Living In Pike.com

PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. With this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment. Your PMI policy payment gets tacked on to your mortgage payment.

It’s important to understand that the primary and only real purpose for mortgage insurance is to protect your lender—not you. As the buyer of this coverage, you’re paying the premiums, so that your lender is protected. PMI is often required by lenders due to the higher level of default risk that’s associated with low down payment loans. Consequently, it’s sole and only benefit to you is a lower down payment mortgage.

PMI companies, because of high losses are making it more and more difficult to get the insurance. In some cases they are making stipulations to the buyer that are somewhat unusual. I am presently in the middle of a transaction that that requires PMI and will tell you the story as soon as it closes. It has been a real education for me. I want to tell you about it.

If you are on the fence this year about buying a home, don’t forget about this very popular Tax Credit that the government is giving. It ends November 30th 2009. Rumor has it that it might be extended BUT my guess would be that prices won’t be as good as they are right now. For details about the credit, here is the tax form 5405.

Want to go to a seminar and learn more? Click here.

Note: Please talk to your tax consultant, tax preparer or tax attorney for details. I am only a very good Realtor that knows about the program and not a tax expert.

As of May 1st, 2009 the Home Valuation Code of Conduct (HVCC) went into effect.

The New York State Attorney General Andrew Cuomo in 2007 filed a lawsuit against eAppraisalIT and its parent, First American, for caving in to Washington Mutual, which allegedly pressured appraisers to submit so-called inflated appraisals. As a result of the lawsuit, Fannie Mae and Freddie Mac, the largest purchasers of home mortgage loans in th United States elected to adopt the Home Valuation Code of Conduct. It does not affect FHA loans.

The rules of the HVCC say that individual banks and mortgage brokers who sell conventional loans in the secondary market to Fannie Mae and Freddie Mac cannot hand-select their own appraisers anymore. They must let an appraisal management company pluck an appraiser from its pool of appraisers to do an appraisal.

The HVCC rules are meant to stop collusion between lending institutions and appraisers. However well meaning, the Home Valuation Code of Conduct, according to me and many other professionals in the real estate business, has backfired. In an attempt to thwart inflated home values, which constituted a small portion of the appraisal market, the HVCC has instead caused chaos and messed up the entire appraisal process for many conventional borrowers.

How will this affect Pike home buyers and sellers?

Out-of-Area Appraisers Are Performing Appraisals – Do you think a Bloomington IN appraiser would do as good as a job as a north side Indianapolis appraiser could do? Do you think they will know the area?

Appraisers With Less Experience Are Performing Appraisals – The experienced and mature appraisers are quitting the business or retiring early. Because they have to give up 40 to 60 percent of their fees to the agency they work for, they would have to do double the work just to be where they are today. Hence the new appraisers are getting the work.

Experienced Appraisers Are Going Out of Business – The thing about experienced appraisers is they have most likely been inside the homes in the neighborhoods where they are asked to appraise. They know why a home on one side of a physical boundary may have a higher market value than a home on the other side. They count on repeat business. When that source of business dries up, they have no job and their expertise is worthless.

Transactions are Falling Apart Because Appraisals Are Too Low – Appraisers who don’t know the neighborhood or have little experience are far more likely to produce an under-valued appraisal. When an appraisal comes in less than the sales price, many sellers refuse to negotiate and buyers don’t want to make up the difference. So the pending sale blows up. The seller loses the buyer and the buyer loses the home.

The Consumer Pays an Increased Cost for the Appraisal – There is no free lunch. Because the appraisal management company that selects the appraisers must be paid, consumers bear the cost. Part of the appraisal fee goes to the appraisal management company with the balance to the appraiser. Somebody has to pay the fee to the appraisal management company which could be as high as 60 percent. I suspect appraiser fees which now are in the $300 to $400 range will soon go up.

PERSONALLY I have not been affected by the HVCC as of yet. I have heard stories within my company. In the past I have been called on by appraisers asking general questions. The HVCC now makes it questionable to talk to a Realtor involved in the transaction.

