Right now there is a lot going on in the real estate market. Home buyer tax credits, low prices and low interest rates have many first time home buyers ready to take the ownership plunge. With all the excitement and incentives, don’t forget the basics when it comes to closing on your Key West home.

The first and most important thing to remember as you prepare for closing is don’t change anything about your financial profile! The excitement of buying your home may have you running out to the local home improvement store and opening a credit account to buy new appliances or other necessities for your new home. STOP! Any changes to your to your credit picture can mean you no longer qualify for your financing.

Avoid buying a new car, new furniture or anything else on credit, even 90 days same as cash. There have been home buyers who walked into a closing and walked out again without becoming a homeowner. If you are working with a real estate agent they will have probably already told you to make no changes to any of your debts. Just be patient and go shopping after the paperwork is done!

Another important thing to do before closing day is asking for a final walk through inspection. Check for the condition of the home and that everything negotiated has been completed. This is your chance to make sure everything is as it should be.The best way to make sure everything goes smoothly at closing is to work with a good real estate agent. They will let you know what to expect at your closing meeting and if there are any special requirements in your state (some states even require a real estate attorney be involved in the closing). Closing doesn’t have to be scary! Your real estate agent will walk you through the process and you will walk away with the keys to your new home!

If you are ready to buy in Key West, call Margarita Villoch! She is your local real estate resource! It won’t be long until you find yourself enjoying the island life and relaxing on the beach!

There are many great reasons to buy a home in Key West! Beautiful surroundings, ocean views, and the island life are just a few that come to mind. The home buyer’s tax credit ($8,000 for first time buyers or $6,500 for repeat buyers) is another reason why now is a great time to buy or sell your home. But there are more changes on the horizon as the FHA announces its new lending guidelines.

January 20th, the FHA made an announcement outlining their new lending quidelines. These changes may make it harder for some to realize their American dream of homeownership. For years, FHA has helped countless people who had less money for a down payment or had a credit score that was lower than what the banks liked. There are many homeowners who would still be renters if it weren’t for FHA loans.

Always a popular program, in the last few years FHA has written almost 30% of mortgage loans. As the number of loans they held increased, they began to feel the impact of rising delinquencies. The new rules are an attempt to reduce the number of defaults. While some of the rules will apply to lenders, there are some big changes for buyers as well.

So what is the FHA’s new plan? Basically to lessen defaults on FHA loans, guidelines are being tightened. While there is not a specific date set for the buyer guidelines to go into effect, they will definitely impact who can buy a home. Here are the basics of the changes:

• Lower FICO scores (below 580) will now require a 10% down payment…that is up from 3.5%
• Mortgage Insurance Payment (MIP) is being raised from 1.75% to 2.25%.
• The allowable seller’s concession has been slashed from 6% to 3%. This means sellers will contribute less to the buyers closing costs.

All three changes are expected to go into effective by late spring-early summer except for the MIP increase which starts April 5, 2010. So if you have been trying to decide if it is time for you to buy or not, it is! You can still take advantage of home buyer tax credit, low interest rates and the current FHA loan guidelines to make the dream of owning a home come true.

If you are ready to embrace the island life and relocate to beautiful Key West, call Margarita Villoch! Her team will be glad to answer any questions you have about the changes coming for first time home buyers! If you are wanting to sell your home, we can help with a free market analysis of your home!

There is no way around it; lending practices are getting stricter when it comes to home mortgages. Recently, even the FHA (Federal Housing Administration) announced new stricter guidelines for first time home buyers that should take effect in late spring or early summer. These changes in lending mean Key West homebuyers may have to do a little more planning than in years past. One of the first things you want to do is make sure your credit score is in order.

It wasn’t that long ago a few blemishes on your credit report didn’t affect you very much. That is no longer the case today. Your credit score determines not only your ability to get a loan, but your interest rate as well. So the first step on the road to home ownership is:  find out your credit score!

