South Atlanta Househounds

If you can no longer afford to make your monthly loan payment, you may qualify for a loan modification. In essence a loan modification changes one of the variable items in your loan. It could be principle, interest rate, loan terms extended, arm rate converted to a fixed rate or they could forgive any past delinquencies. That said, lowering of the principal amount is very, very rarely done. A loan modification is never guaranteed as it is up to the bank to choose to accept or not.

Do Loan Modifications Work?

Yes and no. Statistically, it depends on the amount of modification you are able to attain. If you just can’t afford the house your in, lowering you monthly payments by 10% to 20% is not going to be the answer. Of the loan modifications written in the past year, only 37% actually resulted in a monthly payment that dropped by over 10%. What is startling is that nearly 25% of homeowners who attempted a modification had a monthly payment increase, which happens when the lenders add fees or past due interests to a loan. So what percentages of loan modifications actually work? If you get a reduction in monthly payments of 10% or more then 1 out of 4 (25%) will still go into foreclosure. If you get a reduction in monthly payment of less than 10% then nearly half of the time the borrower moves into foreclosure.

Please understand that sometimes loan modifications aren’t the right answer. If you have a second mortgage, an interest only loan or you have had a significant reduction in earnings then selling your property at a short sale and finding a rental may be a better option at this point. With second mortgages, loan modifications are very difficult to obtain as a first-lien holder doesn’t need approval to modify the first mortgage, but would have to make a more drastic change in terms if the second-lien holder doesn’t cooperate. If you’re in an interest only loan and wish to begin paying interest and principal, this will result in much higher payments than you have been making.

Who can do a Loan Modification?

You should always attempt to do your own loan modification by working with your lender personally first. I suggest you only consider using someone to assist you if you have attempted your loan modification first and it failed for some reason. Even then I suggest you start with non-profit or government agencies such as www.helpumodify.org or www.makinghomeaffordable.gov. If you are considering using a loan modification company, you need to be very cautious and protect yourself. Remember what each person or companies motivation is. You want to change the terms of your loan, the bank wants to continue loaning you money and they would rather not change anything, if you choose to use a loan modification company, they are looking to make money by assisting you. Remember that the only one who is truly looking out for your best interest first is you.

Additionally you should always be very leery of all loan modification companies. Everyone and their brother is all of a sudden a loan modification specialist and the number of loan modification scams out there is disgraceful. Beware of any companies that claim they can always get you a loan modification, anyone claiming they always get principal reductions and any that require money up front. I am not saying that ALL loan modification companies are bad, but many are so beware.

In truth, loan modifications are difficult to obtain. But this difficulty exists whether the person making the request is a homeowner, a non-profit, government agency or professional loan modifier. Lenders and loan servicers are slow to approve refinance mortgages and modifications because there’s no proof that doing so will improve the lender’s position. Many loan modifications end up in default again within the year. When this happens, the whole process starts over. But if the lender forecloses the first time, the home can eventually be sold, and some of the money can be recouped.

What You Need To Qualify

In January the Feds adopted the FDIC qualification criteria for Fannie Mae and Freddie Mac properties and have encouraged standardization with the banks by making it a prerequisite for receiving TARP funds. The good new and bad news is that you know what it takes to qualify, but if you don’t qualify it can make the entire process very, very difficult.  

If you have a FHA or VA loan, to qualify you must:

• Be 60 days late
• Must qualify with full income disclosure with a 38% debt to income (DTI)
• Must not purposefully fall behind

If you have a loan owned by Fannie Mae or Freddie Mac, to qualify you must:

• Be on time with your monthly mortgage payments
• Have the income sufficient to support the new mortgage payments
• Home must be owner occupied

These prerequisites are only current at the time of this posting. The rules are constantly changing so please make sure you have the most current information possible if you are researching a loan modification.

If you are 60 days behind your options really narrow. Everyone starts calling you for money, lenders may not accept partial payments and foreclosure is threatened and possibly even filed. Here in Georgia we have the fastest foreclosure process in the country.

So what’s the process to apply for a loan modification? Click here for information on how to apply for a loan modification.

You don’t have to be a tree hugger or environmental activist to want to be green.  In addition to reducing your monthly utility bills we have to recognize that the world’s energy sources are not unending.  Here are some ways that will not only reduce your monthly expenses but help to increase your homes value. 

