Why You Should Choose a Realtor

September 26, 2007

realtor.gifFew things are as important as purchasing a home.  For most, it will be the largest investment of their life. Therefore, it is important to work with the best when you are ready to buy your home.  Be sure to choose a REALTOR® and not just a sales agent.
A sales agent may sell you a house but a REALTOR®  subscribes to the National Association of REALTORS® (NAR) and adheres to continuous education and a strict code of ethics.  Real Estate is a very competitive industry, please choose carefully.

Why Choose a REALTOR “®” ?

  • A REALTOR® is a trained professional and knowledgeable consultant, who consistently completes continuous education classes to keep abreast of real estate law, ethics, contracting, fair housing and all matters pertaining to real estate.
  • A REALTOR® will minimize the inconvenience a buyer will experience in the search and purchase of a home by saving the buyer time, money and frustration.
  • A REALTOR® may assist, advise and represent the buyer (client) in negotiating, writing a contract, presenting an offer and/or counteroffer(s) financing, inspections and closing.   Note:  Georgia state law requires a Buyer’s Agency Agreement in order for a REALTOR® to advise and negotiate on a buyer’s (client) behalf. Contact or visit Donna , see the “buying” page for more information about buyer’s agency or ask a REALTOR® for details.
  • A REALTOR® is THE local market expert and may provide the buyer with actual market data.
  • A REALTOR® is committed to promoting the client’s best interest above anyone else including his/her own interest within the law.
  • A REALTOR® owes the buyer (client) specific duties such as, loyalty, confidentiality,  and lawful handling of monies.

    This was written with the buyer in mind but applies to sellers too.

Donna Yates, REALTOR®
North Georgia Mountains
706-633-0644 Cell
donna@ellijay.com
www.move2northgeorgia.net


What Everybody Should Know About Earnest Money Deposits

September 6, 2007

cartoon-dollar.jpgHomebuyers should understand what Earnest Money is and that Earnest Money payments made before closing may not be treated the same in all transactions.  How the earnest money will be handled is usually spelled out in the purchase and sales contract.  You should consult with an attorney if you do not understand the purpose or disposition of payment terms or any other terms in the contract. 

Let’s start with some basic questions and answers:

What is Earnest Money?
It is good faith money that the buyer usually gives to the seller’s agent or may give to the buyer’s agent if the buyer is being represented by an agent (requires a Buyer’s Agency Agreement). 

Is earnest money required in order to have a valid contract?

Law does not require an earnest money deposit but most sellers will.  If you agree to pay earnest money and you not make the required payment, you (the buyer) will probably be in breach of the contract.

 

How much Earnest Money is required?

This amount can be negotiated.  Usually, it will be a small percentage of the purchase price which may vary depending on market conditions, the price and type of property (vacant land, resale of a home, new construction) as well as other factors.

 

Where does the Earnest Money go before closing?

The purchase and sale agreement will govern where the earnest money will go.  Also, an amount to be paid will be specified and when the payment will be made.  It should state whether the money will be held in a trust account sometimes called escrow, who will hold the money, whether it will be credited against the purchase price at closing and what happens to the money in the event the transaction does not close.

Will my Earnest Money earn interest between contract and closing?
Typically not because most earnest money is held by real estate brokers in non-interest bearing trust accounts.  In the event the earnest money is deposited in an interest bearing account, the buyer and seller must agree on who will receive the interest.  Be sure this agreement is included in the purchase and sale agreement and may require assistance from an attorney.

Who can hold Earnest Money?

Basically, any entity agreeable to (the buyer) and the seller but usually, it will be held by a licensed real estate broker.  Buyer beware if you allow a seller or builder to hold the earnest money. You risk not getting the money back should the transaction not close.  Therefore, it is good practice to have the real estate broker or attorney hold the deposit since they are required by law to deposit the money in a trust account.  This minimizes the risk of the monies being used improperly.

 

Is Earnest Money different from an option fee?

Yes.  An option fee is a separate fee the buyer may elect to pay in a purchase and sale agreement to walk away from the transaction during a specified time.  Earnest money may be refunded under certain circumstances; the option fee is non-refundable.

 

Is there a federal law that allows me to rescind my home loan and wouldn’t that allow me to get back my Earnest Money?

There is a federal law that gives a buyer three days to cancel a home loan commitment but it does not give the buyer the right to cancel a purchase and sale agreement and get a refund of the earnest money.  The buyer is obligated to the purchase as specified in the sales contract and is not related to your right to obtain the best loan possible.

Does the buyer get back the Earnest Money if the transaction does not close?
This depends on why the transaction did not close.  A typical contract may contain contingencies which must be met in order for the contract to proceed. 

Some requirements may be:

  • the buyer makes a good faith effort to obtain financing
  • the buyer may need to sell his/her own property first

  • the seller may need to make certain repairs

  • the seller will need to provide good title

If the seller does not meet his obligations, then the buyer may be entitled to a refund.  However, if the buyer breaches the contract, then the earnest money will be forfeited.  Also, the party injured by the breach may seek additional damages by asking for “specific performance” where a court may intervene.  Be sure to consult with an attorney to fully understand the consequences and remedies if the purchase does not close.

