Back in the Spring when the economy was bad but not quite in meltdown stage yet the Congress passed a housing bill that raised FHA loan limits in the MD Suburbs of DC area to $729,750 from their previous limit of $369,900.  That was a good thing.  It was also temporary.  The new limit was set to expire on December 31, 2008.

The Good News

The good news about FHA backed mortgages is that the limits are being reduced to $625,500 in the MD Suburbs of DC. Limits vary from location to location but in this area we’re good for the top limit. The new top loan amount is good for the foreseeable future. This is a huge plus for our area because homes prices are still pretty high and since the mortgages are backed by the US Government there are lots of mortgage compainies that are willing to lend money to people who qualify for them.

The other great part about FHA mortgages is that the qualification standards are significantly more relaxed than conventional mortgages.  That’s a good thing for first time home buyers, buyers with less than perfect credit, buyers who may need a co-signer that will not be living in the home (such as a parent or other family member that wants to help but won’t be living in the house), gifts from family members are still allowable for the down payment.  Here is a full run down of the FHA guidelines for lending.

Speaking of Down Payments

Part of the bad news is that the down payment required for FHA 203(b) loans - the regular type - is increasing from 3% to 3.5%. Thius means that home buyers will need to come up with more cash to make a home purchase or get someone to provide them with a gift to help out. However, the FHA 203(k) which is the loan used to help renovate homes that need repairs - think “short sales” and foreclosures - will still have the old down payment requirement.  So it actually makes the FHA 203(k) an even more attractive option when buying a home.

The Bottom Line

So the good news is that FHA loan limits remain high enough to be able to use FHA mortgages for most homes int the MD Suburbs of DC. More good news is that the FHA 203(k) and FHA 203(k) Streamlined mortgage products will stay at the old down payment requirement. The not-so-good news is that the down payment requirement for the regular “plain vanilla” FHA mortgage with increse from 3% to 3.5%

FHA is still one of the best ways to home ownership around, though.

I’m representing a wonderful client with a nice home in College Park Woods. One of the nice things about the home is that there is no wolf at the door. The Seller isn’t in a bind and there is no bank or “third party approval” that needs to get involved with the sale of the home.  If a good offer comes in, the Seller can say “Yes” and move forward to settlement pretty quickly.

It’s probably a sign of the times that no matter what condition the home is in (this one is in excellent condition) or the location of the home (excellent location, too) or the price (very reasonable), Buyers insist on offering way, way below the list price.  It would be insulting if it weren’t a little sad, too.

When Is A House A Home?

If someone is looking for a home to live in it makes sense to try and get the best terms they can get.  A fair price, possibly some help with closing costs are both good. Yet, at some point, they have to ask themselves, “Do I see making this house my home?”.

You see, this house is actually the Sellers’ home, for now.  They have lived in it, made improvements to it, gotten to know the neighbors and paid the mortgage every month. So when Buyers come and “low ball” the price and then ask for lots of additional cash for closing costs on top of the low price, it kinda hurts.

Just Saying No!

Even though this particular house has been on the market only two months, it recently received two offers. Excuse me — one Letter of Intent and one offer. Both were so low that the Seller and I, for that matter, were stunned.  The Seller also said, “NO!”  You see, not everyone is ready to sell their house at any price just to sell it.  Not everyone is in a short sale or foreclosure situation.

Sure. It’s OK to offer lower than list price.  It’s OK to ask for closing help.  It’s OK to ask for inspections and a settlement date you like.  It’s also OK for the Seller to say “No” if you’re being ridiculous. The idea of negotiating terms that are beneficial to the Buyer is to leave room for the Seller to meet the Buyer at some middle ground. If the gap between the list price and the offered price is too wide, there is really no place for the Seller to go.

So they stay put.

In another historic first, President-Elect Barack Obama has taken the traditional Saturday “radio” address and made it into a Web based video.  Now, instead of hunting for a radio station that might air the short, weekly address you can view it on the Web…anytime.

This is the website where you can find future news.  I love the domain name: Change.gov.  It kinda says it all.

