Though we remain optimistic about the housing market here in the Clarksville, TN – Ft. Campbell, KY area, it’s clear that in other parts of the country would-be home owners are still reeling from the housing blow up.

Recently, we’ve had commenters remark, “The economy is so bad right now, unemployment is terrible, isn’t it more wise to wait to purchase a home?” Or ask, “Aren’t we in a post-crash market? Won’t the market improve more quickly if potential buyers feel more confident?”

Taking the former viewpoint, yesterday blogger Scott Snyder illuminated the state of things nationwide. He wrote:

Over the past several months, many in the mainstream media have hailed the slight improvement in the U.S. real estate market as a “housing recovery”.  But the truth is that the small improvement in the numbers was primarily due to a significant number of Americans attempting to squeeze their home purchases in before the huge home buyer tax credit expired at the end of April.  Now that there is no more giant tax incentive, real estate professionals all over the United States are fearing the worst.

Snyder, who authors The Economic Collapse (theeconomiccollapseblog.com) not only believes that the housing crash isn’t over, but that we may be headed for a second one.

But what does this all mean for homeowners (or potential homeowners) in our community?

First of all, as I’ve pointed out in the comments, here in the Clarksville-Ft. Campbell area many homes are selling for much less than their market value, often after several price reductions. If you’re a buyer in our current local market, it’s like you’re purchasing a beautiful home at a discount. Whereas in many other parts of the country — like California, where Snyder and many of his readers apparently live — this may not be the case.

Second, in a community like Clarksville-Ft. Campbell, where many home owners are military men and women, waiting to purchase a home is not always an option, and neither is waiting to sell when it’s time to PCS.  It’s also worth pointing out that the tax credit is still in effect for service members who have been overseas, and will be until 2011. Thanks to our military community, Clarksville’s real estate market will always be active. And our growing civilian community will cushion the effects of any dramatic market turn arounds as well.

It’s true that in Clarksville and most of the country, we are certainly not yet experiencing a “post-crash” market. But rather than “fearing the worst,” as Snyder says, real estate professionals are informing potential homeowners of creative lending practices that benefit both buyers and sellers without breaking the bank; reminding them that real estate professionals and the government are working to prevent more home owners from going into foreclosure by offering them alternatives; and preaching the importance of truly realistic and responsible financing and purchasing.

In our local market, buyers should feel confident about making real estate investments, provided that they buy responsibly and within a realistic budget. As always, I stress that right now is a buyer’s market for those with the real (not imagined!) means to buy.

Thanks for the comments & for reading!

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10 Reasons Why The U.S. Housing Crash Is Far From Over [The Economic Collapse Blog]

Previous Posts:  First Time Buyer Credit For Active Duty Military? ; Creative Financing Options For Practical Homebuyers ; What Can I Do Instead of Foreclosing? ;  You Want to Buy A Clarksville Home, But Can You Afford the Mortgage?

Interested in buying or selling your home? Click here! The Air Assault Team makes it easy!

The tightening of the financial market and the resulting strict lending policies have created a need for alternative lending methods. There are a variety of ways to finance a home — some traditional, others a little more creative.

Invest In A Fixer-Upper

If you don’t have the cash for the home of your dreams, make an investment. In the Clarksville-Ft. Campbell market and elsewhere, homes that need extra TLC  are sold at very low prices. Once you have purchased one, you can make renovations and then rent it out. Eventually, you’ll accumulate enough income to fund your next home purchase: hopefully your dream house.

Think outside the box!

A Lease Purchase

Lease purchasing is an alternative for would-be buyers who are credit challenged or who do not have the funds required by the bank for a down payment. In a lease purchase, the potential buyer engages in a contract with the seller to lease the home for a set period of time. All or part of the lease payment goes towards the principal. You, the buyer, must agree to obtain conventional financing within a set period of time, usually two to three years.

This agreement grants you time to straighten out your credit issues and acquire a large amount of the down payment. Therefore, when you qualify to obtain conventional financing on the balance due, you can present proof of the equity invested in the home, which may help to secure the loan.

Wrap Around Loans

A wrap-around loan, also known as an all-inclusive mortgage, is a loan transaction in which the lender assumes responsibility for an existing mortgage. It may be an alternative for a home buyer who can’t secure a more traditional mortgage. Usually, though not always, the lender assumes the role of seller, selling you the property for an agreed upon amount. You will pay the seller that amount as a fixed monthly payment which includes interest charged by the seller. In this way a wrap-around loan benefits both the seller and the buyer, since the buyer acquires a new home without first qualifying for a loan, and the seller is able to choose a his interest rate.

