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No Fannie, no Freddie

The Obama administration has offered three options for reducing the government's role in home loans.

February 23, 2011
The Obama administration took its first, tentative step this month toward a future without Fannie Mae and Freddie Mac, the troubled mortgage finance giants. The Treasury Department laid out three options for reducing the government's role in home loans, each of which would phase out Fannie and Freddie and shrink or eliminate federal support for run-of-the-mill mortgages. Such an approach is likely to raise mortgage interest rates, especially for 30-year fixed loans, and could make it harder to get a mortgage during a financial crisis. But it would also greatly reduce the likelihood of taxpayers being stuck covering the cost if a downturn causes foreclosures to mount.
Congress created Fannie Mae and Freddie Mac to help lower the cost and increase the availability of home loans. Before the Depression, banks typically required mortgages to be paid off in one lump sum after five years. That's because banks' reliance on short-term sources of money, such as customers' deposits, left them ill prepared for the long-term risks posed by loans that wouldn't be paid back for years.
Launched in 1938, Fannie Mae's original mission was to purchase and hold loans guaranteed by the Federal Housing Administration. By offering banks the chance to sell the loans they issued, Fannie Mae made it possible for them to offer more mortgages and to allow longer payback periods. The eventual result was the wide availability of consumer-friendly 30-year fixed-rate loans. Freddie Mac, which Congress created in 1970, made even more capital available for mortgages by buying, bundling and selling loans to investors.
But Fannie Mae, which became a shareholder-owned company in 1968, and Freddie Mac, which has always been shareholder owned, combine public missions and private ownership in a dangerous way. Because Congress created the two companies and relied on them to promote affordable housing, investors and lenders assumed (correctly) that they wouldn't be allowed to fail. That made it cheaper for Fannie and Freddie to borrow money, giving them an unfair advantage over competitors in the secondary market for home loans.
More important, the implicit federal guarantee encouraged the companies to take excessive risks, which they did by jumping into the market for subprime and other exotic loans late in the housing bubble. After racking up billions in profits for their shareholders and employees, they foundered in 2008, sticking taxpayers with more than $150 billion in losses.

Let's Go Shopping!

Average listing price in Lexington went down 0.78% to $218,869 from prior week.
Median sales price in Lexington  went down 8.14% to $140,000 from prior quarter.
Average price per sqft in Lexington  went up 3.45% to $90/sqft from prior quarter.
There have been 399 price reductions in Lexington.
There are 122 foreclosures in Lexington.

Median sales price in Newberry went down 61.11% to $35,000 from prior quarter.
There have been 39 price reductions in Newberry.
Average listing price in Newberry went up 2.21% to $145,817 from prior week.
There are 16 foreclosures in Newberry.

Average listing price in  Columbia went down 0.03% to $188,026 from prior week.
Average price per sqft in Columbia went down 3.95% to $73/sqft from prior quarter.
There have been 1,195 price reductions in Columbia.
There are 691 foreclosures in Columbia.

Average listing price in Irmo went up 1.40% to $207,154 from prior week.
Median sales price in Irmo went down 9.76% to $143,000 from prior quarter.
Average price per sqft in Irmo  went up 5.88% to $90/sqft from prior quarter.
There have been 170 price reductions in Irmo.
The are 87 foreclosures in Irmo.

Call Hope Dorn with ERA Wilder Realty at (803) 944-9544 to begin your dream home search!

Free Money to Buy a Home!

If you have been procrastinating about buying a home, get off of the fence! Rates are starting to climb and home prices are at an unbelievable low. If downpayment is an issue, consider this:

Many lenders are offering the 5-to-1 down payment match. If you bring $500 to the table, they turn it into $2,500. If you bring $1000, they turn it into $5,000.

SC State Housing Authority  - The Authority offers $5000 down payment assistance based on availability, which may be used toward down payment and closing.

USDA Rural Development  - Rural Housing Direct Loans are loans that are directly funded by the Government.   These loans are available for low- and very low-income households to obtain home ownership.  Applicants may obtain 100% financing to purchase an existing dwelling, purchase a site and construct a dwelling, or purchase newly constructed dwellings located in rural areas. Some of the neighborhoods are closer into town than you think.  

For more information on finding the perfect home and making it happen, contact Hope Dorn with ERA Wilder Realty at (803) 944-9544 or by email at hope.dorn@era.com.

What do real estate agents really do?

