Poconos Real Estate Blog

Higher Down Payment Requirements For Vacation Home Mortgages

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Breaking Mortgage Financing News!

The minimum down-payment required for second homes or investment properties is now 20% of the purchase price. The reason for this is that PMI (Private Mortgage Insurance) is no longer available for 2nd / vacation homes, or for properties purchased for investment purposes. This information was given to me by Andy Williams of Abacus Regional Mortgage 610.837.1616, who has checked with 5 major PMI companies to find one that offers the insurance to lenders, to no avail.

This is breaking news...remember, you heard it first here on The Poconos Real Estate Blog! I have tried to locate some websites to link to about this, but have not found anything useful. As more information becomes available on this change, I will post it. And if you know anything about it, please share what you know in the comments!

What Is PMI?

Private Mortgage Insurance premiums, commonly referred to in the real estate business as PMI, are a mandatory part of mortgage payments for loans made with less than 20% down, and insures the lender against default. The idea behind it is that the less money that borrowers put in to a transaction via their down payment, the more likely they are to default on their mortgage payments. So PMI is there to alleviate the risk and allow these lower down payment loans to occur.

Since summer homes and investment properties are not 'owner occupied' or 'primary residences', the risk to a lender is even that much greater, as borrowers are more likely to default on a mortgage that is not their main home. Combine this with low personal investment on the lower down payment loans, and it makes for just too much risk for the PMI companies to take on.

Another bit of credit tightening as a result of the recent mortgage foreclosure problem....

Another Pocono Real Estate Attorney Offers Valuable Advice (Part III)

Because the notes associated with most mortgages had been packaged with other loans and sold as a commodity over and over again, the documents are often hard to find. Requesting your lender or loan servicer to 'produce the note,' as proof of the debt, can put the breaks on foreclosure in many instances.

Other "Produce the Note" Resources

Attorney Jane Roach Maughan
726 Ann Street
Stroudsburg, Pa 18360
570.421.7009
Email Attorney Maughan

The Poconos Real Estate Blog, Lisa Sanderson & Better Homes and Gardens Real Estate Wilkins & Associates are not licensed attorneys and offer this for informational purposes only and not as legal advice. Everyone's situation is different and a consultation with an attorney is recommended to ensure all your legal rights are protected. If you are a homeowner facing foreclosure, short sale or other issues pertaining to your mortgage, please be pro-active by contacting the appropriate advisors early on - it will make you feel better and may even save your home!

Look Out Poconos, Real Estate Just Got More Colorful!

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Merger Announcement-Real Estate Leaders Unite

Yesterday, we agents at Better Homes and Gardens Real Estate Wilkins & Associates were summoned to a surprise meeting where the company announced it's merger with Coldwell Banker Phyllis Rubin Real Estate. The agents from CBPRRE, now known as The Blue Team, will be assigned to various offices within the company which best suits their market area, and Broker/Owner Heather D'Adamo will work out of the Stroudsburg office as Executive Vice President.

This is an unprecedented collaboration creating the largest residential real estate company in the Pocono Mountains, with 135 agents and 25 employees representing approximately 25% of the property listings currently available for sale. The move positions the new company to ride out the current economy while expanding its pool of exceptional real estate agents, managers and support staff. Real estate buyers and sellers in Monroe County and surrounding areas can expect better than ever exposure and service during this time when they need it most.

Green & Blue Work Well Together!

This is an exciting time for all of us here at Better Homes and Gardens Real Estate Wilkins & Associates and I would like to take this opportunity to welcome all of my new Associates to the team. Being a fairly new member of the company myself, I know what a big step this is and can relate to all of the emotions and flurry of activity associated with a change such as this. I offer my moral support and am always here if you need anything. Most especially, if you need advice about Facebook or Twitter, I'd love to help! =)

Please help me welcome and congratulate The Blue Team in the comments!!

More Valuable Advice From Pocono Real Estate Attorneys (Part II)

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As I wrote in Part I of this series, the Attorney Panel that gave this year's presentation to us members of the Pocono Mountains Association of REALTORS was excellent. Attorneys William Cramer, Louis Powlette and Jane Roach Maughan enlightened us on many timely topics. It is always interesting to hear about the real estate business from another point of view, and with all of the hot topics boiling around in our business these days, it's even more riveting. Part I of this series addressed Attorney Cramer's presentation about common pitfalls in real estate transactions. This installment will discuss Attorney Powlette's discussion of Title Insurance Issues and Short Sales:

Seller-Paid Title Insurance

It is very common for bank- and relocation company- sellers to offer a paid title policy to a home buyer in a transaction. This seems, at first glance, to be a pretty good deal...it can save a buyer a substantial amount of money if they don't have to pay for title insurance themselves. The catch is that the seller chooses the title company, which is not standard practice. Buyers have the legal right to choose their own title insurance company, and usually do this based on recommendations by their real estate agent and/or their attorney.