In general, only assumable loans are wrappable. A loan is assumable if existing borrowers can transfer their obligations to qualified house purchasers. The loan will include the unpaid balance of the original mortgage as well as whatever additional money is necessary for the buyer to purchase the home.

Though wrapping can be used to dodge restrictions on assuming old loans, they’re best not used this way! To do so would be to violate your contract with the lender, and you’ll be in trouble if the deal doesn’t close and your lender finds out. In this event, the lender will either call the loan, or demand an immediate increase in interest rate and probably a healthy assumption fee.

But buyer beware…

Be careful not to borrow over and over again without carefully considering your both budget and the potentially crowded repayment schedule for multiple loans. You can wind up owing more than you expected, sooner than you thought.

And as with traditional loan transactions, if you fall short of your obligations the seller or private lender has the right to terminate the deal contract at will.

Consider your options carefully before you buy responsibly!

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Part of this article originally appeared in The Leaf Chronicle as part of Ask the Expert, a real estate column published regularly.  Listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

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Interested in buying or selling your home? Click here! The Air Assault Team makes it easy!

If home buyers in the Clarksville-Ft. Campbell area and elsewhere have learned anything in the aftermath of the sub-prime lending crash, it’s the importance of purchasing a home you can realistically pay for.

The key to success in purchasing a home is buying what you can afford

To determine the amount of mortgage debt you can handle, lenders use a figure based on your debt-to-income ratio: the amount of personal debt you’re already carrying in relation to how much you earn. Based on this key figure, expressed as a percentage, lenders decide the maximum loan to offer you.

A ratio above 36 percent is generally seen as risky. In this case the lender will likely either deny the loan or charge a higher interest rate.

Do The Math To calculate your own debt-to-income ratio, multiply your monthly gross income (total income before taxes and other expenses) by 36% (.36). This figure is your total allowable monthly debt payment.

Let’s say your gross monthly income is $5,700.

$5,7000   x   (.36)   =   $2,052

Your total allowable monthly debt payment will be $2,052.

Next, add up all your fixed debt—the debts you pay each month. This includes expenses like car payments, student loans, or your minimum monthly credit card payments, but not grocery expenses or utility bills. This figure is your total monthly debt payment.

Minimum monthly credit card payments
+ Monthly car loan payments
+ Other monthly debt payments
= Total monthly debt payments

Subtract your total monthly debt payment (not including the mortgage) from your total allowable debt payment. This final figure is your maximum monthly mortgage payment.

In this case, if your total monthly debts were $645, then your maximum monthly mortgage payment would be $2,052 – 645, or $1,407.

Other Rules of Thumb There’s more than one way to gauge your ability to make payments on your home. For instance, if you’re renting now and want to know if you could be paying-to-own, just add 45% of your rent to itself.

In other words, if rent is $900 a month, 45% of that is $405. Add $405 to your current rent payment. $1,305 a month would be the true cost of owning your home. Is it in your budget?

Another rule of thumb is that no more than 25 percent of your gross monthly income should be spent on mortgage payments. Keeping the percentage at 25% or lower can really improve your financial situation.

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How Much Can You Afford? [Yahoo Real Estate]

What Mortgage Payments Can You Afford? [Banks.com]

FHA Mortgage Calculator [FHA.com]

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Ask the Expert is a real estate column published regularly by The Leaf Chronicle, our Clarksville, TN, newspaper. Listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

Interested in buying or selling your home? Click here! The Air Assault Team makes it easy!

Finding a mortgage before looking for real estate is a smart idea

When you want to purchase real estate, the first step is often purchasing a mortgage. If you want to buy a home in the Clarksville-Ft. Campbell area, you’ll have a good idea which homes you can afford after being pre-approved. This is a great way to avoid purchasing a home beyond your financial reach.

Banks, mortgage brokers, finance companies, credit unions, and private lenders are the most common places to seek a mortgage. Air Assault Team agents—and most experienced Realtors—regularly work with the same brokers and banks. Working with an established lender with a good reputation is generally your best option.

Before seeking a mortgage have a good idea how much you can afford to pay each month. When applying for a loan a person must provide documentation of income, expenses, and assets.  Have your financial statements and tax returns ready and the process will be much easier.