One of the most complex and significant financial events in peoples' lives is the purchase or sale of a home or investment property. Because of the complexity and importance of this transaction, people typically seek the help of real estate brokers and sales agents when buying or selling real estate.
Real estate brokers and sales agents have a thorough knowledge of the real estate market in their communities. They know which neighborhoods will best fit clients' needs and budgets. They are familiar with local zoning and tax laws and know where to obtain financing for the purchase of property.
Brokers and agents do the same type of work, but brokers are licensed to manage their own real estate businesses. Agents must work with a broker. They usually provide their services to a licensed real estate broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent's sale of the property. Brokers, as independent businesspeople, often sell real estate owned by others; they also may rent or manage properties for a fee.
When selling property, brokers and agents arrange for title searches to verify ownership and for meetings between buyers and sellers during which they agree to the details of the transactions. In a final meeting, the new owners take possession of the property. Agents and brokers also act as intermediaries in price negotiations between buyers and sellers. They may help to arrange financing from a lender for the prospective buyer, which may make the difference between success and failure in closing a sale. In some cases, brokers and agents assume primary responsibility for finalizing, or closing, sales, but typically this function is done by lenders or lawyers.
Agents and brokers spend a significant amount of time looking for properties to buy or sell. They obtain listings—agreements by owners to place properties for sale with the firm. When listing a property for sale, agents and brokers compare the listed property with similar properties that recently sold, to determine a competitive market price for the property. Following the sale of the property, both the agent who sold it and the agent who obtained the listing receive a portion of the commission. Thus, agents who sell a property that they themselves have listed can increase their commission.
Before showing residential properties to potential buyers, agents meet with them to get an idea of the type of home the buyers would like, and how much the buyers can afford to spend. They may also ask buyers to sign a loyalty contract, which states that the agent will be the only one to show houses to the buyer. An agent or broker then generates lists of properties for sale, their location and description, and available sources of financing. In some cases, agents and brokers use computers to give buyers a virtual tour of properties that interest them.
Agents may meet numerous times with prospective buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling details. To a young family looking for a house, for example, they may emphasize the convenient floor plan and the proximity to schools and shopping. To a potential investor, they may point out the tax advantages of owning a rental property and finding a renter. If negotiation over price becomes necessary, agents must follow their client's instructions thoroughly and may present counteroffers to reach the final sales price.
Once the buyer and seller have signed a contract, the real estate broker or agent must ensure that all terms of the contract are met before the closing date. If the seller agrees to any repairs, the broker or agent ensures they are made. Increasingly, brokers and agents must deal with environmental issues as well, such as advising buyers about lead paint on the walls. In addition, the agent must make sure that any legally mandated or agreed-upon inspections, such as termite, heating & air and mold inspections, take place. Loan officers, attorneys, and other people handle many details, but the agent must ensure that they are carried out.
Most real estate brokers and sales agents sell residential property. A small number—usually employed in large or specialized firms—sell commercial, industrial, agricultural, or other types of real estate. Every specialty requires knowledge of that particular type of property and clientele. Selling, buying, or leasing business property requires an understanding of leasing practices, business trends, and the location of the property. Agents who sell, buy, or lease industrial properties must know about the region's transportation, utilities, and labor supply. Whatever the type of property, the agent or broker must know how to meet the client's particular requirements.
Work environment. Real estate agents and brokers often work more than a standard 40-hour week, often working evenings and weekends for the convenience of clients. Although the hours are long and frequently irregular, most agents and brokers have the freedom to determine their own schedule.
Advances in telecommunications and the ability to retrieve data about properties over the Internet allow many real estate brokers and sales agents to work out of their homes instead of real estate offices. Even with this convenience, workers spend much of their time away from their desks—showing properties to customers, analyzing properties for sale, meeting with prospective clients, or researching the real estate market. - Courtesy of Bureau Of Labor and Statistics

For the Ultimate Real Estate Experience, contact Hope Dorn with ERA Wilder Realty at (803) 944-9544 or by email, hope.dorn@era.com.

Home Loan Checklist

     After you have received your prequalification letter, freeze your credit activity! The initial credit application that you fill out with your lender is not the final application.  The final application is signed at closing. If your financial condition changes during the period between the initial application and closing then those changes need to be addressed in the final application and loan is re-underwritten. A final credit report, called a “soft pull”, is required within 48 hours prior to closing to make sure there are no new inquires or accounts. Be prepared to offer explanation on any recent credit inquires.
     To ensure a smooth closing without delay, use the following checklist to have everything ready for your lender ahead of time.

  • $450.00 For application fee (to cover appraisal). Credit card or debit card preferred.
  • Current pay stub to cover a minimum of 30 days. (If you get paid weekly that means 5 pay stubs).

  • Copy of past 2 years W2’s

  • Most recent 2 years tax returns

  • Copy of driver’s license.

  • 2 Months of bank statements. All pages/all accounts. All large deposits other than payroll need to be explained. Document source of down payment.
  • Latest statements of assets accounts. i.e. 401K retirement accounts and terms of Withdrawal

  • Copy of the front and back of the earnest money check once it has cleared the buyer’s account along with an online account history tying back into the end of the last full bank statement provided.

  • Copy of purchase contract.

  • Name, address, phone number and email for current employer and prior employer with dates to cover a minimum period of two years of employment history.

  • Current address and any prior addresses, with dates, as needed to cover two year history of residence. If renting Please provide landlord’s name and phone number.

  • Choose your attorney and have contact information.

  • Choose home owners insurance agent and have contact information.

  • Copy of award letter verifying income, social security, retirement, etc.

  • Copy of business license if self employed.

  • For VA applicants please provide a Statement of Service from your admin shop (active duty) or Co DD-214 (non-active duty), a copy of orders and military id.

     For more information on obtaining a home mortgage loan, please contact Hope Dorn with ERA Wilder Realty to get started! (803) 944-9544.