Stock Market Got You Down? Good News: Home Prices Are Up!

After a slow start in the beginning of 2015, home sales have grown significantly throughout the summer season. This summer, and the next few months, will be a seller’s market. A surge in home sales driven by low rates have led to tighter inventory and price gains. In 2014, the median home price for 2014 was $208,500. In June 2015, on the other hand, the median monthly home price was $236,400.

So if the stock market’s got you down these past few months, look at the silver lining—home prices are up and a seller’s dream has emerged. Learn more about the state of the real estate market in this recent article from Keller Williams.

If you’d like a report on the value of your home, contact me right away.

First-time Home buyers, Look into a 3% Down Conventional Loan

First-time home buying* just got easier and more affordable. There is a new type of loan out there that may be of interest. It’s the 3% down conventional loan, and it’s doing wonders for first-time home buyers like you.

*I have to preface this blog post with a strict definition of what a “first-time home buyer” is. Only those who have not owned any property in the past 3 years are considered a “first-time home buyer” and qualify for this type of loan. If two people are buying the home, only one needs to be a first-time home buyer.

Most recently, the loans most first-time home buyers have been selecting was either a 5% down conventional loan or an FHA loan requiring a 3.5% down payment. Now that the 3% down conventional loan is available buying a home has become a little easier and more affordable for first time buyers.  So, if you’d like to own a home, you owe it to yourself to see if you qualify.

First of all, what is the 3% down conventional loan? This loan is a better alternative to both an FHA loan (where you put 3.5% down) and a standard 5% conventional loan because it allows you to qualify with a lower down payment and it makes your mortgage insurance (aka MIP or PMI) much cheaper. Plus, once you reach 20% ownership of the property, it drops off without being forced to refinance.

I consulted with Chad Trease, Senior Loan Officer at Prime Lending for more information.

“This is a great alternative loan through the Fannie and Freddie guidelines,” he explains. “This loan may open the gates for more homeowners.”  Plus, according to Forbes, the 3% down payment conventional mortgage financing “does not handcuff borrowers to mortgage insurance forever like FHA MIP does.”

First-time homeowners still have the ability to utilize a 5% down conventional loan or an FHA loan to purchase their home but the 3% down loan maybe a better option. In addition, both the 5% and 3% down payments can be gifted if need be, allowing for even more flexibility. 

First-time home buyers, now that buying a home is more possible than ever before, it’s time to contact me to schedule a consultation and learn more. Join me and Chad at our first-time homebuyers seminar on February 26 at 6:30pm at 11005 Metcalf Ave. in Overland Park to get even more helpful information about buying a home.

FHA Property Flipping Waiver Expires—What Does This Mean For First-time Homebuyers?

On December 31, the FHA announced that the property flipping waiver had expired. The waiver prohibited the use of FHA financing on the purchase of a single-family property that was resold within 90 days of the previous acquisition. So now that the waiver has been expired, what does this mean for first-time homebuyers?

I sought out the professional opinion of Chad Trease, Senior Loan Officer at Prime Lending. “Now that the 90 day waiver has gone away,” explains Chad, “it is going to be hard to buy a house that was recently flipped.” He explained that any home that has been flipped will not be eligible for FHA financing until its 91^st day.

Is this a problem? According to Chad, probably not. “Most flips take longer than 90 days,” he explains. The reason for this action from the FHA is to do away with people who purchase a home, do little to no work on it, and try to sell the property for even more money right away.

First-time homebuyers need to be aware of this change, especially when out in the market looking to purchase a home. First-time homebuyers should also be aware that although you cannot use an FHA loan until after 90 days, you can use a conventional loan.

Almost anyone qualifies for an FHA loan, however, you are only allowed to have one at a time. FHA loans typically have very expensive mortgage insurance that never drops off the loan. According to Chad, an FHA loan is ideal for homebuyers who are credit challenged. In other words, it’s somewhat of a last resort. Conventional loans, on the other hand, are for first-time homebuyers who have not owned property in the prior 3 years. Conventional loans have a lesser down payment and have a cheaper mortgage insurance that drops off once you reach 20% of the property.

First-time homebuyers, keep in mind that it is not common for a homebuyer to purchase a flipped home before the 90-day timeline. As mentioned before, most flipped houses take longer than 90 days to complete. However, if you have further questions or concerns, contact me and we can talk through the details.

Did You Purchase a Home in 2008? What You Need to Know

Individuals who purchased a home in 2008 and took advantage of the First Time Homebuyer Tax Credit—keep reading. I consulted with Ryan L. Ross, CPA at the Leawood Office Business Center in Leawood, Kansas. He provided some insight into what you need to know as a seller who purchased their home in 2008 and claimed a credit.

First, for all homes purchased in 2008, the First-Time Homebuyer Credit is repaid over 15 years or sooner if the home is sold or ceased to be the taxpayer’s main home. For homes purchased after December 31, 2008, the credit must be repaid only if the home is sold or ceases to be the taxpayer’s main home within 36 months of the date of purchase.

Other things to note: Form 5405, Repayment of the First-Time Homebuyer Credit, must be filed for the year the home is sold or ceases to be the taxpayer’s main home. 

