The FHA, or Federal Housing Administration, has helped many a condo owner buy a Minneapolis condo for sale by providing mortgage insurance through FHA-approved lenders. However, a change in policy, announced in January, may make it harder for those with poor credit.
Before we talk about FHA’s change in policy, let’s cover a few of the basics about the FHA and how it might help you buy a Minneapolis condo for sale.
What is the FHA?
The FHA is a government agency that provides mortgage insurance to approved lending institutions. It assists condo buyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults. This encourages lenders to make loans to borrowers who might otherwise not be able to get a loan.
What is an FHA Loan?
An FHA loan is a loan provided by an FHA-approved lenderand insured by the FHA. In other words, the FHA guarantees that a lender won’t have to write off a loan if the borrower defaults – the FHA will pay. Because of this guarantee, lenders are willing to make mortgage loans.
An FHA loan might help you get a mortgage by providing:
•Lower down payments
•Lower closing costs
•Easier credit qualifications
Now let’s talk about the changes FHA is making…
The Future of FHA Loans
Until recently, the FHA has managed to weather the real estate turmoil rather well. In fact, the turbulence surrounding other lenders had potential condo buyers flocking to take advantage of FHA loans. However, even FHA’s bank account is starting to suffer. In order to shore up capital reserves and keep 34 million families in their condos, the FHA is changing the rules.
Before the changes, borrowers were required to pay a down payment of 3.5% of the cost of the condo. Now, borrowers with a credit rating below 580 will be required to pay at least a 10% down payment. As well, the good upfront mortgage insurance premiums of 1.75% are increasing to 2.25%. The FHA is now trying to get Congress’ approval to raise the annual premiums from 0.55%, although the amount it will seek is still unknown.
What This Means for You
If you’re interested in buying a Minneapolis condo for sale or Minneapolis loft for sale, but haven’t because you’re waiting for the market to bottom out, you may end up losing out on a great deal. With almost record low mortgage rates, condo values lower than they’ve been for eight years, the first-time and upgrade condo buyer tax credits and a wide selection of condos and lofts, there may never be a better time to buy.
Whether you want to use an FHA loan or a traditional loan, I can help you cash in on this great buyer’s market. Call me today at 612.877.1676 or email me at ben@cityoflofts.com
Last November, when Congress approved an extension on the first-time condo buyer tax credit, potential condo buyers who missed the original deadline were excited. It was another chance to buy a Minneapolis condo for sale or Minneapolis loft for sale and receive an often badly needed $8,000 on their tax return.
Real estate agents were excited as well, because the tax credit extension expanded to include “upgrade” buyers – those who wanted to replace their current condo with a bigger one. The possibility of selling a condo was higher than it’d been in a while. However, expansion to include upgrade buyers wasn’t the only change.
If you’re hoping to buy a Minneapolis condo for sale and take advantage of the tax credit before the new 2010 deadlines, here are a few things to keep in mind:
•Two dates are crucial. You must sign a contract before April 30. The closings must be complete by June 30. One of the best ways to make sure things go smoothly is to get pre-approved for a mortgage before you go condo shopping. Pre-approval tells you, as well as the seller, exactly how much condo you can afford. This way, you don’t waste your time or the seller’s.
•Negotiate without emotion. Potential buyers have lost the condo of their dreams because they became competitive. If you’re negotiating for closing costs, housing price or anything else, make sure that your requests are reasonable. Don’t change something “just because.”
•Taxes must be mailed in. Due to people trying to scam the system, you won’t be able to file your taxes electronically; you’ll have to mail them in. Make sure you’re using the right forms, and, if you need your tax refund by a specific time, you might want to file early.
•Documentation is truly priceless. Again, thanks to scammers, buyers will have to include a signed mortgage statement, proof of residency and a driver’s license with their taxes.
You still have until April 30 to sign a contract on a Minneapolis condo for sale or Minneapolis loft for sale to get the tax credit. Today’s real estate market is beneficial for buyers. Put it to work for you!
If you’d like to take advantage of the condo buyer tax credit, I can help. Call me right away at 612.877.1676 or email me at ben@cityoflofts.com so we can beat the deadlines.