Lighting

In addition to using florescent bulbs whenever possible, there are two other options for efficient lighting… light dimmers and motion sensors.  Light dimmers are switches that allow you to increase or reduce the light intensity in a room.  Be careful when using some dimmers with some florescent bulbs, they don’t play well together.  Motion sensors turn lights on and off automatically by sensing when folks enter and leave a room.  These are more effective when used in rooms that are used less often. 

Insulation

Good insulation is probably the number one way of increasing the energy efficiency of your house.   Insulation is rated upon an “R” value used to measure its ability to resist heat flow.  The higher the “R” value, the more effective it is.  Here are a few tips about insulation.

• One type of insulation maybe thicker or thinner, but if the R value is the same they should insulate equally.

• R value performance testing is done in a 70 F environment with no air movement. Ironically enough, when you need insulation the most you’re generally not in these ideal temperatures or conditions. This can result in the rated house insulation R value being higher than the actual effective R value.
• The average recommended R value of insulating material for basement insulation in North America is R-12.
• The R value in house insulation is substantially lowered when there are any air or water/moisture leaks.
• The standard R value for house insulation varies based on climate and temperature
• 1 inch of insulation is = to 30 inches of concrete.

Windows and Doors

Windows and doors account for 30% of the loss of heating or air conditioning.  Well sealed windows and exterior doors are just as important as insulation for preventing energy loss.    Wood frames are the most efficient in terms of energy loss but require painting or staining to keep them looking sharp.  Aluminum frames are very easy to maintain but are the worst rated in energy efficiency.  The best of both worlds is the aluminum-clad windows that have the easy maintenance of aluminum but the improved efficiency of wood. 

Cooling

Ceiling fans are much more energy efficient way of cooling than air conditioners.  Also using light colored drapes or blinds will help to reflect much of the suns rays away from your house.  You can save as much as 10% a year on heating and cooling bills by turning your thermostat back 10-15% for 8 hours a day.  This can be done without sacrificing any comfort by installing a programmable thermostat. 

Landscaping

The way you landscape your yard can drastically reduce your energy bills.  To provide more shade plant large growing trees, vines and shrubs on the south and west sides of your house.  In addition to adding curb appeal, careful planting of trees can add windbreaks which shield your house from the wind, to prevent heat loss.  Also planting trees or shrubs around air conditioning units can help to keep them cool, but they should not block airflow. 

Use an Energy Efficient Mortgage for your remodel

An energy efficient remodel will result in lower monthly bills but the start up costs are often higher.  If you are planning on remodeling a good option might be an EEM (Energy Efficient Mortgage).  To qualify for an EEM, the money you save on your monthly utility bills must be greater than the monthly repayment of the EEM, and your total savings must also be more than your total costs (including maintenance). When you are granted an EEM, you have 90-180 days to carry out the remodeling work. Additionally, you cannot be granted an EEM if you apply after remodeling has started, or if you apply after any other financing has been granted.  You can find more information on EEM’s here:   http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm

Just because we’re having cooler temperatures it doesn’t mean cooler home sales.  The trick is to warm up and make your home a refuge from the cold.  While it is true that there are less buyers during the colder months, there is also less competition… and even fewer folks properly showcasing their home during this time of year.  In fact, most people who are shopping this time of year tend to be more serious buyer than some of the “shoppers” during the warmer months. 

Warm It Up

Think “Warm and Cozy”.  Before the buyers come through, adjust the thermostat to make it warm and welcoming.  Build a fire or turn on the gas logs.  The smell and crackle of a fire is always welcoming.  Add seasonal touches like warm throws on the couches or turning back the thick comforter on the beds. 

Make A Good First Impression

Your entryway or foyer sets the tone, so clean or paint the front door and polish the brass door knocker. If your welcome mat looks shabby replace it with a new one.  Wash the windows as the strong southern light can reveal grime and make it look like they haven’t been washed for ages. 

Let There Be Light

Encourage showings during the high daylight hours, if you show after work your practically in the dark.  Make the most of the light available by having the curtains and blinds cleaned and fully opened.  Clean all the light fixtures and put in the highest wattage bulbs they will safely take.  Before the house is shown, turn on All the lights. 

Can You Smell That?