 

What if there is a dispute between the buyer and the seller on who is entitled to the Earnest Money?

The real estate broker will continue to hold the monies in a trust account until the dispute is resolved either in writing or until a court decides the matter.  The broker is not allowed to pursue a claim for either party but may appear as a witness in court and make necessary documents available.

 

 

 Donna Yates, Realtor with Mountain Investments of North Georgia is ready to help you find your “mountain investment”!  See Donna’s website:  www.move2northgeorgia.net for great mountain properties for sale, real estate tips and advice, general information about the North Georgia Mountains.  Contact Donna with any questions or leave a comment below.   


Reverse Mortgages – Let’s Cut to Chase!

August 9, 2007

I have another post about Reverse Mortgages entitled, “Reverse Mortgage – Things to Know” but it is rather lengthy so I decided this one will be much more concise and hopefully,  an easier read. 

I admit that I was skeptical of Reverse Mortgages.  Every time I heard the two words, I tuned out immediately.  But a local attorney, Jim Johnstone of McCaysville, Georgia held a workshop and I decided I should go.  I really thought that my suspicions would be confirmed in this workshop and that would be the end of that.  Actually, I learned quite a bit and found out how first impressions can be very misleading.  I am glad I  have gotten the straight of it so that I will be of more benefit to future home buyers who may want to take some of their proceeds from a reverse mortgage and invest in a second/vacation home.  Something else I learned about these mortgages that I didn’t know – you can spend the money on virtually anything you want which means a second home if you so desire.

Now let’s cut to the chase:

What is a Reverse Mortgage?  Unlike traditional home equity loans, the Reverse Mortgage is a home loan that allows seniors 62 years of age or older to use the equity in their home.  It does not require payment of any kind until the last surviving borrower permanently leaves the home.

The Federal Housing Administration (FHA) Home Equity Conversion Mortgage or (HECM) is the most popular and is a government insured loan.  A HECM has no payments, it is non-recourse (meaning the final amount of the loan will never exceed the value of the home) and it’s a tax free line of credit – Tax Free!  Also, closing costs are included in the financing of the loan.  There may be a fee to initiate the loan, estimate $300.

What are the Requirements?  A homeowner and all borrowers are at least 62 years old.  There are no income or credit requirements.  No loan to value, debt ratio issues. 

How Much Money Does the Homeowner/Borrower Receive?  Three factors determine the amount of the eligible equity which may be converted to cash.  They are:

  1. Age of the youngest borrower
  2. Value of the home
  3. Current interest rate

The older the borrower, the higher the value of the home, the more money the borrower gets.

How Safe are Reverse Mortgages?  The homeowner/borrower retains ownership of the home and the lender never owns your home.  The loan is non-recourse and protects heirs from taking money out of their pocket for repayment of the loan.

Will the Homeowner/Borrower Ever Be Forced Out of Their Home?  NO!  As long as a one of the borrowers continues to live in the home, adequate property insurance is maintained, the real estate taxes are paid annually, and the home is kept in good condition, just like any traditional mortgage except you cannot be forced out of your home for non-payment of the loan because there are no payments to make.

How Can a Homeowner/Borrower Receive the Money?  The choice is completely up to the borrower.  Receive it all in a lump sum, in regular monthly payments, or place the money in a growing line of credit.  Or combine all three options.

Who Gets the Home when the Homeowner/Borrower Dies?  The estate will receive the home upon the borrower’s death, just like any traditional home loan.  Heirs have the choice of either keeping the home and paying the lender ors selling the home and using the proceeds to pay the Reverse Mortgage.  All remaining equity is paid to the estate after the Reverse Mortgage is satisfied.

Will the Reverse Mortgage Effect the Homeowner/Borrower’s Taxes or Social Security?  NO!  Equity received from a Reverse Mortgage is a loan and not income and is NOT subject to income tax and will NOT affect social security benefits or Medicare.

Jim Johnstone, Real Estate Attorney in McCaysville, Georgia serving the Blue Ridge area of  the North Georgia Mountains is a Reverse Mortgage Advisor and can be contacted at 706-455-1012.

American Reverse Mortgage Corporation located in Ocala, Florida phone toll free: (888) 370-6620.  You may request a free information package failored to meet your specific financial needs with no obligation.

This post was written for information purposes only and Donna Yates, Realtor with Mountain Investments of North Georgia in Blue Ridge is not a Reverse Mortgage Advisor nor a spokesperson for Reverse Mortgages.  Donna nor Mountain Investments of North Georgia are suggesting that you should secure a Reverse Mortgage. 

Please be wise and prudent and do your own research.  It is fair to note that HUD will provide a Reverse Mortgage counselor to advise and guide a borrower through the entire process.

