Banks Need to Start Lending

I was talking with another agent the other day, when he told me the following story. The bank in question I won’t name, we’ll just use their initials.

“My client, is 5 days away from the closing and the bank is refusing to give him a mortgage. The guy is putting 50% down and BOA won’t give him a loan. It just doesn’t make any sense! Even if the guy defaults, the bank picks up the property for half of what it’s worth and they can easily flip the property. If I had the money, I’d loan it to him it’s such a good deal.”

Now, having heard that story all I can say is: BOA it’s time to loosen the purse strings! You guys took over $45 billion in TARP money and it’s time you use it to help keep the economy moving. Anyone else going through something similar let loose in the comments.

1850 Auction Results

The 1850 auction that took place yesterday and it was quite the event! The 35 units that were auctioned off brought out over 100 bidders. It took just 1 hour and 20 mins to sell all 35 units and 21 parking spaces.

Pricing Break Down:

Biggest Discount : Unit 507  $247,000 off last asking price (also the most expensive unit!)

Cheapest Unit: Unit 206 $267,000 buyer got a $100,000 discount.

Average Price per Square Foot: $370.76

Average Discount: $114,029

Average Unit Price: $320,229

10 Reasons Why You Should Help Your Kid Buy a House this Year

Here are the top 10 reasons to help your kid buy a home this year.

1. How else could you take advantage of the low down payment possibility that FHA offers?

One of the things that’s so great about FHA financing is that it only requires a down payment of 3.5%. This is great news for both you and your kid, incase neither one of you has a lot of extra cash on hand. Obviously, the more money you can put down the better, but it’s not necessary with this kind of financing.

2. Low fixed rates on old fashion 30-year mortgages.

Mortgage rates have climbed from their record lows a few months ago, but many remain in the mid to low 5%. Parents, do you remember what your first mortgage rate was? Rates this low make home ownership a reality for many people who are simply throwing away money by renting a place.

3. FHA financing finally has limits high enough that you can get your kid a nice starter property.

It’s important to keep in mind that this is a starter home; it doesn’t need to be Tom Brady’s Mansion. The current FHA loan limit for Suffolk County is $465,000. This means that you can look at homes for roughly up to $490,000. For those of you doing the math right now that means you give roughly a 95% offer on a $490,000 and still fall within the loan limit. In today’s real estate market, I know many sellers that would be quite happy to receive that kind of offer.

4. First Time Homebuyers Tax Credit of $8,000 is good through the end of the year.

The credit is available to those who are first time homebuyers between January 1, 2009 and December 1, 2009. The tax credit is just the beginning of the tax advantages to buying a home this year. To lower your taxes further, you can also deduct the interest you pay on your FHA loan.

5. You can gift the down payment to your kid and not pay any taxes on the money.

Parents can gift their children up to $12,000 each, without paying any taxes on the gift. The father can give $12,000 and the mother can give $12,000. This means that you can give your kids $24,000 to put towards the down payment which is well above the 3.5% minimum that’s required by FHA loans.

6. You can ask for closing costs as part of the offer!

Closing costs can sometimes be a huge expense and one that many people often forget about at first. FHA loans allow for the seller to pay up to 6% of the closing costs related to transaction. This is usually enough to cover all costs associated with the purchase of the home.

7. You can take advantage of dropping interest rates even after you’ve closed.

FHA loans have the ability to easily be re-written if rates drop. This means you never have to worry about being locked into a higher rate if interest rates ever drop down further.

8. There are plenty of properties to choose from! The current market is filled with properties that fall within FHA pricing guidelines.

A quick search of just 3 Boston neighborhoods currently show almost 200 properties that fall under the $490,000 price point. When you expand the search to include a few more neighborhoods, the number of homes increases to well over 300.

9. For recent college grads, you can use your school as a previous employer.

One of the most difficult parts of getting a mortgage for recent college grads is the 2 year work requirement. Many are just starting their careers, but with an FHA loan you can use your school to fill the 2 year work requirement.

10. Real Estate has always been a path to creating wealth, so why not start your kids early?

Every financial guru out there will tell you that the creation of long lasting wealth starts with real estate. Over a long period of time it’s one the most stable and in some cases profitable places to invest your money. My favorite quote on the matter: “Buy land, it’s the one thing they aren’t making any more of. A prime example of this is the parking space in Back Bay that recently sold for $300,000. This undeveloped 8′ x 17′ piece of land that years ago was worth nothing, has now set a record in Boston.

For more information on FHA loans or for help looking for a property that meets these guidelines, feel free to contact me via email.

Back Bay Condo Prices Increase

The average sales price of condos in Back Bay continues to rise. This may sound shocking to many readers who constantly see the news about prices falling all over the city, but numbers don’t lie.

Average sales prices in Back Bay per square foot:
1/1/08-6/15/08 $778.00
1/1/09-6/15/09 $779.00

Now this may not seem like much, but let’s compare it to Beacon Hill in the same time frame.

1/1/08-6/15/08 $745.00
1/1/09-6/15/09 $704.00

Now that increase seems much bigger doesn’t it? My take on this, is that as Back Bay continues to increase in popularity among people of all ages, it’s driving prices higher. The number of renovated homes in Back Bay is also higher than in Beacon Hill which helps further inflate prices.