I won’t be adding this every Saturday but I thought it was important enough and historic enough to add today.  It’s just a little over three and a half minutes long.

In the urban and suburban madness we call daily living aith all the stresses and strains, it’s nice to be able to find an oasis of comfort and relaxation.  I was lucky enough to find such a place at Meadow Hill Wellness in Annapolis, MD.

I actaully first saw an ad for the place in The Bay Weekly, a little newspaper that writes about life on and near the Chesapeake Bay.  I wanted to lose some weight (ok, a lot of weight) and saw a great hypnotherapy program.  So I signed up.  It seems to be working!

By chance, I saw a great program they had for massage.  That, too, turned out to be a huge gift from the Universe.

Meadow Hill Wellness offeres lots of great health enhancing services from yoga and accupunture to hypnotherapy and massage and more.  If Annapolis isn’t too far out of your way, it’s well worth checking out.

Their link has found home in the sidebar to the right (”Helpful, Informative, Interesting or Just Plain Fun”).  Click on it anytime.

It seems that the scams have begun for scalpers and counterfeiters of the tickets to the upcoming Inauguration.

I recently received an e-mail from a company claiming to have tickets to both the swearing-in and parade and the Gala Balls.

The fact is that tickets to the Oath of Office and Parade are free!  However, you can only obtain them from your Congressperson or Senator and, if you don’t have them by now, you probably can’t get them.  Some of the State Associations may have tickets to the State Balls and various parties but if you think you might get a glimpse of the First Family my guess is that unless you have already received your personal invitation, you’re out of luck.

BEWARE of scammers.  They’ll take your money and you’ll still be left out in the cold.

I want to witness history, too.  I’ll be doing it from the comfort of a warm home in front of a TV where I can see things close up.

True story:

I walk into my favorite mom and pop hardware store to get copies of keys to some of my listings.  The owners sees me and sees my jacket with the RE/MAX logo on it (very subdued and tasteful, I might add).

He asks, “How are you holding up, these days?”

I answer, “Well, it’s a whole different life.”

He responds. “I bet it is! Not too many of you guys left.”

What A Difference An Economic Downturn Makes

I remember during the housing bubble (I call it the “frenzy”), people used to come up and rib me about how much money I must be making and could I give to this charity or that event or buy this marketing thing or that. They probably thought I didn’t have a mortgage to pay or gas to keep in my car or insurance to keep up. All that “easy money” was just piling up. So it seemed.

Now, I get the “you poor guy” treatment.  A profession that was once the envy of infomercial con artists and banks is now looked on with a kind of pity. It’s amazing how things change.

I’m Still Here

The thing is, I’m still here.  Still doing the real estate thing.  It is true, a lot of people that got in during the frenzy are gone.  The “easy money” ain’t so easy anymore.  I feel good about it, though.  I like real estate.  I like the people I meet.  I like the houses. The profession has been good to me.

But, hey, if you wanna feel sorry for real estate agents, that’s OK.  I could certainly make time for any referral you’d like to pass my way!

It’s a crazy market out there!

The Maryland Contract of Sale and all of the appropriate addenda for various inspections and jurisdictions, etc. can run to 40+ pages.  Even though most of it is boilerplate put together by lawyers, there are still a lot of blanks to fill in with terms and conditions.

Instead of going to the trouble of filling out this humongous “offer” a lot of Realtors have resorted to a Letter of Intent.  These Letters say right on them that they are not offers to purchase and not enforceable.

So why use them?

They’re an easy way to ‘test the waters” to see if the Seller is even remotely interested in entertaining what is almost always a low ball offer. It’s a way to start a negotiation prior to going to all the trouble writing this 40+ page offer and having people cross out stuff, write new stuff, fax back and forth, etc. until the documents become illegible.

The challenge is that they are almost always way, way too low.  The Seller gets insulted. They either laugh or scream.  Most Buyers’ Agents know this.  Most Listing Agents know this, too.  However, It’s our job as Realtors to represent the interest of our clients faithfully according to their [the clients'] wishes.  As I often tell my clients and other Realtors, “It’s not my house.”