The number one favorite is the smell of chocolate chip cookies.  Everyone likes the smell, and leave a few out on the counters for your buyers to nibble on.  Other great scents are cinnamon rolls, fresh baked bread, apple pie, apple cider or even a few drops of vanilla placed on the burner of the stove.  But be careful not to overdo it.  If  you run around with the bottle of air fresheners, burn scented candles and have a plug in each socket, it makes the buyers think your trying to cover something up. 

How About A Little Music

Create a relaxed atmosphere by tuning the radio to classical or light jazz.  You only want it playing in the background so you can barely hear it.   Even if love a good polka or metal rock, stick to classical or light jazz for the showing as they tend to have the greatest appeal to buyers. 

Make It Festive

While the holidays are over and yes, the Christmas decorations should come down, you can still use winter wreaths and dried arrangements around the door, foyers, kitchen, living room and hallways.  Another nice touch is to set the dining room with the good china and have something waiting for the buyers such as warm cider or bottled water. 

Even if your looking to buy a home in South Atlanta, it’s nice to know why the homeowners are selling.  In the last year 43.4 million Americans moved. Fifty-six percent of these moves were within the same county, twenty percent were between counties but in the same state, and nineteen percent were moves to a different state. Four percent were from abroad.  Here in Henry, Clayton, and Butts Counties the most common reasons why people sell are:  

1. Current Home is too small.  A growing family is the main reason many owners want a new home. 
2. Get a “better” house.  Sometimes people buy a house because “it’s a good deal” and not because it’s what they want.  Maybe your house doesn’t have the yard you would like, you decided that you hate stairs or your kitchen just plain annoys you. 
3. Upgrade.  Everyone is looking for the good life.  It’s normal to want bigger and better.   
4. Transfer.  Relocation for work or for family makes it necessary for us to plant new roots.  Here in South Atlanta many folks just hate the commute and will move closer to the job to make life easier. 
5. Change in Family Status.  Getting married or divorced?  Then there is a good chance someone’s gonna need to move.   Once the kids grow up and move out many homeowners want a smaller home that is easier to maintain. 
6. The In-laws.  Some folks just have too be close to their family.  In contrast, some folks just feel more comfortable with a bit of distance between themselves and crazy old Uncle Bob. 
7. Retirement.  With the number of boomers hitting retirement, adult communities are increasingly attractive to many buyers over 55.  With age also comes potential health problems that can make it difficult to climb stairs, so a one story house may be more practical. 
8. Neighborhood.  The neighborhood may have changed.  The kids that used to ride big wheels now have cars, friends move away or maybe you don’t like your new neighbor who likes too walk around in his underwear all day with the blinds open. 
9. Deferred Maintenance.  Some folks don’t like putting on a new roof or replacing siding… it’s a lot easier to just buy a new house.
10. Cash Out Equity.  In contrast to the above, some folks love home improvement.  Some homeowners like to take the money out of their house and upgrade or invest in a new fixer-upper.   
11. Lifestyle Change.  Some folks are tired of owning a home and prefer to rent or buy a Townhome.  Others may choose to travel the world and see what’s beyond the horizon.   

As to how often we move the best available data on moving is from the U.S. Census Bureau, which has been tracking move information for decades.  Americans have long been known to be mobile, with roughly a move every 5 years.  The most-recent report says “The overall moving rate has remained constant, but people are moving longer distances. 

Your home has sat on the market week after week collecting dust.  Your in agony, frustrated, mad, sad and looking for answers.  But who’s too blame?  Here is my list of common reasons why your home might not be selling… and what you can do about it.

Price

Regardless of the circumstances improper pricing is the number one reason most homes are still sitting on the market.  I love to be optimistic… I’m a glass half full sort of fella!  It’s just human nature to try and get the most you can when selling your home.  Some of the reasons we tend to overprice our homes is that we often have a high opinion of our property and many of us are emotional and attached to our homes… even when we’re trying to sell them.  Some folks may need to sell for a certain price to pay off your mortgage.  You may have bought the house for X amount.  The home down the street sold for X amount just two years ago.  Unfortunately the market doesn’t much care about most of these reasons.  The bottom line is that the market will dictate how much your home will sell for.  If your home is overpriced and you need to sell then adjust your asking price. 

