Heather Morris Realtor Expert for Cedar Rapids, Marion, Hiawatha & Robins

          Two new federal lending regulations effective July 30, 2009 will tighten the belts on banks, brokers, and credit unions. In an attempt to protect home buyers from predatory lending practices, the HERA and HOEPA laws were passed.  HERA, the Housing and Economic Recovery Act and HOEPA, the Home Ownership and Equity Protection Act will provide more information to home buyers prior to signing a mortgage.

 

          When interviewing lenders for a mortgage, have them provide a GFE, Good Faith Estimate and a TIL, Truth in Lending Disclosure.  The Good Faith breaks down the out of pocket cost and monthly payment for the home.  The Truth in Lending Disclosure provides the actual cost of borrowing the money over the term.  The Final Truth in Lending Disclosure and costs must be given to home buyers 4 business days before closing or sooner.  The APR, annual percentage rate will now requires the lender to disclose their fees and all third party costs placed on the closing statement.

 

          The appraisal process has also been modified to protect you.  The lender you choose will not have knowledge to who will be selected to verify the value of your house purchase.  The appraiser will review the last six months of similar closed properties to establish value.  Any appraisal required repairs must be negotiated between buyer and seller, work completed, and re-inspected prior to closing. 

 

          The new lending regulations are designed to help you avoid surprises at the closing table.  Comparing lenders payment options with the Good Faith Estimate, determining the true cost of money with the Truth in Lending Disclosure, and tightening the appraisal process to determine a more accurate value, and providing the final numbers before closing all make you a smart home buyer.  The state of Iowa is a leader in consumer protection.  Originating your new mortgage in Iowa through a local lender you trust is another smart buyer decision. 

Second Home Market 09

 

            Remember when second homes were for rich people.  Today’s market conditions have opened the door for the savvy investor, baby boomers, and land lovers to get away.  If you have ever considered a lake home, cabin, or flying south for the winter, now is your time!

 

            Historically, owning real estate has been a good investment.  Many homeowners in today’s market are purchasing real estate as a result of the unstable stock market.  With real estate, you still own the property, can live, rent, or trade it, and receive income tax benefits!  Deflated property values for second home owners help you afford the home you’ve always wanted for a fair price and payment. 

 

             Another factor increasing the number of second home owners in theU.S. is the baby boomer generation.  Boomers are typically conservative with financial matters.  They are learning that the equity they have in their current residence will allow them to re-arrange their real estate needs.  Many are selling the “family” compound for a one level home or condominiums.  The additional equity can purchase the water or cabin home or fly south to warmer climates.  The Florida, Texas, Arizona, California, Las Vegas markets offer deflated home values and time share options. 

 

             The capitol gain reform act also allows you to avoid a taxable gain on the sale of your primary residence.  The criteria for your primary residence is that you must live in the property 2 out of 5 years.  This allows owners to have 2 homes capitol gain exempt. 

 

             Whether for fun, investment, or tax shelter, it is a wonderful time to purchase a second home.  For a Certified Residential Specialist, CRS, in your desired area, call or email heather@heathermorrisrealtor.com.

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate to Skogman Realty

  

 

Green grass and sunny days are amongst us!  It’s time to get moving again.  Spring boom is how I usually describe the real estate market this time of year.  2009 lends a new tag phrase I’ve been using for the market shift we are experiencing, HOT, HOT, HOT!

 

            A cooperating effort between the Federal government, NAR (National Association of Realtor) and increased FHA loan limits gives people the tools they need to buy today.  The Federal government provided a needed stimulus for real estate sales for the bread and butter market; the market recognized as the median home values.  The $8,000 first time buyer tax credit paired with historic low mortgage rates have created numerous new homeowners and move up buyers.  The trickle-up of home sales in the median sale price have converted sellers into buyers for more expensive homes.

 

            The Cedar Rapids Area Association of Realtors sales statistics reflect amazing home movement under a $150,000 sales price.  A seller’s list to sales price ratio has increased and the average days on market has dropped.  The housing shortage created by our recent flood has also increased the demand for this price range of home.

 

            The stimulated market activity for homes under $150,000 has helped the move up market.  The move up market has struggled with a decrease of relocating home buyers.  Increased FHA loan limits with a low mortgage interest rate has allowed buyers to afford more home price for less monthly payment.  Buying a better home for less money equals market stimulus!

 

            If you have ever considered building or moving up to a luxury home, it is your time.  The deflated financial markets remind us that real estate is a good option for your dollar.  The tax savings from the mortgage interest and property tax deduction also create tax relief for you.  Home builders welcome the opportunity to build the home of your dreams for a fair price in today’s market. 

 

            To view homes for sale in the Cedar Rapids, Robins, Hiawatha, Marion, and Corridor area, visit www.heathermorrisrealtor.com.