Friday afternoon I decided to visit all the production
builders in Pike Township and see what they were up
to. It turned into an interesting afternoon. Following
is my report;

AND PLEASE REMEMBER

Would you like to have a Realtor represent you for FREE
when you buy your new construction home? The cost of
the home is the same whether you are represented by a
Realtor or not. Call me and find out how. 317.319.9012
A Realtor can help you with the right location in the
community, help you find the best floorplan, help you
pick options that will eventually help resale the house
and help you through the process, being there for inspections
and closing. Call me for more info. 317.319.9012

M/I Homes – Cheswick Place – 39th and Kessler Blvd
Starting in the $130,000′s
Going fast this development is located in an ideal location.
Easy access to I65 downtown and close to Lafayette Square shopping.
www.mihomes.com

M/I Homes – Timberview – 46th and Raceway
Starting at about $350,000
A gorgeous isolated area for a gorgeous home.
Just underway with a Grand Opening planned
this fall. 10 houses have already been sold
with 80 more to go. Large lots! You have got to
check out the 5 level model.
Tell them Tim Lord sent you.
www.mihomes.com

Ryland Homes – Northpoint Village and Townhomes at
Northpoint – 83rd and Michigan Road
Average prices are $155,000 and $180,000 for the Townhomes.
Conveniently located on the north Michigan Road Corridor
where shopping abounds. These units are going fast.
Consider buying now for the best lots. Townhomes are almost
sold out.
www.rylandhomes.com

Beazer Homes – Copper Ridge – 96th west of Cooper Road
Starting at – $210,000
Only 3 lots and 3 inventory homes left.
Just across the road from Zionsville.
www.beazer.com

Beazer Homes – Westbourne – 71st and Marsh Road
Starting at $180,000
At this point Beazer is just pushing dirt on the property
preparing to build. There will be 90 townhomes at this
location. This is a new product for Beazer and it will be
interesting to follow it. Great location with a historically
good price.
www.beazer.com

KB Homes (formally Dura) – Faith Knoll
Just North of 62nd and Cooper Road
Starting at $122,403
Only 23 homes in this community and only 3 lots left.
www.kbhome.com

Portrait Homes – Parkside at Georgetown – 52nd and Georgetown
Starting at $92,990
Only 10 lots left. Gorgeous design and surperb value.
www.portraithomes.com

Gunstra Builders – Bishops Pond – 63rd and Coffman Road
Starting at $104,900
3 styles of living. Ranches, lofts and townhomes. 2 and 3 bedroom.
www.gunstra.com

Pulte – Traders Point – 86th and Lafayette Road
From $150,990
Great looking townhomes in a great location. Only 10 left.
www.pulte.com

SOLD OUT - One spec home for sale and one 80 percent done
done home as of 6/30/2006
Arbor Homes – Pikewood – located on Shangahi road
just north of 62nd Street – Starting at $135,000.
www.yourarborhome.com

SOLD OUT – Just 11 spec homes remaining – They are moving
sales offices out of the model and the model is sold.
Beazer Homes – Oakwood at the Preserve at Eagle Creek
On 82nd west of Lafayette Road – Starting in the upper 300′s
Another great isolated wooded area with rolling hills.
Check out the spec homes while you can.
www.beazer.com

The end of the month is the most popular time for houses to close. The number one reason being the buyer does not have to pay interest on their loan. If you close in the middle of the month, the buyer has to pay interest (no principle) on their loan from the time they close until the end of the month. This can be several hundred dollars.

On average it takes about a month from the time you have an accepted contract. This also can vary. FHA loans take longer because it requires an FHA inspection. You are at their mercy. Other reasons include regular home inspections, the time that it takes to get a loan and the wishes of the seller to name a few. The buyer gets to pick the closing date in the Purchase Agreement. The seller has the right to accept that date or negotiate.

Top reasons that closings don’t happen; the buyer can’t get the loan, the inspection report turns up major defect that the seller will not repair, the buyer can’t get insurance for the new home or the buyer refuses to live with the Covanents, Conditions and Restrictions of the Home Owners Association (This rarely happens but is in the Purchase Agreement and consequently can be a reason for not closing.)

I have seen the time it takes from an accepted offer to closing as short as a weekend and as long as 2 months.

Early this year I went out and saw 50 houses in three days in Pike priced between $75,000 and $125,000. 60 percent of the houses sold in Pike are in this price range. I have many buyers in this price range but I was alone this trip doing what Realtors® call previewing homes. Not many Realtors® do this. I try and do it every chance I get. It is very educational and you learn your market quickly. I took notes on every house and rated them on a 1 to 10 scale. as far as marketability. I watched these houses on the MLS for the next few weeks. As predicted, the houses that had been spruced up, painted and had new carpet were the first ones to sell. It did not make any difference which neighborhoods they were located in. The houses that were in great shape and priced well were the first to go. An Important lesson in marketing a home.

My new newsletter is due out in 2 weeks. I will review what happened in Pike Township Real Estate during 2005. It will include prices, most popular communities, age of homes sold and lots more. You will be able to download it from this website.