A free copy of your credit report is available to you once a year. You can go to AnnualCreditReport.com, which is the official site for consumers to access their free annual credit report online. There are numerous other sites you can use as well. These often require enrolling in a free trial period in a credit report protection plan of some sort.

So now that you know your number, let’s talk about what it means. Credit Scores range from 300-850. The higher your score, the better! To give you an idea of where you might stand, let’s look at the average scores needed for most lenders.

 Fannie Mae (Federal National Mortgage Association) recently raised their minimum credit score requirement to 580.. As we discussed in a previous post, FHA just announced their new guidelines. If you have a credit score lower than 580 you will have to come up with a 10% down payment instead of 3.5% for those with a higher score. Lastly, most financial institutions want to see above 700 and for the best interest rates, some lenders are looking for scores of 760 or higher. Just to put that in perspective, three years ago a 630 credit score could have gotten you a mortgage loan with minimal road blocks and a slightly higher interest rate.

Don’t despair if your credit score isn’t where you want it to be. The FHA guidelines have not yet gone into effect! So you still have time to buy a home before these changes impact you. Also, the home buyer tax credit is still available through April 30, 2010. The credit of $8,000 for first time buyers or $6,500 for repeat buyers can also help with your down payment.

If you are not ready to buy right now, that is OK too! It means you have time to improve your score and to save up for your down payment! All the changes taking place can seem a bit intimidating, but don’t let that stop you from pursuing your dream of owning a home! When you are ready to enjoy the island life, call Margarita Villoch! Her team can help you navigate through all the changes and help you find a place to call home in Key West!

Key West living can keep you busy, but in a good way! In a recent post we talked about creating your own Key West festival of food and wine. There was so much to do; it may have left you wondering what could possibly be left? Well, bike tours and sunset sailing are high on the list of things to do.

If you want to have a laid back start to the day, sleep in late and then head to Lloyd’s bike tours for a unique view of the island! These bike tours have been featured in Travel and Leisure magazine, as well as other well known publications. Your bike guide will take you on a leisurely ride through Key West. Enjoy the fragrance of the island. Sea air and tropical flowers carried on an ocean breeze can be the start of a beautiful day! When you get back from your tour, you should head over to Flamingo Crossing Ice Cream store for some homemade tropical ice cream and treats!

We talked a lot about the cuisine you can find in the area, so it is time to move on to the wine! You can enjoy a sunset cruise and wonderful wines with Danger Charter.  This wind and wine experience sails nightly. Danger Charters gives you eight fine wines to choose from on each cruise. Quality beers and delicious hors d’oeuvres round out the menu.

If you prefer to imbibe your spirits on dry land, you can’t beat the night scene in Key West! For a one of a kind experience, you can check out the Key West Pub Crawl walking tour. This 2 ½ hour event will take you to some of the area’s most famous and entertaining establishments. The tour runs on Tuesday and Friday nights.

You can end the weekend at the internationally known La Te Da Key West and its famous Cabaret shows. This hotel and restaurant’s main building was once the residence of Jose Martin the Cuban Revolutionary. It is known for its true Old Key West style and tradition of excellence.

These are just a few of the things to do at the Key West Food and Wine Festival! The best way to experience Key West is to come and see the unique way we live here! Curious about life in the Keys? Call Margarita Villoch! Your Key West real estate expert!

Three or four years ago, the term short sale was not familiar to most home buyers. When the housing bubble burst, everything changed! The term “short sale “is becoming a familiar one as homeowners are finding themselves unable to keep up with their mortgage payments, yet unable to sell their homes for enough to cover the outstanding debt since home values have dropped. Key West has not been untouched by this. Before going into the ins and outs of the short sale, let’s cover some of the basic information.

First, let’s talk about what a short sale is. In this case, the lender agrees to allow the seller to sell property for less than what is owed on all liens and mortgages.  Normally, the lender also agrees to forgive any remaining obligation the seller may have had. Lenders are not anxious to accept less, but may consider a short sale as less costly to them than processing a foreclosure. It is not equivalent to walking away from a mortgage.

