby should something go wrong. On privacy, a regulatory system has to be in place to help reduce the chances of drones being used to take unauthorized photos and video.

Along with these two concerns is the bigger national security concern, since a weaponized drone is a danger of national importance.

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3D Printers: The Game-Changer?

This 3D Printer, Capable Of Building A House In A Day, Could Change Construction Forever

Imagine being able to lease a 3D printer to build your entire house.

The technology, called Contour Crafting, is already here and can build a 2,500-square-foot home in 20 hours.

The massive robot printer was invented by University of Southern California professor Behrokh Khoshnevis, who says that the technology is so versatile that it can be used to build homes in slums or human habitats on Mars.

The technology is ideal for the world’s slums and areas destroyed by natural disasters, claims Khoshnevis, because the robot’s construction is cheaper, stronger, faster, safer and more eco-friendly than manual construction.

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To remodel or not to remodel?

Remodeling Update: Putting on a Pretty Face Pays Off Best

Remodeling Update: Putting on a Pretty Face Pays Off Best

A home’s curb appeal is crucial because it is the first thing buyers notice about a home. That’s why Realtors rated eight exterior projects among the top ten most valuable home improvement projects in the 2014 Remodeling Cost vs. Value Report.

“With many factors to consider such as cost and time, deciding what remodeling projects to undertake can be a difficult decision for homeowners,” said National Association of Realtors President Steve Brown, co-owner of Irongate, Inc., Realtors in Dayton, Ohio. “Realtors® know what home features are important to buyers in their area, but a home’s curb appeal is always critical since it’s the first impression for potential buyers. That’s why exterior replacement projects offer the greatest bang for the buck. Projects such as entry door, siding and window replacements can recoup homeowners more than 78 percent of costs upon resale.”

Realtors judged a steel entry door replacement as the project expected to return the most money, with an estimated 96.6 percent of costs recouped upon resale. The steel entry door replacement is consistently the least expensive project in the annual Cost vs. Value Report, costing little more than $1,100 on average.

Eight of the top 10 most cost-effective projects nationally, in terms of value recouped, are exterior projects. A wood deck addition came in second with an estimated 87.4 percent of costs recouped upon resale. Two different siding replacement projects also landed in the top 10, including fiber-cement siding, expected to return 87 percent of costs, and vinyl siding, expected to return 78.2 percent of costs. Out of the top 10 projects, the fiber-cement siding replacement project improved the most since last year, with costs recouped increasing by more than 15 percent. Two garage door replacements were also in the top 10; a midrange garage door replacement is expected to return 83.7 percent while an upscale garage door replacement follows closely at 82.9 percent of costs recouped. Rounding out the top exterior remodeling projects were two window replacements; a wood window replacement is estimated to recoup 79.3 percent of costs and a vinyl window replacement is estimated to recoup 78.7 percent of costs.

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