So we throw these low balls back and forth to each other wishing and fantasizing that maybe one day we’ll get a phone call saying, “The Seller agrees.  Write the formal offer.”

Tomorrow, I walk into a hotel ballroom in Greenbelt to convert all my Supra lockboxes and key access to Sentrilock lockboxes and key access. Woo! Hooo!!!

Neighboring jurisdictions have converted long ago (and Montgomery County/Washington, DC will convert a little later this year or early next, I understand). So I went and got my Sentrilock key and card reader several months ago. I wasn’t going to forgo showing property in either Anne Arundel County or Howard County just because Prince George’s was running out the clock on their Supra contract.

I’m seeing a lot of pluses to Sentrilock, not the least of which is that they will trade me one-to-one for all the Supra lockboxes I have. Lockboxes aren’t cheap and being able to maintain my personal inventory without breaking the bank is important. I’m just hoping they accept the key cards from all the neighboring jurisdictions. I guess it’s that reciprocity thing.

Luckily, I only have three listings that will be lockbox-less for about 24 hours. I’ll run around late this afternoon to pick up the old Supra lockboxes and then run around again tomorrow after the exchange to install the new Sentrilock lockboxes.

Hey, I guess it’ll give me something to do!

In a previous post I entitled: Will A New Administration Stimulate Home Sales?, I suggested that just because a new Administration was coming to Washington didn’t necessarily mean that home sales would see a big spike…or even a little spike.

I wrote about it because many people believe (or want to believe) that an election brings in lots more people that will need houses to live in.  This would be especially true is a brand new Administration from a different party comes to town.  Such is the case, now, with Barack Obama winning the Presidency and the Democrats gaining seats in both the House of Representatives and the Senate.

It Ain’t Necessarily So.

An article in today’s Real Estate section of The Washington Post confirms my thinking (and experience) about the likelihood that anything different will happen. This article :Change You Won’t See authored by Maryann Haggerty shows research that indicates that many of the players are already living in the area or will be commuting back and forth to their home elsewhere.

In the accompanying graphic there is a bump shortly after George W. Bush was elected for his first term. This coincides with the beginning of the housing frenzy/bubble.  As you can tell the number of home sales rises and rises and rises from about 2000 to 2005 - the year the air is being let out of the housing bubble. After 2005 you see a serious decrease in home sales, again, due to increased credit restrictions and the overall decline of the economy.

So the moral to the story is that we should not expect to see an increase in homes sales just because a change in Administration is taking place.

It’s my fantasy that the optimism and confidence that the President-Elect brings will help. We can only, er, hope.

One of the loan officers I routinely refer to my clients, Alan Gross of National City Mortgage, sent me the following update on the mortgage environment.

Earlier this year the loan limits for conforming  and FHA loans were raised up to a maximum $729,750 in high cost areas by The Economic Stimulus Act of 2008. (Ken’s note: The MD Suburbs of DC is such a high cost area.) These higher loan limits disappear on December 31, 2008.

What may not be understood is that the Jumbo Conforming Loans are almost gone now. Because of delivery requirements for the Jumbo Conforming Loans, most lenders are requiring that the loans be funded before December 15, 2008. Some are cutting off locks as early as mid November. Buyers who are considering purchasing a home with the new temporary higher limits and plan to close at the end of December may find themselves out in the cold.

Although new maximum loan limits up to $625,500 have been announced the newly calculated area median sales price index hasn’t been announced yet. The area median sales prices index is recalculated based on the housing price data from October 2007 - October 2008. This data is expected to be released in November 2008. Until the data is released the Jumbo Conforming Loan program will be in a short hibernation mode.

FHA loans will be able to close using the current maximum loan loan amount of $729,750 through December 31, 2008. The new FHA loan limit will also be $625,500 starting January 1, 2009. The maximum loan limits for various areas will also be set when the newly calculated median sales price information is released. The maximum loan amount will be 115% of the median sales price.

Stay tuned for further updates as they are released.