The entire process of choosing and buying a home will be a lot easier with a mortgage as a guideline.  In today’s market climate, financing is harder to get these days and being prepared is a wise step in the home buying process.

For more information on mortgages click here.

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Interested in buying or selling your home? Click here! The Air Assault Team makes it easy!

For this week’s Ask the Expert, I explained that today’s market conditions mean that pricing your home thoughtfully is more important than ever. Your home will get attention if it’s a bargain, but it shouldn’t be a steal!

Still, some sellers can get carried away with the hope of padding their pockets, unreasonably padding the price of their home in the process.

“We can always come down later, but we won’t be able to go up,” these sellers say, but aiming too high at the outset rarely results in a sale.

If time is not a factor for you, or if you’re in a market area where prices are quickly appreciating and selection is limited, then this approach may work. The Clarksville-Ft. Campbell area, however, is still largely a buyer’s market, not to mention a growing community where relocation is frequent and new homes are being built all the time.

A good realtor will strongly advise you to list your home at a price no greater than its true worth, the value determined by a CMA. This is because informed buyers, working with their own real estate professionals, won’t be interested in buying your home if it’s priced too high above its market value—odds are, most don’t have money to throw away.

The best pricing strategy is not to give your home away, but to seek a win-win situation for both you and the buyer. A home that is priced correctly is seen as a great value, which leads to increased interest, frequent showings, and eventually, a sale.

HOW TO PRICE YOUR HOME CORRECTLY

Be realistic about your motivations and limitations. Do you want to sell your home, or do you want to make money? Are you a seller or a market tester? In other words, is time a factor? While pricing high might work in an area where selection is limited, in a buyer’s market like Clarksville you’re bound to play the waiting game.

Do your research. Compare your home to other homes in your area, both in your own subdivision and other, similar ones. Be competitive but reasonable. Don’t price low because another home on your block is listed below market value, but don’t price too far above other comparable real estate.

Be open to negotiating. You don’t have to drop to your lowest possible price right away, but be flexible in your expectations.

Consult a real estate professional. A CMA will tell you exactly what your home is worth, so you can be confident that your asking price signals a great value in your local market.

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Ask the Expert is a real estate column published regularly by The Leaf Chronicle, our Clarksville, TN, newspaper. Listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

For this week’s edition of Ask the Expert, published regularly by The Leaf Chronicle, I answer a question many have these days: what to do when you think foreclosure is the only way out.

Q: I’m behind on my mortgage payments, will I have to foreclose?

A: If you don’t have enough equity to sell your home or you’re behind on your payments, you may feel that foreclosure is your only option—but it doesn’t have to be! There are resources available that can help.

If you can, it’s advisable to avoid foreclosing, which involves hefty fees for the bank and long term effects on the borrowers. Besides losing your home, foreclosing can damage your credit report for years, making it extremely expensive—or even impossible—to buy again. And if selling your home doesn’t bring in enough funds to cover your loan, you could be sued for the outstanding balance.

What many people don’t know is that you can work with your lender instead of against him. You should call your lender as soon as you fear you’re in danger of foreclosing. Once you’ve missed 3 or 4 payments, it may be too late to negotiate a solution.

There are government programs that reward this sort of forward thinking. For example, recent legislation stipulates that homeowners that sell their homes rather than let them go into foreclosure are eligible for a “relocation assistance” payment of up to $3,000. (See our previous post on Obama’s Mortgage Relief Program for details.)

But if you’re already in the danger zone, there are still some things you can do. A qualified Realtor can walk you through a short sale, various loan modification programs, or even programs made especially for federal employees and members of the military who are forced to sell their homes in unfavorable market conditions.

If you’re in over your head, or you think you’re about to be, contact a real estate professional sooner rather than later.

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More questions? Ask them here!

Or follow Ask the Expert at www.TheLeafChronicle.com, read it in print, or listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

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Interested in buying or selling your home? Click here! The Air Assault Team makes it easy!

Consider doing a home inspection before selling your home

If you’re considering selling your home in the Clarksville-Ft.Campbell area, it’s wise to have a home inspection completed before even putting your home on the market.  It’s rare that a buyer will opt not to have a home inspection done before closing. If you’re aware of any problems and able to take care of them prior to selling, you can avoid that hassle that surprise issues can bring.