New Years has just turned the corner, and for many with Minneapolis condos for sale, it’s the perfect time still to make some resolutions. Let’s be expansive, though, shall we? Don’t say, “I will sell my loft by May.” We can be more specific than that. Here’s a short list of resolutions that might help you take that home off the sales shelf:
1.Resolve to look over the competition. Not just one or two of the Minneapolis condos for sale, but ten or eleven. Look at them with the buyer’s mindset. What selling points do they have? What negative points do they have? Your goal should be to outshine the competition. You can’t do that if you don’t know what the competition is.
2.Resolve to do a little home improvement. These don’t have to be big projects. Your project could be as simple as adding a few bushes for better curb appeal. You don’t have to spend a lot of money or a huge amount of time for the home improvement to count. What you do have to do, however, is make the improvement count. In other words, don’t forget to walk buyers past whatever you’ve decided to do, or tell your real estate agent about it.
3.Resolve to check with your agent about the state of your home. Not when they think it will sell, but what you can do to up the value. Remember, “value” is a relative term. Upping the value for buyers may be as simple as cutting $5,000 off your price.
4.Resolve to be calm if a buyer suggests a lower price than you want. Consider the options fully – don’t just snap his or her nose off. Can you afford to let the loft go at the offered price? If you can and still want to say no, think about it… how long did it take to get this potential buyer? Can you afford to wait longer?
If you have one of the Minneapolis condos for sale, keep in mind that it’s just one of the condos for sale. You have an amazing amount of competition; not just here, but around the nation. Take a chance to do something a little different. Your New Years may turn out to be even happier than you expected!
If you’re looking for unique ways to sell your home, I can help. Call me at 612.877.1676 or email me at ben@cityoflofts.com for more information
Oh, the dreaded/happy DOM question. “How long has this house been up for sale?” If it’s your Minneapolis condo for sale we’re talking about, you’re probably wondering about the split “dreaded/happy” bit. For that matter, whether you’re a buyer or a seller, you’re probably asking, “what the heck is ‘DOM’?”
Days On Market
“DOM” is the shortened industry term for Days on Market, used by the multiple listing services(MLS). It’s exactly what it sounds like: the number of days your Minneapolis condo for sale has been on the market. This metric covers the time it actually goes on sale to the time the deal is closed.
Why Is DOM Important?
Remember the “dreaded/happy” part at the beginning of this article? As a buyer’s agent, I might gleefully answer, “Fifty days.” I say “gleefully”, because a house that has sat on the market for a long time is a good thing for my client. The seller is probably more eager to sell than a month before, and is most likely willing to work a deal. An eager seller makes a happy buyer in most cases.
On the other hand, as a seller’s agent, I might not be so happy about it, and for the same reason. My seller is now an eager seller. I want to get the best deal for my client, but I know the buyer has the upper hand. It is then up to me to help my client get the condo sold without giving away the barn, the pool, the tool shed and the tools.
Already, you may be beginning to understand how the Days on Market metric can affect the sale of your condo.
The problem with the DOM metric is that it causes buyers and agents to build false assumptions. If a condo has been on the market for an above-average length of time, we start to wonder, “What’s the matter with that listing?” Even though I know there are other reasons for a condo to go static and not sell, many people automatically think there’s something wrong.
Although you can’t force a Minneapolis loft or condo to sell, you do have control over some of the reasons for an extended DOM metric:
•The condo may be overpriced – Nothing is wrong with the property itself; it’s just priced too high.
•Testing the market – Although it’s a big mistake and agents will tell you so, some sellers test the market by throwing a high price on a condo they don’t care if they sell – just to see if somebody is foolish enough to take it.
•Sticking to your guns – Often, sellers get fixed on a price and won’t budge, come hell or high water. They figure they can wait around until the market can meet their price, not the other way around.
•Renovations – Sometimes, a condo will go on the market in the middle of renovations. The sellers aren’t ready to let the condo be seen, so it just sits there.
•Availability – A growing problem is the lack of access to a Minneapolis condo for sale. Sadly, agents and FSBOsalike seem to be unavailable when a buyer wants to view the condo. Obviously, no viewing means no sale.
Don’t let your DOM get high because of simple mistakes. If you’re serious about selling your condo, remember the five reasons above and make sure you aren’t doing them.
If you’re ready to sell your condo with a professional who understands how to keep the DOM to a minimum, give me a call today at 612.877.1676 or email me at ben@cityoflofts.com.