There are various reasons why a property owner might request a short sale on their home. Death of spouse or partner, illness, and divorce are the most common circumstances that leave a home owner unable to maintain their current mortgage. In the current economy, loss of employment is at the top of the list, along with having negative equity in the property. Over all, the borrower must show they have an inability to pay their mortgage due to a currently experienced hardship.  

Some lenders will attempt a loan modification first to see if they can help the home owner stay in their home. Short sales are often a last attempt to avoid foreclosure. The difference is tremendous when it comes to salvaging the borrower’s credit rating. A short sale typically will drop a credit score by roughly 50 points. A foreclosure, on the other hand, will decimate a credit score with a 200 point freefall.

In the past, short sales used to take anywhere from three to six months to complete. April 5, 2010, new treasury guidelines will take effect. They will greatly increase the speed in which short sales are completed! The streamlined program is only through December of 2012 and is an attempt to help ease the burden on distressed homeowners.

The new rules state that once a proposal has been received by the loan servicer, they will have 10 days to accept or reject the offer. Closing will be within 45 days UNLESS the borrower agrees to an extension. Some lenders are already applying the guidelines now, rather than waiting until April. This is good news for those looking into short sales.

2010 may very well be the year of the short sale! If you have more questions regarding short sales or Key West real estate in general, call Margarita Villoch! She is your island life real estate expert!

One of the ways banks are trying to help those who have been hit hard by the economy is to modify their mortgage loans. Most financial institutions are offering to lower interest rates or accept interest only payments as a way to help people stay in their homes. But a recent federal study actually shows the best way to help endangered homeowners is to reduce the principal balance of the loan. Many banks are hard pressed to do this, but studies show that this is the best way to keep a homeowner from re-defaulting.

The findings of the study show that servicers who lower the monthly mortgage payments by reducing the principal balance are much more likely to see payments continuing than the servicer who makes interest rate adjustments. The basis behind this may lie in the fact that homeowners feel much more comfortable trying to stay in a home when the loan matches more closely to the value of the property.

Homeowners who have a loan-to-value ratio higher than 115% are 51% more likely to re-default AFTER an interest rate modification. But if the principal balance is lowered instead of the interest rate, the homeowner is much more likely to keep up with the payments. While some lenders do not want to reduce the principal and take a loss, the study shows that when the interest modified loan goes into default again, they get much less through foreclosure than they would if they had reduced the principal balance.

One of the worse side effects of the foreclosure problem is home that sits empty. Vacant homes are often vandalized and destroyed as thieves rip through the floors to check for copper plumbing or tear fixtures completely out of the walls. Keeping a homeowner in the home is the best solution for everyone! It is in the best interest of the lenders to do what they can to accomplish that.

If loan modification is not an option, that brings up the subject of short sales. Short sales can be a saving grace for the lender, the seller and they buyer! We will cover that more in depth in future posts! If you are looking for short sales or just a piece of island living, call Margarita Villoch! Your complete Key West real estate resource!

Stage your home for best results

 With so many homes on the market, how can a seller stand above the crowd? Pricing competitively is key, but making a few improvements can make a big difference in how much a home sells for and how fast. The big question has always been; which improvements should you make and how much should you spend. A recent survey by HomeGain.com may answer part of the question.

HomeGain’s recent survey asked what top do-it-yourself projects Realtors® would recommend to home sellers. All of the projects came in under $5,000, but it also showed that for under $500 you can make some improvements that not only help you sell your home, but also give you a good return on your investment.

The top improvement on every Realtor’s seller to do list is clean and de-clutter. This one came in highest on the list, 98% of those surveyed recommended this step! This step can cost you nothing if you do it yourself, but for an average cost of $200, you can hire an organizer to come in to give you some help. You could also rent a storage unit for your extra stuff for $150-$200. What is the return on this $200 investment? Up to $1700 in potential price of your home! That is over 800% return on investment! There is a reason Realtors tell clients that this is the most important step in preparing your home for sale!