 

Heather Morris CRS, GRI, ABR, CLHMS

Broker Associate/ Skogman Realty

 

            Owning a home with a septic has a few additional responsibilities then a city sewer line.  As of July 1, 2009, a new DNR Time of Transfer inspection has been implemented called Senate File 261.  Septic homeowners will want to be aware of the new regulations if they are considering selling the real estate.  Vacant properties and homes sold when weather does not permit the inspection will be affected financially.

 

            The new regulation is called Time of Transfer because the recorder will not record the deed until the septic inspection has been done with repairs that may be needed completed or escrowed.  The septic inspection must be completed by a certified inspector with a DNR certificate.  Once completed, the inspection will be valid for two years.

 

            For real estate transfers when weather does not permit the septic inspection, a DNR recorded escrow agreement can be recorded with the groundwater hazard statement.  The buyer must have a binding contract with the seller to have the inspection and any repairs if needed completed within a reasonable time. If you are the seller, an escrow agreement for the septic inspection and possible replacement may take away or diminish the proceeds of your sale.  To protect your proceeds at closing, have the Time of Transfer required inspection before winter arrives or the property becomes vacant. 

 

If the property has not been occupied for thirty days, additional procedures to test the septic are required to inspect the distribution box and leach lines.  This will cost the seller more money.  After sixty days of vacancy, a septic meeting the Time of Transfer will not be accepted until a resident occupies the property for thirty days prior to the testing. 

 

Exclusions to the Time of Transfer septic regulations are real estate sales by court order, foreclosure, estate, transfer from marriage or divorce, and transfer between joint tenants in title.

 

Senate File 261 will be implemented on July 1, 2009 to bring current septic and leach fields protecting our groundwater.  For additional information on this new septic regulations or references of DNR certified inspectors email heather@skogman.com or call 319-350-7653. 

 

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate to Skogman Realty 

 

          To be stimulated is defined as a rouse to activity or heightened action, creating excitement.  This is the plan to better our economy with the American Recovery and Reinvestment Act of 2009 passed in February. This consumer benefit encourages us to move money by purchasing real estate, updating our home with energy efficient components, and is assistance to many distressed neighborhoods and home owners.  Will you be stimulated by any of these opportunities? 

 

          First time home buyers benefit with either 10% of their home purchase or $8,000 tax credit (refund) for homes purchased January 1, 2009 through December 1, 2009.  Buyers are using the tax credit in many ways.  Paying student loans, auto loans, and credit cards to lowering monthly debt.  Another option amongst new home owners is to build up savings or replace the down payment they spent to buy their new house.  

 

          Could a remodel or energy efficiency update be a consideration in the new future?  To promote green and energy independence, 30% tax credit on new furnaces, windows, insulation, weatherization, and other efficiency updates.  You must verify the components you agree to put in your house meet the requirements of the energy bill.  This benefit for updates in your home is available through 2010.  Energy efficient updates will save you monthly utility costs and be a benefit when you decide to sell. 

 

          The stimulus bill also increases FHA loan limits to $271,050.  FHA loans are government backed mortgages allowing fewer down payments, a low fixed rate term, more flexibility with your credit score for qualifying.

Neighborhood stabilization for depressed markets, foreclosure assistance, and low income housing grants are available to balance home values.

 

          Our local real estate market will benefit due to the increase of buyers purchasing homes.  For a summary of “The Recovery and Reinvestment Act of 2009” visit our e-newsletter at www.heathermorrisrealtor.com.

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate/ Skogman Realty

 

             A more recent concern to all homeowners is the vacant homes popping up in our neighborhoods.  The market shift has made us very aware that the house we live next to or kids walk by, could be abandoned.  Abandon houses raise red flags to potential buyers and neighbors.

 

            There are more concerns when buying a vacant house.  A whole house inspection should be completed to help you avoid owning the money pit.  Prior to all inspections, make sure all the utilities are turned on.  De-winterize the property if purchasing in cold months.  Hire a wood destroying insect report to learn if there have ever been termites, carpenter ants, or other pests that cause structural damage.  If there has been a lot of damage, require the seller to provide a structural inspection.  Always test for radon gas. Radon is the second largest cause of lung cancer.  You may not be concerned about the radon level, however when you sell it is most likely your buyer will want a radon test.  If the level is above EPA standards, it’s now your mitigation expense. 

 

            Neighboring a vacant home also has concerns.  I never thought this would happen, however I was recently called to one of my sale pending listings to find a squatter living in the house.  I understand neighbors are not outside due to the cold weather but didn’t anyone notice?  When you learn of a vacant house in your neighborhood, find out why?  Communicate with the owners or the neighbors about safety of the house.  You may want to alert the police if you see unusual activity.  Vacant homes are also targets for illegal activities.  If the property has a real estate sign, call or stay in touch with the listing agent.  Foreclosed homes are traditionally vacant for one year allowing the owner to redeem the property.  Neighbors beware is the best policy.