The Clarksville-Ft. Campbell market is a competitive one. As a seller, your best chance at snagging a buyer comes with having your property in top notch condition. In addition to looking good, a home needs to function well. It’s important to examine the bones.  A home inspection will inform the seller–and the buyer–of faulty plumbing, wiring, heating and cooling issues, the need for roof replacement, painting, etc.

If problems with a property are discovered and dealt with before selling, there should be no surprises when going through the contractual steps before closing.

For more information on home inspection and locating a home inspector visit the website for the American Society of Home Inspectors by clicking here.

For this week’s edition of Ask the Expert, published regularly by The Leaf Chronicle, I’m providing buyers with 8 simple secrets for home buying.  Avoid costly mistakes when you buy your dream home by following these guidelines.

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1. Get pre-approved. Pre-approval is more effective than pre-qualification. In the eyes of the seller, pre-approval makes you a more desirable “cash” buyer.

2. Beat the competition to new listings. The Air Assault Team will send you a Hot List of attractive properties for sale as soon as they come on the market, and in some cases before they come on the market. Take advantage by seeing the houses you like before anyone else, then be the first to make an offer.

3. Do your research. Investigate local properties to get an idea of price points, list-to-sale price ratios, hottest areas, and the best places for a bargain.

4. Prove you mean business. Show you are serious about purchasing a property by putting down a good faith deposit.

5. Don’t lose your head. Just because you may be in a competing situation doesn’t mean you should be willing to pay any price to get your dream home, but be flexible. You may have to pay more closing costs than anticipated, close earlier to fit the seller’s timetable, etc.

6. Keep it simple and clean. Do not include unnecessary contingencies in your contract, especially repairs. Keep contingencies to a minimum.

7. Don’t be a lone wolf. In this market you need an experienced professional for guidance. As your neighborhood real estate specialists we can help you get pre-approved, find a prize property, and negotiate the best deal.

8. Seek a win-win situation. Your offer should be a win for you and for the seller.

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For more secrets of seamless home-buying, contact a member of The Air Assault Team today!

Or follow Ask the Expert at www.TheLeafChronicle.com, read it in print, or listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

Each week I answer questions from readers and listeners of our local media sources for a series called Ask the Expert. As the real estate expert for Clarksville-Ft. Campbell, this week I answered another question submitted to The Leaf Chronicle, our Clarksville, TN, newspaper.

Q: What should I look for when deciding on a new community?

A: If you’re thinking of relocating to a new community, the first thing to determine is what your needs are. Consider your family make-up—how many people you are, the age of your children, or the needs of any elderly family members living with you. What are your interests? Is golf a weekend priority, or is boating more your style? What about a religious community, gardening, or volunteering? Consider how your new community’s  amenities, or the lack of, may affect your lifestyle. Is public transportation available? If you plan to drive, how long is your new commute to work or school? Compare the cost of living in your present and future communities. And if you or your spouse will be seeking employment, research potential job opportunities.

What's on your relocation checklist?

After deciding that this new community is for you, but before you begin your home search, learn the “culture” of the new area’s real estate market. Every community has different real estate customs—even Nashville and Clarksville, though they’re located only an hour appart. Find out if the seller will pay closing costs, or if homes typically sell for close to the asking price or for far below. Are there housing incentives unique to your new community? A good housing specialist can help you answer these questions.

Before you purchase in your new community, don’t forget to figure in resale value in case you decide to move again. Remember that if you buy a unique home that suits you now, it may not appeal to potential buyers in the future.

Finally, once you’re in your new home, investigate zoning laws for neighborhoods and architecture and honor the restrictions.

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More questions? Ask them here!

Or follow Ask the Expert at www.TheLeafChronicle.com, read it in print, or listen to recent podcasts of Ask the Expert from local station 100.3 FM, The Beaver.

Exterior improvements give more of a return when remodeling

There is an annual report that examines the cost versus value for home remodeling.  The report is helpful for those  considering making improvements to their homes, especially if their home is one that they consider selling in the near future.  Historically,  homeowners most often consider spending money on bedrooms and bathrooms, but the return on the remodel investment is not necessarily there.

According to the 2009 Remodeling Cost vs. Value Report the best return for your money are exterior improvements that often are lower cost projects to begin with.  Adding  a deck or replacing siding, doors and windows are among projects that recoup the most money when re-selling a home.  The return on these projects is typically 80% or more.

First impressions count for a lot!  If you’re considering selling your home make sure that the exterior is as eye-catching as it can be.

Click here to learn more about remodeling costs versus value at The National Association of Realtors’ website.