Donna Yates, Realtor with Mountain Investments of North Georgia welcomes you to our beautiful Blue Ridge mountains.  View great properties for sale:  www.move2northgeorgia.netAdd to Technorati Favorites

Your comments are welcomed.  If you have any questions, please let me know by clicking the comment link below to open up a comment box.  I’ll be happy to write a post about it just for you!  Keep your comments clean, please.  Thankyou. 

The information in this post is deemed reliable but is not guaranteed.


Reverse Mortgages – Things to Know

August 9, 2007

You’ve seen them on TV – some of our favorite actors like James Garner  or Robert Wagner touting Reverse Mortgages.  My defenses went up immediately and yet I trusted James Garner so I had to listen.  But maybe that was the point, get unsuspecting seniors to see a trusted face and then get sucked in.  I thought about my own parents and did not want them to be duped by anyone and so I investigated Reverse Mortgages a bit more. 

 james-garner.gif

Top Ten Things to Know about Reverse Mortages or HECM (Home equity conversion mortgage) provided by Homes and Communities, Housing and Urban Development

1.  What is a Reverse Mortgage?  It is a loan against your home that you do not have to pay back for as long as you live there.  You can turn the value of your home into cash without having to move or to repay the loan each month.  A Reverse Mortgage allows a homeowner to convert a portion of the equity built up over the years of home mortgage payments to cash which may be paid to you in several ways:

  1. all at once, in a single lump sum of cash;
  2. as a regular monthly cash advance;
  3. as a “creditline” account that lets you decide when and how much of your available cash is paid to you;
  4. as a combination of these payment methods.

Unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence, die, or permanently move out.  The U.S. Department of Housing and Urban Development, HUDs Reverse Mortgage is a federally insured private loan which allows seniors to supplement social security, meet unexpected medical expenses, make home improvements, and more.

2.  Can I qualify for a HUD Reverse Mortgage?  The borrower must be 62 years of age or older; own your home outright or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse mortgage; and must live in the home.  You are also required to receive consumer information from a HUD approved counselor prior to obtaining the mortgage.

3.  Can I apply if I didn’t buy my present house with FHA mortgage insurance?  Yes, you can.  It doesn’t matter if you didn’t buy your home with an FHA-insured mortgage.  Your new HUD Reverse Mortgage will be a new FHA-insured mortgage loan.

4.  What types of home are eligible?  Your home must be a single family dwelling or a two-to-four unit property that you own and occupy.  Townhomes, detached homes, condominium units, and some manufactured homes are eligible.

5.  What’s the difference between a reverse mortgage and a bank home equity loan?  With a traditional second mortgage or a home equity line of credit (HELOC) you must have sufficient income versus debt ratio to qualify and you are required to make monthly payments.  The reverse mortgage is different:

  • it pays you and is available regardless of your current income
  • the amount you borrow depends on your age, current interest rate and appraised value of your home, whichever is less
  • generally, the more valuable your home and the older you are, the lower the interest, the more you can borrow
  • you don’t make payments because the loan is not due as long as the house is your principal residence
  • you are still required to pay your homeowner’s insurance, real estate taxes, utilities and other conventional payments
  • you cannot be foreclosed or forced to vacate your house because of missed mortgage payments

6.  Can the lender take my home away if I outlive the loan?  No.  You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keep up the taxes and insurance.  You can never owe more than your home’s value.

7.  Will I still have an estate that I can leave to my heirs?  When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees to the lender.  The remaining equity in your home, if any, belongs to you or your heirs.  This debt will not be passed along to the estate or heirs.

8.  How much money can I get from my house?  The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less.

9.  Should I use an estate planning service to find a reverse mortgage?  HUD does not recommend using an estate planning service or any service that charges a fee just for referring a borrower to a lender. HUD provides this information without cost and HUD approved housing counseling agencies are available for free, to provide information.  Call 1-800-569-4287, toll free for the name and location of a HUD approved housing counseling agency near you.

10.  How do I receive my payments?  You have five options:

  1. Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  2. Term – equal monthly payments for a fixed period of months selected.
  3. Line of Credit – unscheduled payments or installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.
  4. Modified Tenure – combination of line of credit with monthly payments for as long as the borrower remains in the home.
  5. Modified Term – combination of line of credit with monthly payments for a fixed period of months selected by the borrower.

 It’s important to note that the money borrowed can be used for practically anything you need.  For example: to purchase a second home.  If you are interested in a Reverse Mortgage and live or plan to live in the Blue Ridge area – please contact Jim Johnstone, Attorney and Reverse Mortgage Advisor at 706-455-1012.  Please let Jim know that I referred you.

 Donna Yates, Realtor proudly serving the North Georgia Mountains.  For great mountain properties for sale, visit   www.move2northgeorgia.netAdd to Technorati FavoritesThe information in this post is deemed reliable but is not guaranteed.  Source of information in this post:  Homes and Communities, U. S. Department of Housing and Urban Development.  Be sure to consult with an attorney and the experts in this field.  Do not rely on everything you read on the internet – do as much research on your own or have a family member or trusted friend help guide you.