Attorney Powlette says, "Accepting a title policy from the seller is not a good idea," and he gave several reasons why a buyer should say 'no thanks' and purchase their own title search and title insurance.

• These banks and relocation companies buy their title work in bulk and the overburdened companies that are doing the searches and issuing title policies do a sloppy job. Also, these title insurers are almost never local companies and so they are not well versed in the intricacies of the local public records, closing procedures, etc.
• There are myriad examples of properties being sold with title defects that were overlooked because of shoddy title work. Large real estate liens and previous owners who have not relinquished their claims to properties are some of the things that could threaten a buyer's standing as the true owner of the property after closing. Attorney Powlette cited a specific example where he did title work that revealed a federal tax lien. The prospective purchaser canceled the sale. After the property was put back on the market, a second buyer tried to buy (coincidentally using Powlette too!) and the same lien was still present. The seller was hoping to sell without a buyer questioning their title policy!
  
• Another reason to decline the seller's offer of 'free' title insurance is, a real estate purchaser should have some assurance that the title policy underwriter is sound and stable. Should the underwriter ever go out of business, the title insurance policy becomes worthless. This is a great reason for a buyer to retain control of this aspect of the transaction.
  

Negotiating a Short Sale

These days many sellers are hoping to negotiate a short sale, that is ask their mortgage holder to accept less than what they are owed in order to allow the seller to sell the home at today's prices. Unfortunately, some owners who have their homes listed for sale through the Pocono Mountains Association of REALTORS MLS owe more than what they can currently get in today's market.

Attorney Powlette's recommendation is that a seller facing a short sale situation retain legal counsel to assist with the process. Yes, it sounds a bit self-serving of him to say that, but that's just not Lou's style :)...AND there are good reasons for his advice. A seller who tries to negotiate a short sale on their own, or a real estate agent who does it on the seller's behalf, assumes a lot of risk and liability. There are tax implications to selling short (shortfall can be considered income and therefore is taxed, for instance), and there are many legal issues surrounding the balance of the mortgage and the mortgagors remedies. A seller pursuing a short sale should have proper representation to be sure that their interests are served in the process.

One other caveat from Attorney Powlette: If you must cancel an Agreement of Sale because of unsuccessful short sale negotiations, a seller could be held liable for the buyer's expenses related to the transaction if the documents for the sale are not drafted properly. Always be sure to include the right contingencies when selling a property.

Contact Attorney Powlette at:

Louis D. Powlette Law Office

Stroudsburg, Pennsylvania 18360
Telephone: 570-424-8037
Fax: 570-424-0920
lpowl2@ptd.net

Please Subscribe to the Poconos Real Estate Blog to ensure that you don't miss the rest of this series. Part III will cover Attorney Maughan's inspiring presentation on avoiding foreclosure.

Related Reading:

Valuable Advice From Pocono Real Estate Attorneys (Part I)

This Is Your Year, First Time Home Buyers!

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H.R. 1: The American Recovery and Reinvestment Act of 2009

It was signed by President Obama yesterday...that famed Economic Stimulus Package that has overtaken the news lately is finally done. I will spare you the commentary and analysis of all the different provisions. I am here only to tell you about how this affects you, home owners, home buyers and home sellers in the Poconos.

Today I will discuss the Homebuyer Tax Credit, and hopefully be able to give you information on other facets of the Act that affect private property rights and homeownership later. However, if you are bored and can't wait for me to summarize for you, here is a nice handy list of the real estate related provisions of the Bill, outlining many of the grants, tax incentives and programs aimed at home owners, neighborhoods and local governments, provided by the National Association of REALTORS. Enjoy! :)

Find Out If You Have Been Stimulated!

So, without further ado, I present to you the checklist to see if you qualify for the 2009 Homebuyer Tax Credit. If,

___ You are a first time home buyer (have not owned a home in the past 3 years), and

___ Your adjusted gross income is less than $75,000 (single) or $150,000 (joint return), and

___ You purchase a primary residence between January 1, 2009, and December 31, 2009, then

You probably qualify for an income tax credit of 10% of the purchase price or $8,000, whichever is less. This tax credit IS refundable, so it could very well mean you will get more money back at tax refund time.

Another bonus, if you keep the home for 3 years or more, you will not have to repay this money back!

(This Tax Credit is similar to the $7,500 one passed last year, but with several major improvements. If you would like to compare them, read this.)

Please check with your accountant for detailed information on qualification for this tax credit and to discuss any other issues related to this. This post is for informational purposes and not meant as financial advice.

So, what are you waiting for? Find the perfect first home for you in the Pocono Mountains Association of REALTORS MLS / IDX Database, or contact me via email info@lisasanderson.com or by phone 570.421.8950 ext. 394.

I <3 First Time Home Buyers!