Real Estate Market

A number of different types of companies offer home mortgage loans. Here is a brief summary of how they operate:

• Mortgage bankers are direct lenders, who use their own funds to originate loans, then often quickly sell the loans on the secondary mortgage market. They may or may not continue to service the loans (sending bills, statements, etc.) after selling them. Typically, the loans they provide meet guidelines established by Fannie Mae and Freddie Mac or other government programs that secure loans, so the loans can be easily sold in the secondary mortgage market.
• Portfolio lenders are also direct lenders, using their own funds to make loans. Rather than selling their loans, they typically keep them as investments -- at least for a period of time. Because resale isn't the goal, portfolio lenders are not as bound by Fannie Mae/Freddie Mac guidelines. Some institutions, such as banks, savings and loans or credit unions, may operate both as mortgage bankers and portfolio lenders.
• Mortgage brokers work with a number of lenders, and therefore can offer a wide variety of loan programs. Serving as an intermediary between lenders and borrowers, the mortgage broker will help the borrower select a loan program, then will look for a lender to fund the loan. The broker works with the borrower to complete a loan application, collect required documentation, order a credit report, arrange to have the property appraised, etc. Payment for the broker is factored into the cost of the loan, usually as fees or points in closing/settlement costs.
• Correspondent mortgage brokers act as agents for a single lender (but sometimes several) from originating loans through settlement/closing. The loans are made in the correspondent's name even though the lender supplies the funds, usually underwrites the loan and owns the loan after closing/settlement. The correspondent may also become the servicer for the lender. Correspondents often are paid from the loan origination fee charged to the borrower.

As a first-time home buyer you can take advantage of the 2009 Tax Credit.  Visit 2009 Tax Credit for more information.  Do let time slip by.

Proper pricing is critical to a timely sale in any market. Most home sellers tend to want to set their price in relation to what their neighbors have sold for or are asking now, sometimes ignoring current market conditions and the differences between homes.

When pricing a home -- especially in today's housing market -- we find it's helpful for sellers to understand what governs a buyer's decision to purchase.

Here's a quick look at how buyers view price:

• Monthly payments are usually more important to buyers than the sales price.
  
• The "out of pocket" cash needed at settlement/closing is a big factor with buyers.
  
• All buyers want to cash in on a good deal.
  
• Buyers have often shopped the competition and know how your home compares.
  
• Buyers recognize value and shy away from overpriced homes.
  
• Buyers don't want to pay for your mistakes (paying too much when you purchased, over-improving the home, poor-quality remodeling jobs, etc.).
  
• Buyers have no interest in how much money you need to realize from the sale to make your next move.

If you are selling a home and want to a avoid a future tax audit, remember this: any tax reimbursement you receive from the buyer for previously-deducted property taxes is considered income by Uncle Sam.Because property taxes are typically paid in advance, it's not uncommon for a buyer to reimburse the seller for the unused balance of the year at settlement. Thanks to current rules, all lawyers, title companies, escrow agents and brokers involved in a settlement must report the amount of the property tax reimbursement to the IRS. Now IRS computers can cross-check annual income tax returns with property tax adjustment figures already reported to them. Consult a qualified tax professional for full details.