Be sure to look into exceptions to this repayment rule, too. These exceptions include:

• The repayment is limited to the gain on the sale of the home. Gain is typically computed by subtracting the original cost and improvements from the sales price;

• The home is destroyed or condemned, and a new home is purchased;

• Extended duty of military personnel or intelligence officials;

• Death of the taxpayer.

For more information, consult your tax advisor or contact me to get in touch with someone who can help.

The Numbers Are In! 2014’s Remodeling Projects With the Highest Cost Recouped in Kansas City

Last year, I published a blog titled The Top 10 Remodeling Projects with the Highest Cost Recouped in Kansas City that covered the home remodeling projects that gave homeowners the highest rate of return in 2013. Now that 2013 has come and gone, it’s time to see which remodeling projects will give you the best return on investment in 2014!

According to Remodeling, the top 10 remodeling projects with the highest cost recouped in Kansas City this year are:

     1.  Garage Door Replacement:

Remove and dispose of existing 16x7-foot garage door and tracks. Install new 4-section garage door on new galvanized steel tracks; reuse existing motorized opener. New door is uninsulated, single-layer, embossed steel with two coats of baked-on paint, galvanized steel hinges, and nylon rollers. 10-year limited warranty.

Cost: $1,604
Resale value: $1,233
Cost recouped: 77.0%

2.  Minor Kitchen Remodel:

In a functional but dated 200-square-foot kitchen with 30 linear feet of cabinetry and countertops, leave cabinet boxes in place but replace fronts with new raised-panel wood doors and drawers, including new hardware. Replace wall oven and cooktop with new energy-efficient models. Replace laminate countertops; install midpriced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring.

Cost: $19,854
 Resale value: $14,941
Cost recouped: 75.3%

3.  Entry Door Replacement (Steel):

Remove existing 3-0/6-8 entry door and jambs and replace with new 20-gauge steel unit, including clear dual-pane half-glass panel, jambs, and aluminum threshold with composite stop. Door is factory finished with same color both sides. Exterior brick-mold and 2.5-inch interior colonial or ranch casings in poplar or equal prefinished to match door color. Replace existing lockset with new bored-lock in brass or antique-brass finish.

Cost: $1,240
Resale value: $837
Cost recouped: 67.5%

4.  Deck Addition (Wood):

Add a 16-by-20-foot deck using pressure-treated joists supported by 4x4 posts anchored to concrete piers. Install pressure-treated deck boards in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing system using pressure-treated wood posts, railings, and balusters.

Cost: $10,311
Resale value: $6,926
Cost recouped: 67.2%

5.  Bathroom Remodel:

Update an existing 5-by-7-foot bathroom. Replace all fixtures to include 30-by-60-inch porcelain-on-steel tub with 4-by-4-inch ceramic tile surround; new single-lever temperature and pressure-balanced shower control; standard white toilet; solid-surface vanity counter with integral sink; recessed medicine cabinet with light; ceramic tile floor; vinyl wallpaper.

Cost: $17,439

Resale value: $11,444

Cost recouped: 65.6%

6.  Two-story Addition:

Add a first-floor family room and a second-floor bedroom with full bathroom in a 24-by-16-foot two-story wing over a crawlspace. Add new HVAC system to handle addition; electrical wiring to code.

Family room: Include a prefabricated gas fireplace; 11 3-by-5-foot double-hung insulated clad-wood windows; an atrium-style exterior door; carpeted floors; painted drywall on walls and ceiling; and painted trim.

Bathroom: 5 by 8 feet. Include a one-piece fiberglass tub/shower unit; standard white toilet; wood vanity with solid-surface countertop; resilient vinyl flooring; and mirrored medicine cabinet with built-in light strip; papered walls; and painted trim; exhaust fan. Bedroom: Include walk-in closet/dressing area; carpet; painted walls, ceiling, and trim; general and spot lighting.

Cost: $165,580
Resale value: $106,054
Cost recouped: 64.1%

7.  Deck Addition (Composite):

Add a 16-by-20-foot deck using pressure-treated joists supported by 4x4 posts anchored to concrete piers. Install composite deck material in a simple linear pattern. Include a built-in bench and planter of the same decking material. Include stairs, assuming three steps to grade. Provide a complete railing using a matching system made of the same composite as the decking material.

Cost: $16,291
Resale value: $10,297
Cost recouped: 63.2%

8.  Siding Replacement (Vinyl):

Replace 1,250 square feet of existing siding with new vinyl siding, including all trim.

Cost: $12,411
Resale value: $7,803
Cost recouped: 62.9%

9.  Major Kitchen Remodel:

Update an outmoded 200-square-foot kitchen with a functional layout of 30 linear feet of semi-custom wood cabinets, including a 3-by-5-foot island; laminate countertops; and standard double-tub stainless-steel sink with standard single-lever faucet. Include energy-efficient wall oven, cooktop, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. Add new resilient flooring. Finish with painted walls, trim, and ceiling.