Another trick of the trade that is gaining in popularity is home staging. The main goal of home staging is to make your home look brighter, bigger, and more inviting. Again this is a project you can do yourself. Purchase a few items to add light and texture to your home, play around with the way furniture is arranged. Remember the purpose of home staging is not about function, it is about form. You can spend around $300 staging your home; the increase you will see can be upwards of $1,780! Browse stylish home magazines to get a few ideas!   You can even get ideas of how to arrange your furniture and plan ahead for your next home at websites for companies such as Royal Furniture or Ashley Furniture

Other items that topped the list are tried and true must do’s for selling your home. Clean your carpets, freshen your paint; inside and out, and repair any visible damage to walls and floors. If you want to take on one of the bigger projects, you will normally see big returns on updating kitchens and bathrooms. Your return on investment may be up to double what you spend, if you spend $1200 updating your kitchen you will usually see approximately $ 2850 price increase.

These amounts, of course, are just averages. In some places, you will see more or a little less return on your investment. This is where working with a local real estate agent is crucial. They can help you know what is important in your specific situation. If you want to do $7,000 in home improvements but your area could not carry the price increase, you may spend more than you could make on return. Your local real estate expert can help you avoid that pitfall! If you have questions about selling your Key West home call Margarita Villoch, she is your Key West real estate expert! Margarita offers Free Home Evaluation; Current Market Analysis.

Ever said “I want to time it just right!” and been so caught up in trying to figure out when the right time is, you miss the boat?  Are you waiting on the perfect time to buy a home, in case the prices might drop just a little more before you purchase that dream home?  At the moment if you keep waiting for prices to fall even lower, you could miss two major bonanzas that can impact the cost of your home: low interest rates and the new Home Buyer’s Credit.

Interest rates are still at record lows all across the country and right here in Key West. While many people are keeping their eyes glued to home prices, they may have forgotten the impact the interest rate has over the life of the mortgage. As recent New York Times article pointed out, “If prices came down another 10%, but interest rates went up by 1 percentage point that would mean the same monthly payment as today versus waiting.”  While waiting on a price drop that may not come, you may miss out on the low rates that are NOT going to last forever. 

Another limited time incentive is the Home Buyer Tax Credit.  The first time homebuyer credit has been extended and expanded as most people already know.  It now includes repeat homebuyers as well and some of the income guidelines have increased. Here is the basic information on the credit:

Eligibility 

• First time homebuyer:  those who have not owned a principal residence in last three years
• Repeat homebuyer:  has lived in their principal residence for five out of the last eight years
• All US citizens who file taxes are eligible
• Whether first time home buyer or repeat home buyer; they must be purchasing a primary residence 

Though the credit cannot be used to buy a vacation home, you can buy a new primary residence and change a current home to vacation or rental property home status. 

Income Guidelines 

• Single or Head of Household filers:  Income maximum for full credit -$125,000; partial credit – up to $145,000
• Married, filing jointly: Income maximum for full credit -$225,000; partial credit up to $245,000 

This broader income range should enable buyers whom might ordinarily buy more expensive home to get in on the action and receive a great deal on a home. 

Amount of Credit

•  First time buyer:  10% of purchase price up to $8000 maximum credit
• Repeat buyer:  10% of purchase price up to $6500 maximum credit

 Expiration Date

• You must have a binding sales contract signed by April 30, 2010 and must close by June 30, 2010.

This allows you to use the credit right up to April deadline and have time to close, including some breathing room.

Real Estate remains a good long term  investment, which is why many savvy buyers are taking advantage of all the incentives to buy now. Depending on how you use the tax credit you can make a significant impact on the bottom line of your mortgage. Almost any type of home qualifies for the credit as long as it is considered a principal residence. Good news for buyers in Key West, even houseboats qualify under this program.

Key West is a great place to live!  If you have questions about the Key West real estate market, Margarita Villoch and her team are the local experts on what Florida island living has to offer. Whether you are seeking a second home that you visit occasionally or a year round permanent residence, contact Margarita and start packing!