Taking Out a Reverse Mortgage

More and more homeowners are starting to consider taking out a reverse mortgage.  A reverse mortgage could convert the equity of your home into cash, but don’t sign up unless you fully understand the costs.   CNN Money recently offered their take on what to keep in mind when considering a reverse mortgage.

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Home Odors that will Scare off Buyers

“Sniff, sniff–that smell is buyers walking away from your odorous abode.”

It may come as a surprise to some, but home odors can turn into a huge problem when it comes to selling your home.

When a buyer walks into a home for the first time, they’re using all of their senses to get a feel for the home and to picture how their life would fit with this home.  And many buyers will have trouble doing this if they can’t get past a bad smell.

A recent article released by MSN pointed out that, “A buyers market is a tough challenge for sellers… Your house has to look a little better, smell a little better and be priced a little better than the other houses the buyer will look at that same day.”

The MSN experts caution sellers not to underestimate the power a bad smell may have on a potential real estate transaction: “Homebuyers don’t want houses that stink. Sellers must identify and remediate odors that make prospective purchasers hold their noses and run for the exits.”

Unfortunately, determining whether or not your home has any problematic smells is not always easy. People get used to the way their own homes smell, making it very difficult to identify a smell that is so familiar to you as one that offensive or unpleasant to someone else

Outside sniffers

The best way to find out whether a house smells OK is to “ask someone who doesn’t live there to come inside and give an opinion,” MSN experts advise.

The best person to rely on for this is the real estate agent hired to sell your home.  It’s important to pick the right agent, as a good agent will always advise on your home’s weak points and ways to minimize or eliminate any potential problem areas.

Pet odors

When it comes to home odors, two of the biggest offenders are pets and cigarettes, neither of which are an easy fix.

“The point might seem obvious, but the first line of defense in any smelly situation is to remove the source of the problem, even if that means a beloved pet must board elsewhere for a while… If the pet is in the house, you’re introducing new odor every day.”

Pet urine, among the worst of bad odors, can seep into the carpet fibers and padding, concrete and wood floors, tile grouting, upholstered fabrics, furniture cushions and pillows.  “Oftentimes…you have to remove the carpet, remove the pad and seal the floor, and then replace the carpet and the pad.”  Cleaning the carpet may help a little, but any humidity will reactivate odors as they rise from the carpet padding or floor beneath.

No smoking

Cigarettes leave a lingering odor, as it clings to furnishings, drapes and other window coverings and work its way inside walls.  According to MSN, “Some topically applied solutions can help to reduce the stench, but an ozone generator, hydroxyl generator or air scrubber should be more effective.”  While these approaches are very effective, there is no guarantee that an odor can be eliminated.

You may also want to consider remedial action, say the MSN experts, in the event that someone suffers a long illness or dies in a home.  In most cases, a good airing may be adequate to remove any odors.  However, “In the case of a violent death, however, professionals who handle what’s known as ‘trauma cleanup’ should be called to do the job. The cost might range from a few hundred dollars to $1,000 or more depending on the type of remediation and the square footage.”  For these types of extreme situations, its probably best to bring in professional help: “It may be traumatic for you to do it yourself.”

Why Picking the Right Agent is So Important

According to the Existing Sales Report issued two weeks ago by the National Association of Realtors (NAR), the percentage of cancelled contracts is on the rise.  NAR defined this alarming trend as: “Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”

Only 9% of all contracts were canceled in August 2010.   In August 2011, a whopping 18% of all contracts were canceled.  In one short year, the percentage of canceled contracts doubled!

This issue only serves to highlight the importance that both buyers AND sellers take the time to pick the right real estate professionals that will be able to help you throughout the process with all of your real estate needs.

Buyers should make sure that their agent will not only be able to help find them the right home, but will be helpful and knowledgeable throughout the process, i.e. mortgage, title, escrow, etc.

Sellers should take note that now, more than ever, agents have to be able to sell your home twice:  first to a qualified buyer, and then to the bank by way of the appraiser. The second sale can be MUCH more challenging–coming up short here could potentially kill the deal.  However, the right agent will have no trouble selling your home during an appraisal.

The bottom line is that in the current housing market, there are too many things that can go wrong before and during the Escrow process.   Now, more than ever, it is absolutely crucial for sellers and buyers to use the right real estate professionals to guarantee that their deal will actually close.

New Conforming Loan Limits

Effective October 1, the previously elevated conforming loan limit for home mortgages, were brought back down.  In Los Angeles, the maximum conforming loan amount fell by more than $100,00.  The federal government previously increased the conforming loan limit (which is the maximum loan that sold to FannieMae, FreddieMac and GinnieMae) as a part of their housing market rescue efforts.  Unfortunately this intervention came with an expiration date of September 30, 2011.

Why it Matters

According to Zillow, “Your once ‘conforming mortgage’ could soon become a jumbo loan, with mortgage rates on the latter pricing about half a percentage point or higher than the former. So instead of enjoying an interest rate of 4.00% on your home loan, you may be stuck paying 4.50% or higher for the same mortgage next week.”

Conforming loans are easier to qualify for, require less of a down payment, and are more marketable to investors and cheaper for consumers because they can be sold on the secondary loan market.

What You Can Do

There are definitely options available to homeowners and home buyers affected by the change.  Buyers should consider putting down more money upfront to keep the loan amount at or below the new loan limit.   Another option could be breaking up your loan into a first and second mortgage, so as to keep the first below the conforming limit.   This will make qualifying easier and will reduce your interest rate, potentially saving you a significant amount of money in the long run.  Lenders will also be more accommodating as a result of this change in conforming loan limits.

According to Zillow, though, “Only about one percent of loans extended to homeowners over the past three years would have been affected by this change, so most of us won’t even notice.”