 

            Legal and clear title is usually stronger possibilities with a vacant house.  Estates, foreclosures, short sales may delay the closing for legal reasons.  The CR Board of Realtors listing and purchase agreements require the seller to release all liens and title concerns so the buyer has a CLEAN deed.  Use a professional Realtor or attorney in preparing the purchase contracts for vacant houses. 

 

            As vacant homes become more prevalent with the market shift, let’s be AWARE for our own personal safety. 

 

 

Heather Morris CRS, ABR, GRI, CLHMS

Broker Associate/ Skogman Realty

 

          An age old question in the real estate business is If I remodel to meet my needs, will I get my money back? The answer to the question is case by case.  Home-owner motivators to remodeling usually include lot characteristics, school district, work commute, and family.  Home-owner motivations to relocating are diminishing returns, functional obsolesce in the home, and construction and energy efficiency updates. 

          Location, location, location is the reason most owners remodel.  Once you find the perfect setting for your home, why would you want to move?  Desirable lots that have timber, overlooking water, golf view, mini-acreages are not easily replaced.  Remodeling your current home maybe less expensive then finding another picture perfect lot.  If location is driving your decision to remodel, resale is generally not a concern.        

          School district is a motivator for remodeling.  The schools in our area are nationally ranked with low student to teacher ratios.  Many parents are remodeling or updating their homes because there are not building lots or other desirable home’s they would consider in their school district. 

          Work commute is a motivator to remodel for many professions.  Several professions such as firefighters,Para meds, and doctors are required to have a short commute to work.  If travel time is crucial, updating your current home is a resolution for new home trends. 

          Hanging your heart at home with family values is another reason to remodel.  The phrase “family farm” comes to mind.  Remodeling a home that has been family owned can make it yours and more functional to today’s lifestyles. 

          After researching your options, you may learn it is better financially for you to relocate.  Lifestyles and the way we live changes. If the home you own has a functional obsolesce, you may never get your money out of a remodel.  A few examples would be lack of adequate garage space, basement laundry, or un-used formal areas.

          Diminishing returns is another reason for you to relocate instead of put money into a remodel.  When a home improvement cost does not make sense, the home can over-progress the neighborhood.  An example of this may be a $20,000 kitchen remodel in a $100,000 house.  For the $120,000 cost, additional bedrooms and garage size would have been a better investment return.  Consult a realtor before purchasing high end upgrades for your home. 

 

 

          Construction and energy efficiency savings are motivators for homeowners trading in their out-dated, high utility cost, and not maintenance free homes.  The utility and maintenance cost savings can balance out the increase in a higher mortgage payment.

          When considering a remodel, consult the advice of a realtor, home improvement store for recommendations, and a designer.  You will want to consider the return on your investment, functionality of floor plan changes, and resale probability. Email heather@skogman.com for a rate of return remodel consultation. 

         

 

Heather Morris CRS, GRI, ABR, CLHMS

Broker Associate/ Skogman Realty

 

So, if you can’t see it, taste it, or smell it, why do I care if my house has radon?  Homeowners today are wondering why there is so much concern with radon testing.  In 1998, the National Academy of Sciences (NAS) released a report that 12% of all lung cancer deaths are linked to radon.  Radon has been determined the second leading cause of death due to lung cancer. 

 

Radon is a cancer causing radioactive gas in the air created from the natural break down of uranium in the soil, rock, and water.  Radon can seep from the ground into your home through floor drains, sump pits, concrete cracks and other small spaces.  These radioactive particles can attach to your lungs when inhaled causing health problems.

 

 I recommend you know the radon level in the home you live in.  The EPA suggests reducing radon levels in your home to less then four picocuries per liter (pCi/L).  The age of your home is not relative A radon test kit can be purchased for about twenty dollars or a radon specialist can be hired to test. Once radon has been detected, a mitigation system can be installed to lower the radon level to recommended EPA standards. 

 

As a homeowner, there are resolutions to lower the radon level in your basement.  The range of cost to mitigate the radon to an acceptable EPA reading is estimated from $450 if your home is pre-plumbed for a radon system to $1,700 if the vent path is more difficult.  Linn County does not require new single family construction to pre-plumb for radon.  The other surrounding counties require pre-plumb for radon in their building code.  Most builders in our area pre-plumb for a future radon mitigation system since the cost of installation is under $150.00 at the time of construction.  If you have a home that tested high for radon, the mitigation system can be installed by one of the state licensed professionals.  The installation will take from four to eight hours to install.  The system path to alleviate radon level from the lower level of your home to the outside wall determines the construction of the house and the most direct path.  A retest is required to verify the radon level is now an acceptable level.  A meter will be placed in the lower level of your home so you can monitor any future changes or be assured the mitigation system is in working order. 

 

When buying or selling real estate, a discussion of radon testing is recommended and an option on most real estate purchase contracts.  Feel free to email me at heather@skogman.com with questions or concerns you may have about radon and your home.  You can also research additional information at www.epa.gov.

 

 

Heather Morris, Broker Assoicate

CRS, GRI. ABR, CLHMS

Skogman Realty