Market Conditions

To sell your home in a buyers market is more challenging than a sellers market for sure.  When trying to sell in a down market, there are four basic points to focus on

• Have your property competitively priced.

• Increase buyers perceived value of your property through staging, repairing any defects and keeping your home “show ready”.

• Have your home marketed to as many targeted potential buyers as possible through internet marketing, flyers, advertisements in the paper, magazines or television. 

• Be prepared to evaluate offers and negotiate on amenities, financing and concessions. 

Location

We’ve all heard “Location! Location! Location!” and that’s because location rules in real estate.  Homes in bad locations are hard to sell, tend to be on market longer and sell at a lower price than similar homes in good locations.  If your home is in an area that has high crime, bad schools, a poorly maintained neighborhood, crazy traffic, no shopping or high power lines then your options are somewhat limited.  A good agent can help you accentuate the positives and dampen the negatives.  One option might be to suggest that you use landscaping to screen a busy road from your property and minimize the effect high traffic has on your property. 

Condition

Price and condition are the two things that the seller can do something about.  There are many do’s and don’ts to get your house ready for the “Show”.  A good agent can advise you about where your time and money is best spent. 

• It has to be clean… spotlessly clean.  Buyers are much more likely to buy an immaculate house than if they have to “overlook” the messes.   It’s a pain to put your home back into “Show Condition” before you leave for work, but you are more likely to be less inconvenienced for a shorter period of time when your house impresses and sells faster.

• It has to be maintained.  If you are planning on selling your home “AS IS” then be prepared to price it for less.  When buyers have to factor in the items they have to fix up, then your price had better be lower or you won’t stack up with the other properties.  A new coat of paint is the seller’s best friend because it makes things look and smell fresh and it’s your best return on investment.

• Keep up with the yard work.  Pull the weeds, plant some flowers or pay the neighbor’s kid to cut the grass.  If your outside lawn looks unkempt the buyer may not even want to look inside. 

• Stage, de-clutter and de-personalize your home if possible.  You may love your home but you want the buyer to see the home as they want it to be.  Less equates to more value so pack away personal photos, get rid of the knick-knacks and eliminate your house of clutter.  Using warm neutral colors, keeping inside plants fresh and staging your home makes people want the image that comes with your house. 

Marketing

If potential buyers don’t know your home is available, then it’s not gonna sell.  No matter how nice your home is or how good your price is, no marketing equals no sale.  Long gone are the days when an agent could just list your property in the local multiple listing service and wait for another agent to bring forth a buyer.  Top agents utilize a multilevel marketing plan that includes newspaper advertisements, open houses, fully stocked flyers, Craig’s list, individual property websites, just listed post cards, virtual tours, placements in real estate magazines, placement on real estate websites and even television ads.   If your home isn’t being marketed in these ways or more, find an agent who will market your property the way it deserves. 

The Wrong Agent

Experienced, friendly, enthusiastic, and diligent agents with good marketing skills are crucial where the wrong agent will overprice your home, fail to screen qualified buyers, be unresponsive to you or other agents and keep you in the dark through the whole process.   With the thousands of agents to choose from in Henry County, you have the opportunity to be selective and find someone who works well with you and shares your passions, concerns and needs.  I think it’s always sound to interview several agents and find the right fit for you. 

Flexibility

A difficult seller who fights you every step of the way is incredibly frustrating to the buyers and agents.  If you truly want to sell your home try to be as accommodating as you can in terms of showings, open houses and agent viewings.  It may be inconvenient at times, but it goes a long way towards selling your home.  Be open and flexible about price, concessions and terms during the negotiations.  I’ve had a deal fall through over a $500.00 difference in price that in the end resulted in waiting an additional 3 months for another offer that was $1000.00 lower than the original offer. 

Lastly there are just a few hot buttons to avoid:

Don’t do “showing by appointment” unless your home can be listed as a luxury property.  There is so much inventory in Henry, Clayton, Butts and Spalding Counties that a majority of buyers agents will skip your house if they have to coordinate and schedule a time. 

Eliminate all odors and funky smells.  The house that smells doesn’t sell.  Most sellers are not aware of how their pets, smoking or unique foods can drive away potential buyers by the dozen.   

Don’t be home during a showing.  Take a walk, visit friends or go to another room if you can’t leave.  Potential buyers won’t feel comfortable with you in the same room as they view your house.