Cost: $57,520
Resale value: $36,044
Cost recouped: 62.7%

10.  Attic Bedroom:

Convert unfinished attic space to a 15-by-15-foot bedroom and a 5-by-7-foot bathroom with shower. Include a 15-foot shed dormer, four new windows, and closet space under the eaves. Insulate and finish ceiling and walls. Carpet floor. Extend existing HVAC to new space; provide electrical wiring and lighting to code. Retain existing stairs, but add rail and baluster around stairwell.

Cost: $53,696
Resale value: $32,371
Cost recouped: 60.3%

Want to learn more about buying or selling a home in the Kansas City and Overland Park areas? Check out my Facebook page.

January is Radon Awareness Month – Get Your Home Tested For Only $100!

Image credit: Shane Lyle, Geology Extension

Kansas Geological Survey

January has been designated as Radon Awareness Month by the United States Environmental Protection Agency. But as a homeowner, do you even know what radon is? 

I caught up with my good friend John Clason with Crown Home Inspections to learn a little bit more.  In honor of Radon Awareness Month, John isn’t just inspecting homes for their radon levels, he’s doing it at a discounted price!

Before I let you in on the discount details, let’s explore what radon is and why your home may need to be tested.

As mentioned in a previous Team Ohlde blog post, radon is a silent and odorless gas that could leak into homes from the natural decay of uranium present in different types of soil. Radon contains cancer-causing alpha particles that are drawn from parched soil through draught-driven cracks in home foundation. Believe it or not, radon is the second leading cause of lung cancer, only behind smoking. The EPA estimates that approximately 22,000 people die each year from lung cancer caused by radon.

So as you can infer, having high radon levels in your home can be extremely dangerous. But the even scarier part is that it’s almost impossible to tell what radon levels your home has unless you do a radon test.  A radon tests includes a 48-hour moderation of the home. John at Crown Home Inspections uses an electric continue radon monitor that tells the radon level for each hour during the test and provides an overall reading at the end.

After the test, homeowners receive an overview of their home’s radon levels. Any home with a radon level of 4.0 picocuries per liter of air or higher should act immediately.  Luckily, it’s easy to fix any high levels of radon.

What’s the fix exactly?  A radon mitigation system can be installed in a home in about 3-4 hours.

As the cliché phrase goes, it’s better to be safe than sorry! Take the month of January to schedule a radon testing for your home from Crown Home Inspections for just $100 (a $25 discount off the regular price through February 15, 2014!).  Visit Crown Home Inspections website to learn more.

Want more help with keeping your home safe and in shape? Check out my list of local services providers! Click here. 

Fannie Mae Changes Guides on Gift Funds

Lately, I’ve been getting quite a few questions from homebuyers about the major changes to Fannie Mae (FNMA).  For starters, allow me to define Fannie Mae: Fannie Mae is a government-sponsored enterprise that primarily buys mortgages from lenders for cash or pools them and sells them as mortgage-backed securities to investors on the open market. 

So what’s changing about FNMA?  Like most industries, nothing stays the same for long—and real estate is no exception.  There are many changes coming along that will affect homebuyers in 2014 and one of those is a new FNMA rule with gift down payments.

In the past, most homebuyers have not had the opportunity to use 100% “gift funds” (a financial gift from a spouse or other blood relative, even one’s employer) for their down payment.  So many used the 3% down Conventional (97 LTV) or 3.5% down FHA option, 100% gift (96.5 LTV) options when purchasing a home or they would use a conventional loan with 5% down. But because of major changes to the real estate market, FNMA is now allowing homebuyers to use gift funds to make their 5% down payment on a conventional loan, making the 5% (95 LTV) option much more attainable, particularly for first-time home buyers.

So what does this mean for homebuyers exactly?  A whole lot of opportunity.  In order to get an understanding of this change, I talked with Jim Griffiths, a Mortgage Advisor at Stonegate Mortgage.

“There really is no downside to this change for borrowers,” explains Jim.  “While the 3% down option went away, this allows more home buyers access to conventional lending programs.  It’s perfect for first-time homebuyers who may not have had enough time to save up enough of their own cash reserves to make a down payment.  They can really use this to their advantage.”

The table below will help homebuyers further understand this change and see the minimum borrower contribution requirements for transactions that contain gifts:

As Griffiths stated, with this change, homebuyers are putting more skin in the game, not to mention more investment in the market.  The message here is that investors want to see more “skin in the game” even though it may be 100% gifted funds. 

“Bottom line, if someone can help you with your 5% down payment, you now have that option,” says Griffiths.  “Conventional lending provides a much less expensive option from a mortgage insurance perspective, which lowers the overall monthly payment.  In the long run, it can also be cheaper than an FHA loan. My recommendation is that if it’s available, take advantage of it.”

If you would like to take advantage of this new loan opportunity and begin the home buying process, please contact me today to schedule a private consultation.

Phone: 913.568.7355

Email: tohlde@kw.com

Website: www.toddohlde.com 

Or, if you have more questions regarding the new Fannie Mae guides, or if you want to inquire about qualifying for a home loan, please contact Jim Griffiths:

Phone: 913.951.3786

Email: jgriffiths@stonegatemtg.com

Website: Jim Griffiths

Want more tips and breaking news about the housing market? Stay posted on my Facebook page or contact me.